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Speaker 2: This is Bloomberg Business Wait inside from the reporters and
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Speaker 2: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 3: All right, Well, Shares a Tesla our higher in the
Speaker 3: after hours right now as investors continue to digest those
Speaker 3: first quarter earnings numbers. Global vehicle inventory rose to twenty
Speaker 3: eight days. It's a huge jump from the fifteen days
Speaker 3: at the end of last quarter. Shares high right now
Speaker 3: by just about five percent. First quarter revenue coming in
Speaker 3: at twenty one point three billion dollars that was below
Speaker 3: estimates of twenty two point three billion dollars. That also
Speaker 3: a missed when it comes to EPs adjusted EPs, I
Speaker 3: should say that coming in at forty five cents versus
Speaker 3: estimates of fifty two cents.
Speaker 4: Shares A Tesla up about five and a half percent
Speaker 4: in the aftermarket. But also Tesla to accelerate the launch
Speaker 4: of more affordable models at getting a red sticky by
Speaker 4: our team here at Bloomberg. All right, so let's get
Speaker 4: to it with us Ross Gerber, president and CEO at
Speaker 4: Gerber Kawasaki Wealth and Investment Management, and also Bloomberg BusinessWeek
Speaker 4: columnist Max Chafkin Ross out there in Santa Monica, California.
Speaker 4: Max here in our Bloomberg Interactive Broker studio getting ready
Speaker 4: for another round of Tesla. Bingo will get into in
Speaker 4: just a moment. Ross investors like it. What do you
Speaker 4: make of this report looking backwards looking forwards?
Speaker 5: Well, I think the good part of the report, because
Speaker 5: this is really the only good part of the report,
Speaker 5: is them saying that they're going to accelerate the production
Speaker 5: of this next gen vehicle platform. And they were pretty
Speaker 5: vague about what their calling this or what Robotaxi is
Speaker 5: or is a model to coming, and I think that'll
Speaker 5: be clarified on the conference call. So you know, once again,
Speaker 5: we don't really watch after hours trading because he really
Speaker 5: doesn't represent all the participants and so, and we haven't
Speaker 5: seen the conference call yet, so we'll see how this
Speaker 5: docras over the next several months. But there really isn't
Speaker 5: any other good news in that report other than them
Speaker 5: saying they're going to accelerate production, even though they just
Speaker 5: fire all the people that are in charge of accelerating production.
Speaker 3: Hey Russ, remind everybody take a step back here, because
Speaker 3: Carol and I were looking at the terminal a little earlier.
Speaker 3: You've you know, you are a longtime Tesla bull until
Speaker 3: you weren't, and you were a longtime believer and have
Speaker 3: been a longtime believer in the company. You guys still
Speaker 3: own a substantial number of shares over at kerber Kawasaki.
Speaker 3: But what is your position right now in Tesla moving forward?
Speaker 5: So my position is that Tesla is a wonderful company
Speaker 5: that has enormous potential with the CEO who has become
Speaker 5: so divisive that people won't buy the cars. And that's
Speaker 5: why saying is just going to produce more cars doesn't
Speaker 5: address the real issue is why they're not selling cars today,
Speaker 5: and that's the issue that needs to be addressed that
Speaker 5: isn't being addressed. So as a shareholder, we have to
Speaker 5: assess what the future earnings potential of a company is
Speaker 5: based off what their business model is. And when we
Speaker 5: you know, we start investing in Tesla over ten years ago,
Speaker 5: and we've had a great run up until the purchase
Speaker 5: of Twitter, and so we've been lowering our position because
Speaker 5: what we feel is that Elon's behavior has hurt the
Speaker 5: brand in such a way that consumers actually don't want
Speaker 5: to buy a Tesla. It's just the best car on
Speaker 5: the road at the best price, so people buy the
Speaker 5: car reluctantly at this point.
Speaker 1: So I think, you know, we've got.
Speaker 5: These problems to solve, and I'm not sure if that
Speaker 5: will be addressed on the conference call today. And that's
Speaker 5: you know, And I don't like being called a Tesla
Speaker 5: bear because I actually think they could turn the company
Speaker 5: around pretty quickly if Elon changed his behavior and stopped
Speaker 5: attacking everybody.
Speaker 1: But I just don't think that's going to happen. And
Speaker 1: so so I.
Speaker 5: Think the bigger issue that isn't being addressed is doesn't
Speaker 5: matter how many cars Tesla makes if nobody will buy them.
Speaker 4: All right, So Max chaff can come on in. You
Speaker 4: guys do the Elon Inc. Podcast. You're constantly looking at
Speaker 4: what he says, what he does. You're looking at his
Speaker 4: kind of his assets, his portfolio, your initial thoughts on
Speaker 4: kind of the headlines.
Speaker 6: We got to yeah to kind of under Ross is
Speaker 6: saying something like this, but like the note about the
Speaker 6: new products is very vague. It doesn't say we're going
Speaker 6: to have a model too, and it's going to come
Speaker 6: out on this date, which is what investors, many investors
Speaker 6: have been hoping for. It says it sounds like it's
Speaker 6: saying I'm reading it correctly. They're going to try to
Speaker 6: essentially make the current models more affordable. Now that obviously
Speaker 6: could allow them to sell more cars. But it's a
Speaker 6: slightly different spin on things than what many people have
Speaker 6: been inspecting. The other thing is, as Ross is saying,
Speaker 6: you know, on a Tesla earning's day, what Elon says,
Speaker 6: and more importantly, how he says it is just as
Speaker 6: important as as what's in these numbers, because he is
Speaker 6: going to hopefully anyway clarify some of this. We also
Speaker 6: hopefully get a sense of like where things stand with robotaxi,
Speaker 6: where things stand with potential affordable cars, and investors seemed
Speaker 6: to react to based on his optimism, you know, a
Speaker 6: couple quarters ago, when he was in this kind of
Speaker 6: dowur mood, we saw the stock go down. So so
Speaker 6: it's like, do we get an optimistic version of Elon
Speaker 6: or the kind of very dour, pessimistic Elon.
Speaker 4: Well, I wonder if you have a question for Ross Max.
Speaker 6: Yeah, Ross, what is your reading on this, on this product,
Speaker 6: on this paragraph about the product?
Speaker 5: Well, I think you're dead right about the two things
Speaker 5: you just said. Number One, they're of course vague because
Speaker 5: of the legality of it.
Speaker 1: If they put this down and they don't do it right.
Speaker 5: And since nobody seems to know what Elon's going to do,
Speaker 5: and I'm sure that everybody understands that nobody within Tesla
Speaker 5: knows what the business plan is either, because they just
Speaker 5: don't at this point. But I think secondly, a lot
Speaker 5: of it will be how does Elon answer these questions
Speaker 5: from investors during the conference call?
Speaker 1: And what you said is right.
Speaker 5: If we have sort of a very positive Elon and
Speaker 5: he's refocused and he's going to be working at Tesla more,
Speaker 5: and you know, he can play the room right, maybe
Speaker 5: we get a little rally in the stock, but it
Speaker 5: doesn't change the fundamentals. If he doesn't play the room right,
Speaker 5: this becomes a blood bath. So you know, I'm just
Speaker 5: hoping that he understands the damage that he's done and
Speaker 5: starts to mitigate this versus diving in and sort of
Speaker 5: doubling down.
Speaker 6: It will be interesting to see if if Twitter comes
Speaker 6: up or sorry X comes up, you know, because there
Speaker 6: is this question in this sense that he's spent ge
Speaker 6: Whiz a lot of time talking about X, tweeting about X,
Speaker 6: doing X related things. There's even a potential or they're
Speaker 6: going to have a Grock integration inside of the Tesla's
Speaker 6: And I think that to people who are really bought
Speaker 6: into the ev story rather than the you know, Elon
Speaker 6: Musk genius story, which those are two important constituencies here,
Speaker 6: I think for Tesla Stock, you know, they would like
Speaker 6: to see him spend less time on his social media network.
Speaker 5: Yeah, well, it's not just less time, it's what he's saying,
Speaker 5: you know. It's like it's not the time, it's that
Speaker 5: what he's saying oftentimes is super divisive and basically racist.
Speaker 5: So it's like, it's really hard to sell products to
Speaker 5: people when the CEO says things that are really hurtful
Speaker 5: to people, including me for that matter.
Speaker 4: Now and we've talked with you about that absolutely ross.
Speaker 4: What could Elon say on the call, or Elon and
Speaker 4: Company say on the call that would make you more
Speaker 4: excited about the company, or once again say you know
Speaker 4: kind of owe Elon really well.
Speaker 1: If I had my dream come true.
Speaker 5: He'd say, I'm coming back to work at Tesla, because
Speaker 5: he basically doesn't work at Tesla, and he would say,
Speaker 5: I'm done tweeting all this garbage and politics. I'm going
Speaker 5: to really focus on advancing sustainable transportation and energy and
Speaker 5: that we're going to release this lower you know, priced
Speaker 5: car and.
Speaker 1: The strategy that we all bought into three years ago.
Speaker 5: You know, and the stop was at all time highs,
Speaker 5: and earnings were going up, you know, fifty hundred percent
Speaker 5: a year.
Speaker 1: You know, it was like it was like a different
Speaker 1: world than today.
Speaker 5: And it's amazing to me he doesn't understand this difference
Speaker 5: that that really is his responsibility. And so as a shareholder,
Speaker 5: I have to say it's extremely just stressing time because
Speaker 5: the valuation of Tesla is premised off all these great
Speaker 5: technological innovations, none of which have come to fruition yet.
Speaker 5: So his focus is one hundred percent what needs to
Speaker 5: be happening right now.
Speaker 3: Hey, Ross, I do want to just end with one
Speaker 3: last question about the cost of producing these vehicles. It
Speaker 3: seems like Tesla is doing everything I can to bring
Speaker 3: down the cost of producing these cars, the cost of
Speaker 3: goods sold to Are they what numbers do you want
Speaker 3: to see there?
Speaker 5: Well, they are, but their margins continue to go lower.
Speaker 5: If you look at the report, which I've only had
Speaker 5: a minute to look at, you know, their vehicle margins
Speaker 5: continue to go lower, their operating margins go lower, their
Speaker 5: net margins go lower. So they're able to lower the
Speaker 5: price of the car. But what they're not able to
Speaker 5: do is keep that going as fast as they're they're
Speaker 5: lowering the price of the vehicles, so it's still hurting
Speaker 5: them even though they're lowering the cost of the car,
Speaker 5: and it doesn't bring in a bigger market. But you're
Speaker 5: not creating any demand. And this is I have said
Speaker 5: it a hundred times. Every company in America average for
Speaker 5: a reason. People need to know why your products are superior.
Speaker 5: And all the Tesla people bought in Teslas, you know,
Speaker 5: So all these YouTubers can tweet all they want, but
Speaker 5: everybody wanted to Tesla bought a Tesla. So you've got
Speaker 5: to get new customers. And the new customers are being
Speaker 5: told that charging sucks and evs are bad and this
Speaker 5: and that, and Donald Trump says they're bad, and this
Speaker 5: is all they see all day and then It's like,
Speaker 5: why would they go buy a Tesla because there's not
Speaker 5: one ad anywhere that tells you how great the cars are?
Speaker 1: Because they are great.
Speaker 4: Right and you still own them right real quickly?
Speaker 7: Yes or no?
Speaker 1: Yeah, I do.
Speaker 5: I just don't understand why they don't tell people how
Speaker 5: great their vehicles are.
Speaker 4: All right, Ross Gerbert so appreciated. We know you've got
Speaker 4: to I think run over to our TV guys, President
Speaker 4: Ceot Germer Kawasak, so appreciate you joining us. Max Chafkin
Speaker 4: is staying with us a Bloomberg Business Week and we
Speaker 4: want to roll into the conversation.
Speaker 3: Ed Ludlow, Yeah, he's co host of Bloomberg Technology on
Speaker 3: Bloomberg TV. He joins us from the San Francisco Beer.
Speaker 3: I do want to note, Carroll, the Tesla first quarter
Speaker 3: automotive gross margin excluding regulatory credits is at sixteen point
Speaker 3: four percent.
Speaker 1: Yeah, for the quarter, stack.
Speaker 4: Up six point three percent in the aftermarket.
Speaker 3: Hey, I'd come on in here and explain why you
Speaker 3: think the stock is moving higher given that a lot
Speaker 3: of these numbers came in below estimates.
Speaker 1: Yeah.
Speaker 8: I think that the print and the numbers in after
Speaker 8: has had nothing to do with the quarter gone, everyone's
Speaker 8: looked past it. Frankly, what the shareholder deck outlines is
Speaker 8: almost line for line exactly what Danna and I outlined
Speaker 8: in the Big Take on Sunday, which is on the
Speaker 8: affordable ev A big body of work had already been
Speaker 8: done at the component and production process level, and Tesla
Speaker 8: is moving forward with a more affordable lineup of evs
Speaker 8: based on that technology. It was really misunderstood. It's like
Speaker 8: the world was banking on the Honda Civic of evs
Speaker 8: and Tesla to be the one to bring it. But
Speaker 8: my understanding from sources that was never the case. And
Speaker 8: if you read the shareholder deck, they spell it out
Speaker 8: pretty clearly. They've looked at this kind of more holistically
Speaker 8: and there will be more affordable evs coming late twenty
Speaker 8: twenty five. Caution caveat Musk has often miss his own deadlines.
Speaker 8: You know that. I always say that, But it's like
Speaker 8: a sumthing for everyone. Yeah, you know that, And and
Speaker 8: that was me protecting myself from all the people who
Speaker 8: may go after me on social media. But explicitly it
Speaker 8: states that they are working on a purpose built robotaxi.
Speaker 8: And so we went into this saying if you're a
Speaker 8: Wall Street institutional giant who really wanted to see an
Speaker 8: affordable EV. Or you're the technology investor or the retail
Speaker 8: investor that's kind of all in on the Tesla thesis
Speaker 8: around autonomy. You got that as well, and really I
Speaker 8: think the market adjoining in hands to play that in
Speaker 8: after hours.
Speaker 6: You know, the question is like what is an affordable
Speaker 6: EV And I think one of the things one of
Speaker 6: the ways that Elon Musk could clarify is to is
Speaker 6: to sort of say that, you know, he over the weekend,
Speaker 6: amid all this speculation, he tweeted a screenshot showing the model.
Speaker 6: Why priced at twenty nine thousand dollars sounds pretty affordable.
Speaker 6: Course that includes tax credit, which you know not everybody gets,
Speaker 6: and a and like a five thousand dollars of assumption
Speaker 6: of gas savings. So so like you could imagine a
Speaker 6: situation where he tries to argue, like, look, we're going
Speaker 6: to cut a bunch of costs out of this thing,
Speaker 6: and we're going to make it affordable as is, like
Speaker 6: we don't need an additional model, which is a really
Speaker 6: intriguing proposal. That is a huge, would you know, pretty
Speaker 6: big departure from how the car industry normally does things
Speaker 6: and in certain ways, like it is saying, maybe not
Speaker 6: that surprising, right, that's kind of you know, Elon Musk
Speaker 6: has long model this company after Apple. You know, Apple
Speaker 6: sells a very you know, modest product line. All the
Speaker 6: products kind of look the same, They're all kind of expensive.
Speaker 6: You know, you could have sort of imagine his effort
Speaker 6: to do this and and you know, who knows if
Speaker 6: it's going to work, but it definitely is outside of
Speaker 6: what you know, a normal sort of car company, nor
Speaker 6: normal car company analyst would expect to see, would want
Speaker 6: to see.
Speaker 4: You know, guys, I'm looking at a live blog Creik
Speaker 4: Canter weighing in our BNF Electric Vehicle Analysts and saying,
Speaker 4: you know where he talks about these new models and
Speaker 4: talks about I don't know, new models ahead of our
Speaker 4: previously communicated startup production in the second half of twenty
Speaker 4: twenty five, accelerating that launch, he writes by including these
Speaker 4: statements in the investor deck, it shays Tesla has identified
Speaker 4: that a lack of new models is a problem, but
Speaker 4: are there actually actions being taken or just a continued
Speaker 4: lack of clarity? And I guess you know, I'm going
Speaker 4: to go back to you Max for a second. It
Speaker 4: feels like, right, we want a little bit more specifics, right,
Speaker 4: and what this means?
Speaker 6: Yeah, again, it almost it does have the feel of
Speaker 6: a deck that's being written for maximum optionality.
Speaker 1: And you know, this is all happening very very quickly.
Speaker 6: You know, we saw we've seen Elon Musk get re engaged.
Speaker 6: It appears in any case, you know, connected this layoff
Speaker 6: in a way that has seemed, at least according to
Speaker 6: you know, the reports that the Bloomberg has published that
Speaker 6: Ed has has written very hasty, and so you do
Speaker 6: wonder like maybe they are trying to figure this out
Speaker 6: as we speak, and who knows if we're definitely going
Speaker 6: to get that level of clarity on the call from
Speaker 6: Elon Musk, although given Elon m he cannot help himself
Speaker 6: but sort of say controversial things. You know, he's got
Speaker 6: that sort of trump characteristic of being sort of really
Speaker 6: really honest sometimes to a fault, he may, you know,
Speaker 6: spout something off that could send the stock in any
Speaker 6: number of directions.
Speaker 3: And to that point, you know, what's what are you
Speaker 3: looking for on the call at if you're when you're
Speaker 3: tuning in the call.
Speaker 8: So so I don't want to be inconsistent. You know,
Speaker 8: I posted in the blog before we kick things off clarity.
Speaker 8: But actually, to be fair, I think that Tesla has
Speaker 8: given us one single line of clarity. So I'm just
Speaker 8: going to read it. This update may resolve in a
Speaker 8: result in achieving less cost reductions than previously expected. So
Speaker 8: Carol read out the section in which they outline the explanation.
Speaker 8: There will be multiple affordable models, but I think that
Speaker 8: the market, and indeed because Elon Musk kind of guided
Speaker 8: us there, was thinking this will be a brand new model,
Speaker 8: maybe it will be called M two, maybe it will
Speaker 8: specifically cost twenty five thousand US dollars. I think in
Speaker 8: that single line of the shareholder deck on page ten,
Speaker 8: they're saying it will be less expensive than the average
Speaker 8: cost of a while or three. Now it will not
Speaker 8: be twenty five thousand dollars. And so now we go
Speaker 8: to the big picture clarity, how many of these things
Speaker 8: we build and what is the strategy with that visa
Speaker 8: v ROBOTAXI because they all occupy the same physical production
Speaker 8: space in Austin. Based on our understanding, I also would
Speaker 8: think maybe the tone of Elon Musk Tim to answer
Speaker 8: your question. I thought he'd be a bit combative and frazzled. Yeah,
Speaker 8: now I just don't know.
Speaker 4: Wait, wait surprised? All right, Edlerler, We're gonna let you
Speaker 4: go because we know you've got a full play to continue.
Speaker 4: But of course Bloomberg Technology co host ed Ludlow. But
Speaker 4: we got to talk about with Max final minute here
Speaker 4: or so Elon bingo.
Speaker 6: Right, you know again, I've talked about this three months ago.
Speaker 6: This is a thing that many Tesla watchers, balls bears,
Speaker 6: everybody in between Elon Musk, super fans, Elon Musk's haters
Speaker 6: tend to do, which is to kind of create a
Speaker 6: bingo card and look for some of his catchphrases. So
Speaker 6: we at the Elon Inc. Podcast, we've got a new
Speaker 6: episode out right now and we have this bingo card.
Speaker 6: Just want to flag a few items. A horse that
Speaker 6: would be one.
Speaker 1: Now.
Speaker 6: Elon Musk has said that anyone who's driving a non
Speaker 6: autonomous card, not a ROBOTAXI, it'll be like driving a
Speaker 6: horse compared to a car. So see if he tries
Speaker 6: that line on us, a few others and to Grock
Speaker 6: and for reasonably optimistic, he's often reasonably optimistic about lots
Speaker 6: of things. So so yeah, lots of fun to be
Speaker 6: had here and we'll see if anyone gets bingo.
Speaker 4: It's a fun card hopefully to get you.
Speaker 3: Back in three months and also earlier than three months.
Speaker 3: I'll be sure to check out the Elon Inc. Podcast
Speaker 3: wherever you get your podcast. That's Max Chafkin, a columnist
Speaker 3: for Bloomberg business Week.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 4: Yeah, there's a lot going on today right and as
Speaker 4: we try to keep you certainly up to date on
Speaker 4: what's going on in DC, and it all has to
Speaker 4: do with the ninety five billion dollars in emergency supplemental
Speaker 4: funding that would be provided as we've been talking about
Speaker 4: for Ukraine, Israel and also the Indo Pacific region under
Speaker 4: that measure working its way right now on the Senate floor.
Speaker 4: The measure would also require TikTok's Chinese owner to divest
Speaker 4: the video sharing app impost sanctions on Iran and sees
Speaker 4: Russian assets. So there's a lot of pieces, but the
Speaker 4: big one really has to do with military aid, in
Speaker 4: particular almost sixty one billion for Ukraine team.
Speaker 3: Well, let's get to the interview. Angelas Stan is a
Speaker 3: Russia and foreign policy expert. She's senior Fellow at Brookings Institution,
Speaker 3: also a former National Intelligence officer for Russia and Eurasia
Speaker 3: at the National Intelligence Council, and you also served in
Speaker 3: the Office of Policy Planning at the US Department of State.
Speaker 3: She's the author of the twenty nineteen book Putin's World,
Speaker 3: Russia Against the West and With the Rest. She's also
Speaker 3: Professor Emerita of Government and Foreign Service at Georgetown. She
Speaker 3: joins US from Washington, DC.
Speaker 4: Yeah, and she's been a go to throughout the Ukraine
Speaker 4: Russian War. So Angela, good to have you here with US.
Speaker 4: Ukraine President Zelenski telling NBC's Meet the Press over the
Speaker 4: weekend that this US support quote will really strengthen the
Speaker 4: armed forces of Ukraine and that now we would have
Speaker 4: all the chance to stabilize the situation. From your perspective,
Speaker 4: how important is this US measure from a financial perspective,
Speaker 4: military perspective, and also from a show of support perspective.
Speaker 7: So I think it's crucially important on all of those campts.
Speaker 7: This vote has been six months in the making, and
Speaker 7: in those six months, the Russians have made gains, particularly
Speaker 7: in the last few months, and the Ukrainians have literally
Speaker 7: been running out of ammunition and also air defenses. So
Speaker 7: what they really need is the artillery and they need
Speaker 7: the air defenses. And frankly, if this vote had not
Speaker 7: taken place, and if Ukraine doesn't get the assistance, then
Speaker 7: I think their prospects would look pretty dim by the
Speaker 7: end of the year. If this all goes through, they
Speaker 7: have a fighting chance, if you like, to continue pushing
Speaker 7: back against the Russians and to do better in this
Speaker 7: war than they have been doing for the past six months.
Speaker 3: A fighting chance. But what would you say to critics
Speaker 3: who say that even with this funding, you're just delaying
Speaker 3: the inevitable of Russian win here.
Speaker 7: I don't think it's inevitable. Our European allies have also
Speaker 7: been stepping up and supplying more weapons, and they're financially
Speaker 7: doing more for Ukraine than we are. European Union with
Speaker 7: a fifteen billion a fifty billion euro financial instrument just
Speaker 7: a few months ago money that they've given to Ukraine.
Speaker 7: So it's not inevitable if one believes that at some
Speaker 7: point there will be a negotiation, and there will be
Speaker 7: There'll have to be some kind of a settlement over territory.
Speaker 7: The Ukrainians can st gains with our assistance. And don't forget,
Speaker 7: we should never forget. Eighty percent of this money will
Speaker 7: go to US businesses and US jobs for people manufacturing
Speaker 7: those weapons.
Speaker 2: Right.
Speaker 4: We just talked with that Joe Matthew about replenishing the
Speaker 4: US defense dockpiles that have certainly been coming down as
Speaker 4: a result of this support. How is Ukraine doing in
Speaker 4: this fight? I feel like we've talked to you so
Speaker 4: many times about kind of where we are. Do we
Speaker 4: see an ending this year? Do we see an ending
Speaker 4: anytime soon?
Speaker 7: I don't know.
Speaker 4: How do you see it at this point?
Speaker 7: Well, so, as I said, it's been, Ukraine has suffered
Speaker 7: some reversals in the past few months. Russians have taken
Speaker 7: a bit more territory. The Ukrainians really have a manpower
Speaker 7: shortage now, so a major challenge for Zelenski is to
Speaker 7: mobilize more young men. They've lowered the draft gage now
Speaker 7: from twenty seven to twenty five. Certainly they can go
Speaker 7: on fighting this year and into next year. What happens
Speaker 7: after that really is anyone's guess. It depends also whether
Speaker 7: there's going to be more US assistance next year, which
Speaker 7: we don't know about. But the Russians seem to be
Speaker 7: doing pretty well now, and their economy is on a
Speaker 7: war footing, and they're just manufacturing weapons at a very
Speaker 7: high rate. And of course they're getting drones from Iran,
Speaker 7: and they're getting ammunition from North Korea, and the Russians
Speaker 7: do have more men that they can put in this
Speaker 7: fight than the Ukrainians do.
Speaker 3: On the US front. What did you make of the
Speaker 3: change in position of House leadership, Professor? The idea that
Speaker 3: well that the Speaker was against it until he wasn't right.
Speaker 7: I think Speaker Johnson listened to a lot of people.
Speaker 7: We know that he got briefings from the CIA director
Speaker 7: William Burns about just what the situation was actually like
Speaker 7: and how dire it was for the Ukrainians. He talked
Speaker 7: to a number of top Republicans, as we know in
Speaker 7: the Senate, starting with Mitch McConnell there and the people
Speaker 7: who were very much in favor of this assistance. He
Speaker 7: talked to Ukrainian evangelicals who managed to tell him that
Speaker 7: what Marjorie Taylor Green had said about Christian's being persecuted
Speaker 7: in Ukraine is just not true. They gain them. So
Speaker 7: he talked to a wide variety of other people, and
Speaker 7: in the end, I think the most important thing maybe
Speaker 7: was going to mar Lago and meeting with former President Trump,
Speaker 7: who himself understood that he didn't really want there to
Speaker 7: be a Russian victory, particularly if he were then in
Speaker 7: the White House, and therefore, despite his earlier opposition, President Trump,
Speaker 7: he was in favor of it as long as some
Speaker 7: of it is alone, and some of this money, I
Speaker 7: think nine billion of it is alone, but I should
Speaker 7: say it's a forgivable loan.
Speaker 4: Exactly exactly How are you thinking about Vladimir Putin at
Speaker 4: this point and how he could possibly end this war?
Speaker 4: Does he have to save face.
Speaker 7: And what his.
Speaker 4: Ambitions still are when it comes to his country and
Speaker 4: its ambitions.
Speaker 7: Yeah, Well, the Kremlin is furious about the vote in
Speaker 7: the House, and they're furious about this assistance. We know
Speaker 7: that there was an emergency meeting in the Croun and
Speaker 7: very late at night after the House passed the bill.
Speaker 7: I don't think the Putin's ambitions in Ukraine have changed.
Speaker 7: He still wants Russia to dominate Ukraine, and he still
Speaker 7: wants there to be regime change in Kiev. He may
Speaker 7: understand now that it's going to be much more difficult
Speaker 7: to do, and he can always tell his people that
Speaker 7: Russia has been victorious. He could settle for something less
Speaker 7: than the maximum demands, but that would involve territory that
Speaker 7: Russia has already taken since February of twenty twenty two.
Speaker 7: He might not be willing to give any.
Speaker 1: Of that up.
Speaker 7: So with them, I think until this House vote was passed,
Speaker 7: the Russian thought that they were really in the home
Speaker 7: stretch of winning this war. I think now they have
Speaker 7: to reevaluate that.
Speaker 4: But I mean, in terms of ambitions beyond Ukraine, can
Speaker 4: we think, do you still think that in president Vladimir
Speaker 4: Putin Angela might have some ambitions beyond that?
Speaker 7: Only no doubt does?
Speaker 9: I mean?
Speaker 7: I think the next country would be Moldova, which has
Speaker 7: a rather fragile political system and where we know that
Speaker 7: the Russians definitely have ambitions. The Baltic States and Poland
Speaker 7: are obviously very concerned. I don't think it would be
Speaker 7: possible for Russia to do another major invasion anytime of
Speaker 7: a different country anytime soon. But it can also chip away,
Speaker 7: particularly through the use of disinformation or in the case
Speaker 7: of Moldova, by supporting and funding pro Russian parties that
Speaker 7: will undermine the political system there. But certainly, as long
Speaker 7: as he's in the Kremlin, I don't think he's going
Speaker 7: to give up any of these ambitions.
Speaker 3: So you know, we have been speaking to you, doctor
Speaker 3: Sten many times over the last two plus years about
Speaker 3: Russia's invasion of Ukraine. Given where we are, where we
Speaker 3: are today, what is your realistic view on how it
Speaker 3: could And you did say that Putin might not go
Speaker 3: as far as regime change and actually taking over the
Speaker 3: entire country. But what's a realistic way for our audience
Speaker 3: to understand how we could see an end here?
Speaker 7: Well, there could be there would be an end to
Speaker 7: it if both sides, first of all, agree that it's
Speaker 7: time to negotiate, and neither side agrees on that at
Speaker 7: the moment, and if Ukraine, the Ukrainian side is willing
Speaker 7: to accept a territorial settlement that falls short of their
Speaker 7: maximum goals which of course is taking back all territory
Speaker 7: that Russia has occupied since twenty fourteen, And if the
Speaker 7: Russians were willing, if the Kremlin were willing to accept
Speaker 7: a settlement that again falls short of their maximum goals,
Speaker 7: which is taking over all of Ukraine. But I think
Speaker 7: what we would see would be much more a ceasefire,
Speaker 7: and then you might not it might be a Korean
Speaker 7: situation where you actually don't have a treaty between the
Speaker 7: two sides, but you have de facto ceasefire. But then
Speaker 7: you would have to have troops, you know, ensuring that
Speaker 7: the ceasefire isn't broken. And I think the Ukrainians would
Speaker 7: have to get pretty strong security guarantees from all of
Speaker 7: the major Western countries to bolster them, to arm them,
Speaker 7: to try and deter any future Russian invasion.
Speaker 4: Angela, how do you think about what happened in the
Speaker 4: US election, who is ultimately in the White House and
Speaker 4: what that means potentially this war is still going on,
Speaker 4: what it might mean.
Speaker 7: Well, so I think if President Biden is reelected, you know,
Speaker 7: there will be continued support for Ukraine. Will the US
Speaker 7: be willing to do more? Will it be willing to
Speaker 7: supply Ukraine with the range of weapons that will actually
Speaker 7: reach deep into Russian territory.
Speaker 1: That's a question.
Speaker 7: If President Trump wins the election, he said that he
Speaker 7: would end the war quickly. We'll see whether that happens.
Speaker 7: But I think even if if he were instrumental in
Speaker 7: ending the war, I presume that a Trump administration would
Speaker 7: want to have a settlement in which Ukraine isn't completely
Speaker 7: defeated and Russia can say that it won. I'm not
Speaker 7: sure that that would be in their interest or in
Speaker 7: the interests of the United States. So I'm not sure
Speaker 7: how they would do that, but I think that would
Speaker 7: that's ultimately determined what they do.
Speaker 3: That's my question, doctor sent Short of actually using American force,
Speaker 3: how does the US and a war.
Speaker 7: Well, I mean, if the Trump administration were to say
Speaker 7: to Ukraine, Okay, we're cutting off all funding, and if
Speaker 7: the Europeans began to cut off their funding, then of
Speaker 7: course it would be very difficult for the Ukrainians to
Speaker 7: continue fighting, although they would fight as long as they
Speaker 7: could with whatever they had now. So that's one scenario,
Speaker 7: which would be to force them to the negotiating table,
Speaker 7: but that would take some time too.
Speaker 4: Hey, just to recap everybody. We are, of course talking
Speaker 4: with the Angela Stent Senior fell at the Brookings Institution.
Speaker 4: But again, just moments ago, the US Senate has enough
Speaker 4: votes to advance the ninety five billion dollar aid package
Speaker 4: providing funding to Ukraine, Israel, and Taiwan. The vote to
Speaker 4: limit debate and move to final passage as soon as
Speaker 4: today is though ongoing, and as we've mentioned also, there
Speaker 4: were four pieces, if you will, to this measure. The
Speaker 4: package includes a measure that would force ByteDance to divest
Speaker 4: its ownership of TikTok or face a band here in
Speaker 4: the United States. But again, as we talked about with
Speaker 4: Joe Matthew earlier, this is very key in kind of
Speaker 4: basically putting an end to a lot of the debate
Speaker 4: that was happening on the floor and moving it along.
Speaker 3: So it raises the question for you, doctor stan about
Speaker 3: if you think that this bill, potential bill, this measure
Speaker 3: goes far enough.
Speaker 7: I think it goes far enough. So far, yes, I mean,
Speaker 7: if we're going to supply Ukraine with long range missiles,
Speaker 7: which we are, I do know that we already have
Speaker 7: some weapons over the border in Poland. President Biden to
Speaker 7: in Zelensky on Monday that some of those weapons can
Speaker 7: get to Ukraine very quickly as long as he gets
Speaker 7: the legislation on his desk to sign it. But I
Speaker 7: think hopefully it's not the last assistance package that they
Speaker 7: will be for Ukraine.
Speaker 4: All Right, Kurn leave with there as always keeping us
Speaker 4: up to date on this and really giving us some perspective.
Speaker 4: Angela Stent, Senior fellow at the Brookings Institution. Her book
Speaker 4: Putin's World, Russia against the West and with the rest
Speaker 4: former policy and intelligence official joining us there. From the
Speaker 4: nation's capital.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Apple car
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Speaker 9: Well.
Speaker 3: We spent a good portion of our program earlier talking
Speaker 3: about the sweeping foreign aid package making its way through
Speaker 3: the capital, with emergency supplemental funding for Ukraine, Israel in
Speaker 3: the Indo Pacific region. Another part of the measure would
Speaker 3: also require TikTok Chinese owner to divest the video sharing app,
Speaker 3: and that's where we want to go.
Speaker 4: Now, Yeah, we do, and we've got a great roundtable
Speaker 4: to do it. Bloomberg News Technology reporter Alex Barrinka and
Speaker 4: Bloomberg Opinion US Technology columnist Dave Lee are both here
Speaker 4: with us. Both of them have been all over this
Speaker 4: story from the very beginning. Alex joining us out there
Speaker 4: in our La Bureau Davis right here in our Bloomberg
Speaker 4: Interactive Broker studio. Alex, let me start with you. We've
Speaker 4: been talking so much about this measure making its way
Speaker 4: through the Senate through lawmakers. It does have this provision
Speaker 4: for TikTok and a band. Specifically, let me just go
Speaker 4: to it sanctions the TikTok sanctions Russian assets other language.
Speaker 4: That's kind of the other fourth chunk of it. Long
Speaker 4: way though before we would see TikTok band here in
Speaker 4: the United States.
Speaker 10: Certainly, if this bill does get signed into law, which
Speaker 10: a lot of folks who are watching the progression of
Speaker 10: it think will happen as soon as this week, there
Speaker 10: would be about a year for byte Dance to have
Speaker 10: some kind of separation from TikTok. That is, Byte Dance,
Speaker 10: TikTok's Chinese parent company who under this law would be
Speaker 10: forced to basically sell its stake. It is a company
Speaker 10: in a foreign adversary country. China has laws that potentially
Speaker 10: can allow for data from byte Dance to be seen
Speaker 10: by the Chinese government. Those are the heart of the
Speaker 10: concerns from the Senate. But I will tell you if
Speaker 10: this law does pass and does force byte Dance to
Speaker 10: go through some separation, that's not the end of the fight.
Speaker 9: Our sources familiar.
Speaker 10: With the thinking both that Bite Dance and TikTok have
Speaker 10: said that this is going to head to the courts
Speaker 10: first before Byte Dance will be willing to just easily
Speaker 10: throw up its hands and say, hey, yeah, sure we'll
Speaker 10: get rid of this really valuable asset.
Speaker 4: Yeah, well, you've got one hundred and seventy million US users.
Speaker 4: You don't just walk away from it. Dave, let's bring
Speaker 4: you into this. Should there even be a fight at all,
Speaker 4: because we do wonder about, you know, is the US,
Speaker 4: as you write in your column, you know, a little
Speaker 4: bit being you know, hypocritical in terms of the pushback
Speaker 4: against TikTok. How are you seeing it? How are you
Speaker 4: thinking about it?
Speaker 9: Well?
Speaker 11: I think one of the big questions about how this
Speaker 11: entire episode has happened, is, you know, the nature of
Speaker 11: which this has been very very quickly moved through the process,
Speaker 11: through the House, through the Senate, as we've just seen today,
Speaker 11: without much scrutiny of what exactly the concern about TikTok is.
Speaker 11: Now there's you know, there's one framing of the app
Speaker 11: as being and I think I described it this way
Speaker 11: and the pieces as like a coiled spring, right, a
Speaker 11: method by which it's China. Should they ever want to
Speaker 11: be able to sort of exert this extreme influence over
Speaker 11: many people in America one hundred and seventy million users,
Speaker 11: many of them young users as well, that might be
Speaker 11: receptive to certain messaging. However, we haven't actually seen evidence
Speaker 11: of that happening. And while we've heard a lot of
Speaker 11: discussion around how senators and representatives have had these briefings,
Speaker 11: these kind of behind closed doors briefings, I think it's
Speaker 11: going to take a little bit more to convince the
Speaker 11: public that this was a move done for those reasons.
Speaker 11: And also, as we're just hearing from from Alex you know,
Speaker 11: this is going to go to the courts, and the
Speaker 11: question there is going to be why Is this not
Speaker 11: something that tramples the free speech rights of the user
Speaker 11: of TikTok? What is the national security argument?
Speaker 3: Let's see it well, Alex, how would proponents of a
Speaker 3: bill to ban TikTok in the US respond to what
Speaker 3: Dave was just talking about? What is the national security
Speaker 3: argument here?
Speaker 9: Like he said, it's.
Speaker 10: Been kind of a trust us its scary type of argument.
Speaker 10: You've heard folks say that, oh, the government could get
Speaker 10: its hands on sensitive user data, things like your name,
Speaker 10: your address, what you're interested in, where your location is.
Speaker 10: They also have gone down this path, like Dave was
Speaker 10: talking about, around influence, saying, hey, well the Chinese government
Speaker 10: could influence what these vulnerable young minds could see. But
Speaker 10: on both sides of those issues, we haven't heard a
Speaker 10: lot from lawmakers. We've actually heard also from some lawmakers
Speaker 10: who have been in these closed door briefings who said
Speaker 10: what they're hearing is really similar to their experience actually
Speaker 10: on other social media apps who are not owned by
Speaker 10: a Chinese parent company. As this does go to the courts,
Speaker 10: I think Dave's question is the right one. When are
Speaker 10: we going to see the proof? And is that the
Speaker 10: right venue? I will remind you guys. I think we
Speaker 10: talked about it a month ago when we published the
Speaker 10: story and Business Week. There was a nineteen sixty five
Speaker 10: Supreme Court case where the US Postal Service was trying
Speaker 10: to limit Chinese propaganda going to American users, and Scotis
Speaker 10: actually ruled that Americans have every right to see Chinese
Speaker 10: propaganda and the government cannot intervene. So depending on kind
Speaker 10: of which legal battle lands, where there's an expectation that
Speaker 10: there could be several different arguments that are pushed against
Speaker 10: this bill. If it's signed into law, it might be
Speaker 10: we might see some onus on the government to sort
Speaker 10: of justify some of these things, depending on what TikTok
Speaker 10: or other plaintiffs like creators or merchants, whoever ends up
Speaker 10: in those legal battles, whatever argument they bring forward, we
Speaker 10: might need to see some proof for the judicial system
Speaker 10: to work things out.
Speaker 4: David, you know, I also do wonder this whole li.
Speaker 4: I feel like freedom of speech is just really a
Speaker 4: big issue we're trying to kind of grapple with in
Speaker 4: the US with it or globally really in a social
Speaker 4: media world. Having said that, you know, I'm trying to
Speaker 4: figure out what the real issue is it is it
Speaker 4: that China can just peep into things that have access
Speaker 4: to the information. As you say, China could save itself
Speaker 4: a lot of time and effort by buying America's data
Speaker 4: from the many shady brokers happy to sell it to them.
Speaker 4: So there's a lot of information already out there. And
Speaker 4: to be fair, many would argue the US government also
Speaker 4: is tapping into things and accessing a lot of data
Speaker 4: on its adversaries.
Speaker 1: Yes.
Speaker 11: Absolutely, And you know one of the parts of this
Speaker 11: debate that comes up is that you know, China doesn't
Speaker 11: allow US apps to to become popular. Yeah, deliberation become
Speaker 11: popular in China. So you know there is this sort
Speaker 11: of back and forth here on this. I argue in
Speaker 11: the column that you know, America likes to think it
Speaker 11: holds itself to a higher standard than China on these
Speaker 11: kind of things, which is which you know historically has
Speaker 11: been true. But you know, the question of user data,
Speaker 11: a lot of it comes down to this. The algorithm
Speaker 11: that TikTok hats, right, and this is you know, the
Speaker 11: most lucrative algorithm in the world. And it's interesting that
Speaker 11: even if TikTok was to be sold to a US
Speaker 11: owner China has signaled that the algorithm wouldn't be part
Speaker 11: of that sale, and so the question might then be, well,
Speaker 11: use what value is the app? Anyway, even if it
Speaker 11: was to be divested, which you know, any buyer would
Speaker 11: be very, very aware of the fact that they weren't
Speaker 11: getting the secret source of what TikTok is.
Speaker 4: Alex come in on this, like, I do think we're
Speaker 4: grappling with this idea of you know, data, who owned it,
Speaker 4: who gets access to it, and freedom of information or
Speaker 4: not freedom of information, but freedom of speech. Like, help
Speaker 4: me out how you're seeing this and how it's kind
Speaker 4: of working its way through the global tech industry.
Speaker 10: Yeah, and it's kind of happening both in TikTok's argument,
Speaker 10: who's saying, Look, if we want to protect users, we
Speaker 10: need to have comprehensive data privacy policy and not just
Speaker 10: you guys coming after us and fighting on ownership issues. Obviously,
Speaker 10: the likes of some of TikTok's biggest competitors are not
Speaker 10: always the friendliest of the idea of new legislation. I'll
Speaker 10: also point to what I've seen from users.
Speaker 9: I've been spending a lot of time on TikTok.
Speaker 10: Per usual, it is my job, and a lot of
Speaker 10: folks are really upset that they feel like the government
Speaker 10: is getting in the way of a place that they
Speaker 10: feel is.
Speaker 9: Very amicable to regular people.
Speaker 10: Going viral and talking on the app, TikTok kind of
Speaker 10: changed the game to that extent. So when it comes
Speaker 10: down to this kind of freedom of speech argument, I'm
Speaker 10: also very fascinated to see how people take this bill
Speaker 10: if it becomes law going into the election. Are they
Speaker 10: looking at who their legislators are, who the president is,
Speaker 10: Joe Biden, who would be the one signing this, and
Speaker 10: taking that into account as they sign this bill, and
Speaker 10: also does TikTok maybe try to wait until there's a
Speaker 10: friendly administration. Donald Trump, the president who signed the first
Speaker 10: executive order to ban the app, has now since changed
Speaker 10: his tune, saying the app should probably stay in America
Speaker 10: and that those are his feelings these days.
Speaker 9: That argument will be one that I'm sure will come up, particularly.
Speaker 10: In the eyes of users and in the eyes of
Speaker 10: TikTok will take this to the courts.
Speaker 3: Hey, Dave, I'm wondering in your in your reporting in
Speaker 3: the column that you wrote the idea of it's not
Speaker 3: this is not necessarily part of the band. But one
Speaker 3: thing that I hear from parents all the time is
Speaker 3: that it's completely addictive. The algorithm serves up content that
Speaker 3: I don't necessarily want my kid to see all the time.
Speaker 3: And there are arguments, and I don't know to what
Speaker 3: extent that these are baseless arguments about how the Chinese
Speaker 3: version of TikTok douyan Is serves different content than what
Speaker 3: Americans see on the Byte Dance TikTok version here in
Speaker 3: the US.
Speaker 11: Yeah, I don't think they've actually been backed up by
Speaker 11: sort of firm da and the differences suggestion on Douyen
Speaker 11: you'll get think things about math and rights and where
Speaker 11: it was on TikTok, you'll get.
Speaker 3: People love to talk about. But I get to see
Speaker 3: proof of that.
Speaker 11: Yes, same s. I mean, I think it's an interesting
Speaker 11: fool that that could help be happening. I think one
Speaker 11: of the things that striking to me about how many
Speaker 11: people on TikTok are viewing this and like Alex, it's
Speaker 11: my job, that's my excuse I use for.
Speaker 1: You all the time as well.
Speaker 4: Right, ninety nine point nine percent is for work, point
Speaker 4: one might be for your own.
Speaker 11: But this the reaction is many of them are saying, well,
Speaker 11: hold on, there's a bill to protect children online that's
Speaker 11: currently stalled in Congress.
Speaker 1: There's another bill.
Speaker 11: To put a data privacy law on the books finally
Speaker 11: in America. That seems like a big struggle to get
Speaker 11: that passed as well. I think many people look at
Speaker 11: this and said, why is it that this issue, that
Speaker 11: TikTok issue, has flown through like nothing else, and yet
Speaker 11: these fundamental laws that could protect users more broadly have
Speaker 11: just sort of time and time again.
Speaker 4: I just want to be compensated for all my data
Speaker 4: that's helping people. Alex One last thought, and Dave has
Speaker 4: this in his story that it's interesting, you know, we
Speaker 4: do this all the time. We wonder about the folks
Speaker 4: in Washington. No disrespect lawmakers, but whether they really understand it.
Speaker 4: And Dave, you put in your story a senator asking
Speaker 4: Mark Zuckerberg how does Facebook make money? Or when TikTok
Speaker 4: CEOs was asked whether the app connects to home Wi Fi.
Speaker 4: So there is this understanding that maybe not everybody understands
Speaker 4: how it all works. Last thirty seconds? Is that important?
Speaker 4: Like that maybe they're not so up on it.
Speaker 9: The lawmakers users think it's really important.
Speaker 10: They think that again, this is a place where folks
Speaker 10: have been there to be able to share their mind,
Speaker 10: and they feel like the government is taking away a
Speaker 10: place where a lot of the TikTok users feel like
Speaker 10: they're getting kind of a unvetted, raw view of what's
Speaker 10: happening in the world, and it's it's a kind of
Speaker 10: platform for them to share their thoughts. So certainly those
Speaker 10: kind of questions turn heads freezers of TikTok.
Speaker 4: And Facebook makes money by advertising by their way and
Speaker 4: no you cannot connect it to you, and by selling.
Speaker 2: Too.
Speaker 4: Alex Barenka, Dave Lae, We wanted to do this round table.
Speaker 4: You did it so well. Thank you so much. This
Speaker 4: is Bloomberg, Markle.
Speaker 1: The Journal.
Speaker 8: Yeah, but you let me drive?
Speaker 1: Oh no, no, no, no, honey, please, how do the gravels?
Speaker 1: Let's I want to drive.
Speaker 4: It's a good question.
Speaker 2: This is the drive to the globe. Do me well,
Speaker 2: Bern on Bloomberg Radio.
Speaker 4: All right, everybody just got about eighteen minutes left in
Speaker 4: today's trading session, getting ready to wrap shortly the Tuesday trade.
Speaker 4: Having said that, our next guest says, large profitable tech
Speaker 4: companies are beneficiaries of higher interest rates. She goes so
Speaker 4: far to call them the new defensive companies. And yes, folks,
Speaker 4: she meets companies like Apple, Meta, Amazon, Microsoft, and Alphabet.
Speaker 4: So let's get to it.
Speaker 3: We're talking about none other than Nancy Tangler, CEO and
Speaker 3: a chief investment officer at Laffer Tangler Investments, also the
Speaker 3: author of a women's guide to successful investing. She's here
Speaker 3: in our Bloomberg Interactive Broker's studio. So the new defensive.
Speaker 3: Typically when we see rates go up, the large well,
Speaker 3: a lot of tech companies, particularly unprofitable tech companies move lower.
Speaker 3: But why tech overall? Is it because of just the
Speaker 3: cash that they have on their balance sheets?
Speaker 12: Well, I thank you for that intro.
Speaker 4: I hope you're welcome.
Speaker 12: I think the secular narrative is a tailwind for these
Speaker 12: companies and we're going to hear about that with AI
Speaker 12: in the coming earnings reports and how much it is
Speaker 12: impacting earnings. But yeah, I mean, if you look at
Speaker 12: a company like Meta, their earned interest earned on cash
Speaker 12: went up threefold. Google went up.
Speaker 4: Seventy eight percent.
Speaker 12: And the leader in this it's real money, it's real,
Speaker 12: real money, and the leader in this pack is Microsoft,
Speaker 12: which had a blowout second quarter last year and has
Speaker 12: continued to accumulate cash. And then you sort of add
Speaker 12: to that the fact that nobody can get any M
Speaker 12: and A through this FTC. I think you're going to
Speaker 12: start to see some return of capital shareholders.
Speaker 4: Yeah, it's kind of interesting. I feel like there's momentum.
Speaker 4: I think courtesy of you. I think Abigail do that.
Speaker 3: That's what I was thinking when I asked the question,
Speaker 3: or own Abigail do a little Chief Markets correspondent mentioned
Speaker 3: this a couple of weeks ago about the cash that
Speaker 3: these companies have on hand in the way it's generating money.
Speaker 4: Well, in a higher rate environment, that means something, right,
Speaker 4: and so they're not as problematic. You're a smaller company
Speaker 4: in a higher rate environment, you don't have that access
Speaker 4: to cash so easily because you're and you probably are
Speaker 4: going to need to tap debt markets if you will.
Speaker 4: These guys don't. They're actually okay, all right. Having said that,
Speaker 4: then how do you think about you know, do you
Speaker 4: buy them when there's a little bit of a pullback,
Speaker 4: what's the role in the portfolio? Do you buy all
Speaker 4: of them? How do you think about it?
Speaker 12: Yeah, I don't think you buy all of them, Carol,
Speaker 12: but I will say this, we were trimming the names
Speaker 12: in February. We didn't know the market was going to
Speaker 12: peak in March, and we were pretty disciplined in that regard.
Speaker 12: When things get overweighted, we trim. I mean, I can
Speaker 12: make an argument.
Speaker 4: Just a superweighted call that you would trim back.
Speaker 12: Yeah, or valuation, but I could make a case, and
Speaker 12: as I do in my book, that you probably should
Speaker 12: never trim. I mean, all the great wealth has come
Speaker 12: from one stock in a founder's portfolio. But that's what
Speaker 12: we do as professional money man. We've been back in
Speaker 12: adding to some of the names after this pullback correction,
Speaker 12: whatever you want to call it, because I do think
Speaker 12: that they're well positioned, and it goes back to our
Speaker 12: analogy of the nineties. You know this is we have
Speaker 12: so many similarities ex globalization to the nineteen nineties, and
Speaker 12: I think the most important of that is productivity. And
Speaker 12: like old economy company Raytheon reported today they're going to
Speaker 12: report two hundred million dollars in productivity improvements this year,
Speaker 12: and a lot of that is because they're digitizing their
Speaker 12: factories and connecting them. That stuff really matters, and it's
Speaker 12: going to be what drives earnings growth, and we think
Speaker 12: that's the only thing that matters, and the FED matters
Speaker 12: a lot less.
Speaker 3: Which stocks are you buying right now?
Speaker 12: Where you've adding We've been adding to names like Oracle,
Speaker 12: where we will be adding to LAMB after they report
Speaker 12: because it's been pretty disappointing in the chip space the report,
Speaker 12: just because we think there's probably a little bit more
Speaker 12: room to the downside and it gives you clarity. But
Speaker 12: we are in many of these names at such much
Speaker 12: lower levels. We've added to Microsoft, added to Google pretty significantly,
Speaker 12: And when you asked me this question, it's like in
Speaker 12: my head, Oh, in Adobe, we've been adding to on
Speaker 12: the weakness and Palwelto Networks, which sold off twenty eight
Speaker 12: percent after the last ernest reports.
Speaker 4: I to hear Tesla, we will be you will be, Yeah,
Speaker 4: talk to us about that.
Speaker 9: Okay.
Speaker 12: So, I mean it's not the stock I'm really and Spotify,
Speaker 12: by the way, it's not the stock I really want
Speaker 12: to defend. But you know, this is a CEO who
Speaker 12: thrives in chaos, and the last time that it was
Speaker 12: this bad, the company didn't even have earnings. I bought
Speaker 12: the stock at one hundred names.
Speaker 4: You spot up keeping no finish sorry, yes, yes, I know,
Speaker 4: I know, I know. The focus go ahead.
Speaker 12: We bought about one hundred and eighty pre splits ten
Speaker 12: then yes, and then he was smoking pot on the
Speaker 12: Joe Rogan Show, drinking whiskey. People were quitting. The board
Speaker 12: was just super not independent. He was sleeping on the
Speaker 12: factory floor. You remember, right, we sold it. I felt
Speaker 12: like it was it was gambling documented, so I took
Speaker 12: a double and the stock's up five hundred and fifty
Speaker 12: five percent since then, including the recent pullback. So we've
Speaker 12: added to the stock.
Speaker 9: A year ago.
Speaker 12: We reinitiated it at about one hundred and four dollars
Speaker 12: a share. We sold some when it got in the
Speaker 12: two hundreds. We bought at some a little bit too
Speaker 12: soon at onoint eight, and at current levels, we think
Speaker 12: a lot of the bad news is priced in. And
Speaker 12: the last thing I'll say about it, it's only trading
Speaker 12: as an EV company. But the really interesting part of
Speaker 12: the business is the utility grade battery pack business, which
Speaker 12: is growing fifty percent a year and will dwarf the
Speaker 12: EV business. At about one hundred and twenty billion in
Speaker 12: market valuation in about five years.
Speaker 4: Is there anything that comes off at the earnings tonight
Speaker 4: that would make you, I don't know, either buy, sell
Speaker 4: or do something.
Speaker 7: I mean, I don't know.
Speaker 4: I don't They don't sound like you're very reactionary that way.
Speaker 5: Now.
Speaker 12: I don't think Elon Musk could say anything that would
Speaker 12: surprise me. If by chance, Donald Trump gets invested, I
Speaker 12: think he will no longer Elon that is be the
Speaker 12: man that everyone should hate. And we'll go back to
Speaker 12: parsing the tweets of another well known, outspoken Yeah, I
Speaker 12: want to go back.
Speaker 4: To Spotify surging today, swing to profit boost and paid subscribers.
Speaker 4: You know, woa, I forgot to do this as one
Speaker 4: of my gainers today. But it's up about thirteen percent,
Speaker 4: was up as much as seventeen percent. When were you
Speaker 4: guys buying it?
Speaker 12: We bought in the high eighties and this was this
Speaker 12: was a plant based on today at three to six.
Speaker 9: Yeah.
Speaker 4: Well, we sometimes get them right. We don't not waste
Speaker 4: get them right. But and we were just.
Speaker 12: You know, we were convinced that they have a lot
Speaker 12: of room to raise prices. They'd held the business. You know,
Speaker 12: they were able to grow it. This notion where they
Speaker 12: went out and made it a more open format so
Speaker 12: you can get the Joe Rogan podcast on other platforms.
Speaker 12: That was brilliant. That was a pivot, and I think
Speaker 12: that the management team should be commended. Now they've been
Speaker 12: able to stick a couple of price increases because they
Speaker 12: waited so long, I think it is even more impactful
Speaker 12: as opposed to some of the names. The consumer names
Speaker 12: came out today, they're still raising prices.
Speaker 9: You know.
Speaker 12: Okay, EPs is up, but volumes are down. At some
Speaker 12: point that party comes to an end.
Speaker 3: What do you stand away from?
Speaker 12: Uh, for the moment, we are underweight reats, we're underweight utility.
Speaker 4: You happened treasures at all with the move up and rates? Yeah,
Speaker 4: well where are you so?
Speaker 12: Personally, this is the first time I've ever runed a
Speaker 12: treasury in my entire life. We've been putting clients in
Speaker 12: short ladders and we just started to extend duration a
Speaker 12: couple of weeks ago.
Speaker 9: How far out too?
Speaker 12: Okay, we're not going very far out because we think
Speaker 12: there's an opportunity to morph into unis and corporates when
Speaker 12: when the treasury short game is done and so that's
Speaker 12: we've just been rolling these short ladders and it's worked
Speaker 12: out pretty well.
Speaker 4: What I've been directed way too much.
Speaker 3: We love it when you join us now, No, it's
Speaker 3: especially in person.
Speaker 4: Well just twenty seconds. I mean, does it feel like
Speaker 4: things are going to be okay? Well you you actually
Speaker 4: hate it, Carol.
Speaker 12: I think the economy is slowing somewhat okayst names have
Speaker 12: not performed well, you got the the S and P
Speaker 12: Global pm I stay manufacturer has gone from expansionary to contractionery,
Speaker 12: and the labor market is softening. I think I feel
Speaker 12: like there's that tone. Sorry, yeah, I think that's what
Speaker 12: I'm not sorry it is. I think that'll let the
Speaker 12: fat off the hook. Nancy Tangler, thank you so much.
Speaker 4: I appreciate it. Of Laffer Tangler.
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