1 00:00:03,960 --> 00:00:08,280 Speaker 1: Broadcasting live to New York Bloomberg eleven rio, through Washington, 2 00:00:08,360 --> 00:00:13,400 Speaker 1: d C. Bloomberg to Boston, Bloomberg twelve hundred to San Francisco, 3 00:00:13,520 --> 00:00:17,520 Speaker 1: Bloomberg nine to the country Sui's Exam Channel one nine 4 00:00:17,880 --> 00:00:21,400 Speaker 1: and around the globe the Bloomberg Radio plus Chappen Bloomberg 5 00:00:21,400 --> 00:00:27,319 Speaker 1: Got Gone. This is taking stock automobiles in focus from 6 00:00:27,480 --> 00:00:31,840 Speaker 1: VW earnings maybe not quite as bad as some had forecast, 7 00:00:31,920 --> 00:00:36,360 Speaker 1: but not great. And an annual meeting for Tesla him 8 00:00:36,400 --> 00:00:39,879 Speaker 1: with a lot of focus on the Giga factory, that 9 00:00:40,200 --> 00:00:44,479 Speaker 1: massive battery factory out in Nevada that's about open next month. 10 00:00:44,720 --> 00:00:46,919 Speaker 1: By the way, I'm Kathleen Hayes and he's Pim Fox. Yes, 11 00:00:47,000 --> 00:00:49,160 Speaker 1: so we'll be talking about folks Falcon reporting a profit 12 00:00:49,240 --> 00:00:52,279 Speaker 1: drop as it tries to grapple with that emission's scandal. 13 00:00:52,640 --> 00:00:54,680 Speaker 1: Right now, let's go to Charlie Pellett in the Bloomberg 14 00:00:54,680 --> 00:00:56,959 Speaker 1: news room for a Bloomberg Business flag and I thank 15 00:00:57,000 --> 00:00:59,720 Speaker 1: you Phim, thank you Kathleen. A down day for US equities. 16 00:00:59,760 --> 00:01:03,280 Speaker 1: This up they brought to you by Commonwealth Financial Network. 17 00:01:03,320 --> 00:01:06,319 Speaker 1: When it's time to change the conversation, talk with a 18 00:01:06,360 --> 00:01:09,880 Speaker 1: broker dealer r I A that's ready to listen. Call 19 00:01:10,160 --> 00:01:13,760 Speaker 1: eight six six four six to thirty thirty eight or 20 00:01:13,840 --> 00:01:17,720 Speaker 1: visit Commonwealth dot com to learn more more details about 21 00:01:17,760 --> 00:01:21,920 Speaker 1: that overnight flash crash in China. The China Financial Futures 22 00:01:21,959 --> 00:01:26,200 Speaker 1: Exchange says an investor who used Chinese stock index futures 23 00:01:26,200 --> 00:01:29,600 Speaker 1: for hedging triggered that flash crash. Contracts on the c 24 00:01:29,800 --> 00:01:32,400 Speaker 1: s I three hundred index do in June dropped by 25 00:01:32,440 --> 00:01:35,120 Speaker 1: the temper cent daily limit at ten forty two am 26 00:01:35,240 --> 00:01:38,520 Speaker 1: local time, before recovering almost all of their losses in 27 00:01:38,560 --> 00:01:41,440 Speaker 1: the same minute. In a statement, the exchange said the 28 00:01:41,440 --> 00:01:44,840 Speaker 1: sudden drop was triggered by the unidentified traders order for 29 00:01:44,959 --> 00:01:48,240 Speaker 1: three hundred ninety eight contracts at carrent market prices. They 30 00:01:48,240 --> 00:01:52,040 Speaker 1: were filled consecutively, which prompted the broader sell off. US 31 00:01:52,080 --> 00:01:55,480 Speaker 1: stocks slipping today SMP five hundred index pairing a third 32 00:01:55,560 --> 00:01:59,800 Speaker 1: straight monthly game. Carl Weinberg's chief economists at High Frequency Economics, 33 00:02:00,080 --> 00:02:02,720 Speaker 1: He says world economy has a long way to go 34 00:02:02,960 --> 00:02:06,360 Speaker 1: since the global financial crisis. Looking at world g D, 35 00:02:06,440 --> 00:02:09,120 Speaker 1: he that is hardly back to where it was when 36 00:02:09,160 --> 00:02:13,440 Speaker 1: we started this industrial production in Europe down twelve industrial 37 00:02:13,440 --> 00:02:16,680 Speaker 1: production in Japan down sent compared to where we were 38 00:02:16,720 --> 00:02:18,799 Speaker 1: in two thousand and eight. When we started this, there 39 00:02:18,800 --> 00:02:23,359 Speaker 1: were more people in Japan working in industrial production was 40 00:02:23,440 --> 00:02:26,440 Speaker 1: higher in nine than it was last month. And how 41 00:02:26,480 --> 00:02:28,880 Speaker 1: can we be talking about recovery or any prospect of 42 00:02:28,919 --> 00:02:32,359 Speaker 1: recovery with those kinds of figures out there? Gold is 43 00:02:32,440 --> 00:02:35,040 Speaker 1: up to a gain of two tenths of one percent, 44 00:02:35,080 --> 00:02:37,880 Speaker 1: crude oil down cents a drop of seven tenths of 45 00:02:37,960 --> 00:02:41,919 Speaker 1: one percent, to down down a drop of points seven percent. Now, 46 00:02:42,000 --> 00:02:45,240 Speaker 1: let's look at other news from around the world. Thank you, 47 00:02:45,320 --> 00:02:47,960 Speaker 1: Charlie from the Bloomberg News Room. I'm Ramie. In Essencio, 48 00:02:48,360 --> 00:02:52,399 Speaker 1: California Governor Jerry Brown is endorsing Hillary Clinton for president, 49 00:02:52,639 --> 00:02:55,120 Speaker 1: just a week before the state's primary. Brown says he 50 00:02:55,160 --> 00:02:58,360 Speaker 1: believes Clinton has the best shot at stopping Republican Donald Trump, 51 00:02:58,440 --> 00:03:02,960 Speaker 1: whose candidacy he calls dangerous. President Obama is being pressed 52 00:03:03,040 --> 00:03:06,680 Speaker 1: speed up efforts to help Syrian refugees. The Obama administration 53 00:03:06,720 --> 00:03:10,079 Speaker 1: had promised to resettle ten thousand Syrian refugees in the 54 00:03:10,160 --> 00:03:13,280 Speaker 1: United States, but eight months after the program start, only 55 00:03:13,360 --> 00:03:16,720 Speaker 1: twenty hundred have been admitted. It looks like North Korea 56 00:03:16,800 --> 00:03:19,959 Speaker 1: failed today at another missile launched. Bloomberg's Michael Barr has 57 00:03:20,000 --> 00:03:23,760 Speaker 1: the story. According to South Korea, North Korea attempted to 58 00:03:23,840 --> 00:03:26,960 Speaker 1: launch what may have been a ballistic missile. South Korea's 59 00:03:26,960 --> 00:03:30,000 Speaker 1: Defense ministry sent a text message saying the launch that 60 00:03:30,040 --> 00:03:34,160 Speaker 1: took place appears to have failed. Previously, North Korean rockets 61 00:03:34,160 --> 00:03:37,400 Speaker 1: have exploded in air. The Young Yang testing a ballistic 62 00:03:37,440 --> 00:03:40,960 Speaker 1: missile is in violation of the UN Security Council resolutions. 63 00:03:41,400 --> 00:03:44,640 Speaker 1: On April fifteenth, North Korea failed in a missile launch. 64 00:03:45,040 --> 00:03:48,960 Speaker 1: Michael Barr Bloomberg Radio. Iraqi forces who have been battling 65 00:03:49,000 --> 00:03:52,480 Speaker 1: their way into Fallujah repelled a counter attack by Islamic 66 00:03:52,520 --> 00:03:55,240 Speaker 1: State Today, the Iraqi troops entered the southern part of 67 00:03:55,240 --> 00:03:57,640 Speaker 1: the city with the help of US led air strikes. 68 00:03:58,200 --> 00:04:02,000 Speaker 1: And the first skyscraper at Related Companies twenty five billion 69 00:04:02,040 --> 00:04:05,800 Speaker 1: dollar Hudson Yards project open today. The tower in structure 70 00:04:05,800 --> 00:04:08,360 Speaker 1: brings in office workers to a once desolate area of 71 00:04:08,400 --> 00:04:11,600 Speaker 1: Manhattan's far West Side that's being transformed into a new 72 00:04:11,600 --> 00:04:14,640 Speaker 1: business enclave. The milestone is just the beginning four Related 73 00:04:14,640 --> 00:04:17,520 Speaker 1: which wants to keep tenant momentum. It calls Hudson Yards 74 00:04:17,560 --> 00:04:21,200 Speaker 1: the biggest private real estate development in US history. Global 75 00:04:21,200 --> 00:04:24,240 Speaker 1: News twenty four hours a day, poward by journalists in 76 00:04:24,279 --> 00:04:26,920 Speaker 1: more than one fifty news bureaus around the world. From 77 00:04:26,960 --> 00:04:29,800 Speaker 1: the Bloomberg Newsroom, I'm Rami in a cent cio, Charlie, 78 00:04:30,560 --> 00:04:32,840 Speaker 1: and we thank you, and again recapping a Mouve law 79 00:04:32,960 --> 00:04:36,280 Speaker 1: for US equities SMP five hundred index down eight now 80 00:04:36,320 --> 00:04:38,320 Speaker 1: to two thousand, that you want to drop of four 81 00:04:38,400 --> 00:04:42,240 Speaker 1: tenths of one percent. I'm Charlie Pealaton. That's a Bloomberg 82 00:04:42,279 --> 00:04:47,120 Speaker 1: business flash. This is taking stock with Kathleen Hayes and 83 00:04:47,200 --> 00:04:53,000 Speaker 1: Grim Box on Bloomberg Radio. Volkswagen it's emissions cheating, hits 84 00:04:53,120 --> 00:04:56,280 Speaker 1: profit at its biggest brand, of course, that would be 85 00:04:56,320 --> 00:04:59,120 Speaker 1: the VW. That is the latest news we got as 86 00:04:59,240 --> 00:05:03,840 Speaker 1: VwV Swagon Group reports earnings. But they're very thankful for 87 00:05:03,920 --> 00:05:07,560 Speaker 1: increases of four percent at both Scota and Audie and 88 00:05:07,680 --> 00:05:10,720 Speaker 1: ten percent at Porsche when you look at total deliveries. 89 00:05:11,000 --> 00:05:14,400 Speaker 1: Kevin Tina covers this for Bloomberg Intelligence. He's senior Auto's 90 00:05:14,400 --> 00:05:18,560 Speaker 1: analysts joining us from Princeton, New Jersey today. Kevin, welcome. Thanks. 91 00:05:19,480 --> 00:05:23,320 Speaker 1: So in terms of the expectations, I mean this is 92 00:05:23,320 --> 00:05:27,520 Speaker 1: if you look at profit at VW down eight six 93 00:05:27,560 --> 00:05:31,080 Speaker 1: percent in the first quarter, pretty bad. Is this? Is 94 00:05:31,120 --> 00:05:34,120 Speaker 1: this not a surprise or is it even more? Is 95 00:05:34,160 --> 00:05:36,360 Speaker 1: it just remind people how bad things are after this 96 00:05:36,480 --> 00:05:41,080 Speaker 1: cheating scandal? Yeah, I mean very dramatic drop um, you know, 97 00:05:41,120 --> 00:05:45,000 Speaker 1: and and and like you said, volume wise and margin wise, 98 00:05:45,080 --> 00:05:47,240 Speaker 1: profitability at some of the other brands a lot to 99 00:05:47,320 --> 00:05:51,800 Speaker 1: be thankful for, um that there is a diverse product portfolio, 100 00:05:52,000 --> 00:05:56,760 Speaker 1: regional diversity in terms of deliveries. So uh, it is 101 00:05:56,800 --> 00:06:00,080 Speaker 1: going to be a very long road, um and not 102 00:06:00,480 --> 00:06:04,360 Speaker 1: probably without an entire change in the strategy, maybe even 103 00:06:04,360 --> 00:06:08,240 Speaker 1: a move away from from diesel. Very dramatic, and it's 104 00:06:08,279 --> 00:06:11,320 Speaker 1: going to take time, but I think there's some some 105 00:06:11,760 --> 00:06:14,400 Speaker 1: silver lining there in the strength of some of these 106 00:06:14,440 --> 00:06:17,159 Speaker 1: other brands. Kevin, you want to talk about those brands 107 00:06:17,160 --> 00:06:19,040 Speaker 1: and then tell me what they're doing to repair, a 108 00:06:19,200 --> 00:06:22,560 Speaker 1: fix or buy back those six US vehicles that are 109 00:06:22,600 --> 00:06:26,200 Speaker 1: affected by all this, right, and and even once the 110 00:06:26,320 --> 00:06:29,320 Speaker 1: US issue is sorted out, and how they're going to 111 00:06:29,440 --> 00:06:31,680 Speaker 1: do that and what that winds up costing, whether that's 112 00:06:31,720 --> 00:06:35,080 Speaker 1: the eighteen billion or or more, and you know, then 113 00:06:35,120 --> 00:06:37,640 Speaker 1: you still have to roll through all the issues in Europe, 114 00:06:37,880 --> 00:06:42,680 Speaker 1: and I think him the biggest issue is that is 115 00:06:42,720 --> 00:06:46,000 Speaker 1: the question of whether diesel going forward is going to 116 00:06:46,040 --> 00:06:48,520 Speaker 1: be the strategy, and not just for VW but what 117 00:06:48,640 --> 00:06:50,919 Speaker 1: that means for the other European automakers that are so 118 00:06:51,000 --> 00:06:53,760 Speaker 1: dependent on the technology. You know, is this sort of 119 00:06:53,800 --> 00:06:57,080 Speaker 1: like the emissions or the pollution genie that's sort of 120 00:06:57,080 --> 00:06:59,400 Speaker 1: out of the tail pipe and just you're not going 121 00:06:59,440 --> 00:07:03,400 Speaker 1: to get it back in um when we see other 122 00:07:03,480 --> 00:07:08,560 Speaker 1: regions US specifically leaning towards hybrids, plug in hybrids and 123 00:07:08,600 --> 00:07:11,920 Speaker 1: electric vehicles, Uh, is that sort of the way that 124 00:07:12,080 --> 00:07:14,920 Speaker 1: the successful and growing automakers go in the future. So 125 00:07:15,000 --> 00:07:18,280 Speaker 1: this is not just about cleaning this mess. This is 126 00:07:18,880 --> 00:07:20,880 Speaker 1: and we'll hear more of this later in the month. 127 00:07:21,000 --> 00:07:25,240 Speaker 1: Is this a complete change of strategy for Volkswagen going forward? 128 00:07:25,840 --> 00:07:29,520 Speaker 1: As an analyst who's covered them for a while with that, 129 00:07:29,680 --> 00:07:32,160 Speaker 1: is that? Is it your sense if they had of 130 00:07:33,080 --> 00:07:35,320 Speaker 1: volkswag group came to you and said what should I do? 131 00:07:35,400 --> 00:07:37,680 Speaker 1: Would you say that's the move to take or would 132 00:07:37,680 --> 00:07:40,080 Speaker 1: you say, no, there's still a place for diesel. It's 133 00:07:40,120 --> 00:07:42,240 Speaker 1: it has been very popular in Europe, it's gotten more 134 00:07:42,280 --> 00:07:44,640 Speaker 1: popular in the U s and it's it could work well, 135 00:07:44,680 --> 00:07:46,680 Speaker 1: I think I think it could work. I don't think 136 00:07:46,720 --> 00:07:49,960 Speaker 1: it can work in the US. So depending on how 137 00:07:50,040 --> 00:07:54,240 Speaker 1: much UH important you want to put towards the US market, 138 00:07:54,240 --> 00:07:56,080 Speaker 1: and if you look at them here really have always 139 00:07:56,120 --> 00:08:00,440 Speaker 1: struggled to get above three market share in the US 140 00:08:00,560 --> 00:08:03,679 Speaker 1: and obviously you know, one of the top two largest 141 00:08:03,720 --> 00:08:06,160 Speaker 1: and actually for the court of the largest global automaker 142 00:08:06,160 --> 00:08:08,560 Speaker 1: in terms of deliveries. If you don't care about volume 143 00:08:08,560 --> 00:08:12,480 Speaker 1: in the US market, then Diesel UH probably can push 144 00:08:12,520 --> 00:08:15,720 Speaker 1: through in other regions. But if if they feel like 145 00:08:15,840 --> 00:08:18,640 Speaker 1: that the US market, in the North American market is 146 00:08:18,680 --> 00:08:21,680 Speaker 1: important to that long term growth, I think they have 147 00:08:21,760 --> 00:08:24,720 Speaker 1: to go in another direction. Obviously, Diesel here is you know, 148 00:08:24,760 --> 00:08:27,360 Speaker 1: one percent of the passenger vehicle market if not less 149 00:08:27,960 --> 00:08:31,280 Speaker 1: um and then you look at the success that Tesla 150 00:08:31,320 --> 00:08:34,079 Speaker 1: has had for for what that's worth, and even Toyota 151 00:08:34,160 --> 00:08:38,760 Speaker 1: with with katholeene hybrids and and the GM and Ford 152 00:08:38,800 --> 00:08:41,560 Speaker 1: with plug in hybrids, it just doesn't seem like Diesel 153 00:08:41,600 --> 00:08:43,720 Speaker 1: if it hasn't caught on by now, it's not going to. 154 00:08:43,920 --> 00:08:46,960 Speaker 1: So I think you have the value how you value 155 00:08:47,040 --> 00:08:50,520 Speaker 1: the US to to lay out the strategy going forward. Kevin, 156 00:08:50,559 --> 00:08:54,040 Speaker 1: Volkswagen reported net profits of the quarter that ended March 157 00:08:54,160 --> 00:08:58,040 Speaker 1: thirty one of two point five six billions, So they're 158 00:08:58,040 --> 00:09:01,800 Speaker 1: still making money. How they do in China? Yeah, China 159 00:09:01,920 --> 00:09:03,640 Speaker 1: was a little bit weak, and I think you know 160 00:09:03,840 --> 00:09:07,600 Speaker 1: also you look at all the things that they're dealing with, 161 00:09:07,679 --> 00:09:09,720 Speaker 1: you know, of their own making. In a lot of cases, 162 00:09:10,120 --> 00:09:12,760 Speaker 1: you know, you're still dealing with a very cyclical industry. 163 00:09:13,160 --> 00:09:17,040 Speaker 1: Um you're dealing with macroeconomic issues that are unique to 164 00:09:17,080 --> 00:09:19,600 Speaker 1: each of the countries and regions that they sell in. 165 00:09:19,760 --> 00:09:22,840 Speaker 1: So you look at the results for the core, some 166 00:09:22,920 --> 00:09:25,679 Speaker 1: of the brands were strong. Obviously the namesake, the VW 167 00:09:25,720 --> 00:09:27,640 Speaker 1: brand was very weak. But now you're gonna be dealing 168 00:09:27,640 --> 00:09:32,320 Speaker 1: with potential weakness and demand in their biggest market in China. 169 00:09:33,400 --> 00:09:37,360 Speaker 1: You know, some of the European markets, Germany specifically coming 170 00:09:37,400 --> 00:09:40,000 Speaker 1: back nicely. But again, by the time they work through 171 00:09:40,080 --> 00:09:43,560 Speaker 1: all the diesel emission scandal issues, you know, where is Germany? 172 00:09:43,640 --> 00:09:46,240 Speaker 1: Where is the US? Have we peaked? So there's a 173 00:09:46,280 --> 00:09:48,400 Speaker 1: lot of figure Kevin, you have to quickly ask you 174 00:09:48,440 --> 00:09:50,720 Speaker 1: though you got about the thirty seconds to answer, but 175 00:09:50,920 --> 00:09:54,640 Speaker 1: you're talking about plug ins and hybrids, Tesla's annual meeting 176 00:09:54,760 --> 00:09:58,400 Speaker 1: later today, the Model three, the Giga factory. What's going 177 00:09:58,440 --> 00:09:59,920 Speaker 1: to come out of that? What are you looking for 178 00:10:00,080 --> 00:10:03,040 Speaker 1: from the annual meeting? Well, you know he's not one 179 00:10:03,120 --> 00:10:06,400 Speaker 1: to uh follow the script and go according to the schedule. 180 00:10:06,440 --> 00:10:08,160 Speaker 1: I think the big news came out with the Model 181 00:10:08,200 --> 00:10:12,000 Speaker 1: three launch and then his update of his production timeline 182 00:10:12,040 --> 00:10:14,600 Speaker 1: after that. I'd be surprised if there was anything other 183 00:10:14,679 --> 00:10:18,240 Speaker 1: than reiterating the targets and believing that he can hit 184 00:10:18,280 --> 00:10:20,920 Speaker 1: them in the meeting today. Thank you very much for 185 00:10:21,000 --> 00:10:23,720 Speaker 1: spending time with us, Kevin Tun and his senior auto 186 00:10:23,760 --> 00:10:28,280 Speaker 1: analyst for Bloomberg Intelligence. Shares of Volkswoggen down about one 187 00:10:28,320 --> 00:10:31,840 Speaker 1: and a half percent in European trading. The stock is 188 00:10:31,840 --> 00:10:33,800 Speaker 1: down two and a half percent so far this year. 189 00:10:34,080 --> 00:10:37,840 Speaker 1: Shares of a Tesla right now, they are lower by 190 00:10:38,120 --> 00:10:40,439 Speaker 1: just about two tenths of or percent, down four to 191 00:10:40,520 --> 00:10:44,480 Speaker 1: two cents at twenty two and twenty two dollars and 192 00:10:44,600 --> 00:10:48,080 Speaker 1: sixty three cents. You are listening to Taking Stock. I'm 193 00:10:48,120 --> 00:10:51,400 Speaker 1: Pim Fox, my co host Kathleen Hayes, and this is 194 00:10:51,559 --> 00:11:03,080 Speaker 1: Bloomberg Radio Blubertaking Stock is brought to you by Tito Computing, 195 00:11:03,080 --> 00:11:05,520 Speaker 1: a new kind of I T solutions company for workflow, 196 00:11:05,520 --> 00:11:08,440 Speaker 1: mobility and infrastructure. Let them explain how their expertise can 197 00:11:08,480 --> 00:11:11,480 Speaker 1: help you gain greater business value. 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