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Speaker 2: black Rock Right in the following we expect episodes of macrovolatility.
Speaker 2: We remain attuned to the opportunity cast of being too
Speaker 2: defensive and under risked in this environment. Amanda joins us
Speaker 2: now for more Amandaican Monic morning.
Speaker 3: Thank you for having me.
Speaker 4: Great to see you.
Speaker 2: The risk of being too defensive with stocks at all
Speaker 2: time highs and credit spreads near the ties for the year,
Speaker 2: explain please.
Speaker 5: So I think in a time like this where there's
Speaker 5: a lot of uncertain often the reflex from investors is
Speaker 5: to just generically move up in quality. And we've been
Speaker 5: pushing back against that and basically saying that there's there's
Speaker 5: a case for selectively moving down in credit quality. If
Speaker 5: you look, for example, high yield total returns have outperformed
Speaker 5: investment grade. Here today subsets of high yield, including double
Speaker 5: b's have outperformed triple bees. So I think what the
Speaker 5: market is telling you is that, yes, we're expecting volatility,
Speaker 5: there's residual uncertainty, but if you focus on kind of
Speaker 5: back to basics credit work, companies are navigating this and
Speaker 5: we are paying incredibly close attention to the micro level
Speaker 5: commentary of companies in this environment. And I think what
Speaker 5: the market is actually seizing on is companies guiding towards
Speaker 5: twenty twenty six and twenty twenty seven, outlining all of
Speaker 5: the operational levers that they can pull to navigate this uncertainty.
Speaker 5: And I think that's what's giving some comfort. Now. Is
Speaker 5: there a lot of scope for spread tightening? No, But
Speaker 5: our income are all in yields and corporate credits still attractive. Yes,
Speaker 5: And I think that's really what we're emphasizing.
Speaker 6: That's exactly what I wanted to ask you, the idea
Speaker 6: that spreads are near all time tights onield bonds. You're
Speaker 6: not getting compensated in addition to treasuries that much at
Speaker 6: all relative to history.
Speaker 1: Why doesn't that worry you?
Speaker 5: Well, there is some market segmentation there, so the trade
Speaker 5: off between treasuries. Yes, the spreads are tight, but back
Speaker 5: in Link twenty twenty four, we've characterized that as warranted resilience.
Speaker 5: So those spread levels, there are a host of reasons macro, fundamental, technical,
Speaker 5: why those spreads can remain in that tight range. I
Speaker 5: think from our perspective, when we talk to investors, they're
Speaker 5: looking to deploy capital into corporate credit, and so what
Speaker 5: we're really saying is, if you're buying corporate credit, buy
Speaker 5: it for the income, the carry, the yield, not for
Speaker 5: the potential total return boost from tighter spreads. And I
Speaker 5: think really the point we're just trying to make is
Speaker 5: if you're waiting for sustained selloff in credit spreads, we
Speaker 5: view the bar for that is pretty high.
Speaker 6: So it's pretty remarkable that not only is it not
Speaker 6: April second, but here we are with yet another trade
Speaker 6: war brewing and escalate to de escalate, And not only
Speaker 6: are people not getting bearish, we've got David costen Over
Speaker 6: at Gold miss ax up creating as SMP forecast, you
Speaker 6: could an upgrade over a Bank of America, And here
Speaker 6: you are in the credit space at Black CROC saying
Speaker 6: there's a risk we're not getting risky enough, and then
Speaker 6: essentially that's what we have to go. Are we just
Speaker 6: discounting the policy uncertainty entirely? Has that sort of been
Speaker 6: stripped out of the picture.
Speaker 4: We're not discounting it.
Speaker 5: The title of our third quarter outlook, for example, was
Speaker 5: two sided Risks. So we're absolutely recognizing that there's still
Speaker 5: a lot of uncertainty. There are still a lot of
Speaker 5: potholes that we need to navigate in this environment. What
Speaker 5: we're saying, however, is that the economy has shown relative
Speaker 5: resilience and so taking a complete risk off posture, in
Speaker 5: our view, isn't.
Speaker 4: The way to go.
Speaker 5: In fact, again going back to the lower rated pockets
Speaker 5: of the corporate credit market, they've outperformed. It kind of
Speaker 5: reminds me of in the early stages of the FEDS
Speaker 5: rate hiking cycle, when rates were being hiked significantly and
Speaker 5: there was an expectation in Europe in the US that
Speaker 5: it would lead to an imminent recession. The economy surprised
Speaker 5: to the upside. I feel like that's a little bit
Speaker 5: what's happening in the corporate sector is that it's actually
Speaker 5: turning out that corporates have a lot of levers to
Speaker 5: pull to navigate this. Some are within product mix, some
Speaker 5: are vendor relationship, inventory purchases, and so they're actually navigating this,
Speaker 5: and I think the bottoms up credit work is signaling
Speaker 5: that there is a little bit more resilience, I think
Speaker 5: than many expected. That does not mean, however, that we
Speaker 5: are expecting a more challenging growth inflation mix inflation mix,
Speaker 5: so that doesn't mean that we aren't expecting some softening
Speaker 5: in the data from here.
Speaker 3: We were able to get to this point because we
Speaker 3: saw reversals from this administration when the market pushed back
Speaker 3: on some of their policy proposals.
Speaker 5: I think we got to this point because companies have
Speaker 5: been a little bit more forthcoming about the options that
Speaker 5: they have at their disposal. And so when you look
Speaker 5: at retail earnings, for example, over the last month, some
Speaker 5: of these retail companies have actually guided towards they can
Speaker 5: actually offset the full cost of pariffs starting in twenty
Speaker 5: twenty six. Yes, there may be some near term volatility
Speaker 5: and some near term headwind but I think those sort
Speaker 5: of concrete details are what's giving investors the comfort to
Speaker 5: actually do the bottoms up credit work. That doesn't mean
Speaker 5: that all these companies are created equal. There will be
Speaker 5: some winners and losers in this, but I do think
Speaker 5: it's hard to ignore when companies actually present that full
Speaker 5: suite of lovers.
Speaker 4: Do an each cham in pounds account.
Speaker 5: I think I think that's probably more of a boon
Speaker 5: for the equity market, frankly than the credit market. I
Speaker 5: think actually, if rates stayed in this regime, that's a
Speaker 5: pretty supportive technical for corporate credit in terms of all
Speaker 5: in yields. There's been some increase in default rates, but
Speaker 5: by and large companies have incorporated that higher borrowing cost,
Speaker 5: so I don't think it's a prerequisite for continued resilience
Speaker 5: in corporate credit. I think maybe the equity market might
Speaker 5: be disappointed.
Speaker 4: We can live with rights in the falls on FED funds.
Speaker 5: Yes, I mean you've seen some floating rate borrowers default,
Speaker 5: but those are largely repeat defaulters, so by definition that
Speaker 5: should have been priced into the market. I think ideally
Speaker 5: it would be nice to have some additional normalization cuts.
Speaker 5: But you know our view, we're not expecting easing, so
Speaker 5: I think that's really the base case for us.
Speaker 6: What you just said there was fascinating that any kind
Speaker 6: of rate cuts would help the equity market more than
Speaker 6: the credit market. Is the credit market now clipping the
Speaker 6: coupon all in yield story period full stop? And if
Speaker 6: rates go down that will be challenging in terms of
Speaker 6: justifying why you should purchase credit at these spreads.
Speaker 5: I think psychologically there is some hesitation for investors if
Speaker 5: we would see, for example, high yield all in yields
Speaker 5: below seven percent, right, that kind of gets some attention.
Speaker 5: I think it's I do think that it's more of
Speaker 5: a why are you mind credit for Kerrie for income
Speaker 5: frey yield, not for the total return boost from tighter
Speaker 5: spreads or lower rates that's historically been the driver of
Speaker 5: total returns. Not our real view in this cycle. For sure,
Speaker 5: it would help fixtrate long duration product, but I think
Speaker 5: if you look at the fact pattern of inflation above
Speaker 5: target growth, holding in still residual uncertainty. The commentary from
Speaker 5: the FED, we're not expecting the first rate cut until
Speaker 5: the fourth quarter, so really that's kind of our base case.
Speaker 2: We heard that again early this out. I'm Minderalana a
Speaker 2: black croc. Appreciate it.
Speaker 4: Thank you.
Speaker 2: Let's build on that conversanction with Rob Casey of Sakenem
Speaker 2: looking at Taris and ranks in the following. Consensus currently
Speaker 2: is the July ninth will simply become August one. However,
Speaker 2: we would suggest being cautious around this view and standing
Speaker 2: on God for taras snampback sooner than then, Robed John,
Speaker 2: Just now for more ro Good morning morning. You said it.
Speaker 2: A lot of people are failing good. We can just
Speaker 2: look through all of this. Leaser explained it perfectly. Why
Speaker 2: do you think there is a risk of actually follow
Speaker 2: through here?
Speaker 7: I think there's a risk of follow through a because
Speaker 7: President Trump has not gotten the concessions that he wants
Speaker 7: in private negotiations or in you know, public negotiations with
Speaker 7: posting these letters, and he is potentially running out of room. Right,
Speaker 7: we may get a court decision on AIPA this fall.
Speaker 7: Trump is essentially has the opportunity to negotiate between now
Speaker 7: and then. So they're telling us they're getting closer, right,
Speaker 7: and maybe we get a bunch of deals over the
Speaker 7: course of the next week.
Speaker 4: Or you know today.
Speaker 7: If not, I think they probably want to push their
Speaker 7: advantage before you know, caving or taking a step back.
Speaker 2: What's the decidive factor that dictates the shape of those deals.
Speaker 2: What's the difference between becoming the UK or Vietnam or Japan?
Speaker 2: What's the difference?
Speaker 7: I think that, I mean that that's clearly an open question.
Speaker 7: What we've seen in the UK deal, the Vietnam deal
Speaker 7: among others is I mean, frankly, they're not very detailed.
Speaker 7: So I think that the deciding factor is the you know,
Speaker 7: the leader on the other side of the table is
Speaker 7: willing to accept what President Trump wants in broad terms,
Speaker 7: in vague terms, and maybe maybe they're able to sell
Speaker 7: it to their domestic constituency and then Trump is able
Speaker 7: to come back to us and say we made a
Speaker 7: good deal. But that's not to say that these are
Speaker 7: even the trade deals that are struck. They're still not
Speaker 7: very detailed.
Speaker 3: When you talk about concessions the administration is looking for
Speaker 3: and they haven't received them yet, what exactly.
Speaker 7: Well, I mean, across the board, I think they're really two.
Speaker 7: Trump wants to be able to message that he's bringing
Speaker 7: down tariff levels on US goods being exported elsewhere. He
Speaker 7: wants to message that he's decreasing the trade deficit with individuals.
Speaker 7: I think that is probably the one with individual countries.
Speaker 7: That's probably the one that's going to get the most
Speaker 7: play from President Trump so far, because even when he's announcing,
Speaker 7: you know, twenty five percent on Japan, twenty five percent
Speaker 7: on Korea, he's saying, these tariffs are not enough to
Speaker 7: rectify the trade deficits. So we still focused on the
Speaker 7: trade deficit. He still sees it as a problem even
Speaker 7: at these higher levels.
Speaker 3: When you look at things like the United Kingdom, Vietnam,
Speaker 3: even the slew of deals we saw in his Middle
Speaker 3: East trip, what happened to all of them? What is
Speaker 3: the process that's now happening behind the scenes within the
Speaker 3: administration to actually make sure the deals of the details
Speaker 3: of the deals get done.
Speaker 1: Who's working on that?
Speaker 7: Well, I think it's behind the scenes, Amory for a reason. Right,
Speaker 7: we're not one hundred percent sure.
Speaker 1: Do they even have the staff.
Speaker 7: Well, that's why I was going to say, ninety days ago,
Speaker 7: we heard ninety deals in ninety days, right, and that
Speaker 7: sounded impossible then, and clearly it was impossible, right, Not
Speaker 7: every country that has tariffs to be applied, you know
Speaker 7: today or August first, not every country has even had
Speaker 7: FaceTime with the president's administration. And so if you're a
Speaker 7: country is saying, we haven't even had the chance to
Speaker 7: negotiate and now we're getting these tariffs slapped on at
Speaker 7: the higher level, Like what are you supposed to do
Speaker 7: with that? So I think it's clear that there is
Speaker 7: not the bandwidth maybe that they had expected, because these
Speaker 7: deals aren't quite as easy as as Trump best and
Speaker 7: among others.
Speaker 6: Hoped, there might not be the bandwidth. There's also a
Speaker 6: question about the framework and what kind of framework they're
Speaker 6: using to really understand what to extract from different trading partners.
Speaker 6: It's buy more rice, buy our chickens.
Speaker 1: Talk about car exports.
Speaker 6: I mean, there's this question of raising the ANTI and
Speaker 6: using it as sort of a national security tool as
Speaker 6: well as a trade tool. Have we got any clarity
Speaker 6: around what the framework looks like.
Speaker 4: Not a lot of clarity.
Speaker 7: I think one thing that we can see from both
Speaker 7: the UK and Vietnam is that President Trump wants to
Speaker 7: come back to the US and message that we are
Speaker 7: able to send more goods elsewhere, right and that's broadly
Speaker 7: speaking so far, I would say mostly focused on the
Speaker 7: US farm AAG industry. We also want to be able
Speaker 7: to sell more cars elsewhere, you know, export, build up
Speaker 7: manufacturing capacity in the US. I don't think we can
Speaker 7: forget about a general goal of building up manufacturing capacity
Speaker 7: in the US. Each individual deal may not get us
Speaker 7: that much closer, but I think that's the overall trend,
Speaker 7: at least the President Trump is hoping for.
Speaker 6: The goal is also to raise revenue, and this is
Speaker 6: sort of a key component with the One Big Beautiful Bill.
Speaker 6: And we did see the revenue surge to a record
Speaker 6: twenty four billion dollars in May. How much is that
Speaker 6: sort of a sticking point at this point? They kind
Speaker 6: of have to keep rates high totally.
Speaker 7: I think it's a major priority. Obviously. Obviously we don't
Speaker 7: really hear that from the White House, right because if
Speaker 7: we're talking about tariff revenue, then we also have to
Speaker 7: be talking about who's paying that revenue, right, And a
Speaker 7: lot of times, not all the time, but a lot
Speaker 7: of times it's the American consumer. But the truth of
Speaker 7: the matter is, on the back of One Big Beautiful Bill, right,
Speaker 7: we are still in a deficit crisis, and so we
Speaker 7: have to find money somewhere. We didn't find it in
Speaker 7: higher taxes. We didn't find it in you know, reverting
Speaker 7: to pre Trump tax cut levels. We're going to have
Speaker 7: to find it elsewhere. And I just have to say,
Speaker 7: you know, there is revenue to be had with tariffs,
Speaker 7: of course, but there is I think a broader point
Speaker 7: to make from now until August first, and that is,
Speaker 7: if we don't have the one hundred and forty five
Speaker 7: percent on China right then we really are looking at
Speaker 7: only a marginal I don't want to call it marginal.
Speaker 7: It's more than marginal. But we're not looking at a
Speaker 7: drastic increase in tariff levels, which means we're not looking
Speaker 7: at a drastic increase in revenue levels as well.
Speaker 2: Did you mean to call it a crisis or was
Speaker 2: that a slip Because it's early. We just passed a
Speaker 2: multi trinion dollar bill. It's har to call it a
Speaker 2: crisis down in Washington. What makes it a crisis?
Speaker 7: Well, the deficit may not be in crisis right because
Speaker 7: we've run wide deficits for quite.
Speaker 4: A long time and we're all still standing.
Speaker 7: But the truth of the matter is, I don't think
Speaker 7: Republicans have a solution to the deficit, what they call
Speaker 7: a deficit crisis. Trump came into Washington describing the necessity
Speaker 7: of bringing the deficit down. Of course, we can all
Speaker 7: sit here and say that Democrats have failed to.
Speaker 4: Do it over the previous four years.
Speaker 7: But it's pretty clear that Republicans are going to fail
Speaker 7: to do it, at least in this Congress, and I
Speaker 7: think very likely over the course of Trump's term.
Speaker 2: They're certainly not behaving as if it's a crisis in Washington.
Speaker 6: And they just passed a bill that is definite deficit expansionary.
Speaker 6: The US is going to be selling a net more
Speaker 6: than two hundred and twenty billion dollars net over the
Speaker 6: next five weeks alone. This really raises a question, you again,
Speaker 6: where are the bond vigilantes? Are they just pegging their
Speaker 6: hopes and dreams and the fact that the Treasury is
Speaker 6: going to sell it all in T bills?
Speaker 2: I guess so it's not in the bond market this morning,
Speaker 2: full notty some thirties at the moment, yozah Magli high
Speaker 2: by four or five basis points on a session. Robert's
Speaker 2: going to see you, Thank you, sir, rob Case they
Speaker 2: have signal we've got some extra time joining us not
Speaker 2: to discuss Santa Pianki of Alico, Sarah, welcome back to
Speaker 2: the program. How is the Administration of House Sun tried
Speaker 2: pound that's going to use that extra three weeks?
Speaker 8: Well, I think that you guys are right to say
Speaker 8: that what the White House is trying to do here
Speaker 8: is to signal countries where they are frustrated. Although South
Speaker 8: Korea and Japan early on were places where the White
Speaker 8: House was hopeful for a deal, they've really gotten stuck
Speaker 8: in the conversations around sectoral tariffs, or particularly around.
Speaker 9: Tariffs on auto's steal.
Speaker 8: Some of the largest imports from those countries, the assion countries, Cambodia, Indonesia.
Speaker 8: I think they're trying to follow more the model that
Speaker 8: we saw briefly outlined around Vietnam. So I think we're
Speaker 8: doing some signal sending. The administration has, I think, always
Speaker 8: been very very optimistic about how many trade deals or
Speaker 8: even frameworks one.
Speaker 9: Can cut in a period of time.
Speaker 8: So I really just viewed yesterday this first set of
Speaker 8: letters as an indication of where at this moment, the
Speaker 8: White House believes things are not on the path they want.
Speaker 3: To see how powerful is the signal though, and the
Speaker 3: President says it's firm, but not one hundred percent firm.
Speaker 8: Yeah, well, I think you know, there are certainly some
Speaker 8: in the markets who are just going to shrug this
Speaker 8: off because we have seen delays, we have seen this
Speaker 8: kind of kind of high.
Speaker 9: Top talk before.
Speaker 8: I think what we would remind investors and other stakeholders
Speaker 8: is that right now we do see the directional terif
Speaker 8: rate in the next coming weeks going up. We're seeing
Speaker 8: countries like Vietnam like ending up at higher than this
Speaker 8: sort of ten percent baseline we've been at, and we
Speaker 8: have more sectoral tariffs. So some of this is just
Speaker 8: Trump negotiating that we've watched for a long time.
Speaker 9: But I think also we're at really high terrriforates right now.
Speaker 8: We're already at about fifteen percent, and again in our lines,
Speaker 8: the next signal points upward.
Speaker 2: Sarah, do you have a decent understanding of what has
Speaker 2: been demanded by trade partners? Has the White House articulated that,
Speaker 2: do they know what they need to do to get
Speaker 2: the tariff that's been put in a letter in the
Speaker 2: last twenty four hours to get that tariff lower?
Speaker 8: I think it really depends on the partner. I think
Speaker 8: certainly countries like Japan and Korea understand where the sticking
Speaker 8: points are, even though they don't like it. They just
Speaker 8: really particularly they've got their own politics. For example, in Korea,
Speaker 8: it's a very new government. Japan has an election coming up.
Speaker 8: They need relief on phoos really, so I think they understand.
Speaker 8: I think they're the bid ask is just at this
Speaker 8: part too far apart other countries. I know there is
Speaker 8: a bandwidth challenges given how many countries are negotiating, So
Speaker 8: a country like a Cambodia maybe having trouble getting all
Speaker 8: the airtime. They need to sort this out. So I
Speaker 8: think it really depends on the partner. Interestingly, you know
Speaker 8: EU that it's been traditionally very sticky, difficult trading partner.
Speaker 8: For the Trump administration, they seem on track. So this
Speaker 8: is just kind of, you know, a snapshot of where
Speaker 8: we are in this inning.
Speaker 6: Sarah, what do we mean but when we talk about
Speaker 6: getting deals, because it seems like the details of these
Speaker 6: deals are actually very foggy, It takes a long time.
Speaker 6: You've been intimately involved in crafting some of these deals.
Speaker 1: How realistic is it.
Speaker 6: That they could be more than a framework anytime in
Speaker 6: the next few months, given just what goes into some
Speaker 6: of these new negotiations.
Speaker 8: Well, these are very very high level, as you point out.
Speaker 8: For example, on Vietnam, one of the touted deals by
Speaker 8: the Trump administration, we haven't even really seen paper. And
Speaker 8: one of the big questions for Vietnam is they got
Speaker 8: a bifurcated terra fright, they got twenty percent and then
Speaker 8: forty percent on transshipment. Transhipment can mean lots of different
Speaker 8: things and can have lots of different implications. So these
Speaker 8: are extremely high level. And look, you have trade irritants
Speaker 8: with trading partners because there are a sensitive political and
Speaker 8: economic issues and they take a long time to work through.
Speaker 8: So the notion that we were ever going to get,
Speaker 8: you know, ninety deals in ninety days was certainly thought
Speaker 8: of somebody who hasn't spent a lot of time negotiating trade.
Speaker 3: Well, now it's one hundred and thirteen days, and I
Speaker 3: think a lot of people are questioning whether or not
Speaker 3: you can even get a dozen of deals done by then.
Speaker 3: When can we expect the sectoral tariffs to actually be announced?
Speaker 8: Interesting, some of them are rumored to be coming any
Speaker 8: day now.
Speaker 9: Copper is supposedly close lumber.
Speaker 8: I think the biggest ones that we're watching are on
Speaker 8: SEMIS and the pharmaceutical industry. Those are very large sectors
Speaker 8: of the economy and very important from particularly on semis
Speaker 8: an inflationary perspective. About where the administration goes, I think
Speaker 8: there's still a lot for the administration to sort out.
Speaker 8: But the way we have seen this president operate in
Speaker 8: sectoral tariffs so far is he comes out with twenty
Speaker 8: five percent, pretty broad, and then negotiates from there. So far,
Speaker 8: they have been stickier in those negotiations. That's why the
Speaker 8: Koreas and Japan's are so frustrated. But in terms of
Speaker 8: when he wants to throw this in the mix, sort
Speaker 8: of unclear, except I will say this president is feeling
Speaker 8: pretty good coming off some impressive legislative wins and foreign
Speaker 8: policy wins. He may feel like right now is that
Speaker 8: time he has the bandwidth to put these forwards.
Speaker 3: So do you think he'll be more aggressive and let
Speaker 3: a lot of this drag on.
Speaker 8: I think he is feeling bullish and more aggressive, you know,
Speaker 8: And at the same time, the market, you know, isn't
Speaker 8: necessarily always buying all of it, so that probably also
Speaker 8: tilts in the direction of wanting him to go even further.
Speaker 8: But again, of course there's a lot of back and forth.
Speaker 8: I don't believe, for example, that Japan or Korea will
Speaker 8: end up ultimately with a twenty five percent a reciprocal tariff.
Speaker 9: That's all part of the process.
Speaker 8: But directionally, again, we think we're on an upward move.
Speaker 8: And yeah, I do think he's feeling pretty good, and
Speaker 8: generally that leads presidents to be a bit more bullish.
Speaker 2: Sarah, thank you one of the biggest bulls on this
Speaker 2: stock for quite a while on the street, I'll confess.
Speaker 2: CEO Kathy Wood, Kathy, thanks for making time for us
Speaker 2: this morning. Let's just talk about what Dan I've said
Speaker 2: to us yesterday that he believes Elon Musk is crossing
Speaker 2: a line and that the board needs to step in.
Speaker 4: Do you share that for you?
Speaker 10: Well, I have to tell you we've been dealing with
Speaker 10: controversy around Elon Musk in one form or another since
Speaker 10: we first bought the stock when the company was founded
Speaker 10: in twenty fourteen, and we owned Tesla in It's one
Speaker 10: of the top holdings in three of our ETF so
Speaker 10: arkk W and Q. So we are watching this like
Speaker 10: a hawk, no question about it. But with the experience
Speaker 10: over the last eleven years, we turn around today and
Speaker 10: see Tesla really not an EV manufacturer anymore. Moving into
Speaker 10: the robotaxi age, we believe successfully and we believe it
Speaker 10: will scale much better than most of it's can competitors.
Speaker 10: We see SpaceX really only ninety percent of all of
Speaker 10: the satellites out there neurally transforming lives of paralyzed people,
Speaker 10: people with als, and probably most surprising of all, XAI.
Speaker 10: Now we own all of those again in our venture fund,
Speaker 10: following them very carefully. XAI is on some benchmarks. It
Speaker 10: hit a point that three pro hit in June, it.
Speaker 1: Hit it in February.
Speaker 10: So you know, we are very focused on barriers to
Speaker 10: entry technology moats and we believe that the moats that
Speaker 10: Elon has built, and obviously this is not just Elon.
Speaker 10: He's attracting the best and the brightest to help solve
Speaker 10: some of the world's biggest problems. So again we do
Speaker 10: trust the board and the board's instincts here and.
Speaker 1: We stay out of politics.
Speaker 2: Well, we'd love your opinion on the current situation, just
Speaker 2: on Testa specifically. You mentioned some phenomenal companies doing some
Speaker 2: incredible things for Tesla, though, do you believe that Elon
Speaker 2: can pursue his political ambitions at the same time pursuing
Speaker 2: the best interest of Tensla shareholders.
Speaker 10: One of the announcements Elon made recently is that he
Speaker 10: is going to oversee sales in the US and in Europe.
Speaker 10: And when he puts his mind on something, he usually
Speaker 10: gets the job done. So I think he's much less
Speaker 10: distracted now than he was, let's say, in the White
Speaker 10: House twenty four to seven.
Speaker 6: At what point do you see sort of the political
Speaker 6: landscape shifting though, not just for Tesla but for the
Speaker 6: haves and the have nots in some of the big
Speaker 6: tech space. I know you've had a complicated relationship, say
Speaker 6: with Apple, which seems uniquely pegged by some of these tariffs.
Speaker 1: Is there anything that you could see that.
Speaker 6: Would make you like that stock again or do you
Speaker 6: think that really it is going to fall out of
Speaker 6: magnificent seven.
Speaker 10: Yes, we've been watching Apple for a long time with
Speaker 10: an AI lens, and that started, I'm going to say
Speaker 10: about seven years ago when it was becoming serious about
Speaker 10: autonomous vehicles. If you think about the ultimate mobile device,
Speaker 10: it's an autonomous vehicle, and.
Speaker 1: That should have been Apples to win. And what we've seen.
Speaker 10: There is one turnover of management teams after another, and
Speaker 10: it's all autonomous driving. Is an AI project, is the
Speaker 10: largest AI project on Earth, we believe, and so losing
Speaker 10: the talent that it has, and as I understand it
Speaker 10: lost another one today to Mark Zuckerberg's top fifty. So
Speaker 10: they've had a lot of trouble in this regard and
Speaker 10: I think the burden of proof is on them.
Speaker 6: Do you think that it is time to follow the talent,
Speaker 6: that this is going to work the gamble that you're
Speaker 6: seeing over at Meta and that that's the path of
Speaker 6: travel for the other big tech companies that are going
Speaker 6: to just eat some of the companies from the inside out,
Speaker 6: take the talent unnecessarily by the company.
Speaker 1: You know, it's a very good question.
Speaker 10: We're trying to figure out if what Mark Zuckerberg is
Speaker 10: doing today is much like he did when he was
Speaker 10: pivoting hard to the metaverse, which proved because he thought
Speaker 10: that was the.
Speaker 1: Next big thing, and that was incorrect.
Speaker 10: AI is the next big thing, no question about it,
Speaker 10: and you do have to have the right DNA and
Speaker 10: you have to move fast and break things, as he
Speaker 10: would say. So you know, it'll be interesting to see
Speaker 10: if he's able to turn his open source strategy. And
Speaker 10: we've admired that quite a bit in terms of generative
Speaker 10: AI into a leader again or as we were observing it,
Speaker 10: Apple's LAMA three at the time was improving at a
Speaker 10: faster rate than some of OpenAI's models, and that was
Speaker 10: true of open source generally.
Speaker 1: And then that has stopped. So, yes, you had to
Speaker 1: do something. Is this the right thing? Why did that stop?
Speaker 4: I don't know, Kathy.
Speaker 2: Next time you're with us, we'll have a longer conversation
Speaker 2: to leaders, incredible men doing incredible things.
Speaker 4: I convest CEO Kathy Worth.
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