1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along 2 00:00:04,160 --> 00:00:06,240 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:09,240 Speaker 1: we bring you interviews from CEOs, A market pros, and 4 00:00:09,400 --> 00:00:12,799 Speaker 1: Bloomberg experts, along with essential market moving news. Kind the 5 00:00:12,800 --> 00:00:16,320 Speaker 1: Bloomberg Markets Podcast on Apple podcast or wherever you listen 6 00:00:16,360 --> 00:00:20,799 Speaker 1: to podcasts, and on Bloomberg dot com. It is time 7 00:00:20,840 --> 00:00:24,720 Speaker 1: now to get to our next guests. Currency guest, but 8 00:00:25,000 --> 00:00:27,200 Speaker 1: one of the best because he used to cover emerging 9 00:00:27,200 --> 00:00:29,920 Speaker 1: market currencies. Now he covers everything and he really just 10 00:00:29,960 --> 00:00:33,720 Speaker 1: knows everything about everything. Wentin of Brown Brothers Harmon. Thanks 11 00:00:33,800 --> 00:00:36,959 Speaker 1: for joining us today. Hi FI always a picture. Thank 12 00:00:37,000 --> 00:00:39,000 Speaker 1: you so when you know, I'd love to talk about 13 00:00:39,040 --> 00:00:40,960 Speaker 1: emerging market currencies, but I do want to ask you 14 00:00:41,000 --> 00:00:44,440 Speaker 1: first about this spot, which is really more than a spot. 15 00:00:44,440 --> 00:00:46,480 Speaker 1: I shouldn't call it a bat between the US and China. 16 00:00:46,680 --> 00:00:49,680 Speaker 1: It's pumping up again President Trump, you know, throwing in 17 00:00:49,720 --> 00:00:52,879 Speaker 1: a threat. Perhaps it's too distract from other things. Perhaps 18 00:00:52,880 --> 00:00:55,880 Speaker 1: it's for real, as they say, how are you reading it? 19 00:00:55,920 --> 00:01:00,760 Speaker 1: And will it affect the dollar longer term? As you know, 20 00:01:00,920 --> 00:01:02,960 Speaker 1: the markets have been struggling with the U S China 21 00:01:03,040 --> 00:01:06,160 Speaker 1: struggle really for for several years now, right, it started 22 00:01:06,200 --> 00:01:09,800 Speaker 1: off with the trade war, No certaint you know something 23 00:01:09,840 --> 00:01:13,399 Speaker 1: I think even deeper and such structurally more profound. You 24 00:01:13,520 --> 00:01:16,240 Speaker 1: I think, regardless of who the next president is, I 25 00:01:16,280 --> 00:01:19,399 Speaker 1: think the US China relations have h well, you know, 26 00:01:19,520 --> 00:01:22,600 Speaker 1: have changed um forever. I mean, if you look at 27 00:01:22,600 --> 00:01:27,080 Speaker 1: the poles um voters in in the US cross party lines, 28 00:01:27,160 --> 00:01:31,320 Speaker 1: both Democrats and Republicans all favor taking a tougher line 29 00:01:31,360 --> 00:01:36,000 Speaker 1: against China, against the perceiving fractions, etcetera. So whether it's 30 00:01:36,240 --> 00:01:39,400 Speaker 1: Mr Biden or whether this Mr Trump, um, you know, 31 00:01:39,600 --> 00:01:41,880 Speaker 1: both administrations I think will continue on this tough line 32 00:01:41,880 --> 00:01:45,760 Speaker 1: with China. Yeah. And what will that do to the 33 00:01:45,840 --> 00:01:49,560 Speaker 1: US dollar? Because we definitely saw you know, big weakening 34 00:01:49,560 --> 00:01:51,240 Speaker 1: in the dollar last week. It wasn't just on the 35 00:01:51,320 --> 00:01:53,840 Speaker 1: China news, but you know it was ninety two and 36 00:01:53,920 --> 00:01:57,639 Speaker 1: change on d x y. We've strengthened a little bit again. 37 00:01:58,280 --> 00:02:03,920 Speaker 1: Will there be any the impact even if this continues? Well, 38 00:02:03,920 --> 00:02:07,440 Speaker 1: what we saw back last year was, you know, during 39 00:02:07,600 --> 00:02:10,520 Speaker 1: when the trade war erupted and really got tense, the 40 00:02:10,600 --> 00:02:13,519 Speaker 1: dollars tend to strengthen, especially against emerging markets, right, because 41 00:02:13,840 --> 00:02:15,919 Speaker 1: it's not just China, it's all the countries in sort 42 00:02:15,919 --> 00:02:20,720 Speaker 1: of the wider China orbit. UM. You know, China imports UH, commodity, 43 00:02:20,919 --> 00:02:23,720 Speaker 1: et cetera from other countries. So it's it's really you know, 44 00:02:23,760 --> 00:02:25,639 Speaker 1: part of it, you know, sort of a big cog 45 00:02:25,840 --> 00:02:29,400 Speaker 1: cog in the whole global trading regime. So to me, 46 00:02:29,480 --> 00:02:32,960 Speaker 1: that's the risk UM that you know, a a UM, 47 00:02:33,800 --> 00:02:37,400 Speaker 1: it's a prolonged or renewed tensions in the US China 48 00:02:37,440 --> 00:02:39,960 Speaker 1: would a two things, probably boost the dollars for safe 49 00:02:39,960 --> 00:02:44,040 Speaker 1: haven and most likely UM put down depression on equities. 50 00:02:44,040 --> 00:02:46,040 Speaker 1: You know, we saw that last year. I think that's 51 00:02:46,040 --> 00:02:48,480 Speaker 1: what dynamic would take place. Now what's interesting to me 52 00:02:48,560 --> 00:02:50,920 Speaker 1: is that, you know, and Mr Trump is sort of 53 00:02:51,000 --> 00:02:53,000 Speaker 1: kind of eased off that a little bit. UM. And 54 00:02:53,040 --> 00:02:54,359 Speaker 1: but now I think, as you pointed out, you know, 55 00:02:54,360 --> 00:02:57,040 Speaker 1: we're going into prime election season, and it seems you're 56 00:02:57,040 --> 00:02:58,840 Speaker 1: trying to find some sort of message that's going to 57 00:02:58,880 --> 00:03:03,040 Speaker 1: resonate with voters. UM myself personally, I look at the 58 00:03:03,040 --> 00:03:05,600 Speaker 1: polls and and see that most voters at this point 59 00:03:05,720 --> 00:03:10,200 Speaker 1: really we're most worried about the pandemic and the domestic economy. 60 00:03:10,440 --> 00:03:13,200 Speaker 1: China seems a little bit lower on the list, and 61 00:03:13,240 --> 00:03:16,120 Speaker 1: so also I do suspect this, this, this will not 62 00:03:16,160 --> 00:03:19,320 Speaker 1: get that much traction. And Mr Trump me go on 63 00:03:19,400 --> 00:03:22,600 Speaker 1: the next message. So, if we don't have to worry 64 00:03:22,600 --> 00:03:24,919 Speaker 1: so much about the dollar, where are you looking around 65 00:03:24,919 --> 00:03:29,480 Speaker 1: for value in currencies? We saw the g B P 66 00:03:29,600 --> 00:03:32,160 Speaker 1: U S D weekend today a little bit sterling trading 67 00:03:32,200 --> 00:03:34,360 Speaker 1: at one thirty twenty six, but it had been strengthening. 68 00:03:34,400 --> 00:03:37,280 Speaker 1: So there's that. We have the Canadian dollar almost at 69 00:03:37,280 --> 00:03:40,720 Speaker 1: one thirty two right now and the end below one 70 00:03:40,720 --> 00:03:43,080 Speaker 1: oh six, so there's definitely movement out there when but 71 00:03:43,200 --> 00:03:47,560 Speaker 1: where are you finding the most buying for your book? Literally? Yeah, 72 00:03:47,600 --> 00:03:49,360 Speaker 1: So if I'm glad you brought that, because it's is 73 00:03:49,360 --> 00:03:51,600 Speaker 1: something that myself and I think a few other analysts 74 00:03:51,640 --> 00:03:53,840 Speaker 1: have been talking about that. You know, in the past 75 00:03:53,880 --> 00:03:56,120 Speaker 1: you could talk about interest rate differentials as as a 76 00:03:56,160 --> 00:03:59,400 Speaker 1: big driver for currencies, and that's just no longer the case. 77 00:03:59,400 --> 00:04:02,760 Speaker 1: We've got zero of rates basic basically across developed markets 78 00:04:02,760 --> 00:04:06,480 Speaker 1: and even in across many emerging markets. So instead of 79 00:04:06,760 --> 00:04:09,400 Speaker 1: the carry and sort of intertect differentials, I think investors 80 00:04:09,520 --> 00:04:13,280 Speaker 1: are focusing really purely on the fundamentals and and relative 81 00:04:13,440 --> 00:04:17,920 Speaker 1: economic growth potential and differentials. So where does that put us? Well, 82 00:04:18,200 --> 00:04:19,479 Speaker 1: you know, I've been as you probably know, I've been 83 00:04:19,520 --> 00:04:22,080 Speaker 1: pretty negative on the dollar in two three just because 84 00:04:22,279 --> 00:04:25,440 Speaker 1: you've really I think mishandled this virus. It's been much 85 00:04:25,480 --> 00:04:27,600 Speaker 1: worse than it had to be, and I think the 86 00:04:27,680 --> 00:04:30,679 Speaker 1: US economy has been underperforming. But what we're seeing around 87 00:04:30,680 --> 00:04:33,040 Speaker 1: the world now is that those countries that started to 88 00:04:33,040 --> 00:04:37,560 Speaker 1: reopen or having trouble right We're seeing problems in Italy, France, Germany, 89 00:04:38,200 --> 00:04:41,640 Speaker 1: in Asia. So it's it's sort of almost a moving target, 90 00:04:41,640 --> 00:04:45,520 Speaker 1: like who's what's what's looking worse right now? Um So, 91 00:04:45,600 --> 00:04:48,400 Speaker 1: I remain negative on the US dollar in your term, 92 00:04:48,520 --> 00:04:51,240 Speaker 1: We've got to get these virus numbers that control. Um 93 00:04:51,320 --> 00:04:53,000 Speaker 1: you know, I think China is a good story they 94 00:04:53,160 --> 00:04:55,559 Speaker 1: you know, of all these other countries around the world, 95 00:04:55,560 --> 00:04:58,280 Speaker 1: it's it seems to be done the best in in 96 00:04:58,360 --> 00:05:02,119 Speaker 1: really keeping the virus numbers down. So China, Emerging Asia, 97 00:05:02,160 --> 00:05:04,280 Speaker 1: I think hold the best eye right now in terms 98 00:05:04,320 --> 00:05:07,960 Speaker 1: of relative fundamentals and relative growth Latin Americans and is 99 00:05:08,040 --> 00:05:10,040 Speaker 1: just like he has in the US. Just we're struggling 100 00:05:10,040 --> 00:05:14,240 Speaker 1: with the virus, struggling to keep economic growth. Um So 101 00:05:14,279 --> 00:05:17,039 Speaker 1: it's really I think for fundamental person like myself, you know, 102 00:05:17,080 --> 00:05:20,400 Speaker 1: fundamentally focused investors and analysts, this is really where it 103 00:05:20,440 --> 00:05:22,800 Speaker 1: becomes important. And I think that we really have to 104 00:05:22,839 --> 00:05:26,839 Speaker 1: pay attention here. Yeah. So obviously we're in a coronavirus era, 105 00:05:27,520 --> 00:05:29,760 Speaker 1: and so you're saying that until that era is over, 106 00:05:30,040 --> 00:05:32,839 Speaker 1: you would look at certain countries very differently than you 107 00:05:32,920 --> 00:05:35,640 Speaker 1: might if we were not on a coronavirus era, such 108 00:05:35,680 --> 00:05:40,719 Speaker 1: as emerging Asia and parts of Latin America and not 109 00:05:40,720 --> 00:05:43,600 Speaker 1: not all of Latin America. But does that mean, for example, 110 00:05:43,640 --> 00:05:47,279 Speaker 1: that you would consider, you know, currencies where you wouldn't 111 00:05:47,360 --> 00:05:50,360 Speaker 1: normally and I say normally pre pandemic and post pandemic 112 00:05:50,400 --> 00:05:55,839 Speaker 1: invest Yes, I mean, I think what you know. I 113 00:05:55,839 --> 00:05:59,599 Speaker 1: think that, for instance, we've always seen um emerging markets, 114 00:05:59,760 --> 00:06:04,800 Speaker 1: a lot of high carey countries sort of Brazil, Turkey, um, 115 00:06:05,160 --> 00:06:09,600 Speaker 1: South Africa. They tended to gain during risk on training. 116 00:06:09,640 --> 00:06:12,240 Speaker 1: But now and again with basically zero rates, there's no 117 00:06:12,320 --> 00:06:16,760 Speaker 1: Crishian there, there's no yield or carriage that attracts um 118 00:06:17,400 --> 00:06:19,680 Speaker 1: UH invest in closes these countries, which to me have 119 00:06:19,839 --> 00:06:24,120 Speaker 1: arguably amongst the worst fundamentals. So within the e M, 120 00:06:24,160 --> 00:06:26,760 Speaker 1: it's it's fascinating to me that there's such a divergence 121 00:06:26,760 --> 00:06:29,599 Speaker 1: in performance um even during this sort of risk on 122 00:06:30,200 --> 00:06:33,120 Speaker 1: um environment we really saw in the last several months. 123 00:06:33,839 --> 00:06:36,880 Speaker 1: So again I would just again caution investors to to 124 00:06:37,040 --> 00:06:41,279 Speaker 1: really not buy things sort of wholesale that is, you know, look, 125 00:06:41,560 --> 00:06:46,440 Speaker 1: look differentiate, look at the aversion fundamentals, you know, within 126 00:06:46,480 --> 00:06:49,679 Speaker 1: asset classes, and that's that's that's very important to remember 127 00:06:49,680 --> 00:06:52,520 Speaker 1: as you're going to Q four. Where do you like 128 00:06:52,600 --> 00:06:59,279 Speaker 1: in Emerging Asia? I think, um, Singapore, Korea, China. You know, 129 00:06:59,320 --> 00:07:01,920 Speaker 1: they again these countries, you know, they're still struggling obviously 130 00:07:02,000 --> 00:07:05,120 Speaker 1: to to maintain low virus numbers. They've done a fantastic 131 00:07:05,200 --> 00:07:08,200 Speaker 1: job um and without having to shut down the economy 132 00:07:08,880 --> 00:07:11,800 Speaker 1: as as as uh these day, as we have elsewhere 133 00:07:11,840 --> 00:07:15,920 Speaker 1: in Europe and here in in North America. So Taiwan 134 00:07:15,960 --> 00:07:17,520 Speaker 1: I would go in that as well. You know, again, 135 00:07:17,760 --> 00:07:20,360 Speaker 1: the China story is solid and it's going to bring 136 00:07:20,400 --> 00:07:24,120 Speaker 1: up a lot of these other other regional economies as well. Um. 137 00:07:24,160 --> 00:07:26,400 Speaker 1: You know, it's it's not perfect. You know, China has 138 00:07:26,400 --> 00:07:28,560 Speaker 1: its issues. You know, I think as you as we've 139 00:07:28,560 --> 00:07:30,880 Speaker 1: been talking about this, this issue with the U S 140 00:07:30,880 --> 00:07:34,120 Speaker 1: could flare up and could harm sentiment. But for now, 141 00:07:34,160 --> 00:07:37,160 Speaker 1: I think investors are pretty comfortable with the China recovery story. 142 00:07:37,640 --> 00:07:39,920 Speaker 1: You look at am I numbers and an export numbers 143 00:07:40,400 --> 00:07:42,239 Speaker 1: China just as they lead the sort of the world 144 00:07:42,240 --> 00:07:45,720 Speaker 1: downward during this coronavirus, leaving the world world upward in 145 00:07:45,760 --> 00:07:48,160 Speaker 1: the recovery. And again it's I think we all have 146 00:07:48,200 --> 00:07:51,080 Speaker 1: to focus on which countries have done the best in 147 00:07:51,080 --> 00:07:54,600 Speaker 1: in limiting the pandemic impact. You know, another reason I'm 148 00:07:54,640 --> 00:07:56,560 Speaker 1: negative on the US is we still can't get another 149 00:07:56,600 --> 00:07:59,760 Speaker 1: studless book past, and I think it's very crucial. And 150 00:08:00,600 --> 00:08:02,840 Speaker 1: you know, I would have thought we've had something in 151 00:08:02,880 --> 00:08:06,520 Speaker 1: the in the bank bank by now, but um, I mean, 152 00:08:06,520 --> 00:08:08,600 Speaker 1: it's unreal that it's fifty six days to the election 153 00:08:08,600 --> 00:08:12,080 Speaker 1: and we still have nothing. Very briefly starting, why is 154 00:08:12,120 --> 00:08:15,240 Speaker 1: it not reacting more? Our investors not taking the possibility 155 00:08:15,240 --> 00:08:19,480 Speaker 1: of a worse break sit seriously? Yeah, so what look 156 00:08:19,520 --> 00:08:24,040 Speaker 1: it did we have seen throwing U be the worst 157 00:08:24,040 --> 00:08:26,640 Speaker 1: performance today? And I think over the last week it's 158 00:08:26,640 --> 00:08:30,200 Speaker 1: pretty clear that that they're the odds of a no 159 00:08:30,320 --> 00:08:33,600 Speaker 1: deal Brexit are are rising their higher than I think 160 00:08:33,679 --> 00:08:36,600 Speaker 1: many has expected. Mr Johnson, you know, through our monkey 161 00:08:36,640 --> 00:08:38,640 Speaker 1: mentions and the works by saying he may just throw 162 00:08:38,679 --> 00:08:41,760 Speaker 1: out parts of you know, withdrawalogy, which is against I 163 00:08:41,960 --> 00:08:45,160 Speaker 1: I believe against international law. Uh So it's just to me, 164 00:08:45,200 --> 00:08:47,880 Speaker 1: it's a big mess. Um. I think what most people 165 00:08:47,880 --> 00:08:49,680 Speaker 1: are comfortable with. It's not going to be a huge 166 00:08:49,760 --> 00:08:54,600 Speaker 1: sort of um global can cast. I think most agents 167 00:08:54,679 --> 00:08:57,720 Speaker 1: have have sort of prepared for this um and and 168 00:08:57,800 --> 00:09:01,520 Speaker 1: so the impact will not be huge globally. But throwing 169 00:09:01,559 --> 00:09:04,560 Speaker 1: it's pretty negative. Yeah, that's for sure. Win, thank you 170 00:09:04,640 --> 00:09:07,360 Speaker 1: so much. That's when thin of Brown Brothers Harriman so 171 00:09:07,440 --> 00:09:12,679 Speaker 1: much appreciated. That's a serious story that Greg Jared just 172 00:09:12,880 --> 00:09:16,640 Speaker 1: told us about JP Morgan issuing about two eighty thousand 173 00:09:16,679 --> 00:09:20,200 Speaker 1: loans in the p p P. Those loans told more 174 00:09:20,240 --> 00:09:23,760 Speaker 1: than twenty nine billion dollars with a b so. JP 175 00:09:23,880 --> 00:09:26,280 Speaker 1: Morgan was the top p p P lender in the 176 00:09:26,320 --> 00:09:29,000 Speaker 1: country according to SPA data. And if it's now looking 177 00:09:29,080 --> 00:09:33,680 Speaker 1: into instances, we don't know how many in which COVID 178 00:09:33,720 --> 00:09:37,000 Speaker 1: relief funds were misused by customers and as probing employees 179 00:09:37,080 --> 00:09:40,000 Speaker 1: involvement in the illegal activities, you can be sure we're 180 00:09:40,040 --> 00:09:43,200 Speaker 1: here a lot a lot more about that. All right, 181 00:09:43,240 --> 00:09:45,200 Speaker 1: let's bring in somebody who knows a lot about what's 182 00:09:45,200 --> 00:09:47,240 Speaker 1: going on in the NASDAC right now, and that is 183 00:09:47,480 --> 00:09:51,160 Speaker 1: David Garrity of laid Law and also bt Block. David, 184 00:09:51,160 --> 00:09:54,480 Speaker 1: thanks for joining. How concerned are you that now we're 185 00:09:54,520 --> 00:09:57,040 Speaker 1: you know, in the last three sessions or so, we're 186 00:09:57,240 --> 00:10:03,080 Speaker 1: at around about eight to nine percent drop for the deck. Yeah, Vanni. 187 00:10:03,160 --> 00:10:05,680 Speaker 1: In terms of looking at the price action that we 188 00:10:05,760 --> 00:10:08,360 Speaker 1: had going into the end of August, you certainly had 189 00:10:08,400 --> 00:10:12,200 Speaker 1: a asymptotic move to the upside by the likes of 190 00:10:12,320 --> 00:10:15,679 Speaker 1: Apple as well as Tesla going into their splits um. 191 00:10:15,760 --> 00:10:18,880 Speaker 1: Certainly we've had the news about the options market activity 192 00:10:19,200 --> 00:10:22,040 Speaker 1: that have been taking place. So to have the market 193 00:10:22,080 --> 00:10:26,680 Speaker 1: back now nine percent below its highs um as that 194 00:10:26,760 --> 00:10:29,920 Speaker 1: tends more volatile, we don't think we necessarily going to 195 00:10:30,000 --> 00:10:33,040 Speaker 1: be finished with this correction as of today. It may 196 00:10:33,120 --> 00:10:36,640 Speaker 1: have a little bit further to run. Are there stocks 197 00:10:36,679 --> 00:10:38,840 Speaker 1: that you would pile into right now though, even if 198 00:10:39,240 --> 00:10:40,880 Speaker 1: there is a little more to run, or would you 199 00:10:40,880 --> 00:10:44,120 Speaker 1: wait for another while? Or are we getting to the 200 00:10:44,200 --> 00:10:47,360 Speaker 1: stage where we'll see stocks correctly valued as opposed to 201 00:10:47,400 --> 00:10:50,760 Speaker 1: under valued. I think that your last point here in 202 00:10:50,840 --> 00:10:53,479 Speaker 1: terms of trying to get to a more correct valuation 203 00:10:53,880 --> 00:10:57,880 Speaker 1: is probably the most appropriate point. Um. We have to 204 00:10:57,880 --> 00:11:02,920 Speaker 1: take into account the fact the prospects for further fiscal stimulus, 205 00:11:02,960 --> 00:11:06,800 Speaker 1: at least prior to the election in November, are most 206 00:11:06,840 --> 00:11:10,480 Speaker 1: likely being put squarely on the sidelines. So there is 207 00:11:10,520 --> 00:11:12,360 Speaker 1: nothing that's going to be coming over the hill, so 208 00:11:12,400 --> 00:11:15,760 Speaker 1: to speak, in terms of further spending UH to support 209 00:11:15,840 --> 00:11:18,720 Speaker 1: the US economy, and certainly that has knock on effects 210 00:11:18,720 --> 00:11:21,800 Speaker 1: for the global economy. Um. And at the same time, 211 00:11:21,960 --> 00:11:25,040 Speaker 1: absent that support. The drumbeat of bad news in terms 212 00:11:25,040 --> 00:11:28,800 Speaker 1: of layoffs, whether it's coming from airlines, banks or other places, 213 00:11:28,920 --> 00:11:31,960 Speaker 1: is probably going to become more significant. And you know, 214 00:11:32,040 --> 00:11:34,280 Speaker 1: in the meanwhile, we always have the news about you know, 215 00:11:34,360 --> 00:11:37,679 Speaker 1: the second wave if you will, of coronavirus infections. So 216 00:11:37,960 --> 00:11:41,520 Speaker 1: you know, on balance, um, people were quite a brilliant 217 00:11:41,760 --> 00:11:45,560 Speaker 1: going into the late summer, and unfortunately fall brings along 218 00:11:45,600 --> 00:11:50,560 Speaker 1: with the cooler temperatures perhaps a cooler perspective, David. The 219 00:11:50,600 --> 00:11:53,200 Speaker 1: options activity that you were talking about, you know, religio 220 00:11:53,240 --> 00:11:55,720 Speaker 1: to soft bank and so on, How serious is that 221 00:11:55,920 --> 00:12:00,640 Speaker 1: for trading going forward? Will have any impact? Um? I 222 00:12:00,679 --> 00:12:04,120 Speaker 1: mean to the extent we don't know necessarily what were 223 00:12:04,240 --> 00:12:07,320 Speaker 1: what was the maturity or what was the term on 224 00:12:07,400 --> 00:12:10,480 Speaker 1: the options contracts that were involved, To the extent that 225 00:12:10,520 --> 00:12:13,440 Speaker 1: they appear to have been fairly significant relative to the 226 00:12:13,520 --> 00:12:16,840 Speaker 1: ramp up in the shares um, we would think that 227 00:12:16,880 --> 00:12:20,840 Speaker 1: the options contracts themselves were perhaps relatively short term, in 228 00:12:20,880 --> 00:12:24,079 Speaker 1: which case, um, you know, the impact of those contracts 229 00:12:24,840 --> 00:12:28,960 Speaker 1: should wash out fairly frequently. Nevertheless, it probably leaves us 230 00:12:28,960 --> 00:12:32,720 Speaker 1: in a position here where the month of September um 231 00:12:32,880 --> 00:12:35,640 Speaker 1: is going to be obviously ordered, started volatile, but it's 232 00:12:35,679 --> 00:12:38,880 Speaker 1: likely to continue to be so. And that more, it's 233 00:12:38,920 --> 00:12:40,719 Speaker 1: going to be the earning season that we start to 234 00:12:40,720 --> 00:12:45,000 Speaker 1: get announced in October for the third quarter of that 235 00:12:45,080 --> 00:12:47,920 Speaker 1: will serve to stabilize things and give a better prospect 236 00:12:47,920 --> 00:12:50,800 Speaker 1: in terms of where are the valuations reasonable in terms 237 00:12:50,800 --> 00:12:52,920 Speaker 1: of the prices in the market relative to the earnings 238 00:12:52,960 --> 00:12:58,200 Speaker 1: prospects of the companies involved. So, David, perfect news for you. 239 00:12:58,280 --> 00:13:00,360 Speaker 1: We just got the word that Apple is going to 240 00:13:00,400 --> 00:13:03,800 Speaker 1: hold an online event September where the company is expected 241 00:13:03,840 --> 00:13:06,760 Speaker 1: to unveil its latest iPhones and Apple Watches. It's going 242 00:13:06,800 --> 00:13:09,840 Speaker 1: to start at ten am Pacific time one pm Eastern. 243 00:13:10,120 --> 00:13:12,000 Speaker 1: What should we look forward to from Apple in this 244 00:13:12,120 --> 00:13:16,240 Speaker 1: round of innovation. Well, certainly the biggest thing to look 245 00:13:16,280 --> 00:13:19,520 Speaker 1: for from Apple is going to be the latest edition 246 00:13:19,520 --> 00:13:22,200 Speaker 1: of the iPhone, which is going to be engineered to 247 00:13:22,240 --> 00:13:25,120 Speaker 1: be using the five G wireless spectrum and in this 248 00:13:25,280 --> 00:13:30,520 Speaker 1: regard considered to be possibly a transformative product for Apple. 249 00:13:30,800 --> 00:13:33,439 Speaker 1: Certainly it's been an element that's been responsible for the 250 00:13:33,520 --> 00:13:36,840 Speaker 1: run up and the shares um probably over the last 251 00:13:36,880 --> 00:13:39,080 Speaker 1: three to four months. Maybe if you want to go 252 00:13:39,120 --> 00:13:42,760 Speaker 1: back further and look at the March lows so clearly 253 00:13:42,760 --> 00:13:46,440 Speaker 1: allowed the expectations they're already baked into the market. Um. 254 00:13:46,520 --> 00:13:48,000 Speaker 1: Nice to know that we're going to be getting something 255 00:13:48,000 --> 00:13:51,000 Speaker 1: to look forward to in the fifteen September um, and 256 00:13:51,040 --> 00:13:53,200 Speaker 1: we'll be looking for what the surprises are on the margin. 257 00:13:53,280 --> 00:13:55,320 Speaker 1: But the five G I phone is the big ticket. 258 00:13:56,360 --> 00:14:00,680 Speaker 1: So why put so much and for this on five 259 00:14:00,760 --> 00:14:02,599 Speaker 1: G when really you know there's a lot of the 260 00:14:02,640 --> 00:14:04,520 Speaker 1: country that is not going to be able to benefit 261 00:14:04,520 --> 00:14:06,200 Speaker 1: from that. I mean we're really only talking about the 262 00:14:06,240 --> 00:14:09,200 Speaker 1: major cities and not even all of those major cities 263 00:14:09,240 --> 00:14:13,360 Speaker 1: that have five G right now. No, it's true, um, 264 00:14:13,400 --> 00:14:16,600 Speaker 1: but if we look at what the services are that 265 00:14:16,760 --> 00:14:20,720 Speaker 1: can be facilitated as a result of having the speed 266 00:14:21,200 --> 00:14:25,120 Speaker 1: that five G will offer, it can be a substantially 267 00:14:25,320 --> 00:14:29,480 Speaker 1: different user experience. UM, and you have to look at 268 00:14:29,560 --> 00:14:31,560 Speaker 1: you know, what's going to be capable in terms of 269 00:14:31,560 --> 00:14:36,240 Speaker 1: providing more information by way of video at faster rates. 270 00:14:36,320 --> 00:14:39,280 Speaker 1: And arguably you may say it's the cities that have 271 00:14:39,400 --> 00:14:42,760 Speaker 1: most of the coverage right now, but UM absent COVID, 272 00:14:43,240 --> 00:14:45,520 Speaker 1: that's where most of the people or most of the 273 00:14:45,520 --> 00:14:48,880 Speaker 1: cell phone users tend to be UM. So you know, 274 00:14:49,000 --> 00:14:51,760 Speaker 1: looking at five G we're not so far out from 275 00:14:51,800 --> 00:14:54,520 Speaker 1: the deployment of five gene networks that this is something 276 00:14:54,560 --> 00:14:58,040 Speaker 1: of a product that comes out before there's really a 277 00:14:58,080 --> 00:15:00,520 Speaker 1: market for it. I think the timing on Apple support 278 00:15:00,560 --> 00:15:04,440 Speaker 1: is actually quite good. Yeah, indeed, because there will be 279 00:15:04,480 --> 00:15:06,560 Speaker 1: nothing like wanting a little bit of luxury or a 280 00:15:06,600 --> 00:15:10,360 Speaker 1: little something new to pep us up if coronavirus continues, 281 00:15:10,400 --> 00:15:13,160 Speaker 1: which as we know it will. David Garrity, thank you 282 00:15:13,240 --> 00:15:15,880 Speaker 1: so much for all of your intelligence today. David Garrity, 283 00:15:16,240 --> 00:15:19,920 Speaker 1: chief market strategist at laid Lawn Company and also beat 284 00:15:19,920 --> 00:15:27,320 Speaker 1: t block which is a blockchain and cryptocurrency company. It 285 00:15:27,440 --> 00:15:29,360 Speaker 1: is time now forms and we're opinion of that we're 286 00:15:29,400 --> 00:15:33,360 Speaker 1: going to actually across the pond. Sterling has been trading 287 00:15:33,400 --> 00:15:36,840 Speaker 1: today just a little bit on the idea that Boris 288 00:15:36,880 --> 00:15:39,480 Speaker 1: Johnson might be taking breaksit in a crazy direction. And 289 00:15:39,520 --> 00:15:43,440 Speaker 1: that is also the title of Terre's Raphael's latest bloombaring 290 00:15:43,440 --> 00:15:46,280 Speaker 1: opinion piece. So we welcome tores right now and once 291 00:15:46,320 --> 00:15:49,040 Speaker 1: again Sterling at one thirty thirty two week or by 292 00:15:49,120 --> 00:15:54,880 Speaker 1: one percent. What crazy direction are we talking about, Terres, Well, 293 00:15:54,920 --> 00:15:58,000 Speaker 1: there's there, there is crazy and crazier. Let's put it 294 00:15:58,040 --> 00:16:03,920 Speaker 1: that way. So john since ministers, his cabinet and then 295 00:16:03,960 --> 00:16:05,840 Speaker 1: the can downing streets, have been putting out the word 296 00:16:05,880 --> 00:16:09,400 Speaker 1: for some time now that he sees no deal with 297 00:16:09,480 --> 00:16:12,359 Speaker 1: the EU, no trade deal that sets out the future negotiations, 298 00:16:12,480 --> 00:16:17,000 Speaker 1: is actually preferable to compromising on the outstanding issues, including 299 00:16:17,000 --> 00:16:19,640 Speaker 1: the one of state aid now that carries all sorts 300 00:16:19,640 --> 00:16:22,760 Speaker 1: of implications because of the insertible trade, but the World 301 00:16:22,760 --> 00:16:26,720 Speaker 1: Trade Organization terms, which will carry of course economic costs 302 00:16:26,720 --> 00:16:32,240 Speaker 1: as we get trade Christians. The crazier part is the acknowledgement, 303 00:16:32,280 --> 00:16:35,080 Speaker 1: including by a government minister in the House of Commons today, 304 00:16:35,120 --> 00:16:39,160 Speaker 1: that the government plans to break its treaty obligation. This 305 00:16:39,320 --> 00:16:43,520 Speaker 1: is the treaty it fined with the EU only months ago, UH, 306 00:16:43,520 --> 00:16:46,200 Speaker 1: and the part of the treaty on the Northern Irish 307 00:16:46,280 --> 00:16:50,600 Speaker 1: Protocol that was intended to ensure that there's an open 308 00:16:50,640 --> 00:16:52,920 Speaker 1: border between the Northern Ireland and Ireland, and the government 309 00:16:53,000 --> 00:16:57,200 Speaker 1: is now saying it wants to pass legislation that would 310 00:16:57,240 --> 00:17:00,200 Speaker 1: override parts of that treaty. So all of this is 311 00:17:00,320 --> 00:17:05,320 Speaker 1: obviously caused much consternation uh from the EU side, though 312 00:17:05,680 --> 00:17:08,520 Speaker 1: there is at least, you know, some hope that it's 313 00:17:08,760 --> 00:17:11,359 Speaker 1: uh the kind of brinkmanship we've seen in the past 314 00:17:11,680 --> 00:17:15,000 Speaker 1: that tends to perceive the eleventh hour adminciations that tends 315 00:17:15,000 --> 00:17:18,560 Speaker 1: to procede some kind of a deal. So essentially Boris 316 00:17:18,640 --> 00:17:22,200 Speaker 1: Johnson might be trying to rewrite the Brexit divorce deal 317 00:17:22,320 --> 00:17:25,080 Speaker 1: that took so long to get signed last year with 318 00:17:25,160 --> 00:17:28,400 Speaker 1: the European Union, and he might also be baking international law. 319 00:17:28,440 --> 00:17:31,119 Speaker 1: If all of this goes ahead, why are markets not 320 00:17:31,240 --> 00:17:34,200 Speaker 1: taking this seriously seriously enough in the sense that's starting 321 00:17:34,240 --> 00:17:36,840 Speaker 1: as a little weaker but nothing is falling off a cliff. 322 00:17:39,040 --> 00:17:41,800 Speaker 1: I mean, I think for a couple of reasons. One, 323 00:17:42,040 --> 00:17:48,400 Speaker 1: there is a sense that that EU negotiations always UH 324 00:17:48,640 --> 00:17:52,080 Speaker 1: go through this sort of stage of falling apart before 325 00:17:52,119 --> 00:17:54,040 Speaker 1: they come together at the last minute. And that's what 326 00:17:54,119 --> 00:17:59,520 Speaker 1: we saw last year where Boris Johnson met with the 327 00:17:59,560 --> 00:18:03,200 Speaker 1: former Irish teacher Leo Rodka and did a deal um 328 00:18:03,440 --> 00:18:07,159 Speaker 1: on the Northern Island that that field um are paved 329 00:18:07,160 --> 00:18:08,760 Speaker 1: the way for the rest of the withdrawll agreement. So 330 00:18:08,760 --> 00:18:13,480 Speaker 1: there's some sense that this may be posturing, but you know, 331 00:18:13,520 --> 00:18:18,879 Speaker 1: there's also an understanding that they now had a significant 332 00:18:18,920 --> 00:18:22,320 Speaker 1: time to prepare for a no deal exit. Both sides 333 00:18:22,359 --> 00:18:25,680 Speaker 1: have been doing. So any deal that they would uh 334 00:18:25,760 --> 00:18:30,119 Speaker 1: conclude now is not going to be uh substantially better 335 00:18:30,119 --> 00:18:33,840 Speaker 1: in terms of trade than leaving without a deal. They 336 00:18:33,840 --> 00:18:36,639 Speaker 1: will get, you know, perhaps some relief on tariffs and quotas, 337 00:18:36,680 --> 00:18:39,479 Speaker 1: but we're not talking the kind of comprehensive free trade 338 00:18:39,720 --> 00:18:44,240 Speaker 1: agreement covering all areas of policy that was hoped for 339 00:18:44,520 --> 00:18:46,720 Speaker 1: in the beginning, and that's kind of priced in now. 340 00:18:47,080 --> 00:18:49,600 Speaker 1: These talks are going to go on and on and 341 00:18:49,720 --> 00:18:52,639 Speaker 1: on regardless of whether some kind of deal is reached 342 00:18:52,680 --> 00:18:55,159 Speaker 1: at the end of the year. Not only that, but 343 00:18:55,320 --> 00:18:57,480 Speaker 1: it sounds like there are two options for no deal. 344 00:18:57,600 --> 00:19:00,760 Speaker 1: One is just no deal, but fairly endye terms, and 345 00:19:00,800 --> 00:19:02,600 Speaker 1: the other is what seems to be happening, and that's 346 00:19:02,680 --> 00:19:08,240 Speaker 1: no deal in pretty acrimonious terms. Yeah, and I think 347 00:19:08,440 --> 00:19:10,760 Speaker 1: you know, from the point off, if you're going to 348 00:19:11,240 --> 00:19:14,639 Speaker 1: look at it from from from the market perspective, you 349 00:19:14,720 --> 00:19:17,840 Speaker 1: can have a no deal on acrimonious terms, but how 350 00:19:17,880 --> 00:19:20,600 Speaker 1: long can you really stay on those terms. Britain and 351 00:19:20,680 --> 00:19:25,359 Speaker 1: the EU are each other's major trading partner. They cooperate 352 00:19:25,440 --> 00:19:32,119 Speaker 1: on a whole rate, but issues from migration to counter terrorism, security, policing, um, 353 00:19:32,160 --> 00:19:35,080 Speaker 1: all sorts of uh, you know, all sorts of other issues, 354 00:19:35,119 --> 00:19:37,679 Speaker 1: and really they have to find some way through this. 355 00:19:38,200 --> 00:19:41,680 Speaker 1: So you know, whatever the mood music is now, uh, 356 00:19:42,200 --> 00:19:44,560 Speaker 1: we can expect that at some point cooler had to 357 00:19:44,600 --> 00:19:48,080 Speaker 1: prevail and some kind of return to ano those shaping 358 00:19:48,119 --> 00:19:51,040 Speaker 1: table would be expected. And I think that's that's sort 359 00:19:51,080 --> 00:19:54,480 Speaker 1: of a reasonable expectation. When that happens, and on what 360 00:19:54,720 --> 00:19:57,880 Speaker 1: terms is really hard to say. So as I read 361 00:19:57,920 --> 00:20:00,800 Speaker 1: Lauris Johnson's statement out of the ten Downings Weak yesterday, 362 00:20:00,920 --> 00:20:04,600 Speaker 1: and it appeared to be, you know, very optimistic and look, 363 00:20:05,040 --> 00:20:07,840 Speaker 1: if this all happens, it'll end up that we're you know, 364 00:20:07,920 --> 00:20:11,240 Speaker 1: essentially trading with Europe, like Australia trades with Europe for example, 365 00:20:11,359 --> 00:20:15,960 Speaker 1: but we'll also have completely you know, sovereign power and 366 00:20:16,200 --> 00:20:18,720 Speaker 1: control over what we decide to do and so on. 367 00:20:19,680 --> 00:20:23,159 Speaker 1: Is the tone too optimistic for what would happen in 368 00:20:23,200 --> 00:20:28,600 Speaker 1: a scenario where Britain was on the outside, like say Australia, Well, 369 00:20:28,640 --> 00:20:30,439 Speaker 1: I mean you might as well well have said, you know, 370 00:20:30,560 --> 00:20:33,080 Speaker 1: we'll trade with Europe the way um as someone said 371 00:20:33,080 --> 00:20:36,000 Speaker 1: Outer Mongolia will trade with her, because Australia doesn't have 372 00:20:36,760 --> 00:20:38,679 Speaker 1: a trade deal, and so that is just kind of 373 00:20:38,720 --> 00:20:41,640 Speaker 1: a soft way of saying, um, you know, we will 374 00:20:41,680 --> 00:20:45,120 Speaker 1: be completely on the outside. I think Johnson does want 375 00:20:45,200 --> 00:20:49,240 Speaker 1: some kind of a deal. It's clearly in Britain's economic 376 00:20:49,280 --> 00:20:52,920 Speaker 1: interests to have preferential trade terms. Politically, it will get 377 00:20:53,080 --> 00:20:59,280 Speaker 1: very very tricky with the momentum for independence in Scotland 378 00:20:59,320 --> 00:21:01,000 Speaker 1: if there's no deal at all, So I think his 379 00:21:01,119 --> 00:21:03,720 Speaker 1: preference would be to have a deal. At the same time, 380 00:21:03,760 --> 00:21:07,359 Speaker 1: the issue that's dividing them now, which is a state aid, 381 00:21:07,640 --> 00:21:10,920 Speaker 1: the the ability of governments to get subsidies, tax really 382 00:21:11,080 --> 00:21:14,119 Speaker 1: for other incentives to businesses. It is pretty existential for 383 00:21:14,160 --> 00:21:17,680 Speaker 1: this government because it's trying to reorient the British economy 384 00:21:17,720 --> 00:21:21,520 Speaker 1: after Brexit, to make it amenable to global trade deals, 385 00:21:21,600 --> 00:21:24,760 Speaker 1: to level up, as as Johnson likes to put it, 386 00:21:25,000 --> 00:21:27,560 Speaker 1: parts of the economy that has fallen behind, to try 387 00:21:27,600 --> 00:21:31,879 Speaker 1: to improve certain lagging productivity. And the only way, in 388 00:21:31,920 --> 00:21:33,560 Speaker 1: their view, they can do that is to have a 389 00:21:33,640 --> 00:21:37,560 Speaker 1: free rein when it comes to using taxpayer money to 390 00:21:37,680 --> 00:21:40,680 Speaker 1: help give a boost to investment in R and D 391 00:21:41,200 --> 00:21:43,439 Speaker 1: skills training in certain industries. And they're worried that the 392 00:21:43,480 --> 00:21:47,480 Speaker 1: EU is going to try to prevent that because the 393 00:21:47,520 --> 00:21:51,480 Speaker 1: EU will fear a distortion of competition. So the both 394 00:21:51,520 --> 00:21:54,399 Speaker 1: sides actually have a lot of to stake here. The 395 00:21:54,400 --> 00:21:56,800 Speaker 1: EU is trying to preserve the integrity of the Single 396 00:21:56,880 --> 00:22:00,960 Speaker 1: Market and prevent Britain from undercutting the new industries in 397 00:22:01,040 --> 00:22:03,480 Speaker 1: Britain wants to reap the benefits of Brexit and have 398 00:22:03,600 --> 00:22:07,440 Speaker 1: complete freedom over its rules. And uh, you know, there 399 00:22:07,600 --> 00:22:09,639 Speaker 1: is a deal to be done, no doubt, but it 400 00:22:09,680 --> 00:22:12,680 Speaker 1: will require political will on both sides. And the dangerous 401 00:22:12,680 --> 00:22:16,080 Speaker 1: that you know they've really um from the UK side, 402 00:22:16,119 --> 00:22:18,680 Speaker 1: they've sort of painted themselves into a corner because if 403 00:22:18,680 --> 00:22:20,639 Speaker 1: you you know, if they're if they're going to go 404 00:22:20,680 --> 00:22:24,520 Speaker 1: ahead with a plan to you know, literally abrogated international 405 00:22:24,600 --> 00:22:27,680 Speaker 1: treaty and then say they refused to compromise at all 406 00:22:27,720 --> 00:22:30,560 Speaker 1: of state. It's really hard to say. How I see 407 00:22:30,560 --> 00:22:33,680 Speaker 1: how the EU can move closely towards the UK position 408 00:22:33,680 --> 00:22:36,160 Speaker 1: and save a deal. And again, you know, we're talking 409 00:22:36,160 --> 00:22:39,080 Speaker 1: about a very tight time frame. Johnson's put a deadline 410 00:22:39,080 --> 00:22:42,600 Speaker 1: of October fifteen on it, and then on the Northern 411 00:22:42,600 --> 00:22:45,560 Speaker 1: Ireland Protocol. Ray is just very briefly because we're pretty 412 00:22:45,560 --> 00:22:48,520 Speaker 1: out of time. Hard border has been obviously ruled out, 413 00:22:48,560 --> 00:22:50,080 Speaker 1: but there would be some kind of order now, is 414 00:22:50,119 --> 00:22:54,760 Speaker 1: that what this means? Well, not necessarily. The articles that 415 00:22:54,840 --> 00:22:59,520 Speaker 1: talk just talking about um regards the impact of of 416 00:22:59,600 --> 00:23:03,320 Speaker 1: state aid for trade attract more than Ireland and the EU. 417 00:23:03,400 --> 00:23:08,119 Speaker 1: But I think abrogating the treaty does open reopen questions 418 00:23:08,200 --> 00:23:11,360 Speaker 1: about the border, So you know, one might follow the other. 419 00:23:11,520 --> 00:23:15,080 Speaker 1: It's not for certain, but it certainly it's an issue. 420 00:23:15,880 --> 00:23:18,879 Speaker 1: Terre's Raphael Bloomberg opinion columnists, thank you so much for 421 00:23:18,920 --> 00:23:21,840 Speaker 1: explaining all of this to us. As John author says, 422 00:23:21,880 --> 00:23:28,240 Speaker 1: the Empire strikes back. And in other news, sl Green 423 00:23:28,440 --> 00:23:30,840 Speaker 1: Realty preparing to cut the ribbon next week on one 424 00:23:30,960 --> 00:23:34,600 Speaker 1: Vanderbilt a thirteen billion dollar office tower above Grand Central 425 00:23:34,720 --> 00:23:37,359 Speaker 1: Terminal in New York. It's twenty years in the making. 426 00:23:37,400 --> 00:23:41,679 Speaker 1: But will it be rented now to the story of 427 00:23:41,680 --> 00:23:44,120 Speaker 1: the day. Really, it's the tale of the two electric 428 00:23:44,240 --> 00:23:49,159 Speaker 1: vehicle makers. Neither of them really profitable, but one of 429 00:23:49,160 --> 00:23:52,280 Speaker 1: them is actually turning out vehicles, and that's Tesla. Tesla 430 00:23:52,280 --> 00:23:55,719 Speaker 1: down sent right now. But Nicola that's trying to make 431 00:23:55,760 --> 00:23:59,679 Speaker 1: the badger in big numbers. Well it's higher because GM 432 00:23:59,760 --> 00:24:01,639 Speaker 1: is to get a two billion billion. That's with a 433 00:24:01,720 --> 00:24:04,679 Speaker 1: b dollar steak in Nicola. Let's bring in someone to 434 00:24:04,680 --> 00:24:06,439 Speaker 1: tell us a lot more about this. David Welsh is 435 00:24:06,480 --> 00:24:12,520 Speaker 1: Detroit bureaucy for Bloomberg News. David, just the initial questions 436 00:24:12,960 --> 00:24:16,680 Speaker 1: I want to ask surround the differences between Nicola and Tesla. 437 00:24:16,960 --> 00:24:22,160 Speaker 1: Is it a false comparison? Look right now it is. 438 00:24:22,320 --> 00:24:25,080 Speaker 1: You have a company that's worth almost nineteen billion dollars, 439 00:24:25,080 --> 00:24:30,119 Speaker 1: but they haven't sold any You do have a couple 440 00:24:30,200 --> 00:24:32,479 Speaker 1: of CEOs to these companies that like to get on 441 00:24:32,520 --> 00:24:34,880 Speaker 1: Twitter and and be very active there and be very 442 00:24:35,000 --> 00:24:39,080 Speaker 1: quotable and colorful. But after that the comparison kind of 443 00:24:39,119 --> 00:24:43,639 Speaker 1: fall short. That's not to see Nikola doesn't have some technology, um, 444 00:24:43,680 --> 00:24:45,920 Speaker 1: but they don't even have a model for sale yet. 445 00:24:46,000 --> 00:24:48,760 Speaker 1: They're still in the process of developing those and getting 446 00:24:48,800 --> 00:24:51,800 Speaker 1: plants up and running. And really this deal sort of 447 00:24:51,880 --> 00:24:54,960 Speaker 1: underscores and even bigger difference between Tesla from its early 448 00:24:55,040 --> 00:24:59,440 Speaker 1: days and Nicola today, and that is with this partnership 449 00:24:59,520 --> 00:25:03,320 Speaker 1: with GM, they're actually using GMS utric vehicle battery and 450 00:25:03,440 --> 00:25:07,199 Speaker 1: GM's fuel cell system, which is generally developed with Honda. 451 00:25:07,600 --> 00:25:10,720 Speaker 1: Tesla developed its own battery pack that everybody else in 452 00:25:10,760 --> 00:25:13,359 Speaker 1: the industry said couldn't work, wouldn't have great quality, but 453 00:25:13,440 --> 00:25:15,280 Speaker 1: it did work, and it did that pretty good quality, 454 00:25:15,760 --> 00:25:19,439 Speaker 1: so they didn't need to use anybody else's technology. Early on, 455 00:25:19,600 --> 00:25:23,000 Speaker 1: Dime More of Germany and Toyota Corp. HAID invested in Tesla, 456 00:25:23,080 --> 00:25:26,280 Speaker 1: but they were still using Tesla's own battery pack. This 457 00:25:26,400 --> 00:25:28,600 Speaker 1: is different here, So it does make a lot of 458 00:25:28,600 --> 00:25:32,200 Speaker 1: people question what does Nicola bring the GM in terms 459 00:25:32,200 --> 00:25:34,600 Speaker 1: of technology or is it basically a brand name of 460 00:25:34,640 --> 00:25:37,639 Speaker 1: pickup truck concept and some sales down the line, and 461 00:25:37,640 --> 00:25:40,520 Speaker 1: that that appears to be what it is. That's pretty insane. 462 00:25:40,640 --> 00:25:44,200 Speaker 1: So the story is General Motors is giving two billion 463 00:25:44,240 --> 00:25:46,639 Speaker 1: dollars to Nikola. It gets a two billion dollar equity 464 00:25:46,680 --> 00:25:50,040 Speaker 1: stake for that and even ownership of Nicola. Nicola says 465 00:25:50,080 --> 00:25:52,720 Speaker 1: it's the saving over four billion dollars in battery and 466 00:25:52,800 --> 00:25:56,119 Speaker 1: power train costs, and GM says it's going to receive 467 00:25:56,160 --> 00:25:58,560 Speaker 1: in excess of four billion dollars of benefits. Where did 468 00:25:58,560 --> 00:26:02,040 Speaker 1: I get that four billion dollar figure? So, first of all, 469 00:26:02,080 --> 00:26:04,320 Speaker 1: GM is not even putting cash in the two billion 470 00:26:04,359 --> 00:26:07,600 Speaker 1: dollar UH state that they're getting is simply by giving 471 00:26:07,880 --> 00:26:10,760 Speaker 1: Nicola and their battery and their fuel cell technology. So 472 00:26:10,760 --> 00:26:13,360 Speaker 1: with then no cash deal for GM and therefore much 473 00:26:13,480 --> 00:26:17,760 Speaker 1: less risk the same things everybody's talking about. And we'll 474 00:26:17,760 --> 00:26:19,560 Speaker 1: take a brief walk back here to my days of 475 00:26:19,640 --> 00:26:22,119 Speaker 1: covering M and A deals. It's sort of assuming a 476 00:26:22,200 --> 00:26:24,320 Speaker 1: certain amount of sales and here's how much we will 477 00:26:24,400 --> 00:26:29,680 Speaker 1: save on battery development and fuel cell development and building stories. 478 00:26:29,880 --> 00:26:32,679 Speaker 1: Nicola doesn't have to build an electric vehicle factory. Now 479 00:26:32,720 --> 00:26:35,960 Speaker 1: they'll use GMS. It's really by joining forces, but it's 480 00:26:36,160 --> 00:26:39,200 Speaker 1: based on a bunch of assumptions that X number of 481 00:26:39,280 --> 00:26:42,080 Speaker 1: vehicles will sell and would have cost each company a 482 00:26:42,160 --> 00:26:44,160 Speaker 1: certain amount of money had they gone on their own. 483 00:26:44,280 --> 00:26:46,680 Speaker 1: But now they're joining forces and combining things, and they'll 484 00:26:46,680 --> 00:26:49,520 Speaker 1: get all kinds of savings. You know, I'm not sure 485 00:26:49,560 --> 00:26:52,359 Speaker 1: we'll see four billion peeled out of General Motors UH 486 00:26:52,800 --> 00:26:55,400 Speaker 1: costs and down to the bottom line. But it's sort 487 00:26:55,440 --> 00:26:58,280 Speaker 1: of a future projection here, so I've always looked at 488 00:26:58,320 --> 00:27:00,680 Speaker 1: through a little bit suspiciously. But see what happens in 489 00:27:00,720 --> 00:27:04,720 Speaker 1: the future. So what does it say about GM that 490 00:27:04,800 --> 00:27:08,640 Speaker 1: it's looking for a new concept like that? Why does 491 00:27:08,680 --> 00:27:12,760 Speaker 1: it need it now? And when might the badger is 492 00:27:12,760 --> 00:27:15,359 Speaker 1: sort of becoming off GM assembly lines or even you know, 493 00:27:15,680 --> 00:27:20,879 Speaker 1: Nicola Tesla lines, the Nicola lines. They're saying the second 494 00:27:20,920 --> 00:27:24,960 Speaker 1: half of two, so at least six months after GM's 495 00:27:25,000 --> 00:27:29,119 Speaker 1: Hummer pickup truck comes out. So if if Nicola's vehicles sell, 496 00:27:29,800 --> 00:27:31,600 Speaker 1: GM gets two things out of it, they will be 497 00:27:31,680 --> 00:27:35,159 Speaker 1: selling a basic work pickup truck, very different from the 498 00:27:35,280 --> 00:27:38,600 Speaker 1: Hummer pickup truck that GM is planning. So that's more 499 00:27:38,640 --> 00:27:41,400 Speaker 1: of a lifestyle vehicle, almost kind of a luxury vehicle. 500 00:27:41,600 --> 00:27:44,280 Speaker 1: Hummer is not the kind of brand for people for 501 00:27:44,440 --> 00:27:48,520 Speaker 1: contractors who are loading it up with pipes and two 502 00:27:48,560 --> 00:27:50,200 Speaker 1: by fours and that sort of thing. This is the 503 00:27:50,440 --> 00:27:52,399 Speaker 1: kind of truck that tows a boat or is just 504 00:27:52,520 --> 00:27:55,720 Speaker 1: driven around town. So the Nicola truck would give GM 505 00:27:55,800 --> 00:27:58,359 Speaker 1: a crack. It's selling something more of a regular work truck. 506 00:27:58,800 --> 00:28:00,800 Speaker 1: And then on a few also the side of things, 507 00:28:00,880 --> 00:28:03,440 Speaker 1: what GM give because there's much more concrete, is the 508 00:28:03,560 --> 00:28:05,680 Speaker 1: Class seven and eight pickup truck. These are the big 509 00:28:05,840 --> 00:28:08,560 Speaker 1: over the road or rags for hauling free. GM doesn't 510 00:28:08,560 --> 00:28:10,280 Speaker 1: really have anything there and this is their way to 511 00:28:10,359 --> 00:28:13,280 Speaker 1: get into that game. And fuel cells are a pretty 512 00:28:13,320 --> 00:28:16,400 Speaker 1: good way to power those trucks because batteries weighs so much. 513 00:28:16,440 --> 00:28:18,560 Speaker 1: You're you're just cutting away how much Frede you can 514 00:28:18,600 --> 00:28:20,680 Speaker 1: holof You did it with electric power, now you're doing 515 00:28:20,720 --> 00:28:23,520 Speaker 1: the hydrogen power. So GM gets into a new market 516 00:28:23,640 --> 00:28:25,639 Speaker 1: if it works, if it doesn't work, GM has not 517 00:28:25,760 --> 00:28:29,200 Speaker 1: put any cash in UM and and and so you 518 00:28:29,240 --> 00:28:31,719 Speaker 1: know that there's not a lot of monetary respire GM here. 519 00:28:32,080 --> 00:28:35,560 Speaker 1: So Nika is up. You might understand that. But is 520 00:28:35,640 --> 00:28:43,360 Speaker 1: it understandable that Tesla is down today? Uh? Yeah, in 521 00:28:43,680 --> 00:28:45,920 Speaker 1: in a big way. It is because a lot of investors. 522 00:28:46,200 --> 00:28:49,440 Speaker 1: Tesla is going to be welcomed into the SMP five hundred, 523 00:28:49,840 --> 00:28:51,560 Speaker 1: and that means you have seen a lot of passive 524 00:28:51,600 --> 00:28:56,120 Speaker 1: money through SMP five STP index bonds coming in as 525 00:28:56,160 --> 00:29:00,200 Speaker 1: opposed to you know, the heavy cohort of re Tell 526 00:29:00,280 --> 00:29:04,080 Speaker 1: investors and some institutions that are in Tesla that didn't happen. 527 00:29:04,280 --> 00:29:06,520 Speaker 1: And it has to implications. One that's just you know, 528 00:29:07,120 --> 00:29:09,760 Speaker 1: pure fact, you're not going to have all this potential 529 00:29:09,880 --> 00:29:13,160 Speaker 1: new money coming into the stock. And too, there is 530 00:29:13,200 --> 00:29:17,800 Speaker 1: some talk out there that um Testa's earnings, well, I 531 00:29:17,880 --> 00:29:20,600 Speaker 1: have been profitable several quarters in a row. Now, it's 532 00:29:20,680 --> 00:29:23,080 Speaker 1: not a great quality of earnings. They often lose money 533 00:29:23,120 --> 00:29:25,760 Speaker 1: on the core vehicle business and make enough money selling 534 00:29:25,840 --> 00:29:30,760 Speaker 1: regulatory electric vehicle credits to the gas burning many car manufacturers, 535 00:29:31,440 --> 00:29:33,840 Speaker 1: and and that overshadows the losses and end up turning 536 00:29:33,880 --> 00:29:36,360 Speaker 1: a profit. David, we absolutely there, But thank you so 537 00:29:36,520 --> 00:29:39,000 Speaker 1: much for explaining all of that to us. Much much appreciated, 538 00:29:39,080 --> 00:29:42,960 Speaker 1: David Welch there in Detroit. Thanks for listening to the 539 00:29:42,960 --> 00:29:46,720 Speaker 1: Boomberg Markets podcast. You can subscribe and listen to interviews 540 00:29:46,720 --> 00:29:50,480 Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. I'm 541 00:29:50,520 --> 00:29:53,680 Speaker 1: Bonnie Quinn, I'm on Twitter at Bonnie Quinn. And Paul 542 00:29:53,720 --> 00:29:56,560 Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast, 543 00:29:56,640 --> 00:30:00,240 Speaker 1: you can always catch us worldwide at Bloomberg Radio. Huh 544 00:30:00,720 --> 00:30:03,160 Speaker 1: uh uh u.