1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:23,200 Speaker 1: at Bloomberg dot com slash podcast. As we promise, I 7 00:00:23,200 --> 00:00:27,240 Speaker 1: want to get into this whole Twitter Tesla Elon Musk story. 8 00:00:27,280 --> 00:00:31,040 Speaker 1: It just it keeps evolving every day, new news, every day, 9 00:00:31,240 --> 00:00:33,880 Speaker 1: stocks moving all over the place. Uh. So we said, 10 00:00:33,960 --> 00:00:35,599 Speaker 1: let's get a couple of smart people in here who 11 00:00:35,600 --> 00:00:38,400 Speaker 1: can help us figure out what's going on. Uh and creative. 12 00:00:38,400 --> 00:00:40,479 Speaker 1: We did that today, Man deep Seeing, senior technology and 13 00:00:40,520 --> 00:00:43,839 Speaker 1: also Bloomberg Intelligence and Dan Ives, senior equity analysts at 14 00:00:43,880 --> 00:00:47,760 Speaker 1: web Bush Securities. Dan, you know, I kind of I 15 00:00:47,800 --> 00:00:50,800 Speaker 1: feel for you and I feel for the shareholders of 16 00:00:50,920 --> 00:00:54,200 Speaker 1: Tesla because the fundamentals of the company are one thing, 17 00:00:54,200 --> 00:00:56,640 Speaker 1: and they're pretty darn good when you think about just 18 00:00:56,680 --> 00:00:59,040 Speaker 1: the growth of the TV business, which you've been so 19 00:00:59,200 --> 00:01:01,880 Speaker 1: right on for so along. Yet the stock comes under 20 00:01:01,920 --> 00:01:06,520 Speaker 1: tremendous pressure for really some issues outside of the fundamentals, 21 00:01:06,600 --> 00:01:10,160 Speaker 1: namely Elon Musk and the selling of all the stock. 22 00:01:10,240 --> 00:01:13,880 Speaker 1: How do you put that in context for your clients? Yeah, 23 00:01:13,920 --> 00:01:17,319 Speaker 1: I mean, look, a big part of Tesla and the 24 00:01:17,400 --> 00:01:20,240 Speaker 1: run is Musk. Musk is the hearts and lungs of 25 00:01:20,319 --> 00:01:23,880 Speaker 1: the test of story, key part of the brand, and 26 00:01:24,000 --> 00:01:27,200 Speaker 1: ultimately he's essentially using Tesla like his own a t 27 00:01:27,400 --> 00:01:32,119 Speaker 1: M machine to buy Twitter and ultimately continue to fund 28 00:01:32,160 --> 00:01:35,920 Speaker 1: that situation. It's been a black cloud over Tesla stock 29 00:01:36,560 --> 00:01:40,040 Speaker 1: and the fiasco as we continue to see on Twitter 30 00:01:40,640 --> 00:01:45,319 Speaker 1: that creates brand destruction for Musk and therefore for Tesla. 31 00:01:45,360 --> 00:01:47,680 Speaker 1: And that's why I think we continue to be just 32 00:01:47,760 --> 00:01:52,720 Speaker 1: in this very very frustrating spider web that in it 33 00:01:52,840 --> 00:01:56,360 Speaker 1: speaks that I think the sell off and Tesla is 34 00:01:56,480 --> 00:01:59,240 Speaker 1: must driven. Hey, Dan, that goes to the question I've 35 00:01:59,240 --> 00:02:01,360 Speaker 1: been asking my off. At least I look on the 36 00:02:01,360 --> 00:02:05,080 Speaker 1: Bloomberg terminal and I look at the board makeup of Tesla, 37 00:02:05,120 --> 00:02:06,920 Speaker 1: and I see a couple of Musk names there. And 38 00:02:06,960 --> 00:02:09,520 Speaker 1: I don't know how independent the others are. Mr. Murdoch 39 00:02:09,639 --> 00:02:12,920 Speaker 1: for example, but there is an independent board of directors. 40 00:02:12,960 --> 00:02:18,480 Speaker 1: Presumably there aren't large institutional shareholders are can anybody rain 41 00:02:18,560 --> 00:02:22,840 Speaker 1: an elon Musk from the Tesla perspective, I mean, look, 42 00:02:22,880 --> 00:02:26,760 Speaker 1: in theory they could technically, but realistically not right. And 43 00:02:26,800 --> 00:02:29,560 Speaker 1: I think that's part of the issue here is that 44 00:02:29,960 --> 00:02:33,120 Speaker 1: you know, Musk listens to one person and the person 45 00:02:33,120 --> 00:02:37,560 Speaker 1: in the mirror, and ultimately he's just doubled down because 46 00:02:37,639 --> 00:02:40,480 Speaker 1: ultimately the way he is, the more that he gets 47 00:02:40,520 --> 00:02:43,920 Speaker 1: criticized in terms of what he's doing, he just actually 48 00:02:43,960 --> 00:02:46,080 Speaker 1: just dives further into the deep end of the pool. 49 00:02:46,080 --> 00:02:48,800 Speaker 1: And that's what we've seen in terms of playing out 50 00:02:48,880 --> 00:02:51,480 Speaker 1: in the Twitter situation and as well as with Tesla 51 00:02:51,480 --> 00:02:54,840 Speaker 1: in terms of selling the stock. And that's why the 52 00:02:54,919 --> 00:02:58,440 Speaker 1: problem from an investor perspective is that even though it's 53 00:02:58,560 --> 00:03:02,320 Speaker 1: couldn't non fundamental, it's also a lot of his attention 54 00:03:03,240 --> 00:03:06,560 Speaker 1: seemingly all that right now, it's focused on Twitter instead 55 00:03:06,560 --> 00:03:10,040 Speaker 1: of the golden child plus of his wealth, which is Tests. 56 00:03:10,080 --> 00:03:13,079 Speaker 1: And that's why he lost that crown, which is personal 57 00:03:13,200 --> 00:03:15,839 Speaker 1: world because of what's happening to Test of stock. Six 58 00:03:15,960 --> 00:03:20,079 Speaker 1: under fifty billion of mark cap wiped out. Man Deep 59 00:03:20,080 --> 00:03:21,799 Speaker 1: pop On in here and talked to us a little 60 00:03:21,840 --> 00:03:24,200 Speaker 1: bit about the valuation side of things for Twitter. Now, 61 00:03:24,280 --> 00:03:26,480 Speaker 1: I will say it was a lot easier to do 62 00:03:26,639 --> 00:03:29,320 Speaker 1: this when Twitter was still public. You could see exactly 63 00:03:29,360 --> 00:03:32,040 Speaker 1: what the stocks was trading at, you could exactly see 64 00:03:32,040 --> 00:03:36,360 Speaker 1: exactly what the financials were at. But now that it's private, man, deep, 65 00:03:36,840 --> 00:03:39,800 Speaker 1: is there a sense of just how much Twitter is 66 00:03:39,840 --> 00:03:44,080 Speaker 1: worth or what we would even need to find that out? Yes, 67 00:03:44,240 --> 00:03:47,280 Speaker 1: if it was publicly traded right now, my guess is 68 00:03:47,440 --> 00:03:50,760 Speaker 1: it would be an under ten dollar stock. So Elon 69 00:03:50,880 --> 00:03:55,360 Speaker 1: boughted around about fifty. I bet you it already would 70 00:03:55,360 --> 00:03:58,760 Speaker 1: have lost of its value at this point of time. 71 00:03:58,840 --> 00:04:02,600 Speaker 1: And the reason for that is, uh, you know, Elon 72 00:04:02,760 --> 00:04:05,160 Speaker 1: talked about changes, you know when it comes to free 73 00:04:05,240 --> 00:04:08,840 Speaker 1: speech and how you know, the platform has to serve 74 00:04:08,880 --> 00:04:12,640 Speaker 1: a broader audience. Well, none of it seems to have happened. Yes, 75 00:04:12,720 --> 00:04:15,400 Speaker 1: the services up, and he has cut costs, you know, 76 00:04:16,160 --> 00:04:19,200 Speaker 1: and uh so far at least, you know, you could 77 00:04:19,240 --> 00:04:22,280 Speaker 1: say the silver lining is Twitter hasn't gone down. But 78 00:04:22,360 --> 00:04:25,720 Speaker 1: in terms of how Twitter operates, uh, you know, free 79 00:04:25,760 --> 00:04:29,000 Speaker 1: speech wise or just you know, what they have done 80 00:04:29,040 --> 00:04:32,479 Speaker 1: in terms of the ad formats or boosting revenue. Nothing. 81 00:04:32,560 --> 00:04:36,560 Speaker 1: I mean, he has talked about subscriptions, but it's still 82 00:04:36,600 --> 00:04:39,200 Speaker 1: a work in progress and I think it's gonna take 83 00:04:39,360 --> 00:04:43,200 Speaker 1: months before they can roll out a good subscription offering. 84 00:04:43,360 --> 00:04:46,480 Speaker 1: So they've been losing ad revenue and net net. You know, 85 00:04:46,600 --> 00:04:49,200 Speaker 1: there has been destruction in terms of what the business 86 00:04:49,520 --> 00:04:52,880 Speaker 1: was prior to him buying the company, and Paul what 87 00:04:53,040 --> 00:04:54,840 Speaker 1: Mandy just said kind of talk him as this free 88 00:04:54,880 --> 00:04:57,120 Speaker 1: speech idea a time the journalists Overnight, a lot of 89 00:04:57,160 --> 00:04:59,960 Speaker 1: the journalists that had covered Elon Musk got their accounts 90 00:05:00,000 --> 00:05:03,080 Speaker 1: suspended and then took to Twitter spaces every way around it, 91 00:05:03,360 --> 00:05:06,599 Speaker 1: and then Twitter spaces suspended got suspended. So it's it's 92 00:05:06,680 --> 00:05:08,880 Speaker 1: not trending well. And man deep you know, as if 93 00:05:08,960 --> 00:05:11,880 Speaker 1: I started my career as a uh corporate banker, So 94 00:05:11,920 --> 00:05:13,520 Speaker 1: I do look at the balance sheet, and you know, 95 00:05:13,560 --> 00:05:15,400 Speaker 1: if I look at the f A terminal for Twitter 96 00:05:15,800 --> 00:05:18,760 Speaker 1: before it was taken private, the forecasters like billion dollars 97 00:05:18,800 --> 00:05:21,119 Speaker 1: of EBATA, maybe a little bit more. Then he layers 98 00:05:21,200 --> 00:05:23,120 Speaker 1: thirteen billion dollars of dead on top of the billion 99 00:05:23,160 --> 00:05:27,360 Speaker 1: dollars of That's not good. I mean, how do you think, 100 00:05:28,839 --> 00:05:30,680 Speaker 1: you know, how do you think that the capital structure 101 00:05:30,720 --> 00:05:33,400 Speaker 1: should be on a company like Twitter. Well, so we 102 00:05:33,520 --> 00:05:35,600 Speaker 1: know he has been selling stock and one of the 103 00:05:35,720 --> 00:05:38,680 Speaker 1: things I think he would end up doing is pay 104 00:05:38,720 --> 00:05:43,159 Speaker 1: off some of that debt because the interest expense will 105 00:05:43,279 --> 00:05:46,960 Speaker 1: continue to add up. And my sense is he has 106 00:05:47,080 --> 00:05:51,360 Speaker 1: already sold enough stock to UH pay off a lot 107 00:05:51,440 --> 00:05:54,080 Speaker 1: of that debt, so I wouldn't be surprised if that 108 00:05:54,200 --> 00:05:56,720 Speaker 1: happens a lot sooner. Hey Dan, you know going to 109 00:05:56,839 --> 00:05:59,799 Speaker 1: these stock sales. I haven't. I have not seen any reporting, 110 00:06:00,080 --> 00:06:02,760 Speaker 1: so I don't know. But I do raise the question 111 00:06:02,880 --> 00:06:06,240 Speaker 1: how much of that stock was sold to as MENTEP 112 00:06:06,240 --> 00:06:08,479 Speaker 1: suggests maybe service some of the debt. Payoff the debt 113 00:06:08,560 --> 00:06:13,320 Speaker 1: at Twitter versus personal margin loan accounts that may know 114 00:06:13,400 --> 00:06:16,560 Speaker 1: margin hall that may have come from investment banks. Do 115 00:06:16,680 --> 00:06:19,560 Speaker 1: we have any knowledge of that? Well, that's part of 116 00:06:19,600 --> 00:06:21,480 Speaker 1: this issue. I mean, really nuns to pay up the 117 00:06:21,560 --> 00:06:25,320 Speaker 1: debts so far, because the problem is that the marginal 118 00:06:25,320 --> 00:06:29,840 Speaker 1: mound situation that becomes a spiral because the lower that 119 00:06:29,960 --> 00:06:33,560 Speaker 1: TASO stock goes, you need more collateral. And I think 120 00:06:33,640 --> 00:06:37,200 Speaker 1: that that's beech. The problem here is that look for billion, 121 00:06:37,720 --> 00:06:41,120 Speaker 1: it's gonna go down along with Time Winner a o 122 00:06:41,360 --> 00:06:44,920 Speaker 1: L as the worst tech acquisitions in the history of 123 00:06:45,000 --> 00:06:47,280 Speaker 1: eminem And I don't even know that. The question to 124 00:06:47,360 --> 00:06:50,520 Speaker 1: Mandy's point, forty four billion days probably worth ten to 125 00:06:50,600 --> 00:06:55,160 Speaker 1: fifteen billions. Okay, from from where twitters, the problem goes 126 00:06:55,360 --> 00:07:00,599 Speaker 1: to the more reading Twitter has as advertisers leave. Now 127 00:07:00,960 --> 00:07:03,400 Speaker 1: you you're not profitable. You have a four to five 128 00:07:03,480 --> 00:07:05,960 Speaker 1: billion dollar hole every year. How do you pay for that? 129 00:07:06,200 --> 00:07:08,880 Speaker 1: It's either investors or must which means you have sell 130 00:07:08,920 --> 00:07:13,040 Speaker 1: more stock. But Dan, what does that then mean for 131 00:07:14,200 --> 00:07:16,520 Speaker 1: this margin loan swap that we were talking about. I 132 00:07:16,600 --> 00:07:20,240 Speaker 1: want to say, last week, the idea of a Twitter 133 00:07:20,400 --> 00:07:23,040 Speaker 1: debt I think thirteen billion dollars of financing getting swapped 134 00:07:23,040 --> 00:07:26,800 Speaker 1: out for I actually don't know how much in potential 135 00:07:26,840 --> 00:07:28,640 Speaker 1: Tesla stock, and the idea here was that he would 136 00:07:28,640 --> 00:07:30,720 Speaker 1: start shelling those shares and then take on the Twitter 137 00:07:30,800 --> 00:07:33,360 Speaker 1: debt in a personal capacity. Now we've seen how Tesla 138 00:07:33,600 --> 00:07:36,440 Speaker 1: investors are reacting to that, Is that really going to 139 00:07:36,520 --> 00:07:40,800 Speaker 1: be enough to instill some sort of confidence from bankers 140 00:07:40,840 --> 00:07:44,840 Speaker 1: who are extremely exposed to the Twitter deal? I mean 141 00:07:45,000 --> 00:07:48,000 Speaker 1: that would be like, in terms of that piece, it's 142 00:07:48,040 --> 00:07:52,320 Speaker 1: like the airplanes crashing and you're focused on salted or 143 00:07:52,440 --> 00:07:57,040 Speaker 1: unsalted peanuts that they have, And I think that's part 144 00:07:57,080 --> 00:07:59,880 Speaker 1: of the problem here. It's it's that's a small piece 145 00:08:00,000 --> 00:08:03,080 Speaker 1: on the broader issue that continues to cast in you 146 00:08:03,400 --> 00:08:06,280 Speaker 1: we saw last night. Every day it doesn't get better, 147 00:08:06,760 --> 00:08:10,440 Speaker 1: the twilight Zone gets worse, and unfortunately episode don't end 148 00:08:10,600 --> 00:08:14,040 Speaker 1: because Musk continues to double down on Twitter. Man Deep 149 00:08:14,600 --> 00:08:18,880 Speaker 1: thirty seconds left. Where from an advertiser's perspective does Twitter 150 00:08:19,360 --> 00:08:22,760 Speaker 1: fit in now with his new ownership? Well, so it 151 00:08:22,920 --> 00:08:26,040 Speaker 1: was always about brand advertising, and and look, it's a 152 00:08:26,160 --> 00:08:29,480 Speaker 1: handful of large brand advertisers and I wouldn't be surprised 153 00:08:29,520 --> 00:08:31,680 Speaker 1: a few of them have already left and they don't 154 00:08:31,680 --> 00:08:34,520 Speaker 1: want to be seen advertising on Twitter because they don't 155 00:08:34,559 --> 00:08:36,920 Speaker 1: consider it to be a brand safe flatform anymore. So 156 00:08:38,000 --> 00:08:41,960 Speaker 1: I don't think they're getting any new advertisers right now. Alright, alright, guys, 157 00:08:41,960 --> 00:08:44,880 Speaker 1: I really appreciate your time and deep seeing senior technology 158 00:08:44,880 --> 00:08:48,679 Speaker 1: anneals with Bloomberg Intelligence and Dan I've senior equity analysts 159 00:08:48,720 --> 00:08:52,000 Speaker 1: at web Bush Securities. I mean, Dan was just really early, 160 00:08:52,160 --> 00:08:56,160 Speaker 1: really right on the opportunities within the electric vehicle space 161 00:08:56,800 --> 00:09:00,480 Speaker 1: and championing Tesla. And it's tough for guys Dan ives 162 00:09:00,480 --> 00:09:02,680 Speaker 1: and other supporters of the company and of the technology 163 00:09:02,800 --> 00:09:05,839 Speaker 1: and of the product and not to mention the shareholders 164 00:09:05,920 --> 00:09:08,199 Speaker 1: who actually own the stock and put their money where 165 00:09:08,240 --> 00:09:10,120 Speaker 1: their mouth is to now see a lot of that 166 00:09:10,280 --> 00:09:13,880 Speaker 1: value wiped out um because of issues that are not 167 00:09:14,040 --> 00:09:17,679 Speaker 1: necessarily fundamental. Yes, there's increased competition, but a lot of 168 00:09:17,720 --> 00:09:20,600 Speaker 1: this has been because of Elon Musk and is deal 169 00:09:20,720 --> 00:09:27,400 Speaker 1: with Twitter tough to take. We've got a Federal Reserve, 170 00:09:27,640 --> 00:09:29,920 Speaker 1: We've got a Bank of England, we've got in European 171 00:09:30,080 --> 00:09:33,600 Speaker 1: Central Bank and others, all in the last forty eight 172 00:09:33,679 --> 00:09:38,760 Speaker 1: hours raising rates, talking tough, UH, and the markets certainly reacting. 173 00:09:38,840 --> 00:09:42,400 Speaker 1: Chris Campbell joins US chief strategist at Kroll. He joins 174 00:09:42,440 --> 00:09:44,880 Speaker 1: us here in a Bloomberg Interactive broker studio. So for 175 00:09:44,960 --> 00:09:48,480 Speaker 1: a Friday, you get a double gold star. We appreciate that. Chris. 176 00:09:48,600 --> 00:09:52,240 Speaker 1: You spent some time as former assistant secretary from the 177 00:09:52,360 --> 00:09:56,480 Speaker 1: Universe's US Department of Treasury interact with FED Chairman J Pale. 178 00:09:57,559 --> 00:10:00,880 Speaker 1: What do you make of our Federal Reserve UH and 179 00:10:01,160 --> 00:10:04,960 Speaker 1: it's efforts over the past hours. Yeah, First of all, 180 00:10:04,960 --> 00:10:06,360 Speaker 1: it's great to me be with you. It's a great 181 00:10:06,400 --> 00:10:08,240 Speaker 1: to be in studio as well. It's it's a cold 182 00:10:08,320 --> 00:10:10,000 Speaker 1: morning here in New York, so it's it's good to 183 00:10:10,040 --> 00:10:13,040 Speaker 1: be here. But like I look, there's no question that 184 00:10:13,240 --> 00:10:16,360 Speaker 1: the Cherman Palace is telegraphings as well as central banks 185 00:10:16,400 --> 00:10:19,080 Speaker 1: around the world that they that the markets must take 186 00:10:19,160 --> 00:10:21,760 Speaker 1: them seriously and they're going to do everything they can 187 00:10:21,840 --> 00:10:24,439 Speaker 1: to make sure that that inflation gets under control. And 188 00:10:24,559 --> 00:10:26,160 Speaker 1: they and they're gonna stay, They're gonna keep on the 189 00:10:26,240 --> 00:10:28,280 Speaker 1: gas as for as long as it it's necessary for 190 00:10:28,400 --> 00:10:30,439 Speaker 1: them to be able to you know, break break the 191 00:10:30,480 --> 00:10:34,160 Speaker 1: back of inflation. Do the markets believe them? Do you 192 00:10:34,200 --> 00:10:38,000 Speaker 1: think clearly? Not? Well? Look, I yeah, I look going 193 00:10:38,040 --> 00:10:41,040 Speaker 1: into going into yesterday, No, I think yes. I think now, 194 00:10:41,240 --> 00:10:43,640 Speaker 1: I think that they're actually seeing that there the extent 195 00:10:43,760 --> 00:10:46,480 Speaker 1: of what uh you know what maybe possible, um and 196 00:10:46,559 --> 00:10:49,079 Speaker 1: I think that there's you know, and you know, but 197 00:10:49,280 --> 00:10:52,320 Speaker 1: for one one mistake that that that the chairman made 198 00:10:52,360 --> 00:10:56,000 Speaker 1: pretty early on uh this year, I think, you know there, 199 00:10:56,360 --> 00:10:58,520 Speaker 1: it's it's foolish for the markets to not take this 200 00:10:58,679 --> 00:11:02,600 Speaker 1: Cherman seriously, well, not take it seriously. But I'm wondering 201 00:11:02,679 --> 00:11:04,520 Speaker 1: what they're actually pricing in here, because it feels like 202 00:11:04,520 --> 00:11:07,800 Speaker 1: we've been talking about recession for at least a year. Year. 203 00:11:07,800 --> 00:11:12,040 Speaker 1: Going to half arguably is this just a result of 204 00:11:12,480 --> 00:11:15,000 Speaker 1: the Federal reserves rate hikes and repricing the discount rate 205 00:11:15,080 --> 00:11:17,199 Speaker 1: essentially for a lot of these companies, or is this 206 00:11:17,280 --> 00:11:20,120 Speaker 1: actually pricing in a recession that may or may not hit. 207 00:11:21,760 --> 00:11:24,120 Speaker 1: I think that the markets the consensus was. I think 208 00:11:24,160 --> 00:11:26,640 Speaker 1: that that that you know, that the Federal Reserve is 209 00:11:26,640 --> 00:11:29,480 Speaker 1: actually perhaps even can start reducing rates next year. That 210 00:11:29,679 --> 00:11:32,959 Speaker 1: is not what the chairman indicated yesterday or the day before. 211 00:11:33,280 --> 00:11:35,080 Speaker 1: And that's you know, so I think the market markets 212 00:11:35,120 --> 00:11:37,760 Speaker 1: had had you know, just clearly we're pricing in just 213 00:11:38,000 --> 00:11:41,079 Speaker 1: incorrectly where the where the Federal Reserve is going to go. Um. 214 00:11:41,720 --> 00:11:43,959 Speaker 1: And yes, I think that there is a consensus that 215 00:11:44,040 --> 00:11:47,640 Speaker 1: that the recessions are is going to hit next year sometime. UM. 216 00:11:47,800 --> 00:11:50,599 Speaker 1: But I don't think anyone had had a clueist to 217 00:11:50,679 --> 00:11:52,920 Speaker 1: kind of where where the FOMC was was and there 218 00:11:52,960 --> 00:11:56,080 Speaker 1: where their thoughts were on just how long they're they're 219 00:11:56,120 --> 00:11:59,400 Speaker 1: intending to maintain this posture of type of type of 220 00:11:59,480 --> 00:12:02,280 Speaker 1: type polos. Well, you mentioned those FED cuts. Now, you 221 00:12:02,320 --> 00:12:04,000 Speaker 1: haven't spent time with the Federal Reserve, but you've spent 222 00:12:04,040 --> 00:12:06,280 Speaker 1: time certainly in Washington close by over at the Treasury. 223 00:12:06,800 --> 00:12:09,240 Speaker 1: I'm curious about the playbook here because it feels like 224 00:12:09,320 --> 00:12:11,000 Speaker 1: in the last I want to say, at least in 225 00:12:11,000 --> 00:12:13,880 Speaker 1: the last decade, the idea of cutting rates when things 226 00:12:13,960 --> 00:12:17,920 Speaker 1: get tough is part of the feds um mantra, basically 227 00:12:18,000 --> 00:12:20,560 Speaker 1: the playbook. So if we do actually see a recession 228 00:12:20,600 --> 00:12:24,280 Speaker 1: and say the second quarter or third quarter, isn't the 229 00:12:24,360 --> 00:12:27,640 Speaker 1: go to to cut rates as shown by the last 230 00:12:27,760 --> 00:12:30,520 Speaker 1: decade of Monterrey policy, at least here in the United Dates, 231 00:12:30,559 --> 00:12:33,240 Speaker 1: So why is the market getting that wrong? If that's 232 00:12:33,240 --> 00:12:35,360 Speaker 1: what they've done in the past. Look, this is way 233 00:12:35,400 --> 00:12:37,480 Speaker 1: I described it. The Federal Reserve has lots of tools 234 00:12:37,520 --> 00:12:40,719 Speaker 1: in their arsenal Uh, they're the biggest They're kind of 235 00:12:40,720 --> 00:12:43,319 Speaker 1: their nuclear bomb, if you will, are interest rates. But 236 00:12:43,360 --> 00:12:45,600 Speaker 1: they can they can buy, sell credit, and they can 237 00:12:45,640 --> 00:12:47,880 Speaker 1: do they can do you know, lots of bonds. There's 238 00:12:47,880 --> 00:12:50,000 Speaker 1: a lot of things they can do. Quantitine reasoning, quaritin 239 00:12:50,040 --> 00:12:52,840 Speaker 1: of tightening quite have the same effect. No, that's true, right, 240 00:12:52,880 --> 00:12:54,920 Speaker 1: So and they're they're more and again there it's kind 241 00:12:54,920 --> 00:12:57,360 Speaker 1: of like a gradation of of what they're what they 242 00:12:57,400 --> 00:13:00,760 Speaker 1: can do. But the reality is this, I I look 243 00:13:01,640 --> 00:13:04,520 Speaker 1: got God loved fed Sherman Powell, and I'm so happy 244 00:13:04,559 --> 00:13:06,560 Speaker 1: I'm not in his role right now. But I will 245 00:13:06,600 --> 00:13:08,840 Speaker 1: say one thing, he is not going to be pull walker, 246 00:13:09,280 --> 00:13:11,960 Speaker 1: and so what will not happen, what I'm confident will 247 00:13:11,960 --> 00:13:15,000 Speaker 1: not happen under under his chairmanship, is that there'll be 248 00:13:15,160 --> 00:13:17,560 Speaker 1: will be stops and starts, and so he is going 249 00:13:17,640 --> 00:13:20,120 Speaker 1: to maintain a posture, and I'm very confident to maintain 250 00:13:20,200 --> 00:13:23,880 Speaker 1: a posture until we see a dour trajectory on inflation. 251 00:13:24,400 --> 00:13:26,360 Speaker 1: Is going to maintain the posture. And like, even if 252 00:13:26,400 --> 00:13:28,280 Speaker 1: we have to go into recession, which I think likely 253 00:13:28,400 --> 00:13:30,520 Speaker 1: is very likely, I don't think they're going to change 254 00:13:30,559 --> 00:13:34,520 Speaker 1: their posture until he sees that happen, because stagflation is worse, 255 00:13:34,760 --> 00:13:37,319 Speaker 1: is worse than than than what we're currently and I 256 00:13:37,400 --> 00:13:39,920 Speaker 1: think that that would that would be the most devastating outcome. 257 00:13:40,960 --> 00:13:45,600 Speaker 1: So is recession in your looking up? So how deep, 258 00:13:45,640 --> 00:13:48,120 Speaker 1: how prolonged? How are you guys thinking about that? Yeah, 259 00:13:48,200 --> 00:13:50,720 Speaker 1: we're we're we're suggesting it's going to be uh perhaps 260 00:13:51,360 --> 00:13:55,240 Speaker 1: mid Q two, beginning of Q three and twelve months, 261 00:13:55,880 --> 00:13:58,360 Speaker 1: which so like it could be longer. It really is 262 00:13:58,360 --> 00:14:02,440 Speaker 1: impossible to really genuinely know us, but it's certainly looking 263 00:14:02,520 --> 00:14:04,559 Speaker 1: like it's going to be, uh next year, I think 264 00:14:04,559 --> 00:14:08,319 Speaker 1: we're gonna we're gonna be probably going into four in 265 00:14:08,360 --> 00:14:12,280 Speaker 1: a recessionary environment. Well you said that, Um, he's not 266 00:14:12,360 --> 00:14:16,320 Speaker 1: going to be like Paul Volker, which I think is interesting. Um, 267 00:14:16,559 --> 00:14:18,160 Speaker 1: he's not going to fall to this kind of pressure, 268 00:14:18,240 --> 00:14:20,360 Speaker 1: And to be fair, he hasn't yet, despite a lot 269 00:14:20,400 --> 00:14:22,480 Speaker 1: of political pressure already being put on him. But I 270 00:14:22,560 --> 00:14:25,560 Speaker 1: have to go back to the Trump era of tariffs 271 00:14:25,680 --> 00:14:28,840 Speaker 1: and the idea that a lot of the policymakers, including 272 00:14:28,840 --> 00:14:31,320 Speaker 1: President Trump himself, had said, Joe Powell, you have to 273 00:14:31,400 --> 00:14:33,920 Speaker 1: cut rates, and then he did not because of that pressure, 274 00:14:33,960 --> 00:14:37,040 Speaker 1: but as a kind of insurance cut. Why won't we 275 00:14:37,080 --> 00:14:39,600 Speaker 1: get an insurance cut this time if you start to 276 00:14:39,600 --> 00:14:42,640 Speaker 1: see the same layoffs, the same recessionary pressures that we 277 00:14:42,760 --> 00:14:46,400 Speaker 1: were at the risk of at that point. Yeah, look 278 00:14:46,400 --> 00:14:48,800 Speaker 1: at we all know that that CPI and inflationary data 279 00:14:48,800 --> 00:14:52,240 Speaker 1: is is is a lagging indicator, and the and the 280 00:14:52,320 --> 00:14:55,640 Speaker 1: Federalserve has enormous amount of information at their finger types 281 00:14:55,680 --> 00:14:59,200 Speaker 1: at any given time. But there's no question again I'll 282 00:14:59,240 --> 00:15:02,080 Speaker 1: just repeat myself, there's no question that this that I 283 00:15:02,160 --> 00:15:04,800 Speaker 1: don't believe this Federal reserve is going to do anything 284 00:15:04,920 --> 00:15:09,000 Speaker 1: approximating we saw in the nineteen seventies stops and starts. Uh, 285 00:15:09,080 --> 00:15:12,880 Speaker 1: certainly not certainly not reductions in in in interest until 286 00:15:12,960 --> 00:15:16,880 Speaker 1: there is meaningful downward trajectory on on inflation. All right, 287 00:15:16,960 --> 00:15:19,160 Speaker 1: So what are you telling your clients here? You know 288 00:15:19,480 --> 00:15:22,800 Speaker 1: you're talking about here's our forecast for three is what 289 00:15:22,840 --> 00:15:25,640 Speaker 1: you guys should be doing? What do you guys crossing? Yeah, 290 00:15:26,160 --> 00:15:31,000 Speaker 1: we expect a continued tightening environment with continuing interest rate 291 00:15:31,160 --> 00:15:33,840 Speaker 1: increases UM and so it's you know, like we're we're 292 00:15:33,880 --> 00:15:36,560 Speaker 1: going into a differy, difficult environment. One thing that's that's 293 00:15:36,880 --> 00:15:40,040 Speaker 1: oftentimes missed is that you guys know well, is that 294 00:15:40,120 --> 00:15:43,640 Speaker 1: sixtent of our country live paycheck to paycheck um and 295 00:15:43,760 --> 00:15:45,440 Speaker 1: so with you if you put that on top of 296 00:15:45,640 --> 00:15:49,600 Speaker 1: you know, get a tightening um monetary monetary policy and 297 00:15:50,000 --> 00:15:53,680 Speaker 1: a slowing economy, uh and and an increase in job 298 00:15:53,800 --> 00:15:55,920 Speaker 1: a job list rates. Um. You know that that's going 299 00:15:55,960 --> 00:15:58,640 Speaker 1: to make for a very meaningful and very difficult for 300 00:15:58,880 --> 00:16:01,360 Speaker 1: for retail investor, is for and for the average American 301 00:16:01,920 --> 00:16:04,360 Speaker 1: UM and so and and for companies around around the country. 302 00:16:04,440 --> 00:16:07,000 Speaker 1: So right right now, if you're if you're a company 303 00:16:07,600 --> 00:16:10,480 Speaker 1: you haven't yet already gotten gotten in place where you're 304 00:16:10,560 --> 00:16:13,840 Speaker 1: you know you can withstand um some really difficult economic times. 305 00:16:13,960 --> 00:16:16,920 Speaker 1: You need to do that now, um and uh, for 306 00:16:17,200 --> 00:16:20,560 Speaker 1: for and for investors, you know, I just it's going 307 00:16:20,600 --> 00:16:23,680 Speaker 1: to be a bumpy ride in three and get prepared. 308 00:16:24,160 --> 00:16:26,080 Speaker 1: Well is this that a reserve? Is it still behind 309 00:16:26,120 --> 00:16:29,720 Speaker 1: the curve? Uh? Like I think it started late. UM. 310 00:16:29,800 --> 00:16:31,400 Speaker 1: I don't know if it's beyond the curve now, but 311 00:16:31,480 --> 00:16:33,520 Speaker 1: I think it's I think they're they're taking their jobs 312 00:16:33,680 --> 00:16:36,440 Speaker 1: very seriously. But I think I clearly they started late, 313 00:16:36,800 --> 00:16:38,840 Speaker 1: so they had some they have some catch up to do. Um. 314 00:16:38,920 --> 00:16:40,400 Speaker 1: And but we see that, we see that with center 315 00:16:40,440 --> 00:16:43,040 Speaker 1: banks around the world now, so and maybe they're following 316 00:16:43,080 --> 00:16:45,960 Speaker 1: our our our path. UM. I will say this is 317 00:16:46,000 --> 00:16:48,120 Speaker 1: that I you know, I don't want I wouldn't want 318 00:16:48,120 --> 00:16:50,400 Speaker 1: to be in anyone's shoes around the world right now, 319 00:16:50,480 --> 00:16:52,080 Speaker 1: and I would want to be in some center banker 320 00:16:52,120 --> 00:16:53,680 Speaker 1: in any in any country. But if I had to 321 00:16:53,760 --> 00:16:55,440 Speaker 1: choose one, I would choose the United States because I 322 00:16:55,440 --> 00:16:57,200 Speaker 1: think that we will weather the storm better than anyone. 323 00:16:58,520 --> 00:17:03,800 Speaker 1: Why is China uh in Europe not necessarily being taken 324 00:17:03,840 --> 00:17:06,000 Speaker 1: too account in terms of the press conferences, I've been 325 00:17:06,000 --> 00:17:08,359 Speaker 1: asking all of our guests this question. We know there's 326 00:17:08,640 --> 00:17:11,640 Speaker 1: a more guaranteed recession in Europe right on the doorstep, 327 00:17:11,720 --> 00:17:13,720 Speaker 1: might start showing the data as soon as next month 328 00:17:13,800 --> 00:17:16,520 Speaker 1: or even this month. You have a cozy or policy 329 00:17:16,520 --> 00:17:19,080 Speaker 1: in China that is going and stops and starts. In 330 00:17:19,200 --> 00:17:22,680 Speaker 1: his press conferences, Chairman Powell hasn't mentioned either one once. 331 00:17:22,840 --> 00:17:26,440 Speaker 1: Very focused on domestic policy, which is great and adorable. 332 00:17:26,600 --> 00:17:29,520 Speaker 1: But at the end of the day, these other global 333 00:17:29,600 --> 00:17:32,359 Speaker 1: factors do factor into the American economy. Why is he 334 00:17:32,440 --> 00:17:35,640 Speaker 1: not talking about them as wild cards? Well, okay, both 335 00:17:35,720 --> 00:17:38,520 Speaker 1: of them are outside of his control and the outside 336 00:17:38,560 --> 00:17:41,159 Speaker 1: not only his control, but also policymakers in the United States, right, 337 00:17:41,200 --> 00:17:43,119 Speaker 1: So both on the fiscal and monetary side, these are 338 00:17:43,200 --> 00:17:46,800 Speaker 1: these are external factors, as is Russia. Um that you know, 339 00:17:46,840 --> 00:17:49,560 Speaker 1: are just outside of our control. He has to, you know, 340 00:17:49,720 --> 00:17:52,520 Speaker 1: and he has to, and I'm sure he is taking 341 00:17:52,520 --> 00:17:55,359 Speaker 1: into account that the extential threats that those posed to 342 00:17:55,400 --> 00:17:57,919 Speaker 1: the US economy. But those things that that are are 343 00:17:58,080 --> 00:18:01,240 Speaker 1: in his control. I think he's obviously focused, quite quite 344 00:18:01,320 --> 00:18:03,920 Speaker 1: candily and quite focused on to make sure that that 345 00:18:04,119 --> 00:18:06,240 Speaker 1: you know that that those things that he can work 346 00:18:06,280 --> 00:18:08,959 Speaker 1: in control and Jennet Yellow and others that can control, 347 00:18:09,080 --> 00:18:11,520 Speaker 1: and policy makers in Washington can control, you know, the 348 00:18:11,640 --> 00:18:14,560 Speaker 1: things that that the levers that he has and that 349 00:18:14,680 --> 00:18:17,480 Speaker 1: they have to make sure that that we keep the 350 00:18:17,720 --> 00:18:20,560 Speaker 1: we keep the economy as close to um and as 351 00:18:20,680 --> 00:18:23,040 Speaker 1: as going as as strong as it can for as 352 00:18:23,080 --> 00:18:27,160 Speaker 1: long as it can even there, even under extremely difficult 353 00:18:27,240 --> 00:18:32,679 Speaker 1: head ones seconds. How politicized is that whole federal reserve 354 00:18:32,720 --> 00:18:34,680 Speaker 1: do you think? Now? I know they try to remain independent, 355 00:18:34,800 --> 00:18:37,800 Speaker 1: but you've been down in Washington, what's what's your view? 356 00:18:37,840 --> 00:18:40,360 Speaker 1: You know, it's incredibly great question. I haven't actually asked 357 00:18:40,400 --> 00:18:41,920 Speaker 1: that question a lot in a long time. I would 358 00:18:41,920 --> 00:18:45,280 Speaker 1: say this, I before I went to Treasury, I I 359 00:18:45,359 --> 00:18:48,280 Speaker 1: always had a question as if they're how independent it 360 00:18:48,560 --> 00:18:53,120 Speaker 1: was while serving at treasure departments. There is no question 361 00:18:53,280 --> 00:18:55,760 Speaker 1: that there's a level of independence that actually frustrates those 362 00:18:55,760 --> 00:18:58,040 Speaker 1: as the Treasury um you know, I think, and but 363 00:18:58,119 --> 00:18:59,960 Speaker 1: it needs to be that way. That's you know, there 364 00:19:00,119 --> 00:19:02,480 Speaker 1: is there are so many difficult decisions and populated on 365 00:19:02,560 --> 00:19:06,200 Speaker 1: both sides. Ken like you see what what what Washington 366 00:19:06,240 --> 00:19:07,879 Speaker 1: has been doing now, which is spending a lot of 367 00:19:07,920 --> 00:19:11,320 Speaker 1: money which is actually working at odds with what Federal 368 00:19:11,359 --> 00:19:13,240 Speaker 1: Serve is doing. Right, So, uh, you know, I said, 369 00:19:13,240 --> 00:19:16,480 Speaker 1: there is there's clearly a level independence on both sides, 370 00:19:16,520 --> 00:19:18,560 Speaker 1: and it's really difficult. All right. Chris Campbell, thanks so 371 00:19:18,640 --> 00:19:21,560 Speaker 1: much for joining us. Chris Campbell's chief strategist at CROWL, 372 00:19:21,640 --> 00:19:26,760 Speaker 1: joining us here in a Bloomberg Interactive broker studio. Let's 373 00:19:26,800 --> 00:19:29,520 Speaker 1: talk about our next guest here. There's a lot going 374 00:19:29,640 --> 00:19:32,000 Speaker 1: on when it comes to a lot of these individual companies. 375 00:19:32,040 --> 00:19:33,880 Speaker 1: We talked about the big tech names all the time. 376 00:19:34,200 --> 00:19:36,320 Speaker 1: We have a really cool guest here who has a 377 00:19:36,400 --> 00:19:39,399 Speaker 1: company called work Sport, publicly traded on the nastac to 378 00:19:39,520 --> 00:19:43,760 Speaker 1: go w k SP. He joins us, Stephen Rossie. We 379 00:19:43,920 --> 00:19:46,840 Speaker 1: thank you as always for joining the show on a Friday. Nonetheless, 380 00:19:47,000 --> 00:19:50,199 Speaker 1: we really appreciate that. Let's start off with a very 381 00:19:50,240 --> 00:19:55,600 Speaker 1: simple question, what does your company do explain to our audience? Well, first, yeah, 382 00:19:55,640 --> 00:19:59,280 Speaker 1: thanks for having me, Creedy Paul um and um yeah, 383 00:19:59,640 --> 00:20:02,800 Speaker 1: it's it's interesting. We take a very interesting approach to 384 00:20:02,840 --> 00:20:05,600 Speaker 1: the automotive markets. Uh here at work Sports. So we 385 00:20:05,760 --> 00:20:11,639 Speaker 1: started by making humbly producing truck accessories or automotive accessories, 386 00:20:11,680 --> 00:20:14,520 Speaker 1: and then we took a very interesting approach UH to 387 00:20:14,680 --> 00:20:18,680 Speaker 1: the automotive accessory market by hybridizing. So now we're UM 388 00:20:19,200 --> 00:20:23,800 Speaker 1: into new energy products and we're the first company to 389 00:20:24,040 --> 00:20:27,760 Speaker 1: launch a stolar tunnel cover for pickup trucks that will 390 00:20:27,840 --> 00:20:31,840 Speaker 1: create micro grids out of pickup trucks or recharge electric 391 00:20:31,880 --> 00:20:37,760 Speaker 1: pickup trucks and new energy storage systems battery operated generators 392 00:20:37,880 --> 00:20:40,680 Speaker 1: for a better way of saying it, and both markets 393 00:20:41,240 --> 00:20:44,600 Speaker 1: UM are at this time literally lightning in a bottle 394 00:20:44,640 --> 00:20:47,800 Speaker 1: for us. So, who is your end market customers that 395 00:20:47,880 --> 00:20:51,440 Speaker 1: the individual is that the auto O E M the 396 00:20:51,960 --> 00:20:53,840 Speaker 1: stores that you know, the parts stores? How do you 397 00:20:54,720 --> 00:20:59,600 Speaker 1: who is your customer? Uh? Great question? So on, So 398 00:20:59,760 --> 00:21:04,639 Speaker 1: are our our our solar truck accessory UM is perfect 399 00:21:04,760 --> 00:21:06,960 Speaker 1: for the O E M UM At this point we 400 00:21:07,080 --> 00:21:10,760 Speaker 1: have a named partnership with Hyundai UM and we have 401 00:21:11,119 --> 00:21:14,000 Speaker 1: various other discussions happening with O E M s in 402 00:21:14,080 --> 00:21:17,080 Speaker 1: the North American side. UM. So the accessory could be 403 00:21:17,119 --> 00:21:20,440 Speaker 1: installed on an electric pickup truck and charge the truck, 404 00:21:21,040 --> 00:21:23,760 Speaker 1: or on a gas or diesel truck and turn that 405 00:21:23,840 --> 00:21:25,720 Speaker 1: truck into a micro grid for you know, the job 406 00:21:25,800 --> 00:21:30,119 Speaker 1: site campsite on our battery system. It broadens our market 407 00:21:30,480 --> 00:21:33,440 Speaker 1: from a humble from from being a humbly in the 408 00:21:33,480 --> 00:21:38,360 Speaker 1: automotive markets, which is somewhat niche, to the global consumer market. Anybody, 409 00:21:38,680 --> 00:21:41,720 Speaker 1: whether they drive or or not, could use our power 410 00:21:41,800 --> 00:21:44,800 Speaker 1: generator for a stormy day or as I said, the 411 00:21:44,880 --> 00:21:48,440 Speaker 1: job site or campsite, and that fits perfectly directed consumer 412 00:21:48,880 --> 00:21:52,120 Speaker 1: or through mass merchandisers like home people are lows for example. 413 00:21:52,920 --> 00:21:55,119 Speaker 1: So let's talk about the risks here. At the end 414 00:21:55,119 --> 00:21:57,200 Speaker 1: of the day. We are financial journalists, which means we 415 00:21:57,280 --> 00:21:59,560 Speaker 1: like to look at things class half empty. It's part 416 00:21:59,600 --> 00:22:02,639 Speaker 1: of the description. Let's talk about the risks here. You know, 417 00:22:02,720 --> 00:22:04,400 Speaker 1: we hear a lot of doom and gloom out there 418 00:22:04,960 --> 00:22:08,320 Speaker 1: about recession right on the horizon, a really tough after 419 00:22:08,400 --> 00:22:12,040 Speaker 1: an already pretty in the market. What's your take? Are 420 00:22:12,040 --> 00:22:16,600 Speaker 1: you worried about next year? UM? In the new energy 421 00:22:16,680 --> 00:22:19,639 Speaker 1: markets among one of the fastest growing markets in the 422 00:22:19,680 --> 00:22:24,960 Speaker 1: world UM, recession UM usually starts at the at the niceties, 423 00:22:25,560 --> 00:22:29,159 Speaker 1: the the things that people don't necessarily need UM, and 424 00:22:29,240 --> 00:22:31,359 Speaker 1: then it trickles down depending on how long as you 425 00:22:31,400 --> 00:22:34,200 Speaker 1: guys know the things that uh, you know, perhaps people 426 00:22:34,240 --> 00:22:38,000 Speaker 1: do need essentials, but UM new energy products like backup 427 00:22:38,040 --> 00:22:41,000 Speaker 1: power systems for that stormy day are something more of 428 00:22:41,080 --> 00:22:45,720 Speaker 1: an essential element, So that category is growing. We've found 429 00:22:45,800 --> 00:22:50,359 Speaker 1: some very interesting market data that's that's opened our eyes 430 00:22:50,520 --> 00:22:53,520 Speaker 1: that this market ten times larger than we had even 431 00:22:53,560 --> 00:22:57,800 Speaker 1: anticipated by literal dollar sents on the on the truck side, 432 00:22:57,920 --> 00:23:01,480 Speaker 1: on the on the consumer, UH pickup trucks sales side, 433 00:23:01,920 --> 00:23:05,320 Speaker 1: pickup trucks are really recession proof, and I'll explain first off, 434 00:23:05,400 --> 00:23:08,960 Speaker 1: the name plates are almost the domestics are no longer 435 00:23:09,040 --> 00:23:12,520 Speaker 1: producing Sudans as you know UM and leaning very heavily 436 00:23:12,560 --> 00:23:15,600 Speaker 1: in the pickup trucks. And it seems that the trend 437 00:23:15,680 --> 00:23:18,960 Speaker 1: would be that in good times, good economic times, people 438 00:23:19,000 --> 00:23:21,400 Speaker 1: buy pickup trucks. In tougher reckon amount of times where 439 00:23:21,400 --> 00:23:23,240 Speaker 1: people have to get out and maybe do a little 440 00:23:23,240 --> 00:23:25,879 Speaker 1: bit more work, people are still bud pickup trucks. So 441 00:23:26,240 --> 00:23:29,240 Speaker 1: we find that we are in an enviable position in 442 00:23:29,400 --> 00:23:34,120 Speaker 1: terms of the markets UM. But with with the recession, 443 00:23:34,200 --> 00:23:36,840 Speaker 1: with you know, the economic times as they are coming 444 00:23:36,920 --> 00:23:39,680 Speaker 1: out of covid UM, you know we we are. We 445 00:23:39,760 --> 00:23:44,520 Speaker 1: are noticing supply chain issues, delays, price increases, but there 446 00:23:44,560 --> 00:23:47,040 Speaker 1: are silver linings that I can talk about. So on 447 00:23:47,200 --> 00:23:50,159 Speaker 1: the electric vehicle front. I mean, obviously it's it had 448 00:23:50,200 --> 00:23:53,480 Speaker 1: been Tesla's market that we had Rivian and but now 449 00:23:53,560 --> 00:23:55,760 Speaker 1: we've got all of the O E M s seemingly 450 00:23:55,840 --> 00:24:00,920 Speaker 1: coming in gangbusters on electric vehicles. Do you guys kind 451 00:24:00,920 --> 00:24:06,199 Speaker 1: of think about the growth trajectory, uh, of that business? 452 00:24:07,880 --> 00:24:10,840 Speaker 1: The the O E M s are all very heavily 453 00:24:10,960 --> 00:24:17,000 Speaker 1: focused on electric pickup trucks, almost predominantly focused on it. 454 00:24:17,119 --> 00:24:19,680 Speaker 1: In fact, in some of our meetings in Detroit in 455 00:24:19,760 --> 00:24:22,880 Speaker 1: the past weeks, um, you know, the words were literally 456 00:24:23,560 --> 00:24:27,280 Speaker 1: we are putting almost everything we had into electrifying pickup trucks. 457 00:24:27,359 --> 00:24:29,960 Speaker 1: On a small scale, like the little trucks like hund 458 00:24:30,080 --> 00:24:32,560 Speaker 1: has a Santa Cruz that's more of a of a 459 00:24:32,760 --> 00:24:35,119 Speaker 1: of a car with a or an suv with a 460 00:24:35,160 --> 00:24:38,359 Speaker 1: pickup bed. But the the the O E M s 461 00:24:38,880 --> 00:24:41,720 Speaker 1: on the electric pickup truck, it's kind of a race. Um, 462 00:24:41,840 --> 00:24:44,400 Speaker 1: We've had an amazing amount of interest. And the reason 463 00:24:44,480 --> 00:24:48,240 Speaker 1: why a solar tunnel cover for that truck kind of 464 00:24:48,320 --> 00:24:52,560 Speaker 1: makes sense is just because you're now changing from something 465 00:24:52,680 --> 00:24:56,600 Speaker 1: that used to be the big producer of carbon emissions 466 00:24:56,880 --> 00:25:01,320 Speaker 1: too some step towards carbon neutrality, but as I've always said, 467 00:25:01,400 --> 00:25:04,919 Speaker 1: is are we merely exchanging the emissions from the tailpipe 468 00:25:05,000 --> 00:25:08,359 Speaker 1: of a gas fed pickup truck to the emissions of 469 00:25:08,440 --> 00:25:11,800 Speaker 1: a natural gas or powered smoke stack. So with a 470 00:25:11,880 --> 00:25:14,920 Speaker 1: push towards e s G. A solar tunnel cover, I 471 00:25:15,000 --> 00:25:18,879 Speaker 1: mean the statistics are amazing. We produced ninety eight kill 472 00:25:18,920 --> 00:25:23,200 Speaker 1: a lot hours per year. We reduce with a hundred 473 00:25:23,240 --> 00:25:26,000 Speaker 1: thousand units of that we sell a hundred thousand solar 474 00:25:26,040 --> 00:25:29,119 Speaker 1: tunnel covers, which pickup trucks sell on the millions. We 475 00:25:29,440 --> 00:25:32,560 Speaker 1: are estimated to increase up to ninety five thousand mega 476 00:25:32,600 --> 00:25:36,439 Speaker 1: LOTT hours, which reduces about one point three billion miles 477 00:25:36,480 --> 00:25:39,840 Speaker 1: of vehicle emissions every year in exchange for clean energy 478 00:25:39,920 --> 00:25:43,320 Speaker 1: that could again recharge the pickup truck electric pickup truck, 479 00:25:43,480 --> 00:25:45,880 Speaker 1: or store energy and gas pickup trucks to be used 480 00:25:45,960 --> 00:25:49,399 Speaker 1: for job site cancel. So it's very meaningful. Well, a 481 00:25:49,440 --> 00:25:52,840 Speaker 1: lot of the technology is coming out from abroad. China, 482 00:25:52,840 --> 00:25:56,320 Speaker 1: I believe, is the leader in electrification, even as we 483 00:25:56,440 --> 00:25:59,159 Speaker 1: have the likes of Tesla for GM, these other companies 484 00:25:59,200 --> 00:26:01,480 Speaker 1: that are really trying to advance the ev work here 485 00:26:01,480 --> 00:26:03,359 Speaker 1: in the States. But it is still China that seems 486 00:26:03,359 --> 00:26:06,040 Speaker 1: to be the center of it globally. Are you an 487 00:26:06,080 --> 00:26:10,480 Speaker 1: active competition with Chinese companies? What's your relationship like with 488 00:26:10,920 --> 00:26:17,240 Speaker 1: our Asian counterparts? We are so. There is a big 489 00:26:17,520 --> 00:26:21,040 Speaker 1: push recently We've noticed from multiple businesses that were just 490 00:26:21,440 --> 00:26:26,560 Speaker 1: colleagues with UM in in sourcing or domestification of UM 491 00:26:27,200 --> 00:26:31,919 Speaker 1: of production UM so China is very strong on power electronics, 492 00:26:32,119 --> 00:26:37,040 Speaker 1: very strong on UM battery production, but also very much 493 00:26:37,119 --> 00:26:42,680 Speaker 1: so UM changing their laws, bills and regulations to eliminate 494 00:26:42,840 --> 00:26:47,800 Speaker 1: the the ability for these factories to produce UM kind 495 00:26:47,840 --> 00:26:50,560 Speaker 1: of almost with no real controls on emissions and and 496 00:26:50,800 --> 00:26:54,280 Speaker 1: and carve you know, almost kind of smoggy plants, for 497 00:26:54,400 --> 00:26:56,879 Speaker 1: lack of a better way of saying it. So with 498 00:26:57,720 --> 00:27:01,240 Speaker 1: with the battery technology and PC and animation in North America, 499 00:27:01,680 --> 00:27:05,320 Speaker 1: UM production in North America batteries although a little further out, 500 00:27:05,760 --> 00:27:08,320 Speaker 1: it is very very possible and very exciting for the 501 00:27:08,400 --> 00:27:10,959 Speaker 1: future in the next let's call it two to five years. Uh. 502 00:27:11,160 --> 00:27:14,159 Speaker 1: And in terms of power electronics like like like circuit 503 00:27:14,200 --> 00:27:17,280 Speaker 1: boards and whatnot, it's it's very very so we we 504 00:27:17,560 --> 00:27:20,720 Speaker 1: we can compete, Yes, alright, Steve, great stuff. Really appreciate 505 00:27:20,760 --> 00:27:22,520 Speaker 1: you taking the time to bring us up to date 506 00:27:22,520 --> 00:27:24,680 Speaker 1: on what you guys are doing at work sport. Steve 507 00:27:24,760 --> 00:27:28,639 Speaker 1: Rossi see of work sport. NASTAC traded Company w k 508 00:27:28,920 --> 00:27:31,040 Speaker 1: SP is the ticker to put into your Bloomberg terminal. 509 00:27:31,359 --> 00:27:34,080 Speaker 1: They make those covers for the beds of the pickup trucks, 510 00:27:34,119 --> 00:27:36,080 Speaker 1: and now they make them they can be like solar 511 00:27:36,160 --> 00:27:39,840 Speaker 1: panels to power the pickup trucks and other stuff. Pretty 512 00:27:39,880 --> 00:27:46,240 Speaker 1: cool technology. All right, we are smack dab in the 513 00:27:46,320 --> 00:27:49,440 Speaker 1: middle of the Hollywood shopping season. We've got a US 514 00:27:49,480 --> 00:27:52,600 Speaker 1: retail sales print a couple of days ago. Those missed 515 00:27:52,760 --> 00:27:56,080 Speaker 1: estimates calls calling the question maybe the strength of the consumers. 516 00:27:56,080 --> 00:27:57,520 Speaker 1: So when we want to talk about the consumer, we 517 00:27:57,560 --> 00:27:59,320 Speaker 1: want to talk about retail. We want to talk about 518 00:27:59,720 --> 00:28:02,280 Speaker 1: shout opping. The name at the top of the list, 519 00:28:02,640 --> 00:28:06,560 Speaker 1: Danna Tellsley, chief Research Officer and CEO Tellsley Advisory Group. 520 00:28:06,640 --> 00:28:09,320 Speaker 1: She's been doing this stuff for decades. Hey, Danny, we 521 00:28:09,400 --> 00:28:11,800 Speaker 1: got that retail sales print a couple of days ago, 522 00:28:11,800 --> 00:28:14,040 Speaker 1: a little bit weaker than next or much weaker than expected. 523 00:28:14,440 --> 00:28:17,440 Speaker 1: What was your takeaway from that? It was a week. 524 00:28:17,520 --> 00:28:19,639 Speaker 1: It was first of all, Paul, thank you for having me. 525 00:28:19,920 --> 00:28:22,359 Speaker 1: It was a weaker than expected number. Keep in mind 526 00:28:22,800 --> 00:28:25,040 Speaker 1: that we know that the beginning of November was soft. 527 00:28:25,160 --> 00:28:27,680 Speaker 1: Every retailer talked about it. You had to pull forward 528 00:28:27,720 --> 00:28:31,040 Speaker 1: a demand that went into October a little bit compared 529 00:28:31,080 --> 00:28:33,399 Speaker 1: to what you had in November. And we're having an 530 00:28:33,480 --> 00:28:37,120 Speaker 1: extra Saturday in in the shopping calendar this year, given 531 00:28:37,160 --> 00:28:40,680 Speaker 1: that Christmas is on a Sunday, Consumers are waiting. Last year, 532 00:28:40,760 --> 00:28:44,840 Speaker 1: retailers didn't have enough inventory, and consumers knew that they bought. 533 00:28:44,960 --> 00:28:47,840 Speaker 1: They were flushed with cash, and they bought a full price. 534 00:28:48,280 --> 00:28:52,200 Speaker 1: This year, retailers have more than enough inventory. The promotions 535 00:28:52,280 --> 00:28:56,120 Speaker 1: can continue to build until we get to and even afterwards, 536 00:28:56,400 --> 00:28:59,520 Speaker 1: so consumers don't feel the same sense of urgency as 537 00:28:59,600 --> 00:29:03,440 Speaker 1: specially when promotions have been going on for a while now. Dina, 538 00:29:03,520 --> 00:29:06,080 Speaker 1: there's been this dynamic in the market, at least in 539 00:29:06,080 --> 00:29:08,640 Speaker 1: the narrative here, that as we start to see inflation 540 00:29:09,160 --> 00:29:13,520 Speaker 1: numbers increase headline cp I, even the spending ability of 541 00:29:13,600 --> 00:29:16,520 Speaker 1: everyday Americans will erode, and we haven't actually seen that yet. 542 00:29:16,560 --> 00:29:19,440 Speaker 1: I'm wondering in three as we see these inflation numbers 543 00:29:19,440 --> 00:29:23,160 Speaker 1: that come down, will that actually mean that spending is 544 00:29:23,200 --> 00:29:27,600 Speaker 1: going to rise? Is it as simple as that. I 545 00:29:27,680 --> 00:29:30,000 Speaker 1: think overall, when we think about the income consumer, you 546 00:29:30,040 --> 00:29:33,160 Speaker 1: got a bifurcation of the consumer going on. You definitely 547 00:29:33,280 --> 00:29:37,440 Speaker 1: have the lower middle income consumers shifting their spend to 548 00:29:37,600 --> 00:29:41,760 Speaker 1: grocery and essentials from discretionary. Inflation coming down would be 549 00:29:41,880 --> 00:29:44,520 Speaker 1: a benefit for them. We know that the labor market 550 00:29:44,600 --> 00:29:47,719 Speaker 1: has been strong, and frankly, wages are higher than they 551 00:29:47,720 --> 00:29:49,920 Speaker 1: were even just a couple of years ago. So if 552 00:29:49,960 --> 00:29:52,120 Speaker 1: they want a job, they can get a job. I 553 00:29:52,160 --> 00:29:55,040 Speaker 1: would hope as inflation comes down it would be a 554 00:29:55,120 --> 00:29:58,760 Speaker 1: boost to demand a DNA. As we sit here on 555 00:29:58,880 --> 00:30:01,160 Speaker 1: December six, and I know you and your team, you're 556 00:30:01,200 --> 00:30:03,920 Speaker 1: out at the malls all the time. You've got your 557 00:30:03,960 --> 00:30:06,360 Speaker 1: fingers on the pulses of this retail economy. How do 558 00:30:06,400 --> 00:30:08,360 Speaker 1: you think that's going to play out this year vs. V. 559 00:30:08,560 --> 00:30:10,840 Speaker 1: Last year, or maybe you know more nor normalized year. 560 00:30:11,920 --> 00:30:13,440 Speaker 1: First of all, I think one of the things we're 561 00:30:13,440 --> 00:30:15,960 Speaker 1: saying is there is a lull we are in the law. 562 00:30:16,080 --> 00:30:18,400 Speaker 1: You can see in the lull. Tomorrow is supposed to 563 00:30:18,480 --> 00:30:21,080 Speaker 1: be the super Saturday. Will be out there saying if 564 00:30:21,120 --> 00:30:23,160 Speaker 1: all the shoppers are out there. I think one of 565 00:30:23,200 --> 00:30:25,800 Speaker 1: the big differences is we don't have the scare of 566 00:30:25,920 --> 00:30:28,560 Speaker 1: omicron and COVID that you had last year. So I 567 00:30:28,600 --> 00:30:30,760 Speaker 1: don't know about you, but it seems like people going 568 00:30:30,840 --> 00:30:34,760 Speaker 1: out for dinner occasions. There's holiday celebrations that are happening, 569 00:30:35,280 --> 00:30:38,520 Speaker 1: and part of those dollars, discretionary dollars, is going to 570 00:30:38,600 --> 00:30:42,320 Speaker 1: events spending, and we're seeing that. So is the spend 571 00:30:42,400 --> 00:30:45,480 Speaker 1: going to be gifts that are events and social occasions 572 00:30:45,560 --> 00:30:48,640 Speaker 1: more than just gifts overall? Certainly seems that way in 573 00:30:48,760 --> 00:30:52,440 Speaker 1: some instances, along with the travel pick up. Here in Manhattan, 574 00:30:52,520 --> 00:30:54,640 Speaker 1: where I think you are and I am where you 575 00:30:54,720 --> 00:30:58,080 Speaker 1: definitely are seeing more tourists. Hotel rooms are crazily priced, 576 00:30:58,600 --> 00:31:02,680 Speaker 1: and overall, um, the holiday season I think is going 577 00:31:02,720 --> 00:31:05,840 Speaker 1: to turn out okay, not a barn burner. I think 578 00:31:05,880 --> 00:31:09,080 Speaker 1: the winner of the holiday season who is whose inventory 579 00:31:09,280 --> 00:31:12,520 Speaker 1: levels are clean, and I think inventory levels will see 580 00:31:12,600 --> 00:31:15,240 Speaker 1: an acceleration of promotion if they need to be moved. 581 00:31:16,640 --> 00:31:20,520 Speaker 1: But doesn't that kind of increased spending require some sort 582 00:31:20,560 --> 00:31:23,760 Speaker 1: of turnaround in consumer sentiment. It is still so striking 583 00:31:23,800 --> 00:31:25,200 Speaker 1: to me that if you look at the data, consumer 584 00:31:25,240 --> 00:31:29,080 Speaker 1: sentiment is still extremely low, but isn't actually denting to 585 00:31:29,160 --> 00:31:32,760 Speaker 1: the same extent the spending ability. What happens when that 586 00:31:32,880 --> 00:31:36,600 Speaker 1: turns around. I think when the sentiment picks up and 587 00:31:36,760 --> 00:31:39,640 Speaker 1: you see labor things being stronger, well, then it's going 588 00:31:39,720 --> 00:31:43,160 Speaker 1: to lead to demand and potentially go back towards some 589 00:31:43,280 --> 00:31:47,600 Speaker 1: of the discretionary products instead of towards grocery. Where's shifting now? 590 00:31:48,200 --> 00:31:51,920 Speaker 1: Keep in mind, consumers definitely are feeling fatigued. There's been 591 00:31:52,000 --> 00:31:56,040 Speaker 1: multiople years of the pandemic. There's financial stress and also 592 00:31:56,120 --> 00:31:57,920 Speaker 1: one of the things that consumers are looking to do 593 00:31:58,400 --> 00:32:01,640 Speaker 1: do things conveniently. Why do you think retail stores today 594 00:32:01,800 --> 00:32:04,320 Speaker 1: feel so many more functions than they did in the past. 595 00:32:04,840 --> 00:32:07,960 Speaker 1: Buy online, pickup in store, shipp from store, go to store. 596 00:32:08,320 --> 00:32:11,400 Speaker 1: How do you have that convenience and seamlessness in order 597 00:32:11,480 --> 00:32:15,120 Speaker 1: to help consumers have more time on how they want 598 00:32:15,160 --> 00:32:17,560 Speaker 1: to spend it and how they want to use it. So, Dana, 599 00:32:17,680 --> 00:32:20,320 Speaker 1: what are people buying this season? Where some of the 600 00:32:20,760 --> 00:32:23,560 Speaker 1: hot areas that you're seeing, I think some of the 601 00:32:23,600 --> 00:32:26,120 Speaker 1: occasion we're still working. I mean you're seeing things like 602 00:32:26,520 --> 00:32:29,520 Speaker 1: whether it is social occasion where like dresses and items 603 00:32:29,600 --> 00:32:32,560 Speaker 1: like that that's good doing well. Luggage all of a 604 00:32:32,600 --> 00:32:35,120 Speaker 1: sudden luggage is picking up, and that goes to show 605 00:32:35,400 --> 00:32:38,400 Speaker 1: the travel that's out there. I think some some of 606 00:32:38,520 --> 00:32:42,400 Speaker 1: the high end on luxury goods, those consumers continue to 607 00:32:42,520 --> 00:32:46,200 Speaker 1: have the ability to spend, and the innovative product of 608 00:32:46,280 --> 00:32:48,840 Speaker 1: some of the luxury brands is working for them. I 609 00:32:48,920 --> 00:32:51,720 Speaker 1: think one of the categories it's been a bit softer toys. 610 00:32:51,960 --> 00:32:54,200 Speaker 1: We just haven't seen the toy pickup that we've seen 611 00:32:54,240 --> 00:33:01,000 Speaker 1: in the past. Luggage interesting because traveling. Am I traveling? 612 00:33:01,080 --> 00:33:03,720 Speaker 1: I wish I was traveling, Trust me, I wish I 613 00:33:03,840 --> 00:33:06,480 Speaker 1: was traveling. Um, I actually recently found out that I 614 00:33:06,600 --> 00:33:09,040 Speaker 1: am actually working or was had the option to take 615 00:33:09,080 --> 00:33:11,760 Speaker 1: the last week of the year off and I didn't, 616 00:33:11,920 --> 00:33:17,080 Speaker 1: and I really regretted. Right Um, next year absolutely, But luggage, Paul, 617 00:33:17,160 --> 00:33:19,920 Speaker 1: I mean, I'm still using my fifty dollar suitcase my 618 00:33:20,000 --> 00:33:22,720 Speaker 1: dad got me first year of college. Need to upgrade 619 00:33:22,720 --> 00:33:25,960 Speaker 1: your professional Hey, Dana talked to us about the big 620 00:33:26,040 --> 00:33:28,480 Speaker 1: trend that's been, you know, impacting your industry of the 621 00:33:28,560 --> 00:33:30,760 Speaker 1: last decade, which is just kind of e commerce. And 622 00:33:30,840 --> 00:33:32,719 Speaker 1: I know we probably pulled a lot of e commerce 623 00:33:32,800 --> 00:33:36,080 Speaker 1: market share forward during the pandemic. What are you telling 624 00:33:36,160 --> 00:33:39,200 Speaker 1: your clients today about bricks and mortar worce versus e commerce. 625 00:33:39,880 --> 00:33:41,680 Speaker 1: I don't think it's a versus. I think it's an end. 626 00:33:42,040 --> 00:33:44,040 Speaker 1: I don't think it's either or. I think it's a bolt. 627 00:33:44,480 --> 00:33:46,200 Speaker 1: And I think one of the things we've all seen 628 00:33:46,360 --> 00:33:49,880 Speaker 1: is you're seeing companies. Number One, they've enhanced loyalty programs. 629 00:33:50,200 --> 00:33:52,880 Speaker 1: Companies have put in more functionality. One of the things 630 00:33:52,960 --> 00:33:56,240 Speaker 1: you learned during the pandemic, retailers got rid of boxes 631 00:33:56,360 --> 00:33:59,400 Speaker 1: that were unproductive and not profitable. There sitting here with 632 00:33:59,520 --> 00:34:02,800 Speaker 1: the best boxes out there. With the omni channel initiatives 633 00:34:02,880 --> 00:34:05,040 Speaker 1: of like I mentioned the buy online, to pick up 634 00:34:05,080 --> 00:34:08,680 Speaker 1: in storeship from store. There is multiple use functions and 635 00:34:08,800 --> 00:34:12,120 Speaker 1: if anything, what came out of the pandemic, retail not 636 00:34:12,320 --> 00:34:15,600 Speaker 1: only has a right to live. Retail is wanted by 637 00:34:15,640 --> 00:34:19,799 Speaker 1: the retailers, by the consumers, and also by the enhancements 638 00:34:19,840 --> 00:34:22,640 Speaker 1: that makes to operating a business. And don't forget the 639 00:34:22,680 --> 00:34:26,879 Speaker 1: personalization it gives. It helps retailers be smarter about who 640 00:34:26,960 --> 00:34:30,279 Speaker 1: their customers are, what their customers want to buy. And 641 00:34:30,520 --> 00:34:33,440 Speaker 1: also they've put in store environments that make us say 642 00:34:33,480 --> 00:34:36,879 Speaker 1: a wow. I think there's an energy to shopping that's 643 00:34:36,920 --> 00:34:39,440 Speaker 1: coming out of some of these retail environments that we 644 00:34:39,520 --> 00:34:41,680 Speaker 1: haven't seen in a while, and you're seeing it in 645 00:34:41,760 --> 00:34:44,239 Speaker 1: pop up shops, and you're seeing it in full price 646 00:34:44,280 --> 00:34:48,160 Speaker 1: stores too well. I find it interesting that you say 647 00:34:48,280 --> 00:34:52,000 Speaker 1: it's a e commerce and brick and mortar story, because 648 00:34:52,160 --> 00:34:54,640 Speaker 1: for me, I almost feel like brick and mortars coming 649 00:34:54,640 --> 00:34:57,440 Speaker 1: back into vogue because you can try things on, you 650 00:34:57,520 --> 00:35:00,400 Speaker 1: can see the product in person, um more so than 651 00:35:00,400 --> 00:35:01,719 Speaker 1: I feel like we haven't really been able to do 652 00:35:02,280 --> 00:35:04,120 Speaker 1: the past two years. Do you see some sort of 653 00:35:04,840 --> 00:35:09,239 Speaker 1: um almost pull away from e commerce because of the 654 00:35:09,400 --> 00:35:12,239 Speaker 1: hassle of return shipping, for example, or some of these 655 00:35:12,320 --> 00:35:15,800 Speaker 1: new retailers adding restocking fees when it comes to returns. 656 00:35:16,880 --> 00:35:19,080 Speaker 1: There could be some of that. I think there's also 657 00:35:19,200 --> 00:35:21,359 Speaker 1: just people have been so cooped up for so long 658 00:35:21,719 --> 00:35:23,919 Speaker 1: they want to get out, and I think they're getting 659 00:35:23,960 --> 00:35:26,200 Speaker 1: out on their terms and their choice. One of the 660 00:35:26,280 --> 00:35:28,040 Speaker 1: things that we've seen is that when you think about 661 00:35:28,080 --> 00:35:30,840 Speaker 1: Black Friday weekend, stores don't need to be open twenty 662 00:35:30,880 --> 00:35:34,839 Speaker 1: four hours a day, and there is definitely more There's 663 00:35:34,880 --> 00:35:36,759 Speaker 1: not the same rush in the beginning of the day 664 00:35:36,760 --> 00:35:38,640 Speaker 1: because you didn't have the door busters that you had 665 00:35:38,680 --> 00:35:41,520 Speaker 1: in years past, So consumers are shopping when they want 666 00:35:41,560 --> 00:35:44,480 Speaker 1: to shop and when it's convenient. Retailers are able to 667 00:35:44,560 --> 00:35:48,320 Speaker 1: schedule their sales associates at some of those more productive times, 668 00:35:48,800 --> 00:35:52,239 Speaker 1: and I think there's justin energy and excitement that's back 669 00:35:52,280 --> 00:35:55,680 Speaker 1: in physical retail that we haven't had in years. Dana Leslie, Um, 670 00:35:56,200 --> 00:35:57,880 Speaker 1: you know, you've told us in the past and others 671 00:35:58,000 --> 00:36:00,440 Speaker 1: have that, you know, for a long time, the retail 672 00:36:00,480 --> 00:36:03,480 Speaker 1: space in this country, the retail footprint was overstored over 673 00:36:03,640 --> 00:36:05,600 Speaker 1: there's too many stores. Where are we in kind of 674 00:36:05,800 --> 00:36:09,279 Speaker 1: right sizing that big we've come. We've right sized at 675 00:36:09,280 --> 00:36:12,239 Speaker 1: a ton given all the closures that happened during the pandemic. 676 00:36:12,640 --> 00:36:14,439 Speaker 1: As a matter of fact, one of the things we've 677 00:36:14,440 --> 00:36:18,279 Speaker 1: seen is the watch list on retailers of concern, it's 678 00:36:18,320 --> 00:36:21,400 Speaker 1: been steady. We haven't seen an uptick. The same retailers 679 00:36:21,440 --> 00:36:23,680 Speaker 1: that we've heard about of concern, whether it's bed Bath, 680 00:36:23,800 --> 00:36:26,920 Speaker 1: whether it's Bulks, whether it's cons whether it's Party City, 681 00:36:27,880 --> 00:36:30,800 Speaker 1: are and Tuesday Morning, those are the same retailers that 682 00:36:30,840 --> 00:36:33,400 Speaker 1: were of concern a year or two years ago. I 683 00:36:33,480 --> 00:36:35,680 Speaker 1: don't have new names added to the list, and that's 684 00:36:35,719 --> 00:36:37,719 Speaker 1: a good sign, all right, Danna Tellsy thank you so 685 00:36:37,880 --> 00:36:39,560 Speaker 1: much for your time. You know this time of year 686 00:36:39,640 --> 00:36:42,160 Speaker 1: is particularly busy for you in your team. Dana Telsey, 687 00:36:42,480 --> 00:36:45,880 Speaker 1: chief Research Officer with Telsey Advisory Group, and folks, literally, 688 00:36:45,960 --> 00:36:48,600 Speaker 1: she is the top retail analysts on Wall Street has 689 00:36:48,680 --> 00:36:52,919 Speaker 1: been for a long time. All right, let's switch gears. 690 00:36:52,920 --> 00:36:56,480 Speaker 1: I'm gonna talk about steelmakers. UM. Really interesting. First of all, 691 00:36:56,520 --> 00:36:59,040 Speaker 1: I love the steel and nothing says Middle America and 692 00:36:59,280 --> 00:37:03,520 Speaker 1: industrial like steel. But New Core, the largest U. S steelmaker, 693 00:37:03,600 --> 00:37:07,160 Speaker 1: warn shareholders that recession concerns could impact a man as 694 00:37:07,200 --> 00:37:10,040 Speaker 1: it looks ahead into the new year. So let's get 695 00:37:10,080 --> 00:37:12,280 Speaker 1: the latest on that. Richard Bork, he's a senior analyst 696 00:37:12,320 --> 00:37:17,920 Speaker 1: that with Basic Materials with Bloomberg Intelligence. He joins us here. So, so, Rich, 697 00:37:18,040 --> 00:37:20,319 Speaker 1: what are we hearing from New Cora and and how 698 00:37:20,360 --> 00:37:24,560 Speaker 1: are investors reacting? Well? I think if you kind of 699 00:37:24,600 --> 00:37:27,680 Speaker 1: take a step back, UM, steal stocks have performed really 700 00:37:27,760 --> 00:37:34,719 Speaker 1: well this year, especially considerative prices steel down. So with 701 00:37:34,920 --> 00:37:39,080 Speaker 1: recession talk heating up and uncertainty concerning that, UM, I 702 00:37:39,080 --> 00:37:42,080 Speaker 1: wouldn't be surprised if investors are starting to take way 703 00:37:42,120 --> 00:37:47,200 Speaker 1: off the table here. But really, the demand uncertainty is 704 00:37:47,560 --> 00:37:51,080 Speaker 1: really more long term issue because in the short term 705 00:37:51,160 --> 00:37:55,200 Speaker 1: we have a very favorable set up um entering December 706 00:37:55,320 --> 00:37:57,640 Speaker 1: all the mills and now it's a sixty dollars a 707 00:37:57,760 --> 00:38:01,240 Speaker 1: ton price increase which seems to be kicking, and Cleveland 708 00:38:01,239 --> 00:38:05,080 Speaker 1: Clifts this week announced the second increase. Also a main 709 00:38:05,719 --> 00:38:09,520 Speaker 1: UM service centers, which are one of their main customers, 710 00:38:09,760 --> 00:38:15,160 Speaker 1: have announced raising prices also, so so we're seeing price 711 00:38:15,280 --> 00:38:20,200 Speaker 1: outlook a little more favorable after six the client um. Yeah, 712 00:38:20,320 --> 00:38:24,720 Speaker 1: this year also historically we're heading into a seasonally stronger 713 00:38:24,840 --> 00:38:29,280 Speaker 1: period as customers start to stock up have a construction season, 714 00:38:30,280 --> 00:38:33,919 Speaker 1: and in contrast at times in the past there's been good, 715 00:38:34,840 --> 00:38:38,400 Speaker 1: good supply discipline through the value chain. Demands slowed in 716 00:38:38,440 --> 00:38:42,920 Speaker 1: the second half of two Mills cut back on production 717 00:38:43,120 --> 00:38:48,360 Speaker 1: by extending maintenance ovledges and island assets. Service centers reduced inventory. 718 00:38:48,440 --> 00:38:54,720 Speaker 1: As a year end, manufacturers cut back. UM customers indicate 719 00:38:54,800 --> 00:38:57,560 Speaker 1: that leak times are extending and mills are less willing 720 00:38:57,640 --> 00:39:01,680 Speaker 1: to negotiate on prices and they want to increases. Imports 721 00:39:01,719 --> 00:39:07,120 Speaker 1: are down. Um US prices are actually less than import prices, 722 00:39:07,280 --> 00:39:10,120 Speaker 1: so we shouldn't have any pressure from imports. You know, 723 00:39:10,200 --> 00:39:12,360 Speaker 1: in the NERT terms so all all this sets up 724 00:39:12,400 --> 00:39:17,240 Speaker 1: too for a good start to year, but everybody's concerned 725 00:39:17,239 --> 00:39:20,680 Speaker 1: a longer term if there's a recession being on the table. 726 00:39:21,600 --> 00:39:24,160 Speaker 1: So rich give us a sense of just today in 727 00:39:24,520 --> 00:39:28,640 Speaker 1: our country, how much of our steel is sourced domestically 728 00:39:28,760 --> 00:39:34,080 Speaker 1: versus imported, and maybe how's how's that changed over time? UM. So, basically, 729 00:39:35,320 --> 00:39:37,840 Speaker 1: if you look at the industry and things are just 730 00:39:38,080 --> 00:39:41,320 Speaker 1: kind of rough terms, UM, the U S steel industry 731 00:39:42,080 --> 00:39:45,920 Speaker 1: require consumers require a little more heart million tons of 732 00:39:46,000 --> 00:39:52,080 Speaker 1: steel a year, and normally the US ump I can 733 00:39:52,160 --> 00:39:55,960 Speaker 1: supply about eighty millions, so we do need imports for 734 00:39:56,000 --> 00:39:59,600 Speaker 1: another twenty or so. So this is kind of bounced 735 00:39:59,640 --> 00:40:02,640 Speaker 1: around in the over the last few years. But what's 736 00:40:02,680 --> 00:40:07,440 Speaker 1: happened is such a two thirty two gave UM and 737 00:40:07,600 --> 00:40:11,239 Speaker 1: all you know, you've seen new course steal dynamics, UM 738 00:40:11,560 --> 00:40:15,239 Speaker 1: U S Steel. All of them kind of said, you 739 00:40:15,320 --> 00:40:18,440 Speaker 1: know what such a two two protection is, Maybe we 740 00:40:18,560 --> 00:40:23,640 Speaker 1: can permanently displace imports by building new mills. So they've 741 00:40:23,680 --> 00:40:27,080 Speaker 1: all kind of embarked on construction of various new mills 742 00:40:27,200 --> 00:40:30,239 Speaker 1: over the last few years, and with the thought that 743 00:40:30,480 --> 00:40:36,239 Speaker 1: that that once to thirty two tariffs expire. Um. You know, 744 00:40:36,400 --> 00:40:41,120 Speaker 1: these new mills will permanently displace the imports and in 745 00:40:41,200 --> 00:40:44,320 Speaker 1: the past, so we should see imports trend down in 746 00:40:44,400 --> 00:40:48,360 Speaker 1: the future. And you know, like I mentioned earlier, you 747 00:40:48,400 --> 00:40:53,600 Speaker 1: know we've seen that US actually um domestic prices, you 748 00:40:53,719 --> 00:40:57,719 Speaker 1: are actually cheaper imports steel when you account for kind 749 00:40:57,760 --> 00:41:00,759 Speaker 1: of travel, you know, the free cost everything to get 750 00:41:00,920 --> 00:41:04,600 Speaker 1: over to the US. Alright, good stuff. We don't talk 751 00:41:04,600 --> 00:41:07,000 Speaker 1: about steal enough. And that's the backbone of a lot 752 00:41:07,080 --> 00:41:10,720 Speaker 1: of stuff that gets built. Yeah, Richard Bork's a senior Analds. 753 00:41:10,719 --> 00:41:13,240 Speaker 1: He covers the basic materials and nothing is more basic, 754 00:41:13,520 --> 00:41:16,560 Speaker 1: uh than steel. He does that for Bloomberg Intelligence, joining 755 00:41:16,600 --> 00:41:18,880 Speaker 1: us via phone and new Core, which you know, I 756 00:41:18,960 --> 00:41:20,640 Speaker 1: was looking at new Court's got you know, thirty five 757 00:41:20,640 --> 00:41:22,960 Speaker 1: billion dollar market cap, and then I look at you know, 758 00:41:23,239 --> 00:41:28,160 Speaker 1: US Steel and I thought that was always the biggest steelmaker, 759 00:41:28,800 --> 00:41:30,440 Speaker 1: but it's not. It's one of the smaller ones. Sound's 760 00:41:30,480 --> 00:41:32,400 Speaker 1: got a market cap of five point eight billion dollars, 761 00:41:32,440 --> 00:41:35,040 Speaker 1: so that the market share, the dynamics of the U 762 00:41:35,120 --> 00:41:37,680 Speaker 1: S steel businesses has really changed over the last couple 763 00:41:37,760 --> 00:41:40,640 Speaker 1: of decades. But new Core again the biggest ones calling 764 00:41:40,680 --> 00:41:43,520 Speaker 1: out some recession concerns and how that might impact uh 765 00:41:43,640 --> 00:41:45,960 Speaker 1: their business in so, we thought we'd get rich On 766 00:41:46,040 --> 00:41:47,560 Speaker 1: to kind of get a lay of the land and 767 00:41:47,719 --> 00:41:54,640 Speaker 1: all things steal. Thanks for listening to the Bloomberg Markets podcast. 768 00:41:55,080 --> 00:41:58,239 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 769 00:41:58,440 --> 00:42:01,880 Speaker 1: or whatever podcast plas form you prefer. I'm Matt Miller, 770 00:42:02,160 --> 00:42:06,400 Speaker 1: I'm on Twitter at Matt Miller three, and I'm fall Sweeney. 771 00:42:06,400 --> 00:42:09,040 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 772 00:42:09,080 --> 00:42:11,479 Speaker 1: can always catch us worldwide at Bloomberg Radio.