1
00:00:00,840 --> 00:00:04,000
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

2
00:00:04,040 --> 00:00:05,240
Speaker 1: my co host Matt Miller.

3
00:00:05,640 --> 00:00:09,600
Speaker 2: Every business day we bring you interviews from CEOs, market pros,

4
00:00:09,720 --> 00:00:13,600
Speaker 2: and Bloomberg experts, along with essential market moven news.

5
00:00:14,160 --> 00:00:17,279
Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

6
00:00:17,400 --> 00:00:20,520
Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

7
00:00:21,200 --> 00:00:23,959
Speaker 1: Let's head down to Washington, DC. Nathan Dean. It's his

8
00:00:24,200 --> 00:00:28,040
Speaker 1: task to follow and analyze all the shenanigans coming from

9
00:00:28,080 --> 00:00:30,560
Speaker 1: our good friends in the halls of Congress. He's a

10
00:00:30,640 --> 00:00:35,839
Speaker 1: senior analysts for US government for Bloomberg Intelligence. So, Nathan,

11
00:00:36,000 --> 00:00:38,800
Speaker 1: you're joining us by zoom We appreciate that. My question

12
00:00:38,960 --> 00:00:41,000
Speaker 1: is is this government going to be able to fund

13
00:00:41,000 --> 00:00:42,519
Speaker 1: itself or we're going to get a shutdown at the

14
00:00:42,560 --> 00:00:44,640
Speaker 1: end of this month. Can you give us a timeline

15
00:00:44,640 --> 00:00:45,680
Speaker 1: and kind of where we are here?

16
00:00:46,320 --> 00:00:48,760
Speaker 3: Yeah, so you know, the government's only back for you know,

17
00:00:48,840 --> 00:00:51,040
Speaker 3: eight to ten days, you know, working days until this

18
00:00:51,360 --> 00:00:54,120
Speaker 3: deadline of September thirtieth. And like you said, you know,

19
00:00:54,160 --> 00:00:56,040
Speaker 3: we it's highly likely that we're going to end up

20
00:00:56,080 --> 00:00:58,880
Speaker 3: with a government shutdown. Now, whether this is a thirty

21
00:00:58,960 --> 00:01:02,720
Speaker 3: day shutdown. Look, under President Trump's administration probably not be

22
00:01:02,920 --> 00:01:03,360
Speaker 3: the case.

23
00:01:03,440 --> 00:01:03,600
Speaker 4: You know.

24
00:01:03,600 --> 00:01:06,480
Speaker 3: The Speaker McCarthy says that he wants to kick the

25
00:01:06,480 --> 00:01:09,440
Speaker 3: can to early December to give more time over negotiations.

26
00:01:09,680 --> 00:01:10,960
Speaker 3: But the note that we just put out on the

27
00:01:11,000 --> 00:01:13,360
Speaker 3: terminal this morning essentially states that if you do have

28
00:01:13,400 --> 00:01:17,160
Speaker 3: a shutdown, both markets and defense contractors shouldn't be all

29
00:01:17,200 --> 00:01:20,479
Speaker 3: that concerned. You know, during that thirty days shutdown under

30
00:01:20,520 --> 00:01:23,360
Speaker 3: President Trump, the markets didn't react all that well in

31
00:01:23,400 --> 00:01:25,880
Speaker 3: the first couple of days. But then once realized, once

32
00:01:25,920 --> 00:01:29,760
Speaker 3: people realize the economic you know, impact isn't all that great,

33
00:01:30,120 --> 00:01:33,680
Speaker 3: markets pretty much just moved beyond. Same thing with defense contractors.

34
00:01:33,720 --> 00:01:36,120
Speaker 3: If you're Boeing or you know, raytheon and so forth

35
00:01:36,160 --> 00:01:39,200
Speaker 3: like that, you know your contracts are already funded in.

36
00:01:39,240 --> 00:01:41,440
Speaker 3: They're funded in on a long term basis. So the

37
00:01:41,480 --> 00:01:44,320
Speaker 3: real big impact for a government shutdown, if it lasts

38
00:01:44,720 --> 00:01:46,800
Speaker 3: more than a week or two, is that folks like

39
00:01:46,840 --> 00:01:49,200
Speaker 3: me in Washington, DC can't take their kids to the zoo.

40
00:01:49,560 --> 00:01:53,040
Speaker 2: Well what about federal employees? Will they still get paychecks

41
00:01:53,080 --> 00:01:54,880
Speaker 2: every two weeks or however that works. I mean, if

42
00:01:54,880 --> 00:01:56,800
Speaker 2: you work at the euro of Labor, and statistics putting

43
00:01:56,840 --> 00:01:59,240
Speaker 2: together the CPI, for example, are you still going to

44
00:01:59,280 --> 00:01:59,680
Speaker 2: get paid?

45
00:02:00,360 --> 00:02:02,400
Speaker 3: So what they do is they deem employees to be

46
00:02:02,520 --> 00:02:05,640
Speaker 3: essential and non essential. If you're an essential play it's

47
00:02:05,640 --> 00:02:07,760
Speaker 3: about fifteen percent of the US workforce.

48
00:02:07,800 --> 00:02:09,480
Speaker 5: Obviously, that's right, people.

49
00:02:09,320 --> 00:02:12,240
Speaker 2: Only fifteen percent of the people that we employ are essential.

50
00:02:12,560 --> 00:02:15,560
Speaker 2: Everybody else we could do without exactly.

51
00:02:15,680 --> 00:02:15,760
Speaker 4: So.

52
00:02:15,880 --> 00:02:18,520
Speaker 3: But you know, what's what's happened in the past is

53
00:02:18,520 --> 00:02:22,440
Speaker 3: when the shutdown is over, the Congress will actually pass

54
00:02:22,440 --> 00:02:26,080
Speaker 3: a resolution or pass a bill that provides retroactive back pay.

55
00:02:26,240 --> 00:02:27,960
Speaker 3: So if you're shut down for a couple of weeks,

56
00:02:28,200 --> 00:02:30,200
Speaker 3: obviously that's not going to be good if you're living

57
00:02:30,200 --> 00:02:32,360
Speaker 3: paycheck to paycheck, but you will get that pay back.

58
00:02:32,680 --> 00:02:34,920
Speaker 5: That is not the case for smaller contractors.

59
00:02:35,160 --> 00:02:38,360
Speaker 3: So if you work for a contracting agency and your agency,

60
00:02:39,240 --> 00:02:41,360
Speaker 3: you know, decides to shut down all of a sudden,

61
00:02:41,880 --> 00:02:43,600
Speaker 3: you're not going to get that pay back unless the

62
00:02:43,600 --> 00:02:45,079
Speaker 3: contractor and self pays you back.

63
00:02:45,200 --> 00:02:47,120
Speaker 5: You're not going to get any recourse from the government.

64
00:02:47,360 --> 00:02:47,520
Speaker 6: You know.

65
00:02:47,600 --> 00:02:49,600
Speaker 3: I should also note that, you know, even though I

66
00:02:49,600 --> 00:02:51,960
Speaker 3: took light of the situation with the Zoo, certain things

67
00:02:52,000 --> 00:02:55,000
Speaker 3: like economic releases BLS, you know, so forth like that

68
00:02:55,240 --> 00:02:58,360
Speaker 3: those eventually could be delayed, which and then also could

69
00:02:58,360 --> 00:03:01,280
Speaker 3: cause some you know, can fusion and disruption to the

70
00:03:01,280 --> 00:03:02,960
Speaker 3: traders that are relying on that information.

71
00:03:03,520 --> 00:03:06,000
Speaker 1: Well, what about these things you guys, don't Washington DC

72
00:03:06,240 --> 00:03:09,239
Speaker 1: called continuing resolutions or cr can't we use one of

73
00:03:09,240 --> 00:03:10,240
Speaker 1: those thing that jigs?

74
00:03:10,800 --> 00:03:11,040
Speaker 7: Yeah?

75
00:03:11,080 --> 00:03:12,960
Speaker 3: Absolutely, And that's what I think is gonna happen here.

76
00:03:13,040 --> 00:03:16,800
Speaker 3: You know, the Approachriate appropriations process is a twelve bill process,

77
00:03:17,040 --> 00:03:19,000
Speaker 3: and they've only got an agreement on one. They have

78
00:03:19,040 --> 00:03:21,520
Speaker 3: to pass eleven essentially in the next month. So what

79
00:03:21,520 --> 00:03:23,800
Speaker 3: they're gonna do is they're gonna hit this continuing resolution.

80
00:03:24,200 --> 00:03:27,160
Speaker 3: The challenge is is that Speaker McCarthy has had several

81
00:03:27,200 --> 00:03:29,840
Speaker 3: people in the House Freedom Caucus just say, look, I'm

82
00:03:29,880 --> 00:03:32,480
Speaker 3: not gonna vote for any continuing resolution unless you do

83
00:03:32,560 --> 00:03:35,760
Speaker 3: fund the FBI or you you know, implement any of

84
00:03:35,760 --> 00:03:39,720
Speaker 3: these policies. That has no chance whatsoever with President Biden

85
00:03:39,960 --> 00:03:43,080
Speaker 3: in the Senate under Democratic control. So what's gonna happen

86
00:03:43,120 --> 00:03:45,360
Speaker 3: here is Speaker McCarthy's in a hard place. He's got

87
00:03:45,400 --> 00:03:48,360
Speaker 3: to figure out a way to pass up continuing resolution

88
00:03:48,880 --> 00:03:52,520
Speaker 3: probably to early December, maybe next year. But probably early

89
00:03:52,560 --> 00:03:56,320
Speaker 3: December using Democratic support, and that's just something that he's

90
00:03:56,360 --> 00:03:59,080
Speaker 3: not gonna be able to get to until the last moment.

91
00:03:59,320 --> 00:04:01,760
Speaker 3: So you're looking at either a shutdown will occur, you know,

92
00:04:01,840 --> 00:04:05,400
Speaker 3: I'm guessing less than five days, but you know, negotiations

93
00:04:05,440 --> 00:04:07,480
Speaker 3: are gonna go way up to the high wire and

94
00:04:07,840 --> 00:04:10,480
Speaker 3: you're gonna see constant headlines over the next two to

95
00:04:10,520 --> 00:04:14,360
Speaker 3: three weeks of shutdown inncs, shutdown angst, and more shutdown ancs.

96
00:04:14,360 --> 00:04:16,000
Speaker 2: It's just kooky to me how much the far right

97
00:04:16,040 --> 00:04:18,080
Speaker 2: and the far left have in common. You know, the

98
00:04:18,760 --> 00:04:21,440
Speaker 2: lefties wanted to defund the police and now the Freedom

99
00:04:21,480 --> 00:04:24,039
Speaker 2: Caucus wants to defund the FBI exactly. I mean, do

100
00:04:24,080 --> 00:04:25,839
Speaker 2: we not need law enforcement in this country?

101
00:04:25,880 --> 00:04:27,680
Speaker 1: I thought the FBI were the good guys, all right?

102
00:04:27,720 --> 00:04:30,920
Speaker 1: What else besides the shutdown is Congress focused on here

103
00:04:30,960 --> 00:04:33,520
Speaker 1: we go. They're gonna actually work for a solid eight days.

104
00:04:33,720 --> 00:04:35,240
Speaker 1: Good for them, But what else do they have to

105
00:04:35,240 --> 00:04:35,760
Speaker 1: get done here?

106
00:04:36,600 --> 00:04:39,239
Speaker 3: So you know, you're gonna see a lot of negotiations

107
00:04:39,320 --> 00:04:42,320
Speaker 3: or at least you know, we've heard the House Financial

108
00:04:42,320 --> 00:04:44,960
Speaker 3: Services Chairman Patrick man Henry say that he wants to

109
00:04:44,960 --> 00:04:48,280
Speaker 3: try and schedule a vote on crypto legislation, I'm not sure,

110
00:04:48,360 --> 00:04:50,240
Speaker 3: and many of that's gonna get there in September. I mean,

111
00:04:50,360 --> 00:04:54,120
Speaker 3: you have to reauthorize the FAA. The Farm Bill expiration

112
00:04:54,240 --> 00:04:56,600
Speaker 3: is also in September thirtieth, So for the rest of

113
00:04:56,640 --> 00:04:59,480
Speaker 3: the month, you're gonna see a lot of people try.

114
00:04:59,240 --> 00:05:01,800
Speaker 5: Things, but it's going to be focused on this government shutdown.

115
00:05:02,040 --> 00:05:02,240
Speaker 7: Now.

116
00:05:02,440 --> 00:05:04,480
Speaker 3: One thing that came out last week that was interesting

117
00:05:04,560 --> 00:05:07,320
Speaker 3: is that Bloomberg News reported that the Department of Health

118
00:05:07,360 --> 00:05:11,159
Speaker 3: and Human Services is going to recommend changing marijuana from

119
00:05:11,160 --> 00:05:12,720
Speaker 3: Schedule one to Schedule three.

120
00:05:13,520 --> 00:05:14,600
Speaker 5: We are good, you know.

121
00:05:14,800 --> 00:05:17,200
Speaker 3: That is a big deal for the marijuana industry, and

122
00:05:17,279 --> 00:05:19,680
Speaker 3: so we're gonna be looking to see what steps come

123
00:05:19,720 --> 00:05:21,800
Speaker 3: from the DEEA. They are the ones that are gonna

124
00:05:21,839 --> 00:05:24,120
Speaker 3: have to make this decision, and really we're looking to

125
00:05:24,120 --> 00:05:26,760
Speaker 3: see if they get this done in twenty twenty four

126
00:05:26,960 --> 00:05:29,560
Speaker 3: or is this going to be a multi year process.

127
00:05:29,600 --> 00:05:31,240
Speaker 3: That's really key for the marijuana stocks.

128
00:05:31,440 --> 00:05:34,920
Speaker 2: Schedule one drugs include like heroin and Fenton myl and

129
00:05:34,960 --> 00:05:37,000
Speaker 2: that's where marijuana is, and that's that's where they have

130
00:05:37,200 --> 00:05:40,840
Speaker 2: had weed for decades now, you know, because you know

131
00:05:41,040 --> 00:05:45,120
Speaker 2: Item nine, all right, So that's something that's probably not

132
00:05:45,120 --> 00:05:48,760
Speaker 2: gonna happen salt, any any movement on salt at all. Nathan,

133
00:05:48,800 --> 00:05:51,160
Speaker 2: I got to always ask ask you the state and

134
00:05:51,240 --> 00:05:52,760
Speaker 2: local tax deduction question.

135
00:05:53,600 --> 00:05:56,000
Speaker 3: Yeah, you know, I hit my phone always before these

136
00:05:56,040 --> 00:05:57,880
Speaker 3: hits to see what's gonna happen with the salt folks

137
00:05:57,920 --> 00:05:58,440
Speaker 3: around town.

138
00:05:58,480 --> 00:06:00,440
Speaker 5: But this is laying the work.

139
00:06:00,480 --> 00:06:03,360
Speaker 3: Look, the salt deduction is going to expire when the

140
00:06:03,400 --> 00:06:06,279
Speaker 3: Trump tax cuts expire. That's not going to be that's

141
00:06:06,279 --> 00:06:08,760
Speaker 3: actually coming up fairly soon. But this is one of

142
00:06:08,760 --> 00:06:11,440
Speaker 3: those situations where you have lawmakers from New New York

143
00:06:11,440 --> 00:06:13,800
Speaker 3: and New Jersey going out there and saying, look, we're

144
00:06:13,800 --> 00:06:16,960
Speaker 3: going to fight tooth and nail to try and get

145
00:06:17,000 --> 00:06:18,919
Speaker 3: salt back. I mean they're even saying we would just

146
00:06:18,960 --> 00:06:22,640
Speaker 3: love to take a pinch of salt. But ultimately what's

147
00:06:22,680 --> 00:06:25,480
Speaker 3: gonna happen here is if you're going to you know,

148
00:06:26,040 --> 00:06:28,680
Speaker 3: the salt deduction brought a lot of money back to

149
00:06:28,680 --> 00:06:30,920
Speaker 3: the government, or getting rid of the salt deduction brought

150
00:06:30,960 --> 00:06:32,400
Speaker 3: a lot of money back to the government.

151
00:06:32,640 --> 00:06:34,240
Speaker 5: That is money that can be used elsewhere.

152
00:06:34,279 --> 00:06:36,200
Speaker 3: And there are a lot of lawmakers like, ooh, we

153
00:06:36,320 --> 00:06:37,880
Speaker 3: like this New York New Jersey money.

154
00:06:38,160 --> 00:06:39,599
Speaker 5: We can use this for something else.

155
00:06:40,000 --> 00:06:42,200
Speaker 3: So we're just I think the New York and New

156
00:06:42,279 --> 00:06:44,880
Speaker 3: Jersey lawmakers, the Salt Caucus, if you will, are just

157
00:06:44,960 --> 00:06:48,400
Speaker 3: planting the seeds so that when these negotiations come back

158
00:06:48,440 --> 00:06:51,000
Speaker 3: closer to the expiration date, you know, they can fight

159
00:06:51,040 --> 00:06:53,280
Speaker 3: tooth and nail at that point to get some relief

160
00:06:53,320 --> 00:06:55,800
Speaker 3: back to the you know, the the homeowners of the

161
00:06:55,800 --> 00:06:56,560
Speaker 3: New York City area.

162
00:06:56,720 --> 00:06:59,039
Speaker 2: Is this is this yet another issue on which AOC

163
00:06:59,240 --> 00:07:01,600
Speaker 2: and Marjorie Taylor Green or in agreement.

164
00:07:02,720 --> 00:07:04,080
Speaker 3: You know, this is going to be one of those

165
00:07:04,080 --> 00:07:06,480
Speaker 3: issues where it's essentially New York, New Jersey, California, and

166
00:07:06,520 --> 00:07:08,960
Speaker 3: Illinois against the world against everybody.

167
00:07:09,000 --> 00:07:11,560
Speaker 1: All right, all right, I understand we've got some generals

168
00:07:11,640 --> 00:07:14,840
Speaker 1: and some admirals that need to be approved for senior

169
00:07:14,920 --> 00:07:18,000
Speaker 1: leadership positions. I thought this stuff just gets done like

170
00:07:18,080 --> 00:07:19,240
Speaker 1: rubber stamp. What's going on?

171
00:07:20,000 --> 00:07:22,800
Speaker 3: So this is coming out of Alabama. This is Senator Tubberville,

172
00:07:22,800 --> 00:07:26,240
Speaker 3: you know, coach, you know, of Auburn. He's actually holding

173
00:07:26,360 --> 00:07:32,320
Speaker 3: up these promotions in response to a federal policy related

174
00:07:32,360 --> 00:07:35,280
Speaker 3: to abortion. And this is a classic standoff between the

175
00:07:35,320 --> 00:07:38,600
Speaker 3: White House and one senator. And so you know, we've

176
00:07:38,600 --> 00:07:41,200
Speaker 3: seen statements from Bloomberg News, you know, their interviews with

177
00:07:41,280 --> 00:07:44,960
Speaker 3: other Republican senators. They wish that Senator Tuberville wasn't doing this.

178
00:07:45,520 --> 00:07:47,600
Speaker 3: But this is just a standoff that's going to continue.

179
00:07:47,680 --> 00:07:50,640
Speaker 3: And you know, we've seen other statements from both the

180
00:07:50,640 --> 00:07:54,239
Speaker 3: Department of Defense and so forth that you know, American

181
00:07:54,280 --> 00:07:55,440
Speaker 3: security could be harmed.

182
00:07:55,480 --> 00:07:57,600
Speaker 5: But I don't think we've seen any end in sight.

183
00:07:57,680 --> 00:07:59,440
Speaker 3: Both sides are pretty ducked in and so this is

184
00:07:59,480 --> 00:08:02,280
Speaker 3: just one of those is where I'm not exactly sure

185
00:08:02,280 --> 00:08:03,840
Speaker 3: if there's a resolution anytime soon.

186
00:08:04,560 --> 00:08:07,720
Speaker 1: I mean, poor Nathan Dean's got to analyze and focus

187
00:08:07,760 --> 00:08:09,640
Speaker 1: on Congress like for a living.

188
00:08:10,080 --> 00:08:11,920
Speaker 2: Yeah, that is, and a lot of other stuff, right,

189
00:08:11,960 --> 00:08:15,000
Speaker 2: I mean, the Washington DC. The weed decision doesn't come

190
00:08:15,000 --> 00:08:18,080
Speaker 2: from Congress. That's first gonna come from. Who's the weed

191
00:08:18,080 --> 00:08:20,160
Speaker 2: decision come from? If they push it back to schedule

192
00:08:20,200 --> 00:08:20,960
Speaker 2: three d DA?

193
00:08:21,080 --> 00:08:24,120
Speaker 5: Right, the DA? Yeah, all right, he's got.

194
00:08:23,920 --> 00:08:26,040
Speaker 4: To watch all those agencies. He's gotta be careful.

195
00:08:26,120 --> 00:08:29,880
Speaker 2: You know, the FBI might be defunded, yep, exactly.

196
00:08:29,280 --> 00:08:31,680
Speaker 1: Who knows? All right, Nathan, it's your you got to

197
00:08:31,720 --> 00:08:34,640
Speaker 1: deal with this stuff. We appreciate it. You're demand Nathan Dean,

198
00:08:34,880 --> 00:08:38,000
Speaker 1: senior policy analysts. He covers all the US government stuff

199
00:08:38,120 --> 00:08:40,680
Speaker 1: for Bloomberg Intelligence. He is our go to person for

200
00:08:40,760 --> 00:08:43,160
Speaker 1: all you know, kind of how the sausage is made

201
00:08:43,160 --> 00:08:43,680
Speaker 1: down there.

202
00:08:43,559 --> 00:08:46,280
Speaker 7: With you're listening to the team.

203
00:08:46,640 --> 00:08:50,040
Speaker 6: Ken's are Live program Bloomberg Markets weekdays at ten am

204
00:08:50,080 --> 00:08:53,480
Speaker 6: Eastern on Bloomberg dot com, the iHeartRadio app and the

205
00:08:53,480 --> 00:08:56,520
Speaker 6: Bloomberg Business app, or listen on demand wherever you get

206
00:08:56,559 --> 00:08:57,480
Speaker 6: your podcasts.

207
00:09:00,080 --> 00:09:02,880
Speaker 1: Let's talk global economics year. We're gonna got it from China,

208
00:09:03,120 --> 00:09:04,800
Speaker 1: might head over to Europe. Who knows where else?

209
00:09:04,840 --> 00:09:05,080
Speaker 6: Will go?

210
00:09:05,160 --> 00:09:07,880
Speaker 1: Eddie vnderwaldt you can go anywhere. He is a deputy

211
00:09:07,920 --> 00:09:13,040
Speaker 1: Managing Deputy Managing editor of Market's Live team from Bloomberg News.

212
00:09:13,080 --> 00:09:14,480
Speaker 1: I want to as him about bitcoin first.

213
00:09:14,920 --> 00:09:19,280
Speaker 2: So Eddie is an expert on crypto as well. And Eddie,

214
00:09:19,320 --> 00:09:22,080
Speaker 2: you know, I was off last week, but I still

215
00:09:22,160 --> 00:09:26,240
Speaker 2: read the news and I thought it was so exciting

216
00:09:26,280 --> 00:09:32,080
Speaker 2: for crypto when we found the Grayscale SEC decision overturned

217
00:09:32,080 --> 00:09:34,400
Speaker 2: by an appeals court. So I thought, man, this is

218
00:09:34,720 --> 00:09:38,560
Speaker 2: great news. Bitcoin spot, bitcoin ETFs are happening. I'm sure

219
00:09:38,559 --> 00:09:41,200
Speaker 2: that the underlying ASCID is surgeon. I come back in

220
00:09:41,240 --> 00:09:43,360
Speaker 2: this morning to see it under twenty six thousand.

221
00:09:43,520 --> 00:09:46,440
Speaker 5: What gives Bigcore.

222
00:09:46,080 --> 00:09:49,720
Speaker 8: Really is struggling, And it's really fascinating to see this happen,

223
00:09:49,800 --> 00:09:52,360
Speaker 8: right because not only did you have that, you're also

224
00:09:52,400 --> 00:09:56,280
Speaker 8: coming towards the harving of supply next year. Every four

225
00:09:56,360 --> 00:09:59,160
Speaker 8: years or so, they have the amount of output in

226
00:09:59,240 --> 00:10:01,240
Speaker 8: the amount of coin. And if you see that, you

227
00:10:01,360 --> 00:10:04,600
Speaker 8: also see an ETF launch bringing in more retail investors,

228
00:10:04,600 --> 00:10:07,480
Speaker 8: making it easier for people to invest. Bitcoin really should

229
00:10:07,559 --> 00:10:10,400
Speaker 8: be garnering some momentum going into next year, but it

230
00:10:10,559 --> 00:10:12,760
Speaker 8: just isn't. And I think part of the reason is

231
00:10:13,000 --> 00:10:16,880
Speaker 8: that we are seeing higher real interest rates, right, We

232
00:10:16,960 --> 00:10:20,080
Speaker 8: are seeing interest rates pushing higher, and therefore, you know,

233
00:10:20,160 --> 00:10:23,720
Speaker 8: people probably don't have as much speculative money lying around

234
00:10:24,000 --> 00:10:27,280
Speaker 8: yet are there speculative assets like you know, your your

235
00:10:27,280 --> 00:10:30,200
Speaker 8: bids on Nvidia and so on are really doing well.

236
00:10:30,360 --> 00:10:33,120
Speaker 8: So maybe it's a case of not so much that

237
00:10:33,640 --> 00:10:35,640
Speaker 8: you know that that people don't have the money, but

238
00:10:35,640 --> 00:10:37,880
Speaker 8: but perhaps a little bit more that they that the

239
00:10:37,920 --> 00:10:41,560
Speaker 8: AI story has taken the shine off of cryptocurrencies. I

240
00:10:41,559 --> 00:10:44,480
Speaker 8: think AI is the new shiny thing, and that's where

241
00:10:44,480 --> 00:10:45,840
Speaker 8: investor money is going.

242
00:10:46,080 --> 00:10:48,640
Speaker 1: That's interesting take and thought about that, but that probably

243
00:10:48,679 --> 00:10:50,800
Speaker 1: makes a lot of sense. All right, Eddie, let's I

244
00:10:50,840 --> 00:10:54,000
Speaker 1: want to just go to China here. How concerned are you?

245
00:10:54,120 --> 00:10:58,600
Speaker 1: How concerned should the global economy be about just it

246
00:10:58,600 --> 00:11:01,520
Speaker 1: seems like day after day, you know, kind of disappointing

247
00:11:02,120 --> 00:11:04,920
Speaker 1: economic data coming out of China, weakening data coming out

248
00:11:04,920 --> 00:11:06,959
Speaker 1: of China. How do you put that in prospective?

249
00:11:06,960 --> 00:11:07,080
Speaker 9: Wait?

250
00:11:07,160 --> 00:11:09,200
Speaker 2: I thought they were finally giving a stimulus, were now

251
00:11:10,280 --> 00:11:16,120
Speaker 2: stick giving money to parents of kids and kids of parents?

252
00:11:16,440 --> 00:11:16,720
Speaker 10: Yep?

253
00:11:17,679 --> 00:11:19,839
Speaker 8: Yeah, And look it's it's been this machine gun of

254
00:11:19,880 --> 00:11:22,640
Speaker 8: stimulus literally the way you know, day after day you're

255
00:11:22,640 --> 00:11:25,080
Speaker 8: coming in and you're hearing more and more more stimulus

256
00:11:25,160 --> 00:11:28,480
Speaker 8: coming towards the Chinese economy. And yet today when the

257
00:11:28,559 --> 00:11:31,240
Speaker 8: moment we got in a little bit of bad data,

258
00:11:31,280 --> 00:11:34,320
Speaker 8: we got that pm I numbers showing that the services

259
00:11:34,320 --> 00:11:36,600
Speaker 8: sector is slowing down, which we would think would be

260
00:11:36,640 --> 00:11:40,079
Speaker 8: something that would would lead to further stimulus in China.

261
00:11:40,200 --> 00:11:42,800
Speaker 8: What do we see We see the market actually reacting,

262
00:11:42,920 --> 00:11:44,640
Speaker 8: you know, to the downside and saying, well, this is

263
00:11:44,679 --> 00:11:46,680
Speaker 8: bad news in China? Is everything that is bad?

264
00:11:46,960 --> 00:11:47,200
Speaker 5: Now?

265
00:11:47,400 --> 00:11:49,000
Speaker 8: You ask how, you know, how does it play for

266
00:11:49,040 --> 00:11:51,040
Speaker 8: the world economy. It's bad for the world economy. It

267
00:11:51,120 --> 00:11:53,960
Speaker 8: says something bad about the world economy. It says that

268
00:11:54,040 --> 00:11:57,000
Speaker 8: we are not buying Chinese stuff and we're not exporting

269
00:11:57,040 --> 00:11:59,960
Speaker 8: it elsewhere. But it is very bad for Europe, right

270
00:12:00,160 --> 00:12:02,120
Speaker 8: because it's it's you know, and I think that's why

271
00:12:02,320 --> 00:12:05,840
Speaker 8: we saw Mercedes Benz perhaps you know, reacting to the

272
00:12:05,840 --> 00:12:09,000
Speaker 8: downside today, even though they've got this fairly positive story

273
00:12:09,080 --> 00:12:12,720
Speaker 8: vis A Vitesla. And the reason is that a lot

274
00:12:12,760 --> 00:12:14,760
Speaker 8: of their cars go to China. A lot of the

275
00:12:14,840 --> 00:12:18,760
Speaker 8: high end equipment that's manufactured manufactured in Germany, and a

276
00:12:18,800 --> 00:12:22,000
Speaker 8: lot of the French luxury goods go to China. So

277
00:12:22,120 --> 00:12:25,000
Speaker 8: if they are not spending, if their services sectors lows down,

278
00:12:25,360 --> 00:12:26,880
Speaker 8: that's real trouble for Europe.

279
00:12:26,920 --> 00:12:29,720
Speaker 2: I will say Ola Hellenius is now a little bit more.

280
00:12:30,080 --> 00:12:32,280
Speaker 2: He's not as bullish on China as he wants. They

281
00:12:32,320 --> 00:12:35,440
Speaker 2: have a great story, the CEO of Mercedes Benz on

282
00:12:35,480 --> 00:12:39,040
Speaker 2: the terminal, even though they have you know, a concept

283
00:12:39,080 --> 00:12:44,600
Speaker 2: car that has long range. Any takeaways I mean you well,

284
00:12:44,920 --> 00:12:47,439
Speaker 2: my takeaway is that GM already has that kind of range,

285
00:12:47,480 --> 00:12:51,000
Speaker 2: you know, the Cadillac Escalade IQ or the Silverado ev

286
00:12:51,240 --> 00:12:51,839
Speaker 2: they already have.

287
00:12:51,800 --> 00:12:53,040
Speaker 1: Four h fifteen miles of range.

288
00:12:53,080 --> 00:12:54,920
Speaker 2: It's great to see it in a smaller package. And

289
00:12:55,880 --> 00:12:58,280
Speaker 2: I think it's cool that Mercedes is doing it, but

290
00:12:59,000 --> 00:13:01,280
Speaker 2: they're not as bullish on as they once were. Also,

291
00:13:01,320 --> 00:13:03,840
Speaker 2: the pm I data on China, this is backwards. If

292
00:13:03,840 --> 00:13:06,920
Speaker 2: they come out on Sunday or Monday and say, hey,

293
00:13:06,920 --> 00:13:08,880
Speaker 2: we're going to give money to everybody with kids under

294
00:13:08,880 --> 00:13:11,600
Speaker 2: three and everybody with parents over three, you know, and

295
00:13:11,640 --> 00:13:15,800
Speaker 2: we're going to cut the foreign reserve requirements at banks

296
00:13:15,800 --> 00:13:18,079
Speaker 2: from six percent to four percent. So that's all spec

297
00:13:18,400 --> 00:13:20,720
Speaker 2: this will stimulut of going forward. Why do we care

298
00:13:20,800 --> 00:13:23,280
Speaker 2: so much about the backward looking data release?

299
00:13:24,280 --> 00:13:24,480
Speaker 7: Yeah?

300
00:13:24,520 --> 00:13:29,760
Speaker 8: Absolutely? And and you know, so the PMI number being

301
00:13:29,800 --> 00:13:32,360
Speaker 8: focused on the services sector, which is more important for

302
00:13:32,400 --> 00:13:35,360
Speaker 8: the Chinese economy than the manufacturing, is because they want

303
00:13:35,360 --> 00:13:37,760
Speaker 8: to put it away a little bit towards the services sector, right,

304
00:13:38,040 --> 00:13:41,280
Speaker 8: So I think as long as we that should be

305
00:13:41,440 --> 00:13:44,839
Speaker 8: a net positive because it should mean that they are

306
00:13:44,960 --> 00:13:47,959
Speaker 8: more likely to deliver even more stimulus if more.

307
00:13:47,840 --> 00:13:48,960
Speaker 5: Is needed down the road.

308
00:13:49,080 --> 00:13:52,040
Speaker 8: Right, it shows that this this hurts the part of

309
00:13:52,040 --> 00:13:54,480
Speaker 8: the the part of the economy that they're most concerned

310
00:13:54,520 --> 00:13:57,640
Speaker 8: about is under pressure, and as long as that's the case,

311
00:13:57,720 --> 00:13:59,080
Speaker 8: you know, stimulus will keep coming.

312
00:13:59,440 --> 00:13:59,960
Speaker 5: But I think that.

313
00:14:00,760 --> 00:14:02,760
Speaker 2: Drap the machine gun, eddie and grab a bazooka.

314
00:14:03,280 --> 00:14:06,120
Speaker 8: You know, right, absolutely, But but but this, And you

315
00:14:06,160 --> 00:14:08,240
Speaker 8: know what, if they did bring the bazuka, if they

316
00:14:08,240 --> 00:14:11,640
Speaker 8: did say, hey, here's this massive stimulus package, all of

317
00:14:11,679 --> 00:14:14,040
Speaker 8: these things that we've talked about over the last few

318
00:14:14,080 --> 00:14:16,320
Speaker 8: weeks and they delivered all of that in one day,

319
00:14:16,600 --> 00:14:19,240
Speaker 8: the markets would have said wow, shock and awe, and

320
00:14:19,240 --> 00:14:21,680
Speaker 8: would have responded accordingly. But because it's a kind of

321
00:14:21,760 --> 00:14:25,680
Speaker 8: drip feed, it just doesn't have that momentous feel to it.

322
00:14:25,880 --> 00:14:28,480
Speaker 8: But I do think that this is more of what

323
00:14:28,520 --> 00:14:31,800
Speaker 8: we're seeing today is more about reading what the market

324
00:14:32,000 --> 00:14:34,920
Speaker 8: sentiment on China is than about what the outlook is,

325
00:14:34,920 --> 00:14:36,840
Speaker 8: because I don't think the outlook has changed today. What

326
00:14:36,840 --> 00:14:39,400
Speaker 8: you're saying is true, right, The PMI data is slightly

327
00:14:39,400 --> 00:14:42,880
Speaker 8: more backward looking than the than than the fresh stimulus.

328
00:14:43,040 --> 00:14:45,960
Speaker 8: But we are we asked, we are seeing something about

329
00:14:46,000 --> 00:14:48,520
Speaker 8: the market wants to be negative because the market doesn't

330
00:14:48,520 --> 00:14:49,720
Speaker 8: buy the China story.

331
00:14:49,480 --> 00:14:49,960
Speaker 2: At the moment.

332
00:14:50,160 --> 00:14:52,040
Speaker 1: Well, I mean, one of the things that I think

333
00:14:52,040 --> 00:14:53,920
Speaker 1: we're trying to get a grip of is how bad

334
00:14:54,000 --> 00:14:58,560
Speaker 1: is the real estate issue and the financing and of

335
00:14:58,640 --> 00:15:01,440
Speaker 1: the real estate economy and China? How bad is it?

336
00:15:01,480 --> 00:15:02,840
Speaker 1: How bad could it get?

337
00:15:03,800 --> 00:15:04,040
Speaker 5: Yeah?

338
00:15:04,040 --> 00:15:06,000
Speaker 8: And it is really bad? Right, And I think most

339
00:15:06,000 --> 00:15:08,840
Speaker 8: of the stimulus has been targeted at that sector. Now,

340
00:15:09,000 --> 00:15:10,920
Speaker 8: we had a Country Garden, which is one of their

341
00:15:10,960 --> 00:15:14,720
Speaker 8: big property developers, who was very much distressed and still

342
00:15:14,720 --> 00:15:17,960
Speaker 8: owes something like one hundred and eighty seven billion dollars

343
00:15:18,160 --> 00:15:22,560
Speaker 8: worth of outstanding bonds. Now they met payment on a

344
00:15:22,640 --> 00:15:26,560
Speaker 8: part two of their outstanding bonds today, but still you know,

345
00:15:27,000 --> 00:15:30,040
Speaker 8: several billion are coming due in the next few months,

346
00:15:30,400 --> 00:15:32,760
Speaker 8: and it's unclear whether they'll be able to meet most

347
00:15:32,840 --> 00:15:34,960
Speaker 8: or any of that. The market currently pricing their bonds

348
00:15:35,000 --> 00:15:37,200
Speaker 8: at something like, you know, nine cents to the dollar

349
00:15:37,280 --> 00:15:40,480
Speaker 8: or fourteen cents of the dollar, depending, But you know,

350
00:15:40,680 --> 00:15:46,600
Speaker 8: so this is but the authorities have targeted a lot

351
00:15:46,600 --> 00:15:50,280
Speaker 8: of stimulus at that sector. What is interesting that they've

352
00:15:50,320 --> 00:15:53,160
Speaker 8: done of late is that they pivoted also to things

353
00:15:53,200 --> 00:15:56,320
Speaker 8: like the stock market. Right, So clearly stimulating the stock

354
00:15:56,360 --> 00:15:59,080
Speaker 8: market by removing some of the costs and some of

355
00:15:59,080 --> 00:16:01,520
Speaker 8: the taxes a social with that, and if you see

356
00:16:01,640 --> 00:16:04,720
Speaker 8: the authorities really targeting the stock market. It tells you

357
00:16:04,720 --> 00:16:07,280
Speaker 8: something about what they want to do to sentiment. It

358
00:16:07,280 --> 00:16:09,440
Speaker 8: tells you something that they you know, when they're targeting

359
00:16:09,440 --> 00:16:13,440
Speaker 8: the building sector, that tells you something about what they

360
00:16:13,440 --> 00:16:15,520
Speaker 8: want to do to the economy when they when they're

361
00:16:15,560 --> 00:16:19,120
Speaker 8: targeting the stock market, it tells you that they really

362
00:16:19,160 --> 00:16:20,400
Speaker 8: worried about sentiment too.

363
00:16:21,160 --> 00:16:23,880
Speaker 1: Hey, Eddie, you know everybody, I know, it seems like

364
00:16:23,960 --> 00:16:27,280
Speaker 1: with a notable excession of John Tucker vacationed in Europe

365
00:16:27,600 --> 00:16:31,520
Speaker 1: this summer, what's the economy like in Europe these days?

366
00:16:32,920 --> 00:16:35,080
Speaker 8: Yeah, it's mixed, right, I mean, Europe is slowing down,

367
00:16:35,160 --> 00:16:36,920
Speaker 8: no doubt. Europe is struggling.

368
00:16:36,960 --> 00:16:37,360
Speaker 1: At the moment.

369
00:16:37,480 --> 00:16:41,200
Speaker 8: We're seeing our manufacturing you know, deep below below fifty

370
00:16:41,200 --> 00:16:43,760
Speaker 8: and on the PMIS, and we're seeing now with the

371
00:16:43,800 --> 00:16:46,800
Speaker 8: latest revisions that we got in today, numbers in Europe

372
00:16:46,840 --> 00:16:49,320
Speaker 8: have all been below fifty. Europe has really been struggling

373
00:16:49,360 --> 00:16:51,800
Speaker 8: and it just hasn't been able to get gain that traction. Now,

374
00:16:52,160 --> 00:16:53,880
Speaker 8: the situation in Europe is a little bit a little

375
00:16:53,880 --> 00:16:56,240
Speaker 8: bit different from the from the from the US. Whereas

376
00:16:56,240 --> 00:17:00,880
Speaker 8: the FED has a dual mandate growth and and inflation,

377
00:17:01,000 --> 00:17:03,800
Speaker 8: in Europe, the central banks are supposed to be. The

378
00:17:04,080 --> 00:17:08,560
Speaker 8: ECB is supposed to be focused on inflation, and that

379
00:17:08,680 --> 00:17:11,399
Speaker 8: means that that that that you know, they're probably putting

380
00:17:11,440 --> 00:17:14,960
Speaker 8: more pressure on the economy than they would have otherwise. Now,

381
00:17:15,200 --> 00:17:18,159
Speaker 8: whether they will keep that line if they, you know,

382
00:17:18,240 --> 00:17:22,360
Speaker 8: coming to see real trouble, real structural trouble.

383
00:17:22,040 --> 00:17:22,960
Speaker 5: In the Eurozone.

384
00:17:23,080 --> 00:17:25,720
Speaker 8: None of that we're seeing yet. But if that's the case,

385
00:17:25,760 --> 00:17:28,080
Speaker 8: I think, I think the ECB will will start to

386
00:17:28,080 --> 00:17:30,640
Speaker 8: rethink their policy despite inflation.

387
00:17:30,600 --> 00:17:32,720
Speaker 1: Right, I don't know. I mean all those us I

388
00:17:32,720 --> 00:17:34,439
Speaker 1: mean vacation dollars being spent in.

389
00:17:34,480 --> 00:17:37,080
Speaker 2: The y Well, hotel prices are very high. You know,

390
00:17:37,160 --> 00:17:39,720
Speaker 2: restaurants have been able to get a high ticket price.

391
00:17:40,000 --> 00:17:42,240
Speaker 1: All right, I stayed on the Jersey shore. Did just

392
00:17:42,240 --> 00:17:45,520
Speaker 1: find Eddie vanderwallt wut Managing Editor of Markets Life Team

393
00:17:45,520 --> 00:17:46,720
Speaker 1: at Bloomberg News. Next so much.

394
00:17:46,920 --> 00:17:50,520
Speaker 6: You're listening to the tape cancer Live program Bloomberg Markets

395
00:17:50,600 --> 00:17:53,960
Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune

396
00:17:54,000 --> 00:17:55,840
Speaker 6: in app, Bloomberg dot Com.

397
00:17:55,560 --> 00:17:56,960
Speaker 7: And the Bloomberg Business App.

398
00:17:57,000 --> 00:17:59,760
Speaker 6: You can also listen live on Amazon Alexa from our

399
00:17:59,760 --> 00:18:04,200
Speaker 6: flag Ship New York station just say Alexa playing Bloomberg eleven.

400
00:18:06,359 --> 00:18:08,119
Speaker 1: In September's we head towards the end of the year.

401
00:18:08,200 --> 00:18:09,879
Speaker 1: Part of that is the IPO space, and there is

402
00:18:09,920 --> 00:18:13,879
Speaker 1: one of note that recently hit the tape. ARM is

403
00:18:13,920 --> 00:18:15,920
Speaker 1: coming up with a big IPO, so let's get the

404
00:18:16,000 --> 00:18:18,760
Speaker 1: latest on that. Bailey Lipschal Tease covers all the markets,

405
00:18:18,800 --> 00:18:21,000
Speaker 1: including IPOs and spin offs and all that kind of

406
00:18:21,000 --> 00:18:23,639
Speaker 1: fun stuff, and for a time they're even SPACs. He

407
00:18:23,680 --> 00:18:26,960
Speaker 1: does that stuff for Bloomberg News. I'm psyched about this conversation.

408
00:18:27,040 --> 00:18:28,800
Speaker 1: I know, well, I've got a lot of questions heare me.

409
00:18:28,920 --> 00:18:32,760
Speaker 1: First of all, ARM, what is ARM? And tell us

410
00:18:32,760 --> 00:18:33,359
Speaker 1: about the deal.

411
00:18:33,920 --> 00:18:37,320
Speaker 4: ARM is a chip designer, so they essentially sell chip

412
00:18:37,400 --> 00:18:44,240
Speaker 4: blueprints to customers like Nvidia, AMD, Apple, you name it, Samsung.

413
00:18:44,440 --> 00:18:47,320
Speaker 4: So when they sell a chip, they pay a royalty

414
00:18:47,320 --> 00:18:49,480
Speaker 4: fee to ARMS. So ARM they can just pulls together

415
00:18:49,560 --> 00:18:52,520
Speaker 4: those royalties. It'll be it's expected to be, based on

416
00:18:52,560 --> 00:18:56,600
Speaker 4: the term they laid out this morning, the largest IPO

417
00:18:56,760 --> 00:18:59,560
Speaker 4: on a US exchange since Rivian in late twenty twenty one,

418
00:18:59,600 --> 00:19:02,560
Speaker 4: so large than ken View, which was the consumer health

419
00:19:02,560 --> 00:19:05,080
Speaker 4: spinoff split off from J and J earlier this year,

420
00:19:05,359 --> 00:19:07,800
Speaker 4: which raised about four point four billion dollars. So ARM

421
00:19:07,880 --> 00:19:11,479
Speaker 4: expected now to raise his up to four point eight

422
00:19:11,520 --> 00:19:15,320
Speaker 4: seven billion, But we know, uh, that'll probably get higher,

423
00:19:15,359 --> 00:19:17,159
Speaker 4: just based on how most of these ipeos go.

424
00:19:17,560 --> 00:19:19,800
Speaker 2: Right, you got to add in the green shoe eventually.

425
00:19:20,280 --> 00:19:21,840
Speaker 2: I don't even know where I say that.

426
00:19:21,920 --> 00:19:22,960
Speaker 5: You know, we have to. We didn't.

427
00:19:23,000 --> 00:19:25,760
Speaker 4: We weren't used to be able to write that. Oh

428
00:19:25,840 --> 00:19:27,479
Speaker 4: really it was too jargoning.

429
00:19:27,520 --> 00:19:30,080
Speaker 2: Anyway, it doesn't matter. I've been hearing a lot of

430
00:19:30,080 --> 00:19:33,000
Speaker 2: people today say ARM wanted to raise more. Now Arm's

431
00:19:33,000 --> 00:19:36,240
Speaker 2: gonna raise this And the fact is, I imagine ARM

432
00:19:36,600 --> 00:19:39,280
Speaker 2: isn't gonna be getting any of this money, right.

433
00:19:39,520 --> 00:19:43,280
Speaker 4: ARM doesn't care. ARM is just a pawn for soft Bank.

434
00:19:43,640 --> 00:19:45,840
Speaker 4: Is that right? That's one way to put it.

435
00:19:45,960 --> 00:19:48,480
Speaker 2: ARM is any is any are any of these proceeds

436
00:19:48,520 --> 00:19:49,640
Speaker 2: gonna be invested by ARM?

437
00:19:49,880 --> 00:19:50,399
Speaker 8: No, it is.

438
00:19:50,480 --> 00:19:52,240
Speaker 4: Soft Bank is selling about a ten percent.

439
00:19:52,359 --> 00:19:55,160
Speaker 1: None of the shares are primary shares, they are secondary shares.

440
00:19:55,240 --> 00:19:57,840
Speaker 2: Is kind of so and and and and soft Bank

441
00:19:58,160 --> 00:20:02,280
Speaker 2: recently bought twenty five per percent of ARM from the

442
00:20:02,359 --> 00:20:06,000
Speaker 2: Vision Funds, which Sauce Bank owns. So soft Bank, at

443
00:20:06,000 --> 00:20:10,120
Speaker 2: a higher valuation, took out a quarter of this company

444
00:20:10,160 --> 00:20:14,000
Speaker 2: from a fund that it owns why.

445
00:20:14,160 --> 00:20:16,439
Speaker 4: The view from the street and the view from soft

446
00:20:16,440 --> 00:20:18,320
Speaker 4: Bank is that they wanted to have this all under

447
00:20:18,320 --> 00:20:20,560
Speaker 4: one umbrella. When you look at the terms laid out

448
00:20:20,600 --> 00:20:24,080
Speaker 4: in the filing as it detailed, that sixteen billion dollar

449
00:20:24,160 --> 00:20:26,479
Speaker 4: deal buying back that twenty five percent stake held by

450
00:20:26,480 --> 00:20:29,560
Speaker 4: its Vision fund was part of a bigger switch up,

451
00:20:29,600 --> 00:20:31,480
Speaker 4: so not really clear kind of what was real.

452
00:20:31,520 --> 00:20:33,520
Speaker 2: Well, they were like, we'd like to hold this all

453
00:20:33,600 --> 00:20:36,040
Speaker 2: under one asset that we own rather than spread out,

454
00:20:36,040 --> 00:20:38,439
Speaker 2: and we're gonna punish ourselves by paying a price much

455
00:20:38,520 --> 00:20:42,320
Speaker 2: higher than it's worth. I don't buy that, Bailey. Are

456
00:20:42,320 --> 00:20:44,720
Speaker 2: there other people who have stakes in the Vision Fund?

457
00:20:44,800 --> 00:20:47,960
Speaker 2: Because it sounds to me like soft Bank is trying

458
00:20:48,000 --> 00:20:51,240
Speaker 2: to pacify some of these other shareholders that have been

459
00:20:51,640 --> 00:20:53,360
Speaker 2: walloped by huge losses.

460
00:20:53,640 --> 00:20:56,000
Speaker 4: Yeah, that's the way that you could. The Cynic or

461
00:20:56,040 --> 00:21:00,200
Speaker 4: the Matt Miller view is that you're basically satisfying those LPs. Okay,

462
00:21:00,200 --> 00:21:01,639
Speaker 4: because it's just never explained, right.

463
00:21:01,680 --> 00:21:04,880
Speaker 2: We always say, oh, SoftBank bought twenty five percent of

464
00:21:05,040 --> 00:21:07,760
Speaker 2: ARM from its own Vision fund, and then we move

465
00:21:07,800 --> 00:21:09,720
Speaker 2: on and the rest of the story and never say why,

466
00:21:09,760 --> 00:21:12,679
Speaker 2: which is like what I will say that My favorite

467
00:21:12,680 --> 00:21:14,960
Speaker 2: thing on social media was the spider Man meme where

468
00:21:15,040 --> 00:21:16,639
Speaker 2: was pointing at each other and it was kind of

469
00:21:16,680 --> 00:21:20,359
Speaker 2: like arm Vision Fund one and Masa Son basically like

470
00:21:20,760 --> 00:21:22,639
Speaker 2: where this money is moving from one fund to the

471
00:21:22,680 --> 00:21:26,359
Speaker 2: other fund to satisfy the underlying investors. But nonetheless it

472
00:21:26,440 --> 00:21:30,320
Speaker 2: still will be a massive IPO key for the overall

473
00:21:30,320 --> 00:21:34,159
Speaker 2: IPO sentiment, all things aside, which I know there are

474
00:21:34,200 --> 00:21:36,879
Speaker 2: a number of skeptics as it relates to SoftBank, given

475
00:21:37,040 --> 00:21:39,240
Speaker 2: the history of investing Big Road, the Big Wave with

476
00:21:39,280 --> 00:21:42,520
Speaker 2: Ali Baba, but had more underwhelming IPOs, the likes of

477
00:21:42,640 --> 00:21:44,960
Speaker 2: Uber obviously we work as one that comes to mind,

478
00:21:45,119 --> 00:21:47,760
Speaker 2: and a number of other investments that went public Viaspac

479
00:21:47,920 --> 00:21:49,320
Speaker 2: that I wrote about quite.

480
00:21:49,200 --> 00:21:51,600
Speaker 4: A bit when the well and not just soft Bank.

481
00:21:51,640 --> 00:21:53,640
Speaker 2: I mean you said yourself, this is the first IPOs

482
00:21:53,680 --> 00:21:55,840
Speaker 2: and Drivian how'd that go for investors?

483
00:21:56,840 --> 00:22:02,560
Speaker 4: So, I mean it's from the office question, No exactly Rivian.

484
00:22:02,640 --> 00:22:05,639
Speaker 4: Rivian looked quite a bit like Vinfest where just pulling

485
00:22:05,720 --> 00:22:10,760
Speaker 4: up the chart on the old terminal priced at where

486
00:22:10,760 --> 00:22:14,359
Speaker 4: did the price at? I mean, was trading up got

487
00:22:14,440 --> 00:22:14,639
Speaker 4: up to?

488
00:22:15,600 --> 00:22:15,800
Speaker 1: Right now?

489
00:22:15,840 --> 00:22:16,760
Speaker 4: It's at twenty three bucks?

490
00:22:16,800 --> 00:22:17,080
Speaker 6: All right?

491
00:22:17,359 --> 00:22:17,639
Speaker 7: All right?

492
00:22:17,720 --> 00:22:23,040
Speaker 1: So here we are with arm Every underwriter based on

493
00:22:23,040 --> 00:22:24,360
Speaker 1: Wall Street is on this deal.

494
00:22:24,400 --> 00:22:24,680
Speaker 8: What's that?

495
00:22:24,720 --> 00:22:25,359
Speaker 1: What's up with that?

496
00:22:25,520 --> 00:22:28,200
Speaker 4: Pretty much everyone except for Morgan stands okay?

497
00:22:28,320 --> 00:22:29,640
Speaker 1: Which liable exception.

498
00:22:29,400 --> 00:22:31,640
Speaker 4: A notable exception. It's interesting, a lot of that being

499
00:22:32,119 --> 00:22:35,239
Speaker 4: kind of the view in my colleague game you will

500
00:22:35,280 --> 00:22:36,840
Speaker 4: report on this. The view kind of is that if

501
00:22:36,880 --> 00:22:40,280
Speaker 4: you've done business with soft Bank in the past, whether

502
00:22:40,320 --> 00:22:43,760
Speaker 4: it was related to loans or other kind of your basis,

503
00:22:43,800 --> 00:22:45,679
Speaker 4: you're getting cut in on the deal. So when you

504
00:22:45,680 --> 00:22:49,359
Speaker 4: look at those big four banks that are leading the IPO,

505
00:22:49,440 --> 00:22:53,280
Speaker 4: you've got Goldman, JP, Morgan, Barclays, and Mazoo home Zoo

506
00:22:53,400 --> 00:22:56,359
Speaker 4: obviously a little bit surprising, but based in Asia relationship

507
00:22:56,400 --> 00:22:59,000
Speaker 4: with soft Bank, that's all kind of where the comes.

508
00:22:59,000 --> 00:23:01,080
Speaker 1: So let's look at ARMED company and the fundamentals of

509
00:23:01,119 --> 00:23:01,560
Speaker 1: the company.

510
00:23:01,960 --> 00:23:04,880
Speaker 4: It's not growing, no, it's actually slowing. It is more

511
00:23:04,920 --> 00:23:05,679
Speaker 4: and we wrote about it in.

512
00:23:05,760 --> 00:23:06,200
Speaker 9: A few weeks.

513
00:23:06,320 --> 00:23:09,160
Speaker 1: Chip company aren't chips and AI kind of the thing.

514
00:23:09,080 --> 00:23:11,919
Speaker 4: This year, but they're so heavily based in smartphones, so

515
00:23:12,000 --> 00:23:13,560
Speaker 4: smartphone sales have been weaked.

516
00:23:13,600 --> 00:23:15,200
Speaker 1: So this is not an AI play.

517
00:23:15,600 --> 00:23:17,720
Speaker 4: They're pitching it as an AI play, but it's still

518
00:23:17,760 --> 00:23:19,840
Speaker 4: a question of how that fits in and what kind

519
00:23:19,840 --> 00:23:22,600
Speaker 4: of premium will be baked in. Analysts from New Street

520
00:23:22,640 --> 00:23:24,720
Speaker 4: kind of laid out their expectations that this thing could

521
00:23:24,760 --> 00:23:27,720
Speaker 4: be worth, you know, eighty two billion dollars in three years,

522
00:23:27,760 --> 00:23:30,159
Speaker 4: which is quite the pie and the sky view. But

523
00:23:30,200 --> 00:23:32,240
Speaker 4: when you look at kind of as you mentioned, the

524
00:23:32,680 --> 00:23:35,919
Speaker 4: underlying growth has slowed. It's pretty much flat year over

525
00:23:36,000 --> 00:23:38,879
Speaker 4: year based on their last annual sales, pointing to the

526
00:23:38,920 --> 00:23:42,720
Speaker 4: global semiconductor kind of glut that we've been working through.

527
00:23:42,720 --> 00:23:46,600
Speaker 4: They are exposed us to smartphones and home devices and

528
00:23:46,640 --> 00:23:49,080
Speaker 4: not quite yet really penetrating that AI.

529
00:23:49,480 --> 00:23:51,280
Speaker 1: So the pitch when they go on the road, the

530
00:23:51,280 --> 00:23:55,679
Speaker 1: pitches we're a chip company for the phones, but we

531
00:23:55,880 --> 00:23:58,560
Speaker 1: are going to be an AI chip company in the

532
00:23:58,640 --> 00:24:01,440
Speaker 1: future and that's what you should be buying today exactly.

533
00:24:01,480 --> 00:24:04,040
Speaker 4: And they're pitching it as we're getting into data centers,

534
00:24:04,080 --> 00:24:06,320
Speaker 4: which we know with Nvidia has been so lucrative and

535
00:24:06,400 --> 00:24:08,320
Speaker 4: is where a lot of that money comes from. So

536
00:24:08,359 --> 00:24:11,080
Speaker 4: that's kind of the view of yes, we've done smartphones,

537
00:24:11,119 --> 00:24:11,880
Speaker 4: but this is where it.

538
00:24:11,880 --> 00:24:14,399
Speaker 1: Was not a clean deal. I mean, they got to

539
00:24:14,440 --> 00:24:16,240
Speaker 1: do some heavy lifting here, which it just feels like

540
00:24:16,320 --> 00:24:18,680
Speaker 1: cause I got slow in growth. I've got to buy

541
00:24:18,760 --> 00:24:22,120
Speaker 1: off on this leap towards AI, which I don't really

542
00:24:22,160 --> 00:24:26,560
Speaker 1: have much in the in the numbers right now, you know,

543
00:24:26,600 --> 00:24:29,360
Speaker 1: I can't really look at the as Matt was pointing out,

544
00:24:29,359 --> 00:24:32,120
Speaker 1: the soft Bank valuation, because that's probably not a good

545
00:24:32,200 --> 00:24:35,240
Speaker 1: comp even though it just happened. So there's some headlines

546
00:24:35,280 --> 00:24:35,800
Speaker 1: it just happened.

547
00:24:35,840 --> 00:24:38,200
Speaker 2: The soft Bank valuation was for like sixty four billion,

548
00:24:38,280 --> 00:24:39,919
Speaker 2: right yep, And they're going to come to market at

549
00:24:39,920 --> 00:24:41,160
Speaker 2: what kind of valuation.

550
00:24:40,880 --> 00:24:42,480
Speaker 4: Fifty four and a half right now as the current

551
00:24:42,560 --> 00:24:42,840
Speaker 4: high end.

552
00:24:42,960 --> 00:24:44,320
Speaker 1: Yeah, that's that's crazy.

553
00:24:44,400 --> 00:24:45,920
Speaker 4: Well, the other risk that a lot of investors have

554
00:24:46,000 --> 00:24:48,359
Speaker 4: pointed out is China. They generate about a quarter of

555
00:24:48,359 --> 00:24:52,760
Speaker 4: their revenue from China through a ARM called ARM Technology,

556
00:24:52,800 --> 00:24:57,399
Speaker 4: which isn't actually controlled by ARM or soft Bank, so

557
00:24:57,440 --> 00:25:00,520
Speaker 4: it's kind of this standalone subsidiary with arms shareh So

558
00:25:00,880 --> 00:25:02,720
Speaker 4: there is kind of a bit of a headwind not

559
00:25:02,760 --> 00:25:05,560
Speaker 4: only with pitching that future vision, but also exposure to.

560
00:25:05,560 --> 00:25:07,240
Speaker 1: All Right, so what's the timing of this thing is

561
00:25:07,240 --> 00:25:10,240
Speaker 1: There're gonna be a traditional road show and September thirteenth, right,

562
00:25:11,040 --> 00:25:13,040
Speaker 1: road shows kicked off, Okay.

563
00:25:12,680 --> 00:25:14,720
Speaker 4: So we're gonna see about a week long road show

564
00:25:14,800 --> 00:25:16,919
Speaker 4: pricing expected post So.

565
00:25:16,960 --> 00:25:19,119
Speaker 1: They're not doing any virtual stuff. They're going the rubber

566
00:25:19,160 --> 00:25:21,720
Speaker 1: Chicken in New York and London and so on.

567
00:25:21,880 --> 00:25:23,600
Speaker 4: So what we're hearing, we're hearing there hitting the road,

568
00:25:23,680 --> 00:25:26,199
Speaker 4: no more, no more zoom calls. So interesting to me.

569
00:25:26,240 --> 00:25:28,840
Speaker 2: The more interesting IPO talk is around a Ramco, even

570
00:25:28,840 --> 00:25:31,879
Speaker 2: though it kind of comes and goes. They could do

571
00:25:32,160 --> 00:25:33,960
Speaker 2: not an IPO, but they could raise I guess in

572
00:25:33,960 --> 00:25:37,120
Speaker 2: the secondary another fifty billion dollars.

573
00:25:37,160 --> 00:25:39,359
Speaker 1: Wait, So a Ramco's talking about doing more stock.

574
00:25:39,520 --> 00:25:42,159
Speaker 2: Well, I saw a story in the Journal, sorry Bailly,

575
00:25:42,240 --> 00:25:45,160
Speaker 2: a couple of days ago that said A Ramco may

576
00:25:45,200 --> 00:25:47,760
Speaker 2: come back to market now. To be fair, they in

577
00:25:47,800 --> 00:25:51,200
Speaker 2: the Journal, I think, cited another story from Bloomberg back

578
00:25:51,200 --> 00:25:53,800
Speaker 2: in March. Well bred story comes and goes, but it

579
00:25:53,880 --> 00:25:56,080
Speaker 2: could be a massive.

580
00:25:56,840 --> 00:25:59,840
Speaker 1: Capital race with brinkrud at ninety bucks a bottle I

581
00:26:00,359 --> 00:26:01,480
Speaker 1: issue more stock, wouldn't you?

582
00:26:02,200 --> 00:26:03,080
Speaker 4: They really want to.

583
00:26:03,119 --> 00:26:04,600
Speaker 2: But the thing is they can't do it on other

584
00:26:04,640 --> 00:26:06,399
Speaker 2: exchanges because they don't want that regulations.

585
00:26:06,440 --> 00:26:07,560
Speaker 1: They have to do it in riod.

586
00:26:08,520 --> 00:26:11,760
Speaker 4: Yeah, that's definitely an interesting, interesting company and kind of

587
00:26:11,760 --> 00:26:15,400
Speaker 4: that the prospects of raising cash. Obviously there is kind

588
00:26:15,400 --> 00:26:18,840
Speaker 4: of the push. Broadly speaking, for Saudi you're able to diversify,

589
00:26:18,880 --> 00:26:19,800
Speaker 4: and that's why we've seen.

590
00:26:19,640 --> 00:26:22,000
Speaker 2: All big numbers that would be the biggest amount of

591
00:26:22,040 --> 00:26:25,680
Speaker 2: money ever raised selling shares, right, I mean stock is

592
00:26:25,720 --> 00:26:29,800
Speaker 2: the biggest IPO is like ant Group or something, right, Yeah,

593
00:26:30,080 --> 00:26:31,040
Speaker 2: like thirty four billion.

594
00:26:31,359 --> 00:26:33,040
Speaker 1: Yeah, all right, we got so, we got so from

595
00:26:33,040 --> 00:26:35,679
Speaker 1: your perspective, we've got ARM. How's the rest of the

596
00:26:35,680 --> 00:26:39,120
Speaker 1: calendar look In the next four or five six weeks.

597
00:26:38,920 --> 00:26:42,080
Speaker 4: We've got Instacart. Expectations will be bubbling. They filed their

598
00:26:42,119 --> 00:26:45,720
Speaker 4: S one a few days after ARM, as did Clavio,

599
00:26:45,840 --> 00:26:50,000
Speaker 4: which is another tech company. So these are two real

600
00:26:50,160 --> 00:26:52,359
Speaker 4: tests of what IPO demand will look like. When I

601
00:26:52,359 --> 00:26:54,399
Speaker 4: talk to a lot of investors in bankers, they kind

602
00:26:54,400 --> 00:26:56,520
Speaker 4: of see ARM as a one off, just given it's

603
00:26:56,560 --> 00:27:00,520
Speaker 4: a big company, it's profitable, it's was public at one song,

604
00:27:00,760 --> 00:27:03,800
Speaker 4: whereas now you have Instacart hasn't been public, was really

605
00:27:03,800 --> 00:27:07,440
Speaker 4: expected to go during the pandemic, but has taken quite

606
00:27:07,440 --> 00:27:09,920
Speaker 4: some time. In Claviyow, which is another one which will

607
00:27:09,920 --> 00:27:13,360
Speaker 4: be closely watched just to see how investors are valuing

608
00:27:13,400 --> 00:27:16,240
Speaker 4: some of these technology companies, especially those that are primarily

609
00:27:16,280 --> 00:27:20,439
Speaker 4: owned by venture capitalists, again as opposed to SoftBank, take private,

610
00:27:20,440 --> 00:27:21,240
Speaker 4: bring back public.

611
00:27:21,320 --> 00:27:23,879
Speaker 1: Yep, all right, lots of stuff. Bailly, thanks so much.

612
00:27:23,920 --> 00:27:24,639
Speaker 4: Just stop it in.

613
00:27:24,680 --> 00:27:28,359
Speaker 1: Billy Lipsholt season markets reporter for Bloomberg News, bringing us

614
00:27:28,359 --> 00:27:32,479
Speaker 1: the latest on the deal calendar. One of the notable

615
00:27:32,560 --> 00:27:36,480
Speaker 1: names is a Ramca is arm arm so that that

616
00:27:36,640 --> 00:27:39,040
Speaker 1: chip maker, so be inchating to see how that plays

617
00:27:39,080 --> 00:27:39,960
Speaker 1: in this market.

618
00:27:40,680 --> 00:27:44,520
Speaker 6: You're listening to the Team ken'shur Live program Bloomberg Markets

619
00:27:44,560 --> 00:27:47,639
Speaker 6: weekdays at ten am Eastern on Bloomberg dot com, the

620
00:27:47,720 --> 00:27:50,879
Speaker 6: iHeartRadio app and the Bloomberg Business app, or listen on

621
00:27:50,920 --> 00:27:53,080
Speaker 6: demand wherever you get your podcasts.

622
00:27:55,440 --> 00:27:57,800
Speaker 1: All right, we were talking about oil again, Brent. I'll

623
00:27:57,840 --> 00:28:01,600
Speaker 1: just quote the Brent stuff, ninety one dollars per barrel.

624
00:28:01,640 --> 00:28:03,639
Speaker 1: It's up two and a quarter percent. I don't know

625
00:28:03,680 --> 00:28:06,000
Speaker 1: what's going on. I guess it's supply and demand. But

626
00:28:06,119 --> 00:28:08,280
Speaker 1: let's bring on Fernando Valley. He knows what's going on

627
00:28:08,320 --> 00:28:10,240
Speaker 1: because we pay him to know what's going on. He

628
00:28:10,400 --> 00:28:13,800
Speaker 1: is the energy analyst for Bloomberg Intelligence. Fernando, is it

629
00:28:13,960 --> 00:28:18,119
Speaker 1: just the SADIS and OPEC buddies talking tough. Is is that

630
00:28:18,200 --> 00:28:20,200
Speaker 1: what's driving this crewe to oil higher.

631
00:28:21,359 --> 00:28:24,800
Speaker 11: Well, it's been a little bit of a better demand improvement,

632
00:28:24,800 --> 00:28:26,520
Speaker 11: and then people like you, Paul, who think we're going

633
00:28:26,560 --> 00:28:29,959
Speaker 11: to have a soft lending and lower interest rates creating

634
00:28:30,000 --> 00:28:34,080
Speaker 11: some momentum behind oil, which frankly, I think is a

635
00:28:34,080 --> 00:28:38,960
Speaker 11: little misplaced considering that the Chinese real estate market continues

636
00:28:39,000 --> 00:28:43,000
Speaker 11: to deteriorate. And I'm with Matt, I think that the

637
00:28:43,680 --> 00:28:45,440
Speaker 11: higher interest rates are here to stack.

638
00:28:46,520 --> 00:28:49,240
Speaker 2: The Chinese did start a little bit of stimulus, a

639
00:28:49,240 --> 00:28:50,040
Speaker 2: little bit more, I.

640
00:28:50,040 --> 00:28:51,120
Speaker 1: Should say, right with.

641
00:28:53,480 --> 00:28:57,640
Speaker 2: Foreign reserves cut at their banks, and they're giving money

642
00:28:57,680 --> 00:29:00,840
Speaker 2: to people to pay for their kids and for their parents.

643
00:29:00,880 --> 00:29:03,440
Speaker 2: And it's been this, as Eddie Vanderwold said, kind of

644
00:29:03,440 --> 00:29:06,880
Speaker 2: a drip drip drip of stimulus. But is this part

645
00:29:06,920 --> 00:29:10,400
Speaker 2: of part of the run up in the oil price?

646
00:29:10,480 --> 00:29:12,120
Speaker 2: People think China's going to come back?

647
00:29:13,320 --> 00:29:16,680
Speaker 11: Absolutely China. I mean China has come back, and in

648
00:29:16,720 --> 00:29:19,120
Speaker 11: a lot of ways. If you look at just their imports,

649
00:29:19,680 --> 00:29:23,000
Speaker 11: they are much stronger than they were during the COVID

650
00:29:23,120 --> 00:29:27,840
Speaker 11: zero policy in twenty twenty two. But even then, we're

651
00:29:27,880 --> 00:29:31,400
Speaker 11: seeing some declines in the US inventories and global inventories,

652
00:29:31,600 --> 00:29:33,480
Speaker 11: but we're not seeing the pace of demand that you

653
00:29:33,480 --> 00:29:37,760
Speaker 11: would expect in an oil bull market, especially in the

654
00:29:37,760 --> 00:29:40,960
Speaker 11: Western hemisphere. And then you know, we can talk about

655
00:29:41,000 --> 00:29:46,280
Speaker 11: how higher rates are going to affect investments elsewhere, and

656
00:29:46,280 --> 00:29:49,200
Speaker 11: then the employment picture. All of those will be the

657
00:29:49,600 --> 00:29:52,240
Speaker 11: ultimate determinant of oil for the remainder of the year,

658
00:29:53,040 --> 00:29:56,120
Speaker 11: and we see cracks in that window.

659
00:29:57,400 --> 00:29:58,840
Speaker 10: But I think in the short term it's.

660
00:29:58,720 --> 00:30:02,120
Speaker 11: Been as you mentioned this, Muli, the supply cuts, Saudi

661
00:30:02,280 --> 00:30:06,920
Speaker 11: extending supply cuts to September, and then some positive momentum

662
00:30:06,960 --> 00:30:08,480
Speaker 11: on the US inventory sign.

663
00:30:08,960 --> 00:30:11,680
Speaker 1: So, Fernando, how about our buddies in the fracking space.

664
00:30:11,720 --> 00:30:14,160
Speaker 1: How come they're not out there drilling or fracking whatever

665
00:30:14,200 --> 00:30:17,160
Speaker 1: they do to If I if I saw Wtech Crudel

666
00:30:17,240 --> 00:30:19,240
Speaker 1: with eighty bucks eighty seven dollars a bottle, I'd be

667
00:30:19,280 --> 00:30:20,000
Speaker 1: pumping more out.

668
00:30:21,320 --> 00:30:24,840
Speaker 10: Well, I think it's one thing you mentioned interest rates.

669
00:30:25,560 --> 00:30:29,920
Speaker 11: Yes, you're higher, so your cost to drill is significantly higher,

670
00:30:29,960 --> 00:30:34,240
Speaker 11: especially for the private players. Data availability is much smaller

671
00:30:34,280 --> 00:30:38,040
Speaker 11: as well. And then we've talked about this, but the

672
00:30:38,080 --> 00:30:42,400
Speaker 11: efficiency and shale has really peaked. You know, our colleagues

673
00:30:42,400 --> 00:30:44,440
Speaker 11: at Bloomberg, and you have just put out a report

674
00:30:44,560 --> 00:30:49,360
Speaker 11: with the productivity per well and they're down versus twenty

675
00:30:49,480 --> 00:30:50,360
Speaker 11: twenty two levels.

676
00:30:51,000 --> 00:30:53,800
Speaker 4: Why is that, Well, it's.

677
00:30:53,680 --> 00:30:57,640
Speaker 11: A combination of a drilled some of your best acredge b.

678
00:30:58,960 --> 00:31:01,600
Speaker 11: You are not making the same advances if you go

679
00:31:01,720 --> 00:31:04,200
Speaker 11: back just you know, over ten years, we've been drilling

680
00:31:04,240 --> 00:31:08,200
Speaker 11: longer and longer wells. We've been increasing how many fracts

681
00:31:08,880 --> 00:31:11,440
Speaker 11: stages as we call them, are placed in each well,

682
00:31:11,640 --> 00:31:14,240
Speaker 11: and we kind of peaked because we've realized that the

683
00:31:14,360 --> 00:31:19,520
Speaker 11: cost benefit of adding more going longer is not worth

684
00:31:19,520 --> 00:31:20,320
Speaker 11: the price anymore.

685
00:31:20,320 --> 00:31:25,160
Speaker 10: We kind of hit that sweet spot and then we're

686
00:31:25,240 --> 00:31:25,760
Speaker 10: drilling out.

687
00:31:25,800 --> 00:31:28,560
Speaker 11: We're going to further and further out regions that don't

688
00:31:28,600 --> 00:31:32,440
Speaker 11: have the same positive geology as the core of the place.

689
00:31:33,200 --> 00:31:35,160
Speaker 2: By the way, in terms of the spr which we

690
00:31:37,040 --> 00:31:41,800
Speaker 2: ran down, I guess to save Americans from higher gas prices,

691
00:31:41,840 --> 00:31:45,840
Speaker 2: maybe to win the midterm elections, whatever, are we gonna

692
00:31:45,840 --> 00:31:48,760
Speaker 2: build that back up because it seems like we certainly

693
00:31:48,800 --> 00:31:50,280
Speaker 2: missed the chance in terms of price.

694
00:31:51,840 --> 00:31:55,400
Speaker 11: Well, there could be more chances. One thing that's certainly

695
00:31:55,440 --> 00:31:57,960
Speaker 11: in oil is the cyclicality, So there will be chances,

696
00:31:58,160 --> 00:32:01,920
Speaker 11: but we don't really need to consuming. We are, you know,

697
00:32:02,000 --> 00:32:05,440
Speaker 11: thirteen million barrels a day of oil output. Our neighbors

698
00:32:05,440 --> 00:32:09,000
Speaker 11: to North and Canada four million barrels. That all gives

699
00:32:09,040 --> 00:32:13,120
Speaker 11: you a significant cushion that when we started growing the

700
00:32:13,320 --> 00:32:16,120
Speaker 11: SPR to the levels that they were now, we didn't

701
00:32:16,120 --> 00:32:18,680
Speaker 11: have the US was not the biggest oil producer in

702
00:32:18,720 --> 00:32:21,520
Speaker 11: the world. When we built the SPR to those levels.

703
00:32:22,040 --> 00:32:29,040
Speaker 11: They're also commercial inventory, so we have available crew to Still,

704
00:32:29,560 --> 00:32:32,880
Speaker 11: the bigger concern is really some regions like the Northeast

705
00:32:33,000 --> 00:32:36,920
Speaker 11: and their lack of diesel inventory, rather than crude itself.

706
00:32:37,760 --> 00:32:40,560
Speaker 1: All right, does it surprise you or is it surprising

707
00:32:40,640 --> 00:32:45,200
Speaker 1: to the market that OPEC plus, I guess has this

708
00:32:45,920 --> 00:32:48,920
Speaker 1: level of impact on the market. I kind of there's

709
00:32:48,920 --> 00:32:50,360
Speaker 1: a time when I thought OPEQ would maybe I had

710
00:32:50,360 --> 00:32:54,240
Speaker 1: lost some of its power. OPEC plus I don't.

711
00:32:54,080 --> 00:32:56,160
Speaker 10: Think that they are having that big impact.

712
00:32:56,200 --> 00:33:00,000
Speaker 11: I think it's really China right now and the expectations

713
00:33:00,080 --> 00:33:02,960
Speaker 11: of a soft landing that are driving. Of course they

714
00:33:03,520 --> 00:33:07,080
Speaker 11: can in a market that is so teetering on supply

715
00:33:07,880 --> 00:33:11,800
Speaker 11: in balances, cutting as much supply as they have will

716
00:33:11,840 --> 00:33:16,280
Speaker 11: have a significant impact, but over the long term they

717
00:33:16,320 --> 00:33:19,760
Speaker 11: can't fight the FED. They don't have the balance sheet

718
00:33:20,080 --> 00:33:22,600
Speaker 11: and they don't have the unity required for them to

719
00:33:22,640 --> 00:33:26,680
Speaker 11: fight the FED. If rates remain higher for a long

720
00:33:26,720 --> 00:33:29,160
Speaker 11: period and drives lower investment.

721
00:33:28,720 --> 00:33:31,200
Speaker 1: All right, If I'm an investor here, I kind of

722
00:33:31,240 --> 00:33:34,240
Speaker 1: thought that the energy game was played out. I had

723
00:33:34,320 --> 00:33:37,320
Speaker 1: my run in twenty twenty one, twenty two, kind of

724
00:33:37,320 --> 00:33:40,680
Speaker 1: thought the game was played out. But no, the stocture

725
00:33:40,760 --> 00:33:42,320
Speaker 1: rolling here. How do I play it? Do I just

726
00:33:42,360 --> 00:33:45,400
Speaker 1: go out and buy Exxon Mobile or what are you know?

727
00:33:45,520 --> 00:33:47,400
Speaker 1: Energy investors that you talked to, how are they playing this?

728
00:33:47,480 --> 00:33:48,440
Speaker 1: Did this run up here?

729
00:33:49,120 --> 00:33:50,240
Speaker 10: Well, that's one way there.

730
00:33:50,360 --> 00:33:53,640
Speaker 11: You can also look at oil services because as we

731
00:33:53,760 --> 00:33:56,320
Speaker 11: said that we are a bit more bearish in the

732
00:33:56,360 --> 00:33:58,760
Speaker 11: short term because of the demand picture, but in the

733
00:33:58,760 --> 00:34:01,440
Speaker 11: long term this underinvestment and the high rates are leading

734
00:34:01,440 --> 00:34:06,720
Speaker 11: to further on their investment. You can't find that more

735
00:34:06,840 --> 00:34:10,400
Speaker 11: areas will become commercial. So oil services and exploration might

736
00:34:10,440 --> 00:34:12,759
Speaker 11: start coming back in twenty twenty four to twenty twenty five,

737
00:34:13,040 --> 00:34:15,360
Speaker 11: And it might even be as your earlier conversations on

738
00:34:15,440 --> 00:34:18,520
Speaker 11: Man United, it might be why the glaziers are waiting

739
00:34:18,600 --> 00:34:21,000
Speaker 11: till twenty twenty five. If oil prices get to one hundred.

740
00:34:21,040 --> 00:34:22,680
Speaker 11: Maybe the Saudi's will give him a better offer.

741
00:34:23,360 --> 00:34:27,160
Speaker 1: Yeah, it's a good point, Yep, Saudi's are everywhere these days.

742
00:34:27,560 --> 00:34:28,000
Speaker 5: Mo money.

743
00:34:28,080 --> 00:34:30,839
Speaker 11: Also, they lost in my arsenal this weekend, so that's

744
00:34:30,840 --> 00:34:31,880
Speaker 11: probably why they're down.

745
00:34:31,960 --> 00:34:33,400
Speaker 1: That's right. Wait, what's arsenal?

746
00:34:33,480 --> 00:34:33,719
Speaker 7: Is that?

747
00:34:33,800 --> 00:34:34,560
Speaker 4: Are you a gunner?

748
00:34:35,120 --> 00:34:35,440
Speaker 1: Yes?

749
00:34:35,560 --> 00:34:36,920
Speaker 10: Yes, okay, see look at you.

750
00:34:37,200 --> 00:34:39,399
Speaker 2: Well I've been listening to surveillance, so you know, I'm

751
00:34:39,480 --> 00:34:42,160
Speaker 2: learning more and more about British soccer from Tom Keane.

752
00:34:42,360 --> 00:34:45,040
Speaker 1: All right, so what's what's kind of the bear case here?

753
00:34:45,040 --> 00:34:47,520
Speaker 1: Because I know if I talked to Mike mcgloon, your

754
00:34:47,560 --> 00:34:51,120
Speaker 1: your colleague of Bloomberg Intelligence, he follows all commodities, including oil.

755
00:34:51,560 --> 00:34:53,760
Speaker 1: He's bearish on oil. He thinks we go to fifty.

756
00:34:54,640 --> 00:34:58,080
Speaker 1: What is the fundamental bear case for global energy?

757
00:34:59,200 --> 00:35:02,960
Speaker 11: I think the fundament case is bearish for the global economy.

758
00:35:03,160 --> 00:35:06,759
Speaker 11: And that's Mike's point, is that the Chinese real estate

759
00:35:06,800 --> 00:35:10,319
Speaker 11: market could collapse and that would drag along a lot

760
00:35:10,360 --> 00:35:13,799
Speaker 11: of different industries, from petrochemicals to oil. I still think

761
00:35:13,840 --> 00:35:16,279
Speaker 11: that at the end of the day, the oil chain

762
00:35:16,360 --> 00:35:19,120
Speaker 11: looks very attractive in a long term basis, But I

763
00:35:19,160 --> 00:35:21,719
Speaker 11: agree with Mike the short term, demand will be the

764
00:35:21,719 --> 00:35:25,560
Speaker 11: biggest driver. And you know, you just can't raise rates

765
00:35:25,600 --> 00:35:28,160
Speaker 11: as quickly and as sharply as we did without an

766
00:35:28,200 --> 00:35:33,440
Speaker 11: impact on consumption. And we're starting to see that. You know,

767
00:35:33,440 --> 00:35:36,319
Speaker 11: it's just a matter of how if China gets the

768
00:35:36,360 --> 00:35:39,120
Speaker 11: soft landing, that's the biggest variables. Not even the US

769
00:35:39,200 --> 00:35:42,360
Speaker 11: is because we're already not having that grade of a

770
00:35:42,400 --> 00:35:46,120
Speaker 11: soft landing. As far as gasoline consumption, diesel consumption, those

771
00:35:46,200 --> 00:35:47,760
Speaker 11: numbers are already kind of dismal.

772
00:35:48,640 --> 00:35:52,279
Speaker 2: Wow, yeah, all right, not for us, like for you

773
00:35:52,360 --> 00:35:54,719
Speaker 2: and me and Tucker right right, we're still buying as

774
00:35:54,800 --> 00:35:55,680
Speaker 2: much gas as we can.

775
00:35:56,040 --> 00:35:59,280
Speaker 1: Yep, regular unleaded. That's a role for an end of value,

776
00:35:59,400 --> 00:36:02,720
Speaker 1: you guys a little bit more. Yeah, all right, Fernando,

777
00:36:02,920 --> 00:36:04,800
Speaker 1: we appreciate it for an end of all. Senior analyst

778
00:36:04,840 --> 00:36:08,480
Speaker 1: covers all the energy space for Bloomberg Intelligence.

779
00:36:08,920 --> 00:36:12,040
Speaker 6: You're listening to the tape can's our live program Bloomberg

780
00:36:12,080 --> 00:36:15,680
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

781
00:36:15,760 --> 00:36:17,719
Speaker 6: tune in app, Bloomberg dot Com, and.

782
00:36:17,680 --> 00:36:19,000
Speaker 7: The Bloomberg Business App.

783
00:36:19,000 --> 00:36:21,839
Speaker 6: You can also listen live on Amazon Alexa from our

784
00:36:21,840 --> 00:36:26,920
Speaker 6: flagship New York station. Just say Alexa Play Bloomberg eleven thirty.

785
00:36:27,920 --> 00:36:30,160
Speaker 2: Now we've been promising to talk to you about more

786
00:36:30,200 --> 00:36:35,000
Speaker 2: about cars. Nice all, but from chips perspective. Nicole Dougal

787
00:36:35,080 --> 00:36:38,919
Speaker 2: joins US senior VP and General manager for Automotive over

788
00:36:39,000 --> 00:36:43,440
Speaker 2: at Qualcomm, and Nicole, thanks so much for your time.

789
00:36:44,160 --> 00:36:47,040
Speaker 2: I'm guessing that Qualcom is one of the biggest automotive

790
00:36:47,080 --> 00:36:48,400
Speaker 2: chip suppliers in the world.

791
00:36:48,960 --> 00:36:50,799
Speaker 1: Lay out the market for us.

792
00:36:51,840 --> 00:36:53,840
Speaker 12: You know, the card is going through a tremendous amount

793
00:36:53,840 --> 00:36:57,520
Speaker 12: of disruption. It is becoming a software defined platform.

794
00:36:57,960 --> 00:37:00,600
Speaker 9: And a big shift that is happening in.

795
00:37:00,080 --> 00:37:03,319
Speaker 12: In the car, especially as it become electric, is the

796
00:37:03,480 --> 00:37:07,600
Speaker 12: entire electrical architecture of the vehicle is changing. Bigger chips,

797
00:37:07,680 --> 00:37:11,880
Speaker 12: more complicated chips, all software driven, and that has created

798
00:37:11,880 --> 00:37:14,319
Speaker 12: a significant opportunity for us to be able to bring

799
00:37:14,360 --> 00:37:16,560
Speaker 12: our technology, our differentiation.

800
00:37:16,160 --> 00:37:16,800
Speaker 9: Into the space.

801
00:37:17,920 --> 00:37:19,960
Speaker 1: I've been going to go ahead and Nicole.

802
00:37:20,840 --> 00:37:23,800
Speaker 12: We are an autonomous driving we are driving the cockpit

803
00:37:23,880 --> 00:37:24,480
Speaker 12: of the vehicle.

804
00:37:24,600 --> 00:37:27,240
Speaker 9: We connect the car to the cloud. Big opportunity.

805
00:37:27,640 --> 00:37:29,200
Speaker 1: So I was just saying to Matt, you know, I've

806
00:37:29,200 --> 00:37:31,400
Speaker 1: been going to the Consumer Electronics show for about thirty

807
00:37:31,480 --> 00:37:33,720
Speaker 1: years and it's really not even that anymore. It's basically

808
00:37:33,800 --> 00:37:38,000
Speaker 1: an auto show in Vegas in Vegas with some electronics

809
00:37:38,000 --> 00:37:40,200
Speaker 1: around it. That's really the auto industry is really take

810
00:37:40,200 --> 00:37:42,680
Speaker 1: it over and it shows how technology is coming into

811
00:37:42,680 --> 00:37:47,239
Speaker 1: the automobile. So, Nicole, from your perspective, from the Chips perspective,

812
00:37:47,719 --> 00:37:52,000
Speaker 1: is the industry capable to meet the demand that this industry,

813
00:37:52,040 --> 00:37:54,400
Speaker 1: that auto industry is going to really drive over the

814
00:37:54,480 --> 00:37:56,080
Speaker 1: next five to ten years.

815
00:37:56,719 --> 00:37:57,399
Speaker 9: Absolutely.

816
00:37:57,520 --> 00:38:04,200
Speaker 12: I think, you know, the the pandemic definitely highlighted gap

817
00:38:04,320 --> 00:38:07,759
Speaker 12: in the resilience of the supply chain, but I think

818
00:38:08,239 --> 00:38:11,200
Speaker 12: every automaker and their suppliers.

819
00:38:10,760 --> 00:38:12,319
Speaker 9: Have understood how to go deal with that.

820
00:38:13,560 --> 00:38:16,640
Speaker 12: We now have direct relationships with pretty much all of

821
00:38:16,719 --> 00:38:21,480
Speaker 12: our major automotive customers, and you know, supply chain is

822
00:38:21,520 --> 00:38:26,279
Speaker 12: a very complex part of the automaker's overall business, so

823
00:38:26,719 --> 00:38:28,279
Speaker 12: a deep understanding of that part of the.

824
00:38:28,280 --> 00:38:29,120
Speaker 9: Business is needed.

825
00:38:29,440 --> 00:38:31,840
Speaker 12: It has actually allowed us to build very intimate, very

826
00:38:31,840 --> 00:38:34,880
Speaker 12: approximate relationship with our automaker customers.

827
00:38:35,680 --> 00:38:37,560
Speaker 2: So talk to us about the products that you make,

828
00:38:37,600 --> 00:38:42,160
Speaker 2: what they actually enable in a vehicle. You know, I've

829
00:38:42,160 --> 00:38:44,600
Speaker 2: been seeing I go to all the auto shows r

830
00:38:45,000 --> 00:38:47,040
Speaker 2: I did before I moved back here. To the US

831
00:38:47,080 --> 00:38:51,560
Speaker 2: and I have been seeing Qualcomm at every one What

832
00:38:51,600 --> 00:38:55,080
Speaker 2: do you make possible that we enjoy doing in cars?

833
00:38:55,840 --> 00:38:57,920
Speaker 9: So we've been connecting the car to the cloud for

834
00:38:57,960 --> 00:38:58,759
Speaker 9: over twenty years.

835
00:38:58,800 --> 00:39:01,600
Speaker 12: That's been our core business, you know, wireless communications, and

836
00:39:01,640 --> 00:39:03,520
Speaker 12: we entered the telematics market back.

837
00:39:03,440 --> 00:39:04,279
Speaker 9: In two thousand and two.

838
00:39:05,280 --> 00:39:08,319
Speaker 12: Most cars that are connected to the cloud today use

839
00:39:08,400 --> 00:39:11,160
Speaker 12: a lot of Fi wireless technology. We have everything from

840
00:39:11,719 --> 00:39:18,359
Speaker 12: five G Wi Fi navigation systems, powerline communication, Bluetooth. We

841
00:39:18,600 --> 00:39:21,959
Speaker 12: entered the in car experience market.

842
00:39:21,719 --> 00:39:23,640
Speaker 9: As we like to call it, which is the cockpit,

843
00:39:23,680 --> 00:39:24,479
Speaker 9: which is the in car.

844
00:39:24,520 --> 00:39:28,479
Speaker 12: Navigation, and this is a big business that has grown

845
00:39:28,480 --> 00:39:32,279
Speaker 12: over the last decade or so. That's about creating an

846
00:39:32,320 --> 00:39:35,759
Speaker 12: experience for the consumer that is owned by the automaker.

847
00:39:35,840 --> 00:39:38,279
Speaker 12: So automakers are always looking to find a way to

848
00:39:38,280 --> 00:39:41,399
Speaker 12: connect to their consumers, to be able to find differentiators

849
00:39:41,440 --> 00:39:44,440
Speaker 12: that pull the consumers in. As cars have gone electric,

850
00:39:44,680 --> 00:39:46,400
Speaker 12: you know, you can see all of the new vehicles

851
00:39:46,440 --> 00:39:49,239
Speaker 12: being launched. There is a complete change in terms of

852
00:39:49,320 --> 00:39:51,400
Speaker 12: how the in car experiences evolved.

853
00:39:51,800 --> 00:39:55,719
Speaker 9: Ray at I here in Munich, we announced a partnership.

854
00:39:55,960 --> 00:39:58,560
Speaker 12: We have cars now with BMW that are running our

855
00:39:58,600 --> 00:40:01,839
Speaker 12: technologies for both the cockpit and connectivity.

856
00:40:02,280 --> 00:40:03,319
Speaker 9: Same with Mercedes.

857
00:40:03,719 --> 00:40:07,520
Speaker 12: Their latest E class is running our cockpit technology and chips.

858
00:40:07,960 --> 00:40:10,400
Speaker 12: So this is a trend that has started to really

859
00:40:10,480 --> 00:40:14,160
Speaker 12: take off globally. In a market like China, we are

860
00:40:14,239 --> 00:40:17,640
Speaker 12: one of the largest suppliers of cockpit chips just because

861
00:40:17,680 --> 00:40:19,680
Speaker 12: of the pace at which we can move the technology.

862
00:40:20,080 --> 00:40:22,880
Speaker 12: And then we entered the air ass business driver assistance

863
00:40:22,920 --> 00:40:25,960
Speaker 12: and automated driving about five years ago. We announced a

864
00:40:26,000 --> 00:40:29,120
Speaker 12: partnership with the BMW theres a few years ago we

865
00:40:29,160 --> 00:40:29,479
Speaker 12: were going.

866
00:40:29,400 --> 00:40:30,879
Speaker 9: To go commercial with them in twenty five.

867
00:40:31,480 --> 00:40:35,200
Speaker 12: So the amount of silicon and semiconductor tech that is

868
00:40:35,200 --> 00:40:38,960
Speaker 12: going into vehicles that is really expanding, and we are

869
00:40:39,080 --> 00:40:41,760
Speaker 12: the partner part of all of that growth.

870
00:40:42,840 --> 00:40:44,839
Speaker 1: All Right, You have to ask you about, just because

871
00:40:44,840 --> 00:40:48,080
Speaker 1: it seems like we have to everywhere artificial intelligence AI.

872
00:40:48,239 --> 00:40:50,919
Speaker 1: How does that kind of weave into your business and

873
00:40:50,960 --> 00:40:53,280
Speaker 1: the products you're providing to the auto industry.

874
00:40:54,160 --> 00:40:57,600
Speaker 12: You know, AI is very much part of everything that

875
00:40:57,640 --> 00:40:59,560
Speaker 12: we do in driver assistance.

876
00:40:59,600 --> 00:41:01,080
Speaker 9: That is underlying technology.

877
00:41:01,120 --> 00:41:04,360
Speaker 12: But the big opportunity that we are seeing as generative

878
00:41:04,360 --> 00:41:08,520
Speaker 12: AI starts to become very relevant is how cockpits become

879
00:41:08,520 --> 00:41:10,840
Speaker 12: more intelligent. Something that we are showing here at the

880
00:41:10,880 --> 00:41:14,640
Speaker 12: show is how is an automaker as they make their

881
00:41:14,760 --> 00:41:18,880
Speaker 12: enterprise much more intelligent. How do they define products that

882
00:41:19,000 --> 00:41:22,400
Speaker 12: are natively intelligent? For example, if you were to design

883
00:41:22,840 --> 00:41:25,920
Speaker 12: the next generation cockpit, would you be able to bring

884
00:41:26,080 --> 00:41:28,799
Speaker 12: the user manual, which is typically something that you have

885
00:41:28,920 --> 00:41:31,279
Speaker 12: as a physical copy in your vehicle. Can they just

886
00:41:31,320 --> 00:41:34,239
Speaker 12: be downloaded into the vehicle. Is that something that the

887
00:41:34,320 --> 00:41:37,480
Speaker 12: user can interact with. We started to have those conversations

888
00:41:37,680 --> 00:41:41,080
Speaker 12: really fascinating how many different things an automaker can actually do.

889
00:41:41,440 --> 00:41:43,680
Speaker 9: If they're able to go embrace AI across the board.

890
00:41:44,520 --> 00:41:47,920
Speaker 12: The consumer experience inside the car is extremely different as

891
00:41:47,960 --> 00:41:50,759
Speaker 12: you think about AI, because the car is used not

892
00:41:50,840 --> 00:41:52,920
Speaker 12: just going not just to go from A to B,

893
00:41:53,440 --> 00:41:55,080
Speaker 12: but also the experience that the.

894
00:41:54,960 --> 00:41:56,520
Speaker 9: Consumer wants within the vehicle.

895
00:41:56,840 --> 00:41:59,239
Speaker 12: What are they trying to do, What is the context

896
00:41:59,280 --> 00:42:01,960
Speaker 12: around which they're trying to do that specific thing.

897
00:42:03,000 --> 00:42:05,440
Speaker 9: You have camera input, you have voice input that it

898
00:42:05,480 --> 00:42:06,520
Speaker 9: can provide with the vehicle.

899
00:42:07,040 --> 00:42:09,800
Speaker 12: That lends to the possible to create a wide variety

900
00:42:09,800 --> 00:42:10,440
Speaker 12: of experiences.

901
00:42:10,480 --> 00:42:12,840
Speaker 9: And the silicon that we put into.

902
00:42:12,680 --> 00:42:17,799
Speaker 12: Vehicles is already defined to actually have enough AI capability

903
00:42:18,239 --> 00:42:20,520
Speaker 12: that customers can just start to go build on top

904
00:42:20,560 --> 00:42:22,600
Speaker 12: of that and k and these experiences.

905
00:42:23,760 --> 00:42:26,960
Speaker 2: So who are your competitors and where do you stand

906
00:42:27,000 --> 00:42:28,680
Speaker 2: in this market? I mean, there are a lot of

907
00:42:28,680 --> 00:42:32,840
Speaker 2: other uses for chips besides connecting to the cloud and

908
00:42:32,880 --> 00:42:35,440
Speaker 2: talking on your phone and watching TV. I think of

909
00:42:35,960 --> 00:42:41,920
Speaker 2: you know, throttle by wire, electronic steering, all the advanced

910
00:42:42,239 --> 00:42:44,040
Speaker 2: driving assistance systems.

911
00:42:44,480 --> 00:42:45,760
Speaker 1: Do you do that stuff as well?

912
00:42:46,760 --> 00:42:50,600
Speaker 12: There is a wide variety of opportunity inside the automotive space,

913
00:42:50,640 --> 00:42:53,240
Speaker 12: and we compete across, you know, So our primary focus

914
00:42:53,320 --> 00:42:57,279
Speaker 12: areas are connectivity, cockpit system and driver assistant systems. That's

915
00:42:57,320 --> 00:43:01,279
Speaker 12: where we see more most of our competitors. Outside of that,

916
00:43:01,360 --> 00:43:04,040
Speaker 12: we are not participating in the powertrain space or in

917
00:43:04,280 --> 00:43:07,560
Speaker 12: you know, the domain controller space today. So our focus

918
00:43:07,600 --> 00:43:09,960
Speaker 12: area are basically those three areas that I described.

919
00:43:10,880 --> 00:43:14,920
Speaker 1: How about you know, driverless driving? I mean, yeah, I

920
00:43:14,960 --> 00:43:15,919
Speaker 1: was gonna ask the same thing.

921
00:43:15,960 --> 00:43:17,839
Speaker 2: When are we going to Actually I know that in

922
00:43:17,880 --> 00:43:23,040
Speaker 2: San Francisco right there are you know, autonomous vehicles operating

923
00:43:23,200 --> 00:43:23,640
Speaker 2: as like.

924
00:43:23,719 --> 00:43:24,640
Speaker 5: Ubers or whatever.

925
00:43:24,760 --> 00:43:27,719
Speaker 4: But when are we going to start seeing this everywhere?

926
00:43:27,840 --> 00:43:30,560
Speaker 4: Is it like ten years out or is it like

927
00:43:30,640 --> 00:43:32,879
Speaker 4: two years out to look.

928
00:43:32,920 --> 00:43:36,319
Speaker 12: The technology around robot taxis I think is well prog

929
00:43:36,400 --> 00:43:39,600
Speaker 12: and waymore and crews have had this deployed for many

930
00:43:39,680 --> 00:43:42,160
Speaker 12: years in San Francisco and also in many other parts

931
00:43:42,239 --> 00:43:42,640
Speaker 12: of the world.

932
00:43:43,160 --> 00:43:45,600
Speaker 9: I think it's really a combination of the business case

933
00:43:45,760 --> 00:43:46,640
Speaker 9: and I think it's.

934
00:43:46,960 --> 00:43:51,279
Speaker 12: A conversation around societal adoption off of rover taxi. I think,

935
00:43:52,520 --> 00:43:54,840
Speaker 12: you know, this is something that is definitely going to

936
00:43:54,880 --> 00:43:56,680
Speaker 12: take a little bit of time. There is a cultural

937
00:43:56,719 --> 00:44:00,440
Speaker 12: adjustment that people have to get used to. Cities have

938
00:44:00,480 --> 00:44:04,120
Speaker 12: to be able to understand what it means for robotaxi,

939
00:44:04,280 --> 00:44:07,839
Speaker 12: something that is driverless to apply in terms of the

940
00:44:07,960 --> 00:44:10,720
Speaker 12: utility value, in terms of the benefit, there are certainly

941
00:44:10,840 --> 00:44:13,759
Speaker 12: many use cases where I could see a robotaxi making

942
00:44:13,800 --> 00:44:17,520
Speaker 12: a huge difference in terms of its mass deployment in

943
00:44:17,560 --> 00:44:19,719
Speaker 12: all of our cities. I think it is going to

944
00:44:19,719 --> 00:44:22,040
Speaker 12: be a slower journey because there is really going to

945
00:44:22,080 --> 00:44:25,040
Speaker 12: be a question of consumer adoption, city adoption.

946
00:44:25,280 --> 00:44:27,880
Speaker 9: How do you get the.

947
00:44:29,320 --> 00:44:31,840
Speaker 12: Changes that you have to make to infrastructure, changes that

948
00:44:31,880 --> 00:44:34,000
Speaker 12: you have to make to regulation to be able to

949
00:44:34,040 --> 00:44:36,759
Speaker 12: make this technology takeaway. But the great thing is that

950
00:44:36,800 --> 00:44:41,239
Speaker 12: the underlying technology is actually quite mature, and now it

951
00:44:41,320 --> 00:44:43,480
Speaker 12: is at a stage where as you start to go

952
00:44:43,640 --> 00:44:45,520
Speaker 12: deploy it, you have to be able to figure out

953
00:44:45,560 --> 00:44:48,080
Speaker 12: what the kings are and keep controlling so that journey

954
00:44:48,120 --> 00:44:50,720
Speaker 12: is started, and I think the pace will vary depending

955
00:44:50,760 --> 00:44:52,520
Speaker 12: upon which part of the world you're in.

956
00:44:52,840 --> 00:44:55,200
Speaker 1: All Right, fascinating stuff, Nicole, Thank you so much for

957
00:44:55,280 --> 00:44:58,279
Speaker 1: joining us. Nicole DeGale, Senior VP and general manager in

958
00:44:58,280 --> 00:45:01,080
Speaker 1: the automotive business for all Calm the chip Maker.

959
00:45:01,520 --> 00:45:04,640
Speaker 6: You're listening to the tape Ken's are Live program Bloomberg

960
00:45:04,719 --> 00:45:08,319
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

961
00:45:08,360 --> 00:45:10,440
Speaker 6: tune in app, Bloomberg dot Com.

962
00:45:10,160 --> 00:45:11,600
Speaker 7: And the Bloomberg Business app.

963
00:45:11,640 --> 00:45:14,440
Speaker 6: You can also listen live on Amazon Alexa from our

964
00:45:14,480 --> 00:45:18,840
Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

965
00:45:20,440 --> 00:45:22,640
Speaker 1: Well, if you're the big media companies out there in Hollywood,

966
00:45:22,640 --> 00:45:24,200
Speaker 1: you've got a lot of big issues ahead of you,

967
00:45:24,480 --> 00:45:28,840
Speaker 1: most notably the transition from the traditional distribution system of

968
00:45:28,880 --> 00:45:32,239
Speaker 1: cable TV and satellites to now that this new technology

969
00:45:32,320 --> 00:45:35,160
Speaker 1: called streaming, and that has a lot of long term

970
00:45:35,239 --> 00:45:38,319
Speaker 1: challenges for the industry. More near term is you got

971
00:45:38,320 --> 00:45:39,399
Speaker 1: some strikes on your hands.

972
00:45:39,400 --> 00:45:39,879
Speaker 7: You got your.

973
00:45:39,760 --> 00:45:45,080
Speaker 1: Writers striking, some actors striking, big, big challenge for Hollywood

974
00:45:45,160 --> 00:45:47,880
Speaker 1: right now, Let's see kind of what the legal issues

975
00:45:47,920 --> 00:45:50,719
Speaker 1: are and how they might be resolved. Katie Charleston joins us.

976
00:45:50,840 --> 00:45:53,279
Speaker 1: She's a founder of Katie Charleston Law. Katie, thanks so

977
00:45:53,360 --> 00:45:55,799
Speaker 1: much for joining us here. Can you just frame out

978
00:45:55,800 --> 00:45:59,880
Speaker 1: what the big issues there are between the writers in

979
00:46:00,480 --> 00:46:04,319
Speaker 1: the big then the studios absolutely thank you.

980
00:46:04,280 --> 00:46:07,279
Speaker 13: For having me. The main issues that we're looking at

981
00:46:07,320 --> 00:46:10,760
Speaker 13: between the writers and the actors and the production companies

982
00:46:11,239 --> 00:46:15,760
Speaker 13: are AI. For one, the writers and actors are concerned

983
00:46:15,800 --> 00:46:20,440
Speaker 13: with the use of artificial intelligence, which could potentially replace them,

984
00:46:20,520 --> 00:46:24,320
Speaker 13: at least that's the fear. They are also concerned with residuals,

985
00:46:24,800 --> 00:46:28,400
Speaker 13: which is a payment structure where typically they would receive

986
00:46:28,440 --> 00:46:32,520
Speaker 13: residual payments every time a rerun was shown on broadcast television,

987
00:46:32,680 --> 00:46:35,040
Speaker 13: which is different than what we have today in streaming.

988
00:46:35,400 --> 00:46:38,080
Speaker 13: And the last main issue is that of compensation. They're

989
00:46:38,080 --> 00:46:42,200
Speaker 13: looking for complete, a better and complete compensation package with

990
00:46:42,280 --> 00:46:44,360
Speaker 13: higher salaries and health benefits included.

991
00:46:45,040 --> 00:46:48,120
Speaker 1: So I can see I can understand both sides here.

992
00:46:48,120 --> 00:46:50,640
Speaker 1: I mean, certainly from the creator's perspective, the actors, the

993
00:46:50,640 --> 00:46:54,360
Speaker 1: writers this AI risk is just really you could paint

994
00:46:54,360 --> 00:46:57,560
Speaker 1: it as existential. Here be that as I made though,

995
00:46:58,080 --> 00:47:00,520
Speaker 1: I would think this is something that smart lawyers like

996
00:47:00,560 --> 00:47:03,839
Speaker 1: yourself could create some language to protect them, no matter

997
00:47:03,880 --> 00:47:05,279
Speaker 1: how the technology.

998
00:47:04,800 --> 00:47:09,360
Speaker 13: Changes exactly, and that is really what should be happening.

999
00:47:10,080 --> 00:47:14,560
Speaker 13: Artificial intelligence and its use in copying or duplicating the

1000
00:47:14,680 --> 00:47:18,319
Speaker 13: likeness of an individual will generally not fly. State law

1001
00:47:18,440 --> 00:47:22,080
Speaker 13: prohibits using the likeness of someone without their permission in general,

1002
00:47:22,640 --> 00:47:26,399
Speaker 13: But there are contract provisions right Each one of these

1003
00:47:26,440 --> 00:47:29,759
Speaker 13: writers and actors are able to negotiate their contracts and

1004
00:47:29,840 --> 00:47:33,239
Speaker 13: make sure that terms are in the contract that protects

1005
00:47:33,280 --> 00:47:36,800
Speaker 13: them from the use of their voice or likeness without

1006
00:47:36,800 --> 00:47:37,360
Speaker 13: their consent.

1007
00:47:38,160 --> 00:47:41,279
Speaker 1: Talk to us about copyright because I thought copyright is

1008
00:47:41,360 --> 00:47:45,080
Speaker 1: really for something to get copyright protection, I thought it

1009
00:47:45,120 --> 00:47:46,840
Speaker 1: has to be created by a human. Is that the

1010
00:47:46,920 --> 00:47:50,760
Speaker 1: case and how's AI fit into that?

1011
00:47:50,760 --> 00:47:53,400
Speaker 13: That is correct, and in fact, there was a recent federal

1012
00:47:53,440 --> 00:47:58,719
Speaker 13: court ruling that upheld a copyright the Copyright Office registration

1013
00:47:59,320 --> 00:48:02,560
Speaker 13: rejection and a piece of art that was generated by AI.

1014
00:48:03,160 --> 00:48:07,000
Speaker 13: And basically the general rule is that you can only

1015
00:48:07,080 --> 00:48:10,640
Speaker 13: get copyright registration if a work is created by a

1016
00:48:10,719 --> 00:48:15,319
Speaker 13: human and the production companies themselves are not going to

1017
00:48:15,360 --> 00:48:20,160
Speaker 13: want to use artificial intelligence like chat GPT or chasp

1018
00:48:20,920 --> 00:48:25,239
Speaker 13: dot AI or any of these other tools to basically

1019
00:48:25,760 --> 00:48:28,719
Speaker 13: replace the actors or writers themselves, because if there is

1020
00:48:28,760 --> 00:48:32,160
Speaker 13: not human authorship of these works, then the studios will

1021
00:48:32,200 --> 00:48:33,960
Speaker 13: not be able to make any money, right because they

1022
00:48:33,960 --> 00:48:36,479
Speaker 13: will not be able to get a copyright, which would

1023
00:48:36,480 --> 00:48:40,520
Speaker 13: then allow them to protect any kind of duplication or

1024
00:48:40,760 --> 00:48:45,000
Speaker 13: derivatives of their works, which brings them profit.

1025
00:48:45,640 --> 00:48:48,040
Speaker 1: So how about get the stuff that I mean writers

1026
00:48:48,080 --> 00:48:50,000
Speaker 1: and actors. They care about the compensation, of course, but

1027
00:48:50,000 --> 00:48:53,600
Speaker 1: they also care about awards, oscars and think things like that.

1028
00:48:53,680 --> 00:48:57,600
Speaker 1: Can artificial intelligence? You can't? You know, something written by

1029
00:48:57,640 --> 00:48:59,560
Speaker 1: AI is not eligible for any awards?

1030
00:48:59,600 --> 00:49:00,920
Speaker 7: Is it not?

1031
00:49:01,080 --> 00:49:04,759
Speaker 13: As of today? However, I suppose that could change in

1032
00:49:04,760 --> 00:49:06,960
Speaker 13: the future. But as of now, I mean, it is

1033
00:49:07,000 --> 00:49:12,240
Speaker 13: these actual writers and actors, the humans involved, that are

1034
00:49:12,520 --> 00:49:14,080
Speaker 13: nominated and given the awards.

1035
00:49:14,440 --> 00:49:17,640
Speaker 1: So again, it just seems to this outsider that this

1036
00:49:17,760 --> 00:49:19,880
Speaker 1: is also something that can be negotiated. Why do you

1037
00:49:19,880 --> 00:49:22,480
Speaker 1: think we got to this point where a they went

1038
00:49:22,520 --> 00:49:24,840
Speaker 1: on strike on strike for such a getting to be

1039
00:49:24,880 --> 00:49:25,640
Speaker 1: a long period of time.

1040
00:49:25,680 --> 00:49:29,319
Speaker 13: Now, well, there's some things that have happened over the

1041
00:49:29,400 --> 00:49:34,400
Speaker 13: last several months. I think that basically emotionally charged several

1042
00:49:34,480 --> 00:49:39,280
Speaker 13: groups of people. One being that there were some background

1043
00:49:39,280 --> 00:49:42,480
Speaker 13: actors that have come forward and said that they've been

1044
00:49:42,520 --> 00:49:48,080
Speaker 13: asked to be scanned completely so that they can be

1045
00:49:48,120 --> 00:49:53,600
Speaker 13: really duplicated and used without permission in perpetuity, meaning these actors,

1046
00:49:53,680 --> 00:49:57,440
Speaker 13: their identities will be used without any kind of compensation

1047
00:49:57,680 --> 00:49:59,960
Speaker 13: or terms involved. And so I think that's an emotion

1048
00:50:00,320 --> 00:50:03,000
Speaker 13: charge trigger point. And I think, well, it's it's a

1049
00:50:03,040 --> 00:50:05,640
Speaker 13: real fear for these people. You can see the genuine

1050
00:50:05,719 --> 00:50:08,799
Speaker 13: nature of the fear. It's unlikely that that will ever

1051
00:50:08,920 --> 00:50:13,360
Speaker 13: be something that's upheld, especially without the consent of the individual.

1052
00:50:13,400 --> 00:50:16,680
Speaker 13: And again it goes back to contract terms. But there

1053
00:50:17,160 --> 00:50:21,880
Speaker 13: there's also you know, these unions have tend to strike

1054
00:50:22,560 --> 00:50:24,840
Speaker 13: regularly over the years, and I think we're at a

1055
00:50:24,880 --> 00:50:29,399
Speaker 13: point where overall the nation's been touched by inflation, right,

1056
00:50:30,000 --> 00:50:33,200
Speaker 13: and these actors, group of actors that are sort of

1057
00:50:33,280 --> 00:50:36,480
Speaker 13: at the beginning stages of their career, really are being

1058
00:50:36,600 --> 00:50:40,879
Speaker 13: hit with the emotional charge and the lack of resources

1059
00:50:40,920 --> 00:50:43,719
Speaker 13: and the inflation all at one time. And they are

1060
00:50:43,760 --> 00:50:46,759
Speaker 13: being brought together by a larger group of individuals who

1061
00:50:46,760 --> 00:50:49,200
Speaker 13: are more established in the industry, if you will, these

1062
00:50:49,200 --> 00:50:53,399
Speaker 13: big name actors that are out there that really they're

1063
00:50:53,480 --> 00:50:56,680
Speaker 13: sort of out of touch what compensation with what compensation

1064
00:50:56,800 --> 00:50:59,399
Speaker 13: should look like. And so when you have these two

1065
00:50:59,440 --> 00:51:03,560
Speaker 13: forces together, along with the emotional triggers, it really will

1066
00:51:03,600 --> 00:51:06,360
Speaker 13: create something like we're facing today with this strike.

1067
00:51:06,800 --> 00:51:09,000
Speaker 1: Is there I mean, again, we're multiple weeks into the

1068
00:51:09,000 --> 00:51:12,279
Speaker 1: strike here. Is there any sense in Hollywood how long

1069
00:51:12,320 --> 00:51:14,920
Speaker 1: this will go when it can be resolved? Because now

1070
00:51:14,960 --> 00:51:17,800
Speaker 1: you're getting to the point where you know, shooting schedules

1071
00:51:17,800 --> 00:51:20,360
Speaker 1: are being materially adjusted here and it's real money for

1072
00:51:20,440 --> 00:51:20,960
Speaker 1: both sides.

1073
00:51:22,120 --> 00:51:25,320
Speaker 13: Sure, I mean, it could go on for quite a while.

1074
00:51:25,640 --> 00:51:29,279
Speaker 13: Warner Brothers Discovery announced this morning that their outlook for

1075
00:51:29,320 --> 00:51:32,040
Speaker 13: profits for the year are down by a projected five

1076
00:51:32,120 --> 00:51:35,560
Speaker 13: hundred million based on the strikes, and that sort of

1077
00:51:37,400 --> 00:51:40,000
Speaker 13: would assume that they're predicting that this will go through

1078
00:51:40,000 --> 00:51:42,799
Speaker 13: the end of the year, so you know, this could

1079
00:51:42,800 --> 00:51:45,600
Speaker 13: continue on. Really the two sides need to come together

1080
00:51:45,680 --> 00:51:49,040
Speaker 13: and talk. There are viable and reasonable arguments on both

1081
00:51:49,080 --> 00:51:52,480
Speaker 13: sides to be made. You've got these movie studios and

1082
00:51:52,480 --> 00:51:55,319
Speaker 13: production companies on one side, where you know, this is

1083
00:51:55,400 --> 00:51:59,080
Speaker 13: a business that's changing. It's an evolving industry where we're

1084
00:51:59,080 --> 00:52:04,640
Speaker 13: no longer looking at broadcast television where ads are generating

1085
00:52:04,680 --> 00:52:08,240
Speaker 13: these residual payments. We're looking at streaming services like Netflix

1086
00:52:08,280 --> 00:52:15,080
Speaker 13: and Hulu that allow subscription low payment subscription options without commercials,

1087
00:52:15,480 --> 00:52:18,160
Speaker 13: so they are not generating that ad revenue to pay

1088
00:52:18,880 --> 00:52:22,800
Speaker 13: these residual payments. And you know that overall, the industry

1089
00:52:22,840 --> 00:52:24,480
Speaker 13: just needs to come up with a better type of

1090
00:52:24,560 --> 00:52:27,200
Speaker 13: contract and that could take a while to negotiate.

1091
00:52:27,520 --> 00:52:29,400
Speaker 1: All right, we'll have to stay on top of this

1092
00:52:29,480 --> 00:52:32,800
Speaker 1: story again, major major news for the media companies and

1093
00:52:32,840 --> 00:52:35,239
Speaker 1: all the folks that work with them, all the stakeholders

1094
00:52:35,280 --> 00:52:39,120
Speaker 1: quite frankly involved in entertainment and content creation. Katie Charleston,

1095
00:52:39,440 --> 00:52:42,040
Speaker 1: she is the founder of Katie Charleston Law, getting us

1096
00:52:42,120 --> 00:52:44,280
Speaker 1: up to speed on some of the legal issues here.

1097
00:52:44,520 --> 00:52:47,200
Speaker 1: Again it's we saw as Katie was mentioning Warner Brothers,

1098
00:52:47,200 --> 00:52:50,800
Speaker 1: Discovery warns of five hundred million dollars hit to profit.

1099
00:52:52,280 --> 00:52:55,399
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1100
00:52:55,440 --> 00:52:59,200
Speaker 2: subscribe and listen to interviews in Apple podcasts or whatever

1101
00:52:59,280 --> 00:53:02,560
Speaker 2: podcast plans form you prefer. I'm Matt Miller. I'm on

1102
00:53:02,600 --> 00:53:05,640
Speaker 2: Twitter at Matt Miller nineteen seventy three, and.

1103
00:53:05,760 --> 00:53:08,360
Speaker 1: I'm Faull Sweeney. I'm on Twitter at pt Sweeney. Before

1104
00:53:08,400 --> 00:53:11,200
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg

1105
00:53:11,280 --> 00:53:11,520
Speaker 1: Radio