WEBVTT - Markets, Chips, Nikola, And Battiers (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg markets podcast. I'm Paul Sweeney. Alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOS, market pros and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news on the Bloomberg markets podcast, 0:00:15.600 --> 0:00:18.439 on Apple podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.480 at Bloomberg Dot com, slash podcast s and p five hundred. 0:00:22.520 --> 0:00:26.799 You know, getting close to retesting those June lowe's. Certainly 0:00:26.840 --> 0:00:29.400 feels very heavy out there in terms of the tape. 0:00:29.880 --> 0:00:32.320 Looking across the asset classes, let's check in with the professional, 0:00:32.360 --> 0:00:35.680 a j Odin's Senior Investment Strategist for bn Y Melon 0:00:35.800 --> 0:00:38.279 Investors Solutions. A J thanks so much for joining us here. 0:00:38.920 --> 0:00:42.479 What are you telling your clients at B N Y? Hey? 0:00:42.520 --> 0:00:44.760 Thanks for having me. Um, right now we're telling clients 0:00:44.760 --> 0:00:47.720 you know, we need to remain under underweight and equities 0:00:47.800 --> 0:00:50.400 right now. I mean we we see the fat that 0:00:50.680 --> 0:00:53.479 isn't going to capitulate or pivot anytime soon, and so 0:00:53.960 --> 0:00:57.160 you know we're staying. You know, obviously we need to 0:00:57.200 --> 0:01:00.840 stay in the markets, but remaining underweight equities, looking for, 0:01:01.040 --> 0:01:04.399 you know, more defensive names, large cap stocks, with, you know, 0:01:04.520 --> 0:01:08.680 income generating equities. Um, we're neutral from a fixing commerspective, 0:01:08.720 --> 0:01:11.200 but we prefer short duration. However, as we start to 0:01:11.200 --> 0:01:13.840 see the tenure continue to move up, we're gonna act 0:01:13.880 --> 0:01:15.720 continue you start to add a little bit more duration 0:01:15.720 --> 0:01:19.200 in the portfolio. Um, we're replacing that underweight in equities 0:01:19.240 --> 0:01:22.160 with an overweight in real assets, just because we need 0:01:22.160 --> 0:01:25.080 to be allocate to the sources of inflation. However, pulling 0:01:25.080 --> 0:01:27.679 back on that commodity pieces. We're seeing energy come down today, 0:01:27.720 --> 0:01:29.880 but that's that's kind of how we're we're positioning our 0:01:29.959 --> 0:01:32.520 our clients a little bit more defensive in nature. Um, 0:01:32.560 --> 0:01:38.520 looking at utilities, healthcare, Um, things names like that. What 0:01:38.600 --> 0:01:41.800 does that mean in terms of the thought that we 0:01:41.920 --> 0:01:45.520 have to have capitulation to really have a sustainable but market? 0:01:45.560 --> 0:01:47.760 In the last hour pulseween I we're speaking to David 0:01:47.800 --> 0:01:50.120 Sowerby and he said, you know, we can't really tell 0:01:50.160 --> 0:01:52.640 what capitulation looks like. We don't know what the signals are. 0:01:53.360 --> 0:01:56.400 Your take on that? What do you look for? You know, 0:01:56.480 --> 0:01:58.880 I think we're gonna have to follow the feed here. We, 0:01:59.280 --> 0:02:01.240 I feel like, the more kit for the last fourteen, 0:02:01.320 --> 0:02:04.360 fifteen years has been under this this sort of understanding 0:02:04.400 --> 0:02:06.560 that you know, the market's gonna or the Fens gonna come, 0:02:07.080 --> 0:02:09.200 come through, you know, ride through on a white horse 0:02:09.240 --> 0:02:11.000 and sort of Save the markets when there's a massive 0:02:11.040 --> 0:02:13.880 dip like this Um. But you know, we have to 0:02:13.960 --> 0:02:17.200 understand that we've benefited from the amount of quantitative easing 0:02:17.200 --> 0:02:19.480 that's come in and that nine trillion dollar balance sheet, 0:02:19.639 --> 0:02:21.520 as part of their mandate, is trying to run that 0:02:21.600 --> 0:02:24.560 off as well. And so you know, when when inflation 0:02:24.639 --> 0:02:27.320 is persistently highlight this, you know they're they're waiting for 0:02:27.639 --> 0:02:30.160 to see a downward trend of that. You know, the 0:02:30.360 --> 0:02:34.359 last month we're seeing inflation rise in parts of of 0:02:34.360 --> 0:02:38.440 of the PC and C P I um, aside from energy, 0:02:38.520 --> 0:02:41.560 and so you know, wage wage pressures continue to add 0:02:42.000 --> 0:02:45.639 onto the inflation narrative until we start to see cooling 0:02:45.639 --> 0:02:47.799 and the labor markets. Can Imagine, the FT's going to 0:02:47.880 --> 0:02:49.880 continue to move forward, and that's I felt like they 0:02:49.880 --> 0:02:52.760 gave a good projection of where what the potential terminal 0:02:52.840 --> 0:02:55.000 rate could be. And so a market at some point 0:02:55.000 --> 0:02:58.320 will stabilize as as we start to see yields sort 0:02:58.320 --> 0:03:00.320 of normalized here. But obviously when you're seeing, you know, 0:03:00.760 --> 0:03:02.720 the five basis points swing up in the two year 0:03:03.120 --> 0:03:05.200 at four seventeen right now. You know we're going to 0:03:05.280 --> 0:03:07.720 continue to see repricing and so we start to see 0:03:07.800 --> 0:03:11.440 yields normalize a bit. So you're you're you're not alone 0:03:11.480 --> 0:03:13.760 in saying that following the Fed is is the way 0:03:13.800 --> 0:03:15.799 to go. But I have to talk about the precedent 0:03:15.840 --> 0:03:18.560 that's set. The last time the federal reserved high rates 0:03:18.600 --> 0:03:22.880 like this about seen through. At the same time, they 0:03:22.919 --> 0:03:25.800 had this massive quantity of tightening operation, which was massive 0:03:25.840 --> 0:03:27.480 at the time, not of the same skills it is 0:03:27.600 --> 0:03:31.040 right now, and the equity market actually rallied over that 0:03:31.120 --> 0:03:35.040 time frame. You had tech leading that charge despite rising rates. 0:03:35.360 --> 0:03:42.280 Why is this time different? You know, that's a great question. Um, 0:03:42.400 --> 0:03:44.960 what we would say here is that the reason why 0:03:45.000 --> 0:03:48.200 this time is different, I think, has a lot to 0:03:48.280 --> 0:03:52.240 do with inflation and it's it's really it's really been 0:03:52.280 --> 0:03:55.440 this sort of differentiator in the market. Um and and 0:03:55.480 --> 0:03:59.800 many of the different UH exogenists supply driven impacts that 0:03:59.840 --> 0:04:02.000 we're dealing with here. You know, Russia Ukraine conflict is 0:04:02.040 --> 0:04:04.480 still having spillower effects. There's still the risk for for 0:04:04.560 --> 0:04:07.960 energy prices to go up Um and China, zero covid 0:04:08.000 --> 0:04:10.800 policy having an impact on supply chains and any other 0:04:11.040 --> 0:04:14.000 geopolitical tensions that it's sit out there between China and Taiwan, 0:04:14.280 --> 0:04:16.240 but also the concept of reshowing and on showing and 0:04:16.279 --> 0:04:18.240 how you know, even though the Fed has a two 0:04:18.240 --> 0:04:20.599 percent target for inflation, that it's potential that we could 0:04:20.600 --> 0:04:23.720 see persistently higher inflation for longer as jobs move back 0:04:23.760 --> 0:04:26.520 to the US, and so I feel like inflation is 0:04:26.520 --> 0:04:29.039 is that is that differentiator in the in the in 0:04:29.080 --> 0:04:31.840 the environment that we're seeing today and the feds, and 0:04:31.880 --> 0:04:34.520 not just the Fed but on a global perspective major 0:04:34.800 --> 0:04:39.320 central banks, trying to maintain price stability. So H is 0:04:39.800 --> 0:04:44.400 a recession part of the bing y melon kind of outlook, 0:04:44.440 --> 0:04:46.320 I guess, for markets? Is that kind of what you're 0:04:46.320 --> 0:04:49.760 factory into your models? We're definitely looking at it. Um 0:04:49.800 --> 0:04:52.040 You know, I I wouldn't say you know it's it's 0:04:52.080 --> 0:04:55.280 it's a high probability. I know we do have a 0:04:55.360 --> 0:04:58.120 more recent UH snapshot. Our projection come out in a 0:04:58.120 --> 0:05:00.599 few weeks, so I don't want to uh jump ahead 0:05:00.640 --> 0:05:04.360 and give any sort of UH indications before that comes out, 0:05:04.360 --> 0:05:06.840 but it is something that we're wearing on. I'd say Europe. 0:05:07.120 --> 0:05:08.920 Europe in the UK, some of the news coming out 0:05:09.200 --> 0:05:12.400 about potentially being in a recession is definitely something that 0:05:12.400 --> 0:05:14.760 we're looking at as well. And and but you know, 0:05:14.839 --> 0:05:16.800 the U s seems to be a relative out performer 0:05:17.200 --> 0:05:19.320 Um when you're looking at many of the developed market countries. 0:05:19.360 --> 0:05:21.400 But to that question that you had, yes, it is 0:05:21.440 --> 0:05:23.719 something that we're looking at, but I think we believe 0:05:23.760 --> 0:05:26.360 that the Fed can still pull this off and navigate 0:05:26.720 --> 0:05:29.520 this this landing Um of the economy. Are you guys 0:05:29.560 --> 0:05:32.960 holding more cash than you typically do? Uh, we're definitely 0:05:32.960 --> 0:05:36.320 moving into Um. A little bit more cash, for sure. Um, 0:05:36.400 --> 0:05:39.040 and even within some of our our tacticle asset allocation, 0:05:39.080 --> 0:05:42.279 looking at Treasury floating rate securities. Um. But, like I 0:05:42.320 --> 0:05:45.760 said before, as we start to see higher duration, I'm sorry, 0:05:45.800 --> 0:05:48.400 higher yields from the ten year, we're gonna start to 0:05:48.400 --> 0:05:50.800 add a little bit more duration to the portfolio. All right, 0:05:50.839 --> 0:05:52.800 a J great stuff. Really appreciate you taking the time 0:05:52.920 --> 0:05:55.039 checking in with us. Hey, J Odin, he's a senior 0:05:55.080 --> 0:05:59.000 investment strategist at B and y melon's investors solutions. B 0:05:59.240 --> 0:06:06.760 N Y, the Bank of the York Nicole dugal joins us. 0:06:06.800 --> 0:06:10.800 He's a senior vice president general manager for automotive at Qualcom, 0:06:10.839 --> 0:06:13.320 and your qualcom has probably got this monster booth there 0:06:13.360 --> 0:06:16.560 which shows off all all its cool stuff. Nicole, talk 0:06:16.640 --> 0:06:20.240 to us about where we are with just kind of 0:06:20.279 --> 0:06:24.320 the computerization of the automobile. I mean, Matt Miller had 0:06:24.360 --> 0:06:28.440 to wait for US Chevy silverado truck for months because 0:06:28.480 --> 0:06:31.800 they couldn't get enough chips to fund to drive all 0:06:31.800 --> 0:06:35.680 this stuff that's in the car. Where are we now? Yeah, 0:06:35.720 --> 0:06:38.159 good morning, thank you for having me. Look, I think 0:06:38.240 --> 0:06:42.479 the car industry is going through this massive transformation where 0:06:42.880 --> 0:06:47.200 every automaker realizes that the platform that they're building has 0:06:47.880 --> 0:06:51.719 so much more potential, so much more capable, capability to 0:06:52.279 --> 0:06:55.800 really create a brand identity for the automaker, to connect 0:06:55.800 --> 0:06:59.360 with their customers, make it a services platform, find new 0:06:59.360 --> 0:07:02.080 ways to monitor times, and really the center of it 0:07:02.160 --> 0:07:06.719 all is chips and software. These platforms are all becoming 0:07:06.839 --> 0:07:10.680 much more advanced technologically, you know, keeping up with the 0:07:10.680 --> 0:07:14.200 most complex technology that we are defining today. So, uh, 0:07:14.240 --> 0:07:17.720 this progression has started. It's upon us and we really 0:07:17.800 --> 0:07:22.320 seeing every card company become a technology company and our 0:07:22.360 --> 0:07:26.160 snapdrag and digital chassis is the basis on top of 0:07:26.160 --> 0:07:29.040 which we are building these partnerships with automakers. Talk to 0:07:29.120 --> 0:07:32.000 us a little about pricing here. I mean it's clear 0:07:32.040 --> 0:07:34.880 that chips are in demand and have been in demand 0:07:34.920 --> 0:07:37.320 and probably will be in demand, I want to say, 0:07:37.360 --> 0:07:39.880 for the next minimum year or so, as we starts 0:07:39.880 --> 0:07:42.440 see supply chain issues really a bait. What does that 0:07:42.520 --> 0:07:45.960 mean for pricing? How much of a premium can you 0:07:46.080 --> 0:07:52.120 charge based on that really Um unabated demand? Yeah, you know, 0:07:52.200 --> 0:07:58.400 I think automotive is and remains a very competitive space. Uh. 0:07:58.560 --> 0:08:01.280 What is changing, however, as you know, as we are 0:08:01.280 --> 0:08:04.960 able to integrate more and more functionality into the chips 0:08:05.000 --> 0:08:08.000 that we build, it allows us to be able to a, 0:08:08.760 --> 0:08:13.520 bring technology, bring products over to more affordable segments of 0:08:13.600 --> 0:08:18.800 the value chain also, uh, bring much more capability to 0:08:18.840 --> 0:08:21.000 the higher end. So there is certainly a price premium 0:08:21.040 --> 0:08:24.320 that we can extract by the integration capabilities that we 0:08:24.400 --> 0:08:27.720 have Alba, bringing more technology to really every year of vehicle. 0:08:28.840 --> 0:08:31.760 All right, so, Nicole, in the past couple of months 0:08:31.760 --> 0:08:35.080 I experienced to first for me. Number One, I drove 0:08:35.160 --> 0:08:38.360 my first pickup truck. Number two, I drew my first 0:08:38.400 --> 0:08:41.000 electric vehicle. That happened to be the electric pickup truck, 0:08:41.040 --> 0:08:44.240 and I was just blown away by the technology of 0:08:44.280 --> 0:08:46.400 that E v in the in terms of the performance. 0:08:46.440 --> 0:08:48.960 So okay, I get the EV thing that's coming. I 0:08:49.000 --> 0:08:54.560 get it. Autonomous Driving, that's another thing altogether. How do 0:08:54.600 --> 0:08:58.880 you envision the evolution towards autonomous drivings? I know calcom 0:08:59.000 --> 0:09:01.679 is going to be right at the four front of them. Yeah, 0:09:01.760 --> 0:09:03.959 it's an excellent question and you know, our snap dragon 0:09:04.040 --> 0:09:08.920 right platform really addresses this transition towards autonomous driving. So 0:09:08.920 --> 0:09:10.600 there are a few things going on, you know. I 0:09:10.640 --> 0:09:13.600 think your experiences in terms of driving a new vehicle 0:09:13.679 --> 0:09:16.600 and really being impressed with all of the electronics inside. 0:09:16.640 --> 0:09:19.560 I think that is certainly indication of one shift. I 0:09:19.600 --> 0:09:22.640 think the other, clearly, is that cars are becoming safer 0:09:22.840 --> 0:09:26.400 because there is technology, there are sens there is a 0:09:26.440 --> 0:09:31.160 lot of capability now available to make cars much more safe. 0:09:31.559 --> 0:09:35.360 The transition from safety to comfort, to where you can 0:09:35.440 --> 0:09:37.679 actually allow the car to take you from point a 0:09:37.800 --> 0:09:41.360 to point B, is a complex part. It is something 0:09:41.400 --> 0:09:44.120 that is going to take time because it really is 0:09:44.160 --> 0:09:46.600 about making sure that this can be implemented in a 0:09:46.679 --> 0:09:50.440 safe way. We are already seeing, for example, for highway applications, 0:09:50.840 --> 0:09:54.640 the ability for cars to be operating in autonomous mode 0:09:55.440 --> 0:09:58.640 for long durations, for long length of time. But as 0:09:58.679 --> 0:10:01.160 you start to bring in more way ability, more animous 0:10:01.240 --> 0:10:03.400 there is clearly a lot of work that needs to 0:10:03.440 --> 0:10:05.960 be done. And mostly, in my mind, this is actually 0:10:06.000 --> 0:10:09.679 a question of the safety responsibility that automakers owe to 0:10:09.840 --> 0:10:12.720 their consumers. So, while the tech might be there, you 0:10:12.760 --> 0:10:15.079 have to do this in a very responsible fashion because 0:10:15.080 --> 0:10:19.319 you're essentially taking control away from the driver giving you 0:10:19.480 --> 0:10:23.480 the vehicle, and that's kind of where the responsibility potion 0:10:23.559 --> 0:10:26.520 has to be really high. Cool. Yeah, I know you 0:10:26.559 --> 0:10:28.360 focus on the auto industry, but just I'd love to 0:10:28.360 --> 0:10:31.760 get your thoughts just over on the overall UH semiconductor 0:10:32.480 --> 0:10:36.839 supply issue kind of where are we as an industry 0:10:36.920 --> 0:10:40.480 in terms of getting supply matched with demand on a 0:10:40.480 --> 0:10:44.840 global basis, because that was a big, big problem continues 0:10:44.880 --> 0:10:47.480 to be a big, big problem for, you know, getting 0:10:47.480 --> 0:10:49.719 these economies kind of reopen and back up, up and 0:10:49.800 --> 0:10:53.160 running where already think? You know, I think from an 0:10:53.160 --> 0:10:56.480 auto perspective we've been fortunate in that we've actually been 0:10:56.520 --> 0:11:01.520 able to prioritize availability of semising to supply for our 0:11:01.640 --> 0:11:06.680 automaker customers ahead of all other verticals and through Covid 0:11:06.679 --> 0:11:09.080 we were actually able to manage that quite well. Uh. 0:11:09.160 --> 0:11:11.000 You know, as we look at the next year or so, 0:11:11.440 --> 0:11:15.240 they are clearly still, uh, pockets of the market, you know, 0:11:15.360 --> 0:11:19.280 certain types of semiconductors that are still in short supply. 0:11:19.440 --> 0:11:23.640 Supplies catching up, but I think, you know, through the 0:11:23.679 --> 0:11:26.400 second half of next year I do feel that the Automan, 0:11:26.600 --> 0:11:29.160 that the auto industry, is going to start to see 0:11:29.640 --> 0:11:32.440 much better balance between supplying the man so we have 0:11:32.520 --> 0:11:34.040 had a minute left. talked to us a little bit 0:11:34.040 --> 0:11:38.199 about the regional challenges that call comes specifically might be facing. 0:11:38.200 --> 0:11:40.920 I mean, like the auto industry is really in North America. 0:11:40.960 --> 0:11:43.400 It's in Germany as well, but a lot of the 0:11:43.480 --> 0:11:46.319 chips are coming from abroad. Talk to us about the 0:11:46.360 --> 0:11:51.400 challenges there. So, you know, we are a fabulous company. 0:11:51.520 --> 0:11:58.480 We have partnerships globally across many different H semiconductor fabric 0:11:58.640 --> 0:12:02.960 fabrication partner and very the way that we have established 0:12:03.000 --> 0:12:06.520 the businesses to have the ability to build products across 0:12:06.920 --> 0:12:13.240 multiple locations, have dual sourcing strategies. H The automotive supply 0:12:13.400 --> 0:12:17.520 chain is highly complex and so scale is a very 0:12:17.559 --> 0:12:20.160 important factor and you have to be able to work 0:12:20.200 --> 0:12:24.720 across a wide variety of complexity, whether it's partnerships at 0:12:24.760 --> 0:12:27.400 the front end or the back end. Because of the 0:12:27.440 --> 0:12:30.120 scale which we operate, this is something that we've actually 0:12:30.160 --> 0:12:32.360 been able to do, perhaps a bit better than some 0:12:32.440 --> 0:12:35.679 of the other more entrance players that do not have 0:12:35.760 --> 0:12:39.840 similar scale from a from an overall semic supply perspective. 0:12:40.480 --> 0:12:42.720 All right, Nicole, thank you so much for joining us there. 0:12:43.080 --> 0:12:45.680 Nicole de Gal, senior VP and general manager. He covers 0:12:45.679 --> 0:12:49.360 the automotive business for Qualcom and again, the transition to 0:12:49.640 --> 0:12:53.360 electric vehicles well on the way Um and again the 0:12:53.360 --> 0:12:56.200 performance that I experienced, which is awesome. Now the question is, 0:12:56.240 --> 0:13:01.679 you know, getting more and more autonomous. Looking at the 0:13:01.720 --> 0:13:05.120 shares of the Nicola U N K L A is 0:13:05.160 --> 0:13:07.480 your ticker, you can put in there. Trading at three 0:13:07.520 --> 0:13:09.840 dollars and eight cents to share. It's off five percent today, 0:13:09.840 --> 0:13:13.600 off year to date, fifty two week low. It is ugly. 0:13:13.640 --> 0:13:15.120 But we want to talk about, and that's so much 0:13:15.200 --> 0:13:18.440 the stock. But what's going on with it's founder? Ed Ludlow, 0:13:18.520 --> 0:13:21.880 joins us. Ed Ludlow's west coast correspondent, but he's in 0:13:21.920 --> 0:13:25.000 New York, but he's from England, so I don't know 0:13:25.040 --> 0:13:28.120 where he calls home here, but he joins us here 0:13:28.320 --> 0:13:31.280 talk about the trial of Nicola founder Trevor Milton and 0:13:31.559 --> 0:13:34.640 give us the background here on the issue here, at 0:13:34.679 --> 0:13:37.160 the trial here. What's going on, a kind of where 0:13:37.200 --> 0:13:40.600 are we? So Nikola was the post to child right 0:13:40.679 --> 0:13:43.760 of this wave of EV companies that went public. Vis 0:13:43.840 --> 0:13:49.600 Back Special Purpose Act was in company one and Milton 0:13:49.760 --> 0:13:52.760 was like bill to be the next mosque. He was 0:13:52.840 --> 0:13:56.959 this visionary who would make hydrogen powered fuel cell semi trucks. 0:13:57.240 --> 0:14:02.280 That's a reality, and retail investors poured money into this stock. 0:14:02.920 --> 0:14:05.320 But you know, things change really quick. You know, at 0:14:05.360 --> 0:14:07.320 one point they had a market cap bread and forward, 0:14:07.760 --> 0:14:11.440 but just after they went public, Bloomberg reported that their 0:14:11.480 --> 0:14:14.520 first truck, their debut truck that they'd unveiled in twenty six, 0:14:15.360 --> 0:14:19.560 was grossly exaggerated, never worked, missing parts. The next thing 0:14:19.560 --> 0:14:23.920 that happens a short seller takes notice, cites that Bloomberg report, 0:14:24.040 --> 0:14:28.240 looks into Trevor Milton and basically accuses him of deceiving investors. 0:14:28.760 --> 0:14:32.560 The SEC gets involved, looks into him and ultimately by 0:14:32.640 --> 0:14:36.239 September of that year. He resigns. A year later he's indicted, 0:14:36.520 --> 0:14:38.760 charged with securities and wire fraud and that is the 0:14:38.760 --> 0:14:43.200 trial that's ongoing in Manhattan right now. So walk us 0:14:43.200 --> 0:14:46.240 through now what comes next in the trial and walks 0:14:46.240 --> 0:14:49.080 through the timeline. What have we seen? Where are we 0:14:49.160 --> 0:14:52.320 see next? So we're in day ten of the trial 0:14:52.520 --> 0:14:57.120 to working weeks in and it's just been astonishing. Um, 0:14:57.160 --> 0:15:01.840 you know, we've had key witnesses, including Nicholas current outgoing CEO, 0:15:02.000 --> 0:15:05.720 Mark Russell, who basically testified and told the jury that 0:15:05.840 --> 0:15:08.080 he did have a lot of concerns about things that 0:15:08.160 --> 0:15:11.680 Milton was saying, that in fact most of what much 0:15:11.680 --> 0:15:13.520 of what he said was not true and that he 0:15:13.640 --> 0:15:17.760 and other executives had warned Milton that, as the executive 0:15:17.800 --> 0:15:22.120 chairman at the company, he everything he said equated to 0:15:22.120 --> 0:15:25.640 a press release, equated to a securities filing. We heard 0:15:25.680 --> 0:15:28.560 from Nicolas Social Media Manager, and a big part of 0:15:28.560 --> 0:15:30.600 the story around Milton is he was a big user 0:15:30.600 --> 0:15:35.640 of twitter, sounds familiar, right, and Instagram, and she testified 0:15:36.120 --> 0:15:39.880 that they had a policy that non public information must 0:15:39.880 --> 0:15:42.640 not be shared on social media. She testified that only 0:15:43.280 --> 0:15:46.320 herself and Milton had access to the company's accounts and 0:15:46.400 --> 0:15:49.480 she testified that Milton was breaching his own company social 0:15:49.520 --> 0:15:52.960 media policies. Next we hear from the CFO. We heard 0:15:53.000 --> 0:15:56.120 from a retail investor that says they lost a hundred 0:15:56.160 --> 0:15:59.480 and sixty thousand dollars because of investing in the company 0:15:59.520 --> 0:16:01.880 based on what Milton says. That's the crux of the case, 0:16:01.920 --> 0:16:04.120 by the way. So I look at I see Steve 0:16:04.120 --> 0:16:05.960 Gursky is the chairman of the board, who's a long 0:16:06.040 --> 0:16:10.840 time auto executive, longtime analyst. He and I used to 0:16:10.840 --> 0:16:12.440 work together way back in the day when he covered 0:16:12.480 --> 0:16:18.080 the auto stocks. He's a savvy investor, savvy auto person. 0:16:18.760 --> 0:16:21.400 It looks like Trevor Milton perhaps duped a lot of 0:16:21.440 --> 0:16:25.400 smart people, not just kind of retail investors as well, potentially. Yes, 0:16:25.680 --> 0:16:27.480 I think it's important to say, like the defense are 0:16:27.480 --> 0:16:30.000 going to argue and they're trying to prove and convince 0:16:30.040 --> 0:16:33.720 a jury that a Milton genuinely believed what he was 0:16:33.760 --> 0:16:36.800 saying was true, but also that he was the CEO 0:16:36.840 --> 0:16:39.640 of the company right, it was his duty to market 0:16:39.680 --> 0:16:43.040 the company. He was following the marketing plan and the 0:16:43.080 --> 0:16:45.840 burden of proof this is the American justice system is 0:16:45.880 --> 0:16:48.200 on the prosecution to not just prove that he lied, 0:16:48.520 --> 0:16:53.000 but those lies in fact did prompt investors to invest. 0:16:53.480 --> 0:16:55.920 And Steve Gursky is really interesting and that that's the 0:16:56.040 --> 0:16:59.600 extra bit of this trial that we're learning what really 0:16:59.600 --> 0:17:02.880 took ace at the time. For example, yesterday a GM 0:17:03.040 --> 0:17:07.560 current GM employee and engineer testified that the pickup truck, 0:17:07.600 --> 0:17:10.760 the Badger, that GM had agreed initially to build on 0:17:10.840 --> 0:17:15.520 Nikola's behalf was not going to contain any parts from Nikola. Well, 0:17:16.000 --> 0:17:19.119 Trevor Milton gave an interview saying seventy of the parts 0:17:19.119 --> 0:17:21.280 would come from Nikola. So we're kind of filling the 0:17:21.320 --> 0:17:23.359 blanks of what we knew at the time. What is 0:17:23.400 --> 0:17:26.200 the fine here? What is the what is the defense 0:17:26.359 --> 0:17:29.879 APP or the prosecution, excuse me, after when it comes 0:17:29.920 --> 0:17:33.320 to if they win this case, do the investors benefit? 0:17:33.640 --> 0:17:37.480 What is Trevor Milton cast a great question. This is 0:17:37.480 --> 0:17:41.160 a criminal trial and he faces two counts of securities fraud, 0:17:41.240 --> 0:17:45.080 two counts of wire fraud. The most severe penalty for 0:17:45.119 --> 0:17:47.640 one of the counts is twenty five years in prison, 0:17:48.200 --> 0:17:51.919 and so I think most legal experts and based on president, 0:17:52.000 --> 0:17:54.760 he is unlikely, I found guilty, to face that much 0:17:54.760 --> 0:17:56.760 prison time. But the other way looking at it is 0:17:56.800 --> 0:17:59.480 the holistic picture that they were the poster child of 0:17:59.520 --> 0:18:02.680 the EB back wave. There are many commentators that would 0:18:02.680 --> 0:18:05.400 say this is kind of the shot across the bow 0:18:05.520 --> 0:18:10.960 from the government and regulators about the perils of investing 0:18:10.960 --> 0:18:13.399 in companies that when public virus back, and also the 0:18:13.440 --> 0:18:15.840 behavior some of those companies. We know there are many 0:18:15.920 --> 0:18:19.800 that have encountered financial trouble. Um You know. It's kind 0:18:19.800 --> 0:18:22.879 of an interesting tale of a market that's changed, the 0:18:22.960 --> 0:18:25.399 specific market. What's the timing here? I mean I know 0:18:25.480 --> 0:18:28.040 you're here in part to cover this trial. What's the 0:18:28.040 --> 0:18:31.320 expectation when we might get a kind of windingness up 0:18:31.320 --> 0:18:32.880 and when we get a ruling? Yes, so it's it's 0:18:32.880 --> 0:18:35.320 built to be a five week trial winding up around 0:18:35.320 --> 0:18:39.520 October fourteenth. That's at least what the judge brief the jury. 0:18:39.920 --> 0:18:42.040 You know, the government will need a few weeks to 0:18:42.080 --> 0:18:43.919 present their case and they have a long list of 0:18:43.920 --> 0:18:47.200 witnesses that they've been calling, Um you know, and that 0:18:47.240 --> 0:18:50.240 would leave about a week for the defense before closing arguments. 0:18:50.320 --> 0:18:52.960 And you know this is being really closely followed. That 0:18:53.080 --> 0:18:55.280 people want to know what happened to this guy, but 0:18:55.400 --> 0:18:57.760 many stuck with nickle. But you pointed out the stock. 0:18:58.080 --> 0:19:00.000 You know, the stock breached four dollars for the first 0:19:00.080 --> 0:19:03.359 US time. Um, you know, the background being that most 0:19:03.880 --> 0:19:07.440 SPECTA quad companies, Star trading attend. There's a share. So 0:19:07.520 --> 0:19:09.800 you're out of the money right if if you held 0:19:09.840 --> 0:19:13.440 onto your your shares. You know it's become in the background. 0:19:13.720 --> 0:19:16.040 Has Become a boring truck company and at a really 0:19:16.119 --> 0:19:17.960 hard time. I'm looking at some of the stockholders, shore 0:19:18.040 --> 0:19:21.800 Vanguard Group, nor just bank, Black Rock, h some state streets. 0:19:21.800 --> 0:19:24.360 So a lot of the some big big funds own 0:19:24.440 --> 0:19:25.879 this thing. So I'm sure there's a lot of folks 0:19:25.880 --> 0:19:28.800 paying attention, in addition to obviously all the retail uh 0:19:28.840 --> 0:19:31.879 investors as well. Ed Ludlow, thanks so much for joining us. 0:19:31.920 --> 0:19:37.640 There are we got in our studio here, Leo Kelly, 0:19:37.680 --> 0:19:40.080 CEO Verdon's capital visors. I have no interest in any 0:19:40.080 --> 0:19:42.040 of that. I just found out, first of all, he's 0:19:42.040 --> 0:19:43.960 a graduate of the College of New Jersey in Ewing, 0:19:43.960 --> 0:19:45.800 New Jersey, which I have. I grew up in that 0:19:45.880 --> 0:19:47.679 area so I'm very familiar with that. That school has 0:19:47.680 --> 0:19:50.320 gotten so good so quickly, but then you just worked 0:19:50.320 --> 0:19:53.760 a couple of summers at Bloomberg and Princeton. Well, you 0:19:53.760 --> 0:19:55.760 just found his new best friends. Yeah, exactly. I mean 0:19:56.040 --> 0:19:57.720 I can't believe he still doesn't have his badge or 0:19:57.720 --> 0:20:05.080 his badge doesn't work. Who says it doesn't? Late night 0:20:05.119 --> 0:20:07.760 snack there? You've got to get a free lunch sometimes. Exactly. 0:20:08.000 --> 0:20:10.840 All Right, Leo, you've been doing this wealth management stuff 0:20:10.840 --> 0:20:13.280 for a long time in Merrila Kelly wealth management and 0:20:13.359 --> 0:20:16.120 I got your own firm here. What do you talk 0:20:16.160 --> 0:20:17.719 to well, what do you say to your clients these 0:20:17.800 --> 0:20:22.879 days when they see their performance in yes one, great years, 0:20:23.359 --> 0:20:25.680 this year just brutal equities and fixed income. Where do 0:20:25.720 --> 0:20:26.760 you go? So what do you what do you tell 0:20:26.840 --> 0:20:30.159 your clients? Well, the first thing we tell them is 0:20:30.560 --> 0:20:36.240 that they have to remain calm as always and Um. 0:20:36.400 --> 0:20:38.560 But in the bigger picture we've been talking about this 0:20:38.640 --> 0:20:40.880 inflation and rising interest rates now for a couple of years. 0:20:41.280 --> 0:20:44.360 It's never made sense to me, Um, that we could 0:20:44.400 --> 0:20:47.119 put this much money, grow M to a percent a 0:20:47.240 --> 0:20:50.320 year and not have inflation. We didn't buy into the 0:20:50.400 --> 0:20:53.720 transitory we didn't buy into rates would remain low. So 0:20:54.320 --> 0:20:57.920 they've been prepared. I don't think you can be prepared 0:20:58.000 --> 0:20:59.720 for this, though. I don't think you'd be prepared for 0:20:59.800 --> 0:21:02.480 eight or nine. We're running up to four on the 0:21:02.560 --> 0:21:06.360 ten year Um and the result of this, in my opinion, 0:21:06.640 --> 0:21:09.280 all of the money being flooded into the system, is 0:21:09.400 --> 0:21:13.600 we're moving into a secular change in interest rates and 0:21:13.800 --> 0:21:15.520 that's going to change a lot of things in the market. 0:21:15.640 --> 0:21:18.440 So what people have relied on to be constants in 0:21:18.480 --> 0:21:20.760 the market in the past, it's all going to change 0:21:20.800 --> 0:21:24.360 and that's what we're talking to our clients about. Well, 0:21:24.600 --> 0:21:26.560 one of the things that we've been talking about throughout 0:21:26.600 --> 0:21:29.800 this show has been the C word capitulation, not clients Um, 0:21:30.200 --> 0:21:33.440 and I'm curious if you're in the camp that says 0:21:34.160 --> 0:21:37.600 to see a sustainable rebound in the stock market you 0:21:37.720 --> 0:21:40.600 have to see capitulation. And if you answers yes, tell 0:21:40.640 --> 0:21:42.960 me how we discover like, how you detect it. For 0:21:43.040 --> 0:21:45.920