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Speaker 2: Boeing hitting the market. I'm raising some money up to
Speaker 2: nineteen large, maybe fourteen billion in common, maybe five billion
Speaker 2: in preferred. I think they can get this done pretty quickly.
Speaker 2: Everybody knows the Boeing name. It's been trading in these
Speaker 2: levels for a long time, so we know where the
Speaker 2: value is. George Ferguson, he's the analysts responsible for all
Speaker 2: this stuff. He's a senior airspace, defense and airlines analysts
Speaker 2: for Bloomberg Intelligence. George, if they are able to get
Speaker 2: this deal done again, roughly nineteen billion of incremental new equity,
Speaker 2: what's that going to do for him? How much time
Speaker 2: is I going to buy him?
Speaker 3: So we think it probably buys them a couple of quarters, right.
Speaker 3: So on the call the other day, on the evening's
Speaker 3: call for three Q, they indicated that they thought they'd
Speaker 3: burn four four and a half billion dollars in four
Speaker 3: Q similar to what they burned in two Q at
Speaker 3: that burn rate, what it gets maybe even you know,
Speaker 3: three quarters or the burn I wouldn't I would hope
Speaker 3: they wouldn't need all that, but we did here. Again
Speaker 3: their outlook that the first half of next year they
Speaker 3: expect to be largely a cash use scenario and for
Speaker 3: the full year they'd be cash used'd go sounded like
Speaker 3: they would go cash positive sometime in the second half,
Speaker 3: they hoped, so two three quarters.
Speaker 4: So, George, just in terms of how large this can be,
Speaker 4: we know that they launched the shelf to raise up
Speaker 4: to twenty five billion. Do you think that gets close
Speaker 4: to maxing it out just because it's going and they
Speaker 4: simply probably can.
Speaker 3: Well, I guess you know they have to, you know,
Speaker 3: sort of really, I mean, there's a lot of dilution here, right,
Speaker 3: so really be concerned about dilution. But you know, last
Speaker 3: I look, the shares were down a couple percent, so
Speaker 3: it seemed like the market's not that concerned about whatever
Speaker 3: delution is going to occur here. I think the bigger
Speaker 3: amount they have, right, the more staying power, obviously, the
Speaker 3: more they can look at the union across the negotiating table.
Speaker 3: And say we can hang out for a long time.
Speaker 3: We really need you to rethink your idea on let's
Speaker 3: say something like a pension, right.
Speaker 5: And so I think, you know, more money helps them there.
Speaker 3: And look, the aerospace supply chain still isn't stable, right,
Speaker 3: so Airbus should be sort of moving towards fifty rate
Speaker 3: on a three twenty as they close out the year.
Speaker 5: Here, we're not seeing it.
Speaker 3: We're seeing them in the forties still, so they're sort
Speaker 3: of proof positive to us.
Speaker 5: You know, we're.
Speaker 3: Seeing more noise out of the engine makers. They're still
Speaker 3: sort of working to get their supply chains fully functioning
Speaker 3: coming out of the pandemic. So it's not a given
Speaker 3: that just once they get this strike past them that
Speaker 3: Bowe's going to have, you know, clear skies ramp up quickly,
Speaker 3: generate cash and not have any additional problems. So I
Speaker 3: think raising more, raising above twenty billion, which yeah, I
Speaker 3: think could certainly happen here, just buys them more time
Speaker 3: in a world that is just has a lot more
Speaker 3: variables in it than you know, than most other industries.
Speaker 5: The airspace industry is more more variables right.
Speaker 2: Now, George, what are you hearing about this strike here?
Speaker 2: Has there been any movement here? Have they been able
Speaker 2: to narrow in on a or a topic or two
Speaker 2: or three? What are what are you hearing?
Speaker 3: I'm hearing it has a lot to do about pensions,
Speaker 3: right I'm still this weekend, I'm hearing noise out of
Speaker 3: the unions on the on the West coast, and that
Speaker 3: that noise, you know, not trying to demean it. It's
Speaker 3: it's the commentary is probably better way of putting it.
Speaker 3: Out of the union is really around a pension now,
Speaker 3: you know, I have heard the machinists presidents say that,
Speaker 3: you know, if they can't give a pension, they should
Speaker 3: Boeing should be prepared to give somewhere else. So it
Speaker 3: sounds like there is flexibility, but it sounds like a
Speaker 3: lot of it has to do with retirement plans and
Speaker 3: what the union thought they lost a decade ago. They
Speaker 3: did lose the pension a decade ago, and they think
Speaker 3: they lost a very valuable benefit. And it sounds like
Speaker 3: there's a lot of focus on that right now.
Speaker 4: And we saw the report at the end of last
Speaker 4: week that the company could sell their Starliner space program.
Speaker 4: What's your thinking on that? Is a more streamlined Boeing
Speaker 4: more attractive to equity investors.
Speaker 3: Look, I think Boeing could potentially do some streamlining. I
Speaker 3: frankly think the space business isn't necessarily the place.
Speaker 5: For them to do the streamlining.
Speaker 3: But I do think they're looking for pieces of the
Speaker 3: company that aren't core to sort of aircraft, you know,
Speaker 3: defense aircraft, commercial aircraft, and so space I think stands
Speaker 3: out for that. The problem I have though with the
Speaker 3: space business is they've got a launch business called the
Speaker 3: United Launch a line.
Speaker 5: It's with Lockheed.
Speaker 3: It's not as competitive as SpaceX, right, I know from
Speaker 3: people I talked to in the industry, SpaceX can deliver
Speaker 3: things into orbit much cheaper. You know, I think the
Speaker 3: Boeing Lockheed joint venture suffers from I think some of
Speaker 3: those sort of structural challenges inside any big defense contract
Speaker 3: that they're not nimble and they're not cheap. And I
Speaker 3: think you know, star Liner, they took four point six
Speaker 3: billion to develop a capsule. It's supposed to be the
Speaker 3: second capsule to the SpaceX capsule, which one as well.
Speaker 3: You know, NASA wantce redundancy to deliver to the International
Speaker 3: Space Station.
Speaker 5: There's a commitment in there. I think they have to.
Speaker 3: Deliver or at least have to go to the space
Speaker 3: station at least twice a year for a number of years.
Speaker 3: I don't see NASA, you know, letting them off that
Speaker 3: that requirement. So they're gonna have to find someone else
Speaker 3: to step in to a program they've already developed, to
Speaker 3: take it over and commit to making you know, deliveries
Speaker 3: to the space station or shots to the space station
Speaker 3: twice a year. I think that they're going to be
Speaker 3: hard pressed to really get much money from that, because again,
Speaker 3: they don't they don't deliver cheap.
Speaker 5: They're overruns on Starliner two. So I just think it's.
Speaker 3: Going to be a real challenge to really generate much
Speaker 3: cash from that. That's been on the market too for
Speaker 3: a while, and nobody's bitten so far. I understand Blue
Speaker 3: Origin looked at it, and now they're going to the
Speaker 3: equity markets for twenty billion in equity. So I think
Speaker 3: that's a sign of what they think they can generate
Speaker 3: for that business just isn't there, I don't think all.
Speaker 6: Right, George, thanks so much for the update. Appreciate it
Speaker 6: as always.
Speaker 2: George Ferguson, Senior Aerospace, Defense and Airlines sentists for Bloomberg Intelligence,
Speaker 2: Boeing in the market for you know, up to nineteen
Speaker 2: billion dollars in some equity common stock, preferred stock. We'll
Speaker 2: see stock's only off one percent years. So, as George
Speaker 2: was suggesting, it seems like the market's okay with the delution.
Speaker 2: I mean, it is what it is. You kind of
Speaker 2: knew this was coming. It's been well telegraphed.
Speaker 4: We reported it back in early October, so almost four
Speaker 4: weeks ago. At this point that they were in talks
Speaker 4: with advisors, that stock was about one point fifty three.
Speaker 4: Right now it's one fifty three to five. So when
Speaker 4: you think about it, we're continuing to see the stock
Speaker 4: move sideways. As you mentioned, the big question is what
Speaker 4: kind of a discount, How quickly does this deal get done,
Speaker 4: and what are the terms that actually get agreed upon
Speaker 4: for that convertible debt, Just because when as George mentioned,
Speaker 4: when you talk dilution, if you're an equity investor, I'm
Speaker 4: sure you want to clean balance sheet, but you also
Speaker 4: don't want to get squeezed out of your position.
Speaker 2: Yep, it's actually and then presumably that'll strengthen their position
Speaker 2: with the union. Just in terms of talking about this
Speaker 2: upcoming contract.
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Speaker 2: Let's switch hears to the global auto industry. A little
Speaker 2: bit different story there is. The best I could tell
Speaker 2: the two may your headwinds for the auto industry is
Speaker 2: one China, which is obviously a huge growth market for
Speaker 2: the global auto industry. It's slowing and the local brands
Speaker 2: there are improving dramatically, so they're getting much more competitive there.
Speaker 2: And then the second thing is, oh, yeah, they got
Speaker 2: this whole transition to evs and how do you do that?
Speaker 2: We heard some some really cautious news out of Volkswagen today.
Speaker 2: Volkswagen eyes closing three German factories in a cost cutting push.
Speaker 2: Let's check them with Steve Man, he covers the global
Speaker 2: auto industry for Bloomberg Intelligence. Steve talked to us first
Speaker 2: about this Volkswagen news here, I mean shutting German factories.
Speaker 2: They don't typically do that, So how much, how much
Speaker 2: hurt are they feeling over their VW.
Speaker 7: Oh, they're in the world of pain at the moment.
Speaker 7: You kind of mentioned it, Paul. They are hurting around
Speaker 7: the world in all three major regions of the auto market.
Speaker 7: You know, US, they're not They're not that big of
Speaker 7: a they don't have that big of a presence in
Speaker 7: the US. You're up, you know, it's sales are down.
Speaker 7: You're not only hearing it from Volkswagen, but also Silentis
Speaker 7: as well. You know, their stock is down quite a
Speaker 7: bit over the past few months. And in China, you know, China,
Speaker 7: the Chinese OEMs are taking a lot of market share
Speaker 7: in China, They're they're entering the EU market. Like you
Speaker 7: said earlier, you know, Chinese automaker are just much quicker
Speaker 7: in transitioning to EVS in that region than any of
Speaker 7: the foreign OEMs operating in China at the moment. So,
Speaker 7: you know, Volkswagen is feeling it.
Speaker 4: And how does that kind of position a company And
Speaker 4: you're up one of the biggest automakers trying to compete
Speaker 4: with US automakers who are having their own issues and
Speaker 4: as well as kind of the potential pent up demand
Speaker 4: at least in terms of capacity production capacity in China.
Speaker 7: Yeah, there, I mean de pent up the capacity in China.
Speaker 7: It is really not EV capacity. It's actually really ICE capacity,
Speaker 7: internal combuntion engine vehicle capacity.
Speaker 8: Uh.
Speaker 7: There's been a lot of closing of those plants in China.
Speaker 7: Volkswagen has closed one of its plants in China with
Speaker 7: his partner Shanghai Auto sai C. You know, Ford has
Speaker 7: closed a number of plants. Hyundai has closed a number
Speaker 7: of plants. And these are all companies that have not
Speaker 7: transitioned to EV as fast as the OEM's companies like
Speaker 7: GM and BUYD taking huge market share from the foreign automakers.
Speaker 7: By D is actually the biggest now biggest automaker in
Speaker 7: terms of volume in China.
Speaker 2: All right, So what is Global Auto to do about China?
Speaker 2: What is the strategy?
Speaker 6: Do you think?
Speaker 2: Because I think if I've got these Chinese companies that are,
Speaker 2: you know, getting better and better every day, what do.
Speaker 1: I do there?
Speaker 2: Do I walk away from this market? I can't do that.
Speaker 6: It's too big.
Speaker 9: Yeah, that's I know.
Speaker 7: You know, if you look at the four OEMs operating
Speaker 7: in China five years ago, they were they had market
Speaker 7: share over fifty percent in the last couple of years,
Speaker 7: they basically have changed position.
Speaker 5: Uh.
Speaker 7: You know, the Chinese OEM has more and more capacity,
Speaker 7: more and more market share, uh, and it's growing. There's
Speaker 7: a number of ways they can attack this. They need,
Speaker 7: you know, they either invest a lot of money uh
Speaker 7: and and really grow evs and not just evs, but
Speaker 7: these user interface. Chinese consumers are buying cars because they
Speaker 7: like the user interface that the Chinese OEMs are offering them.
Speaker 7: So they need to build more evs. They need to
Speaker 7: look at revamping their software to cater the local customers
Speaker 7: in China.
Speaker 5: Well.
Speaker 7: The other the other option is really to close shop
Speaker 7: and you know, focus, refocus their their investments and their costs.
Speaker 7: They know how to you know, they know how to
Speaker 7: operate in Europe, they know how to operate in the US.
Speaker 7: They know how to do, you know, sell more cars
Speaker 7: in their local markets. That that may be one option
Speaker 7: is to just retrench. But you know, that's that's not
Speaker 7: an unfortunate approach if they had to do that in
Speaker 7: the biggest auto market in the world.
Speaker 4: When I look at Europe, are there any automakers well positioned?
Speaker 4: I mean, Stilantis is hitting getting hit by four performance
Speaker 4: in the US BMW has an expensive recall. Mercedes Bins
Speaker 4: has been struggling in China, Like is anyone winning well?
Speaker 7: Relatively speaking, I think the German luxury automakers, the BMW,
Speaker 7: Mercedes are faring better than the mass market, but they're
Speaker 7: also feeling the pain, right They're all the luxury brands
Speaker 7: are also feeling the pain.
Speaker 5: You know.
Speaker 7: BMW and Mercedes just reported, you know, lower sales in China.
Speaker 7: And you know, I also am concerned. And it's a
Speaker 7: matter of time because there are companies like Neil, there
Speaker 7: are companies that are xpunk, you know, they're also moving
Speaker 7: up market competing with the Mercedes and BMW. So I think,
Speaker 7: relatively speaking, just to answer your question, the luxuries are
Speaker 7: doing better, but you know, time will tell if they
Speaker 7: can you know, maintain you know, some of the sales
Speaker 7: that they have in China.
Speaker 2: All right, Steve, thanks so much for joining us there.
Speaker 2: Steve Man, he covers the global global autos and industrials
Speaker 2: for Bloomberg Intelligency spased down in our Princeton, New Jersey office,
Speaker 2: So getting the latest on VW closing some plants, cutting
Speaker 2: some staff, trying to cut some costs here as they
Speaker 2: face the some headwinds coming out of China, as well
Speaker 2: as the continued costs of going over to electric vehicles.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: All right, our next guest, let me see if I
Speaker 2: got this conjugated right. She's in Chicago, though, but she's
Speaker 2: a Boston native and fan of the Red Sox, which
Speaker 2: means she's rooting for the Dodgers. I think I've got
Speaker 2: that rate. Shane Sissel, president and CEO of a ban
Speaker 2: Rionn Capital Management, joins us here in our Bloomberg Interactive Broker.
Speaker 6: Studio that I get that right.
Speaker 10: We totally got that right. I think, guys we were
Speaker 10: saying before, Dave Roberts has to continue to do everything
Speaker 10: he can to help the Red Sox, whether it be
Speaker 10: win a World Series as a player, as give the
Speaker 10: Red Sox World Series as a manager, and now he
Speaker 10: needs to make sure.
Speaker 2: That the Yankees prevent the Yankees. I get the whole
Speaker 2: concept there, all right, Before we get to your market
Speaker 2: call which we want to talk about pink ETF. Talk
Speaker 2: to me about that.
Speaker 10: Yes, so pink ETF is near and dear to my heart.
Speaker 10: I am a breast cancer survivor and October is breast
Speaker 10: cancer Awareness month. The pink ETF is issued by Simplify
Speaker 10: Asset Management. It is a healthcare ETF. It invests in healthcare,
Speaker 10: is not specific to cancer or breast cancer in general.
Speaker 10: It's the only pro bono ETF on the market, meaning
Speaker 10: the manager does it pro bono and they donate all
Speaker 10: of the net profits of the fund through its expense
Speaker 10: ratio to the Susan G. Comen Foundation for Breast Cancer Research.
Speaker 10: So you know it's October, yeap breast cancer on this month.
Speaker 10: You can do your part and this is an interesting
Speaker 10: way to do that. Fund has a great track record.
Speaker 2: Yeah, absolutely, nice Caaren from Springlake. That's for you. Talk
Speaker 2: to us about the markets. What do we do here?
Speaker 2: Do we just sit on the sidelines until the election's
Speaker 2: over and then become investors again? What are you telling
Speaker 2: your clients about these markets these days?
Speaker 5: Well?
Speaker 10: I mean yeah, I mean the election is the number
Speaker 10: one most important piece of news that the markets is
Speaker 10: waiting for we have a virtual tie and almost all
Speaker 10: the polls and I have opinions on where I think
Speaker 10: that kind of leans. But in that kind of environment,
Speaker 10: companies are reluctant to make any big Capex decision, are
Speaker 10: kind of putting a pause on policy, waiting to see,
Speaker 10: you know, who wins, because the rules could be substantially
Speaker 10: different depending on who becomes the victor.
Speaker 4: Well, what do you make, Shana of the betting market?
Speaker 4: We talk kind of ad nauseum. It feels like at
Speaker 4: poly market and predicted and how that impacts it. What
Speaker 4: the Trump trade is or isn't. If we're still in
Speaker 4: agreement that it's a coin flip, how are people positioning
Speaker 4: if we are kind of at least reading about in
Speaker 4: Bloomberg's reporting about kind of the so called Trump trade,
Speaker 4: if it still feels kind of like a deadlock.
Speaker 10: Well, I think there's this one little caveat nuance to this,
Speaker 10: which is that I think in polls that are showing
Speaker 10: a deadlocked electorate that is actually pro Trump in my opinion, right,
Speaker 10: I think we've seen this in every election he's been
Speaker 10: involved in. The Polls tend to underestimate his voting, his
Speaker 10: voters because being associated as a Trump voter has some
Speaker 10: negative connotation in the broad public right, so people are
Speaker 10: less likely to be honest about it until they get
Speaker 10: into the the voting booth, and then it doesn't matter
Speaker 10: because it's truly anonymous or we hope. So in that case,
Speaker 10: I think that when you see something where it's a
Speaker 10: virtual tie, it's probably leaning more in Trump's direction.
Speaker 11: Than it is in Harris's direction.
Speaker 2: That's just my opinion, all right, So elections aside, it
Speaker 2: seems like we've got a FED that's accommodative, seems like
Speaker 2: earnings generally remain fairly strong, the economy remains fairly strong,
Speaker 2: in inflation coming down.
Speaker 5: Is that?
Speaker 2: How constructive is that for you guys in terms of
Speaker 2: taking risk in this market in place?
Speaker 10: Well, I think this is a market where you can
Speaker 10: take risk. So for me, the way I position portfolios
Speaker 10: is I want to make sure I can get the
Speaker 10: most upside.
Speaker 11: I can from the equity markets because I.
Speaker 10: Think that the probability of upside in the equity markets
Speaker 10: is quite high, and I think it's also high probability
Speaker 10: of risk assets outperforming, so I want to be able
Speaker 10: to take that risk. I'm not as certain about fixed
Speaker 10: income markets. So I'm taking some of my fixed income
Speaker 10: allocation and putting it into more alternative strategies, which I
Speaker 10: think do better than fixed income but allow me to
Speaker 10: take more risk and equities because they are diversifiers that
Speaker 10: tend to reduce overall portfolio risk. So that's kind of
Speaker 10: how I'm positioning myself.
Speaker 4: Right now within taking on risk. When you say that,
Speaker 4: do you mean within large caps? Are you skewing out
Speaker 4: more towards like a small cap? I just am looking
Speaker 4: at in terms of earnings we're going to hear from
Speaker 4: this week alone Alphabet, AMD, Microsoft, Meta, Apple, Amazon, and
Speaker 4: that's really cap X comments have been making up so
Speaker 4: much of the Nvidia trade. So when you're looking at
Speaker 4: allocating risks to equities, what does that look like?
Speaker 10: So I do think it involved some of the high
Speaker 10: flyer growth stocks. We haven't had an environment that's conducive
Speaker 10: to small caps or value in a while. Jason Trendert
Speaker 10: from STRTIGAZ did a great piece last week called ten
Speaker 10: Things I Think, I Think, and one of the things
Speaker 10: he talked about is in since two thousand and nine,
Speaker 10: we've been in this perpetual QE cycle where companies haven't
Speaker 10: been permitted to fail, and we've been in this perpetual
Speaker 10: late cycle business cycle. The business cycles kind of disappeared,
Speaker 10: and in doing that, it's been a complete headwind to
Speaker 10: anything that would benefit from things winning and losing and
Speaker 10: not allowing companies to fail has kind of also increased
Speaker 10: the haves and have nots. So I'm willing to take
Speaker 10: more risk in those larger cap names. That's where I
Speaker 10: actually think there is more risk, but also things like bitcoin,
Speaker 10: which is not a stock obviously, but is a risk asset.
Speaker 10: In my opinion, I would argue small caps could be
Speaker 10: considered a risk asset, but value wouldn't be right. So
Speaker 10: you're probably staying away from some of your cyclicals and
Speaker 10: you're going with your more risk growth beta names.
Speaker 11: Is where I would be paying attention right.
Speaker 2: Now, Shane. I know you have a lot of experience
Speaker 2: in alternatives, and I've been surprised when I talk to
Speaker 2: retail advisors how willing they are to embrace alternatives and
Speaker 2: to a much higher percentage of their portfolio than I
Speaker 2: would have thought. Where do you see opportunities in alternatives
Speaker 2: these days? Private equity, private credit has becomes so big.
Speaker 2: Hedge funds where do you see alternatives? How do you
Speaker 2: talk your clients about that?
Speaker 10: So private credit is credit, it's correlated to credit markets.
Speaker 10: Private equity is equity, it's correlated to equity markets. So
Speaker 10: they belong in equity and fixed income. And while they
Speaker 10: are alternatives in the sense that their liquidity terms and
Speaker 10: not available to everyone, they're not necessarily diverse fying alternatives.
Speaker 10: I think the opportunities lie in those diverse fying alternatives,
Speaker 10: things like hedge equity, and there's a million different ways
Speaker 10: to slice that pie. That's a pro and a con
Speaker 10: of that asset class. It's you know, they all kind
Speaker 10: of get thrown in together, but you can do hedge
Speaker 10: equity a million different ways, market neutral, managed future is
Speaker 10: global macro, more those hedge fund type strategies, but also
Speaker 10: looking at you know, things like sports rights. I've talked
Speaker 10: about this a million times because I'm a huge sports
Speaker 10: fan and it resonates with me. But there's real opportunity
Speaker 10: here for you to be able to bring diversification into
Speaker 10: your portfolio using things like that. And while advisors are
Speaker 10: definitely more open to alternatives than they've been before, it's
Speaker 10: mostly because their clients are demanding it.
Speaker 11: Right.
Speaker 10: It's because if they don't, then they could lose those relationships.
Speaker 10: And ALTS, I would argue, is a relationship builder because
Speaker 10: you can really I mean, it's such a huge universe,
Speaker 10: you can really find things that will resonate with your
Speaker 10: client on a million different levels. So they're seeing that,
Speaker 10: but seventy five percent advisors still don't use alts and
Speaker 10: the vast majority are allocating something like five percent, where
Speaker 10: institutions is more like twenty five to thirty. So there's
Speaker 10: a huge gap there. Still, it's going to take a
Speaker 10: long time to get there, and we as an industry
Speaker 10: have not done advisors any favor by making investing in
Speaker 10: any sort of alternative incredibly difficult, operationally cumbersome, and in some.
Speaker 11: Cases just annoying.
Speaker 10: Like just a trade BTL, which is an alternative ETF.
Speaker 10: If you tried to do that in your Fidelity or
Speaker 10: Schwab account, you'd get a pop up saying that you
Speaker 10: need to change your risk tolerance to aggressive. And I
Speaker 10: would argue, if I am an aggressive investor, i am
Speaker 10: definitely not doing hedge, dequity or market neutral like that's
Speaker 10: like completely counterintuitive. But because of that, it sort of
Speaker 10: makes people shy away because you've got to change your
Speaker 10: client's risk tolerance and it's not reflective of reality just
Speaker 10: to be able to make a trade.
Speaker 4: And when you talk sports diversification sports rights, like, I
Speaker 4: immediately think of the fact that the Atlanta Braids are
Speaker 4: publicly traded. Is that what you mean or how do
Speaker 4: you think about allocation to sports is an alternative investment?
Speaker 11: No, I think the private equity aspect of it.
Speaker 10: So my favorite fund in that space is the one
Speaker 10: managed by Avenue Capital because I think that what they're
Speaker 10: doing is really interesting. They weren't one of the high
Speaker 10: flyers that was approved by the NFL, but they invest
Speaker 10: in MLB and NBA and things of that.
Speaker 11: Mark Lazari is the kind of founder of that firm.
Speaker 11: He used to own the.
Speaker 10: Box, but he talks about it also in the credit sense.
Speaker 10: Most people don't realize that banks won't lend to sports
Speaker 10: teams because the goal to have a franchise that's worth
Speaker 10: anything is based on whether or not you win, and
Speaker 10: you don't win if you don't spend, and banks don't
Speaker 10: like that so much. So, you know, teams, when they
Speaker 10: need access to the credit markets, they don't really have
Speaker 10: any place to go, so that fund does that. They
Speaker 10: also do what they call emerging sports. So I've done
Speaker 10: a bunch of interviews talking about cricket, Like, cricket is
Speaker 10: an incredibly interesting area of private equity is looking at
Speaker 10: buying cricket teams.
Speaker 11: Women's sports is huge.
Speaker 10: You know, you have the yacht league that's out there
Speaker 10: and some of this as we have the proliferation of
Speaker 10: streaming services and everybody trying to get live events because
Speaker 10: that's really the only way you can get ad dollars.
Speaker 11: You're seeing this more and more.
Speaker 10: Which gives you more and more opportunity to make money
Speaker 10: in sports that maybe we wouldn't have paid attention for.
Speaker 11: A while back.
Speaker 2: Yeah, lots of different opportunities out there. Shana Sisil, thank
Speaker 2: you so much for joining us. Shane Sisil, She's a
Speaker 2: president and CEO of ban reON Capital Management based in Chicago,
Speaker 2: but originally from Boston. We've got that all cleared up.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: just say Alexa playing Bloomberg eleven thirty.
Speaker 2: Let's switch gears and touch base on the ever changing
Speaker 2: situation in the Middle East. Kirsten Fulton Rose joins as
Speaker 2: president of Red six Solutions. Kirsten, I guess the most
Speaker 2: recent data point that everyone's trying to digest here is
Speaker 2: the Israeli response in its attack on Iran. How would
Speaker 2: you characterize Israel's response sending approximate one hundred fighter jets
Speaker 2: to attack some key logistical targets. What do you make
Speaker 2: of that move?
Speaker 12: It's interesting. One hundred fighter jets sounds like a lot.
Speaker 13: They were sent in three waves, but this response was
Speaker 13: actually designed to allow Iran to declare it requires no response.
Speaker 13: Israel only hit military sites. They hit outside densely populated areas.
Speaker 13: They had it most one civilian casualty. The Israeli defense
Speaker 13: forces say that they targeted border radar systems with very
Speaker 13: light warheads direct quote to remove Aroan's early warning capability,
Speaker 13: and then they followed with the jets that struck carefully
Speaker 13: selected sites.
Speaker 12: If we look at those sites.
Speaker 13: According to some experience US analysts who were looking at
Speaker 13: unclassified imagery, Israel struck buildings in a couple of places,
Speaker 13: including in Parchen and in Klojure, and there are two
Speaker 13: reasons why these locations matter. One, Israel hit Clgier, which
Speaker 13: is a large missile production site that's near Tehran but
Speaker 13: not in it. The reports back in July that Hadro
Speaker 13: was being expanded, So according to these analysts looking at
Speaker 13: the imagery, Israel's pinpointed strikes could have significantly reduced Iran's
Speaker 13: capacity to produce missiles, which then make it less apt
Speaker 13: to want to continue this fight with Israel right now.
Speaker 13: Second Partschen is a large military complex near Tehran as well,
Speaker 13: so capital pays attention, but it's not actually feeling the hit.
Speaker 13: The satellite imagery analysts tell us that Israel hit a
Speaker 13: building there that was used for testing in an old
Speaker 13: nuclear weapon weapons program that was called the Ahmad Plan.
Speaker 13: This program was shut down about twenty years ago according
Speaker 13: to international watchdogs, but Iran denied it ever worked on
Speaker 13: a nuclear weapon there. So this target, we think was
Speaker 13: a message to Tehran. We hit an old facility without personnel,
Speaker 13: without nuclear material present this time, but we can reach
Speaker 13: your nuclear facilities without you being able to prevent it
Speaker 13: in the future.
Speaker 12: If we think it's necessary.
Speaker 4: And Kirsten, you have more than two decades of experience
Speaker 4: working in our security with a focus in the Middle
Speaker 4: East and Africa. One of the things that stood out
Speaker 4: to me was that Israel distributed videos of Prime Minister
Speaker 4: Benjamin n Yahoo and military chiefs coordinating the defense from
Speaker 4: a ministry bunker, which was a rare acknowledgment of an
Speaker 4: attack on Islamic Republican expansion what had been mostly a
Speaker 4: shadow war. What do you make of the video being
Speaker 4: distributed and how does that potentially impact kind of the
Speaker 4: path forward.
Speaker 13: I think the reason for distributing the video was to
Speaker 13: make it clear to the international community that Israel is
Speaker 13: in a real war, that it is truly the existential
Speaker 13: threat it feels it wants the international community to have
Speaker 13: a sense of as well. While we're planning our response
Speaker 13: on Israel on Iran, we are still taking hits from
Speaker 13: Hazbala and from Hemas and perhaps from the Huthis. So
Speaker 13: they're trying to let the international community know that this
Speaker 13: is not something they're taking lately, that they're being arrogant,
Speaker 13: that they really see the threat as serious. So that
Speaker 13: means US support needs to stay high, that means Europe
Speaker 13: needs to stay behind them. They're trying to make sure
Speaker 13: that they continue to maintain this level of support and
Speaker 13: this level of attention on the threat from their international
Speaker 13: partners while they stage these responses, sometimes without listening closely
Speaker 13: to their international partners.
Speaker 2: Kirsen, what do you think the end game is now
Speaker 2: for Israel and maybe the timing associated with that.
Speaker 12: For Israel? The endgame is not with the international community
Speaker 12: you would like to hear.
Speaker 13: The arguments for a ceasefire are ongoing from almost every
Speaker 13: corner except from inside Israel, and often except from inside
Speaker 13: parts of Hamas and parts of Habeala.
Speaker 12: For instance.
Speaker 13: You see that Hasbala right now is saying it will
Speaker 13: not negotiate less it's not under attack, and their own
Speaker 13: speaker of the parliament in Lebanon is negotiating for them.
Speaker 12: So Israel saying, look, we don't.
Speaker 13: Have space to talk about a ceasefire unless it's short
Speaker 13: we get some of our hostages back so that we
Speaker 13: can reduce the domestic pressure on us to bring hostages home.
Speaker 13: But this conflict is not over as long as there
Speaker 13: is still a threat, As long as all of these
Speaker 13: groups continue to say one of their primary objectives is
Speaker 13: to eliminate our state from the map. This threat will
Speaker 13: continue to face us. We will continue to fight this
Speaker 13: kind of onslaught every few years like we have for
Speaker 13: decades now, unless we do something decisive. So they're looking
Speaker 13: to uproot Hamas, uproot Hu's Baalah, shut down the Khuthi's
Speaker 13: ability or will to fight this war on behalf of Hamas,
Speaker 13: and to put Yourn on the back foot where it
Speaker 13: is no longer has the capacity to strike and perhaps
Speaker 13: no longer the will. It certainly does not have the
Speaker 13: domestic support, but the hardliners in Iran's leadership are going
Speaker 13: to push that fight going forward as well.
Speaker 12: This is not over.
Speaker 2: Yep, all right, That's kind of what what we're hearing
Speaker 2: across the board. Kirsten, thank you so much for joining us.
Speaker 2: Kirsten fontin Rose, she is the president of Red six Solutions,
Speaker 2: joining us in Washington, DC via zoom kind of getting
Speaker 2: the latest there. But again, it seems like this is
Speaker 2: Israel saying, you know, we're going to settle everything here.
Speaker 2: That's kind of our goal as opposed to maybe when
Speaker 2: we started out a year ago, which is, you know,
Speaker 2: neutralize Hamas and get her hostages back. This obviously is
Speaker 2: much broader, much wider.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business App. You can also listen
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Speaker 1: Just Say Alexa Play Bloomberg eleven.
Speaker 2: Thirty Billy Lipschild sitting in for Alex steel On Paul Sweeney.
Speaker 2: We're live here on O Bloomberg in Arrector Brokers Studio,
Speaker 2: streaming live on YouTube as well. Boy, if you we're
Speaker 2: paying attention, the ten year treasury just in the last
Speaker 2: five weeks has gone from a yield of three point
Speaker 2: six percent to four point two six percent. Kind of
Speaker 2: where we are today, that's a big time move here.
Speaker 2: I don't know what's going on out there in the
Speaker 2: bond market, but our next guest does. R J Gallow.
Speaker 2: He's a senior portfolio manager of fixed income and Federated
Speaker 2: at Hermes, coming to us from Pittsburgh, PA. No, they
Speaker 2: do not have a team in the World Series, but
Speaker 2: they have a good football team. So r J, thanks
Speaker 2: so much for joining us here. My giants are coming
Speaker 2: out to Pittsburgh tonight. It'd be nice to them. What's
Speaker 2: going on in fixed income market?
Speaker 6: Again?
Speaker 2: That ten year treasury kind of got me by surprise
Speaker 2: that the moves we've seen in rates, what's going on
Speaker 2: out there?
Speaker 9: Yeah, well, good morning, Yeah, steals giants side always excited
Speaker 9: in terms of the rates market. There's been quite a
Speaker 9: turn of events basically since the Fed's ease. The fedies
Speaker 9: fifty basis points, and you might recall leading into that meeting,
Speaker 9: the expectation was twenty five. The Fed seemed to use
Speaker 9: media outlets to lay the groundwork for a fifty basis
Speaker 9: point ease, a bold move when the economy isn't back
Speaker 9: doing well. Since the data, excuse me, since the FED
Speaker 9: meeting and the fifty basis point ees, the data has
Speaker 9: in fact affirmed that the economy is doing pretty well.
Speaker 9: So you have the Fed layering in a large first
Speaker 9: move in what will be a path of easing, and
Speaker 9: an economy that has been quite resilient on the on
Speaker 9: the labor and growth front, terms of things like retail
Speaker 9: sales and CPI came in a little firmer than expected.
Speaker 9: So you have an economy that's not showing signs of recession,
Speaker 9: a FED that's committed to landing the economy outside of recession,
Speaker 9: a soft landing as we've all come to call it.
Speaker 9: And then you have the election coming up. All those
Speaker 9: factors have leaned towards a significant repricing hire and yield.
Speaker 9: You mentioned the ten year treasury I think if you
Speaker 9: take a look at the implied rate on SOFA futures
Speaker 9: out in June of twenty twenty six, the implied rate
Speaker 9: has risen almost eighty basis points since September tenth. It
Speaker 9: is now three point fifty five. It was one below
Speaker 9: to eighty.
Speaker 5: Wow.
Speaker 9: So all those factors have really hit the bond market
Speaker 9: pretty hard. It's now priced i think for perhaps an
Speaker 9: inflationary election outcome, and that's the next big focus the
Speaker 9: election itself.
Speaker 4: Well within that, we're eight days from the election. How
Speaker 4: should investors be positioning just given the polls that we've
Speaker 4: been seeing and how kind of markets have seemingly been
Speaker 4: moving ahead of it.
Speaker 9: Yeah, well, the markets certainly have been moving, and by markets,
Speaker 9: I'm sort of speaking broadly, the betting markets, starting probably
Speaker 9: in the first week of October, just started shifting in
Speaker 9: the direction of a Trump win and a red sweep
Speaker 9: as the most probable of outcomes according to some of them,
Speaker 9: you know, forty five to fifty percent probability of a
Speaker 9: red sweep. That's a big change from where they were
Speaker 9: in September. The financial markets, including the impact on rates,
Speaker 9: I think the economy's resilience that I just described, and
Speaker 9: the unwind of expectations to some degree of a deep
Speaker 9: fed easing path, those were the primary drivers. But the
Speaker 9: election risk and the prospect of an inflationary setup policies
Speaker 9: from a Trump two point zero, we're secondary factors there.
Speaker 9: I think it's safe to say that the market now
Speaker 9: is leaning heavily in the direction that we just described,
Speaker 9: but I would still think some caution is warranted. We're
Speaker 9: leaning a little bit short, not aggressively. So there's a
Speaker 9: lot of other complex factors out there. Kamala Harris could
Speaker 9: surprise us on election day. We could actually have an
Speaker 9: indeterminate election outcome. You go back to two thousand, a
Speaker 9: highly indeterminate outcome between Gore and George W. Bush led
Speaker 9: to yields falling, in flight to quality demand and risk
Speaker 9: assets struggling. If we have prolonged and decision this time,
Speaker 9: you might see a rerun of that script.
Speaker 2: So when you guys get together for your Monday morning
Speaker 2: meeting plot out the week, where do you guys see
Speaker 2: value these days?
Speaker 9: A great question, you know. So we started off the
Speaker 9: year thinking the bond market was going to produce us
Speaker 9: pretty good total returns, and then that was sort of
Speaker 9: tempered earlier in twenty twenty four by the fact that
Speaker 9: Inflame had a bit of a resurgence and started getting
Speaker 9: a little sticky. We had a great run there from
Speaker 9: say April all the way up through the expectations of
Speaker 9: the FED easing, but now the total returns are getting
Speaker 9: diminished yet again. So for example, if you look at
Speaker 9: the aggregate index, your today's total return is just up
Speaker 9: two percent over the last three months, it's just one
Speaker 9: point two And it's been a brutal October. Over the
Speaker 9: last thirty days we've lost two and a half percent.
Speaker 9: A month to day, we've lost two point three percent.
Speaker 9: So just betting on rates has not been compelling. But
Speaker 9: that's not all that we do. We obviously look at
Speaker 9: and actively managed duration, but we realize calling rates is
Speaker 9: a dicey prospect, so we focus very heavily on other variables.
Speaker 9: So the yield curve has steepened sharply in relation to
Speaker 9: the FEDS easing and the prospect of inflationary policies to come.
Speaker 9: We've played that rather well in our number of our portfolios,
Speaker 9: positioning for YELD curve steepening, and that's been a way
Speaker 9: to generate alpha within a fixed income portfolio. When it
Speaker 9: comes to credit, we've been overweight mortgages. We remain cautious
Speaker 9: on how you in corpus where we think spreads are
Speaker 9: just not enticing enough. But the good news about a
Speaker 9: fixed income portfolio, a highly diversified one is you can
Speaker 9: move across sectors to look for opportunities. You can move
Speaker 9: up and down the YOK curve for changes and it's
Speaker 9: slope and shape in addition to taking some positions on duration.
Speaker 9: So all in all, we've been deploying all those different
Speaker 9: tools to varying degrees throughout what's been a moderate return
Speaker 9: but a positive return year.
Speaker 2: All right, Urjie, thanks so much for joining us as always.
Speaker 5: R J.
Speaker 2: Gallow, Senior Portfolio Manager Fixed and come over there at
Speaker 2: Federated Hermes.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: All right, you're listening to Bloomberg Intelligence Belly Lipschultz sitting
Speaker 2: in for alexel On Paul Sweeney live here in our
Speaker 2: Bloomberg Interactive Brooker Studio, streaming live on YouTube as well.
Speaker 2: We're eight days away from the election, and one aspect
Speaker 2: the election we haven't really had to think about up
Speaker 2: until the most cycled, most recent cycle or two is
Speaker 2: just ensuring that we have safe and secure elections. That
Speaker 2: is now a big deal, particularly with early voting and
Speaker 2: mail and voting and all those things that came out
Speaker 2: of the pandemic. Somebody who does think about that is
Speaker 2: Rhet Buddle. He's the CEO of the Public Private Strategies
Speaker 2: joining us here via zoom sod. How are you thinking
Speaker 2: these elections are going to go next Tuesday and then
Speaker 2: Wednesday and then Thursday? Are you what is your concern
Speaker 2: level that we will in fact have safe and secure elections?
Speaker 8: Well, great to be with you. So, first of all,
Speaker 8: I mean you know, America, as we know, you know,
Speaker 8: over the last you know, set of election cycles has
Speaker 8: primarily had very safe and secure elections, and I think
Speaker 8: we're feeling confident about all the elections to date, and
Speaker 8: many of the you know, state local officius have worked
Speaker 8: very hard to prepare. I think, you know, one of
Speaker 8: the bigger questions is, you know, we probably will not
Speaker 8: have the exact results of the election on election night,
Speaker 8: and so you know, it might be until Saturday or
Speaker 8: Sunday until we know an official winner. And so one
Speaker 8: of the pieces that we've been thinking a lot about
Speaker 8: is really making sure that folks are preparing for that,
Speaker 8: that they know that every vote is still being counted
Speaker 8: and that the process might just take a while. But
Speaker 8: that is the important role of democracy, making sure every
Speaker 8: vote gets counted, and particularly for business owners, understanding that
Speaker 8: this sort of period of uncertainty is a really important
Speaker 8: moment for businesses to be able to you know, bring
Speaker 8: some calm to the market, to be able to say
Speaker 8: this is how democracy plays out, not just in the
Speaker 8: role that they play in the markets, but also in
Speaker 8: the role that they play as community leaders. You know,
Speaker 8: for a lot of CEOs who have employees this can
Speaker 8: be a fraught time, for example, and so it's really
Speaker 8: important to know that, you know, every vote will be counted.
Speaker 8: The elections are on part of be very safe and secure,
Speaker 8: but we may have a period of uncertainty and that's okay,
Speaker 8: and we just need to understand that that might be
Speaker 8: the case. But it's an important part of letting democracy
Speaker 8: play out.
Speaker 4: Well, I think back to twenty twenty when it took
Speaker 4: a few days, but we were still in the midst
Speaker 4: of the pandemic. Now in twenty twenty four, people will
Speaker 4: be back into the office, back at work, back on
Speaker 4: subways here in the New York and commuting around the country.
Speaker 4: How does that actually kind of impact a delayed ruling
Speaker 4: or delayed decision on who in fact will win the election,
Speaker 4: especially as we see a number of contested seats across
Speaker 4: the House and Senate.
Speaker 6: Yeah.
Speaker 8: Look, we're so used to having everything, you know, be
Speaker 8: so instant instantaneous. We're used to obviously having a result,
Speaker 8: you know, called on election night. The reality is, at
Speaker 8: least for the national presidential election, we expect it to
Speaker 8: be very close, and there's a number of states that
Speaker 8: probably will take a few days to make sure that
Speaker 8: every ballot is counted, and so you know, unlike where
Speaker 8: we were all sort of huddled in our homes around
Speaker 8: zoom screens or around TV screens, before you know, we
Speaker 8: are going to have people going back into the office
Speaker 8: and we know want the things we learned in twenty
Speaker 8: sixty was that elections can invoke a lot of emotions
Speaker 8: with employees and start a lot of conversation. And the
Speaker 8: reality is is the workplace has become a really important
Speaker 8: square for civic engagement. Right It's one of the places
Speaker 8: where people interact, they talk to each other, and so
Speaker 8: it's become increasingly important that business leaders and CEOs think
Speaker 8: about the role they can play and sort of setting
Speaker 8: the tone of the role that they can play in
Speaker 8: sort of depoliticizing things and making sure that there's a
Speaker 8: safe space. We've see in a lot of companies with
Speaker 8: employee research groups that there's the opportunity to provide space
Speaker 8: for dialogue. And so part of the work that we've
Speaker 8: been doing under an initiative we created it's called the
Speaker 8: Business and Democracy Initiative, is we've been working with business
Speaker 8: leaders to help them prepare for this election to not
Speaker 8: only sort of raise their voice in their communities to
Speaker 8: talk about how this is the normal part of democracy,
Speaker 8: but also to play an important role in sort of depolarizing,
Speaker 8: de escalating and making sure that everyone's voices are heard
Speaker 8: in this process over the next few weeks.
Speaker 2: And the business leaders that you do speak to, what
Speaker 2: is a concern level, if at all, that we have
Speaker 2: a recreation of something like January sixth to that level.
Speaker 8: Look, I think overall people feel that the election is
Speaker 8: going to be safe and secure and that every vote
Speaker 8: is counted. So that's that is a good point, you know.
Speaker 8: I think generally what I hear from business leaders is,
Speaker 8: you know, increasingly, you know, risk has become an issue
Speaker 8: with just instability, and so even beyond the elections, you know,
Speaker 8: there's a broader issue with the government, for example, not
Speaker 8: being able to pass you know, funding bills that go
Speaker 8: on for years, or the debate over the debt selling
Speaker 8: for example, and not being able to reach resolution. So
Speaker 8: there's that broader sort of risk level. You know, America,
Speaker 8: as we all know, is the most important economy in
Speaker 8: the world, and so having that certainty is really important
Speaker 8: for business leaders. And I think over the last few years,
Speaker 8: businesses have become increasingly frustrated that the government hasn't been
Speaker 8: able to provide more stability and that partisanship is continued
Speaker 8: to sort of really you know, make it difficult for
Speaker 8: business leaders to make decisions, especially businesses who rely upon
Speaker 8: the government for you know, a wide variety of factors.
Speaker 8: So it's a broader sort of risk appetite rather than
Speaker 8: just in this moment. But it's definitely something that boardrooms
Speaker 8: and businesses are starting to look at.
Speaker 2: All right, fascinating times. And we'll have election day eight
Speaker 2: days and then we'll have to see how many days
Speaker 2: are for that it takes to get a declared winner
Speaker 2: and loser. Redbuttle, he's the CEO of the Public PRIVCT Strategies,
Speaker 2: that's the name of the firm there, and again eight
Speaker 2: days away, so we'll have to see.
Speaker 9: Here.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: We got an election coming up, so I'm told next
Speaker 2: week one of the major issues from a policy perspective
Speaker 2: that might see us a big difference depending upon who's
Speaker 2: in the White House. Is kind of renewable energy, electric vehicles,
Speaker 2: all that kind of stuff. So let's check out Corey
Speaker 2: Kantra joins us, the lead US electric vehicle analysts. Yes,
Speaker 2: we have one of those. He's at bn EF. Those
Speaker 2: are the new energy finance people. He's in our Bloomberg
Speaker 2: Interactive Broker's studio. Corey, how does your market, the electric
Speaker 2: vehicle market looking at this election as to a Trump
Speaker 2: presidency versus the potential Harris presidency is it?
Speaker 6: Are there material differences?
Speaker 14: Yeah, they're pretty big differences and great to be here
Speaker 14: with you again. Paul and Bailey, still still doing the
Speaker 14: EV thing. We basically are one week out of a
Speaker 14: pretty pivotal moment of implementation of some pretty major US
Speaker 14: federal policies. So everything from federal fuel economy standards that's
Speaker 14: the kind of miles per gallon of new vehicles which
Speaker 14: electric vehicles help automakers achieve, to the implementation of the
Speaker 14: Inflation Reduction Act. So even though the law has passed
Speaker 14: now over two years ago, you're going to see those
Speaker 14: loans and grants from the federal government impacted all the
Speaker 14: way up to the seventy five hundred dollars Clean Car
Speaker 14: ev tax credit that people know and love in some
Speaker 14: cases depending on who wins. Obviously, with the IRA, you're
Speaker 14: going to need Congresses input on that, but there are
Speaker 14: things that the Trump administration could do very early on
Speaker 14: on the implementation side to make those credits a bit
Speaker 14: more restrictive. So it's going to be big, but also
Speaker 14: a split decision could have an impact too if you have,
Speaker 14: say a Republican Congress with Kamala Harris's president or vice versa.
Speaker 4: And how does that actually impact the ability for these
Speaker 4: car makers to sell cars? When I look at targets
Speaker 4: of Biden administration having a certain number of evs. I'm
Speaker 4: from California, where they lay out these overly ambitious goals five, six,
Speaker 4: seven years down the road and then seemingly chop them
Speaker 4: down when they get closer.
Speaker 14: Yeah, Bailey, I mean even beyond that, there's been a
Speaker 14: kind of back and forth between California and the rest
Speaker 14: of the country for a long time, known as you know,
Speaker 14: the California Advanced Clean Cars to policy, which aims to
Speaker 14: have one hundred percent of all new sales by twenty
Speaker 14: thirty five is electric eighty percent fully electric, twenty percent
Speaker 14: plug in hybrid. And so last time Trump was elected,
Speaker 14: there is a lot of lawsuits, a lot of uncertainty
Speaker 14: in the market. Makes it very difficult from an automaker
Speaker 14: perspective actually planned. And so these automakers for a long
Speaker 14: time have wanted both the carrots, which are these IRA
Speaker 14: kind of subsidies and incentives on grants and loans, and
Speaker 14: then they'd be willing to take the stick, which is
Speaker 14: the fuel economy standards.
Speaker 6: So we have to see how it shapes out.
Speaker 14: But from the automakers that we speak to, it's a
Speaker 14: pretty confusing policy environment. But given that the globe is
Speaker 14: moving towards electric vehicles and cleaner cars in general, they
Speaker 14: have to kind of prepare to move that way regardless.
Speaker 14: And it's just how quickly in the US are they
Speaker 14: going to move in that direction?
Speaker 2: The Chinese are moving very aggressively. How do you expect
Speaker 2: them to do outside of China? Will there be market
Speaker 2: for Chinese evs in Europe?
Speaker 6: In the US? Yeah, it's a really good question, Paul.
Speaker 14: And you know, looking at the data which we do
Speaker 14: at BNEF, you can see Chinese automakers like BYD making
Speaker 14: upground in places like Brazil, in places like Latin America,
Speaker 14: in places like Israel, you know where you might not
Speaker 14: expect to see Chinese automakers. They've been moving into Europe
Speaker 14: and there's been a pushback with all the tariffs and
Speaker 14: back and forth there. I think that's also why the
Speaker 14: US election does have a big impact, because if there's
Speaker 14: no kind of counter bailing force coming out of the US.
Speaker 14: You see what's going on with Volkswagen on the European
Speaker 14: side today, it's going to maybe make the road easier
Speaker 14: for those Chinese automakers on electric to kind of shift
Speaker 14: into those export markets, because if Tesla isn't focused on
Speaker 14: making more affordable evs, then there's really only going to
Speaker 14: be one major player in town. It doesn't mean, you
Speaker 14: know that Chinese automakers are going to be the only
Speaker 14: ones who are making mass evs, but it's a pretty
Speaker 14: big transformation at the global auto market level, just like
Speaker 14: when the Japanese automakers came onto the scene.
Speaker 6: So I think that's the way I like to think
Speaker 6: about it.
Speaker 14: It doesn't mean that you know evs are going to
Speaker 14: be sold everywhere overnight, but without a kind of other
Speaker 14: major automaker, that's where I.
Speaker 6: Think a lot of these countries are going to turn.
Speaker 4: And if we do see tariffs on some magnitude, yeah,
Speaker 4: what does that actually mean for the market for Elon
Speaker 4: Musk's Tesla who he's had a very prominent role campaign
Speaker 4: for Donald Trump as well as other companies.
Speaker 14: I think when it comes to US tariffs, you know
Speaker 14: that could buy you. I think some time you look
Speaker 14: at the one hundred percent tariff that the Buying Administration
Speaker 14: put on Chinese EV makers. While there weren't that many
Speaker 14: Chinese EV makers selling electric vehicles here currently, Jili Group,
Speaker 14: which owns Volvo and Pollstar, was pretty much the major
Speaker 14: automaker impacted.
Speaker 6: So that's why you saw those prices.
Speaker 14: Or the Volvo Ex thirty, which is a really popular
Speaker 14: model globally not sold here yet. It's keeping BYD out
Speaker 14: for a little bit longer. But if the automakers like
Speaker 14: GM or Stillantis or Ford aren't helped or don't move
Speaker 14: towards electric vehicles, you know, maybe it buys you two, three,
Speaker 14: four years. But all the while BYD and other Chinese
Speaker 14: automakers are making more investments in battery technology, and I
Speaker 14: think regardless of who wins, you need to see more
Speaker 14: of those investments here on batteries because those are going
Speaker 14: to be important not only for electric vehicles but for
Speaker 14: the grid as well, and you're letting China get a
Speaker 14: major competitive advantage.
Speaker 2: What are the US manufacturers doing? Have they pulled back
Speaker 2: on their EV investments.
Speaker 14: We've definitely seen at the global level those EV targets
Speaker 14: moving back. I think Ford in particular, you saw them
Speaker 14: move their new EV models.
Speaker 6: Out a couple of years.
Speaker 14: So it's let's so on the dollar amount and more
Speaker 14: pushing it back. GM has seen better EV sales. In fact,
Speaker 14: the third quarter this year was the best in the
Speaker 14: US that they had seen to date, with the Equinox
Speaker 14: and Blazer and Lyric really taking off. To make one
Speaker 14: bright point, Bailey, your home state of California actually saw
Speaker 14: in that third quarter the best EV share of sales
Speaker 14: they've ever had at twenty seven percent, So that's twenty
Speaker 14: three percent, about almost twenty four percent fully electric, the
Speaker 14: rest plug in hybrid.
Speaker 2: So it's pretty good calif Like, what's the US average?
Speaker 14: US average has been at about ten percent now nine
Speaker 14: and a half ten percent. Yeah, far California twice twice
Speaker 14: the average. But what's significant about that is California had
Speaker 14: been stuck at about twenty five percent. Tesla actually for
Speaker 14: four quarters in a row in California has seen decline
Speaker 14: in deliveries because of I think some of the kind
Speaker 14: of Tesla or musk fatigue, and so to see California
Speaker 14: begin to grow again from the other automakers, even as
Speaker 14: Tesla's pullback is pretty significant.
Speaker 2: All right, Corey, good stuff. As always Corey Canter. He's
Speaker 2: a lead US electric Vehicle analyst at b n e F.
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