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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 2: More news.

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Speaker 3: Manus out of our good friends at Tesla. Tesla cuts

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Speaker 3: roughly forty person growth content advertising team, so they're elimiting

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Speaker 3: the marketing team is part of those layoffs. That's according

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Speaker 3: people familiar with the matter. Here, stock off four percent today,

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Speaker 3: fifty two week low down forty three percent a year

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Speaker 3: to date. Let's check in with Steve Man. He's a

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Speaker 3: global autos analyst for Bloomberg Intelligence. He joins us from

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Speaker 3: the Princeton campus and I mean campus down there. It

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Speaker 3: is beautiful down there in Princeton. That's kind of where

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Speaker 3: we got a lot of the Bloomberg Intelligence folks housed

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Speaker 3: down there. Steve, this is brutal here. Let's start with

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Speaker 3: something basic, which is really the fundamental issue here, which

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Speaker 3: is pricing. I believed mister Musk cut prices. Again, if

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Speaker 3: he wakes up on the wrong side of the bed,

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Speaker 3: does he cut prices? What's going on with the pricing

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Speaker 3: and Testa these days.

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Speaker 4: There's a lot of things going on at Tesla right now.

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Speaker 4: Bruto is probably not it's that's mildly calling it. You know,

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Speaker 4: we always thought that they will have to reverse prices.

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Speaker 4: We're not sure why. You know, early in the year

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Speaker 4: they increase prices. But you know, price prices have been

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Speaker 4: dropped in the US, prices over the weekend, it's been

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Speaker 4: dropped in China. China is a different quite different market.

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Speaker 4: It's hyper competitive. Everybody's cutting prices, especially by d early

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Speaker 4: in the year and late last year. So we're not

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Speaker 4: surprised going to cut prices. The question is, you know,

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Speaker 4: where are the earnings going to be? And there's gonna

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Speaker 4: be a lot of questions that Elon must has to

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Speaker 4: answer tomorrow at their earnings call.

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Speaker 5: Yep uh. Web Bush Securities were with me a couple

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Speaker 5: of weeks ago and they said, it's a hurricane five

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Speaker 5: storm coming towards him. That's gone from a Cinderella story

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Speaker 5: to that. But who if you look at BYD, if

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Speaker 5: you look at Lee, and you look at Tesla, they're

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Speaker 5: all cutting prices. So is is is this the bottom

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Speaker 5: of that cycle? Has Tesla got the capacity to weather

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Speaker 5: a price cutting storm in China.

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Speaker 4: That's a good question. I don't think it's the end

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Speaker 4: of it. We're actually seeing second quarter sales to be uh,

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Speaker 4: you know, uh probably the same as what we saw

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Speaker 4: in the first quarter. And remember our first quarter Tesla

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Speaker 4: actually in the industry itself actually show uh slower growth

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Speaker 4: and even some declinentes uh for certain automakers like Tesla.

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Speaker 4: So uh, you know, second quarter is not gonna be

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Speaker 4: pretty as well. And I think Tesla, you know, fortunately

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Speaker 4: for them, they are pr They are still the only

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Speaker 4: profitable EV maker in the industry right now. You know,

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Speaker 4: they have about seventeen percent gross margin compared to four

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Speaker 4: in GM. They're at you know, single high single digit,

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Speaker 4: so you know, they do have some room to give.

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Speaker 4: And you know, I think part of it is really

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Speaker 4: they're they're really hoping, Tesla is really hoping to drive

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Speaker 4: more volume, generate more cash. And you know, one of

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Speaker 4: the things that they want to get to sooner than

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Speaker 4: rather than later is really to you know, monetize that

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Speaker 4: robo taxi. All the investment they've made in AI and

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Speaker 4: autonomous vehicles.

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Speaker 3: Gross margin is seventy percent, is that just on the

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Speaker 3: manufact on the manufacturing side, or is that with the

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Speaker 3: credits and so on and so forth, Because my question is,

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Speaker 3: you know, if they start cutting prices, are they going

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Speaker 3: to sacrifice unit profitability?

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Speaker 4: Yeah, the seventeen percent thinking autumn, Yeah, seventeen is on

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Speaker 4: the automotive side. Look, they you know, we're hoping they

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Speaker 4: don't cut more prices because seventeen percent is not as

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Speaker 4: good as the mid twenty percent they were getting last

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Speaker 4: year and the year before. And cutting prices is not

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Speaker 4: the not the solution. You know, the industry does not

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Speaker 4: need to be in that spiral of cutting tit for

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Speaker 4: tat price cuts. It's gonna hurt everyone, and at the

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Speaker 4: same time, it's gonna hurt you know, the GMS and

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Speaker 4: four because it doesn't really make it, you know, feasible

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Speaker 4: even for them to roll out a cheaper model down

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Speaker 4: the road. So, you know, what we're trying to do

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Speaker 4: is create greater adoption in the EV market, in the

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Speaker 4: EV industry for every consumer, and cutting prices is gonna

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Speaker 4: you know, weed out a lot of the competition that

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Speaker 4: are actually trying to introduce a more affordable model for

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Speaker 4: the for the market, for the greater market Steve, I mean.

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Speaker 5: We can debate adaptability in China in the United States

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Speaker 5: of America forever. I mean the infrastructure is one could

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Speaker 5: coin phrase probably not there again, going back to a

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Speaker 5: web Bush note delivered in my inbox this morning by

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Speaker 5: Dan Ives, which is it comes down to delivering a

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Speaker 5: model TO in the next twelve to eighteen months to

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Speaker 5: deliver a second wave of growth. If they don't deliver

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Speaker 5: a new model TO, that growth will not come and

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Speaker 5: robotaxis would be a tragic gamble in our opinion, as

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Speaker 5: full autonomy we do not see until twenty thirty. This

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Speaker 5: comes down to innovation in model two at the base,

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Speaker 5: doesn't it.

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Speaker 4: Yeah, Model two is important. I think what the industry

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Speaker 4: is looking for and what investors are looking for is

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Speaker 4: looking They're looking for more affordable models for consumers so

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Speaker 4: that the penetration rates, so the addressable market for EV. Actually,

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Speaker 4: it's going to be greater than what it is today now.

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Speaker 4: Like I said earlier, Tesla it has been aggressive, probably

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Speaker 4: the most aggressive and cunning EV prices, and they've redesigned

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Speaker 4: a vehicle that they can manufacturing at a lower cost

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Speaker 4: than you know, than it is today.

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Speaker 2: So you know, they.

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Speaker 4: Could launch a model to the other option. You know,

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Speaker 4: I don't think the market has really talked about is

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Speaker 4: you know, the price cutting will allow them potential, the

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Speaker 4: cost cutting will probably allow him the cut prices even further.

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Speaker 4: You know, it wouldn't be a surprise down the road

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Speaker 4: that they're going to offer the model three below thirty thousand,

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Speaker 4: you know, if they can manage that costs wisely.

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Speaker 3: Hey, Steve, After the close tomorrow, Tesla will report numbers.

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Speaker 3: They have a conference called five thirty pm Wall Street Time.

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Speaker 3: What does Elon Musk need? What message does he need

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Speaker 3: to get across to kind of you know, shore up

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Speaker 3: this stock price.

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Speaker 4: Here well as you know, the stock price is you know,

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Speaker 4: mostly driven by the anticipation of robotaxi, of autonomous vehicle

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Speaker 4: of AI. I think what he needs really needs to

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Speaker 4: come out and tell people, give certain milestones for the

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Speaker 4: investors to follow. Understand, you know, how he's taking that

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Speaker 4: company forward into you know, into the next decade, how

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Speaker 4: his robotaxi is going to generate the revenue and the

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Speaker 4: profit that he's so much been advocating for. So, you know,

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Speaker 4: automotive business. We all know it's it's it's a small

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Speaker 4: part it's in terms of valuation, but they you know,

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Speaker 4: I think Elon Musk and the company really needs to

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Speaker 4: come out to make the investor feel comfortable that he

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Speaker 4: is still on track and there is a light at

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Speaker 4: the end of the tunnel sooner rather than later.

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Speaker 3: Is there a sense that he's focused enough on this

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Speaker 3: company here? Is there still that concern that he spread

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Speaker 3: too thin?

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Speaker 2: Do you think?

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Speaker 4: I don't think so. I think, you know, he's He's

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Speaker 4: one person. I mean, he's done a lot with SpaceX uh,

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Speaker 4: he's done a lot with Tesla obviously, and I think

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Speaker 4: he's even though there's been some departure, I think still

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Speaker 4: I think he still has a very very strong behind him.

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Speaker 4: He's still hiring a lot for the AI for the

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Speaker 4: town of his vehicle business. So I'm not too concern

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Speaker 4: at the moment. I think communication is key for the

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Speaker 4: company in the next you know, tomorrow, in the next

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Speaker 4: few weeks yep, and through August eighth, when he actually

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Speaker 4: reveals his ROBOTAXI.

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Speaker 3: Oh, okay, all right, Well I'm going to listen to

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Speaker 3: this call tomorrow, so that'll be interesting. I think I

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Speaker 3: think a lot of people are going to pay attention

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Speaker 3: to that call. Steve, thanks so much for joining us.

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Speaker 3: Steve Man Global Global Autos and Industrials research Channels for

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Speaker 3: Bloomberg Intelligence, joining USROM Princeton, New Jersey via zoom.

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Speaker 2: And here it's you know, it's Dan Iives of.

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Speaker 3: Webbush said, this is a critical, critical, maybe the most

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Speaker 3: important conference call for Elon Musk here because there.

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Speaker 2: Is a whole host of headwinds for this company.

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Speaker 5: It's about reinstilling confidence.

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Speaker 2: Yeah, it's confidence in genius. I never said the genius

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Speaker 2: had left right. No, exactly right. So we'll see that

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Speaker 2: Tesla again.

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Speaker 3: Fifty two week low here today off about forty five percent,

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Speaker 3: just a year to date, significant loss of value.

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Speaker 1: There. You're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty.

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Speaker 3: The Right Smack in the Middle Earning season Menace Verizon Communications.

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Speaker 3: I'm a customer of Horizon Wireless.

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Speaker 2: You know I think I am as well. Yes, I

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Speaker 2: am the riison.

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Speaker 3: I've gotten, I've cut my kids off just about everywhere. Financially,

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Speaker 3: they're pretty much on their own. With one glaring exception

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Speaker 3: the Celluar telephone bill. They're all still on this whole

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Speaker 3: family plan. I'm carrying all of them, so I haven't

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Speaker 3: figured out how to get rid of them.

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Speaker 2: Maybe that helped with the Verizon's earnings.

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Speaker 5: Here.

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Speaker 3: John Butler joins us. He covers all things telecom for

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Speaker 3: Bloomberg Intelligence. He's here in the Bloomberg Interactive Broker studio.

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Speaker 3: He doesn't mail it in like some of his managers do.

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Speaker 3: He comes into the New York office, which we appreciate.

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Speaker 2: John. What'd you see from Verizon this quarter?

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Speaker 6: So, Paul, I thought, overall, a very solid quarter from Verizon.

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Speaker 6: I mean, one thing that I always look at is pricing,

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Speaker 6: right because when they raise prices, which they did on

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Speaker 6: me and you, by the way, it extends across the

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Speaker 6: whole base, their base of one hundred million plus subscribers.

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Speaker 6: So pricing was up strongly in the quarter, and I thought, overall,

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Speaker 6: a solid quarter. I mean, it's interesting because the telecoms

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Speaker 6: throw all these metrics at you, and you can always

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Speaker 6: point to one or two and say they were weak.

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Speaker 6: Here they were strong there, you know, and it all

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Speaker 6: comes out in the wash. In my opinion, I sort

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Speaker 6: of look, I take that ten thousand foot view and

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Speaker 6: I say, how is pricing and how were subscriber net ads?

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Speaker 6: How many netnews subscribers did they add? And there's still

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Speaker 6: a shared donor. They're still losing a bit of subscribers

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Speaker 6: on the margin.

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Speaker 2: At every quarter they're getting better and better.

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Speaker 6: So on balance, I thought a decent quarter in terms

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Speaker 6: of the trends, and.

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Speaker 2: You know, I like where they're headed for the year.

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Speaker 5: I remember when we used to try to get used

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Speaker 5: to acronyms when we were covering Vodafone and different things

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Speaker 5: in Europe. You know, you've got your average revenue per user,

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Speaker 5: but you look at the you just switch on your

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Speaker 5: television at home, and you got Apple, You've got Netflix,

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Speaker 5: you've got Prime, and you've got you just consuming so

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Speaker 5: much more at so much more faster speed. So where

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Speaker 5: are they in terms of pricing differential for that additional

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Speaker 5: bandwidth that I'm I'm going to use more of. It's

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Speaker 5: just a natural evolution of gorging on data.

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Speaker 6: Well, I'm glad you asked that, manus, because what Verizon

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Speaker 6: is doing so well is They've come out with a

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Speaker 6: new family of unlimited plans called My Plan, and it

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Speaker 6: allows people to not only buy wireless service, but also

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Speaker 6: so the streaming services at.

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Speaker 2: A pretty good deal.

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Speaker 6: Finally, there's a bundle, right, there is a bundle praise,

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Speaker 6: and you get to control the bundles, so they don't

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Speaker 6: set preset bundles and say you can get planned a

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Speaker 6: B or C. You can sort of mix and match

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Speaker 6: and say I want wireless service and I want Disney

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Speaker 6: but not Hulu, so you can sort of customize the

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Speaker 6: plan yourself. Ergo the name my Plan, and it's resonating

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Speaker 6: really well, Like I'm really surprised after about a year

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Speaker 6: they've got a quarter of the base on My Plan.

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Speaker 6: It's very good for them because they're highly profitable plans,

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Speaker 6: and by year end they hope to have half the

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Speaker 6: base on that My Plan structure, which is big.

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Speaker 3: You know, I'm looking at the stock here about two

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Speaker 3: and a half percent today, but up about five percent

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Speaker 3: year to date.

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Speaker 2: This seems got a six and a half percent dividend yield.

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Speaker 2: That's what I'm talking about.

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Speaker 3: So I don't know why you can't talk to your

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Speaker 3: good I saw Tim Cook that Duke recently and I said,

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Speaker 3: can you raise your dividend.

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Speaker 2: A little bit? And he gave me the heisman. But

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Speaker 2: six percent dividend, seven percent divin in yield? Yeah, is

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Speaker 2: that sustainable for these guys?

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Speaker 6: You know, I think most telecoms know the danger of

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Speaker 6: cutting a dividends. So let's put it that way. But

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Speaker 6: if you look at Verizon stock you touched on it,

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Speaker 6: it's had a bit of a run here, and so

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Speaker 6: is that stock price goes up? Obviously the yield goes down.

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Speaker 6: But you know they're very focused on shareholder returns as

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Speaker 6: they mature here AT and T is the same way,

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Speaker 6: so is T Mobile, and so in terms of the divinend,

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Speaker 6: I think it's very safer right now.

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Speaker 5: You see, you use the web maturity and that brings

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Speaker 5: that brings a lot of connotations, and one of them

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Speaker 5: is M and A. You remember the most fabled disaster

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Speaker 5: telecoms murder of all time at and what was it?

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Speaker 5: Aol Time Warner. But when you use the word maturity.

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Speaker 2: Got paid on that, thank you? Yeah, we got paid Yeah, good.

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Speaker 5: For you represent everything, We represent what you know what.

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Speaker 5: But there's the question is is the next iteration in

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Speaker 5: this market some form of M.

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Speaker 2: And A or is it innovation?

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Speaker 6: So they got asked that in the call, and I

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Speaker 6: thought the answer was very good, which is, we have

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Speaker 6: the assets in place right now to execute on the

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Speaker 6: growth plan that we see for the next few years.

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Speaker 6: And I think that's right. But they also have the

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Speaker 6: ability if they want to make either tuck in acquisitions.

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Speaker 2: He wants disitions.

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Speaker 6: I think I think they know that investors want that dividend.

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Speaker 6: So in terms of any grand ambition, ambitious M and

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Speaker 6: A like we saw with AT and T in Time Warner,

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Speaker 6: I'm not saying it with Verizon.

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Speaker 2: What's the competitive landscape these days? Is it just price, price,

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Speaker 2: price price.

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Speaker 6: It is very tough at the low end, it's all

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Speaker 6: about price. At the higher end, which is where Verizon plays, it's.

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Speaker 2: All about value.

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Speaker 6: What kind of value are you offering with that package?

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Speaker 6: And I think we were talking about verizons my plan,

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Speaker 6: the mix and match that has high value, and I

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Speaker 6: think I think it's resonating well with the subscriber base.

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Speaker 3: All right, very good, John Butler. He has our go

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Speaker 3: to guy and all things telecom. Verizon putting out some

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Speaker 3: numbers here, decent number stock off a couple of percent. Today,

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Speaker 3: John Butler covers telecom for Bloomberg Intelligence.

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Speaker 2: We appreciate getting some of his time.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Affle Card, playing Android

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: So my tech m and A bankers are not happy

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Speaker 3: because it apparently Salesforce takeover talks with Informatica are cooling off,

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Speaker 3: and that might have been a nice mm A trade

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Speaker 3: in the tech space. Let's break it down a little

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Speaker 3: bit here on a rag ran a senior technology analyst.

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Speaker 2: You know him. He's out in Chicago. This guy I.

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Speaker 3: Don't know Sunil rog Gopaul, senior software analyst. But the

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Speaker 3: goodness is he's in our Bloomberg Interactive Broker studio. He

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Speaker 3: doesn't mail it in from Chicago like an rock Ron.

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Speaker 3: It does, Honor Rock. I didn't hire this guy, Roger

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Speaker 3: Capal did. I.

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Speaker 2: I don't know him.

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Speaker 7: No, Samiel's awesome and he does all things infrastructure. You'll

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Speaker 7: really like him.

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Speaker 2: Good stuff. At least he's here in the office. We

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Speaker 2: make note of that. All right. So, Anrak, I was

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Speaker 2: kind of surprised to see.

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Speaker 3: This news to begin with, Like, I didn't think Salesforce

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Speaker 3: needed to really buy.

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Speaker 2: Anything, So what's going on here do you think?

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Speaker 7: Yeah, it was just a big head scratcher for us

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Speaker 7: to almost a few days ago because last March, Bennehoff

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Speaker 7: comes and says, I've disbandled the MNE committee, no more

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Speaker 7: m and A. I'm going to focus on margins and

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Speaker 7: organic growth. And in less than a year, you know,

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Speaker 7: just around that one year mark, he's like, oh, we've

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Speaker 7: got to go back and you know, buy something now.

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Speaker 7: He didn't say that, the company didn't say that, but

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Speaker 7: that was the rumor on the street that they're looking

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Speaker 7: to buy Informatica. For us, that was a bit of

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Speaker 7: a surprise because Informatica grows six to seven percent compared

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Speaker 7: to Salesforce, which is growing north of ten percent. So

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Speaker 7: why would anybody buy something that.

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Speaker 2: Is slow growth?

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Speaker 7: I get the data angle of it, but you know,

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Speaker 7: it was it was not something that we really liked.

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Speaker 3: Sunil, first of all, thanks so much for joining us

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Speaker 3: here in studio. Sunil Rochkopal, senior software analyst for Bloomberg Intelligence,

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Speaker 3: tell us about Informatica, I don't know a lot about it.

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Speaker 3: I don't think a lot of investors know a lot

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Speaker 3: about it. And that was one of the reasons that

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Speaker 3: they're saying, what is Salesforce buying here or maybe thinking

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Speaker 3: about buying? What tell us about this company?

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Speaker 8: Sure, Informatica is all about data management, which is about

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Speaker 8: clean cleaning all the data that comes from different sources

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Speaker 8: and aligning it with the applications and getting all things

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Speaker 8: sorted out. For data, so data comes in various shapes,

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Speaker 8: forms and different sources, so all of that needs to

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Speaker 8: be cleaned up to be used in a proper shape.

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Speaker 8: So I think Informatica is that layer that acts as

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Speaker 8: a cleanser of data and gets you to that right usage.

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Speaker 8: So that's where it comes in as a player.

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Speaker 3: So with if they're not going to tie up with Salesforce,

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Speaker 3: what's the call on this company, what's the call on

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Speaker 3: the stock?

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Speaker 2: Either you know, bullsh or bears.

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Speaker 8: Look strategically for Informatica, such an alliance would have been

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Speaker 8: a great move that would have helped fuel its cloud journey,

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Speaker 8: and that now accounts for roughly one third of its revenues.

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Speaker 8: With the deal not happening. Informatica now has to focus

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Speaker 8: on fueling its cloud growth organically. The company is boosting

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Speaker 8: its partnership and rolling out new AI powered features, but

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Speaker 8: this space is highly fragmented and competitive. The company has

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Speaker 8: continued to lose market share, especially with the challengers that

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Speaker 8: have risen substantially over the last few years. There are

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Speaker 8: other big players like SAP and IBM that also compete,

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Speaker 8: So I think going forward the market will definitely look

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Speaker 8: a lot more challenging because now Salesforce are not having

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Speaker 8: to go through with this tale will put more resources

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Speaker 8: into MuleSoft, which I think will raise the competitive intensity

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Speaker 8: and I think that is a big challenge for Informatical

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Speaker 8: going forward.

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Speaker 3: An rag on your side from the Salesforce side, I mean,

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Speaker 3: is it just steady as she goes?

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Speaker 2: I mean, it's just such a great company.

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Speaker 3: What's the call for the next twelve to eighteen months

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Speaker 3: for Salesforce dot com?

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Speaker 7: So, Paul, what we're thinking. You know, hopefully by the

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Speaker 7: end of this year we get a little more clarity

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Speaker 7: on technology spending and perhaps from next year onwards we

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Speaker 7: can see that, you know, load double digit growth in

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Speaker 7: earnings as well as I take that back load. Double

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Speaker 7: digit growth in sales coupled with some margin expansion getting

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Speaker 7: you to that mid to high teens earnings growth. That's

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Speaker 7: what we want from salesforce, organic growth, organic earnings, not

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Speaker 7: so much driven by M and A. And I'm hoping

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Speaker 7: that that's what the company delivers.

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Speaker 3: On the software side, what are the most exciting areas

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Speaker 3: for you?

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Speaker 2: You that you're looking at here.

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Speaker 8: Look for me in the overall enterprise software space, I

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Speaker 8: still like names in the observability sector. The Yeah, all right,

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Speaker 8: So the observability is they act as a layer that

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Speaker 8: monitors all of your systems applications, so be it any

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Speaker 8: kind of an application that you're running your enterprise, everything

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Speaker 8: needs to be monitored if there are like any bugs,

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Speaker 8: if there are like system downtimes, et cetera. So observability

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Speaker 8: vendors typically monitor all your applications and the infrastructure. So

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Speaker 8: they play a very critical role in the overall enterprise

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Speaker 8: software space. And I think players such as the data

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Speaker 8: Dog diner trays are very well positioned in.

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Speaker 2: Public recently, like recently as a couple of years.

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Speaker 8: Yeah, yes, that's right.

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Speaker 2: So so what is I mean? I love the name.

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Speaker 3: I'm looking at the stock here and bringing up the

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Speaker 3: stock Data Dog.

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Speaker 2: The DG this is kind of forty billion dollar market cap.

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Speaker 3: It's kind of flat stock price on the year, but

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Speaker 3: up to seventy five percent over the trailing twelve months.

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Speaker 2: What's the call on Data Dog here?

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Speaker 8: Look, it's a very I would say it has been

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Speaker 8: a fast growing company. And of course last year we

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Speaker 8: have seen a slow down in the overall enterprise software space,

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Speaker 8: and the Data Dog of course has been impacted with

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Speaker 8: that slow it spending trends. But overall, if you look

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Speaker 8: at the observability space as we see, I think that

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Speaker 8: is a space that will continue to grow because the

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Speaker 8: number of applications and the infrastructure that enterprises are deploying,

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Speaker 8: especially with what is supposed to come with Jenny AI

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Speaker 8: and others, we will continue to see a massive rise

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Speaker 8: in the infrastructure and applications and that should all bode

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Speaker 8: well for Data Dog and the players such as a Diner,

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Speaker 8: Trace and others in the observatory space.

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Speaker 3: An rob We've getting earnings coming up for the tech names.

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Speaker 2: What are you looking for here?

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Speaker 3: Should we be just kind of saying count how many

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Speaker 3: times they mentioned AI and the conference call?

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Speaker 7: Yeah, a little bit of that I think it's going

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Speaker 7: to be a steady growth rate. But I'm getting a

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Speaker 7: little concerned about the guidance because I think the macro

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Speaker 7: environment is getting a little bit diceee, not sure what's

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Speaker 7: going to happen in the Middle East. So I'll be

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Speaker 7: very surprised if any company comes up with a bullish guidance,

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Speaker 7: but I think, you know, one should be prepared for

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Speaker 7: it because we have seen some of these names go

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Speaker 7: up pretty strong over the last twelve months, so they

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Speaker 7: could be a period of consolidation for the next quarter

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Speaker 7: or two.

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Speaker 8: You know.

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Speaker 7: Our big call is that we do see tech spending recovery,

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Speaker 7: perhaps now in the later half of the year into

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Speaker 7: next year, but we don't want any one of that

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Speaker 7: to be delayed, So not baking any massive positive surprises

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Speaker 7: over the next quarter or two, but hoping for a

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Speaker 7: rebound by the end of the year.

438
00:22:48,680 --> 00:22:51,320
Speaker 3: So but a rebound, you're I mean, there's no declines here.

439
00:22:51,400 --> 00:22:53,719
Speaker 3: Let's be clear, it's just a question what is the

440
00:22:53,760 --> 00:22:56,200
Speaker 3: growth rate in tech spending? So just give us an

441
00:22:56,200 --> 00:22:58,720
Speaker 3: eyeball kind of where we are now, where it has been,

442
00:22:58,920 --> 00:22:59,879
Speaker 3: and where do you think it could go.

443
00:23:00,920 --> 00:23:03,159
Speaker 7: So let's talk about, for example, I'll throw out a

444
00:23:03,240 --> 00:23:05,919
Speaker 7: number a w as constant currency growth rate. That's a

445
00:23:05,920 --> 00:23:09,000
Speaker 7: big leading indicator of what's happening. Last quarter it was

446
00:23:09,040 --> 00:23:11,960
Speaker 7: thirteen percent in constant currency, the quarter before that twelve,

447
00:23:12,160 --> 00:23:14,360
Speaker 7: and the quarter before that twelve. We think this time

448
00:23:14,400 --> 00:23:16,920
Speaker 7: it comes to around fourteen to fifteen. But next quarter

449
00:23:16,960 --> 00:23:19,399
Speaker 7: again it comes to in that same range of about

450
00:23:19,400 --> 00:23:22,400
Speaker 7: fourteen to fifteen because now we are looking at stabilization

451
00:23:22,480 --> 00:23:24,600
Speaker 7: of the growth rates, but we do we expect that

452
00:23:24,760 --> 00:23:26,399
Speaker 7: to pick up by the end of the year. You

453
00:23:26,440 --> 00:23:29,440
Speaker 7: can correlate that for any company, whether it's Salesforce, whether

454
00:23:29,480 --> 00:23:33,159
Speaker 7: it's Microsoft, as your growth rate a similar chart in

455
00:23:33,240 --> 00:23:36,879
Speaker 7: the rate of growth of the growth rates rather than

456
00:23:36,880 --> 00:23:39,560
Speaker 7: anything else. And that's why I'm saying the next quarter

457
00:23:39,640 --> 00:23:42,480
Speaker 7: or two is where we see stabilization in that rather

458
00:23:42,560 --> 00:23:43,399
Speaker 7: than a big leg up.

459
00:23:44,119 --> 00:23:47,680
Speaker 3: So Neil, in your software space where you play, are

460
00:23:47,680 --> 00:23:49,400
Speaker 3: you trying to are your companies trying to go them

461
00:23:49,440 --> 00:23:50,479
Speaker 3: onto the AI trend?

462
00:23:50,640 --> 00:23:52,880
Speaker 2: And if so, how are they doing it?

463
00:23:53,560 --> 00:23:56,920
Speaker 8: Look, I think most of the companies that I cover

464
00:23:57,240 --> 00:24:00,840
Speaker 8: are in the initial phase of the AI wave, and

465
00:24:01,160 --> 00:24:04,959
Speaker 8: most of them are piloting new products, bringing up features

466
00:24:05,280 --> 00:24:10,520
Speaker 8: like copilot and others But one interesting fact that data

467
00:24:10,560 --> 00:24:14,280
Speaker 8: Doc pointed out very recently is three percent or so

468
00:24:14,400 --> 00:24:18,000
Speaker 8: of their arr is being driven by these gen AI

469
00:24:18,160 --> 00:24:21,560
Speaker 8: focused companies, which is interesting that you're still in very

470
00:24:21,560 --> 00:24:24,480
Speaker 8: early stages, and I think that will be a momentum

471
00:24:24,560 --> 00:24:25,680
Speaker 8: that will continue to grow.

472
00:24:26,119 --> 00:24:27,320
Speaker 2: Are we going to get Sneil?

473
00:24:27,359 --> 00:24:30,080
Speaker 3: Do you think like I came up when the Internet

474
00:24:30,200 --> 00:24:32,320
Speaker 3: was first started, you had companies from public that were

475
00:24:32,359 --> 00:24:34,760
Speaker 3: Internet names, whether it was America Online, whether it was

476
00:24:35,280 --> 00:24:35,800
Speaker 3: Google for.

477
00:24:35,800 --> 00:24:37,240
Speaker 2: Search, Facebook for social.

478
00:24:37,320 --> 00:24:40,840
Speaker 3: You had companies that defined or help define and then

479
00:24:40,880 --> 00:24:42,359
Speaker 3: so simple people like me could say, oh, if I

480
00:24:42,359 --> 00:24:45,040
Speaker 3: want explosures to the Internet by go by Google or

481
00:24:45,040 --> 00:24:48,120
Speaker 3: by Facebook, if I want social. Are we gonna have

482
00:24:48,240 --> 00:24:50,520
Speaker 3: AI specific companies coming public?

483
00:24:50,560 --> 00:24:51,000
Speaker 2: Do you think?

484
00:24:52,200 --> 00:24:55,520
Speaker 8: I think that's a move that everyone is watching. Of course,

485
00:24:55,560 --> 00:24:59,720
Speaker 8: we have companies like open ai and others that are

486
00:25:00,560 --> 00:25:05,240
Speaker 8: potentially growing in size and have a massive amount of

487
00:25:05,960 --> 00:25:09,320
Speaker 8: I mean say users, etc. So that's a market that

488
00:25:09,359 --> 00:25:11,639
Speaker 8: will continue to be on watch out. And there are

489
00:25:11,680 --> 00:25:15,600
Speaker 8: a number of other smaller companies that are coming up

490
00:25:15,920 --> 00:25:18,280
Speaker 8: in the AI space. I think over the course of

491
00:25:18,359 --> 00:25:20,320
Speaker 8: next twelve months we will see a lot of them

492
00:25:20,320 --> 00:25:20,879
Speaker 8: in the market.

493
00:25:21,280 --> 00:25:22,400
Speaker 2: All right, good stuff studio.

494
00:25:22,640 --> 00:25:25,959
Speaker 3: Roj Capal, senior software Anas Bloomberg Intelligence, joining us here

495
00:25:25,960 --> 00:25:28,080
Speaker 3: in a studio, and of course Ana rod ron, a

496
00:25:28,160 --> 00:25:31,640
Speaker 3: senior technaist for Bloomberg Intelligence at Chicago, breaking down what's

497
00:25:31,680 --> 00:25:35,159
Speaker 3: happening in the world of technologies. Apparently Salesforce, the rumor

498
00:25:35,200 --> 00:25:39,720
Speaker 3: discussions between Salesforce and software company Informatica cooling off here,

499
00:25:39,720 --> 00:25:43,320
Speaker 3: so we're seeing the Informatica stock down a little bit today.

500
00:25:43,320 --> 00:25:45,399
Speaker 3: We thank both of those guys for bringing us up

501
00:25:45,400 --> 00:25:46,000
Speaker 3: to speed here.

502
00:25:47,520 --> 00:25:51,400
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

503
00:25:51,480 --> 00:25:55,000
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

504
00:25:55,040 --> 00:25:57,800
Speaker 1: Outo with the Bloomberg Business app. You can also listen

505
00:25:57,920 --> 00:26:01,040
Speaker 1: live on Amazon Alexa from our Flag New York station

506
00:26:01,400 --> 00:26:03,760
Speaker 1: just Say Alexa playing Bloomberg eleven.

507
00:26:05,880 --> 00:26:09,679
Speaker 3: Coming into today's trading, SMP five hundred goes down roughly

508
00:26:09,760 --> 00:26:11,800
Speaker 3: five percent off of its recent high, and a lot

509
00:26:11,840 --> 00:26:13,080
Speaker 3: of folks were just saying, hey, is this.

510
00:26:13,119 --> 00:26:14,040
Speaker 2: A bump in the road.

511
00:26:14,600 --> 00:26:17,280
Speaker 3: Is this the beginning of a sustained drawdown which may

512
00:26:17,320 --> 00:26:19,959
Speaker 3: or may not be healthy for this market longer term.

513
00:26:20,359 --> 00:26:21,960
Speaker 3: That's some of the questions we've been hearing from a

514
00:26:21,960 --> 00:26:24,320
Speaker 3: lot of the smart folks who cover these markets. Sylvia

515
00:26:24,359 --> 00:26:27,119
Speaker 3: Jablonski Joints, and he's the chief executive officer and chief

516
00:26:27,160 --> 00:26:32,160
Speaker 3: investment officer at Defiance ETFs. Sylvia, how do you view

517
00:26:32,280 --> 00:26:35,080
Speaker 3: the trading we've seen over here over the last week

518
00:26:35,080 --> 00:26:37,359
Speaker 3: and a half here, this five percent pullback in the market,

519
00:26:37,440 --> 00:26:39,200
Speaker 3: How does that kind of strike.

520
00:26:38,880 --> 00:26:40,840
Speaker 2: You in terms of the overall market behavior?

521
00:26:42,280 --> 00:26:42,919
Speaker 9: Good morning.

522
00:26:43,080 --> 00:26:45,439
Speaker 10: Well, it's you know, it's been a painful couple of weeks,

523
00:26:45,440 --> 00:26:49,400
Speaker 10: that's for sure. You know, I think that some new

524
00:26:49,400 --> 00:26:51,720
Speaker 10: headwinds came into the market, right that that kind of

525
00:26:51,760 --> 00:26:52,480
Speaker 10: weren't there before.

526
00:26:52,560 --> 00:26:53,960
Speaker 9: We came out of the gate really strong.

527
00:26:54,080 --> 00:26:56,480
Speaker 10: The inflation readings were looking you know, kind of good

528
00:26:56,560 --> 00:27:00,640
Speaker 10: and solidly pointing downward, and then you know, we got

529
00:27:00,640 --> 00:27:04,320
Speaker 10: some potter than expected factory number jobs numbers CPI and

530
00:27:04,359 --> 00:27:07,320
Speaker 10: things like this recently. And so I think that until

531
00:27:07,359 --> 00:27:09,520
Speaker 10: we get the data going back in the direction that

532
00:27:09,560 --> 00:27:11,920
Speaker 10: we want it too, which is essentially you know, coming

533
00:27:11,960 --> 00:27:15,639
Speaker 10: in below estimates and downward on inflation, and then we

534
00:27:15,640 --> 00:27:18,080
Speaker 10: start to feel the security of the Fed potentially cutting

535
00:27:18,080 --> 00:27:20,760
Speaker 10: this year again, whether it's one or two times, and

536
00:27:20,840 --> 00:27:22,359
Speaker 10: you know, kind of just knowing that the foot the

537
00:27:22,400 --> 00:27:25,120
Speaker 10: FED put is still in play, right and that we're

538
00:27:25,160 --> 00:27:26,600
Speaker 10: not going to turn around the other way.

539
00:27:27,560 --> 00:27:29,120
Speaker 9: I think that'll help the markets turn around.

540
00:27:29,160 --> 00:27:31,320
Speaker 10: And then I think the other thing that you know

541
00:27:31,440 --> 00:27:34,800
Speaker 10: is sort of trepidations for investors is geopolitics. I mean,

542
00:27:34,920 --> 00:27:38,080
Speaker 10: there's there's some you know, notable things going on in

543
00:27:38,080 --> 00:27:40,760
Speaker 10: the world right now that I think really rocked markets

544
00:27:40,760 --> 00:27:41,560
Speaker 10: over the last.

545
00:27:41,320 --> 00:27:41,840
Speaker 9: Week and a half.

546
00:27:41,920 --> 00:27:43,480
Speaker 10: And then I you know, I think that there's a

547
00:27:43,560 --> 00:27:46,280
Speaker 10: need for kind of knowing what happens next there. But

548
00:27:46,359 --> 00:27:48,600
Speaker 10: in terms of like the fundamentals and the macro picture,

549
00:27:48,880 --> 00:27:51,440
Speaker 10: you know, I'm still very constructive and bullish on the market,

550
00:27:52,359 --> 00:27:54,840
Speaker 10: provided that those things, you know, don't surprise us out

551
00:27:54,840 --> 00:27:55,480
Speaker 10: of left field.

552
00:27:56,040 --> 00:27:57,719
Speaker 3: How About on the earnings front here, we're just kind

553
00:27:57,760 --> 00:27:59,720
Speaker 3: of another real busy week here for the S and

554
00:27:59,760 --> 00:28:02,520
Speaker 3: P five hundred earnings. What do you think this market

555
00:28:02,560 --> 00:28:03,320
Speaker 3: needs to see?

556
00:28:03,400 --> 00:28:04,400
Speaker 2: I mean, how dependent?

557
00:28:04,880 --> 00:28:07,639
Speaker 3: I mean, and obviously earnings matter, but it seems like

558
00:28:07,720 --> 00:28:09,399
Speaker 3: this is a market that's been pushed around by the

559
00:28:09,440 --> 00:28:10,399
Speaker 3: FED one way.

560
00:28:10,320 --> 00:28:11,800
Speaker 2: Or the other. Here, what are you looking for in

561
00:28:11,840 --> 00:28:12,840
Speaker 2: earnings this cycle?

562
00:28:14,160 --> 00:28:16,520
Speaker 10: So, I mean, I guess the you know, the good

563
00:28:16,560 --> 00:28:18,960
Speaker 10: thing about earnings is over the past couple of weeks

564
00:28:19,040 --> 00:28:21,280
Speaker 10: or so, a lot of analysts have revised their earnings

565
00:28:21,320 --> 00:28:24,159
Speaker 10: expectations downward, and so I think that you know, beats

566
00:28:24,160 --> 00:28:27,120
Speaker 10: are going to be easier to come by in terms

567
00:28:27,160 --> 00:28:27,720
Speaker 10: of earnings.

568
00:28:27,760 --> 00:28:29,840
Speaker 9: You know, we live in this world now where the

569
00:28:29,920 --> 00:28:30,560
Speaker 9: Mac seven.

570
00:28:30,720 --> 00:28:34,520
Speaker 10: You know, maybe we've subtracted Tesla from that list or

571
00:28:34,760 --> 00:28:36,480
Speaker 10: or you know a couple of names here and there.

572
00:28:36,560 --> 00:28:39,280
Speaker 10: But the top tech companies, let's call it as well

573
00:28:39,320 --> 00:28:44,240
Speaker 10: as Navidia are are really you know, names that investors

574
00:28:44,400 --> 00:28:46,640
Speaker 10: want good news from, and so then I think if

575
00:28:46,680 --> 00:28:50,680
Speaker 10: they deliver, that tends to broaden the rally, and that

576
00:28:50,760 --> 00:28:54,000
Speaker 10: tends to lift stocks in other sectors. You know, bank

577
00:28:54,040 --> 00:28:56,400
Speaker 10: earnings haven't been so bad, right and we haven't seen

578
00:28:56,920 --> 00:29:01,400
Speaker 10: kind of this this you know recent from that news.

579
00:29:01,400 --> 00:29:02,920
Speaker 10: So it's really those names that I think that have

580
00:29:02,960 --> 00:29:04,360
Speaker 10: to perform. So I'll be looking at that.

581
00:29:05,400 --> 00:29:08,200
Speaker 3: So, you know, one of the the big themes last

582
00:29:08,280 --> 00:29:10,760
Speaker 3: year and coming into this year was AI and obviously

583
00:29:10,880 --> 00:29:11,600
Speaker 3: Nvidia and all.

584
00:29:11,520 --> 00:29:12,360
Speaker 2: Those types of things.

585
00:29:12,400 --> 00:29:15,360
Speaker 3: We saw some pretty violent action on Friday some of

586
00:29:15,360 --> 00:29:16,520
Speaker 3: those names kind of coming down.

587
00:29:16,600 --> 00:29:19,160
Speaker 2: Was that kind of a technical move for you or

588
00:29:19,200 --> 00:29:19,360
Speaker 2: do you.

589
00:29:19,360 --> 00:29:21,440
Speaker 3: Feel like the bloom is kind of coming off the

590
00:29:21,520 --> 00:29:23,719
Speaker 3: roads a little bit on some of those AI driven

591
00:29:24,000 --> 00:29:25,040
Speaker 3: thematic names.

592
00:29:26,320 --> 00:29:29,320
Speaker 10: So I think that this is you know I always

593
00:29:29,360 --> 00:29:31,280
Speaker 10: talk about like buy on the dip opportunities.

594
00:29:31,720 --> 00:29:32,280
Speaker 9: This is it.

595
00:29:32,400 --> 00:29:34,880
Speaker 10: I mean, I think that with some of the top names,

596
00:29:34,880 --> 00:29:37,920
Speaker 10: if you're looking to get invested in AI or quantum computing,

597
00:29:38,000 --> 00:29:40,840
Speaker 10: and you know you're a stock picker, you're an ETF buyer,

598
00:29:41,400 --> 00:29:44,160
Speaker 10: these five to ten percent recent pullbacks and some of

599
00:29:44,200 --> 00:29:46,760
Speaker 10: these top names are really good opportunities to get back in.

600
00:29:46,880 --> 00:29:50,640
Speaker 10: You know, AI innovation isn't going anywhere. It's just in

601
00:29:50,680 --> 00:29:53,120
Speaker 10: the beginning. It's it's in its infancy. And when you

602
00:29:53,160 --> 00:29:56,760
Speaker 10: think about when other companies and sectors start talking about

603
00:29:56,800 --> 00:29:59,320
Speaker 10: how AI has transformed what they do, whether it's the

604
00:29:59,360 --> 00:30:03,440
Speaker 10: defend section or you know, banks talking about better risk mitigation,

605
00:30:04,080 --> 00:30:09,760
Speaker 10: pharmaceuticals talking about more efficient drug discovery, price discovery, you know,

606
00:30:09,960 --> 00:30:12,440
Speaker 10: more effective surgeries in the healthcare system, things like this.

607
00:30:13,040 --> 00:30:14,480
Speaker 9: You know you're going to start to.

608
00:30:14,480 --> 00:30:17,920
Speaker 10: See how compelling it is to continue to buy these stocks.

609
00:30:17,960 --> 00:30:20,360
Speaker 10: Is that innovation builds out and you know, we're barely

610
00:30:20,360 --> 00:30:23,360
Speaker 10: scratching the surface with supercomputing and quantum competing too. So

611
00:30:23,800 --> 00:30:25,560
Speaker 10: when you have all of this data, it has to

612
00:30:25,560 --> 00:30:28,440
Speaker 10: be processed quickly. In order for that to happen, you're

613
00:30:28,440 --> 00:30:30,680
Speaker 10: going to have to kind of like buy up supercomputers

614
00:30:30,720 --> 00:30:32,920
Speaker 10: and quantum computers and things like this too. So I

615
00:30:33,000 --> 00:30:35,240
Speaker 10: just think that it's a great time to get back

616
00:30:35,280 --> 00:30:37,320
Speaker 10: in or get in if you know, if you've kind

617
00:30:37,320 --> 00:30:37,920
Speaker 10: of had FOMO.

618
00:30:38,760 --> 00:30:41,080
Speaker 9: Even though the stock prices are high, they have pulled back.

619
00:30:41,600 --> 00:30:44,640
Speaker 3: What's the I guess you know, it defines ETFs. Where

620
00:30:44,680 --> 00:30:48,440
Speaker 3: are you guys seeing the fund flows these days?

621
00:30:49,880 --> 00:30:53,160
Speaker 10: Yeah, so two places, well the three places really, So

622
00:30:53,520 --> 00:30:55,959
Speaker 10: we see a lot of flows into target income funds.

623
00:30:55,960 --> 00:30:58,520
Speaker 10: So the investor that just likes to have that, you know,

624
00:30:58,640 --> 00:31:00,920
Speaker 10: double digit monthly return at the end of the month

625
00:31:00,960 --> 00:31:02,920
Speaker 10: and have broad based index exposure.

626
00:31:02,960 --> 00:31:04,160
Speaker 9: So we see a lot of flows.

627
00:31:03,880 --> 00:31:08,719
Speaker 10: Into our SPYT and iwmy off of investors that want dividends.

628
00:31:08,920 --> 00:31:11,320
Speaker 10: But I would say the fun that people are talking

629
00:31:11,320 --> 00:31:13,600
Speaker 10: about the most and has kind of grown the most,

630
00:31:13,600 --> 00:31:17,440
Speaker 10: even though it's been around kind of the longest is quantum.

631
00:31:17,040 --> 00:31:19,920
Speaker 9: And that's the AI and machine learning what we were

632
00:31:19,960 --> 00:31:20,560
Speaker 9: just talking about.

633
00:31:20,600 --> 00:31:22,480
Speaker 10: You know, I think a lot of investors realize that

634
00:31:23,000 --> 00:31:25,680
Speaker 10: Navidia and AMD while they all know stocks, there's got

635
00:31:25,720 --> 00:31:28,040
Speaker 10: to be something else. They don't necessarily know who the

636
00:31:28,080 --> 00:31:30,120
Speaker 10: winners are going to be, or who that's something else,

637
00:31:30,160 --> 00:31:32,320
Speaker 10: what that something else is, And so they liked the

638
00:31:33,000 --> 00:31:35,800
Speaker 10: you know, equal weighted basket of seventy stocks that are

639
00:31:35,840 --> 00:31:41,200
Speaker 10: covering semiconductors, graphics, you know, technology, computers, cloud, cyber things

640
00:31:41,240 --> 00:31:42,960
Speaker 10: like this, and so we've seen a lot of interest

641
00:31:43,040 --> 00:31:45,120
Speaker 10: there from investors.

642
00:31:45,280 --> 00:31:47,400
Speaker 3: How about only the fixed income side, I mean, are

643
00:31:47,440 --> 00:31:49,080
Speaker 3: you seeing money flow in? Because I mean you can

644
00:31:49,400 --> 00:31:50,920
Speaker 3: sit there at a two year treasure, you can get

645
00:31:50,920 --> 00:31:53,520
Speaker 3: close to the five percent. I know some folks were

646
00:31:53,520 --> 00:31:56,520
Speaker 3: saying in some ETFs they were seeing like the folks

647
00:31:56,560 --> 00:31:59,120
Speaker 3: at bond blocks, for example, will focus on ETFs seeing

648
00:31:59,160 --> 00:32:00,479
Speaker 3: a lot of fun flow into there.

649
00:32:00,480 --> 00:32:01,360
Speaker 2: Are you seeing that as well?

650
00:32:02,720 --> 00:32:02,960
Speaker 7: Yeah?

651
00:32:02,960 --> 00:32:04,960
Speaker 10: And so when the market pulls back, I mean we

652
00:32:04,960 --> 00:32:06,720
Speaker 10: definitely see that. We don't see that on our side,

653
00:32:06,720 --> 00:32:08,520
Speaker 10: we don't really have those types of products. But when

654
00:32:08,640 --> 00:32:12,360
Speaker 10: when you see that, it's usually you know, it was

655
00:32:12,520 --> 00:32:14,760
Speaker 10: it was years of inflation that was too high and

656
00:32:14,800 --> 00:32:17,160
Speaker 10: stocks thats just weren't running like a twenty twenty two

657
00:32:17,320 --> 00:32:19,280
Speaker 10: tech recession where you're going to put your money at

658
00:32:19,320 --> 00:32:21,760
Speaker 10: five percent treasuries made sense, but I would argue that

659
00:32:21,800 --> 00:32:24,360
Speaker 10: this year is different, and those trillions of dollars that

660
00:32:24,400 --> 00:32:26,880
Speaker 10: are sitting in those products and on the sidelines, I

661
00:32:26,920 --> 00:32:29,360
Speaker 10: think we'll eventually make their way back into the market.

662
00:32:29,400 --> 00:32:31,320
Speaker 10: You know, Yes, we've had a five percent pullback, but

663
00:32:31,320 --> 00:32:34,120
Speaker 10: look at Broadway secuity performance this year. I think you'd

664
00:32:34,200 --> 00:32:37,040
Speaker 10: rather be invested there than you wouldn't treasuries. And I

665
00:32:37,040 --> 00:32:40,160
Speaker 10: think that that'll slowly start to you know, revert back

666
00:32:40,160 --> 00:32:43,600
Speaker 10: into the markets, particularly if we get you know, a broadening.

667
00:32:43,160 --> 00:32:45,360
Speaker 9: Of performance in the markets. But for now, you know,

668
00:32:45,880 --> 00:32:46,760
Speaker 9: market pulls back yup.

669
00:32:46,800 --> 00:32:49,120
Speaker 10: Geopolitical risk you have, you know, a FED that's kind

670
00:32:49,120 --> 00:32:52,920
Speaker 10: of you know, less less iffy about those rate cuts

671
00:32:52,920 --> 00:32:54,600
Speaker 10: and things like that, and some investors tend to flee

672
00:32:54,640 --> 00:32:56,120
Speaker 10: to safety, you know.

673
00:32:56,520 --> 00:32:57,920
Speaker 3: So if I know one of the names on your list,

674
00:32:57,960 --> 00:32:59,760
Speaker 3: and we've talked about it in the past, is IBM

675
00:33:00,560 --> 00:33:04,480
Speaker 3: in the world of AI or in quantum computing, what

676
00:33:04,560 --> 00:33:06,880
Speaker 3: does it the likes of an IBM play.

677
00:33:08,280 --> 00:33:08,480
Speaker 7: Yeah.

678
00:33:08,480 --> 00:33:10,240
Speaker 10: So it's so funny because I think, and we talked

679
00:33:10,240 --> 00:33:12,600
Speaker 10: about this before too, it's almost like that sleeper tech

680
00:33:13,320 --> 00:33:16,640
Speaker 10: tech stock, right, just what happened to IBM, And I

681
00:33:16,640 --> 00:33:18,360
Speaker 10: would say that they're back, you know, I mean they

682
00:33:18,360 --> 00:33:20,440
Speaker 10: were always here, they had Watson. They're sort of the

683
00:33:20,480 --> 00:33:24,600
Speaker 10: first you know, true AI play I think, but they

684
00:33:24,640 --> 00:33:26,960
Speaker 10: just weren't kind of known for it, I guess. And

685
00:33:27,000 --> 00:33:28,920
Speaker 10: now they're coming out of the woodworks because they're doing

686
00:33:28,960 --> 00:33:31,880
Speaker 10: so much work in quantum computing and supercomputing and they're

687
00:33:31,960 --> 00:33:35,880
Speaker 10: you know, kind of providing services to Fortune five hundred

688
00:33:35,920 --> 00:33:39,040
Speaker 10: companies using their AI technology. But then they're also building

689
00:33:39,040 --> 00:33:42,080
Speaker 10: and scoping out quantum computing. So they have deals with

690
00:33:42,600 --> 00:33:45,600
Speaker 10: Cleveland Clinic to to you know, create better drugs and

691
00:33:45,600 --> 00:33:47,520
Speaker 10: pharmaceutical discovery processes.

692
00:33:47,560 --> 00:33:50,880
Speaker 9: They have a project with Korea Quantum where they're looking.

693
00:33:50,680 --> 00:33:54,800
Speaker 10: At, you know, more precise information around aerospace and defense

694
00:33:54,880 --> 00:33:59,240
Speaker 10: and then also you know military types of logistical projects

695
00:33:59,280 --> 00:34:01,120
Speaker 10: that they're working on. And you know, you think about

696
00:34:01,120 --> 00:34:04,000
Speaker 10: the US government pumping into pumping money into you know,

697
00:34:04,320 --> 00:34:07,080
Speaker 10: kind of defense and quantum competing in AI as it

698
00:34:07,120 --> 00:34:09,640
Speaker 10: relates to that, You're going to see IBM have a

699
00:34:10,000 --> 00:34:11,840
Speaker 10: good seat at the table I think in the future.

700
00:34:12,200 --> 00:34:14,240
Speaker 3: All right, Sylvia, thanks so much for joining us. Always

701
00:34:14,239 --> 00:34:16,480
Speaker 3: appreciate getting a few minutes of your time. Sylvia Jablonski,

702
00:34:16,560 --> 00:34:20,120
Speaker 3: Chief Executive Officer and Chief Information Officer Defiance ETF.

703
00:34:22,760 --> 00:34:26,640
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

704
00:34:26,719 --> 00:34:30,280
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

705
00:34:30,280 --> 00:34:33,440
Speaker 1: Auto with the Bloomberg Business. You can also listen live

706
00:34:33,560 --> 00:34:36,719
Speaker 1: on Amazon Alexa from our flagship New York station Just

707
00:34:36,800 --> 00:34:39,400
Speaker 1: Say Alexa playing Bloomberg eleven thirty.

708
00:34:40,640 --> 00:34:44,160
Speaker 3: Last week, Alex and I were at the Bloomberg BNF

709
00:34:44,520 --> 00:34:47,480
Speaker 3: conference that's New Energy Finance. These are the folks that

710
00:34:47,680 --> 00:34:51,640
Speaker 3: really look at the energy space in depth, including all

711
00:34:51,640 --> 00:34:55,719
Speaker 3: the new energy and new energy businesses that are being created.

712
00:34:55,440 --> 00:34:56,000
Speaker 2: Across the world.

713
00:34:56,000 --> 00:34:59,040
Speaker 3: Where we're looking at from the business perspective of global energy.

714
00:34:59,520 --> 00:35:01,680
Speaker 3: They had great conference last week in New York, some

715
00:35:01,840 --> 00:35:03,520
Speaker 3: really smart people. They were talking about some of the

716
00:35:03,560 --> 00:35:06,360
Speaker 3: bigger picture, bigger picture issues and what's getting done on

717
00:35:06,400 --> 00:35:08,759
Speaker 3: the ground. David dharerty joints US here today. He's head

718
00:35:08,760 --> 00:35:12,640
Speaker 3: of Oil and Renewable Fuels Research at Bloomberg BNEF here

719
00:35:12,680 --> 00:35:15,360
Speaker 3: in our Bloomberg Interactive Broker Studios. So, David, great conference

720
00:35:15,360 --> 00:35:17,759
Speaker 3: you guys had last week. I learned a lot because

721
00:35:17,760 --> 00:35:20,040
Speaker 3: I'm not an energy geek like Alex is, so I

722
00:35:20,120 --> 00:35:23,279
Speaker 3: learned a lot here just buy and large. What's the

723
00:35:23,360 --> 00:35:26,360
Speaker 3: view of the big energy companies here in the US

724
00:35:26,400 --> 00:35:31,000
Speaker 3: towards making that migration to maybe greener energy.

725
00:35:31,080 --> 00:35:33,279
Speaker 2: How committed are they? How long of a path do

726
00:35:33,280 --> 00:35:35,520
Speaker 2: you think this will be for global energy?

727
00:35:35,680 --> 00:35:38,800
Speaker 11: Yeah, long path, regardless whether you're European or American and

728
00:35:39,200 --> 00:35:44,080
Speaker 11: an oil producer, completely different angles. US companies have gone

729
00:35:44,120 --> 00:35:46,319
Speaker 11: into sort of a cleaner molecule when they're willing to

730
00:35:46,360 --> 00:35:49,000
Speaker 11: invest in low carbon tech, so think of like renewable

731
00:35:49,000 --> 00:35:52,799
Speaker 11: fuels ccs, hydrogen, and the Europeans have pretty much piled

732
00:35:52,840 --> 00:35:55,560
Speaker 11: into a bit of everything, but a lot of clean electrons, wind,

733
00:35:55,719 --> 00:35:59,600
Speaker 11: solar batteries, evs. Very different cultures. You know, Europe doesn't

734
00:35:59,600 --> 00:36:02,120
Speaker 11: produce as much oil as the US, so you know,

735
00:36:02,239 --> 00:36:03,520
Speaker 11: default position makes sense.

736
00:36:03,560 --> 00:36:06,040
Speaker 3: I think are you surprised just looking at I'm looking

737
00:36:06,080 --> 00:36:08,560
Speaker 3: at Brent crude here, You've got your Irish accent. I'm

738
00:36:08,600 --> 00:36:11,440
Speaker 3: assuming you look at Brent more than my WTI crude

739
00:36:11,440 --> 00:36:13,760
Speaker 3: oil just under eighty seven dollars per barrel.

740
00:36:14,080 --> 00:36:15,360
Speaker 2: I could make a case that it should be a

741
00:36:15,400 --> 00:36:16,239
Speaker 2: lot higher.

742
00:36:16,320 --> 00:36:18,440
Speaker 3: Given what's going on in the world with in the

743
00:36:18,480 --> 00:36:21,719
Speaker 3: Middle East, in Ukraine, with Russia and so on.

744
00:36:21,840 --> 00:36:23,200
Speaker 2: What's going on in it energy markets?

745
00:36:23,320 --> 00:36:26,040
Speaker 11: Yeah, everybody's looking at one hundred dollars, right, three digits

746
00:36:26,080 --> 00:36:28,920
Speaker 11: that the eyes are sort of focused on. The market's

747
00:36:28,960 --> 00:36:30,680
Speaker 11: just completely different to the way it used to be. Right,

748
00:36:30,680 --> 00:36:32,879
Speaker 11: if you had an attack on Iran five years ago,

749
00:36:32,920 --> 00:36:36,480
Speaker 11: you would have seen fifteen dollars upside on the price.

750
00:36:36,560 --> 00:36:39,759
Speaker 11: The market's one smarter. We've satellites, we can track things.

751
00:36:39,800 --> 00:36:42,239
Speaker 11: We've got people like Bloomberg, you know, counting ships going

752
00:36:42,239 --> 00:36:44,840
Speaker 11: in and out of regions. But also the market was

753
00:36:44,840 --> 00:36:47,080
Speaker 11: braced for it. It wasn't news, right, it wasn't.

754
00:36:47,120 --> 00:36:47,480
Speaker 5: It wasn't.

755
00:36:47,520 --> 00:36:49,920
Speaker 11: I guess we're expecting something to happen. The price is

756
00:36:49,960 --> 00:36:52,200
Speaker 11: built in. We've had a couple of months of sort

757
00:36:52,200 --> 00:36:54,680
Speaker 11: of like anxiety around the oil price, what could happen

758
00:36:54,680 --> 00:36:57,640
Speaker 11: to fundamentals? And then it was a bit anticlimactic. I

759
00:36:57,640 --> 00:37:00,400
Speaker 11: guess in the end, I mean.

760
00:37:00,640 --> 00:37:01,600
Speaker 2: I guess what's changed?

761
00:37:01,680 --> 00:37:03,759
Speaker 3: Just we're talking about it in the break here, I mean,

762
00:37:03,960 --> 00:37:06,120
Speaker 3: just in the blink of an eye. It seems like

763
00:37:06,160 --> 00:37:08,520
Speaker 3: the United States has gone from a big, big net

764
00:37:08,600 --> 00:37:11,799
Speaker 3: importer of oil so now being a pretty big net

765
00:37:11,960 --> 00:37:15,520
Speaker 3: exporter of oil. What does that mean for the global markets?

766
00:37:15,520 --> 00:37:17,160
Speaker 3: Does that mean we don't have to worry about Opek

767
00:37:17,200 --> 00:37:18,120
Speaker 3: or any of those guys.

768
00:37:18,440 --> 00:37:19,840
Speaker 11: Absolutely have to worry about Opeking.

769
00:37:20,000 --> 00:37:20,399
Speaker 2: Those guys.

770
00:37:20,480 --> 00:37:21,279
Speaker 8: Yeah, yeah, I.

771
00:37:21,200 --> 00:37:24,520
Speaker 11: Mean, if you look at the world of sanctions about

772
00:37:25,520 --> 00:37:28,160
Speaker 11: just over, just over, the amount of Saudi Arabia and

773
00:37:28,200 --> 00:37:32,879
Speaker 11: exports is now sanctioned Venezuela around and Russia. Right, that's huge.

774
00:37:32,920 --> 00:37:35,240
Speaker 11: You're taking let's say, the equivalent of the biggest producer

775
00:37:35,560 --> 00:37:39,480
Speaker 11: that's falling under our form of sanctions. US produces a

776
00:37:39,480 --> 00:37:41,160
Speaker 11: bunch of oil, yes, but it's not the right kind

777
00:37:41,200 --> 00:37:42,800
Speaker 11: of oil for the US, so it's got to swap

778
00:37:42,800 --> 00:37:43,680
Speaker 11: it out into the market.

779
00:37:44,040 --> 00:37:45,919
Speaker 2: You know, there's a lighter crud.

780
00:37:46,000 --> 00:37:48,160
Speaker 11: Yeah, exactly where You've got really great refineries here that

781
00:37:48,200 --> 00:37:51,640
Speaker 11: are built for Venezuela and Mexican oil. Right, Okay, so

782
00:37:51,680 --> 00:37:53,920
Speaker 11: there's this swap happening. And then if you bring in

783
00:37:54,000 --> 00:37:58,120
Speaker 11: sort of disruptions around straights from US et cetera, any

784
00:37:58,200 --> 00:38:01,319
Speaker 11: disruption and shipping adds back clog into the whole, you know,

785
00:38:01,360 --> 00:38:03,040
Speaker 11: the pipeline of how to get oil from A to

786
00:38:03,080 --> 00:38:06,360
Speaker 11: B where it's needed. So the market's changing, the disruptions

787
00:38:06,400 --> 00:38:09,040
Speaker 11: are changing. The US is a big producer and we've

788
00:38:09,080 --> 00:38:11,200
Speaker 11: seen that makeup for some of those OPEC cuts in

789
00:38:11,200 --> 00:38:13,960
Speaker 11: the last couple of months, but absolutely still got to

790
00:38:13,960 --> 00:38:16,800
Speaker 11: pay attention to what OPEC seeing and those big sanctioning exports.

791
00:38:16,920 --> 00:38:18,360
Speaker 2: Well, let's go to the sanctions.

792
00:38:18,360 --> 00:38:20,320
Speaker 3: I mean, I'm just I don't know anything about the

793
00:38:20,360 --> 00:38:22,560
Speaker 3: energy market other than what alex Steel tells me. But

794
00:38:22,640 --> 00:38:25,520
Speaker 3: it just doesn't seem like sanctions really work on it.

795
00:38:25,520 --> 00:38:28,120
Speaker 3: The oil finds its way around, whether it's from Russia

796
00:38:28,160 --> 00:38:31,279
Speaker 3: to India. India refines it and then it ends up

797
00:38:31,320 --> 00:38:33,680
Speaker 3: in my car in New Jersey. I mean, how does

798
00:38:34,120 --> 00:38:35,600
Speaker 3: the sanctions work from your perspective?

799
00:38:36,280 --> 00:38:38,279
Speaker 11: I think they're probably working the way they're intended to

800
00:38:38,400 --> 00:38:40,600
Speaker 11: this time. But this sort of round and sanctions on

801
00:38:40,640 --> 00:38:43,000
Speaker 11: Russian Russian oil is just meant to be different to

802
00:38:43,000 --> 00:38:44,799
Speaker 11: those on around Right. If you think about Iran, it

803
00:38:44,840 --> 00:38:47,160
Speaker 11: was like stop exporting, stop producing, they want to contain it.

804
00:38:47,640 --> 00:38:49,680
Speaker 11: We've saw obviously volumes get to China about one and

805
00:38:49,760 --> 00:38:51,560
Speaker 11: a half million hours a day go to China from

806
00:38:51,560 --> 00:38:55,399
Speaker 11: around right, So pretty big Russia. The idea was not

807
00:38:55,560 --> 00:38:58,080
Speaker 11: to shock the market right by taking this big, big

808
00:38:58,120 --> 00:39:00,680
Speaker 11: export off the off of the market. About four million

809
00:39:00,680 --> 00:39:03,279
Speaker 11: bars per they exported out of Russia. That's huge, right,

810
00:39:03,440 --> 00:39:06,520
Speaker 11: much bigger than a run election year. They don't want

811
00:39:06,520 --> 00:39:09,040
Speaker 11: to rock the boat too much. Gasoline prices even when

812
00:39:09,080 --> 00:39:12,280
Speaker 11: you're seeing evs in California breach like twenty percent of sales.

813
00:39:12,719 --> 00:39:14,480
Speaker 11: You tell your average person on the street that and

814
00:39:14,480 --> 00:39:17,680
Speaker 11: they'll say, why is my gasoline gallon so expensive? Right?

815
00:39:17,960 --> 00:39:21,640
Speaker 11: Super sensitive election? You're us people like to drive. You

816
00:39:21,680 --> 00:39:23,240
Speaker 11: don't want to have that taken out of the pocket.

817
00:39:23,280 --> 00:39:26,160
Speaker 3: Right, all right, So as you sit back and take

818
00:39:26,160 --> 00:39:28,439
Speaker 3: a look at your history is with oil trading, oil,

819
00:39:28,480 --> 00:39:30,439
Speaker 3: all the distillates, all that kind of stuff you're from.

820
00:39:30,840 --> 00:39:32,799
Speaker 3: You know, you're kind of like John Talkern, we're kind

821
00:39:32,840 --> 00:39:34,960
Speaker 3: of old energy people. But you live in a world

822
00:39:35,000 --> 00:39:37,600
Speaker 3: of new energy finance. How do you think, Like if

823
00:39:37,640 --> 00:39:41,319
Speaker 3: you what's what are the NEF people saying ten years now,

824
00:39:41,320 --> 00:39:45,840
Speaker 3: twenty years now, what percentage of global energy supply will.

825
00:39:45,640 --> 00:39:48,719
Speaker 2: Be you know, lack of a better word, green.

826
00:39:48,600 --> 00:39:50,800
Speaker 3: Versus kind of the fossil fuels is or a feeling

827
00:39:50,840 --> 00:39:52,240
Speaker 3: that that could be material.

828
00:39:52,680 --> 00:39:53,600
Speaker 2: It will be material.

829
00:39:53,680 --> 00:39:56,640
Speaker 11: But it's important to put into context what's growth versus

830
00:39:56,640 --> 00:39:59,320
Speaker 11: what's currently existing. Right, the world isn't slowing down and

831
00:39:59,360 --> 00:40:02,239
Speaker 11: its energy can asumption growth story. So you're seeing more green,

832
00:40:02,280 --> 00:40:04,239
Speaker 11: but it's meeting a lot of that upside that growth. Right,

833
00:40:04,600 --> 00:40:06,520
Speaker 11: You're still seeing a lot of fossil fuels in the mix.

834
00:40:06,600 --> 00:40:11,160
Speaker 11: That's way harder to displace. So you're seeing evs being

835
00:40:11,239 --> 00:40:13,960
Speaker 11: like really high percentage of sales in places like China,

836
00:40:14,040 --> 00:40:18,200
Speaker 11: but you're still seeing healthy internal combustion engine sales in China, right,

837
00:40:18,880 --> 00:40:21,719
Speaker 11: That growth and mobility demand in markets like that. It's

838
00:40:21,719 --> 00:40:24,239
Speaker 11: just outstripping anything we can do to disrupt the sort

839
00:40:24,280 --> 00:40:26,920
Speaker 11: of status quo of a fossil any.

840
00:40:26,680 --> 00:40:30,000
Speaker 2: So, where's the argument today, which I've heard for twenty years?

841
00:40:30,360 --> 00:40:33,720
Speaker 2: Peak oil? Are we is that even a concept?

842
00:40:33,880 --> 00:40:36,520
Speaker 3: Or is because the world economy is growing that there

843
00:40:36,560 --> 00:40:39,439
Speaker 3: always will be I guess increasing demand for oil.

844
00:40:39,480 --> 00:40:39,839
Speaker 2: I don't know.

845
00:40:39,960 --> 00:40:42,560
Speaker 11: I mean, yeah, we are house here is twenty twenty nine, right,

846
00:40:42,600 --> 00:40:45,120
Speaker 11: but it's you know, it's modeling, it's it's oil at

847
00:40:45,120 --> 00:40:49,440
Speaker 11: twenty twenty nine demand exactly, Yeah, twenty twenty nine. For

848
00:40:49,520 --> 00:40:52,520
Speaker 11: every EV displaced, does an airplane going into the sky

849
00:40:52,960 --> 00:40:55,040
Speaker 11: or demand for plastics. Some things are a lot easier

850
00:40:55,040 --> 00:40:57,760
Speaker 11: to displace than others. But road is important. It's really interesting.

851
00:40:57,800 --> 00:41:00,360
Speaker 11: It's forty five percent of all oil consumers wheels on

852
00:41:00,440 --> 00:41:03,240
Speaker 11: the ground. Right, So this electric story that people sometimes

853
00:41:03,239 --> 00:41:05,680
Speaker 11: shift off and say whatever, Yep, that's the one to watch,

854
00:41:05,719 --> 00:41:06,000
Speaker 11: I think.

855
00:41:06,160 --> 00:41:08,320
Speaker 3: So, I mean, do you think that, Like here, Tesla

856
00:41:08,400 --> 00:41:11,200
Speaker 3: stocks down over forty percent year to date, Some people

857
00:41:11,239 --> 00:41:13,800
Speaker 3: think we've seen peak EV demand.

858
00:41:14,080 --> 00:41:14,560
Speaker 2: What do you think?

859
00:41:14,560 --> 00:41:15,880
Speaker 3: Because I know in other parts of the world it

860
00:41:16,360 --> 00:41:17,640
Speaker 3: continues to grow dramatically.

861
00:41:17,880 --> 00:41:19,640
Speaker 11: You know, that will get clicks in a headline, but

862
00:41:19,880 --> 00:41:22,880
Speaker 11: realistically that's the world is not just Tesla when it

863
00:41:22,920 --> 00:41:24,919
Speaker 11: comes to EV's and if you look outside of the US,

864
00:41:25,000 --> 00:41:28,040
Speaker 11: there's a huge range of automakers piling into that. China,

865
00:41:28,160 --> 00:41:31,240
Speaker 11: Europe over twenty percent of sales. We're at the point

866
00:41:31,680 --> 00:41:35,320
Speaker 11: the US might not be. California is rapid tipping point.

867
00:41:36,040 --> 00:41:38,440
Speaker 11: Some will go faster than that. There's in some some wones, right,

868
00:41:39,080 --> 00:41:41,080
Speaker 11: there's a lot of growth there still in some markets.

869
00:41:41,160 --> 00:41:43,279
Speaker 3: Yeah, I mean, I thanks to Matt Miller, I drove

870
00:41:43,360 --> 00:41:46,399
Speaker 3: testra of the F one fifty electric thing.

871
00:41:46,440 --> 00:41:48,759
Speaker 2: That was a right beast man. That is really cool.

872
00:41:48,760 --> 00:41:50,640
Speaker 3: So I could see a bunch of the F one

873
00:41:50,680 --> 00:41:53,080
Speaker 3: to fifty people switching over electric. It looked, I mean

874
00:41:53,200 --> 00:41:56,439
Speaker 3: looked great, drove great had huge power, so good stuff.

875
00:41:56,440 --> 00:41:59,280
Speaker 3: Will see how it goes Tesla earnings after the closes tomorrow.

876
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Speaker 3: Listened in that it's called David Dharty joins us here.

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Speaker 3: Appreciate getting a couple of minutes of his time. He's

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Speaker 3: set of Oil and Renewable Fuels research at Bloomberg NEEF.

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Speaker 3: That's new Energy finance for the people that don't know.

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Speaker 3: Joining us here in our Bloomberg Interactive Brooker Studio.

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