WEBVTT - Bloomberg Intelligence: Disney Earnings, Tesla Layoff Fears 0:00:00.600 --> 0:00:12.600 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.360 with Alex Steinhl and Paul'sweeny. 0:00:14.480 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.880 --> 0:00:20.239 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:33.120 These are two big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:42.040 Bloomberg Intelligence with Alex Steinel and Paul's Wheenye on Bloomberg Radio. 0:00:43.440 --> 0:00:43.559 Well. 0:00:43.600 --> 0:00:46.640 Today's Bloomberg Intelligence Show, we dig inside the big business 0:00:46.640 --> 0:00:48.760 stories impacting Wall Street and the global markets. 0:00:48.880 --> 0:00:51.600 Each and every week, we provide research and data on 0:00:51.640 --> 0:00:53.519 some of the two thousand companies in one hundred and 0:00:53.520 --> 0:00:55.880 thirty industries our analysts cover worldwide. 0:00:55.920 --> 0:00:58.160 Today, we'll look at why Tesla Stiff are said to 0:00:58.200 --> 0:00:59.600 be bracing for potential job. 0:00:59.480 --> 0:01:01.960 Cuts, discuss why warre in the Middle East is hurting 0:01:02.080 --> 0:01:03.160 McDonald's sales. 0:01:03.320 --> 0:01:05.760 For first, we dive into Walt Disney. Earlier in the week, 0:01:05.800 --> 0:01:08.759 the company reported better than expected earnings for its fiscal 0:01:08.800 --> 0:01:11.880 first quarter and issued an upbeat profit outlook for the year. 0:01:12.080 --> 0:01:14.040 For more on all of this, we were joined by Githerang, 0:01:14.160 --> 0:01:16.760 Na than Bloomberg intelligence analyst on US media, and we 0:01:16.800 --> 0:01:19.840 asked her why there is reason for optimism at the company. 0:01:20.240 --> 0:01:23.280 Disney is definitely back back with the bank. One of 0:01:23.319 --> 0:01:26.280 the big pain points with Disney has really been the 0:01:26.400 --> 0:01:29.160 lack of streaming profitability. But now there seems to be 0:01:29.680 --> 0:01:32.399 a clear path to the streaming business kind of getting 0:01:32.440 --> 0:01:35.200 to that profitability metric. So we saw the losses come 0:01:35.200 --> 0:01:38.320 in way below expectations. It was sixty five percent below 0:01:38.319 --> 0:01:41.360 what people were projecting. They're still kind of guiding to, 0:01:41.720 --> 0:01:44.880 you know, hitting profitability by the September quarter, but most people, 0:01:44.920 --> 0:01:47.880 I think on the street expected to happen much much sooner. 0:01:48.120 --> 0:01:50.040 And then Hugh Johnston, who was the new CFO and 0:01:50.040 --> 0:01:52.920 this was his first call with Disney, basically said that 0:01:53.200 --> 0:01:57.440 look to or expect double digit operating margins in the 0:01:57.440 --> 0:01:59.840 streaming business. And I think that was something that was 0:02:00.080 --> 0:02:02.760 really really powerful because we know that, you know, the 0:02:02.880 --> 0:02:05.400 number that we're all chasing is that twenty percent operating 0:02:05.440 --> 0:02:08.440 margin where you know, Netflix has been I think the 0:02:08.440 --> 0:02:11.040 one area that we kind of still need clarity is 0:02:11.320 --> 0:02:14.359 how all of this the streaming bundles are going to work. 0:02:14.400 --> 0:02:17.120 So it's really good to see them kind of be 0:02:17.280 --> 0:02:20.880 proactive and go out with their own solution. So they 0:02:20.919 --> 0:02:24.240 have that sports super app that's coming out a little 0:02:24.240 --> 0:02:27.280 bit later this year in conjunction with Fox and Warner Brothers. 0:02:27.280 --> 0:02:31.800 They have their own ESPN Plus standalone app. Again a 0:02:31.800 --> 0:02:34.400 little bit of you know, we're not really sure whether 0:02:34.440 --> 0:02:36.600 those are necessarily going to cannibalize each other. I don't 0:02:36.639 --> 0:02:38.880 think so. I think really Disney what they're trying to 0:02:38.880 --> 0:02:41.960 do here is kind of create this this super bundle 0:02:42.080 --> 0:02:45.320 because they know that, you know, content bundling works and 0:02:45.360 --> 0:02:48.200 everybody's kind of looking aggregation is the holy grail, and 0:02:48.240 --> 0:02:50.160 I think Disney wants to be at the forefront of it. 0:02:50.600 --> 0:02:52.359 But definitely we need a little bit more kind of 0:02:52.639 --> 0:02:55.280 clarity at least around like what the financial value creation 0:02:55.400 --> 0:02:55.840 is going to be. 0:02:56.080 --> 0:02:58.480 How about the theme park business that seems to continue 0:02:58.480 --> 0:03:01.360 to be a really solid business for them, and I 0:03:01.400 --> 0:03:03.080 know they you know, they announce several months ago that 0:03:03.080 --> 0:03:05.840 they're really stepping up their investment in their theme parks 0:03:05.840 --> 0:03:07.320 and their cruises and all that kind of stuff. How 0:03:07.320 --> 0:03:09.560 did that business do very very well. 0:03:09.600 --> 0:03:13.160 So again, operating income was for the quarter was well 0:03:13.200 --> 0:03:15.560 above three billion dollars. That was again above what the 0:03:15.560 --> 0:03:18.000 street was expecting. And really what we're seeing is a 0:03:18.000 --> 0:03:20.919 lot of momentum at the International parks. So they opened, 0:03:21.160 --> 0:03:23.600 you know, they've opened so many new attractions in their 0:03:24.280 --> 0:03:27.280 overseas properties. You have a new Frozen Land in Hong Kong, 0:03:27.560 --> 0:03:31.360 you have the new Zootopia attraction in in Shanghai, and 0:03:31.440 --> 0:03:34.680 both of those are doing really really well for the company, 0:03:34.760 --> 0:03:36.760 and that has really enabled them to take, you know, 0:03:36.800 --> 0:03:40.520 implement all of these price increases. So International parks really 0:03:40.600 --> 0:03:43.720 kind of doing extremely well. Domestically. There's a little bit 0:03:43.760 --> 0:03:46.160 of pressure from wage inflation, there's a little bit of 0:03:46.200 --> 0:03:48.160 pressure from you know, tough comms from like the Walt 0:03:48.200 --> 0:03:51.720 Disney World fifty that anniversary celebration, But again, just transient 0:03:52.040 --> 0:03:54.440 parks are really set up very very well. And you 0:03:54.480 --> 0:03:57.280 mentioned the sixty billion dollar investment. Now seventy percent of 0:03:57.400 --> 0:04:00.960 that capex is going to be towards new attractions, So 0:04:01.280 --> 0:04:04.320 this is really going to be a major major profit 0:04:04.400 --> 0:04:05.600 driver for them going forward. 0:04:05.920 --> 0:04:08.080 Gito, there was a journal article that I just felt 0:04:08.120 --> 0:04:10.480 like helped someone like me who's not seeped in Disney, 0:04:10.480 --> 0:04:14.240 Like you guys understand how they're just seeping in to 0:04:14.440 --> 0:04:16.600 all the Americana. 0:04:15.800 --> 0:04:19.839 That's out there. They said, Taylor, Swift, football and Fortnite. 0:04:19.480 --> 0:04:22.520 But like anywhere that you will want to be or 0:04:22.560 --> 0:04:25.560 listen to or watch, Disney will be there. What did 0:04:25.600 --> 0:04:27.400 you make of the Fortnite investment? 0:04:28.720 --> 0:04:31.920 Super smart move by them, right, It's so strategic, it's 0:04:31.960 --> 0:04:34.159 so smart, and it's still a kind of not a 0:04:34.279 --> 0:04:37.120 huge investment. One point five billion gives them some steak, 0:04:37.200 --> 0:04:39.000 gives them some skin in the game, and there's a 0:04:39.000 --> 0:04:41.280 lot of upside, not too much downside. So I think 0:04:41.279 --> 0:04:43.880 a really good way for them. And remember, Alex, they've 0:04:43.880 --> 0:04:46.360 had this kind of really checkered past when it comes 0:04:46.400 --> 0:04:48.040 to video games. It's not that they haven't been there. 0:04:48.080 --> 0:04:50.560 They were in the publishing business. Didn't really work out 0:04:50.560 --> 0:04:53.880 for them. They exited that business in twenty sixteen started 0:04:53.960 --> 0:04:56.640 licensing out a lot of their content. But you know, licensing, 0:04:56.680 --> 0:04:59.240 you're still kind of this passive participant. They really need 0:04:59.279 --> 0:05:01.240 to be there. They need to be an active participant 0:05:01.240 --> 0:05:04.240 in the video gaming industry. There's so much overlap between 0:05:04.279 --> 0:05:06.279 all of the audiences that go to the you know, 0:05:06.320 --> 0:05:08.760 the Disney parks and the people who are gaming, right, 0:05:08.760 --> 0:05:10.800 it's all these youngsters and they really want to be 0:05:10.880 --> 0:05:12.839 there and this is a great way for them to 0:05:12.839 --> 0:05:13.120 do it. 0:05:13.600 --> 0:05:16.000 What are they saying about the theatrical business, You. 0:05:15.920 --> 0:05:18.640 Know, the content the studio has not really been the 0:05:18.680 --> 0:05:21.520 blockbuster that it was. We've had a whole string of 0:05:21.560 --> 0:05:24.240 misfires over the past few months. But I think what 0:05:24.440 --> 0:05:26.359 bar Baker was saying is they are in the process 0:05:26.360 --> 0:05:30.000 of rebuilding. The whole content pipeline is refilling. They're having 0:05:30.040 --> 0:05:32.359 this really smart move here with this new Taylor Swift 0:05:32.400 --> 0:05:36.159 movie coming out on March fifteenth, and then they spoke about, 0:05:36.200 --> 0:05:38.919 you know, having this new Moana movie. This was originally 0:05:38.920 --> 0:05:40.800 going to be a series on Disney, plus it's now 0:05:40.839 --> 0:05:44.159 going to be a theatrical, full blown theatrical release. And again, 0:05:44.200 --> 0:05:46.880 we're prepping for twenty twenty six, really, which is going 0:05:46.920 --> 0:05:49.800 to be the biggest year for the box office ever 0:05:49.839 --> 0:05:51.680 since the pandemic, and a lot of that will be 0:05:51.839 --> 0:05:54.159 Disney kind of driving the slate right with. You have 0:05:54.240 --> 0:05:57.279 the whole Star Wars coming back with Mandalorian and Grogu. 0:05:57.360 --> 0:06:00.520 You have a whole set of Marvel releases, so it's 0:06:00.560 --> 0:06:02.400 going to be really interesting as we kind of build that. 0:06:02.560 --> 0:06:06.240 So again, nothing really major in twenty twenty four, maybe 0:06:06.240 --> 0:06:08.440 other than you know, kind of the Deadpool movie, but 0:06:08.839 --> 0:06:11.159 we're kind of building to what's a much stronger slate 0:06:11.240 --> 0:06:12.480 I'm in twenty five twenty. 0:06:12.440 --> 0:06:15.360 Nothing big coming except for the Deadpool. Excuse me, I've 0:06:15.400 --> 0:06:18.040 been waiting for this movie for years. Deadpool three. 0:06:18.480 --> 0:06:19.640 You're a big fan of the franchise. 0:06:19.680 --> 0:06:21.880 Definitely not my audience that I'm talking to right now. 0:06:22.960 --> 0:06:26.560 This is the third one having Wolverine make a little cameo. 0:06:26.760 --> 0:06:28.560 Whatever. Anyway, it's gonna be awesome. 0:06:29.120 --> 0:06:29.320 Paul. 0:06:29.360 --> 0:06:30.920 What do you make of like how fast Disney was 0:06:30.960 --> 0:06:33.480 able to move, Well, a lot. 0:06:33.360 --> 0:06:35.320 Of people tell you they didn't move fast enough. But 0:06:35.400 --> 0:06:38.120 it's I think when i Biger came in, I mean, yeah, yeah, 0:06:38.160 --> 0:06:40.040 and it's but the stock's been kind of dead money 0:06:40.080 --> 0:06:42.719 for a while and Githa well knows here. It's just 0:06:42.760 --> 0:06:44.760 a question of when can we get a sense of 0:06:44.760 --> 0:06:46.200 when the streaming losses are going to be in the 0:06:46.200 --> 0:06:49.279 rear view mirror, and you know, bob Byger's surprises. You know, 0:06:49.360 --> 0:06:51.160 I guess a year or so ago when he said 0:06:51.480 --> 0:06:53.040 some of these assets might be for sale, like the 0:06:53.080 --> 0:06:55.840 ABC networks, some of the cable networks. Any update on that. 0:06:56.320 --> 0:06:58.360 Yes, we did have him kind of say everything's up 0:06:58.360 --> 0:07:00.240 for sale, and then he kind of walked back all 0:07:00.240 --> 0:07:02.720 of that. It's kind of starting to make sense because 0:07:02.720 --> 0:07:05.600 they're obviously taking all that content, they're putting it now 0:07:05.640 --> 0:07:07.880 on the super app, So it makes sense for them 0:07:07.880 --> 0:07:09.680 to still kind of hold on to their linear TV 0:07:09.760 --> 0:07:12.640 assets because they still do have very valuable sports rights 0:07:12.680 --> 0:07:14.920 on there. So I think they're kind of aiming for 0:07:14.960 --> 0:07:18.280 this bigger, kind of grander strategy. I don't necessarily think 0:07:18.320 --> 0:07:20.000 that they're looking to sell any of their linear TV 0:07:20.040 --> 0:07:20.840 networks right now. 0:07:21.080 --> 0:07:23.920 Our thanks to KEITHA. Rong Andathan Bloomberg, intelligence analysts on 0:07:24.000 --> 0:07:24.640 US Media. 0:07:24.720 --> 0:07:27.240 We turn now to the financial services sector. This week, 0:07:27.480 --> 0:07:31.160 UBS reported a fourth quarter net law, citing higher expenses. 0:07:31.400 --> 0:07:33.240 The bank also announced it will buy back up to 0:07:33.280 --> 0:07:35.520 one billion dollars in shares this year, and this comes 0:07:35.560 --> 0:07:38.640 as UBS seeks to keep investors focused on the upside 0:07:38.640 --> 0:07:40.560 of its complex integration of credits. 0:07:40.560 --> 0:07:42.760 Weeeze for more on this. We were joined by Alison 0:07:42.800 --> 0:07:46.560 Williams Bloomberg Intelligence senior analysts Global banks and asset Managers. 0:07:46.800 --> 0:07:48.960 I asked her what her key takeaways were from this 0:07:48.960 --> 0:07:49.720 week's earnings. 0:07:50.080 --> 0:07:53.120 Investor's got as much as they could. They may have 0:07:53.280 --> 0:07:56.480 wanted a bit more. The one negative thing for the 0:07:56.520 --> 0:07:59.080 outlook is that twenty twenty four estimates are likely going 0:07:59.120 --> 0:08:03.160 to come down a little bit because you know, the 0:08:03.200 --> 0:08:05.240 returns are going to be lower. But that's because I 0:08:05.280 --> 0:08:08.640 think UBS is trying to be aggressive in you know, 0:08:08.680 --> 0:08:12.440 pulling forward those costs. So they did upsize the costs 0:08:12.960 --> 0:08:15.080 on a growth basis, but they're going to invest those 0:08:15.120 --> 0:08:17.840 so not falling to the bottom line, so perhaps some 0:08:17.920 --> 0:08:21.679 disappointment there. They did reiterate their sort of three year target. 0:08:22.200 --> 0:08:25.240 They gave a longer term target that was in line 0:08:25.280 --> 0:08:27.559 with the high end before credits we so I think 0:08:27.880 --> 0:08:30.640 those were all positive. The buybacks also a little bit 0:08:30.640 --> 0:08:34.600 better than expected. The big positive news was twenty seven 0:08:34.640 --> 0:08:38.720 percent increase in dividend. Also fourth quarter, you know, not 0:08:38.880 --> 0:08:41.559 so much great things going on there, so that the 0:08:41.640 --> 0:08:45.640 miss was on costs. Their adjusted costs fell, Their integration 0:08:45.720 --> 0:08:49.160 costs or the restructing costs were much bigger than expected. 0:08:49.240 --> 0:08:51.760 The wealth flows moderated a little bit, and the investment 0:08:51.760 --> 0:08:52.920 buying lost money. 0:08:53.120 --> 0:08:56.760 Allison, what is the new UBS here post Credit Swiss 0:08:56.760 --> 0:08:59.079 and full disclosure on a client of UBS used to 0:08:59.160 --> 0:09:01.200 work at Credit Swiss. So I'm all over the Swiss 0:09:01.559 --> 0:09:03.920 stuff here. But what's where does UBS want to be 0:09:04.040 --> 0:09:07.720 now that they've acquired Credits Swiss? What are their ambitions 0:09:07.800 --> 0:09:10.720 visa a global financial institution? 0:09:11.520 --> 0:09:14.959 So I don't think that the big picture strategy has 0:09:15.080 --> 0:09:18.480 changed much for them, right, So they their focuses on wealth, 0:09:18.800 --> 0:09:22.040 you know, they're the premier global wealth manager. They added 0:09:22.080 --> 0:09:25.920 some assets, they added some relationships with Credit Suite in 0:09:25.960 --> 0:09:30.440 the investment bank. Again, they're still focused on equities. So 0:09:30.640 --> 0:09:34.120 even though profit disappointed, revenue came in about in line. 0:09:34.120 --> 0:09:37.160 So that's that's a positive thing. On the equities trading 0:09:37.200 --> 0:09:41.320 side of things. They did add, you know, some incremental ads. 0:09:41.360 --> 0:09:44.880 There were some numbers around the traders. The Bloomberg News reported, 0:09:44.960 --> 0:09:48.240 We obviously look at the top line of revenue. They 0:09:48.360 --> 0:09:51.600 kept the M and A and the research areas were 0:09:51.640 --> 0:09:54.839 the areas that they added to and those areas did 0:09:54.840 --> 0:09:55.360 pretty well. 0:09:55.280 --> 0:09:55.720 On the corner. 0:09:55.960 --> 0:09:57.480 So what else do you need to hear to get 0:09:57.520 --> 0:09:59.839 more confidence in all of this mean just like a 0:10:00.120 --> 0:10:01.680 kind of holding wait for two more years. 0:10:01.720 --> 0:10:04.439 Basically, I think it is like a show me right, 0:10:04.520 --> 0:10:06.120 So I think it's going to be a step by 0:10:06.200 --> 0:10:10.160 step So Armandi, as you know, said that you know, 0:10:10.200 --> 0:10:12.400 they might sacrifice a little bit of revenue because they 0:10:12.440 --> 0:10:15.320 are focused on profitability. They're focused on doing things right. 0:10:15.559 --> 0:10:18.880 So again like those are the types of things that 0:10:19.520 --> 0:10:22.440 you have to have confidence. He has done a big 0:10:22.440 --> 0:10:25.560 turnaround at UBS before. But I think that it is 0:10:25.559 --> 0:10:27.280 the kind of thing where it's like quartered by quarter. 0:10:27.320 --> 0:10:30.319 Investors have to start to see, you know, some support 0:10:30.640 --> 0:10:33.640 for these estimates. Another target they put out was one 0:10:33.679 --> 0:10:36.599 hundred billion per year for the next two years in 0:10:36.640 --> 0:10:39.160 net new wealth asset. So I think that's a pretty 0:10:39.160 --> 0:10:41.920 good target. But again we saw some slowing in the 0:10:41.920 --> 0:10:45.280 fourth quarter. Some of that was mandates leaving with credit sweee, 0:10:45.360 --> 0:10:50.280 relationship managers still pretty stable. But I think investors will 0:10:50.280 --> 0:10:53.600 want to see you know more so you know, over 0:10:53.600 --> 0:10:56.880 the next few quarters, UBS delivering on its plans. 0:10:57.520 --> 0:11:00.360 So Elison, just, I mean you cover everything the all 0:11:00.360 --> 0:11:04.480 the global big investment banks, commercial banks. Here is the 0:11:04.520 --> 0:11:08.520 global bank is that just left to the Morgan Stanley's 0:11:08.640 --> 0:11:11.040 the Goldman Sachs is or what it doesn't seem like 0:11:11.040 --> 0:11:14.920 anybody in Asia, anybody in Europe can compete against the 0:11:15.000 --> 0:11:16.240 JP Morgans of the world. 0:11:16.640 --> 0:11:19.120 So Paul, it's I mean, it's really been over the 0:11:19.160 --> 0:11:21.679 last decade, you know, ever since you left the business, 0:11:21.800 --> 0:11:25.880 but it was it was last decade, you know, the 0:11:26.000 --> 0:11:29.880 US bank just follow you know, really making those market 0:11:29.920 --> 0:11:32.600 share games. Credit SUITEE was is sort of the latest 0:11:32.679 --> 0:11:36.160 to provide some games to those US players, if you 0:11:36.240 --> 0:11:39.679 will keep in mind that that sale from UBS follows 0:11:39.679 --> 0:11:43.680 them exiting prime brokerage. Before Credit Suite, we had Deutsche Bank, 0:11:43.760 --> 0:11:46.559 who also accident in prime brokerage. They shed parts of 0:11:46.600 --> 0:11:49.160 their fixed income business. If we went back to several 0:11:49.240 --> 0:11:52.400 years prior, there was a lot of the European players 0:11:52.440 --> 0:11:55.920 getting out of fix and you know, keep in mind, 0:11:56.280 --> 0:11:59.560 it is a scale business and I think where banks 0:11:59.600 --> 0:12:02.880 like JP, if you Morgan have been winning at In fact, 0:12:02.880 --> 0:12:05.120 Goldman Sachs has gained the most market share over the 0:12:05.200 --> 0:12:09.120 last several years. Or that they are investing in technology 0:12:09.200 --> 0:12:11.440 that helps them get better revenue, that helps them have 0:12:11.480 --> 0:12:14.640 more money to invest. And so it's really that virtuous 0:12:14.679 --> 0:12:18.240 cycle that some of those big US banks have been enjoying. 0:12:18.200 --> 0:12:21.880 Thanks to Alison Williams, Bloomberg Intelligence, senior analysts for global banks. 0:12:22.280 --> 0:12:24.200 Coming up, we're going to break down earnings from Caterpillar, 0:12:24.240 --> 0:12:26.800 one of the world's largest manufacturers of heavy machinery. 0:12:27.040 --> 0:12:30.160 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing up 0:12:30.240 --> 0:12:32.800 research and data on two thousand companies one hundred and 0:12:32.800 --> 0:12:35.760 thirty industries. You can access Bloomberg Intelligence via b I 0:12:35.840 --> 0:12:37.719 go on the terminal, I'll Paul Sweet. 0:12:37.480 --> 0:12:39.679 And am Alex Steel and this is Bloomberg. 0:12:47.679 --> 0:12:51.560 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:51.640 --> 0:12:54.720 weekdays at ten am Eastern on fo Cardplay and Android 0:12:54.760 --> 0:12:57.840 Auto with the Bloomberg Business App. Listen on demand wherever 0:12:57.920 --> 0:13:02.240 you get your podcasts, or watch us live on YouTube. 0:13:03.240 --> 0:13:04.240 Let's turn out a Tesla. 0:13:04.400 --> 0:13:06.720 So Tesla staff are said to be racing for potential 0:13:06.800 --> 0:13:09.760 job cuts, and we're told managers were asked whether each 0:13:09.800 --> 0:13:12.560 of their employees' positions is critical. 0:13:12.720 --> 0:13:15.280 We would join this week by Steve Man Bloomberg Intelligence, 0:13:15.320 --> 0:13:18.600 Global Autos and Industry Research Channels. You're first asked for 0:13:18.679 --> 0:13:20.440 his take on the potential job cuts. 0:13:20.679 --> 0:13:23.320 Job cuts are never good for the employees. But I 0:13:23.320 --> 0:13:27.000 think the investors will probably look at it positively because 0:13:27.000 --> 0:13:29.840 the stock's been down like twelve percent since their last 0:13:29.840 --> 0:13:34.080 earnings call, in thirty percent year to day, and that's 0:13:34.080 --> 0:13:38.000 all because you know, slowing EV sales, price cuts. So 0:13:38.240 --> 0:13:41.040 the company needs to do something to address them of 0:13:41.080 --> 0:13:43.280 the short term challenges they're facing. 0:13:44.080 --> 0:13:46.760 So when I see news like this, it really makes 0:13:46.800 --> 0:13:50.600 me think, Steve, that maybe they see something fundamental in 0:13:50.679 --> 0:13:53.240 their business such that they have to look at a 0:13:53.280 --> 0:13:57.520 big fixed cost like people. What's the company saying these 0:13:57.600 --> 0:13:59.319 days about where they see. 0:13:59.320 --> 0:14:02.199 Well, Man, well, that's a good question. I think you 0:14:02.280 --> 0:14:05.400 got two questions there. First of all, fundamentally, you know, 0:14:05.559 --> 0:14:08.280 they've done a lot of price cutting, you know, in 0:14:08.320 --> 0:14:12.880 their operations, in the administrative side of things, in their manufacturing. 0:14:13.520 --> 0:14:15.800 They plucked out all the low hanging fruits. There's not 0:14:15.920 --> 0:14:20.200 much to cut anymore other than looking at their human resources, 0:14:20.240 --> 0:14:22.480 and that's what they're doing at this time. 0:14:23.000 --> 0:14:23.320 Now. 0:14:23.480 --> 0:14:26.800 Obviously, you know you don't want to cut, but I 0:14:26.840 --> 0:14:30.080 think they have to. If you look at Forge Earning's call, 0:14:31.000 --> 0:14:35.680 the market is really brutal. They've the margins was down, 0:14:35.840 --> 0:14:38.920 like was at negative ninety eight percent for Ford's EV 0:14:39.080 --> 0:14:43.280 business that's worse than their third quarter. So from that 0:14:43.320 --> 0:14:47.680 you can see the whole entire EV market is still 0:14:47.800 --> 0:14:52.560 facing you know, price cuts, slower demand, and that's you know, 0:14:52.640 --> 0:14:55.200 I think that's what Testa is trying to dress for 0:14:55.320 --> 0:14:56.680 twenty twenty four he Steve. 0:14:56.760 --> 0:14:59.320 Do we have an idea of when the trough might 0:14:59.400 --> 0:15:02.280 happen for evs? When is it just going to take 0:15:02.360 --> 0:15:04.360 cheaper ones or is it going to be actually more 0:15:04.440 --> 0:15:06.760 hybrid and that trough be really pushed out. 0:15:07.680 --> 0:15:11.800 I think hybrid is a good kind of fill in 0:15:12.040 --> 0:15:17.520 between now and when EV's can take off. Our view 0:15:17.760 --> 0:15:21.240 is actually, you know, around twenty twenty six, because I 0:15:21.280 --> 0:15:26.200 think that's when prices, cost of manufacturing evs will come 0:15:26.240 --> 0:15:31.320 down with localization of battery production, more EV models out there, 0:15:31.560 --> 0:15:36.560 and everyone, every automaker right now is talking about the 0:15:36.600 --> 0:15:40.880 second generation of EV vehicles, the third generation of EV vehicles. 0:15:40.920 --> 0:15:44.480 They're actually designed on a very different platform than the 0:15:44.520 --> 0:15:48.600 ICE vehicles, the internal combustion engine vehicles that is supposed 0:15:48.640 --> 0:15:52.720 to streamline production, cut parts, cut the number of parts, 0:15:53.000 --> 0:15:55.600 and hopefully drive costs down to make it more affordable 0:15:56.040 --> 0:15:58.120 for the consumers. 0:15:57.760 --> 0:16:02.480 So it's a twenty six story. Will the charging infrastructure 0:16:02.920 --> 0:16:04.320 also be a twenty six story? 0:16:05.640 --> 0:16:09.120 Well, no, there are some spending at the moment to 0:16:09.200 --> 0:16:13.880 increase charging infrastructure. I mean, that's another bottleneck that the 0:16:13.960 --> 0:16:17.000 industry is facing. I think you know, out in the 0:16:17.040 --> 0:16:20.440 West coast, out in the East coast, charging infrastructure are 0:16:20.800 --> 0:16:24.360 not of a big concern, but Central America is. So 0:16:24.400 --> 0:16:26.200 that's where the focus is, I think in the next 0:16:26.240 --> 0:16:29.000 couple of years to really built up the charging infrastructure 0:16:29.640 --> 0:16:30.680 in that part of the country. 0:16:30.880 --> 0:16:33.760 How many charging units do you have at the Princeton 0:16:33.760 --> 0:16:35.320 campus at Bloomberg right now? 0:16:36.280 --> 0:16:37.600 Oh, it's it's interesting. 0:16:37.640 --> 0:16:40.080 If you go out to the parking lot here, you 0:16:40.440 --> 0:16:49.640 think it's a Tesla dealership out here, there's probably you know, fifty. 0:16:48.040 --> 0:16:51.000 Fifty the cars, Like, are the Teslas actually being plugged 0:16:51.000 --> 0:16:51.840 in or ev. 0:16:51.880 --> 0:16:54.800 Oh yeah, oh yeah, oh yeah. You'll see mostly Tesla. 0:16:54.960 --> 0:16:57.880 You'll see a couple of Volkswagen, a couple of Volvols. 0:16:57.960 --> 0:16:59.680 But because I that's why. 0:17:00.040 --> 0:17:01.920 When I was at the Princeton campus, Steve, you know, 0:17:02.000 --> 0:17:04.760 I guess I haven't been there since before the pandemic. 0:17:04.960 --> 0:17:06.960 It's called it five years. Five years are gonna be 0:17:06.960 --> 0:17:10.240 ad two? Now you're telling me, we have fifty. That 0:17:10.560 --> 0:17:13.960 is a good barometer. I think Bloomberg is usually on 0:17:13.960 --> 0:17:16.320 the cutting edge of this stuff. But still interesting. 0:17:16.400 --> 0:17:17.919 Yeah, and I wonder like, did you get the idea 0:17:17.920 --> 0:17:21.240 that the charging was there, therefore you brought the EV's 0:17:21.840 --> 0:17:25.119 or it's just a clientele that has the EV's unfair question, 0:17:25.320 --> 0:17:26.040 But like, what do. 0:17:26.000 --> 0:17:28.919 You think that's a good question. It's all about the 0:17:28.920 --> 0:17:29.919 cost of ownership. 0:17:30.400 --> 0:17:31.320 You're right, Alex. 0:17:31.560 --> 0:17:35.000 Having the charging stations here make it convenient for people 0:17:35.040 --> 0:17:38.640 to charge and really cut their monthly costs. Right, there's 0:17:38.640 --> 0:17:41.160 no fuel costs anymore with the evs our. 0:17:41.080 --> 0:17:43.960 Thanks to Steve Man, Bloomberg Intelligence Global Auto Analyst. 0:17:44.359 --> 0:17:46.199 Now we look at Caterpillar, one of my faves, one 0:17:46.200 --> 0:17:47.960 of the world's largest manufacturers of. 0:17:47.880 --> 0:17:49.280 Heavy machinery, and then early in. 0:17:49.200 --> 0:17:52.040 The week the company reported higher fourth quarter sales and 0:17:52.080 --> 0:17:53.760 his energy and transportation business. 0:17:54.000 --> 0:17:56.760 For more, we spoke with Chris Chilino, Bloomberg Intelligence Senior 0:17:56.840 --> 0:17:59.760 US machinery analyst. We first asked Chris for his key 0:17:59.840 --> 0:18:01.440 tape ways from the earnings results. 0:18:01.880 --> 0:18:04.280 It was a real solid print despite the fact that 0:18:04.320 --> 0:18:07.439 we continued to see these really cautionary signs out there 0:18:07.520 --> 0:18:10.960 of slowing demand. Four key results you know, broadly exceeded 0:18:11.000 --> 0:18:14.440 not only our expectations, but I think Kat's internal expectations 0:18:14.440 --> 0:18:18.119 as well. Pricing continues to surprise to the upside. The 0:18:18.200 --> 0:18:21.840 margin performance was quite good, particularly in their energy and 0:18:21.840 --> 0:18:26.400 transportation business. Retail sales to end users continued to hold 0:18:26.480 --> 0:18:30.080 up reasonably well, orders came in better than we anticipated, 0:18:30.320 --> 0:18:32.719 and the cash generation of the business, you know, remains 0:18:32.840 --> 0:18:35.880 very strong. So there's a lot of positives to take 0:18:35.880 --> 0:18:38.760 away from the report, and I think this probably dispelled 0:18:38.840 --> 0:18:41.440 some of those, you know, concerns over a more pronounced 0:18:41.480 --> 0:18:45.000 or near term cyclical downturn, at least for the time being. 0:18:45.400 --> 0:18:47.720 As it appears, you know, twenty four is really shaping 0:18:47.800 --> 0:18:49.800 up to be a little bit maybe more resilient than 0:18:49.800 --> 0:18:53.680 we had anticipated going into the print. That being said, 0:18:53.840 --> 0:18:57.120 you know, we still think there remains risk and it's 0:18:57.160 --> 0:19:00.760 mostly to the downside moving forward here, and we're really 0:19:00.840 --> 0:19:03.919 kind of cautious on the sustainability of this performance, especially 0:19:04.000 --> 0:19:06.840 as the macro backdrop begins to soften. 0:19:07.200 --> 0:19:10.600 So what's the company saying about their outlook? And I 0:19:10.600 --> 0:19:13.240 guess my question A what's the company saying and B 0:19:13.680 --> 0:19:16.320 what's their lead time on they can how far out 0:19:16.320 --> 0:19:18.200 can they see in terms of their orders and things 0:19:18.240 --> 0:19:18.560 like that. 0:19:19.760 --> 0:19:22.560 Yeah, so they're looking at twenty twenty four's kind of 0:19:22.560 --> 0:19:27.280 being more of a flatish type top line environment. Caterpillars 0:19:27.320 --> 0:19:30.760 notorious for not giving much on the guidance, but they're 0:19:30.840 --> 0:19:35.000 kind of suggesting that the top line will be relatively flatish. 0:19:35.160 --> 0:19:37.560 Volumes will be down next year, So this is going 0:19:37.600 --> 0:19:39.879