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Speaker 2: Elon Musk giving a wide ranging interview earlier today with
Speaker 2: the Bloomberg's Michelle Hussain at the Qatar Economic Forum Some News.
Speaker 2: Musks that he's committed to still leading Tesla five years
Speaker 2: from now and expects to pair back his political spending,
Speaker 2: assuaging some investors' concerns about the future of his most
Speaker 2: valuable company. He also addressed the attacks on the Tesla
Speaker 2: brand and the actual cars too. Here's part of the
Speaker 2: conversation with Bloomberg's Michelle Hussain at the Qatar Economic Forum.
Speaker 3: In terms of political spending, I'm going to do a
Speaker 3: lot less in the future.
Speaker 4: And why is that.
Speaker 3: I think I've done enough?
Speaker 4: Is it because of blowbuck Well?
Speaker 5: If I see a reason to do political spending in
Speaker 5: the future, I will do it.
Speaker 3: I don't recurrently see a reason.
Speaker 2: That was Elon Musk talking about pulling back on political
Speaker 2: spending with Bloomberg's Michelle Assan at the Kaitar Economic Forum.
Speaker 2: We've got Max Chafkin with us. He's the co host
Speaker 2: of the new Bloomberg podcast Everybody's Business. He's also the
Speaker 2: co host of the not so new podcast but still
Speaker 2: pretty great podcast it's called Elon Ink, and a reporter
Speaker 2: for Bloomberg BusinessWeek. When he's not doing the podcast so reporting,
Speaker 2: he joins us here in the Bloomberg Interactive Brokers studio.
Speaker 2: I'm glad that's what we played, because that's getting a
Speaker 2: lot of attention right now. And I heard that, and
Speaker 2: I went back to Elon's Twitter from March of twenty
Speaker 2: twenty four, and that's when he posted on X this
Speaker 2: is over a year ago, I will not tribute to
Speaker 2: either political candidate, and we all saw what happened a
Speaker 2: few months later. My point is he says stuff and
Speaker 2: doesn't necessarily commit to it.
Speaker 6: Yeah, and even here he's building himself an out right.
Speaker 6: He's saying less money, which you'd kind of expect anyway. Right,
Speaker 6: midterms are not as expensive as presidential years. So like
Speaker 6: it would be very surprising if he dropped another three
Speaker 6: hundred million dollars, which is roughly what he spent in
Speaker 6: twenty twenty four on twenty twenty six. And he's also saying,
Speaker 6: you know, I would it's it's I don't see a
Speaker 6: reason now, But if I did see a reason in
Speaker 6: the future, I could I see this as a public negotiation.
Speaker 2: Right.
Speaker 6: This is the audience here, well, they aren't. There are
Speaker 6: several different audiences. One of course is Tesla's shareholders trying
Speaker 6: to say like, look, I'm I'm focused on the company.
Speaker 6: I'm not getting sucked into Washington, going to try to
Speaker 6: deal with some of the brand damage that my political
Speaker 6: presidence has caused. But of course the other audience is Republicans. Right,
Speaker 6: He's he's putting it out there that if they want
Speaker 6: money from him, they're going to have to do stuff.
Speaker 6: And you know, there's lots of stuff that has happened
Speaker 6: in Washington since Donald Trump took office that I think
Speaker 6: has made Elon Musk really happy. But Elon Musk is
Speaker 6: a very long list, and not all those things have happened.
Speaker 6: There are lots of opportunities for him to get contracts.
Speaker 6: You know, the Golden Dome, as you were discussing, like
Speaker 6: that's a potential revenue source for SpaceX. There are lots
Speaker 6: of areas that Elon Musk stands to benefit. You also
Speaker 6: have this in the bill right now, like they're plan
Speaker 6: cutting these EV subsidies. Now, we will see where that
Speaker 6: ends up. But if those EV subsidies are cut completely,
Speaker 6: that could really hurt Tesla. So I think I think
Speaker 6: it's to his advantage to say, hey, I'm you know,
Speaker 6: I'm not a gimme for twenty twenty six. You have
Speaker 6: to win my support.
Speaker 3: Hey, listen.
Speaker 7: One are the things that we noticed, Max. We got
Speaker 7: went on air about two o'clock Wall Street time, and
Speaker 7: then shortly thereafter we saw the market pull back and
Speaker 7: go down to its lows. So we sell some selling.
Speaker 7: We were talking about our Eric Wiener here, who covers
Speaker 7: the equity marketing. So a lot of that was with
Speaker 7: Tesla doing an interview with CNBC and talk about robotaxis
Speaker 7: and saying that they will be a thousand robotoxies in
Speaker 7: Austin within a few months, and part of his was
Speaker 7: saying the cost of that, there's still a lot to
Speaker 7: be worked out in terms of liabilities. So I'm just
Speaker 7: curious some of the comments that we got from our
Speaker 7: interview as well as just Elon talking a lot today.
Speaker 6: So the Robotaxi thing, I think part of the challenge,
Speaker 6: one of the challenges for Tesla is there's so much
Speaker 6: sort of assumed in the stock. The Tesla bulls basically
Speaker 6: believe that almost overnight they're going to be able to
Speaker 6: turn this thing into a massive, massive business. And I
Speaker 6: think everything we know from the history of other companies
Speaker 6: trying to launch these robotaxi things, and I'm thinking particularly
Speaker 6: of Waimo, Google's driverless car division, which has been doing
Speaker 6: this for like ten years and has really struggled to commercialize,
Speaker 6: is that it's going to take a long time. And
Speaker 6: when you look closely at what Musk is saying is
Speaker 6: going to happen in Austin, if you are not paying
Speaker 6: that close attention, if you're just sort of buying this,
Speaker 6: like on robin Hood, you hear Elon must say, you know,
Speaker 6: robotax is going to heat over the world. You think
Speaker 6: they're going to turn this on, They're going to be
Speaker 6: huge fleets, It's going to be very small, you know.
Speaker 2: On the during the earnings call.
Speaker 6: We learned something like ten to twenty robotaxis with tele operation.
Speaker 6: That's that's people, you know, sitting in command centers making
Speaker 6: sure the cars don't hit anybody.
Speaker 2: It's going to be certainly what WEIMO does by any.
Speaker 6: Means, No, it's it's closer to it's maybe what WEIMO did,
Speaker 6: you know, years ago, And it's just it's a realization.
Speaker 6: I think that this is going to take a long time.
Speaker 6: So I don't know. Elon Musk has this kind of
Speaker 6: amazing ability to spin stories about the future to get
Speaker 6: people excited about the future, and he may be able
Speaker 6: to do that. But but like Tesla's stock has gone
Speaker 6: up a lot in recent weeks, you know, And no,
Speaker 6: some of that has to do with you know, terriff
Speaker 6: expectations and so on. But this is a very valuable
Speaker 6: company relative to the number of cars it sells.
Speaker 2: Max in the interview that he gave to our team
Speaker 2: at the Guitar Economic Forum earlier today, he was asked
Speaker 2: about protesters or the Tesla brand damage, and what he
Speaker 2: answered was he said, quote, they're on the wrong side
Speaker 2: of history, and that's an evil thing to do. That's
Speaker 2: referring to people damaging Tesla cars and showrooms. Something needs
Speaker 2: to be done about them, and a number of them
Speaker 2: are going to prison and they deserve it. It seems
Speaker 2: like he's certainly there were reports of damage to Tesla
Speaker 2: vehicles and damage to test Tesla shrooms, but there's also
Speaker 2: been these protests that happened happening at Tesla showrooms all
Speaker 2: over the country, especially during his work with Doge, that
Speaker 2: were not violent. Yeah, it seems like he's He's also
Speaker 2: in the past talked about these people being part of
Speaker 2: some bigger movement. He's referred to them online as being paid.
Speaker 2: Have we seen any evidence of that?
Speaker 6: No, there's no evidence, no good evidence that the people
Speaker 6: who are showing up at these Tesla protests are paid.
Speaker 6: You know, I would say that there's a he's conflating
Speaker 6: a couple of different things. But you know, and having talked,
Speaker 6: we did a podcast episode on Eline a week and
Speaker 6: a half ago with a former Tesla sales manager, and
Speaker 6: who he's talking about is like, the real danger is
Speaker 6: not these protesters, not somebody showing up to a protest,
Speaker 6: It's just somebody not buying. And like that is a
Speaker 6: thing that even if you remove the protests, the protests
Speaker 6: are of course not good for the brand. They're an
Speaker 6: expression of unhappiness and so on. It doesn't lead to
Speaker 6: good headlines. Obviously, protests can sometimes get out of hand,
Speaker 6: but also it's just a lot of people, I think,
Speaker 6: do not want to be associate associate their car with
Speaker 6: something this controversial. And what he was saying is that
Speaker 6: when Musk started, what this Tesla manager was saying is
Speaker 6: that when Must started getting involved in politics a couple
Speaker 6: of years ago, they had people come into the Tesla
Speaker 6: stores and argue and say, you know, I like the car,
Speaker 6: but I don't like this. You know, still very engaged.
Speaker 6: And when he said what changed as Must became more
Speaker 6: and more engaged, is they just stopped coming. They just decided,
Speaker 6: you know, screw this, Like I don't want to be
Speaker 6: associated with something that's controversial. And when you look at
Speaker 6: what's happening in the sales, like that's what's showing up.
Speaker 6: It's not the protesters, it's just the people not buying.
Speaker 6: And that's the thing that's going to be hard to
Speaker 6: turn around.
Speaker 7: I think in terms of Tesla, the business just real quickly.
Speaker 7: I mean, I think you talked about things are turning around.
Speaker 5: Is he right?
Speaker 6: I think investors are certainly hoping, so we have not
Speaker 6: in Again, in the publicly available data, there is very
Speaker 6: little to support and that support this. Now Elon Musk
Speaker 6: is saying it's happening, trust me, and he's citing the
Speaker 6: stock price now. As I said earlier, the stock price.
Speaker 6: Lots of things are driving the stock price, but one
Speaker 6: of the big things is expectations around Trump's tariffs, in
Speaker 6: other words, having nothing to do with sales. So he's
Speaker 6: saying you should trust me that the business is turning around.
Speaker 6: Because Tesla's stock is up substantially over the last month.
Speaker 6: That doesn't to me suggest that sales are definitely up.
Speaker 6: What we've seen is numbers out of Europe and numbers
Speaker 6: out of China still not good. The US we don't
Speaker 6: really know yet, so we will see. But this is
Speaker 6: not the kind of thing I think that can be
Speaker 6: turned around in a matter of days or weeks. People
Speaker 6: make decisions about buying cars over a term of years.
Speaker 6: That's why car companies like spend so much doing brand advertising.
Speaker 6: And so this is going to be This is going
Speaker 6: to have created damage with at least some subset of
Speaker 6: consumer that may be hard to undo. Now Musk did
Speaker 6: say during the interview this morning in Qatar that some
Speaker 6: people are buying Teslas because of who he is, and
Speaker 6: there's a very memorable quote he said, maybe they're buying
Speaker 6: it the people who are putting the stickers on the cars,
Speaker 6: saying I bought this before he was crazy. Maybe some
Speaker 6: people are buying it because he was crazy or whatever.
Speaker 6: So obviously making light of those stickers. Now, I don't
Speaker 6: think we've really seen that show up in the data yet.
Speaker 6: Cyber truck sales have not been great, although again this
Speaker 6: stuff can take time. Maybe it will start to show up.
Speaker 4: We'll see, We'll see, we'll see.
Speaker 7: Always fun to listen from what Elon has to say,
Speaker 7: but always fun to also get someone else's from. Max
Speaker 7: Chafkin on all of It. Maxi crosco host of Everybody's Business,
Speaker 7: senior reporter for Bloomberg News, author of The Contrarian Peter
Speaker 7: Teal and Silicon Valley's Pursuit of Power, and of course,
Speaker 7: one of the hosts of the Elon In podcast Check
Speaker 7: It All Out at Bloomberg dot Com.
Speaker 4: Are also on the Bloomberg Terminal.
Speaker 1: Max, Thanks, you're listening to the Bloomberg Business Week Daily podcast.
Speaker 1: Catch us live weekday afternoons from two to five East
Speaker 1: during Listen on Applecarplay and Android Auto with the Bloomberg
Speaker 1: Business app, or watch us live on YouTube.
Speaker 2: I want to talk about batteries because last night, Jean.
Speaker 7: Nicol, for every time you said you want to talk
Speaker 7: about batteries, I'd.
Speaker 6: Be a rich woman.
Speaker 2: You would be because you like batteries. Batteries are in
Speaker 2: everything and they're super important, especially when we think of
Speaker 2: the electrification of vehicles.
Speaker 4: Super important.
Speaker 7: So what do you want to tell me?
Speaker 2: Well, last night c ATL jumped in its Hong Kong
Speaker 2: trading debut last night our time, I should say, correct
Speaker 2: today Hong Kong time. This after the Chinese battery Giant
Speaker 2: wrapped up the world's biggest listing this year, raised four
Speaker 2: point six billion dollars. This despite being blacklisted by the
Speaker 2: Pentagon and grinding through political storms. CTL is the largest
Speaker 2: maker of EV batteries. It supplies batteries to Tesla, VW, FOD, Mercedes,
Speaker 2: Benz and more. Our next guest, though, is working on
Speaker 2: a different type of battery. See U Wong is a
Speaker 2: founder in CEO of Factorial Energy. This is a company
Speaker 2: that's working on solid state batteries. She joins us from Massachusetts.
Speaker 2: See you. Good to have you on the program today.
Speaker 2: I started out by doing some research when it came
Speaker 2: to different types of batteries, and I was just thinking
Speaker 2: to myself, No, I'm just going to have you answer
Speaker 2: the question for us. If we think about the batteries
Speaker 2: that are prominently featured in EVS right now, how are
Speaker 2: these different than the solid state batteries that you are
Speaker 2: developing at.
Speaker 8: Factorial solid state batteries like a traditional battery, but instead
Speaker 8: of using a liquid insight, it uses solid state or
Speaker 8: quasi solid state material. And this makes a battery safer,
Speaker 8: longer lasting, and more powerful because you can't store more
Speaker 8: energy and it's less likely to leak or catch on fire.
Speaker 8: Also more efficient and safer for everything from your cell
Speaker 8: phones to electric cars.
Speaker 4: Plus, our unique.
Speaker 8: Dry coding process makes manufacturing cleaner and more cost effective.
Speaker 2: So why is it so difficult to make an EVY
Speaker 2: battery a solid state battery?
Speaker 8: Well, there are different part of the challenges coming to play.
Speaker 8: The biggest challenges scale up. I mean that has been
Speaker 8: uh that's value for a lot of battery companies, from
Speaker 8: the first minimal viral product to the manufacturer with a
Speaker 8: really good quality and cost effective product. And on top
Speaker 8: of that, it's really the supply chain challenges. I think
Speaker 8: that's definitely very central to all the battery players in
Speaker 8: the world.
Speaker 4: And last, butt of the.
Speaker 8: Least, I think it's really coming down to the execution,
Speaker 8: right from a startup to a giant supply chain player
Speaker 8: in the value chain for the batteries really the big difference.
Speaker 8: So I think that's really coming down to the execution
Speaker 8: and also the conviction from the leadership team.
Speaker 7: Wait, so help me understand to in turn of scaling up,
Speaker 7: what's the biggest impediment? Is it resources? Financial, resources, materials?
Speaker 7: I'm trying to understand because you guys have been working
Speaker 7: on this for a while, and I understand there's development
Speaker 7: and all of that takes some time. But tell us
Speaker 7: what's kind of the biggest point or factor that's holding
Speaker 7: you guys back at this point.
Speaker 8: Yeah, I would see there are probably mostly three areas.
Speaker 8: But I think the biggest hurdle when it comes from
Speaker 8: a technology to a real product is really to scale
Speaker 8: up the battery itself. You know, traditionally we have batteries
Speaker 8: like with our cell phone size batteries when a lot
Speaker 8: of smaller started to de developing, even as small as
Speaker 8: your watch battery, like a coy cell battery, and it's
Speaker 8: a big hurdle scale from like small cell phone batteries
Speaker 8: to like a big automotive sized battery.
Speaker 4: Actually, I brought up a post type that.
Speaker 8: The audience today that this is actually one hundred empower
Speaker 8: battery which is launched in twenty twenty three, and actually
Speaker 8: we're brought into the b sample earlier last year as well,
Speaker 8: So this is actually an automotive size battery, and it's
Speaker 8: a huge from a cell phone size battery to automotive
Speaker 8: size battery. It's a lot of work to put into
Speaker 8: like manufacturing, design the battery, and also even to keep
Speaker 8: the quality and cost on track. So I think that's
Speaker 8: really the top biggest challenge for making a battery, alongside
Speaker 8: with also the cost, the equality checking the.
Speaker 2: Battery that you're holding right now that would be a
Speaker 2: battery that would go into an electric vehicle.
Speaker 4: Yeah.
Speaker 8: So actually we launched with Mercedes together earlier this year
Speaker 8: the first solid state battery vehicle with the Global OEM,
Speaker 8: and we're putting the lithium metal solid state battery that
Speaker 8: we produced and we're able to power the vehicle of
Speaker 8: EQS and with our battery which is bringing higher energy
Speaker 8: and it's a denser energy, so it gives you a
Speaker 8: less volume and also.
Speaker 4: A lighter, smaller battery.
Speaker 8: It actually delivers a longer range and also be able
Speaker 8: to more caustic FUSHI ending the long run. So this
Speaker 8: is what we have delivered with Mercedes earlier this year
Speaker 8: in the EQS and it's actually powering the vehicle and
Speaker 8: it was running on the street of Stutgart.
Speaker 7: So just for those who are listening on radio, you
Speaker 7: know CEU has been holding up.
Speaker 4: We all know our car. You know what our cell
Speaker 4: phone looks like in the small.
Speaker 7: Batteries, but this one was about It looked like it
Speaker 7: was about a foot and a half long, maybe four
Speaker 7: inches wide. It was very light. Was that the actual
Speaker 7: battery that batteries are heavy? Was that actually the weight
Speaker 7: of an actual car battery, a solid state car battery.
Speaker 8: Yes, that could be a much lighter compared with the
Speaker 8: traditional lithium mind batteries. Right, we're using a lithium metal
Speaker 8: in the anode, which is the lightest metal on.
Speaker 4: Earth and also has a.
Speaker 8: Lightest weight as ano material has highest capacity as an
Speaker 8: ano material, so it does give you much higher energy
Speaker 8: density from the volume metric age density to the guadametricity perspective.
Speaker 4: So we're able to enable about fifty to eighty.
Speaker 8: Percent higher energy do as they compare with traditional time batteries.
Speaker 8: And this means with the same size of battery you
Speaker 8: can potentially give you like twenty thirty or even fifty
Speaker 8: eighty percent longer range depends on the integration efficiency and
Speaker 8: the same have the same energy battery, you potentially can
Speaker 8: have like twenty to thirty percent lighter weight and potentially
Speaker 8: lower weight and lower volume as well as a less
Speaker 8: expensive vehicle compared to what you have today.
Speaker 7: So kind of win win here, right, lighter weight can
Speaker 7: go further. Hey, One thing, and this is actually coming
Speaker 7: from the New York Times, which is also written about
Speaker 7: what you guys are up to. It says that these
Speaker 7: types of battery sales that are more prone to grow
Speaker 7: spiky irregularities that cause short circuits best riches a weight
Speaker 7: in a company that can overcome this problem develop a
Speaker 7: battery that is durable, safe and reasonably easy to manufacture.
Speaker 7: But these spiky irregularity is a cause short circuits. Is
Speaker 7: that still an issue of problem that needs to be overcome.
Speaker 8: It is a fundamental physics issue when it comes to battery.
Speaker 8: When this cycling and is performing, it does.
Speaker 4: Tend to grow.
Speaker 8: There's little dyn drites over the lifetime of the battery.
Speaker 8: So the difference between solid state versus a liquid battery
Speaker 8: is that we're able to use the solid state material
Speaker 8: as well as electrolyze to suppress the dyn dried growth.
Speaker 4: So that's the little.
Speaker 8: Spiky lithium metal or the various materials will be able
Speaker 8: to be suppressed when is being grown within the battery system.
Speaker 8: So it's much lower risk of this short and also
Speaker 8: even when it happens, it's much less hazard compared to
Speaker 8: the liquid battery because it's the liquid system is much
Speaker 8: more volatile when there's a normal embent.
Speaker 2: What about when it comes to charging and the ease
Speaker 2: and quickness of charging range anxiety gives people well anxiety
Speaker 2: and what about.
Speaker 8: Charging, Yes, I know there has been a lot of fuzz,
Speaker 8: like big buzz around the charging space. I would say
Speaker 8: for the solid state back the charging speed is very good.
Speaker 8: Right now For our first generation causes only state battery,
Speaker 8: we're able to deliver about eighteen eighteen minute fast charging
Speaker 8: from like ten to ninety percent, and we're also we
Speaker 8: can do potentially fifteen from like twenty to eighty percent.
Speaker 8: So that's very much in line with where the lead
Speaker 8: inmind battery does. But one thing to remember is that
Speaker 8: we do deliver higher energy density, which means it's longer
Speaker 8: driving range even as the same size as battery pack.
Speaker 8: So with the same minutes of charging, even with the
Speaker 8: same state of charge, you'll be able to deliver a
Speaker 8: longer range per charge. So it's less about like how
Speaker 8: many minutes you can fill up the battery, it's about
Speaker 8: how many miles you can drive per charge.
Speaker 7: So will you guys manufacture these batteries, what percentage are
Speaker 7: without fault in other words, they work?
Speaker 4: Yeah, that's a really good question.
Speaker 8: Like people in the industry usually colid yield, which is
Speaker 8: a very characteristic to evaluate how much scrap and how
Speaker 8: much faulty batteries it is coming out of the line.
Speaker 8: So typically for a Gigo factory, which is a huge
Speaker 8: battery factories, you spend a two three billion dollars into this,
Speaker 8: and that's a state of art is about ninety five
Speaker 8: percent or higher compared with traditional like smaller size of
Speaker 8: the manufacturing presence, and with the POWERT line which is
Speaker 8: usually about two hundred three hundred, like what our line
Speaker 8: and if you get you can get to seventy to
Speaker 8: eighty percent yield.
Speaker 4: It's already state of art in the industry.
Speaker 8: So our line, which is a prototyping line right now,
Speaker 8: is already over eighty five percent yield from our current
Speaker 8: production line.
Speaker 2: What about when it comes to competition, as Carol and
Speaker 2: I mentioned, there are a lot of companies working on
Speaker 2: this technology, how do you differentiate yourself from what is
Speaker 2: out there, what's being worked on by competitors now, including
Speaker 2: c Ato.
Speaker 4: And that's a great point.
Speaker 8: I mean, it's a great thing that solid state has
Speaker 8: been perceived as the next generation to go product for batteries.
Speaker 8: I mean that's unprecedented an industry. Even among all the
Speaker 8: top ten players in automotive industry have all seen that
Speaker 8: this is coming up and it's going to be the
Speaker 8: immediate next step from the Lindi min battery. And the
Speaker 8: challenge for that is, like there's a lot of competition
Speaker 8: around us, including c Atos. You said, yeah, so our
Speaker 8: big advantage for our battery first of far, compared with
Speaker 8: other solid state players.
Speaker 4: Is that we have been leading industry with the first So.
Speaker 8: We were the first one that scaled it up from
Speaker 8: a small cell to one hundred empower solid state battery,
Speaker 8: and we were the first one has the un test,
Speaker 8: which is very important standard test for shipment with the
Speaker 8: linked metal battery.
Speaker 4: And we were the first one.
Speaker 8: Deliver the b sample to a global automotive OEM just
Speaker 8: for cities. And we were also the first one announced
Speaker 8: that demol fleet and with the stolentis that's the first
Speaker 8: fleet being announced by any Saudi state player.
Speaker 2: Got it?
Speaker 4: Heyns.
Speaker 7: Can I just say we're running out of time? Fifteen seconds?
Speaker 7: What does this thing cost? Is it more expensive than
Speaker 7: other batteries? And just really quickly ten seconds?
Speaker 4: It is very cost competitive at a cell level.
Speaker 8: And then we're bleeding that is actually lower costs for
Speaker 8: the vehicle because it's lighter and safer.
Speaker 7: Interesting stuff. Hey, stay in touch and let us know
Speaker 7: how things are going. See Huang she's founder and CEO
Speaker 7: of Factorial Energy, a company that's working on those solid
Speaker 7: state batteries. She's joining us from Massachusetts on this Tuesday.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 2: Risk off Trade. We also heard from the President right
Speaker 2: when the markets closed. The big news is about the
Speaker 2: Golden Dome. The President says that it will be operational
Speaker 2: in three years. He vowed that a Golden Dome missile
Speaker 2: defense shield would be fully operational by the end of
Speaker 2: his term. He said it would be able to protect
Speaker 2: the US from threats including ballistic missiles, hypersonics, and advanced
Speaker 2: cruise missiles. Here's what he said, quote, we will truly
Speaker 2: be completing the job President Reagan started forty years ago.
Speaker 2: This is from the Oval Office and it referenced Ronald
Speaker 2: Reagan's unfulfilled quest for a space based missile defense system
Speaker 2: that was widely known in the nineteen eighties as Star Wars.
Speaker 7: Gotta say it was something I actually remember as a kid,
Speaker 7: that big announcement by Reagan, and it was, you know,
Speaker 7: to be kind of this massive spending program, but to
Speaker 7: build kind of a you know, Star wars like defense.
Speaker 2: System in the sky that was during the Cold War.
Speaker 2: The here of would'tay the height of tension, but during
Speaker 2: a time of very much tensions. It was in the
Speaker 2: Cuban missile crisis, but it was pretty tense.
Speaker 3: Right all right.
Speaker 7: I know someone who knows about this better than we do,
Speaker 7: Bloomberg National Security Team leader Nik Wada. I'm sitting by
Speaker 7: in DC. I don't know, Nick, we get so much
Speaker 7: out of the White House. I am curious about this plan.
Speaker 7: What struck you in terms of the President's announcement sitting
Speaker 7: there of course and making talking about it with the
Speaker 7: Defense Secretary as well, Pete Hesett.
Speaker 5: Well, the big thing is that the president has essentially
Speaker 5: set a timeline. I mean, he said this would be
Speaker 5: operational by the time he leaves office, so in about
Speaker 5: three years. But the technology at the heart of this system,
Speaker 5: the idea of space based interceptors, is still totally unproven.
Speaker 5: So you know, the US is capable of intercepting some
Speaker 5: ground launched missiles, and you know it does have some
Speaker 5: ability to knock down incoming threats, but the threats that
Speaker 5: he really listed and the idea that they have of
Speaker 5: developed this network of interceptors in space to be able
Speaker 5: to neutralize threats before they even threaten the United States
Speaker 5: is completely unproven and a massive gamble. The other element
Speaker 5: of it. He said that the system would cost one
Speaker 5: hundred and seventy five billion dollars overall, but the Congressional
Speaker 5: Budget Office has estimated that it's going to cost about
Speaker 5: five hundred and forty two billion dollars over twenty years
Speaker 5: to develop and launch the interceptors. So you know, no
Speaker 5: surprise that the president would have a lower cost and
Speaker 5: a truncated timeline, but that's out of whack with what
Speaker 5: experts did even the Congressional Budget Office say are realistic.
Speaker 2: Okay, that's a good point, Nick. I'm also wondering too
Speaker 2: about the risk or the threats, rather that this protects
Speaker 2: the United States from. As Carol and I were talking about,
Speaker 2: the Star Wars program was during the Reagan administration that
Speaker 2: obviously did not end up happy, but it was at
Speaker 2: a time when the US and the Soviet Union were
Speaker 2: locked in the Cold War. I'm just wondering about the
Speaker 2: threats that the US faces right now. And look, nobody
Speaker 2: can see the threats in the future, but what is
Speaker 2: out there that he's so concerned about.
Speaker 5: Well, I mean, you know, certainly the threats of intercontinental
Speaker 5: ballistic missiles have not gone away. I mean, Russia retains
Speaker 5: its arsenal and another concern is North Korea. But you know,
Speaker 5: there is a sort of wing of experts who argue
Speaker 5: that actually by creating this system, the administration might in
Speaker 5: some ways actually spur even greater threats, that it would
Speaker 5: essentially provoke an arms race or a new arms race
Speaker 5: have you know, like we haven't seen since the Cold War.
Speaker 5: But you know, then there's China as well. So there
Speaker 5: are plenty of countries that retain these capabilities, and the
Speaker 5: question is whether putting or trying to put a system
Speaker 5: like this in place will only lead them to advance
Speaker 5: it's those capabilities, or make it so that they can't
Speaker 5: be intercepted. So there are all sorts of sort of
Speaker 5: practical questions around this system, but also strategic ones as
Speaker 5: well that you may actually be spurring innovation by your adversaries.
Speaker 7: Nick, why is he doing this?
Speaker 5: Why is he doing this?
Speaker 3: Now?
Speaker 5: Well, I think you know, this was an executive order
Speaker 5: he signed, you know, on January twenty seventh, so a
Speaker 5: couple days into his second administration. It's a big project.
Speaker 5: It's a splashy project. It's a little bit like sort
Speaker 5: of you know, declaring you're going to put a man
Speaker 5: on the moon. I mean that's the sort of level
Speaker 5: of technological achievement that is going to be required here.
Speaker 5: And it's also something I mean, he hasn't explicitly said
Speaker 5: this is why, but it's something that is going to
Speaker 5: be a huge boon to defense contractors. You know, amid
Speaker 5: all the talks about cutting waste and efficiency in the
Speaker 5: government and looking to both increase the defense budget but
Speaker 5: also cut back on wasteful programs. I mean, this is
Speaker 5: going to be a mega program with you know, unlimited spending.
Speaker 5: I mean, it's sort of extraordinary. Even as this has
Speaker 5: just started to only get off the ground, you're already
Speaker 5: seeing companies from all over the US saying, hey, we
Speaker 5: have an idea, we have an idea, we have an idea.
Speaker 5: And it's like, you know, it's just seen as this
Speaker 5: essentially you know, cashapalooza, where they could just get tons
Speaker 5: of funding to be able to work on these systems
Speaker 5: and try to pursue technology, like I said, doesn't exist yet.
Speaker 7: All right, So three years from now, we'll see what happens. NICKA,
Speaker 7: I am curious you understand this stuff. What do you
Speaker 7: think is going to get done first, the dome or
Speaker 7: the retro fit on the plane that may come from Qatar.
Speaker 5: Well, I mean it's a great question because in some
Speaker 5: ways it shows you how truncated that timeline is. I mean,
Speaker 5: the conversation around the plane from Qatar, you know that
Speaker 5: they're saying they're not even going to be able to
Speaker 5: get that plane retrofitted to be able to go into
Speaker 5: service before or Trump leaves office in twenty twenty eight.
Speaker 5: So you know, you have one plane that's the timeline
Speaker 5: is already there saying it's going to be it's unrealistic
Speaker 5: to have that done, and then you have a whole
Speaker 5: space based interceptor system whose technology doesn't even exist, much
Speaker 5: less less contracted, much less deployed. Three years is an
Speaker 5: awfully short timeframe for.
Speaker 7: That interesting times.
Speaker 4: Hey, thank you so much.
Speaker 7: We know a lot coming at you as always, but
Speaker 7: Nick Wadams is a voice we always want to check
Speaker 7: in with. He's Bloomberg News National Security Team leader joining
Speaker 7: us from.
Speaker 4: Our bureau in DC.
Speaker 7: Nick, thank you so much.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 2: The market's exactly where I want to go right now?
Speaker 2: Is Carol mentioned near our session lows? Right now the
Speaker 2: S and P five hundred down about nine tenths of
Speaker 2: one percent. We've got with us Eric Wiener. He's Bloomberg
Speaker 2: News Senior editor for Equities Americas. He joins us here
Speaker 2: in the Bloomberg Interactive Brokers studio.
Speaker 3: Eric.
Speaker 2: When I was preparing our interview with you earlier today,
Speaker 2: I was planning to talk about what happened yesterday because
Speaker 2: it was a little bit of a wild day. We
Speaker 2: all thought that equities would fall and that bond yields
Speaker 2: would surge, and that happened in the early part of
Speaker 2: the day. Then the dip buyers appeared to come in.
Speaker 2: We could talk about that in a few minutes, but
Speaker 2: first I want to talk about the reversal, not a reversal,
Speaker 2: but sort of the leg lower that we saw in
Speaker 2: the last hour. What do we attribute this to.
Speaker 3: Well, probably the best place to look would be Tesla's chart.
Speaker 3: If Musk has been out talking today, he's been talking
Speaker 3: more about his companies and on a rival network, will
Speaker 3: say he said something to the effect of the future.
Speaker 3: He reiterated that the future is in robotaxis. And whereas
Speaker 3: robotaxis were seen as a positive for the company, that's
Speaker 3: kind of flipped because of the amount of some cost
Speaker 3: that goes into developing it. And then a lot of
Speaker 3: a lot of people who started asking the question about
Speaker 3: regulating all of this and ensuring all of this. And
Speaker 3: there are many, many, many pieces that go to creating
Speaker 3: a robotaxi environment, and we don't know if Tesla is
Speaker 3: going to be the company that does it and where
Speaker 3: those costs go.
Speaker 2: And I mean, if you go to Washington, d C. Well,
Speaker 2: I won't say if you go to Washington, d C
Speaker 2: now because I don't know if they're there yet, but
Speaker 2: I know they're on their way there. These are the
Speaker 2: waymo cars. Carol her mind blown last week.
Speaker 7: The week closed my eyes and like on the whole
Speaker 7: twenty twenty five minute run.
Speaker 2: Once, I've been saying you got to try one of
Speaker 2: these things. I tried one in San Francisco on the fall.
Speaker 2: It was amazing.
Speaker 3: Loved it.
Speaker 7: At night, I'm like, would I feel comfortable? I was
Speaker 7: kind of blown away by it, and I loved it
Speaker 7: was clean, it was easy, no music if.
Speaker 6: I didn't want it.
Speaker 2: So you were in a Jaguar that was powered by
Speaker 2: Google's technology. I was not in a Tesla. That's the point.
Speaker 2: If I was in a Jaguar, would be happy. But
Speaker 2: they are a nice cars.
Speaker 3: The flip side of that, we can all see the
Speaker 3: base case for it. You know you're out late, you
Speaker 3: don't want to drive home, and your car just takes
Speaker 3: you there, or you know the city is you know
Speaker 3: has plenty of cabs and you don't have to worry
Speaker 3: about anything. They come right over. The question is our
Speaker 3: whole system is built on liability, right, So the whole
Speaker 3: idea of ensuring something is being able to point the
Speaker 3: finger it oo's to blame. So if you're in the
Speaker 3: backseat having had you know, a couple too many drinks
Speaker 3: and are just doing what you're supposed to do with
Speaker 3: what you bought the car for and then it t
Speaker 3: bones somebody else, who pays for that accident? Who's responsible?
Speaker 2: It's such a basic question that I've never actually considered, well.
Speaker 3: And this is where this is where a somebody who's
Speaker 3: going to bet on that goes because if that infrastructure
Speaker 3: is in place, then of course, yeah, you know, Waimo
Speaker 3: and all of these things become national the idea of
Speaker 3: us having self driving cars becomes completely you know, reliable.
Speaker 3: But without that, we're still in a you got to
Speaker 3: drive your own car world, or you need to figure
Speaker 3: out who is going to be responsible to the company
Speaker 3: take that, How do we how do we do the
Speaker 3: insurance for that. We have to re regulate a whole
Speaker 3: bunch of things before that can become a national reality.
Speaker 3: And if you're putting if you're one of the most
Speaker 3: important stocks in the market, and you're putting a bunch
Speaker 3: of money behind this and there isn't that background there,
Speaker 3: the risk of that turning into a sunken cost is
Speaker 3: very real.
Speaker 4: Yeah, it's kind of fascinating.
Speaker 7: It's funny because we do these gainers into winners and losers.
Speaker 7: And Tessa was a gainer for me because it was
Speaker 7: up you know, more than three percent earlier in the session.
Speaker 7: And now I'm like, okay, I got to kind of
Speaker 7: pull the yank this one, because it's just pretty much
Speaker 7: sticking around unchanged or it's even got into the red
Speaker 7: a little bit. But it's a really good point, I
Speaker 7: do think about it. It was interesting when I was
Speaker 7: in the Waimow and there was at a point where
Speaker 7: a biker, know, kind of scooted alongside and then.
Speaker 2: Terms we prefer the term cyclist unless you're talking about
Speaker 2: a guy on a motorcycle, like it was a cyclist.
Speaker 7: And I was watching how the car like navigated and
Speaker 7: I was even watching it was impressive, wasn't it. It
Speaker 7: was pretty impressive And I was like, whoa, okay, saw
Speaker 7: it like stayed around, you know, around also started there
Speaker 7: like with yellow lights, like kind of went through some
Speaker 7: yellow lights, and I was like, hmm, how did.
Speaker 2: I feel about that?
Speaker 4: But it was the ride was smooth.
Speaker 7: But you're right, there's so many questions, right, and if
Speaker 7: there's a lot more on the road, does that make
Speaker 7: the road more safer or does it create more variable
Speaker 7: But I don't know.
Speaker 3: Poretically, theoretically, when you talk to people who are involved
Speaker 3: in mass producing cars that that actually is safer because
Speaker 3: they're all going to travel at the same speed and
Speaker 3: they're going to keep the same gaps and everything track together.
Speaker 3: But technology is not perfect, it is not infallible. So
Speaker 3: when and it's not if, it's when a circuit goes
Speaker 3: a little haywire, who catches the black aim for that?
Speaker 3: And our society is very very clear on blame. And
Speaker 3: so when you don't have that you and you have
Speaker 3: something that's doing sixty miles an hour and can kill someone,
Speaker 3: it becomes a much disier proposition.
Speaker 7: Isn't a product liability? Yes?
Speaker 3: It actually interested and personal and if you hurt somebody,
Speaker 3: good luck.
Speaker 2: And look, we've seen this happen over the last couple
Speaker 2: of years as different companies have experimented. I mean there's
Speaker 2: a company that doesn't even operate wait the way it
Speaker 2: used to operate because of issues that happened when it
Speaker 2: was testing these vehicles in San Francisco. And even on Reddit,
Speaker 2: the weaimo reddit threads have examples of when the car
Speaker 2: hasn't necessarily not necessarily crashed or anything, but when something
Speaker 2: has gone wrong, like there's examples of it just going
Speaker 2: around and around it for example, Yeah, yeah, yeah, we've
Speaker 2: all clitched.
Speaker 7: It's interesting even the pickup, you know, is that kind
Speaker 7: of a for work a resort And it was like
Speaker 7: the guys even there said, like, the car may just
Speaker 7: kind of park somewhere.
Speaker 3: Because it can.
Speaker 2: You'll find it because it's not like a human. This
Speaker 2: is why I talked to somebody who works in AI.
Speaker 2: I was saying, I would love for this to come
Speaker 2: to New York and he was like, the challenge with
Speaker 2: this happening in New York is there aren't very many
Speaker 2: legal safe places for them to pull over, yeah, and
Speaker 2: pick people up. And it's the truth. I mean, if
Speaker 2: you think about the way we pick up cabs and
Speaker 2: ubers and lifts. Here, we're walking into the middle of
Speaker 2: the street and they're stopping. It's all about I mean,
Speaker 2: and you can't somebody do it but it's nuts. Well, no,
Speaker 2: it's absolutely insane. No, that's what I mean.
Speaker 3: Like, it's all about us interacting with the person who
Speaker 3: picks us up. And when you have cars that are
Speaker 3: just pulling in by themselves, you don't know how this
Speaker 3: is going to work. And that's really what it's about.
Speaker 3: If you're sinking your money and this is a company
Speaker 3: that builds cars, you're sinking your money into something that
Speaker 3: you don't know how it's going to work. That gets dangerous.
Speaker 2: Okay, So this is all about Tesla.
Speaker 3: Well, I think the last hour has been about Tesla.
Speaker 2: That's interesting because there's the chart.
Speaker 3: It's it's the one in the SMP that really it's almost.
Speaker 7: Two percent of the S and P five hundred terms
Speaker 7: of waiting, it's about a little bit more than it's
Speaker 7: almost three point two percent of the Nasdaq one hundred
Speaker 7: three at move.
Speaker 3: On our system, you can see that like basically the
Speaker 3: whole MAG seven is on is in the red. Google
Speaker 3: got hammered earlier as well, so it's like sort of
Speaker 3: a tech risk off. But like the big turn was
Speaker 3: in Texa where it had it had gone down when
Speaker 3: Musk was talking from to us and it went flying
Speaker 3: down and then it came back up and now it
Speaker 3: just dropped like a stone.
Speaker 2: Okay, yeah, good point. I mean, look, six out of
Speaker 2: the seven MAG seven are in the red. Tesla shares
Speaker 2: were up earlier in the session. They're still up about
Speaker 2: half a percentage point, but a far crytit.
Speaker 3: They were like up three. Yeah, that's big, big move
Speaker 3: on the SMP.
Speaker 2: Hey, I want to go back in time a little
Speaker 2: bit and talk yesterday, which was actually the plan before
Speaker 2: we saw things move a little lower. What would happened
Speaker 2: yesterday because we thought that because of this Moody's downgrade,
Speaker 2: we'd see this certain tone with the trade that didn't
Speaker 2: end up coming to fruition.
Speaker 3: So well, the bond market is hard to figure because
Speaker 3: that actually should have happened, and it did. I mean, yields,
Speaker 3: you know, jumped, and stock sort of responded. What we
Speaker 3: saw in the market was the highest retail buying that
Speaker 3: we've seen in I think it was over a decade,
Speaker 3: some absurdly strong amount of retail buying up until twelve thirty.
Speaker 3: So basically as that market sold off, retail stepped in
Speaker 3: and bought every inch of it. So whereas we were
Speaker 3: positioning like you, we were thinking like you, you know, okay,
Speaker 3: well it's a down day and it's probably going to
Speaker 3: stay down. Instead, it turned into this you know, V
Speaker 3: shape recovery where all of a sudden it sort of
Speaker 3: gets this lift and by the end of the day
Speaker 3: we're in the green. But there is so little conviction
Speaker 3: in this market right now that everything's on a hair trigger.
Speaker 3: So Musk saying something about robo taxis and suddenly everybody
Speaker 3: sells it off. There's just this sort of waiting for
Speaker 3: the other shoe to drop feel to everything, and then
Speaker 3: you have retail buying their dip, and the question is
Speaker 3: how much longer they can when the SMP is approaching
Speaker 3: six thousand six, when you're at fifty nine and yeah,
Speaker 3: and so you've come all the way back. How much
Speaker 3: more strength does retail have to keep this going because
Speaker 3: the institutional guys are on the sidelines and they cannot
Speaker 3: buy in at these levels, so they have to sit
Speaker 3: Why can't they buy in? Well, because if you're timing
Speaker 3: this and you're questioning whether it's going to go higher,
Speaker 3: your risk is enormous. Buying in right now. You're much
Speaker 3: better off waiting for yesterday's one percent drop buy that
Speaker 3: you know, you wait for some sort of announcement that
Speaker 3: is going to temporarily take the market down two percent.
Speaker 3: You buy there. But if you were looking at things
Speaker 3: a month ago and you were like, if we get
Speaker 3: up to six thousand, this is amazing, and then we
Speaker 3: do it, well, now you buy in and you're at it.
Speaker 3: You're buying in at a level where it's really dicey
Speaker 3: whether you're going to go higher, and there's a strong
Speaker 3: chance you're going to go lower, So the entry point
Speaker 3: is not attractive. To somebody who's actually building a portfolio.
Speaker 3: If you're just trading in and out during the day,
Speaker 3: doesn't really matter, and that's what you see and you're
Speaker 3: acting reacting to the way the charts look. But if
Speaker 3: you're actually putting positions on in your portfolio, right now,
Speaker 3: stocks are pretty fully.
Speaker 7: Valued, right, It's like, Okay, what's the next catalyst you
Speaker 7: can really trade on definitively? And I keep thinking about, Okay,
Speaker 7: ninety days out in terms of the tariffs, like that's ticking.
Speaker 2: We got to wait for that.
Speaker 7: I mean, there's a lot of issues that we have
Speaker 7: to wait for, right, Yes, Eric to kind of understand, Okay,
Speaker 7: so what's kind of the next backdrop for It's the
Speaker 7: economic term tread.
Speaker 3: It's the economic data, right, So we're gonna have a
Speaker 3: jobs report coming up, We're going to be having you know,
Speaker 3: pc CPI all that sort of stuff coming. I don't
Speaker 3: know that anybody is expecting a June rate cut from
Speaker 3: the Fed anyhow. Yeah, I mean, I think we're down
Speaker 3: to September if if at all. But it's really it
Speaker 3: really feels like people are waiting. When I say people,
Speaker 3: I mean Wall Street pros are kind of waiting for
Speaker 3: the confirmation to come that the economy is weaker than
Speaker 3: the market is playing.
Speaker 2: We've been hearing for weeks about this idea of empty
Speaker 2: shelves coming that hasn't materialized. And the pause that we
Speaker 2: saw between the tension with the US and China could
Speaker 2: perhaps be some sort of reprieve. But in the background,
Speaker 2: Eric I can't help but think we're still in a
Speaker 2: trade war.
Speaker 3: Yeah. Well, and it's see so we go back to
Speaker 3: COVID and it's like, we remember.
Speaker 2: What that was like, and everybody says, oh, we don't
Speaker 2: want to go back to that.
Speaker 3: But if if you look at like the seventies or
Speaker 3: like periods where there was very slow growth and high inflation,
Speaker 3: it does mean that certain things, there are shocks and
Speaker 3: certain things, but overall, it's just the economy doesn't move,
Speaker 3: and that's what people are fearing. It's not so much.
Speaker 3: I mean, obviously, you know, walking into Target and just
Speaker 3: seeing empty shelves, well that's you know, that's a huge problem.
Speaker 3: But just you're paying ten percent more on everything. Nothing
Speaker 3: is on sale. Your meat is more expensive, your groceries
Speaker 3: are more expensive. Everything you buy everywhere you go, it's
Speaker 3: more expensive. And what happens then, is people just with trench.
Speaker 3: You know, It's like each individual decision happens and people go, Okay,
Speaker 3: well I'm gonna pull back, and that hits earnings and
Speaker 3: that's when it starts spreading. So too, if you're a trader,
Speaker 3: you're looking at the clues that are going to get
Speaker 3: you to those earnings that are then going to send
Speaker 3: you lower.
Speaker 7: Yes, okay, off to the next earning cycle. But I
Speaker 7: think about what Lebby Cantralla, Pimco's at two, the same
Speaker 7: thing like Tyris. We're going to be in a higher
Speaker 7: tariff environment and that's that's going to have an impact.
Speaker 7: Eric Wiener, thank you, as always, Bloomberg New Senior Editor
Speaker 7: of Equities Americas.
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