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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Ira Jersey, chief US

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Speaker 1: interest rate strategist for Bloomberg Intelligence. Uh, he joins us here,

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Speaker 1: I I gotta be honest with you. Back just left

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Speaker 1: the studio, he says, I got nothing to ask Ira.

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Speaker 1: I'm all about earnings. I don't really care about the

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Speaker 1: Federal Reserve right now. But so he's not even here. So, Um,

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Speaker 1: but I'm looking at these two year tenure it's still

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Speaker 1: inverted by you know, forty forty three points in terms

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Speaker 1: of the yield curve, and you know types like you

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Speaker 1: and Lisa Bramwins. You've teld me, I gotta pay attention

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Speaker 1: to that stuff. It's important, isn't really, because it's been

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Speaker 1: inverted for a while now and it's probably gonna continue

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Speaker 1: to be inverted. Um. I think it matters in so

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Speaker 1: far as um it is signaling that at some point

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Speaker 1: we're going to have a much slower economic activity, UM

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Speaker 1: in the future, and the Federal Reserve is going to

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Speaker 1: continue to hike interest rates, so you know, at least

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Speaker 1: well above four percent, and the market certainly price for

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Speaker 1: that right now, and so so it does matter. Is

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Speaker 1: it Is it going to affect economic growth in and

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Speaker 1: of itself, No, it won't, but it is just a

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Speaker 1: signal that the market thinks that we're going to have

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Speaker 1: lower interest rates at some point in the future. Talk

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Speaker 1: to us about some of these auctions, um, you tell

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Speaker 1: us we need to really pay attention to these auctions,

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Speaker 1: how they go, where's the demand, where's the demand coming from?

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Speaker 1: What's been your observation over last week or two. Yeah, So,

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Speaker 1: so the auctions really in both September and October have

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Speaker 1: been pretty pretty weak. Actually, Um, you've seen demand slip

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Speaker 1: a little bit. You've seen um, you've seen indirect bidder.

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Speaker 1: So these are those are end users so UM, so

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Speaker 1: you know mutual funds, central banks, UM, asset managers in general. UM,

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Speaker 1: that's actually fallen a little bit. So that means that

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Speaker 1: primary dealers have actually taken a larger share of these

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Speaker 1: auctions and and I think that that's a signal that

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Speaker 1: people are still not quite willing to go full bore

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Speaker 1: into the market yet because these um, you know, these

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Speaker 1: securities being auctioned right now are going to be out

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Speaker 1: there for you know, ten years, thirty years, and and

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Speaker 1: they've been reasonably uh reasonably weak, um you know that.

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Speaker 1: That being said, I think it will be really interesting

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Speaker 1: because in a couple of weeks we actually got the

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Speaker 1: Treasury refunding announcements, So they're going to uh, the Treasury

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Speaker 1: Department will determine how much it's going to issue over

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Speaker 1: the next three months, and I suspect that they might

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Speaker 1: actually reduce the amount that they're issuing just by a

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Speaker 1: little bit. Um. But but interestingly, they've asked primary dealers

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Speaker 1: and and we'll have some notes out on this in

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Speaker 1: the recent in the recent future, UM about the h

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Speaker 1: whether or not they're going to issue more debt at

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Speaker 1: auction in order to buy back UH currently existing debts.

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Speaker 1: So what we call off the run debt or or

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Speaker 1: um you know, debt that was issued, say say two

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Speaker 1: years ago, and a lot of that debt, remember, is

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Speaker 1: trading at like eighty cents on the dollar, and eighty

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Speaker 1: five cents on the dollar. So the Treasury Department can basically,

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Speaker 1: you know, sell bonds now at par at a hundred

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Speaker 1: and be able to buy back their uh you know,

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Speaker 1: treasury securities at eighty five cents in the dollar, actually

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Speaker 1: making the taxpayer you know, fifteen points effectively. And and um,

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Speaker 1: you know, even though they'll be paying more interest cost

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Speaker 1: on on the new debt compared to maybe the old debt,

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Speaker 1: the fact that that old debt is not um is

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Speaker 1: not trading at pars is an interesting um uh you know,

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Speaker 1: it's really interesting. I think that that they might do

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Speaker 1: this talk just about quantitative tightening. We don't I don't

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Speaker 1: talk about it much. I don't hear about it much.

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Speaker 1: Talk to us about is it happening? How is it happening?

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Speaker 1: Do we need to pay attention to it? Yeah, well,

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Speaker 1: it's it's it's kind of an autopilot. And I don't

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Speaker 1: think that the Treasury at that the Federal Reserve will

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Speaker 1: change the way that they do quantitative tightening at least

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Speaker 1: until January February of next year. Um. And it's so

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Speaker 1: basically for for the treasury market, um, the two big

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Speaker 1: days that you have, uh, you have treasuries coming off

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Speaker 1: the Fed's balance sheet, or the fifteenth of the month

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Speaker 1: when you get settlements of of of three year notes,

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Speaker 1: and then at the end of the month when you

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Speaker 1: get settlements of of two year, five year, and seven

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Speaker 1: year notes. When those bonds mature, they fall off the

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Speaker 1: Fed's balance sheet, and that's when you see the Fed's

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Speaker 1: balance eat shrink. And then of course mortgages roll off,

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Speaker 1: and they roll off on the twenty fifth of the month,

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Speaker 1: just the way that the um that that mortgages are

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Speaker 1: retired when when people make principal payments um the Federal

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Speaker 1: Reserves balance sheet falls from that. So so it does matter,

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Speaker 1: and you've seen it. It's not it hasn't affected recently

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Speaker 1: the treasury market. I think it affected the treasury market

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Speaker 1: when it was being thought of and when it was

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Speaker 1: announced earlier this year. So you really saw significant moves

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Speaker 1: in the treasury market in February when not only because

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Speaker 1: everyone was anticipating the FED raising interest rates, but also

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Speaker 1: because of the quantitative tightening. I think where you've seen

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Speaker 1: more of an of an effect is really in the

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Speaker 1: mortgage market, where you see mortgage spreads. So the difference

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Speaker 1: between mortgages and and the hedges that more that people

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Speaker 1: who buy mortgages make have really widened out quite a lot.

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Speaker 1: And liquidity in the mortgage market is as bet as

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Speaker 1: liquidity is in the treasury market. Liquiditying the mortgage markets

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Speaker 1: even worse. And and that's in part because um, there's

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Speaker 1: just a lot more of them that have to be

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Speaker 1: um uh they have to be absorbed by investors compared

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Speaker 1: to the compared to treasuries, where like I mentioned, the

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Speaker 1: Treasury Department has actually been shrinking the amount of bonds

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Speaker 1: it's been issuing real quick seconds. If I want to

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Speaker 1: unload a bunch of treasuries back in the day, I

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Speaker 1: have a bunch of investment banks bidding me for those bonds.

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Speaker 1: Is that still happen today? Uh? Yeah, well it does,

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Speaker 1: and and primary dealers have to. But but there has

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Speaker 1: been significantly less uh liquidity in the treasury market. So

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Speaker 1: you've seen bid offers wide and you've seen you know,

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Speaker 1: definitely challenge liquidity. Paul, I thought you were gonna ask

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Speaker 1: me about where I am. I'm I'm in London today

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Speaker 1: and I'm actually going to a to a soccer match tonight.

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Speaker 1: I'm gonna go to Selhurst Park to see uh to

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Speaker 1: see Crystal Palace play Wolverhampton Wanderers. So awesome. Alright, I

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Speaker 1: have you know, have a point for me, you know,

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Speaker 1: put a couple of shekels down on your favorite one there,

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Speaker 1: but enjoy the soccer. Enjoy London. Um, that would be

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Speaker 1: good fun. Our Jersey chief US interest rate strategist. So

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Speaker 1: why is he in London if he's the chief US

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Speaker 1: interest rate strategist? But anyway, shopping around his team may

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Speaker 1: be shopping. He's just going over there to see some football,

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Speaker 1: So good for him, Iro Jersey, good buddy of the show.

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Speaker 1: Let's check in right now with our next guest. I'll

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Speaker 1: hate Desponde, founder and chief investment officer of center Stone Investors.

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Speaker 1: Am I buying this little rally here in the past

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Speaker 1: couple of days? Hey, what do you make of it? Is?

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Speaker 1: It's just kind of a technical bounce here? Is there

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Speaker 1: something more there? Hey? Good morning? Yeah. I think basically

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Speaker 1: there's that two D week moving average people have been

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Speaker 1: fixating on has actually no relevance to the fundamentals. But

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Speaker 1: you know, there's probably a lot of stop losses and

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Speaker 1: and what not around there, So a couple of weeks

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Speaker 1: of moving around that kind of makes sense to me,

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Speaker 1: But the fundamentals are still uh, you know, deteriorating, not

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Speaker 1: bad sell the rip is that? Is that what you're

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Speaker 1: saying here? Um? At some point? Yeah, I don't know.

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Speaker 1: I mean, I'm not a trader. You know, we're long term,

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Speaker 1: but I'm not. I'm not you know, advocating one way

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Speaker 1: or the other. I'm just saying that the you know,

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Speaker 1: like this whole thing about capitulation and wall that you

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Speaker 1: know you need you need some of that or bad

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Speaker 1: news to confirm the capitulation. You don't have that yet,

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Speaker 1: you just had fundamental deteriorating. I mean it takes uh, well,

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Speaker 1: a lot of brains, a lot of guts, and a

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Speaker 1: gigantic wallet really to be able to trade a day

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Speaker 1: on a day to day basis. And even with all

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Speaker 1: of those threings, you're three things, you're probably losing money

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Speaker 1: in the long run for most people in terms of

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Speaker 1: long term investments. Um, what would you do right now

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Speaker 1: if you had cash to put to work? And apparently

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Speaker 1: you know a lot of people do. Um. The b

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Speaker 1: of A survey showed ASH at six point three percent,

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Speaker 1: the highest level since April of two thousand and one. Yeah,

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Speaker 1: you know, it's a tough one because if you have

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Speaker 1: cash already, you are not used to seeing it earn anything.

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Speaker 1: And now you're getting you're getting three well, just sitting

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Speaker 1: in a bank account of money market you are getting

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Speaker 1: almost three percent. UM. You're soon to get to four

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Speaker 1: percent at least that's what the toilet or the one

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Speaker 1: year notes are telegraphing. So it doesn't seem like a

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Speaker 1: bad place to sit and wait, right without the uncertainty

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Speaker 1: um the treasury. You know, there's going to be a

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Speaker 1: point at which treasury bonds will become attractive. I'm I

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Speaker 1: don't know exactly, but my initial work suggests that somewhere

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Speaker 1: between four and five percent seems to be a resting

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Speaker 1: place for treasure yields. UM. So you know, at some

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Speaker 1: point that will be attractive. But um probably even more

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Speaker 1: interesting is what you're starting to unearth overseas in some

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Speaker 1: of these international markets where you can by, you know,

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Speaker 1: very high quality franchises for twelve thirteen times earnings with

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Speaker 1: four dividend yields. So we've kind of gotten you know,

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Speaker 1: we're investors. You know, I'm not a money market fund, right,

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Speaker 1: so for the most part we've been allocating more and

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Speaker 1: more overseas to higher quality franchise type companies. Uh, you

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Speaker 1: know within our value framework, um, that that seems to

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Speaker 1: be from a three to five year perspective, very interesting

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Speaker 1: place to be. And of course in the United States,

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Speaker 1: we've also found plenty of interesting things to either buyer,

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Speaker 1: buy moreover or even hold. So but you know, in

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Speaker 1: two it's really unique year when you know, the whole

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Speaker 1: sixty forty portfolio scenario really did not work. I mean,

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Speaker 1: you know, you've got stocks down the mid twenties, you've

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Speaker 1: got bonds down load of mid teens in total return. Man,

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Speaker 1: what's an investor supposed to do here? Well, don't sell now, right, Yeah,

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Speaker 1: because you've had that. As you mentioned, it's been the worst.

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Speaker 1: I saw a Bank of America of studies that this

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Speaker 1: is the worst year for household wealth destruction ever, right,

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Speaker 1: going back back anyway, So at this point, um, you know,

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Speaker 1: you're well more than halfway through this. Even I don't

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Speaker 1: think that there's gonna be a banking crisis. I don't

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Speaker 1: think there's gonna be some systemic issue that's anything unusual

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Speaker 1: for a like a recessionary environment, which means that you know,

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Speaker 1: you're kind of like two thirds of the way three

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Speaker 1: quarters of the way down as far as stock price,

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Speaker 1: UH moves at least um and and as I mentioned,

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Speaker 1: if I think that UH inflation already peaked, which I do,

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Speaker 1: and you know, bond rates at four or you're not

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Speaker 1: that far from it, you know, just suggest holding and

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Speaker 1: you know, just just waiting. I can do that, all right,

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Speaker 1: I can do that. Thank you so much. We appreciate

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Speaker 1: always checking in with you. Founder and ce IO at

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Speaker 1: center Stone Investors, Mark Douglas is the CEO of Mountain.

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Speaker 1: He's in our studio, which guarantee I guarantee to see

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Speaker 1: the Yankees? Am I wrong? Now I look at him.

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Speaker 1: I think I might be wrong. Wrong. I'll squeeze in

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Speaker 1: some Yankees. I'll try my best. But it's New York.

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Speaker 1: Are we skipping fall? It's like yesterday man had the

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Speaker 1: wine shirt on him. So it was kind of, you know,

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Speaker 1: last vestiges of summer. Now we're all in fall. Yeah,

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Speaker 1: well like now I'm in the full flannel? Yes, are

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Speaker 1: you in full Flanney? So we went from sorry, talk

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Speaker 1: to me about the Yankees? Are they gonna win? Are

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Speaker 1: they playing this afternoon? Four oh seven? First pitch and

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Speaker 1: so what's the deal is it. It's a it's the

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Speaker 1: game five, it's the winn or go home. So we

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Speaker 1: got Nasty Nestor on the mound, one of our favorite

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Speaker 1: pictures for the year. Feeling good about it all right

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Speaker 1: that I just summarized that, and I think you got

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Speaker 1: it right. But if and if they lose, it's gonna

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Speaker 1: be bad, bad, mark Um. Netflix is a name that

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Speaker 1: we love to talk about around here, and we love

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Speaker 1: talking media with you, and we love talking media with you.

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Speaker 1: But now Netflix is going to introduce an advertising tier.

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Speaker 1: I thought that they the whole Netflix gig was we

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Speaker 1: don't do advertising. You just pay us a subscription and

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Speaker 1: it's a much better user experience. Well, I mean a

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Speaker 1: lot of their customers obviously like Netflix content without the ads,

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Speaker 1: but a lot of people want to pay less and

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Speaker 1: advertising brings in the dollars to pay for all the

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Speaker 1: content for those users. So this new tiers launching in November.

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Speaker 1: UM it's been very well received. The price point and

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Speaker 1: the number of minutes. It's not going to be a

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Speaker 1: lot of minutes of advertising. So people like four minutes

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Speaker 1: versus maybe five, fourteen or fifteen, Yeah, like four to

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Speaker 1: five minutes of ads per hour of content, So that's

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Speaker 1: pretty low at I think roughly half the price. So

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Speaker 1: you know, it's a nice trade off, especially in these times.

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Speaker 1: And I hear the CPM they're going to charge. The

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Speaker 1: cost per thousand is like almost super Bowl Like there's

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Speaker 1: a lot of the bait about that right now. Yeah,

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Speaker 1: I think it's a little higher than the Super Bowl.

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Speaker 1: I think, Um, I think that. I think maybe we'll

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Speaker 1: see a couple of months of that and then I'm

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Speaker 1: telling you, everyone I talked to they've rolled their eyes

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Speaker 1: when I hear the CPM, but they were we'll see

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Speaker 1: how it goes. Is that just because I know what

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Speaker 1: the audience is, I know who they are, and as

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Speaker 1: an advertiser, I'll pay up for that. Well, you know,

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Speaker 1: I was watching Netflix the other day and I thought

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Speaker 1: I was watching something that seemed like an ad. It wasn't.

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Speaker 1: It was just part of content. It made me look

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Speaker 1: at this, I was like, is that an ad? On Netflix?

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Speaker 1: So they're counting on people paying attention to the ads

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Speaker 1: and they can charge that premium CPM. My big question is, um,

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Speaker 1: who does the seven dollar package? I mean, is it

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Speaker 1: somebody paying fifteen dollars already that goes down to seven

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Speaker 1: or is it for new customers that started seven? I mean,

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Speaker 1: I think it's people who are not the binge watching

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Speaker 1: watches on the show bad or maybe watching a little

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Speaker 1: more casually and like, hey, I can say, you know,

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Speaker 1: seven bucks, but doesn't cannibalize the subscription subscriber base they

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Speaker 1: already had. That's the big questions. So their predictions that

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Speaker 1: this is going to bring back rejoiners that think is

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Speaker 1: the word, is going to bring back um former subscribers,

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Speaker 1: maybe expand the subscriber base, but yeah, there's a lot

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Speaker 1: of people who are gonna immediately want to go that

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Speaker 1: lower price here and the Yeah, can they bring the

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Speaker 1: ad revenue up as fast as they're gonna lose the

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Speaker 1: revenue and subscriptions. I think that's the big question. I

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Speaker 1: think the market is kind of immune to it right now.

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Speaker 1: I mean, Netflix is dealing with problems that other streaming

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Speaker 1: services wish they were dealing with. Yeah, I heard so,

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Speaker 1: By the way, fifteen is what I pay. I hear

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Speaker 1: there's a nine dollar subscription, which is what you can

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Speaker 1: like the least you can pay, and you can only

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Speaker 1: use it on one device, and they I guess they watch.

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Speaker 1: By the way, that was the price for this new

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Speaker 1: subscription is what Netflix was charging a few years right,

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Speaker 1: But now they're gonna be making I here about six

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Speaker 1: dollars six fifty on the ads per subscribers. So the

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Speaker 1: seven plus that yields doing the quick math is from

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Speaker 1: the Ohio state exactly. And so they're gonna be at

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Speaker 1: least making more than the nine dollars that the cheaper

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Speaker 1: subscribers would be paying, and almost as much as the

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Speaker 1: fifteen that um that the financially irresponsible people like me.

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Speaker 1: And and this is in the US. In the nationally,

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Speaker 1: I think there's a lot of potential there to to

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Speaker 1: offer them different priced tiers. So there you know. Again,

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Speaker 1: these problems are huge opportunities and Netflix is moving very

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Speaker 1: very quickly to capitalize on them. What else you're working on?

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Speaker 1: What else is interesting out there that you guys are

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Speaker 1: looking at? Well, I think the whole ads in terms

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Speaker 1: of media, I think we're seeing every major service. Disney

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Speaker 1: Plus is announced ads um. Amazon I think it is

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Speaker 1: likely expand their ads here. So it's a little bit

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Speaker 1: back to the future in the television industry. Looks like

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Speaker 1: I'm glad you brought up because it feels like again five, seven,

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Speaker 1: ten years ago, packages stuff up. Oh, that's what Comcast does,

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Speaker 1: that's what Charter does. I mean, we're getting back to

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Speaker 1: the same gig. You know. I had a dinner about

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Speaker 1: two weeks ago, actually less than two weeks ago. I

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Speaker 1: was at a table with someone who runs a major

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Speaker 1: cable company, and he's the CEO, and he was complaining

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Speaker 1: about the price the cable and he runs the company,

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Speaker 1: and he explained, look, you know, we have to in

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Speaker 1: order to offer choice as a cable provider, we have

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Speaker 1: to have every channel on streaming. You don't have you

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Speaker 1: just have to have the content. You don't have to

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Speaker 1: doll out dollars to all of these individual TV networks.

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Speaker 1: And so the price point and cable became very high streaming.

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Speaker 1: If you want all this choice, you're gonna have to

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Speaker 1: pay all these dollars exactly. I mean that that the

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Speaker 1: value proposition from streaming. I don't think it's relevant anymore

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Speaker 1: because I just I think, and maybe it's just from neglect.

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Speaker 1: People are just paying four or five, six, seven streamers

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Speaker 1: and you add it all up and it's the same

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Speaker 1: as I was paying the eighty bucks per month for

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Speaker 1: my cable for Comcast, which which is by the way,

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Speaker 1: John Farroh asked this um question of I think, um,

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Speaker 1: Michael Nathanson today, smart dude, which is is are some

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Speaker 1: people trying to put together the cable box, you know

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Speaker 1: as Disney with Hulu, trying to put together kind of

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Speaker 1: an ESPN a cable experience. Yeah, I mean, we're gonna,

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Speaker 1: we're gonna come back. You're gonna stick with us. But

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Speaker 1: Matt has an interview coming up with Guy Johnson. They're

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Speaker 1: gonna be interviewing the CEO of Rolls Royce, uh, which

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Speaker 1: is owned by BMW. So that's gonna be very cool.

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Speaker 1: That's coming up in just one which we're gonna bring

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Speaker 1: that to you. Uh. And they're gonna talk about the

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Speaker 1: car business, which Matt, as we know, loves to talk about.

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Speaker 1: The carbiss Matt Miller, Guy Johnson with the CEO of

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Speaker 1: Rose Royce, let's listen in. So Rolls Royce, talking of

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Speaker 1: the car sector, is debuting its first fully electric vehicle.

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Speaker 1: It's called the Specter. UH. This marks, of course, a

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Speaker 1: new era for the also maker. We welcome now our

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Speaker 1: TV and radio audience worldwide for an interview with Rolls Royce.

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Speaker 1: Motor Cars CEO tostenst and of course we bring into

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Speaker 1: this conversation as ever Bloomberg's Matt Miller Tosten thank you

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Speaker 1: very much indeed for taking the time. So you've made

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Speaker 1: the jump to the electric vehicle. What does demand look

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Speaker 1: like for this first car? Very pleasing. First of all,

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Speaker 1: good morning, Matt, really good. I mean we call it

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Speaker 1: it's a prophecy fulfilled. Our founding father, Charles Rowles said

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Speaker 1: in that he foresees the great future for electric cars

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Speaker 1: once charging is fixed and is available. And I think

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Speaker 1: now we are here fulfilling his prophecy, and we are

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Speaker 1: very excited and our clients are. I mean, it's the

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Speaker 1: very first time that you can acquire in the super

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Speaker 1: luxury segment an electric car. So it's the very first,

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Speaker 1: and for that reason we are also in pensively proud

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Speaker 1: that we are the first. Obviously it's a true Rose

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Speaker 1: Royce and an electric Ross Royce second, and that was

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Speaker 1: very important for our clients. So what Towardsen. First of all,

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Speaker 1: good morning to you and thanks so much for joining us.

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Speaker 1: Um the car looks spectacular. I don't think anyone would

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Speaker 1: have expected anything else. What about the performance the magic

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Speaker 1: carpet ride that Rolls Royce is so famous for. And

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Speaker 1: until now, Um, we've come to rely on the V

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Speaker 1: twelve six and Athlete of V twelve for that. Now

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Speaker 1: we're gonna rely on a big pound battery. I mean,

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Speaker 1: first of all, Matt, it is a true Ros Royce

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Speaker 1: that is promised, and we would never bring anything into

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Speaker 1: the market that doesn't carry magic carpet right, whaf stability.

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Speaker 1: Everything you know from Rose Royce is embedded also inspector,

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Speaker 1: that's for sure. And it is even a remarkable way

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Speaker 1: to drive it because it's even more silent, no slide

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Speaker 1: raw from the twelve cylinder. It's a very silent propulsion

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Speaker 1: fits perfect to the mark and for that reason, I

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Speaker 1: think a brilliant Rose Royce rest issued and all the

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Speaker 1: qualities you're used from Rose Royce embedded into it. So

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Speaker 1: and it's a it's a huge car. It's built on

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Speaker 1: a phantom like chassis, um and even heavier than a

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Speaker 1: colony in is I think Sunds right. The colony is

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Speaker 1: about six thousand, Um. Are you gonna put batteries in

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Speaker 1: the colony next? What's next for Rolls Royce in terms

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Speaker 1: of electrification mhm yeah. I mean I can't talk today

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Speaker 1: about let's say, obviously all the next steps, but one

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Speaker 1: just by end of twenties thirty met we will be

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Speaker 1: fully electrified. So every future Rose Royce we're gonna bring

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Speaker 1: into the market, every new one, is fully electrified Rose Royce.

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Speaker 1: So we are seizing building combustion engine cars end or

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Speaker 1: the beginning of twenty thirty m Tolsten. Let's talk about

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Speaker 1: the profitability that is going to be um with you

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Speaker 1: when when you make this this full move to electrification,

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Speaker 1: you make a lot of money of building traditional ice

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Speaker 1: engine cars. Your margins are being phenomenal. Are you going

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Speaker 1: to be able to match those margins when you go

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Speaker 1: all electric? Matt Yes, definitely, because that was always on

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Speaker 1: my mind when we have the plan to go electric.

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Speaker 1: That is not a plan that was born a year

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Speaker 1: ago or whatever. We basically came into it when we

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Speaker 1: experimented for the very first time over ten years ago

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Speaker 1: with a prototype of an electric Phantom, and the client

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Speaker 1: feedback was always fabulous, it fits to the brand great.

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Speaker 1: But obviously we also knew that one day we go

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Speaker 1: completely electric, and for that reason, contribution margins per car

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Speaker 1: are untouched. They are as strong as they have used

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Speaker 1: to be also in the past. For that reason, no

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Speaker 1: worries Rose Royce will stay a profitable, very profitable company.

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Speaker 1: Are you going to rely on the BMW New Class

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Speaker 1: platform to maintain those margins? Tolston though, um, and when

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Speaker 1: you're gonna, when you're gonna start bringing that in, what

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Speaker 1: can you do to that platform as well to tweak

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Speaker 1: it when it comes in? I think it's isn't it

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Speaker 1: when it comes in? It's five And the BMW brings

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Speaker 1: the NEYR class in new class in. That's right, And

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Speaker 1: obviously that is always and had happened also in the

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Speaker 1: past in a very successful way, whilst maintaining what the

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Speaker 1: Rose Royce stands for. We for instance, have our own architecture,

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Speaker 1: the architecture of Luxury, which is just preparatory for Rose

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Speaker 1: Royce motor cars. While it'st obviously we are taking whatever

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Speaker 1: technology is available and we do it, in our founders belief,

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Speaker 1: take the best that exists and make it even better.

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Speaker 1: So obviously, of course we would be allowed me to

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Speaker 1: say that mad not to use the technology we get

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Speaker 1: from the BMW group. We adjust it and we make

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Speaker 1: it Rose Royce technology. At the end, for instance, battery

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Speaker 1: cells software that is very much also helped by the

426
00:23:18,320 --> 00:23:22,360
Speaker 1: BMW Group and we modify it. So there are synergies

427
00:23:22,440 --> 00:23:25,800
Speaker 1: which are really very very helpful if it is purchasing

428
00:23:25,880 --> 00:23:28,639
Speaker 1: or whatever. And for that reason, I think it's a

429
00:23:28,760 --> 00:23:33,720
Speaker 1: great mix of getting help from the mother company BMW

430
00:23:33,960 --> 00:23:39,080
Speaker 1: Group whilst maintaining the own character of Rose Royce motorcas

431
00:23:39,200 --> 00:23:41,560
Speaker 1: and I think that has made us over the last

432
00:23:41,600 --> 00:23:44,560
Speaker 1: ten fifteen years so successful in the market. You know

433
00:23:44,680 --> 00:23:47,280
Speaker 1: that we go from one record to the next. Clients

434
00:23:47,359 --> 00:23:50,640
Speaker 1: love Rose Royces and they also love that we are

435
00:23:50,680 --> 00:23:53,639
Speaker 1: definitely stand alone in a way of what they buy.

436
00:23:53,680 --> 00:23:55,359
Speaker 1: At the end of the day, this is not in

437
00:23:55,440 --> 00:23:59,000
Speaker 1: any way modified BMW X seven. When you buy a

438
00:23:59,000 --> 00:24:02,199
Speaker 1: Culon in know that's a true Rose Royce, and the

439
00:24:02,200 --> 00:24:05,200
Speaker 1: same holds true worlds of respect. Specter is a true

440
00:24:05,320 --> 00:24:08,880
Speaker 1: Rose Roys first and then an electric car second. Obviously

441
00:24:08,960 --> 00:24:14,000
Speaker 1: based on also BMW technology or BMW Group technology. I

442
00:24:14,320 --> 00:24:18,720
Speaker 1: have to ask about um the battery and the changeability

443
00:24:18,760 --> 00:24:21,120
Speaker 1: of it, just because my colleague Hannah Elliott, I'm sure

444
00:24:21,119 --> 00:24:23,480
Speaker 1: you know her, she reviews cars for us, and she

445
00:24:23,600 --> 00:24:27,440
Speaker 1: bought like a nineteen seventies Silver Shadow which is so cool.

446
00:24:27,480 --> 00:24:31,359
Speaker 1: So she's a classic Rolls Royce owner. I'm wondering, you know,

447
00:24:31,480 --> 00:24:36,000
Speaker 1: in thirty years maybe my daughter will buy um a Specter,

448
00:24:36,400 --> 00:24:38,400
Speaker 1: but she'll want to put in a new battery pack

449
00:24:38,480 --> 00:24:42,560
Speaker 1: technology Shirley will have um evolved by then. Is that

450
00:24:42,600 --> 00:24:48,560
Speaker 1: going to be an incredibly difficult process. No, you might

451
00:24:48,600 --> 00:24:51,960
Speaker 1: know that Rose Royce is are well known for keeping

452
00:24:52,080 --> 00:24:55,600
Speaker 1: value of a long time and that we always provide

453
00:24:56,040 --> 00:25:00,800
Speaker 1: spare parts also in twenty five years thirty So in

454
00:25:00,840 --> 00:25:04,520
Speaker 1: that case, if your daughter one day by suspect battery

455
00:25:04,800 --> 00:25:07,639
Speaker 1: is available, make no error. So there is nothing to

456
00:25:07,720 --> 00:25:10,600
Speaker 1: be worried about that this might at one day be outdated,

457
00:25:10,720 --> 00:25:14,159
Speaker 1: doesn't work anymore, or whatever. It will always work and

458
00:25:14,200 --> 00:25:16,800
Speaker 1: we're gonna make sure. That's the promise from the Ross

459
00:25:16,880 --> 00:25:20,080
Speaker 1: roy side, that our cars will always be serviceable for

460
00:25:20,160 --> 00:25:23,840
Speaker 1: a long long time. So it's always great to catch up.

461
00:25:24,000 --> 00:25:28,600
Speaker 1: Congratulations on the vehicle. Looks fantastic to the Rolls Royce

462
00:25:28,600 --> 00:25:33,560
Speaker 1: motor cars. Of course, I thanks mate Miller. All right,

463
00:25:33,600 --> 00:25:38,080
Speaker 1: that's that is good stuff. Torsten Molars with the Rolls

464
00:25:38,240 --> 00:25:42,240
Speaker 1: Royce Specter. Matt, what what what's that going to set

465
00:25:42,280 --> 00:25:44,800
Speaker 1: me back? If I want to walk onto the lot

466
00:25:45,400 --> 00:25:48,399
Speaker 1: and get myself an electric Rolls Royce. I think you

467
00:25:48,440 --> 00:25:51,480
Speaker 1: know the answer if you have to ask. If you

468
00:25:51,600 --> 00:25:54,440
Speaker 1: have to ask, it's not for you. I mean, look,

469
00:25:54,480 --> 00:25:58,520
Speaker 1: I've I've spect out a Rolls Royce Ghost just for fun.

470
00:25:58,600 --> 00:26:01,160
Speaker 1: It's my favorite the vehicles that they make. I think

471
00:26:01,200 --> 00:26:03,720
Speaker 1: it's the most practical, the most fun to drive. And

472
00:26:04,359 --> 00:26:07,919
Speaker 1: I come in well over four grand, like four forty,

473
00:26:08,000 --> 00:26:10,080
Speaker 1: and that's not even a phantom. So this is a

474
00:26:10,119 --> 00:26:15,399
Speaker 1: phantom coop basically with electric power. I imagine it's gonna

475
00:26:15,480 --> 00:26:18,000
Speaker 1: go easily half a million dollars plus. You can't just

476
00:26:18,080 --> 00:26:21,000
Speaker 1: buy one, you know, straight off the lot or with

477
00:26:21,040 --> 00:26:23,080
Speaker 1: the specs that they sell it. You need to create

478
00:26:23,119 --> 00:26:27,800
Speaker 1: your own bespoke version, hopefully with some Paul T. Sweeney

479
00:26:27,840 --> 00:26:30,320
Speaker 1: pin stripes down the sides. You know. Let's go down

480
00:26:30,320 --> 00:26:32,160
Speaker 1: Park Avenue today and we'll see if we can find one,

481
00:26:32,280 --> 00:26:34,320
Speaker 1: you know, the dealership. They will be sold at the

482
00:26:34,400 --> 00:26:40,000
Speaker 1: end of watching on Bloomberg Television. A good stuff. Let's

483
00:26:40,040 --> 00:26:43,399
Speaker 1: bring back Mark Dougus. He's president CEO of Mountain Uh.

484
00:26:43,440 --> 00:26:47,000
Speaker 1: He's mysteriously in New York City today. We're assuming it's

485
00:26:47,040 --> 00:26:48,600
Speaker 1: because he's going up to the Bronx to see the

486
00:26:49,040 --> 00:26:52,199
Speaker 1: Yankees game. But Margot Bronx bombers, by the way, we

487
00:26:52,240 --> 00:26:54,719
Speaker 1: I always think that because you grew up near the stadium, right,

488
00:26:55,440 --> 00:26:57,560
Speaker 1: all right, So, but you're not really a super fan,

489
00:26:57,680 --> 00:26:59,679
Speaker 1: You're not really well. When I was in the when

490
00:26:59,680 --> 00:27:01,800
Speaker 1: I live to New York. Unfortunately I don't live in

491
00:27:01,800 --> 00:27:06,840
Speaker 1: New York anymore. I've definitely Yeah, I live in Miami.

492
00:27:07,880 --> 00:27:09,880
Speaker 1: Another one. I just came back from and I see

493
00:27:09,880 --> 00:27:13,360
Speaker 1: a lot of worlds. I didn't know so many Bloomberg

494
00:27:13,480 --> 00:27:16,479
Speaker 1: listeners were potentially going to be driving worlds. Round'm kind

495
00:27:16,480 --> 00:27:19,800
Speaker 1: of impressed. Sure, I will say we have I'm going

496
00:27:19,840 --> 00:27:25,240
Speaker 1: to say the wealthiest listeners of any radio station in America. Absolutely.

497
00:27:25,240 --> 00:27:29,520
Speaker 1: Why Netflix after the close today? Um? Again, the big

498
00:27:29,520 --> 00:27:32,200
Speaker 1: issue is, and it's rating your wheelhouse, Marcause you guys

499
00:27:32,200 --> 00:27:35,560
Speaker 1: in Mountain, you're an advertising software company. You work with brands,

500
00:27:35,560 --> 00:27:38,040
Speaker 1: you try to help them get into the digital age.

501
00:27:39,320 --> 00:27:42,560
Speaker 1: What does Netflix bring up? I'm an advertiser. I feel

502
00:27:42,560 --> 00:27:46,480
Speaker 1: like this is a really good platform for me to

503
00:27:46,640 --> 00:27:49,280
Speaker 1: put my digital dolledge. Well, there's not there's not been

504
00:27:49,359 --> 00:27:52,359
Speaker 1: this much opportunity to be like, you know, like on

505
00:27:52,520 --> 00:27:56,000
Speaker 1: a new platform that so many people watch, and all

506
00:27:56,000 --> 00:27:58,720
Speaker 1: of a sudden, you're the brand that appears next to

507
00:27:58,760 --> 00:28:01,879
Speaker 1: this content. So it's a unique opportunity. We were talking

508
00:28:01,920 --> 00:28:05,000
Speaker 1: earlier about the CPMs they want to charge and how

509
00:28:05,080 --> 00:28:07,679
Speaker 1: that's likely to play out. So I don't think that

510
00:28:07,680 --> 00:28:10,680
Speaker 1: window is gonna last long, but I think it's gonna

511
00:28:10,720 --> 00:28:12,920
Speaker 1: play out really well for Netflix and Ultimate is gonna

512
00:28:12,920 --> 00:28:16,280
Speaker 1: get more people content with a few minutes of advertising,

513
00:28:16,320 --> 00:28:19,200
Speaker 1: they see some hopefully some interesting products and some really

514
00:28:19,240 --> 00:28:22,359
Speaker 1: cool Madison Avenue I would guess has to up their game.

515
00:28:22,640 --> 00:28:24,439
Speaker 1: I mean, now I hear these ants are not going

516
00:28:24,480 --> 00:28:27,040
Speaker 1: to be within the show. They're gonna be before and after,

517
00:28:27,240 --> 00:28:29,399
Speaker 1: I think. But I would think if I'm going to

518
00:28:29,480 --> 00:28:34,560
Speaker 1: go onto a platform that has premium content like the Netflix,

519
00:28:34,600 --> 00:28:37,800
Speaker 1: I don't want to have premium well that I mean,

520
00:28:38,280 --> 00:28:42,840
Speaker 1: there's this idea of premium spots, um, yes, But I

521
00:28:42,920 --> 00:28:45,720
Speaker 1: actually I think most consumers want to learn about the

522
00:28:46,280 --> 00:28:50,160
Speaker 1: emerging brand, you know, like what's new, what's exciting. They

523
00:28:50,160 --> 00:28:54,000
Speaker 1: don't want to just see a car commercial or beer commercial.

524
00:28:54,320 --> 00:28:56,880
Speaker 1: They want to see something interesting in news. So maybe

525
00:28:57,000 --> 00:29:00,360
Speaker 1: on day one it's the biggest brands, but hopefully you're

526
00:29:00,360 --> 00:29:03,080
Speaker 1: gonna learn about some really cool new stuff over time

527
00:29:03,240 --> 00:29:06,640
Speaker 1: on Netflix and other other streamers. All right, good stuff.

528
00:29:07,040 --> 00:29:10,640
Speaker 1: Mark Douglas, President CEO of Mountain does all that digital advertising,

529
00:29:10,840 --> 00:29:13,080
Speaker 1: We didn't hear anything about Mountain, I know, we didn't

530
00:29:13,080 --> 00:29:15,480
Speaker 1: talk about Ryan Reynolds. Who cares what the hell is

531
00:29:15,920 --> 00:29:24,440
Speaker 1: in town? He is actually in town. Yes, I don't

532
00:29:24,440 --> 00:29:27,960
Speaker 1: have talk digital rather talk digital advertising, all right, Mark Douglas,

533
00:29:28,000 --> 00:29:33,000
Speaker 1: President CY of Mountain, matt You know, you get these

534
00:29:33,000 --> 00:29:36,760
Speaker 1: work from home guys, and they dat us with their presence,

535
00:29:36,880 --> 00:29:41,000
Speaker 1: you know, once in a while, okayday or a Friday,

536
00:29:41,200 --> 00:29:43,600
Speaker 1: no God forbid. So you know, when we do see

537
00:29:43,600 --> 00:29:45,280
Speaker 1: them in the office, we say, hey, let's get them

538
00:29:45,320 --> 00:29:48,440
Speaker 1: in studio. And even then sometimes I can't be on time.

539
00:29:48,520 --> 00:29:51,280
Speaker 1: It's just they're just they have their whole thing, the

540
00:29:51,280 --> 00:29:56,000
Speaker 1: whole sense of you know, yeah, exactly what that's you know,

541
00:29:56,040 --> 00:29:59,800
Speaker 1: it's entitled saying to their employer, guess what, you won't

542
00:29:59,800 --> 00:30:01,640
Speaker 1: be able to find another one on me. That's right,

543
00:30:01,840 --> 00:30:04,520
Speaker 1: that's working from home. That's right. That's the world. We

544
00:30:04,600 --> 00:30:06,520
Speaker 1: live in a rack ron and nobody takes advantage of

545
00:30:06,520 --> 00:30:10,160
Speaker 1: it better than him. Well, maybe Mike McLoone who's absconded

546
00:30:10,160 --> 00:30:13,320
Speaker 1: to Miami. In Miami, that's nice, and we've got we've

547
00:30:13,320 --> 00:30:16,200
Speaker 1: been dealing with the big banks. We've been reporting numbers

548
00:30:16,200 --> 00:30:18,680
Speaker 1: over the past few days. But we're tech companies are

549
00:30:18,760 --> 00:30:21,520
Speaker 1: coming up soon, and that's what the market really, really,

550
00:30:21,560 --> 00:30:24,600
Speaker 1: really likes to focus on. What are you focusing on

551
00:30:24,800 --> 00:30:26,680
Speaker 1: as we approached some of the earning season for the

552
00:30:26,680 --> 00:30:28,880
Speaker 1: big tech names. So I think the big thing is

553
00:30:28,920 --> 00:30:30,640
Speaker 1: going to be what kind of guidance do they give

554
00:30:30,720 --> 00:30:33,600
Speaker 1: for not just this year, and about some early indications

555
00:30:33,600 --> 00:30:36,440
Speaker 1: of what next year could look like. We already know

556
00:30:36,600 --> 00:30:38,840
Speaker 1: ex is going to be a very big problem this time.

557
00:30:39,240 --> 00:30:42,640
Speaker 1: We should see some softness and almost all their divisions.

558
00:30:42,680 --> 00:30:44,960
Speaker 1: But the question really is how much of that is

559
00:30:45,000 --> 00:30:48,040
Speaker 1: already accounted for in the stock price that has declined

560
00:30:48,080 --> 00:30:50,760
Speaker 1: over the past you know, three to five months. So

561
00:30:50,800 --> 00:30:53,480
Speaker 1: I mean I as an as an analyst, I used

562
00:30:53,520 --> 00:30:57,160
Speaker 1: to look through that, you know, kind of the the

563
00:30:57,200 --> 00:31:01,200
Speaker 1: FX impacts, like for a lot of big advertising holding companies,

564
00:31:01,240 --> 00:31:04,480
Speaker 1: they're complete global companies, and you'd always look at the revenue,

565
00:31:04,800 --> 00:31:08,600
Speaker 1: you know, ex acquisitions X, you know foreign exchange. The

566
00:31:08,640 --> 00:31:11,000
Speaker 1: tech investors do that as well, yes, but you know,

567
00:31:11,040 --> 00:31:14,200
Speaker 1: if you look at it. Companies like Microsoft or Salesforce

568
00:31:14,280 --> 00:31:16,520
Speaker 1: have done a very good job on even Amazon Web

569
00:31:16,560 --> 00:31:21,440
Speaker 1: Services of reporting revenue growth in constant currency. Now on

570
00:31:21,480 --> 00:31:23,760
Speaker 1: the other hand, Apple does not do that. Now, Apple

571
00:31:23,800 --> 00:31:26,520
Speaker 1: talks about it that it has an impact on um,

572
00:31:26,600 --> 00:31:29,280
Speaker 1: you know, their services business by five minute basis points.

573
00:31:29,400 --> 00:31:31,200
Speaker 1: But you could say, you can't really go back on

574
00:31:31,200 --> 00:31:32,960
Speaker 1: a trend line and look at it over a two

575
00:31:33,000 --> 00:31:35,520
Speaker 1: year basis as to what the growth rate was on

576
00:31:35,560 --> 00:31:38,239
Speaker 1: a on a x f X basis. So I think

577
00:31:38,280 --> 00:31:40,360
Speaker 1: they will have to explain that a little bit more,

578
00:31:40,680 --> 00:31:43,200
Speaker 1: or they'll have to start disclosing that or going forward

579
00:31:43,480 --> 00:31:45,440
Speaker 1: because now efex is going to hurt by you know,

580
00:31:45,480 --> 00:31:48,040
Speaker 1: somewhere in the sixth wait for some range for almost

581
00:31:48,080 --> 00:31:51,240
Speaker 1: all these companies. Yeah, I wonder if it's going to

582
00:31:51,320 --> 00:31:53,600
Speaker 1: affect M and A at all. We're starting to see

583
00:31:53,640 --> 00:31:57,719
Speaker 1: a little bit more. I haven't seen really a currency advantage,

584
00:31:57,760 --> 00:32:00,960
Speaker 1: but are big dollar earner is going to be able

585
00:32:00,960 --> 00:32:04,560
Speaker 1: to take over companies in euros? So that was, you know,

586
00:32:04,600 --> 00:32:06,520
Speaker 1: to be very frank, that was never a big issue.

587
00:32:06,560 --> 00:32:08,200
Speaker 1: The big issue in the M and A world is

588
00:32:08,320 --> 00:32:11,640
Speaker 1: who's eventually going to be the biot. It's only private equity,

589
00:32:11,880 --> 00:32:13,960
Speaker 1: you know, companies that are really the big bias right

590
00:32:14,000 --> 00:32:17,280
Speaker 1: now because frankly speaking, any of the other larger vendors

591
00:32:17,360 --> 00:32:19,959
Speaker 1: are it's not easy for them to buy any anything

592
00:32:20,000 --> 00:32:23,640
Speaker 1: at this point because of you know, antitrust issues on rock.

593
00:32:23,720 --> 00:32:29,800
Speaker 1: CNBC is reporting that activists investors Starboard has taken a

594
00:32:29,840 --> 00:32:33,960
Speaker 1: stake in Salesforce and now confirmed exactly that's confirmed the

595
00:32:33,960 --> 00:32:36,520
Speaker 1: conference here in New York, the Team de Monitor conference

596
00:32:37,160 --> 00:32:38,960
Speaker 1: in all right, So we got CRM, which is the

597
00:32:39,000 --> 00:32:42,200
Speaker 1: stock symbol of stocks down year to date, it's up

598
00:32:42,240 --> 00:32:46,680
Speaker 1: about four percent today. What do you think Starboards thinking

599
00:32:46,680 --> 00:32:49,400
Speaker 1: about here? What's the case investment case for an activist

600
00:32:49,720 --> 00:32:53,360
Speaker 1: taking a spot in Salesforce. It's the same investment case, Paul,

601
00:32:53,400 --> 00:32:55,680
Speaker 1: that I made. I would say about six seven months

602
00:32:55,680 --> 00:32:58,680
Speaker 1: ago that their margins need to go up far more

603
00:32:58,720 --> 00:33:00,880
Speaker 1: than where they are right now. That I think it's

604
00:33:00,880 --> 00:33:03,960
Speaker 1: going to be has to be a margin expansion story. Otherwise,

605
00:33:04,080 --> 00:33:05,720
Speaker 1: you know, investors are not going to give it the

606
00:33:05,800 --> 00:33:08,400
Speaker 1: multiple it used to get. So if you look at Salesforce,

607
00:33:08,440 --> 00:33:11,200
Speaker 1: for example, even if we ignore the pandemic period or

608
00:33:11,240 --> 00:33:14,240
Speaker 1: the software booming the pandemic period, it used to trade

609
00:33:14,240 --> 00:33:17,080
Speaker 1: about six points seven times forward price to sales at

610
00:33:17,120 --> 00:33:20,280
Speaker 1: that time, and now it's trading at four points sometimes

611
00:33:20,320 --> 00:33:23,440
Speaker 1: because at the peak of the pandemic when they bought Slack,

612
00:33:23,560 --> 00:33:26,200
Speaker 1: they were trading at ten eleven time sales. They went

613
00:33:26,240 --> 00:33:29,040
Speaker 1: and bought Slack and since then it's just been butchered.

614
00:33:29,240 --> 00:33:32,640
Speaker 1: And the reason is that for the longest period of time,

615
00:33:33,040 --> 00:33:35,440
Speaker 1: there are two things that matter to software investors. It's

616
00:33:35,560 --> 00:33:39,400
Speaker 1: organic growth rate and margin expansion. Salesforce has always been

617
00:33:39,440 --> 00:33:42,080
Speaker 1: good on the growth rate part of it, but they

618
00:33:42,120 --> 00:33:45,000
Speaker 1: never showed a decent amount of margin expansion like some

619
00:33:45,080 --> 00:33:47,760
Speaker 1: of their peers did, whether it's Adobe or Service Now

620
00:33:48,080 --> 00:33:51,120
Speaker 1: and investors really got bugged this time by the company

621
00:33:51,200 --> 00:33:53,440
Speaker 1: saying we're not going to take any more large act position,

622
00:33:53,640 --> 00:33:56,680
Speaker 1: and then they went went ahead and bought slack. Um. Now,

623
00:33:56,760 --> 00:33:59,520
Speaker 1: I think this deal in hindsight, it's not a bad

624
00:33:59,560 --> 00:34:02,200
Speaker 1: deal in a strategic way. But you know what happens

625
00:34:02,320 --> 00:34:05,000
Speaker 1: is when your investors get really fed up and tired

626
00:34:05,000 --> 00:34:07,440
Speaker 1: and say, you have not given me any margin expansion

627
00:34:07,680 --> 00:34:09,920
Speaker 1: over the past five to six years, where your peers

628
00:34:09,920 --> 00:34:11,839
Speaker 1: are giving why do I need to deal with you?

629
00:34:11,960 --> 00:34:14,200
Speaker 1: And not you know, by those stocks. But this is

630
00:34:14,239 --> 00:34:18,080
Speaker 1: Mark Bennioff. Isn't he one of the gods of Silicon Valley? Yeah,

631
00:34:18,120 --> 00:34:20,320
Speaker 1: the gods of Silicon Valley. Yes, but that happened to

632
00:34:20,360 --> 00:34:24,000
Speaker 1: Steve bamber also once. So I think now he owns

633
00:34:24,000 --> 00:34:26,640
Speaker 1: a basketball team. Yeah, so I think I think it's

634
00:34:26,719 --> 00:34:29,160
Speaker 1: I but I personally think they found religion at this point.

635
00:34:29,200 --> 00:34:31,560
Speaker 1: I really think that these guys are now looking to

636
00:34:31,600 --> 00:34:34,160
Speaker 1: look at their cost structures a little bit better, and

637
00:34:34,280 --> 00:34:37,240
Speaker 1: I don't think they're gonna spend that recklessly going forward.

638
00:34:37,440 --> 00:34:39,240
Speaker 1: I think they're going to show at least a hundred

639
00:34:39,239 --> 00:34:41,640
Speaker 1: and fifty to two hundred basis points of margin improvement.

640
00:34:41,920 --> 00:34:44,040
Speaker 1: And once they can show that, I think, you know,

641
00:34:44,120 --> 00:34:46,120
Speaker 1: that could help their multiple. By the way, we're gonna

642
00:34:46,120 --> 00:34:52,200
Speaker 1: see companies like Apple or Amazon going and buy um

643
00:34:52,320 --> 00:34:56,120
Speaker 1: some of these streaming businesses. They logically they should, but

644
00:34:56,160 --> 00:34:58,680
Speaker 1: as I said before, it's not it's not so much

645
00:34:58,680 --> 00:35:00,560
Speaker 1: whether they have the cash or what they should do.

646
00:35:00,800 --> 00:35:03,359
Speaker 1: The question is whether they'll be allowed to do it. Yeah,

647
00:35:03,560 --> 00:35:05,879
Speaker 1: that's the biggest issue at this point. They can't buy

648
00:35:06,040 --> 00:35:08,120
Speaker 1: those companies are just they can't really buy anything. They

649
00:35:08,600 --> 00:35:12,960
Speaker 1: pizza without look at it all, right, Salesforce equity go

650
00:35:13,880 --> 00:35:16,279
Speaker 1: uh CRMs is the ticker and then you put in

651
00:35:16,440 --> 00:35:21,239
Speaker 1: a n R for analysts recommendations. Forty five buys eight

652
00:35:21,280 --> 00:35:25,279
Speaker 1: holds zero cells. The cell side likes Salesforce dot Com

653
00:35:25,320 --> 00:35:28,359
Speaker 1: and Soda Starbirds. So okay, we got techery coming up

654
00:35:28,400 --> 00:35:30,560
Speaker 1: next week we'll be checking in with the Anora Ranas

655
00:35:30,640 --> 00:35:32,960
Speaker 1: and the man deep sings of the world from Blueberg Intelligence,

656
00:35:33,000 --> 00:35:35,840
Speaker 1: getting of the latest as those come across the tape.

657
00:35:36,160 --> 00:35:38,760
Speaker 1: Uh green on the screen here, but definitely way off

658
00:35:38,960 --> 00:35:41,080
Speaker 1: the day's highs. We'll see if you can hold onto

659
00:35:41,120 --> 00:35:43,360
Speaker 1: it for Carol coming up. I'll be with Carol this

660
00:35:43,440 --> 00:35:48,600
Speaker 1: afternoon looking at w t I crude oil here off

661
00:35:48,640 --> 00:35:53,600
Speaker 1: three point eight percent today two cents, about a far

662
00:35:53,760 --> 00:35:57,440
Speaker 1: cry from the one twenty we saw, uh reasonably what

663
00:35:57,560 --> 00:36:01,000
Speaker 1: was that six nine months ago? Um so again supply demand.

664
00:36:01,080 --> 00:36:02,359
Speaker 1: You have to have a call there, and you're talking

665
00:36:02,360 --> 00:36:05,120
Speaker 1: about those commodities and our next guests, I think I

666
00:36:05,120 --> 00:36:07,040
Speaker 1: will say gas prices are up because I filled up

667
00:36:07,040 --> 00:36:09,920
Speaker 1: this morning at a shell I get V power obviously

668
00:36:10,120 --> 00:36:12,720
Speaker 1: for my trucks, and it was five dollars and thirteen

669
00:36:12,760 --> 00:36:15,400
Speaker 1: cents a gallon. What are you doing? I see you

670
00:36:15,480 --> 00:36:18,600
Speaker 1: gotta just mind the wrong state or three dollars and

671
00:36:18,960 --> 00:36:22,360
Speaker 1: seven cents on a national basis. That's regular, that's regular.

672
00:36:22,600 --> 00:36:24,399
Speaker 1: All right, Well, I'm gonna go to my next guest.

673
00:36:24,440 --> 00:36:27,879
Speaker 1: But then, okay, here we go Scott Levine analyst Bloomberg Intelligence,

674
00:36:28,000 --> 00:36:30,880
Speaker 1: he covers the energy stuff. And Emily Wilkins, Congression reporter

675
00:36:30,920 --> 00:36:33,919
Speaker 1: with Bloomberg Government. Uh, Emily, let's start with you. Here

676
00:36:35,040 --> 00:36:37,480
Speaker 1: is the Biden administration. What's their policy as it relates

677
00:36:37,520 --> 00:36:40,520
Speaker 1: to the Strategic Petroleum Reserve? I know they did one release.

678
00:36:40,800 --> 00:36:43,240
Speaker 1: Are they considering more? Is the idea when they're less

679
00:36:43,280 --> 00:36:47,920
Speaker 1: popular than they release more oil? I mean at this point,

680
00:36:48,000 --> 00:36:50,719
Speaker 1: remember the Bide administration they said the spring they'd be

681
00:36:50,760 --> 00:36:54,480
Speaker 1: releasing a total of one million barrels of crude. So far,

682
00:36:54,719 --> 00:36:57,080
Speaker 1: they have released most of that at this point, but

683
00:36:57,120 --> 00:36:59,760
Speaker 1: they're moving towards another release of at least ten millions

684
00:36:59,760 --> 00:37:02,200
Speaker 1: to five team million barrels of oil. And of course,

685
00:37:02,600 --> 00:37:06,080
Speaker 1: this is coming just weeks before a very competitive midterm

686
00:37:06,120 --> 00:37:08,680
Speaker 1: for the Democrats. They're trying to hold onto the House,

687
00:37:08,719 --> 00:37:11,640
Speaker 1: they're trying to hold onto the Senate. U the headwinds

688
00:37:11,640 --> 00:37:14,279
Speaker 1: are are very much against them in this particular year,

689
00:37:14,440 --> 00:37:17,279
Speaker 1: and gas prices are not helping that if you take

690
00:37:17,280 --> 00:37:20,480
Speaker 1: a look at political ads, political polls, just to go

691
00:37:20,520 --> 00:37:22,960
Speaker 1: out there and talk with folks, I mean, gas prices

692
00:37:22,960 --> 00:37:25,279
Speaker 1: are really sort of one of the dominant issues on

693
00:37:25,480 --> 00:37:28,960
Speaker 1: voters minds, and the Biden administration is aware that kind

694
00:37:29,000 --> 00:37:31,399
Speaker 1: of the higher the prices are around November, the more

695
00:37:31,480 --> 00:37:34,200
Speaker 1: difficult it could be for Democrats to hold on to

696
00:37:34,280 --> 00:37:37,600
Speaker 1: control of Congress. So, Scott, how much oil do we

697
00:37:37,680 --> 00:37:41,960
Speaker 1: have in there? I mean, um, can administration keep giving

698
00:37:42,000 --> 00:37:46,080
Speaker 1: away gas for votes or are we're gonna run out soon? Well,

699
00:37:46,120 --> 00:37:51,160
Speaker 1: according to the traditional laws of supply and demand, they're

700
00:37:51,320 --> 00:37:56,480
Speaker 1: running out of capacity on the on the cuts that

701
00:37:56,520 --> 00:38:01,400
Speaker 1: they announced in the spring, which we're just alluded to there.

702
00:38:01,480 --> 00:38:04,400
Speaker 1: And the problem here, I think, Paul, is they're trying

703
00:38:04,400 --> 00:38:10,200
Speaker 1: to implement UH an upstream or crude oil solution to

704
00:38:10,280 --> 00:38:14,240
Speaker 1: a downstream or refining problem. At the end of the day,

705
00:38:14,400 --> 00:38:17,520
Speaker 1: the big issue in the bottleneck here and the challenges

706
00:38:17,560 --> 00:38:23,359
Speaker 1: on the refining side. So in introducing more reserves UH

707
00:38:23,400 --> 00:38:28,040
Speaker 1: and UH cutting the support UH the spr really isn't

708
00:38:28,080 --> 00:38:30,719
Speaker 1: going to help them solve the issue of high prices

709
00:38:30,719 --> 00:38:34,120
Speaker 1: at the pump. That's more a function of rising refining

710
00:38:34,160 --> 00:38:38,359
Speaker 1: crack spreads and tightness on the refining side, uh than

711
00:38:38,400 --> 00:38:41,680
Speaker 1: it is on the crude oil side. That's my opinion.

712
00:38:41,760 --> 00:38:45,040
Speaker 1: So what I guess in that case President Biden has

713
00:38:45,080 --> 00:38:47,480
Speaker 1: to go down to Oklahoma, He's got to go down

714
00:38:47,520 --> 00:38:51,640
Speaker 1: to Texas. Never been sweet talking those uh oil guys.

715
00:38:52,120 --> 00:38:56,760
Speaker 1: It's unlikely, isn't it. Emily. I mean, to certain extent,

716
00:38:56,920 --> 00:39:00,640
Speaker 1: you have seen the Biden administration UM give into sort

717
00:39:00,640 --> 00:39:02,319
Speaker 1: of a bit of a sort of tent back and

718
00:39:02,360 --> 00:39:04,759
Speaker 1: forth with some of these oil companies and saying, hey,

719
00:39:04,840 --> 00:39:06,759
Speaker 1: we need you guys to really sort of consider the

720
00:39:06,800 --> 00:39:09,680
Speaker 1: American consumer. We need you guys to sort of keep

721
00:39:09,719 --> 00:39:12,040
Speaker 1: them in mind. Um. And of course there's a lot

722
00:39:12,080 --> 00:39:14,960
Speaker 1: of questions right now because there is uh, you know,

723
00:39:15,160 --> 00:39:18,080
Speaker 1: a lot of need for oil in Europe. A lot

724
00:39:18,080 --> 00:39:20,600
Speaker 1: of these companies are trying to meet part of that need.

725
00:39:20,960 --> 00:39:23,759
Speaker 1: And so you definitely have seen the Biden administration kind

726
00:39:23,800 --> 00:39:26,040
Speaker 1: of try and put pressure on folks where they can

727
00:39:26,120 --> 00:39:30,120
Speaker 1: in terms of companies and to you're seeing candidates out

728
00:39:30,160 --> 00:39:33,520
Speaker 1: on the campaign trail go ahead and just blame companies

729
00:39:33,560 --> 00:39:36,279
Speaker 1: for the high gas prices, trying to tell voters no, no, no,

730
00:39:36,640 --> 00:39:39,279
Speaker 1: you shouldn't be blaming the Biden administration. You should be

731
00:39:39,280 --> 00:39:42,400
Speaker 1: blaming these major corporations for having prices as high as

732
00:39:42,480 --> 00:39:45,520
Speaker 1: they are. So and Scott on the refining side, is

733
00:39:45,760 --> 00:39:50,040
Speaker 1: you raised earlier? There really isn't any incentive for these

734
00:39:50,080 --> 00:39:53,600
Speaker 1: refining companies to go and build new refineries, is there?

735
00:39:53,640 --> 00:39:56,920
Speaker 1: I mean, the political environment is just it's not supportive

736
00:39:56,920 --> 00:40:00,440
Speaker 1: at all. No, there really isn't. And I think got

737
00:40:00,520 --> 00:40:03,799
Speaker 1: Ultimately the the problem here is that the thing that

738
00:40:03,840 --> 00:40:08,360
Speaker 1: will encourage them to produce more are higher our higher

739
00:40:08,400 --> 00:40:11,960
Speaker 1: diesel prices and higher gasoline prices, and that's something that

740
00:40:12,040 --> 00:40:16,040
Speaker 1: the administration obviously doesn't want to see, particularly ahead of

741
00:40:16,520 --> 00:40:19,720
Speaker 1: ahead of the mid terms. And so ultimately this problem

742
00:40:19,880 --> 00:40:23,839
Speaker 1: would be resolved naturally through supply and demand. I guess

743
00:40:23,880 --> 00:40:27,239
Speaker 1: the issue really is, Uh, the government doesn't really have

744
00:40:27,320 --> 00:40:32,560
Speaker 1: the time to Scott. What about a friendlier regulatory environment.

745
00:40:32,640 --> 00:40:35,640
Speaker 1: I mean, every time these CEOs go to Capitol Hill

746
00:40:35,760 --> 00:40:38,520
Speaker 1: or bank CEOs who financed them, Um, they're made to

747
00:40:38,600 --> 00:40:42,200
Speaker 1: look like the true criminals of the modern age. Is

748
00:40:42,239 --> 00:40:45,919
Speaker 1: that going to change? Well, you know, I think that's

749
00:40:45,960 --> 00:40:49,680
Speaker 1: a function of who's in in office and what their

750
00:40:49,960 --> 00:40:52,920
Speaker 1: m O is At the present time. The reality is

751
00:40:53,000 --> 00:40:55,640
Speaker 1: I wouldn't expect it to change much or too quickly.

752
00:40:56,520 --> 00:40:58,719
Speaker 1: I think the oil and gas companies have been more

753
00:40:58,800 --> 00:41:02,120
Speaker 1: vocal h and the fact that the government should stop

754
00:41:02,200 --> 00:41:07,080
Speaker 1: blaming the industry for problems that are macroeconomic in nature.

755
00:41:07,640 --> 00:41:11,840
Speaker 1: But I wouldn't expect the monstra to change anytime. All right, Scott,

756
00:41:11,880 --> 00:41:14,320
Speaker 1: thank you very much for joining us. Scott Levine analysts

757
00:41:14,360 --> 00:41:16,920
Speaker 1: with Bloomberg Intelligence covering all things energy, and Emily Wilkins,

758
00:41:16,960 --> 00:41:20,959
Speaker 1: congressional reporter with Bloomberg Government down in d C, giving

759
00:41:21,000 --> 00:41:24,520
Speaker 1: us the political angle there. But uh oil pulling back

760
00:41:24,600 --> 00:41:30,440
Speaker 1: again springing Stephen Lee right now, he's a brand manager

761
00:41:30,480 --> 00:41:33,480
Speaker 1: over at Ford Motor Company the FOMO code to talk

762
00:41:33,520 --> 00:41:36,600
Speaker 1: about what's going on with UM. I guess the move

763
00:41:36,640 --> 00:41:40,800
Speaker 1: to electrification is the sort of mid to longer term story.

764
00:41:40,920 --> 00:41:45,239
Speaker 1: But Stephen, right now, I guess, UH, chips are the

765
00:41:45,320 --> 00:41:49,200
Speaker 1: number one kind of question facing the auto industry. How

766
00:41:49,239 --> 00:41:50,920
Speaker 1: are you doing in terms of getting the chips you

767
00:41:51,000 --> 00:41:53,759
Speaker 1: need for the cars that we want? He Paul and

768
00:41:53,760 --> 00:41:56,759
Speaker 1: Matte thanks for having me on UM. You know, it's

769
00:41:56,800 --> 00:41:58,719
Speaker 1: certainly a lot of change in the world over the

770
00:41:58,760 --> 00:42:02,240
Speaker 1: course of the past four months. And ships and semiconductors

771
00:42:02,239 --> 00:42:05,600
Speaker 1: has certainly been on the forefront UM with us forward.

772
00:42:05,680 --> 00:42:09,080
Speaker 1: We've got dedicated teams working around the clock too with

773
00:42:09,120 --> 00:42:13,480
Speaker 1: each of our suppliers and then their suppliers even to

774
00:42:13,560 --> 00:42:15,920
Speaker 1: help try and get the parts that we need to

775
00:42:15,920 --> 00:42:20,160
Speaker 1: help sep the plants operating, and get customers the vehicles

776
00:42:20,200 --> 00:42:24,160
Speaker 1: that there UM and sometimes patiently been waiting for. Yeah,

777
00:42:24,200 --> 00:42:27,239
Speaker 1: some people for a year or two. Right. I have

778
00:42:27,239 --> 00:42:29,160
Speaker 1: a buddy who waited about two years to get his

779
00:42:29,239 --> 00:42:33,120
Speaker 1: Bronco full disclosure. He loves it now, He's very happy

780
00:42:33,160 --> 00:42:35,200
Speaker 1: with it, and I guess he wasn't that bothered about

781
00:42:35,239 --> 00:42:38,520
Speaker 1: the weight. But are we still seeing UM waits that long?

782
00:42:38,600 --> 00:42:41,399
Speaker 1: How long until I can get a Bronco if I

783
00:42:41,400 --> 00:42:44,160
Speaker 1: if I want one, or or if Paul can get

784
00:42:44,160 --> 00:42:47,919
Speaker 1: an F one fifty Lightning if he wants one. So

785
00:42:48,040 --> 00:42:50,840
Speaker 1: I mean we're looking at reducing that time overall between

786
00:42:50,840 --> 00:42:53,880
Speaker 1: when a customer can go in place their orders and

787
00:42:53,920 --> 00:42:57,800
Speaker 1: then when that that vehicle is built and then ultimately

788
00:42:58,440 --> 00:43:01,520
Speaker 1: UM shipped to the lear and the customer can take delivery.

789
00:43:01,560 --> 00:43:05,600
Speaker 1: I can I can speak to specifically three Super Duty,

790
00:43:05,719 --> 00:43:09,359
Speaker 1: which we're very excited to introduce. The all new Super

791
00:43:09,440 --> 00:43:12,760
Speaker 1: Duty and UH customers will be able to place orders

792
00:43:12,800 --> 00:43:15,680
Speaker 1: for the all new Super Duty UM later this fall,

793
00:43:15,840 --> 00:43:20,200
Speaker 1: and UM we aim to begin production early next year

794
00:43:20,239 --> 00:43:24,400
Speaker 1: and customers begin taking delivery in the first quarter. So Stephen,

795
00:43:24,600 --> 00:43:27,680
Speaker 1: you know, since the beginning of time, it seems like

796
00:43:27,719 --> 00:43:30,640
Speaker 1: you'd walk onto a lot, there's just hundreds of vehicles

797
00:43:30,680 --> 00:43:33,480
Speaker 1: on the lot. You'd find when you like, you go

798
00:43:33,560 --> 00:43:36,640
Speaker 1: haggle with a salesperson and you see how much blow

799
00:43:36,800 --> 00:43:38,320
Speaker 1: M s r P you can get this thing for

800
00:43:38,440 --> 00:43:42,320
Speaker 1: what kind of incentives there might be. Now it seems

801
00:43:42,320 --> 00:43:45,719
Speaker 1: like they're carrying a lot less inventory coming out of

802
00:43:45,760 --> 00:43:48,640
Speaker 1: this pandemic? Is that the new norm? I mean, do

803
00:43:48,719 --> 00:43:50,359
Speaker 1: I just walk on and take whatever I can get

804
00:43:50,360 --> 00:43:55,359
Speaker 1: and pay m srps? With how high Yeah, with how

805
00:43:55,480 --> 00:43:59,560
Speaker 1: high demand has been recently, certainly inventory levels are much

806
00:43:59,680 --> 00:44:03,160
Speaker 1: lower than historical barms, especially for us here at Ford

807
00:44:03,239 --> 00:44:08,120
Speaker 1: and and on vehicles like super Duty UH. Demand continues

808
00:44:08,239 --> 00:44:11,359
Speaker 1: to be very strong. And I mean most of our

809
00:44:11,560 --> 00:44:14,320
Speaker 1: our trucks as soon as they're arriving on dealers a

810
00:44:14,360 --> 00:44:17,719
Speaker 1: lot UM. You know, the dealers already have a name

811
00:44:18,440 --> 00:44:22,200
Speaker 1: assigned to that specific truck coming in and customers show

812
00:44:22,320 --> 00:44:25,320
Speaker 1: up and take delivery. It's uh, demand continues to be

813
00:44:25,560 --> 00:44:31,759
Speaker 1: very strong. So what are the hottest UM? I guess

814
00:44:31,880 --> 00:44:34,120
Speaker 1: trims right now? If I'm looking at a n F

815
00:44:34,239 --> 00:44:38,799
Speaker 1: two fifty, I want the Lariat package and a crew cab.

816
00:44:38,880 --> 00:44:41,719
Speaker 1: I'm gonna put a Tremor package on it, probably the

817
00:44:42,280 --> 00:44:44,279
Speaker 1: uh if I can afford it, drop in the six

818
00:44:44,360 --> 00:44:48,800
Speaker 1: point seven leader Um power stroke diesel. What do you

819
00:44:49,200 --> 00:44:50,880
Speaker 1: But the thing is I'm getting up to like eighty

820
00:44:51,040 --> 00:44:53,759
Speaker 1: five thousand dollars with that? What what do you? What

821
00:44:53,840 --> 00:44:57,839
Speaker 1: do you like? Stephen so? Uh? The Lariat Trum model

822
00:44:57,840 --> 00:45:00,560
Speaker 1: is certainly one of our most popular rims in the

823
00:45:01,200 --> 00:45:06,520
Speaker 1: individual retail customer space. UH. Certainly the off road capability

824
00:45:06,800 --> 00:45:10,680
Speaker 1: amongst these heavy duty trucks that's grown in popularity immensely.

825
00:45:11,160 --> 00:45:14,160
Speaker 1: And we offer the Tremor off Road Package, which which

826
00:45:14,239 --> 00:45:17,920
Speaker 1: provides during five inch off road tires and and ray

827
00:45:17,960 --> 00:45:20,560
Speaker 1: suspension to help navigate some of that off road terrain.

828
00:45:20,880 --> 00:45:24,400
Speaker 1: That is certainly one of our more popular configurations that

829
00:45:24,520 --> 00:45:27,600
Speaker 1: customers are opting for. And the great part is they

830
00:45:27,640 --> 00:45:30,040
Speaker 1: can they can get that configuration, they can get that

831
00:45:30,120 --> 00:45:34,799
Speaker 1: off road capability, but but they're not really sacrificing towing capability,

832
00:45:34,920 --> 00:45:37,719
Speaker 1: which when we're talking with our customers, even though the

833
00:45:37,800 --> 00:45:41,480
Speaker 1: off road space is increasing in popularity far and away,

834
00:45:41,600 --> 00:45:44,600
Speaker 1: towing is the number one usage for heavy duty trucks.

835
00:45:44,680 --> 00:45:47,640
Speaker 1: In our engineers, they take that to heart. They think

836
00:45:48,480 --> 00:45:50,840
Speaker 1: they seek out to create, you know what, what we

837
00:45:50,960 --> 00:45:54,280
Speaker 1: call a best in class towing experience. They really focus

838
00:45:54,400 --> 00:45:57,400
Speaker 1: on those pain points that customers have with towing and

839
00:45:57,640 --> 00:46:01,040
Speaker 1: trying to trying to deliver some utians to reduce those

840
00:46:01,120 --> 00:46:05,000
Speaker 1: pain points. One of them being visibility, especially with some

841
00:46:05,080 --> 00:46:07,720
Speaker 1: of these trailers, how big they're getting, the fifth wheel

842
00:46:07,800 --> 00:46:11,399
Speaker 1: campers that the big horse trailers you name it. Um.

843
00:46:12,200 --> 00:46:15,320
Speaker 1: Visibility is always, uh, you know, top of mind for customers.

844
00:46:15,400 --> 00:46:18,040
Speaker 1: And with the new super duties, we offer up to

845
00:46:18,080 --> 00:46:22,080
Speaker 1: twenty eight available camera views, including what's really cool, a

846
00:46:22,160 --> 00:46:25,440
Speaker 1: three six degree trailer camera system. So not only do

847
00:46:25,520 --> 00:46:28,080
Speaker 1: you get a bird's eye view above the truck, you

848
00:46:28,120 --> 00:46:30,440
Speaker 1: can now get a bird's eye view above the trailer

849
00:46:30,600 --> 00:46:33,840
Speaker 1: as well, so you can see around your trailer on

850
00:46:33,960 --> 00:46:38,640
Speaker 1: all sides, right on the built in six screen. And uh,

851
00:46:39,000 --> 00:46:41,080
Speaker 1: you know, you won't be free entertainment for those neighbors

852
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Speaker 1: at the camp side as you back that this wheel

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Speaker 1: into that type space. That's right, all right, Steven Lee,

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Speaker 1: thank you so much for joining us there. Stephen Lee,

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Speaker 1: barrant manager for Ford Motor Company, got the Super pick

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Speaker 1: up trucks. Thanks for listening to the Bloomberg Markets podcast.

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Speaker 1: You can subscribe and listen to interviews of Apple Podcasts

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Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

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Speaker 1: on Twitter at Matt Miller nineteen seventy three. Pet On

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