WEBVTT - Bloomberg Surveillance TV: October 10, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.240 with Lisa Bromwitz and a Marie hort Ern. Join us 0:00:18.280 --> 0:00:21.280 each day for insight from the best in markets, economics, 0:00:21.320 --> 0:00:24.440 and geopolitics from our global headquarters in New York City. 0:00:24.680 --> 0:00:27.360 We are live on Bloomberg Television weekday mornings from six 0:00:27.400 --> 0:00:30.400 to nine am Eastern. Subscribe to the podcast on Apple, 0:00:30.520 --> 0:00:33.440 Spotify or anywhere else you listen, and as always on 0:00:33.479 --> 0:00:36.960 the Bloomberg Terminal and the Bloomberg Business App. Brian Leavitt 0:00:37.120 --> 0:00:39.440 of Vanvesco Joints surround the table here in New York. Brian, 0:00:39.479 --> 0:00:41.760 good morning to you. We're looking ahead to economics eight 0:00:41.840 --> 0:00:43.720 this morning at eight thirty Eastern Time. We're looking back 0:00:43.720 --> 0:00:46.680 at payrolls from last Friday, bloom out payrolls for important 0:00:46.760 --> 0:00:48.560 and we're attempting to look ahead to more of the same. 0:00:48.960 --> 0:00:50.720 I just wonder how messy the days is going to 0:00:50.760 --> 0:00:53.160 be after the one two punch we've seen across several 0:00:53.200 --> 0:00:56.360 states in America, Hurricane Alean onto Hurricane Milton. 0:00:56.800 --> 0:00:58.640 Yes, some of the data may be messy, but I 0:00:58.680 --> 0:01:01.760 think the law larger themes are still in place, and 0:01:01.800 --> 0:01:03.880 I know that there's a lot of focus on today's 0:01:04.000 --> 0:01:07.720 CPI report. The reality is, I continue to believe that 0:01:07.760 --> 0:01:10.199 the inflation story is largely behind us. 0:01:10.040 --> 0:01:10.760 It's passe. 0:01:11.080 --> 0:01:14.080 If you look at the Fed's preferred measure of inflation 0:01:14.319 --> 0:01:16.600 very much in the comfort zone. If you look at 0:01:16.600 --> 0:01:19.600 the inflation break evens, which give you the bond markets 0:01:19.640 --> 0:01:23.559 expectation of inflation relatively benign. I mean, the inflation story 0:01:23.680 --> 0:01:26.520 was one of large stimulus and a pandemic that caused 0:01:26.840 --> 0:01:30.920 supply challenges. I don't think it's something that is re emerging. Rather, 0:01:31.440 --> 0:01:34.919 it's a market that's responded to some good economic activity. 0:01:34.440 --> 0:01:36.320 And it's responded as follows, a two year back at 0:01:36.319 --> 0:01:38.840 four percent, a ten year back at four percent. How 0:01:38.880 --> 0:01:40.560 do you think about the influence of the bond market 0:01:40.600 --> 0:01:42.039 and the equity market alignment. 0:01:42.160 --> 0:01:43.600 I'm okay with that. 0:01:44.040 --> 0:01:47.560 I would rather see better economic data and less rate 0:01:47.640 --> 0:01:50.600 cuts than bad economic data and a lot of ray cuts. 0:01:50.920 --> 0:01:53.280 You know, the markets. The bond market's. 0:01:52.920 --> 0:01:55.040 Been moving in this three and a half to four 0:01:55.040 --> 0:01:57.600 and a half percent range, give or take this year, 0:01:58.000 --> 0:02:00.240 depending on the direction of the data. Now, if you 0:02:00.280 --> 0:02:04.080 think of four percent is a general proxy for what 0:02:04.200 --> 0:02:06.720 nominal growth will be in this country two percent real, 0:02:06.720 --> 0:02:10.760 two percent inflation, So that seems like a reasonable value. 0:02:10.880 --> 0:02:13.560 Is things deteriorate and growth you come down a little bit, 0:02:13.680 --> 0:02:15.880 So I think we're probably at the upper end of 0:02:15.880 --> 0:02:18.560 that range. Again, Yeah, we had a good payroll report, 0:02:18.600 --> 0:02:21.240 but if you look at survey data, it's somewhat mixed 0:02:21.480 --> 0:02:24.120 and doesn't seem like an economy heading into a recession, 0:02:24.120 --> 0:02:26.600 but doesn't seem like one that's reaccelerating either. 0:02:26.560 --> 0:02:28.440 Which raises a question. Did the sell off in the 0:02:28.480 --> 0:02:30.280 bond market that we've seen over the past few. 0:02:30.160 --> 0:02:32.480 Weeks actually raise the specter of. 0:02:32.440 --> 0:02:34.840 A pretty big rally if you get a downside surprise 0:02:34.880 --> 0:02:37.360 and CPI In other words, does inflation start to matter 0:02:37.560 --> 0:02:38.240 a whole lot more? 0:02:38.240 --> 0:02:41.520 Again, maybe in the short term, but I would say 0:02:41.560 --> 0:02:44.440 in the long term or in the intermediate term, it's 0:02:44.440 --> 0:02:46.080 going to be more about growth. And one of the 0:02:46.080 --> 0:02:47.760 ways to think about it is just look at the 0:02:47.760 --> 0:02:52.640 correlations between stocks and bonds, which have become negatively correlated. Again, 0:02:52.720 --> 0:02:55.399 so it's become a good news as good news bad 0:02:55.440 --> 0:02:56.760 news is bad news. 0:02:56.720 --> 0:02:57.600 Type of environment. 0:02:57.639 --> 0:03:00.799 And so I'm focused on the growth side of this story. 0:03:00.840 --> 0:03:03.960 You know, when I see a good payroll report or 0:03:04.639 --> 0:03:07.720 a CPI report, that's you know, even a little bit 0:03:07.720 --> 0:03:10.480 above of what the expectation is. To me, I'm thinking 0:03:10.480 --> 0:03:13.880 that's a good nominal growth backdrop. That's good for corporate profitability. 0:03:13.880 --> 0:03:17.440 It doesn't increase concerns to me significantly that this FED 0:03:17.520 --> 0:03:19.959 can ease or the FED may have to raise rates again, 0:03:20.040 --> 0:03:22.760 or inflation's coming back again. I think that's a twenty 0:03:22.800 --> 0:03:23.720 twenty two story. 0:03:23.840 --> 0:03:25.720 So you like treasure is here in terms of where 0:03:25.720 --> 0:03:28.080 they're at and the value that they're giving. That's what 0:03:28.080 --> 0:03:30.280 I'm getting from you. We just heard Bill Waddell talk 0:03:30.320 --> 0:03:33.079 about potential four hundred and fifty billion dollars in recovery 0:03:33.080 --> 0:03:35.400 funds needed to pay for what's going on in Florida. 0:03:35.480 --> 0:03:36.840 This isn't going to be the last. A lot of 0:03:36.840 --> 0:03:38.880 people saying these storms coming a lot more frequently, and 0:03:39.160 --> 0:03:41.080 aside from just the storms and paying for all of this, 0:03:41.200 --> 0:03:43.200 it raises a question of how much more spending needs 0:03:43.240 --> 0:03:46.920 to happen and whether that spending can really be tolerated 0:03:46.960 --> 0:03:48.720 by a treasuring market where the auctions are starting to 0:03:48.720 --> 0:03:49.360 get messier. 0:03:49.480 --> 0:03:49.960 Well, they may be. 0:03:49.960 --> 0:03:52.200 Getting a little bit messier, but we haven't seen the 0:03:52.360 --> 0:03:56.160 treasury break from nominal growth potential. I mean people view 0:03:56.280 --> 0:04:00.720 treasuries as perhaps trading like a credit They don't measury market. 0:04:01.040 --> 0:04:03.520 It largely trades on the direction of the economy and 0:04:03.560 --> 0:04:05.400 what the Federal Reserve is going to do. So I'm 0:04:05.440 --> 0:04:10.280 not concerned that additional spending will cause rates to jump 0:04:10.360 --> 0:04:15.280 because we're concerned about the credit worthiness of the US 0:04:15.280 --> 0:04:17.599 A rate that's going to continue to move in line 0:04:17.640 --> 0:04:19.400 with inflation and with growth. 0:04:19.440 --> 0:04:20.920 And you know, it's sort of like. 0:04:20.839 --> 0:04:23.520 Every time rates come down, you say to investors, well, 0:04:23.560 --> 0:04:25.120 you've been sitting in money markets. 0:04:25.160 --> 0:04:26.080 You should have locked in. 0:04:26.360 --> 0:04:28.800 This is like the third or fourth bite at the 0:04:28.800 --> 0:04:31.359 app Well they've gotten People used to beg me for 0:04:31.480 --> 0:04:33.840 four percent, right, and now this is the third or 0:04:33.880 --> 0:04:37.680 fourth time they've had the opportunity to take advantage of 0:04:37.720 --> 0:04:40.479 that beyond thirty days, maybe think about it for five 0:04:40.560 --> 0:04:42.200 years or ten years. 0:04:42.240 --> 0:04:44.040 So I think investors should take advantage of it. 0:04:44.160 --> 0:04:46.240 Hurricanes are not just going to be expensive, but the 0:04:46.279 --> 0:04:48.760 fact is they can also increase fuel costs. We are 0:04:48.800 --> 0:04:51.680 seeing this risk in the oil market, not just domestically 0:04:51.720 --> 0:04:53.960 but also internationally. What's going on in the Middle East. 0:04:54.160 --> 0:04:54.680 What kind of. 0:04:54.600 --> 0:04:57.320 Impact you see from the price of oil, not just 0:04:57.320 --> 0:04:59.920 on inflation data, potentially also its relationship with the bond. 0:05:00.320 --> 0:05:03.040 Well, we know energy prices tend to rise late cycle, right, 0:05:03.080 --> 0:05:05.440 so that's a phenomenon where you get these moves and 0:05:05.520 --> 0:05:08.520 energy prices and that's when the consumer rolls over. 0:05:08.920 --> 0:05:10.919 But let's think of the starting point. 0:05:11.040 --> 0:05:13.800 So the starting point is the US is producing or 0:05:13.839 --> 0:05:16.520 is drilling more oil right now than any country in 0:05:16.560 --> 0:05:19.440 the history of the world ever, right, some thirteen million 0:05:19.480 --> 0:05:20.320 barrels per. 0:05:20.200 --> 0:05:21.440 Day or more. 0:05:21.839 --> 0:05:25.560 And we started this environment or we've you know, the 0:05:25.920 --> 0:05:28.520 expansion of the Middle East war into Lebanon and Israel 0:05:28.560 --> 0:05:33.480 and Iran, and these hurricanes with oil in the sixties 0:05:33.560 --> 0:05:36.880 in the United States, so we've moved up into the 0:05:36.920 --> 0:05:40.279 mid seventies, but certainly not the one hundred and twenty 0:05:40.320 --> 0:05:42.479 dollars that we were looking at when ahead of the 0:05:42.560 --> 0:05:46.359 global financial crisis. I drive around my neighborhood gasolines, you know, 0:05:46.480 --> 0:05:49.760 two seventy five, you know, two eighties, So we're not 0:05:49.839 --> 0:05:52.680 at a level that's you know, prohibitive. In fact, that's 0:05:52.680 --> 0:05:54.880 part of the soft landing story. Consumer networth at an 0:05:54.920 --> 0:05:58.040 all time high gasoline beflow three. But yes, if this 0:05:58.120 --> 0:06:01.200 were to skyrocket significantly, don't think that it's an inflation story. 0:06:01.480 --> 0:06:04.560 That's a tax on the US consumer story. But US 0:06:04.680 --> 0:06:06.320 drilling hopefully prevents that. 0:06:06.560 --> 0:06:09.640 So what's your biggest risk then, to the soft landing scenario. 0:06:09.920 --> 0:06:12.480 The biggest risk would be a rollover in economic activity. 0:06:12.520 --> 0:06:15.480 I mean, we've had interest rates high for a very 0:06:15.600 --> 0:06:18.000 long period of time, and you know, usually when the 0:06:18.040 --> 0:06:20.720 yield curve inverts, you wait eighteen months for the Fed 0:06:20.760 --> 0:06:22.560 to have to normalize the yell curve and you go 0:06:22.600 --> 0:06:25.839 into a recession. And this time that has not happened. 0:06:25.839 --> 0:06:28.600 The bankers were tightening lending standards, now they're not. Corporate 0:06:28.600 --> 0:06:31.560 bond spreads are very benign, so it doesn't feel like 0:06:31.600 --> 0:06:36.200 a recession, largely because most American households have fixed rate mortgages, 0:06:36.480 --> 0:06:39.000 so the increase in rates hasn't hit. Now those are 0:06:39.000 --> 0:06:42.159 famous last words. Right anytime you're two years after tightening cycle, 0:06:42.200 --> 0:06:44.919 you're saying no overseet you know, you say, well, I 0:06:44.920 --> 0:06:45.880 guess we got through this. 0:06:46.000 --> 0:06:47.280 So that would be the risk. 0:06:48.080 --> 0:06:50.359 I'm laser focused on the growth side, not on the 0:06:50.360 --> 0:06:54.400 inflation side. But right now, the evidence suggests it's an 0:06:54.440 --> 0:06:55.679 economy that's pretty resilient. 0:06:55.800 --> 0:06:59.000 Let's finish on Nanning's Importan twenty four as Delta JP 0:06:59.120 --> 0:07:01.600 Morgan wels FONC Bank of America's Vita subramanium. 0:07:01.680 --> 0:07:03.919 The bar isn't high, do you agree? 0:07:04.200 --> 0:07:05.479 Yeah, the bar isn't high. 0:07:05.520 --> 0:07:08.239 It's you know, the expectations are fairly low. We're likely 0:07:08.320 --> 0:07:12.040 to surpass expectations on earnings as we as we tend 0:07:12.040 --> 0:07:14.960 to do. And again it's a good nominal growth back job. 0:07:15.000 --> 0:07:17.600 You know, investors sitting here looking at the equity market 0:07:17.680 --> 0:07:21.680 saying all time highs on the equity market, can I invest? 0:07:21.840 --> 0:07:23.680 You know, we've had, you know. 0:07:24.120 --> 0:07:26.280 Twelve hundred all time highs since the S and P 0:07:26.400 --> 0:07:27.400 five hundred went live. 0:07:27.480 --> 0:07:29.640 And you know people say buy low, sell high. 0:07:29.680 --> 0:07:31.960 I say, by high, sell higher, And I think we're 0:07:32.000 --> 0:07:34.600 in a I think we're in a or maybe never sell. 0:07:34.680 --> 0:07:37.720 I think we're in a bowl market. And peak inflation, 0:07:37.800 --> 0:07:40.280 peak tightening, peak rates should be good for equities. 0:07:40.280 --> 0:07:42.680 He's still but it's just pro vescot Pran is going 0:07:42.720 --> 0:07:54.080 to say, I get the thank you, say, Tom, welcome 0:07:54.120 --> 0:07:56.720 back to the program, set giant step back. Can we 0:07:56.760 --> 0:07:58.920 just spend some time from thirty five thousand feet. Can 0:07:58.960 --> 0:08:02.520 you explain to us how different this universe will lurk 0:08:02.880 --> 0:08:04.760 in ten, fifteen, twenty years time. 0:08:06.440 --> 0:08:10.120 Yeah, certainly. You know, today the auto industry is about 0:08:10.120 --> 0:08:12.800 a two point seven trillion dollar industry. It's essentially a 0:08:12.840 --> 0:08:17.320 box with wheels industry with about ten percent operating margins. 0:08:18.000 --> 0:08:21.320 The robotaxi industry will be about a one point seven 0:08:21.360 --> 0:08:25.920 trillion dollar industry, but massively more profitable. Right you and I. 0:08:25.960 --> 0:08:28.240 When we take an uber pay about a dollar to 0:08:28.280 --> 0:08:31.239 two dollars a mile, it only costs about thirty cents 0:08:31.280 --> 0:08:35.280 to operate one of these per mile, So it's it 0:08:35.320 --> 0:08:39.560 becomes a software business, a subscription based business, and the 0:08:39.720 --> 0:08:43.400 multiples that these companies will trade it will be tech multiples. 0:08:43.760 --> 0:08:46.920 So I have Tesla at something like two hundred and 0:08:47.000 --> 0:08:50.480 fifty billion out of the one point seven trillion, but 0:08:50.640 --> 0:08:54.160 you apply a tech multiple to it, and now all 0:08:54.160 --> 0:08:56.760 of a sudden, it's more than half of my entire 0:08:56.880 --> 0:09:02.640 Tesla valuation. So it dramatically increases the valuation of the 0:09:02.679 --> 0:09:06.880 mobility sector, the auto sector, because it gives all of 0:09:06.960 --> 0:09:11.040 us as consumers greater utility. We don't have to own 0:09:11.040 --> 0:09:13.680 a car, get chased by the cops, deal with parking, 0:09:14.240 --> 0:09:19.600 don't get into accidents. It's really a transformational thing for society. 0:09:19.679 --> 0:09:22.320 I'm sure we'll hear a lot about that tonight. It 0:09:22.679 --> 0:09:26.160 help solve the urban housing crisis. No more parking garages, etc. 0:09:27.559 --> 0:09:31.679 Really a breakthrough type thing for society. The real question, 0:09:31.720 --> 0:09:33.400 obviously is when is it's going to happen. 0:09:33.480 --> 0:09:34.280 Well, let's talk about that. 0:09:34.320 --> 0:09:36.000 So how quick did you think we'll see the shift 0:09:36.040 --> 0:09:39.280 from consumers just pulling away from buying a single automobile 0:09:39.559 --> 0:09:42.199 and maybe buying a subscription to one of these services. 0:09:43.600 --> 0:09:46.600 Yeah, I think this will be a very slow process. 0:09:47.240 --> 0:09:49.599 This is not years, This could even be decades. 0:09:50.000 --> 0:09:53.360 It will happen, though, you know, we had Carlos Stavars 0:09:53.360 --> 0:09:55.400 from Stilantis at our conference a couple of years ago, 0:09:55.480 --> 0:09:59.040 and he said, you'll have to re engineer cities entirely, 0:09:59.240 --> 0:10:01.640 you know, not the example of the champ Sela, say, 0:10:02.040 --> 0:10:04.520 where it's really a human decision of how to drive, 0:10:05.640 --> 0:10:08.959 and so cities left to re engineer themselves. 0:10:09.360 --> 0:10:13.120 Regulatory will be the big question mark that we'll need, 0:10:13.160 --> 0:10:16.560 and that's always a slow process. It will happen, but 0:10:16.679 --> 0:10:20.160 it will be years, maybe decades. Before we get kind 0:10:20.160 --> 0:10:23.439 of full ubiquity, but certain cities you'll see it happen 0:10:23.520 --> 0:10:24.360 quicker than others. 0:10:24.640 --> 0:10:26.440 Tim, I want to pick up on that this question 0:10:26.600 --> 0:10:29.080 of the sheer technology of it versus the regulation of 0:10:29.120 --> 0:10:32.800 it versus the oversight, especially to time, where the host 0:10:32.840 --> 0:10:35.200 of data that you're going to need to make this happen, 0:10:35.200 --> 0:10:38.240 as well as the oversight and the potential manipulation of 0:10:38.280 --> 0:10:41.000 people's driving patterns is going to become in cold relief 0:10:41.000 --> 0:10:43.760 when everything is a national security issue, how high are 0:10:43.760 --> 0:10:45.600 the hurdles. Do you have a sense of who's even 0:10:45.679 --> 0:10:48.440 working on trying to get some sort of regulatory framework 0:10:48.520 --> 0:10:51.600 and oversight into how this would operate, let alone whether 0:10:51.640 --> 0:10:52.280 it even could. 0:10:53.880 --> 0:10:56.160 Yeah, I mean I was at cs a couple of 0:10:56.200 --> 0:11:00.760 years back, and there were congressmen from you know, US 0:11:01.360 --> 0:11:05.600 states who were speaking about this topic. So there is 0:11:05.640 --> 0:11:09.320 a political movement to get this happening, even in the US. 0:11:09.480 --> 0:11:11.600 It is a state by state issue in the US. 0:11:12.360 --> 0:11:17.120 But remember we're saving thousands of lives, you know, hundreds 0:11:17.120 --> 0:11:20.880 of millions of dollars in productivity, etc. So there is 0:11:20.920 --> 0:11:23.960 a political motivation to get it done. But obviously you 0:11:23.960 --> 0:11:27.760 have questions about liability, the automaker get the liability, does 0:11:27.840 --> 0:11:30.520 the person driving get the liability? So the US it's 0:11:30.520 --> 0:11:34.000 somewhat complicated. Europe is even more difficult to get this. 0:11:34.080 --> 0:11:36.720 On the finishing line, you have the European Commission, which 0:11:36.720 --> 0:11:39.600 is a multiple countries have to all agree together. We 0:11:39.640 --> 0:11:42.640 all know how difficult that is. China, however, is I 0:11:42.679 --> 0:11:45.480 think we're ground zero where this will happen. We're already 0:11:45.520 --> 0:11:48.720 seeing it happen. It's a you know, obviously central government 0:11:48.800 --> 0:11:51.960 can actually make this happen, So we'll see it happen 0:11:52.000 --> 0:11:54.760 in China. Quicker. My numbers have China with a much 0:11:54.760 --> 0:11:59.520 bigger robotaxi number than Europe or the US. Then it'll 0:11:59.559 --> 0:12:02.000 gradually happens state by state, I think in the US, 0:12:02.240 --> 0:12:04.760 and then finally, we do think it will eventually happen 0:12:04.800 --> 0:12:05.280 in Europe. 0:12:05.360 --> 0:12:07.840 And John, the person who's leading the charge here is 0:12:07.920 --> 0:12:10.560 a politically polarizing human being, Elon Musk, and he's making 0:12:10.600 --> 0:12:14.040 himself more so. And I wonder whether that puts Tesla 0:12:14.120 --> 0:12:16.920 in a better position or a worse position when it 0:12:16.920 --> 0:12:19.320 comes to still being the leader of the whole robo 0:12:19.360 --> 0:12:20.679 taxi movement in the future. 0:12:22.800 --> 0:12:25.920 Yeah, I mean you guys probably know that I can 0:12:25.960 --> 0:12:28.439 answer that question better than I can, But what I 0:12:28.520 --> 0:12:33.200 would say is, I don't anticipate him doing something completely 0:12:33.200 --> 0:12:35.719 different than what we've seen already, at least in your 0:12:35.800 --> 0:12:40.640 term from ROBOTAXI fleets from Cruz and from Weimo. I 0:12:40.720 --> 0:12:44.120 expect them to announce tonight a fleet service similar to 0:12:44.160 --> 0:12:49.760 that with their vehicle. Those programs already have approval right 0:12:49.840 --> 0:12:54.320 in the US by those certain cities and states. I 0:12:54.360 --> 0:12:57.160 can see that being a similar path forward. But I 0:12:57.200 --> 0:12:59.760 do want to stress the technology that Tesla has with 0:12:59.800 --> 0:13:04.959 that SD is different. It is AI base. We have 0:13:05.120 --> 0:13:08.200 it on the roads in Level two plus and people's cars. 0:13:08.559 --> 0:13:11.559 It is very different and it is better, quite frankly 0:13:11.679 --> 0:13:14.400 than a lot from a lot of Level two plus 0:13:14.440 --> 0:13:16.320 on the road that we have. And there is an 0:13:16.400 --> 0:13:20.120 arms race for Nvidia chips and Tesla has quite a lot. 0:13:20.400 --> 0:13:23.559 So you know, over time, I think people will look 0:13:23.600 --> 0:13:26.920 at the kind of proof in the pudding and see 0:13:27.000 --> 0:13:29.760 obviously the data that will bear it out. We have 0:13:29.880 --> 0:13:34.240 to see the safety statistics and what happens. But you know, 0:13:34.280 --> 0:13:37.440 it's an arms racer GPUs. Tesla has a lot of them. 0:13:37.720 --> 0:13:40.040 FSC is a great product there's a lot of people 0:13:40.080 --> 0:13:42.720 working in this company, not just one individual. I think 0:13:42.760 --> 0:13:44.760 we all have friends who work there who are very 0:13:44.800 --> 0:13:48.960 interesting in dynamic people, and it's a dynamic company first 0:13:48.960 --> 0:13:49.600 and foremost. 0:13:49.720 --> 0:13:52.720 Well, no one said Elon Musk wasn't dynamic. Tom, You're 0:13:53.000 --> 0:13:55.160 very optimistic when it comes to a long term. Can 0:13:55.160 --> 0:13:57.840 we really narrow this to the short term? This event 0:13:58.080 --> 0:14:00.680 is delayed by two months? How hi is the bar 0:14:00.760 --> 0:14:03.000 for Elon Musk and Tesla this evening? 0:14:04.400 --> 0:14:07.000 Sure? You know I've said that near term. I don't 0:14:07.000 --> 0:14:11.439 actually expect this to be a big a big catalyst 0:14:11.480 --> 0:14:13.880 for the stock. It had run into the event. We 0:14:13.960 --> 0:14:16.360 had a delivery number that was in line, and the 0:14:16.360 --> 0:14:18.840 stock still kind of sold off a bit. I think 0:14:18.920 --> 0:14:22.160 there was some folks who moved into Tesla because of 0:14:22.240 --> 0:14:28.120 all the carnage happening from you know, the German OEM's 0:14:28.160 --> 0:14:30.880 profit warning never let a good crisis go to waste. 0:14:30.920 --> 0:14:35.440 I think I was the person who said that, thank you, Tom, sorry, credit, 0:14:35.560 --> 0:14:38.520 I no worries, and so a lot of that happened, 0:14:39.080 --> 0:14:42.240 and basically, you know, the stock pulled back, so it 0:14:42.320 --> 0:14:44.800 showed you that the stock ran into the event. So 0:14:44.840 --> 0:14:47.080 I don't anticipate a big up move, but I do 0:14:47.160 --> 0:14:50.600 expect that people like myself will finally get numbers on 0:14:50.600 --> 0:14:53.680 how to model robotaxis. I also think they could talk 0:14:53.680 --> 0:14:57.280 about optimist because on the invitation it said we robot 0:14:58.360 --> 0:15:01.040 So I do wonder if we could hear more about optimists. 0:15:01.080 --> 0:15:04.240 It's definitely not in people's numbers, so it could be 0:15:04.280 --> 0:15:07.440 a catalyst more longer term, as we start putting these things, 0:15:07.720 --> 0:15:11.520 these higher multiple non auto things in our models, we'll 0:15:11.520 --> 0:15:14.000 remember this day of you know, in the future and 0:15:14.040 --> 0:15:17.560 look back as opposed to tomorrow seeing the stock price, 0:15:17.880 --> 0:15:19.680 you know, demonstrably higher or lower. 0:15:19.720 --> 0:15:21.120 Tell them how strong do you think some of the 0:15:21.120 --> 0:15:21.960 hands in this stock are? 0:15:22.080 --> 0:15:22.240 Now? 0:15:22.240 --> 0:15:24.960 Given the Elon Musk himself said basically, if you don't 0:15:24.960 --> 0:15:27.560 believe in autonomous driving, don't hold this name. That was 0:15:27.640 --> 0:15:29.560 basically what he came out within the last twelve months. 0:15:29.600 --> 0:15:31.320 How strong do you think the hands are in this name? 0:15:31.440 --> 0:15:33.120 Given them riding we've seen off the Eighthril low. 0:15:34.600 --> 0:15:37.360 Yeah, but I think people are starting to believe, if 0:15:37.480 --> 0:15:40.600 not starting to believe, they have been believing in the 0:15:40.640 --> 0:15:42.840 past several months. I mean, you can't get to a 0:15:42.880 --> 0:15:45.960 market cap close to whatever eight hundred billion dollars just 0:15:46.040 --> 0:15:48.520 on a car business. It just doesn't work. The math 0:15:48.600 --> 0:15:51.680 isn't there. You have to believe it's a tech company, 0:15:52.240 --> 0:15:54.920 and autonomy is one of the only ways you can 0:15:54.960 --> 0:15:57.320 really get there. I mean, not even with energy storage, 0:15:57.360 --> 0:16:01.120 not with regulatory credits. One of me is a real 0:16:01.200 --> 0:16:05.360 software subscription based business. People clearly giving credit for it 0:16:05.400 --> 0:16:09.200 based on where the stock is right. So I actually 0:16:09.240 --> 0:16:12.560 think folks are believers in it. We just need details 0:16:12.960 --> 0:16:16.000 more than anything, and not just PowerPoint slide. So we'll 0:16:16.000 --> 0:16:18.200 see the vehicle, I think tonight we'll see what it 0:16:18.240 --> 0:16:20.640 looks like. I mean that in of itself is not 0:16:20.680 --> 0:16:22.920 going to get folks excited, but I think it'll give 0:16:23.040 --> 0:16:26.520 credibility that this is real. And then this is happening 0:16:26.600 --> 0:16:29.400 and could happen. We could have a service maybe within 0:16:29.440 --> 0:16:31.080 the next six or twelve months. 0:16:31.360 --> 0:16:33.600 We hope been promised that for a long time. Tom 0:16:33.640 --> 0:16:36.240 to run a s some thank you, sir, appreciate the 0:16:36.320 --> 0:16:47.960 up day. Dan Gun has a SOUS alternative asset management, 0:16:48.000 --> 0:16:50.560 saying the stock market still looks good to me. Broadening 0:16:50.600 --> 0:16:53.840 gains are encouraging and despite all the worries over everything 0:16:54.200 --> 0:16:57.480 market camp and equal weighted and decease reach essentially at 0:16:57.560 --> 0:16:59.560 high stand joined, nap for more dank and morning. 0:17:00.040 --> 0:17:01.320 Good morning, sir, how are you going to see? 0:17:01.320 --> 0:17:02.920 Why do you always act surprised. 0:17:03.000 --> 0:17:04.640 Because I'm not listening to start? 0:17:05.600 --> 0:17:10.240 Thanks, you're listening now now call life on sav good. 0:17:10.240 --> 0:17:11.080 It's good to see. 0:17:11.359 --> 0:17:11.600 Look. 0:17:11.680 --> 0:17:15.320 Equity spread, equities a record highs. Credit spreads are incredibly tired. 0:17:15.480 --> 0:17:17.520 I think we should start in credit. When you look 0:17:17.520 --> 0:17:20.480 at credit right now, how tight are things at the moment? 0:17:20.640 --> 0:17:23.440 Yeah, listen, they are. I think depending on your index, 0:17:23.480 --> 0:17:26.080 you're effectively at all time tights. I mean that's not 0:17:26.160 --> 0:17:29.040 exactly true. If you use the JP Morgan index, for instance, 0:17:29.560 --> 0:17:32.440 their IG indexes called ten or so basis points away 0:17:32.440 --> 0:17:35.040 from all time tights. The high Yealed indexes ninety basis 0:17:35.040 --> 0:17:37.639 points away from all time tights. Bloomberg obviously has an 0:17:37.680 --> 0:17:40.399 index that's similarly close to all time tights. But but 0:17:40.440 --> 0:17:42.200 I don't think in that sense the credit market tells 0:17:42.240 --> 0:17:44.600 you anything that the equity market is not. We're obviously, 0:17:44.960 --> 0:17:48.160 as we've discussed and you discussed with other guests, pricing 0:17:48.160 --> 0:17:50.280 in for lack of a better word, of soft landing 0:17:50.359 --> 0:17:53.280 or just a continuation of the expansion and risk assets 0:17:53.280 --> 0:17:55.600 in general or appreciating in that type of environment. 0:17:55.840 --> 0:17:58.359 Is it sufficient that they're even talking about interest right cards? 0:17:58.400 --> 0:17:59.960 Is that just good enough? The fact that we've got 0:18:00.160 --> 0:18:01.800 bank drop for growth and we've got a central bank 0:18:01.800 --> 0:18:05.240 that's even having a conversation about lower and interest right small. 0:18:05.119 --> 0:18:07.080 Well, let's just state the obvious. We're not just having 0:18:07.080 --> 0:18:09.480 a conversation about it. We've already realized a fifty basis 0:18:09.480 --> 0:18:12.960 point reduction, We're probably going to realize two more twenty 0:18:12.960 --> 0:18:15.600 five basis point reductions this year. There's obviously a debate 0:18:15.640 --> 0:18:18.480 about whether that's completely necessary or not, but from a 0:18:18.680 --> 0:18:21.760 expected value standpoint, that's probably should be your baseline. And 0:18:21.800 --> 0:18:24.359 so it's again, we're not just discussing it. It's happening. 0:18:24.400 --> 0:18:26.760 And so the more important thing for risk assets is 0:18:26.800 --> 0:18:28.840 not whether rates are going up or down. It's what's 0:18:28.880 --> 0:18:32.000 the broader economic and earnings backdrop. And in that sense, yes, 0:18:32.080 --> 0:18:35.000 rates are coming down, and that's an added benefit, certainly 0:18:35.000 --> 0:18:37.280 for companies that have to refinance and the maturity wall 0:18:37.320 --> 0:18:39.879 and the credit market, et cetera. But ultimately what matters 0:18:39.920 --> 0:18:42.240 is that cash flows still look pretty good and the 0:18:42.240 --> 0:18:44.520 economy still looks pretty good, and so from that standpoint, 0:18:44.520 --> 0:18:46.640 why shouldn't risk assets appreciate. 0:18:46.400 --> 0:18:49.359 There's a question about whether the bond market, treasury market 0:18:49.400 --> 0:18:52.400 in particular, is increasingly kind of dancing to its own music. 0:18:52.440 --> 0:18:54.639 As long as good data comes out, even if fields 0:18:54.640 --> 0:18:57.520 go higher, it doesn't really matter for risk assets. At 0:18:57.560 --> 0:19:00.640 what point is that sort of a threat that gets 0:19:00.680 --> 0:19:02.840 crossed as yields continue to grind up war it well. 0:19:02.840 --> 0:19:05.000 I think it's also important for investors to remember that 0:19:05.040 --> 0:19:08.840 the relationship between yields in the treasury market and risk 0:19:08.920 --> 0:19:12.840 assets is a moving target, and in particular in the 0:19:12.880 --> 0:19:18.520 post two thousand period, roughly higher yields, which are associated 0:19:18.520 --> 0:19:21.119 with higher growth and not necessarily higher inflation, have been 0:19:21.160 --> 0:19:23.960 a positive for risk assets. They can move in tandem, 0:19:24.160 --> 0:19:25.840 and I think you had a period of time obviously 0:19:25.880 --> 0:19:29.480 where inflation was spiking, where that relationship was inverted. People 0:19:29.520 --> 0:19:32.199