WEBVTT - Macri Frittered Away His Time To Make Reforms: Rhodes (Podcast) 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul Swinge. You, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor, find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:24.840 at Bloomberg dot com. Well, global trade and global finance 0:00:24.920 --> 0:00:27.640 continue to be in the headlines and continue to impact 0:00:27.720 --> 0:00:30.080 financial markets. To get the latest on some of the 0:00:30.160 --> 0:00:32.600 key global issues, we turn once again to Bill Rhodes. 0:00:32.640 --> 0:00:35.640 Bill as President CEO of William R. Rhodes Global Advisors. 0:00:35.880 --> 0:00:38.519 He's also author of the book Banker to the World, 0:00:38.760 --> 0:00:41.720 Leadership Lessons from the front Lines of Global Global Finance. 0:00:42.159 --> 0:00:43.960 Bill joins us live here in the Bloomberg and Ractor 0:00:44.000 --> 0:00:47.760 Broker Studio. So Bill, let's turn our attention to Latin America. 0:00:48.479 --> 0:00:51.960 Argentina in the news. This you know, kind of blew 0:00:52.040 --> 0:00:54.320 up yesterday with yields on government bonds rising to the 0:00:54.360 --> 0:00:57.080 highest level since the country was last in the fall 0:00:57.360 --> 0:00:59.920 stocks and the pay so we're in free fall. What's 0:01:00.000 --> 0:01:04.320 the latest from Argentina? Length. The problem in in Argentina, 0:01:04.480 --> 0:01:07.000 as we were discussing in the break, is that when 0:01:07.040 --> 0:01:11.000 Macari came in, everyone had great expectations. I actually did 0:01:11.000 --> 0:01:13.840 a piece for Bloomberg the first week he was in office. 0:01:14.160 --> 0:01:16.679 What happened, though, is he fritted away his time. So 0:01:16.800 --> 0:01:21.200 instead of implementing tough economic reforms up front, like Fernando 0:01:21.240 --> 0:01:24.280 and Rick Carloso did with the Real Plan and Uh, 0:01:24.840 --> 0:01:28.800 Belsarovitch did UH with Poland when Poland broke away from 0:01:28.800 --> 0:01:31.959 the Soviet Union. He fritted it away and he called 0:01:32.000 --> 0:01:36.920 it gradualismo, the Spanish term for do it gradually. UH. 0:01:36.959 --> 0:01:39.039 And the reason he did that was because he thought 0:01:39.040 --> 0:01:41.280 it would help him politically. But if you don't take 0:01:41.319 --> 0:01:44.720 the tough measures up front, it blows up in your face. UH. 0:01:44.760 --> 0:01:46.959 And last year when I was there, they had just 0:01:47.280 --> 0:01:50.400 they were just firing ahead of the Central Bank, blaming 0:01:50.480 --> 0:01:54.000 him for it. Uh. They put in the Minister of 0:01:54.000 --> 0:01:57.560 Finance UH, and he lasted two or three months Caputo, 0:01:57.960 --> 0:02:02.440 and then he resigned or was fired because they did 0:02:02.480 --> 0:02:04.240 not want to take the tough steps. Now the I 0:02:04.400 --> 0:02:07.640 m F has got their next out there, just like 0:02:07.680 --> 0:02:09.840 they did on Greece, because they've given him the largest 0:02:09.840 --> 0:02:13.840 program efforts over fifty billion dollars, and they can't be 0:02:13.960 --> 0:02:17.600 very happy now because inflation is over fifty the country's 0:02:17.639 --> 0:02:21.280 deep into recession. Elections are in October and all of 0:02:21.320 --> 0:02:24.760 the polls show believe it or not. Uh. Christina Kirshner, 0:02:24.800 --> 0:02:27.480 who people thought would be in jail by now, says 0:02:27.480 --> 0:02:30.480 she's gonna run, and she's running ahead of Macari. And 0:02:30.480 --> 0:02:34.440 and now he slapped on price controls and having restarted 0:02:34.440 --> 0:02:37.480 that country more than anybody else in history five times. 0:02:37.520 --> 0:02:41.960 Every time they get into price controls, it doesn't work. Uh. 0:02:42.000 --> 0:02:44.160 And you remember you had a bad ending of Alfonsin, 0:02:44.240 --> 0:02:46.840 you had a bad ending of day lar Ua. The 0:02:46.919 --> 0:02:49.120 press in Argentina is full of that. I hope it 0:02:49.160 --> 0:02:52.400 doesn't happen because I think Macari has the right intentions, 0:02:52.440 --> 0:02:55.840 but uh, time may have run out, and so he's 0:02:55.880 --> 0:02:57.920 got to use the rest of his time to implement 0:02:58.000 --> 0:03:01.800 these reforms, and maybe too late. So I remember all 0:03:01.880 --> 0:03:04.560 the way back, maybe two years ago, when Argentina was 0:03:04.600 --> 0:03:08.840 selling hundred year bonds and investors were piling in and 0:03:08.880 --> 0:03:13.000 the biggest institutions were saying Argentina is a recovery story. 0:03:13.080 --> 0:03:15.480 Never mind the fact that it's defaulted five some odd 0:03:15.480 --> 0:03:18.760 times in the past hundred years. Here we are the 0:03:18.880 --> 0:03:21.280 chances of potential to faull to being priced into the 0:03:21.280 --> 0:03:25.840 market of Argentinian debt over six currently up from a 0:03:25.919 --> 0:03:29.360 year ago. In your perspective, what are the chances that 0:03:29.400 --> 0:03:34.160 we see yet another Argentinian default? Well, I certainly hope 0:03:34.200 --> 0:03:37.320 we will not, but there's still time to take some 0:03:37.400 --> 0:03:39.600 of these tough measures. But it's not like putting on 0:03:39.640 --> 0:03:44.720 price controls. And the economic team down there was very 0:03:44.760 --> 0:03:47.920 slow to recognize the problems, and those who did recognize it, 0:03:48.000 --> 0:03:52.000 unfortunately Mauricio got rid of UH. And so it's like 0:03:52.080 --> 0:03:54.960 my father taught me when I was a young man, said, Bill, 0:03:55.040 --> 0:03:57.360 the road to Hell is paved with good intentions, and 0:03:57.440 --> 0:03:59.960 Macary has all the good intentions, but if you don't 0:04:00.000 --> 0:04:02.920 take the proper steps, you could have more problems. And 0:04:02.960 --> 0:04:06.920 so the markets are now fixated on Argentina. How people 0:04:07.080 --> 0:04:10.080 people would have bought a hundred year bonds? And when 0:04:10.080 --> 0:04:12.760 you asked me that earlier, UH in the break, I said, 0:04:12.760 --> 0:04:16.960 because there's too much liquidity. UH still slashing around with 0:04:16.960 --> 0:04:20.560 with all UH, the emphasis on central banks providing liquidity, 0:04:20.640 --> 0:04:23.080 the reach ree yield and people are desperate for that, 0:04:23.839 --> 0:04:27.520 so they went into all sorts of things, including those bonds. Uh. 0:04:27.560 --> 0:04:29.400 But you know it's not just Argentina. Let's take a 0:04:29.400 --> 0:04:31.760 look at what's going on in Turkey. Look at the 0:04:31.760 --> 0:04:36.159 inflation rate in Turkey. They're in recession. UH. And I 0:04:36.200 --> 0:04:38.599 don't see the economic reforms happening there. So I think 0:04:38.600 --> 0:04:40.880 there's a lot of problems the emerging markets. Korea just 0:04:40.960 --> 0:04:45.040 came out uh and surprised people with their negative growth. Uh. 0:04:45.080 --> 0:04:49.800 There's a lot of weakness in Asia. Europe is very weak. Uh. 0:04:49.839 --> 0:04:52.120 When you look at Germany, the industrial figures, you look 0:04:52.160 --> 0:04:55.520 at Italy uh, and of course brexits unsettled. So the 0:04:55.600 --> 0:04:59.440 one part of the world which is booming for the 0:04:59.520 --> 0:05:03.960 moment is US, the US, But you know, we can't 0:05:04.080 --> 0:05:06.279 be the locomotive for the rest of the world forever. 0:05:06.480 --> 0:05:09.960 How about going back to Latin America Venezuela. What's your 0:05:09.960 --> 0:05:12.800 current view there? That was is such a difficult situation. 0:05:12.800 --> 0:05:15.640 What's your current view there? Well, I lived there thirteen years, 0:05:15.640 --> 0:05:17.400 my daughter was born there, so I have a very 0:05:17.440 --> 0:05:21.080 strong feeling for what's going on there. The three things 0:05:21.160 --> 0:05:23.760 have got to happen to turn that country around. First 0:05:23.960 --> 0:05:27.679 has to be some sort of political change that uh, 0:05:27.880 --> 0:05:30.680 that the Trump administration thought would happen a month ago, 0:05:30.880 --> 0:05:33.000 six weeks ago. They were too optimistic when they put 0:05:33.040 --> 0:05:38.239 on sanctions. So far, the sanctions haven't worked very well. Um. 0:05:38.279 --> 0:05:41.560 So that is one point. And of course Maduro is 0:05:41.600 --> 0:05:44.279 being backed up not only by the Cubans but also 0:05:44.320 --> 0:05:48.040 by the Russians. The Chinese, I think, are more realistic. 0:05:48.080 --> 0:05:49.839 They will deal with who's ever in because they have 0:05:49.880 --> 0:05:52.920 too much of an investment there. Uh. And I think 0:05:53.040 --> 0:05:55.280 the second point, which is what disturbs me so much 0:05:55.320 --> 0:05:57.320 and I'm spending a lot of time on, is to 0:05:57.360 --> 0:06:00.320 try and help on the humanitarian situation. Here's a country. 0:06:00.320 --> 0:06:02.280 When I lived there, which is the wealthiest country in 0:06:02.320 --> 0:06:06.000 Latin America, had the best medical system. Malaria didn't exist, 0:06:06.279 --> 0:06:08.599 it had been stamped out years before. Now you have 0:06:08.640 --> 0:06:12.240 a malaria outbreaking parts of the country. Uh. You have 0:06:12.960 --> 0:06:14.920 uh what the u N says a three and a 0:06:14.960 --> 0:06:18.520 half million out of third thirty million population refugees, but 0:06:18.560 --> 0:06:20.400 it's more like four or four and a half million, 0:06:20.560 --> 0:06:23.520 and it's growing all the time because there's no plasma 0:06:23.520 --> 0:06:26.240 in the hospitals. Uh, there's no antibiotics in the in 0:06:26.279 --> 0:06:29.640 the hospitals, people are dying. Uh. And you see some 0:06:29.720 --> 0:06:32.480 of these people that go across the border to Brazil 0:06:33.200 --> 0:06:37.880 uh in Roraima state, or go across the go across 0:06:38.200 --> 0:06:42.960 to Columbia or elsewhere, and it's tragic because the malnutrition. 0:06:43.000 --> 0:06:45.040 I just talked to a friend of mine from Argentina 0:06:45.400 --> 0:06:49.160 before the show, and here Argentina, so far away from Venezuela, 0:06:49.200 --> 0:06:53.120 they already have five hundred thousand refugees there. I'll be 0:06:53.160 --> 0:06:57.960 going down and talking with the President of Ecuador about, uh, 0:06:58.240 --> 0:07:01.040 what can be done with the Venezuelan refugees in Ecuador. 0:07:01.080 --> 0:07:05.040 So I'm working with a very well trained, experienced epidemologist 0:07:05.800 --> 0:07:08.560 who's a standout person in this field, to see if 0:07:08.600 --> 0:07:11.400 we can do something. Uh. We're talking to the American 0:07:11.400 --> 0:07:13.400 Development Bank to see if we can do something for 0:07:13.440 --> 0:07:17.120 the refugees outside. But what's really needed in the country. 0:07:17.680 --> 0:07:20.800 They've got to allow in aid, humanitarian aid, and they 0:07:21.040 --> 0:07:23.600 now say they'll allow in some Red Cross aide, but 0:07:23.680 --> 0:07:26.680 really not clear. And of course the last thing before 0:07:26.720 --> 0:07:28.520 you asked me is what's going to happen with the 0:07:28.560 --> 0:07:30.640 economy and the debt, Because this is going to be 0:07:30.960 --> 0:07:33.680 the mother of all debt restructions. We've never seen it 0:07:33.840 --> 0:07:36.080 quite like it, because you have paids of the oil 0:07:36.120 --> 0:07:38.520 company has all this money out as well as a 0:07:38.560 --> 0:07:41.520 sovereign and they're tied together. And the Russians have half 0:07:41.560 --> 0:07:45.000 of Sitko, the oil refiner and the West coast. So 0:07:45.760 --> 0:07:49.120 this is a country that I think is a disaster 0:07:49.240 --> 0:07:51.920 case and the question is what's the outcome going to be. 0:07:52.320 --> 0:07:54.960 Bill Rhodes, thank you so much. You're involved in so 0:07:55.000 --> 0:07:57.640 many incredible things and have been throughout your life. Bill Rhodes, 0:07:57.680 --> 0:08:00.200 President and CEO of William R. Rhodes Global Advisor, is 0:08:00.400 --> 0:08:02.720 author of Banker to the World, Leadership Lessons from the 0:08:02.720 --> 0:08:04.880 front Lines of Global Finance and when you talk about 0:08:04.920 --> 0:08:09.320 all of the concern for humanitarian issues. Bill Rhodes also 0:08:09.960 --> 0:08:13.400 just established the new Road Center for Globlastoma at New 0:08:13.480 --> 0:08:17.680 York Presbyterian Hospital. His wife passed away from glioblastoma, which 0:08:17.680 --> 0:08:22.600 is actually the fastest growing at cancer, particularly among younger people. 0:08:23.000 --> 0:08:25.480 So if you want to check out more, just google 0:08:25.680 --> 0:08:44.000 the Roads Center for gleob Blastoma. Intel reports after the 0:08:44.080 --> 0:08:48.360 close today on a Shrinivasan uh covers all things on 0:08:48.400 --> 0:08:50.800 the tech chip side for us. He's a senior semiconductor 0:08:50.840 --> 0:08:53.440 and hardware analyst for Bloomberg Intelligence. He joins us here 0:08:53.440 --> 0:08:55.760 in a Bloomberg Interactor broker studio. So on it and 0:08:55.840 --> 0:08:59.000 get a big rally in chip stocks. What's driving it? 0:09:00.000 --> 0:09:02.720 Semi Connectors are certainly the tip of the speer. We 0:09:02.960 --> 0:09:05.360 tend to be or the chip stocks tend to be 0:09:05.360 --> 0:09:09.679 incredibly forward looking, and they are prognosticating an incredible, incredible 0:09:09.760 --> 0:09:14.080 second half. Now, if you listen to what t I 0:09:14.240 --> 0:09:19.160 said on the call, that is likely slower to materialize, 0:09:19.200 --> 0:09:23.560 potentially lower in magnitude. But if you look at Skienix, 0:09:23.600 --> 0:09:29.000 which reported earnings last night, They're optimism is actually magnifying. 0:09:29.360 --> 0:09:32.679 So they're starting to see strength potentially as early a 0:09:32.800 --> 0:09:36.240 second to second quarter and in the second half. My 0:09:36.400 --> 0:09:39.040 problem with the chip rally that we have seen so 0:09:39.160 --> 0:09:43.440 far from December to day is the magnitude of the 0:09:43.559 --> 0:09:47.080 rally and how quickly it's come by. Right, So if 0:09:47.080 --> 0:09:49.160 you look at the earnings per share growth for the 0:09:49.200 --> 0:09:52.640 next two months in the socks um the Philadelphia Semi 0:09:52.640 --> 0:09:57.199 Connector Index, it's projected to be about seven percent um. 0:09:57.240 --> 0:09:59.840 And if you look at the price earning stratio of 0:09:59.840 --> 0:10:03.800 that same index over the using the EPs of the 0:10:03.840 --> 0:10:08.120 denominator there, it's eighteen times my my problem. And when 0:10:08.120 --> 0:10:10.360 you break down the components of that right, So, if 0:10:10.400 --> 0:10:13.880 you look at in Video, for example, which has had 0:10:13.920 --> 0:10:18.080 some um structural issues in the last three months, earnings 0:10:18.080 --> 0:10:21.679 for twenty nineteen or its fiscal twenty twenty have come down. 0:10:23.040 --> 0:10:26.440 If you look at m D one of the better ones, 0:10:26.760 --> 0:10:29.000 it's earnings have only gone up eight percent. If you 0:10:29.000 --> 0:10:33.160 look at n XP three three month earnings for down 0:10:33.200 --> 0:10:35.560 eleven percent. So you've had a whole host of these 0:10:35.600 --> 0:10:40.960 companies where the shares have rallied dramatically, so thirty at least, 0:10:41.400 --> 0:10:44.880 and the earnings for caunty or nineteen has gone down 0:10:44.960 --> 0:10:48.000 somewhere in the vicinity of five to so. So this 0:10:48.080 --> 0:10:52.120 is exactly this is fascinating, fantastic numbers to put to this. Basically, 0:10:52.360 --> 0:10:56.080 the performance is not matching the optimism. So what could 0:10:56.160 --> 0:10:59.760 the chips sector be looking at? Fundamentals better catch up. 0:11:00.679 --> 0:11:03.640 That's the bottom line. Fundamental is better catch up, and 0:11:03.720 --> 0:11:08.400 if they don't, we're going to see some adjustment. It's 0:11:08.400 --> 0:11:10.520 sort of you know, blow the blow the bottom out 0:11:10.520 --> 0:11:12.800 from under them and just watch them, watch them fall 0:11:12.960 --> 0:11:15.640 or I mean, the big part that has been missing 0:11:15.679 --> 0:11:19.199 in semiconductor demand is one is the handset cycle is 0:11:19.200 --> 0:11:21.880 waning a little bit. We all know that the magnitude 0:11:21.920 --> 0:11:25.400 of the handset cycle weakness is something to be considered 0:11:25.400 --> 0:11:29.120 in the second half. Offsetting this is the impending strength 0:11:29.200 --> 0:11:34.160 from Amazon, Google, Facebook, Microsoft, where the CEO went to 0:11:34.240 --> 0:11:37.640 my alma mater engineering school. But that's a separate issue. Um, 0:11:39.360 --> 0:11:44.480 So this cloud company's server strength, that these cloud companies 0:11:44.520 --> 0:11:47.680 server strength is the has been the missing piece of 0:11:47.720 --> 0:11:50.960 the demand puzzle. Everybody's expecting that to come back in 0:11:50.960 --> 0:11:54.839 the second half. It's a substantial portion of CPU consumption, 0:11:55.240 --> 0:11:59.560 memory consumption, um, solid state drive consumption. It better come back, 0:11:59.600 --> 0:12:01.840 and better come back in space, right, So, Dave, I 0:12:01.840 --> 0:12:03.520 think what I'm hearing from on it is maybe these 0:12:03.600 --> 0:12:06.400 semiconductor stocks may have gotten a little bit ahead of themselves, 0:12:06.520 --> 0:12:08.680 but the tech earnings so far have been pretty darn good. 0:12:08.920 --> 0:12:12.320 Well they have, and you have an interesting contrast within 0:12:12.400 --> 0:12:15.079 the group today. I mean, I mentioned Zylenks, the way 0:12:15.120 --> 0:12:18.079 the shares are taken a beating. On the other hand, 0:12:18.400 --> 0:12:21.800 you had numbers out late yesterday from LAMB Research which 0:12:21.880 --> 0:12:24.840 is in the chip equipment business. They went over well, 0:12:25.000 --> 0:12:27.640 the stocks up almost six percent. It's going back and 0:12:27.679 --> 0:12:30.000 forth with Facebook for the biggest game on the day 0:12:30.000 --> 0:12:32.040 in the S and P five hundreds. So you know, 0:12:32.080 --> 0:12:35.559 it's an interesting kind of contrast that's showing up within 0:12:35.600 --> 0:12:38.480 the group on and on twenty seconds here, we didn't 0:12:38.480 --> 0:12:41.880 really hit on Intel. How important is Intel with respect 0:12:41.920 --> 0:12:44.320 of their earnings? You know, Intel's is a little bit 0:12:44.320 --> 0:12:46.960 of a sleeper here between Intel, aim Ding and Video. 0:12:47.240 --> 0:12:50.760 We like all three companies, but for completely different reasons. 0:12:50.800 --> 0:12:54.480 I think Intel expectations are relatively low. Um we actually 0:12:54.520 --> 0:12:57.439 think they could really do well with PCs and the 0:12:57.520 --> 0:12:59.000 data center in the second half of the year. And 0:12:59.080 --> 0:13:01.360 on Street of Us and Senior Analystic covering the semi 0:13:01.360 --> 0:13:05.120 conductors in tech hardware space for Bloomberg Intelligence, Staviles and 0:13:05.120 --> 0:13:08.280 Bloomberg Stox editor joining us all here in our Bloomberg 0:13:08.280 --> 0:13:27.360 eleven three oh studios. The question is in how good 0:13:27.520 --> 0:13:31.400 were Tesla's reported earnings yesterday? It was how terrible were they? 0:13:31.800 --> 0:13:34.679 And to answer that question is David Coodlag CEO and 0:13:34.760 --> 0:13:38.560 Chief Investment strategistic Mainstake Capital Management, overseeing about two and 0:13:38.559 --> 0:13:41.360 a half billion dollars from Michigan. David, thank you so 0:13:41.440 --> 0:13:44.480 much for being with us. Tesla reported earnings that were 0:13:44.520 --> 0:13:50.079 below already very low expectations and talked about raising capital 0:13:50.120 --> 0:13:52.240 even after Ellen Musk has said that he wouldn't need 0:13:52.320 --> 0:13:56.200 to raise capital. Shares down two point and that's it. 0:13:56.720 --> 0:14:01.800 What was your take on these earnings, Poles? Yeah, I 0:14:01.920 --> 0:14:04.520 was surprised even at at how big a loss it 0:14:04.559 --> 0:14:06.640 was going to be. We had consensus estiments at about 0:14:06.679 --> 0:14:11.199 sixty nine cents a share for share, and uh facts 0:14:11.200 --> 0:14:13.960 that had a little bit of a dollar. But when 0:14:14.000 --> 0:14:17.040 it came in, it, uh, here's three dollars per share loss, 0:14:17.080 --> 0:14:19.440 even more than we thought it would be. Worse than 0:14:19.480 --> 0:14:22.600 consensus estimates. It was really a miserable quarter all the 0:14:22.600 --> 0:14:25.200 way around. When you consider the news we got on 0:14:25.920 --> 0:14:29.960 deliveries earlier in the um, earlier in the month, and 0:14:30.040 --> 0:14:34.920 now what we thought would would adversely impact earnings. Uh 0:14:35.160 --> 0:14:38.600 we this is this is definitely a very bad quarter 0:14:38.720 --> 0:14:41.640 for Tesla. So, David, it seems like Elon Musk is 0:14:42.000 --> 0:14:44.360 kind of on the earnings call opened the door just 0:14:44.440 --> 0:14:47.840 a bit as it relates to an equity capital raise. 0:14:48.240 --> 0:14:49.960 What do you think is the outlook that does this 0:14:50.000 --> 0:14:52.360 company need to raise money? How much did they need 0:14:52.400 --> 0:14:55.120 to raise when did they need to raise it? Well, 0:14:55.160 --> 0:14:57.720 they do need to uh to raise capital. And they 0:14:57.720 --> 0:15:01.240 talk about having about two point two billion cash on hand, 0:15:01.240 --> 0:15:04.280 but if you take away customer deposits, that falls below 0:15:04.560 --> 0:15:07.520 a billion and a half dollars. Uh, they are burning cash. 0:15:07.720 --> 0:15:11.720 You know, they went from cash generation in the latter 0:15:11.840 --> 0:15:13.560 half of the year, the latter part of the year 0:15:14.120 --> 0:15:17.200 back to a burn rate near a billion dollars in 0:15:17.200 --> 0:15:20.520 this first quarter. And uh, you know, they thought they 0:15:20.560 --> 0:15:24.160 would have cash coming in from uh this you know, 0:15:24.280 --> 0:15:26.880 increasing sales of the Model three along with the stained 0:15:26.880 --> 0:15:30.800 sales of models and Model X. That hasn't happened. He's 0:15:30.880 --> 0:15:35.240 calling for uh eighty or nine to a hundred thousand 0:15:35.320 --> 0:15:40.200 deliveries in the next quarter. I think he's dreaming when 0:15:40.200 --> 0:15:42.760 you look at what the deliveries were in the first quarter. 0:15:43.280 --> 0:15:46.040 So the cash isn't going to come from sales. They're 0:15:46.080 --> 0:15:49.680 going to have to raise cash. It's an inevitability. So 0:15:49.880 --> 0:15:53.400 here's my question. One analyst and I have over what 0:15:53.600 --> 0:15:57.560 Bush said that Tesla's quarter was a top debacle, one 0:15:57.600 --> 0:16:00.160 of the top debacles ever seen in its two twenty 0:16:00.240 --> 0:16:03.480 years covering tech stocks on the street. I'm just wondering, 0:16:04.200 --> 0:16:07.200 given how scathing people have been in their assessment of 0:16:07.240 --> 0:16:11.120 these quarterly reports, why are the shares down only two? 0:16:12.960 --> 0:16:16.880 Um there? I mean there are some there's a following 0:16:16.920 --> 0:16:20.440 for Tesla that I think some real believers in the stock. 0:16:21.000 --> 0:16:24.560 There is a you know, we've seen this floor around 0:16:25.040 --> 0:16:31.960 that two from a technician standpoint, quintuple bottom, whatever it 0:16:32.000 --> 0:16:36.960 may be. Uh, we've seen of Florence Florence stock price 0:16:37.120 --> 0:16:41.720 around this level. But you know that was uh in 0:16:42.320 --> 0:16:45.080 after market trading yesterday. Today we're seeing the shares down 0:16:45.120 --> 0:16:47.480 a little bit further. You know, we also didn't see 0:16:47.480 --> 0:16:52.160 the shares change much on Tesla autonomy day earlier this week, 0:16:53.080 --> 0:16:55.920 our share price change much. So I think we've got 0:16:55.960 --> 0:16:58.400 some things unfold here. He did come out, you know, 0:16:58.440 --> 0:17:02.200 in the earnings call with some guidance that was very positive. 0:17:02.200 --> 0:17:05.040 And remember how this goes, and this is how we 0:17:05.200 --> 0:17:09.240 play the stock. You know, when whether we're whether we're 0:17:10.040 --> 0:17:13.359 buying puts or outright shorting the stock and then covering later, 0:17:13.840 --> 0:17:17.119 Elon can bid up the stock on these claims and 0:17:17.200 --> 0:17:19.840 these promises of what he's gonna do he made some 0:17:20.000 --> 0:17:24.960 bold claims in this earnings announcement about that all the 0:17:25.000 --> 0:17:29.199 hardware is on the cars today for full autonomy, uh 0:17:29.240 --> 0:17:32.560 in a year from now, but for level five autonomy. 0:17:32.600 --> 0:17:35.439 He's made bold claims about the deliveries that they're going 0:17:35.480 --> 0:17:38.080 to make for the remainder of the year. UH, that 0:17:38.160 --> 0:17:41.840 they're going to be a small loss in Q two 0:17:41.920 --> 0:17:44.240 and then profitable in Q three and Q four. I 0:17:44.240 --> 0:17:46.919 don't think they'll have a profitable quarter this year, but 0:17:46.960 --> 0:17:49.960 if you believe the claims that he's making, there's hope. 0:17:50.160 --> 0:17:52.520 You know, there's hope in the in the stock price, 0:17:52.560 --> 0:17:54.400 and it is trading near its low. So there are 0:17:54.440 --> 0:17:56.520 those that think it it might have a chance to 0:17:56.600 --> 0:17:59.320 rally from here, uh, if not right away, later in 0:17:59.320 --> 0:18:02.160 the year, so they Let's switch gears a little bit 0:18:02.200 --> 0:18:05.560 to Ford Motor Company. The reporting coming up, and I 0:18:05.600 --> 0:18:07.520 know you've mentioned in the past, I think this first 0:18:07.560 --> 0:18:10.720 quarter announcement and guidance are arguably the most important in 0:18:10.760 --> 0:18:14.240 the past five years. Why is that, Well, you know, 0:18:14.320 --> 0:18:17.000 let's compare and contrast. Now we switched to you know, 0:18:17.040 --> 0:18:20.000 a company that's really doing a lot of UH has 0:18:20.040 --> 0:18:23.680 had a very good first quarter. UH. You know, Ford 0:18:23.680 --> 0:18:27.960 has their their suv and truck sales really did the 0:18:28.000 --> 0:18:32.400 best among their competition when you look at Toyota, GM, Ford, Uh, 0:18:32.800 --> 0:18:36.160 they really trounce the competition in terms of those sales, 0:18:36.200 --> 0:18:39.400 which are the high margin vehicles. The other thing that 0:18:39.400 --> 0:18:42.840 that Ford suffered from over the past year really since 0:18:42.920 --> 0:18:46.679 Jim Hackett has been there in leadership position, is is 0:18:46.760 --> 0:18:50.520 that messaging, that communication, that articulation of the vision of 0:18:51.000 --> 0:18:53.640 you know, there was the restructuring plan there, multibillion dollar 0:18:53.640 --> 0:18:56.760 restructuring plan. What is the detail. We've seen some of 0:18:56.760 --> 0:18:59.800 that more recently with what they're doing globally, what they're 0:18:59.800 --> 0:19:03.560 doing domestically, also their vision for Auto two point out 0:19:04.080 --> 0:19:06.960 or what we call the future of mobility. And you 0:19:06.960 --> 0:19:08.960 know we now know the flat Rock plant where they're 0:19:09.000 --> 0:19:12.840 investing eight hundred million for autonomous vehicles, and the hiring 0:19:12.880 --> 0:19:16.439 of Tim Stone as the CFO, who comes from the 0:19:16.440 --> 0:19:19.280 digital community, that signed that they're moving to a new 0:19:19.320 --> 0:19:22.080 age company. There's just a lot of things, you know, 0:19:22.560 --> 0:19:24.480 very good performance and what we refer to as the 0:19:24.560 --> 0:19:29.760 legacy business trucks and SUVs that the high margin vehicles. 0:19:30.040 --> 0:19:34.200 They're the best stock performance among the Detroit three. If 0:19:34.240 --> 0:19:37.320 you will in the first quarter in and beating the 0:19:37.440 --> 0:19:39.720 S and P five hundreds performance as good as it was. 0:19:40.359 --> 0:19:43.159 And then you look at the detail we want to 0:19:43.160 --> 0:19:47.600 see on their restructuring plan and the detail on the 0:19:47.640 --> 0:19:50.439 future mobility that's coming together. We're seeing what we want 0:19:50.440 --> 0:19:52.679 to see. Wall Street investors seeing what they want to 0:19:52.680 --> 0:19:55.720 see out of Board. Now. If they maintain the momentum, 0:19:56.080 --> 0:19:57.639 it's gonna be a very good year for Ford in 0:19:57.640 --> 0:20:00.840 a in a real turnaround compared to kind of a 0:20:00.880 --> 0:20:04.240 tough and past couple of years. Got it, David Couldla 0:20:04.280 --> 0:20:06.160 thank you so much for joining us. David's the CEO 0:20:06.200 --> 0:20:09.800 and chief investment strategists for Mainstay Capital, joining us on 0:20:09.840 --> 0:20:27.240 the phone from Michigan. Well, right now, traders are pricing 0:20:27.320 --> 0:20:31.679 in the high increasing likelihood of a FED rate cut 0:20:31.880 --> 0:20:34.520 in the near future, perhaps even later this year. And 0:20:34.600 --> 0:20:37.440 as they do so, our Bloomberg opinion called noists are 0:20:37.600 --> 0:20:40.679 trying to figure out what the FED should do in 0:20:40.720 --> 0:20:44.040 the next downturn because they don't really have that much ammunition. 0:20:44.280 --> 0:20:48.120 One proposal by municipal bonds, and that comes from Brian Chapatta, 0:20:48.320 --> 0:20:51.520 who is a Bloomberg Opinion calumnists. So, Brian, why was 0:20:51.680 --> 0:20:55.480 that the solution that you see is something that is 0:20:55.520 --> 0:20:58.320 potentially attractive for the Federal Reserve. Yeah, so, I guess 0:20:58.560 --> 0:21:00.239 I got a lot of feedback on this. So at 0:21:00.280 --> 0:21:03.640 first of all, the caveat is that if it's another 0:21:03.720 --> 0:21:07.120 recession and the and the FED uses all of its 0:21:07.119 --> 0:21:09.159 ammunition as it has in the past, it's done the 0:21:09.240 --> 0:21:13.120 rate cuts, it's done the typical kiwi and there's still issues, 0:21:13.200 --> 0:21:16.000 what do you do? And my idea was turned to 0:21:16.040 --> 0:21:19.760 the muni market, because you know, states don't have the 0:21:19.800 --> 0:21:23.280 ability to print money. You know, they have to implement 0:21:23.320 --> 0:21:27.359 austerity measures during recessions, and that can really slow down 0:21:27.760 --> 0:21:31.919 economic growth. You don't fund infrastructure, you miss payroll, you 0:21:32.040 --> 0:21:34.840 underfund your pensions. Those are all really bad things that 0:21:34.920 --> 0:21:39.320 affect main street. And so potentially using the FED as 0:21:39.359 --> 0:21:42.640 a tool to extend a lifeline to these states, give 0:21:42.720 --> 0:21:44.960 them a little influx of cash that they'll eventually pay 0:21:44.960 --> 0:21:48.280 back when times are better, could be a reasonable way 0:21:48.320 --> 0:21:51.920 to jump start the economy, uh, during a recession. So historically, 0:21:51.920 --> 0:21:54.280 just give us some history here, the federal government generally 0:21:54.280 --> 0:21:57.119 has not done this. Correct. Yeah, well, that's part of 0:21:57.160 --> 0:22:00.600 the problem is that the Federal Reserve Act prohibits purchasing 0:22:00.600 --> 0:22:03.480 communies that are longer than six months, so they could 0:22:03.680 --> 0:22:07.520 in theory do some real short term uh purchases immunis. 0:22:07.600 --> 0:22:09.880 But if you wanted to actually do something that would 0:22:09.880 --> 0:22:11.840 be a little bit more sustainable and do a little 0:22:11.880 --> 0:22:14.280 bit more than just you know, a really brief thing, 0:22:14.640 --> 0:22:17.000 they'd have to unbend the Federal reserve at This would 0:22:17.000 --> 0:22:21.159 be somewhat challenging though also from a who's your favorite 0:22:21.200 --> 0:22:22.879 child kind of point of view, right, I mean it 0:22:22.880 --> 0:22:25.600 basically ahead of the decide which municipal bonds to buy, 0:22:25.640 --> 0:22:27.800 which projects to finance. Given the fact that there are 0:22:27.840 --> 0:22:29.840 thousands of que SIPs, this is a very a using 0:22:29.880 --> 0:22:33.480 credit market, uh, you know a lot of small issuances, 0:22:33.560 --> 0:22:37.119 and you basically have an active portfolio manager buying munis 0:22:37.520 --> 0:22:39.679 at the federal reserve. Yeah. Well, my idea was sort of, 0:22:39.720 --> 0:22:41.920 you know, keep it at the state level. And as 0:22:41.920 --> 0:22:44.520 far as precedent goes, you do have the European Central 0:22:44.560 --> 0:22:49.320 Bank going out and purchasing debt of various sovereign countries 0:22:49.400 --> 0:22:51.720 within everything and anything, yeah, right within it, with it 0:22:51.760 --> 0:22:54.840