1
00:00:05,720 --> 00:00:13,040
Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

2
00:00:13,480 --> 00:00:17,560
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

3
00:00:18,000 --> 00:00:23,520
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,600 --> 00:00:33,600
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. You

5
00:00:33,680 --> 00:00:36,839
Speaker 1: might recall just over a month ago Ray Daio of

6
00:00:36,920 --> 00:00:39,640
Speaker 1: Bridgewater was it a month ago around about that he

7
00:00:39,720 --> 00:00:42,680
Speaker 1: came out and he talked to Bloomberg from Davos, Switzerland

8
00:00:42,760 --> 00:00:46,040
Speaker 1: and mentioned that maybe investors might be feeling stupid about

9
00:00:46,080 --> 00:00:48,640
Speaker 1: owning cash. Well, I can tell you they feel less

10
00:00:48,640 --> 00:00:51,640
Speaker 1: stupid now because investors are piling in to an all

11
00:00:51,720 --> 00:00:54,880
Speaker 1: cash e t F. The Bloomberg Barclays one to three

12
00:00:54,920 --> 00:00:58,400
Speaker 1: month T bill exchange traded fund taking in five hundred

13
00:00:58,440 --> 00:01:02,280
Speaker 1: and eighty million dollars just last week among some of

14
00:01:02,320 --> 00:01:05,119
Speaker 1: the top US fixed income products. So it's the dash

15
00:01:05,160 --> 00:01:07,680
Speaker 1: for cash back on and it's the yield going to

16
00:01:07,760 --> 00:01:10,800
Speaker 1: compete for capital elsewhere. I'm ready pleased we can have

17
00:01:10,920 --> 00:01:15,000
Speaker 1: this conversation with Kate more blank Rocks, chief Equity Strategistics.

18
00:01:15,040 --> 00:01:16,800
Speaker 1: She joins us in our studio here in New York

19
00:01:16,840 --> 00:01:19,160
Speaker 1: and morning Kate good morning, So help me out. Does

20
00:01:19,200 --> 00:01:21,759
Speaker 1: it compete for capital out swear? I don't think so. Look,

21
00:01:21,840 --> 00:01:24,280
Speaker 1: maybe some of those flows are relatively impressive, but I'm

22
00:01:24,480 --> 00:01:27,120
Speaker 1: also thinking back to the e p f R data

23
00:01:27,200 --> 00:01:28,880
Speaker 1: that I look at in terms of fund flows a

24
00:01:28,920 --> 00:01:31,360
Speaker 1: year to date. In January, there was over a hundred

25
00:01:31,360 --> 00:01:33,839
Speaker 1: billion dollars of net new money put into global equity funds.

26
00:01:34,120 --> 00:01:36,080
Speaker 1: That's come down a little bit as there were some redemptions,

27
00:01:36,120 --> 00:01:38,080
Speaker 1: but it's about you know, almost close to eighty billion

28
00:01:38,080 --> 00:01:40,399
Speaker 1: dollars of net new money into global equity funds this year.

29
00:01:40,880 --> 00:01:43,000
Speaker 1: That's phenomenal when you consider in all of two thousand

30
00:01:43,040 --> 00:01:45,960
Speaker 1: and sixteen, a record breaking year, there were three billion

31
00:01:46,000 --> 00:01:48,240
Speaker 1: dollars of money put in. You know, we went from

32
00:01:48,600 --> 00:01:51,640
Speaker 1: a year last year where people were worried about the

33
00:01:51,720 --> 00:01:55,000
Speaker 1: length of the bullmarket, about valuations, about you know, a

34
00:01:55,040 --> 00:01:58,720
Speaker 1: myriad of different you know, political and geopolitical risks, to

35
00:01:59,360 --> 00:02:02,280
Speaker 1: putting money back to work in equities this year, and

36
00:02:02,320 --> 00:02:03,760
Speaker 1: then now I think we're in a bit of a

37
00:02:03,800 --> 00:02:06,360
Speaker 1: pause as they assess the new volatility and rate environment.

38
00:02:06,680 --> 00:02:09,040
Speaker 1: Are you surprised that there's still this narrative out there,

39
00:02:09,040 --> 00:02:11,680
Speaker 1: a narrative which basically says the following. When the yields

40
00:02:11,680 --> 00:02:14,840
Speaker 1: go higher, equities will be challenged when some of the

41
00:02:14,919 --> 00:02:17,560
Speaker 1: data doesn't really back up that narrative, but it's still

42
00:02:17,600 --> 00:02:19,720
Speaker 1: out there, it still exists. You're surprised by that. Yeah,

43
00:02:19,720 --> 00:02:21,440
Speaker 1: there are a lot of narratives out there that don't

44
00:02:21,560 --> 00:02:24,880
Speaker 1: are not frankly, really based in fundamentals. Um. What I

45
00:02:24,880 --> 00:02:27,160
Speaker 1: would also say is, you know, everyone is looking for

46
00:02:27,320 --> 00:02:30,600
Speaker 1: historical comparisons or periods as their guide to the future,

47
00:02:30,919 --> 00:02:32,760
Speaker 1: and we think that needs to inform perhaps the way

48
00:02:32,760 --> 00:02:35,760
Speaker 1: you look at things, but can't be your soul dictate. Um,

49
00:02:36,880 --> 00:02:39,600
Speaker 1: we are still in a very low rate environment, even

50
00:02:39,600 --> 00:02:42,520
Speaker 1: if rates are moving higher, and we think that companies

51
00:02:42,560 --> 00:02:46,120
Speaker 1: are very well insulated against a significant uh, you know,

52
00:02:46,200 --> 00:02:48,400
Speaker 1: higher rates because they've done such a good job as

53
00:02:48,400 --> 00:02:51,880
Speaker 1: we were just talking about about refinancing themselves. But we'll

54
00:02:51,880 --> 00:02:54,280
Speaker 1: have to watch very closely as as companies talk about

55
00:02:54,320 --> 00:02:56,760
Speaker 1: their spending in investment plans. How are they going to

56
00:02:56,840 --> 00:02:59,280
Speaker 1: be financing that, Will they do it with equity? Will

57
00:02:59,280 --> 00:03:01,160
Speaker 1: they do it with and does that end up having

58
00:03:01,240 --> 00:03:04,359
Speaker 1: an impact? Um. On two thousand nineteen and onwards, Good

59
00:03:04,360 --> 00:03:08,000
Speaker 1: morning everyone, Bloomberg Surveillance, Jenferrow and Tom Keene to John's

60
00:03:08,040 --> 00:03:13,359
Speaker 1: good question, it is about investment. Do you see tangible

61
00:03:13,520 --> 00:03:19,040
Speaker 1: increases in corporate enthusiasm to invest in America? There seems

62
00:03:19,080 --> 00:03:21,160
Speaker 1: to be a little bit of a disconnect, Tom, between

63
00:03:21,560 --> 00:03:23,480
Speaker 1: what companies tell us they would like to do in

64
00:03:23,560 --> 00:03:26,000
Speaker 1: terms of investments and what they're doing in terms of

65
00:03:26,000 --> 00:03:27,959
Speaker 1: putting their money to work. And I think this is

66
00:03:27,960 --> 00:03:30,040
Speaker 1: going to be a real tell me and show us

67
00:03:30,160 --> 00:03:34,079
Speaker 1: kind of moment over the next two quarters. Do companies

68
00:03:34,160 --> 00:03:38,560
Speaker 1: use tax windfall to actually invest? And is that investment

69
00:03:38,600 --> 00:03:40,680
Speaker 1: new investment or was it stuff that just got delayed

70
00:03:40,720 --> 00:03:42,960
Speaker 1: from last year because they thought there was gonna be

71
00:03:42,960 --> 00:03:45,080
Speaker 1: a tax cut coming they were just waiting for it,

72
00:03:45,280 --> 00:03:50,080
Speaker 1: delayed maintenance and sustainable sustainability cap facts. This will be

73
00:03:50,120 --> 00:03:53,160
Speaker 1: on a case by case basis. K I don't expect

74
00:03:53,240 --> 00:03:56,040
Speaker 1: you to make really sweeping generalizations, but I might ask

75
00:03:56,080 --> 00:03:59,120
Speaker 1: you to make just one exception right now. Do you

76
00:03:59,200 --> 00:04:01,560
Speaker 1: want them to invest the money or would you like

77
00:04:01,640 --> 00:04:05,600
Speaker 1: to just see big capital return plans throughout? I want

78
00:04:05,640 --> 00:04:09,520
Speaker 1: companies to make growth generative investments, not investments just to

79
00:04:09,560 --> 00:04:13,480
Speaker 1: appease outsiders. And I think this is what we've we've

80
00:04:13,520 --> 00:04:17,320
Speaker 1: come really used to a corporate management sort of. You know,

81
00:04:17,320 --> 00:04:19,560
Speaker 1: our set of behaviors over the last ten years, where

82
00:04:19,560 --> 00:04:23,040
Speaker 1: companies have been conservative, they were really cautious about spending,

83
00:04:23,040 --> 00:04:25,120
Speaker 1: they were cautious about hiring. They did a lot of jobs,

84
00:04:25,200 --> 00:04:27,360
Speaker 1: the great job of controlling their costs for a long time.

85
00:04:27,680 --> 00:04:29,279
Speaker 1: If they all of a sudden throw that out the

86
00:04:29,320 --> 00:04:31,800
Speaker 1: window in two thousand eight, that would make me anxious

87
00:04:31,920 --> 00:04:34,360
Speaker 1: as an equity investor. So yes, I want them to spend.

88
00:04:34,480 --> 00:04:35,880
Speaker 1: I want them to do stuff that's going to lead

89
00:04:35,880 --> 00:04:39,080
Speaker 1: to better growth longer term. But I don't want it

90
00:04:39,120 --> 00:04:41,360
Speaker 1: to be spending for the sake of spending. Well, let's

91
00:04:41,360 --> 00:04:44,440
Speaker 1: just think about it. They are continually rewarded to introduce

92
00:04:44,480 --> 00:04:46,520
Speaker 1: a buy back plan or increase the dividend. And I'm

93
00:04:46,520 --> 00:04:48,200
Speaker 1: not taking a position on this and saying it's right

94
00:04:48,279 --> 00:04:50,799
Speaker 1: or wrong. I'm just saying, look at Barclays as an example,

95
00:04:50,880 --> 00:04:54,159
Speaker 1: this morning, the stock searching not because anything terrific is

96
00:04:54,160 --> 00:04:56,760
Speaker 1: in the numbers this morning. It's because just Stady, the CEO,

97
00:04:56,880 --> 00:04:59,480
Speaker 1: is increased the dividend one and two. He's talked about

98
00:04:59,480 --> 00:05:01,640
Speaker 1: the prospect of buybacks at some point in the future.

99
00:05:02,080 --> 00:05:04,960
Speaker 1: Maybe that's the stuff that the investment community wants to

100
00:05:05,000 --> 00:05:07,640
Speaker 1: hear is the CEO you know that? How difficult is

101
00:05:07,640 --> 00:05:09,560
Speaker 1: it to put that to one side and say we're

102
00:05:09,560 --> 00:05:12,280
Speaker 1: all about the future, We're all about multi decade strategies.

103
00:05:12,520 --> 00:05:14,760
Speaker 1: I think we also have to remember companies haven't had

104
00:05:14,800 --> 00:05:16,920
Speaker 1: that heart of a time access in capital the last

105
00:05:16,960 --> 00:05:20,040
Speaker 1: couple of years. I mean rates have been low. You know,

106
00:05:20,080 --> 00:05:22,800
Speaker 1: if you're a high quality company with a strong plan,

107
00:05:22,880 --> 00:05:25,520
Speaker 1: it should have no trouble access in the market. So

108
00:05:25,680 --> 00:05:27,840
Speaker 1: if there's this meaningful shift this year, that would make

109
00:05:27,839 --> 00:05:29,680
Speaker 1: me a little bit of gy What a big picture

110
00:05:29,960 --> 00:05:32,640
Speaker 1: to you know, not only your institutional clients, but mostly

111
00:05:32,640 --> 00:05:35,479
Speaker 1: to our listeners who are just worried about keeping the

112
00:05:35,520 --> 00:05:38,240
Speaker 1: four oh one kid going. The great mistake of this

113
00:05:38,279 --> 00:05:41,880
Speaker 1: bull market has been the rationalization of an actual aerial

114
00:05:41,960 --> 00:05:45,240
Speaker 1: assumption is seven percent. You get into that mindset, you

115
00:05:45,279 --> 00:05:47,920
Speaker 1: do certain things. The people that have one day, what

116
00:05:48,200 --> 00:05:51,520
Speaker 1: happened yesterday with David Einhorn, John Ferrell, do we have

117
00:05:51,560 --> 00:05:54,360
Speaker 1: those numbers? And just maybe I don't think green Light

118
00:05:54,400 --> 00:05:56,760
Speaker 1: had yet. Yeah, they don't have a great year. And

119
00:05:56,960 --> 00:06:01,800
Speaker 1: and my answer is is the actual aerial assumption has

120
00:06:01,880 --> 00:06:07,960
Speaker 1: not proven correct? Do you invest now believing with more optimism, inequities,

121
00:06:08,320 --> 00:06:10,600
Speaker 1: or do you hunker down in the land of Kate

122
00:06:10,720 --> 00:06:14,040
Speaker 1: Moore towards an actual real assumption. You know, I think

123
00:06:14,040 --> 00:06:15,839
Speaker 1: this is a great question. We spend a lot of

124
00:06:15,839 --> 00:06:18,480
Speaker 1: times thinking thinking about our near term expectations as well

125
00:06:18,520 --> 00:06:21,400
Speaker 1: as our medium term and longer term capital markets assumptions

126
00:06:21,400 --> 00:06:24,600
Speaker 1: and looking at the gaps between them. It's really hard,

127
00:06:24,640 --> 00:06:26,880
Speaker 1: as you know, tom to time the market. It's really

128
00:06:26,920 --> 00:06:29,440
Speaker 1: really difficult to say, I know the perfect entry or

129
00:06:29,480 --> 00:06:32,320
Speaker 1: exit point. But we feel in general that investors have

130
00:06:32,400 --> 00:06:35,599
Speaker 1: been sitting on too much cash given the strength of

131
00:06:35,600 --> 00:06:38,120
Speaker 1: this cycle. And this is a message we've given to you,

132
00:06:38,240 --> 00:06:42,880
Speaker 1: our institutional and individual clients, and said, look, you can't

133
00:06:42,880 --> 00:06:45,400
Speaker 1: time the market. All you can do is focus on

134
00:06:45,440 --> 00:06:47,920
Speaker 1: the longer term trend. And we think we're gonna have

135
00:06:48,000 --> 00:06:51,640
Speaker 1: less volatility, both in terms of the macro and continued

136
00:06:51,680 --> 00:06:53,880
Speaker 1: corporate health. So as in not a lot of math

137
00:06:54,160 --> 00:06:56,440
Speaker 1: mix of fifty, you're willing to say we're still going

138
00:06:56,480 --> 00:06:58,640
Speaker 1: to have less volatility, we don't expect we're going to

139
00:06:58,680 --> 00:07:01,159
Speaker 1: be at a sustained fixed big fifty. I mean, as

140
00:07:01,200 --> 00:07:04,640
Speaker 1: we were talking about two thousand seventeen was a really

141
00:07:04,720 --> 00:07:07,280
Speaker 1: weird year in terms of low ball, which should be

142
00:07:07,279 --> 00:07:08,840
Speaker 1: a little bit higher than that. It would be an

143
00:07:08,839 --> 00:07:17,480
Speaker 1: even Can you image the ratings with the sustained average

144
00:07:17,800 --> 00:07:20,320
Speaker 1: fifty vis Yeah, I can. I think things have got

145
00:07:20,360 --> 00:07:23,200
Speaker 1: a little bit berserk. Your point about David Ironhorne of

146
00:07:23,720 --> 00:07:26,360
Speaker 1: green Light the under performance the worst since the year

147
00:07:26,400 --> 00:07:28,960
Speaker 1: two thousand and One of the things that comes up

148
00:07:29,080 --> 00:07:31,840
Speaker 1: is this expectation that at some point value stocks are

149
00:07:31,840 --> 00:07:34,240
Speaker 1: going to start out performing growth stocks. Yeah, we're going

150
00:07:34,280 --> 00:07:36,480
Speaker 1: to see that this year, Kate. We need to think

151
00:07:36,480 --> 00:07:38,680
Speaker 1: about what is value. So we think we talked about

152
00:07:38,720 --> 00:07:41,040
Speaker 1: value to different ways, value the investment style, and then

153
00:07:41,120 --> 00:07:43,560
Speaker 1: value the factor. And you remember, value the factors often

154
00:07:43,600 --> 00:07:46,040
Speaker 1: sector neutralized, so you're just looking at the cheapest companies

155
00:07:46,080 --> 00:07:50,080
Speaker 1: within each sector as opposed to taking big sector concentrations,

156
00:07:50,120 --> 00:07:53,680
Speaker 1: oftentimes with a value value the style. And so there

157
00:07:53,720 --> 00:07:57,240
Speaker 1: are certainly companies that are cheaper than they have been historically.

158
00:07:57,600 --> 00:08:00,880
Speaker 1: Some of them are more structurally impaired, and some of

159
00:08:00,880 --> 00:08:03,240
Speaker 1: the stuff, like let's say we're looking in Europe that

160
00:08:03,400 --> 00:08:06,640
Speaker 1: is cheaper, is more domestically oriented, doesn't have the strong

161
00:08:06,680 --> 00:08:10,920
Speaker 1: global growth um you know, tilt, and perhaps deserves a

162
00:08:10,960 --> 00:08:13,760
Speaker 1: lower valuation than some of the multinationals that have multiple

163
00:08:13,760 --> 00:08:17,360
Speaker 1: earning streams. Were you guys long ice cream? Yesterday? The

164
00:08:17,400 --> 00:08:20,400
Speaker 1: weather in Manhattan was so good that anybody within forty

165
00:08:20,440 --> 00:08:23,560
Speaker 1: two ft of me demanded ice cream. You need a

166
00:08:23,600 --> 00:08:26,320
Speaker 1: time arizon of about five minutes if you were, because

167
00:08:26,560 --> 00:08:31,240
Speaker 1: it's freezing again. Went back down into the fourties. There's

168
00:08:31,280 --> 00:08:33,560
Speaker 1: the most position and open up the trading book on

169
00:08:33,640 --> 00:08:36,280
Speaker 1: ice cream. Do you want to understand the cost of

170
00:08:36,360 --> 00:08:40,360
Speaker 1: ice cream? That's not Howard Johnson's Columbus Circle. There's an

171
00:08:40,400 --> 00:08:44,120
Speaker 1: ice cream place it dance the wallet. I don't have

172
00:08:44,200 --> 00:08:47,000
Speaker 1: kids like you, and I'm actually it's really expensive. Tompkin.

173
00:08:47,120 --> 00:08:49,200
Speaker 1: It was gorgeous yesterday. What do we get up to?

174
00:08:49,320 --> 00:08:54,200
Speaker 1: Seventies and seventy seventies? Ate? Thank you with black Rocket.

175
00:08:54,280 --> 00:09:08,760
Speaker 1: This is Bloomberg. We're talking with Hans Hume before about

176
00:09:08,800 --> 00:09:12,640
Speaker 1: his interest in Venezuela. We think all in Venezuela for watching,

177
00:09:12,679 --> 00:09:16,280
Speaker 1: as we've heard from a number of voices today. Speak

178
00:09:16,320 --> 00:09:19,920
Speaker 1: to the Venezuela people and Hans Hume, as you mentioned earlier,

179
00:09:20,280 --> 00:09:25,640
Speaker 1: the Venezuela elite about almost as nostalgia to get back

180
00:09:25,640 --> 00:09:31,000
Speaker 1: to a Venezuela of another time. Is that possible. You know,

181
00:09:30,440 --> 00:09:33,840
Speaker 1: I don't think anybody wants to go back to the

182
00:09:33,920 --> 00:09:36,480
Speaker 1: Venezuela another time. I mean, certainly in the nineteen seventies,

183
00:09:36,520 --> 00:09:39,240
Speaker 1: I mean that was probably the dream scenario. Oil prices high,

184
00:09:39,760 --> 00:09:43,920
Speaker 1: um education funded for any anybody in Venezuela, that a

185
00:09:44,000 --> 00:09:48,400
Speaker 1: lot of people stuttering studying internationally, and I mean Venezuela

186
00:09:48,440 --> 00:09:52,440
Speaker 1: was the strongest economy in Latin America. All prices go down,

187
00:09:53,160 --> 00:09:56,480
Speaker 1: you start getting social divisions. The elite was very entrenched,

188
00:09:56,480 --> 00:09:59,160
Speaker 1: and Chaves took a message that really resonated with the

189
00:09:59,160 --> 00:10:02,120
Speaker 1: majority of the popula Asian. The problem is that Javis

190
00:10:02,240 --> 00:10:03,800
Speaker 1: was hardly an economist. I mean, if you take a

191
00:10:03,800 --> 00:10:07,280
Speaker 1: look of Venezuela and compared to Equador, for example, Raphael

192
00:10:07,360 --> 00:10:09,320
Speaker 1: Correa came in with the same kind of message, but

193
00:10:09,360 --> 00:10:13,040
Speaker 1: he actually implemented some economic policies that were was able

194
00:10:13,080 --> 00:10:17,120
Speaker 1: to broaden the economy and opportunities for the majority of

195
00:10:17,160 --> 00:10:19,880
Speaker 1: the population. Um. So there's been a real change in

196
00:10:19,920 --> 00:10:23,600
Speaker 1: the infrastructure Equador, Venezuela. It's all been ripped apart, and

197
00:10:23,640 --> 00:10:25,480
Speaker 1: I think that the recovery is going to have to

198
00:10:25,520 --> 00:10:29,320
Speaker 1: be something along those lines. Eventually, were more people of

199
00:10:29,360 --> 00:10:33,120
Speaker 1: access to you know, the economic power than you saw

200
00:10:33,160 --> 00:10:37,719
Speaker 1: prior to the Javis Revolution. This is a total economic tragedy.

201
00:10:38,040 --> 00:10:42,319
Speaker 1: There is a seriously powerful story on the Bloomberg Today

202
00:10:42,320 --> 00:10:46,959
Speaker 1: written by our colleague Fabiol Zerpa who's basically rights that

203
00:10:47,080 --> 00:10:50,800
Speaker 1: PETERSA Cruz the National Old Company a skipping work to

204
00:10:50,920 --> 00:10:53,880
Speaker 1: hunt for food. Just think about that, skipping work to

205
00:10:54,000 --> 00:10:55,960
Speaker 1: hunt for food. And the individual in the story says,

206
00:10:55,960 --> 00:10:57,920
Speaker 1: I haven't eaten meat for two months. The last time

207
00:10:57,960 --> 00:11:00,640
Speaker 1: I did, I spent my whole week's salary on chicken meal.

208
00:11:01,080 --> 00:11:03,920
Speaker 1: That's how tragic things are right now, Hans. And as

209
00:11:03,920 --> 00:11:06,120
Speaker 1: you look at other situations you've been involved in the past,

210
00:11:06,120 --> 00:11:09,959
Speaker 1: and we can talk about your experience with Grace Venezuela,

211
00:11:10,240 --> 00:11:14,319
Speaker 1: is that a really really unique situation right now versus

212
00:11:14,360 --> 00:11:17,360
Speaker 1: everything else you've ever experienced. You know, it's kind of

213
00:11:17,360 --> 00:11:21,200
Speaker 1: interesting because I remember in another interview Um making the

214
00:11:21,280 --> 00:11:24,920
Speaker 1: point that if you're looking long term returns, you know,

215
00:11:25,400 --> 00:11:27,240
Speaker 1: investing in men as well, you're not expecting it to

216
00:11:27,240 --> 00:11:31,800
Speaker 1: become Switzerland. You just don't want it to become Zimbabwe. Absolutely.

217
00:11:31,880 --> 00:11:35,280
Speaker 1: The next day you had the coup and Zimbabwe and

218
00:11:35,600 --> 00:11:39,080
Speaker 1: Gabe got kicked out. And now Zimbabwe is like sort

219
00:11:39,080 --> 00:11:42,920
Speaker 1: of the darling at Davos um Venezuel. It is a tragedy,

220
00:11:43,440 --> 00:11:46,400
Speaker 1: uh the um you know, if you look at the

221
00:11:46,400 --> 00:11:49,760
Speaker 1: amount of hunger, not just among the you know, the

222
00:11:49,880 --> 00:11:52,800
Speaker 1: oil industry workers, but across you know, you look at

223
00:11:52,880 --> 00:11:56,520
Speaker 1: deaths of you know, babies in hospitals. I mean, the

224
00:11:56,679 --> 00:12:01,360
Speaker 1: entire support network for the society has been ripped apart um.

225
00:12:01,400 --> 00:12:03,040
Speaker 1: And I think the real tragedy is I mean, there

226
00:12:03,080 --> 00:12:06,480
Speaker 1: was the initial elite that consolidated a lot of the

227
00:12:06,520 --> 00:12:08,360
Speaker 1: wealth and we're taking quite a bit of off shore.

228
00:12:08,559 --> 00:12:13,680
Speaker 1: But in the last ten fifteen years, the people in

229
00:12:13,720 --> 00:12:17,400
Speaker 1: the current administration that had people in the oil companies

230
00:12:17,760 --> 00:12:20,600
Speaker 1: in you know, the senior people in the government have

231
00:12:20,840 --> 00:12:26,160
Speaker 1: probably swept you know, between billion and trillion dollars offshore.

232
00:12:26,640 --> 00:12:29,439
Speaker 1: So you know what the tragedy really isn't I mean,

233
00:12:29,480 --> 00:12:32,200
Speaker 1: people has been discussion about hunger bonds, but it's really

234
00:12:32,920 --> 00:12:36,319
Speaker 1: that there's it's a kleptocracy at this point and so

235
00:12:36,440 --> 00:12:40,800
Speaker 1: much money has been swept off shore that there's nothing there,

236
00:12:41,320 --> 00:12:43,720
Speaker 1: you know, two left in the country. So I worked

237
00:12:43,760 --> 00:12:45,959
Speaker 1: this question carefully because I think it's the best way

238
00:12:46,000 --> 00:12:48,679
Speaker 1: of wording this as an investor. You want to finance

239
00:12:48,720 --> 00:12:52,160
Speaker 1: the economic recovery of what is right now an absolute tragedy.

240
00:12:52,400 --> 00:12:53,800
Speaker 1: But as you look at the situation, what are the

241
00:12:53,800 --> 00:12:57,680
Speaker 1: opportunities to do that? I mean, clearly, anything you know

242
00:12:57,760 --> 00:13:00,240
Speaker 1: that you look at to invest on the ground is

243
00:13:00,600 --> 00:13:02,880
Speaker 1: that the people are giving it away. Um. On the

244
00:13:02,920 --> 00:13:06,240
Speaker 1: fixed income side, both Petavesa and Venezuelan sovereign bonds are

245
00:13:06,240 --> 00:13:10,400
Speaker 1: trading very cheap. But I think the first step, uh

246
00:13:10,679 --> 00:13:14,480
Speaker 1: is to get you know, assuming there'll be a transition

247
00:13:14,960 --> 00:13:18,080
Speaker 1: of the government at some point, um. I mean, I

248
00:13:18,120 --> 00:13:22,240
Speaker 1: think that the idea that Caracas will become Havana and

249
00:13:22,440 --> 00:13:26,080
Speaker 1: will stay off in outside the international community for more

250
00:13:26,120 --> 00:13:29,439
Speaker 1: than five years is is far fetched, but it is.

251
00:13:29,679 --> 00:13:32,320
Speaker 1: You know, when the recovery happens, you're going to have

252
00:13:32,520 --> 00:13:36,440
Speaker 1: to cooperate with the international community to bring the stolen

253
00:13:36,480 --> 00:13:39,600
Speaker 1: money back into the domestic economy, and then you'll have

254
00:13:39,640 --> 00:13:42,719
Speaker 1: to start rebuilding the rule of law, um, you know,

255
00:13:43,280 --> 00:13:45,560
Speaker 1: and try to bring the country back to where it was.

256
00:13:45,880 --> 00:13:48,679
Speaker 1: Thank you for the briefing. Hans Hume, who looks at

257
00:13:48,720 --> 00:13:52,720
Speaker 1: distressed things like Greece at a certain point, like maybe

258
00:13:52,760 --> 00:13:56,280
Speaker 1: Portugal at a certain point. In this case, Venezuela. He

259
00:13:56,440 --> 00:14:10,000
Speaker 1: is with Gray Lucky. Should we now speak with Dennis Gartman,

260
00:14:10,080 --> 00:14:12,240
Speaker 1: which is always a good and beautiful thing. We talked

261
00:14:12,240 --> 00:14:16,120
Speaker 1: to him about rising rates, about equities, about the joy

262
00:14:16,200 --> 00:14:18,319
Speaker 1: that in his newsletter he writes in the back end

263
00:14:18,360 --> 00:14:22,520
Speaker 1: of it, the winning and often the losing in trades.

264
00:14:23,040 --> 00:14:27,240
Speaker 1: Capital risk management always from the center from Mr Gartman.

265
00:14:27,760 --> 00:14:31,160
Speaker 1: But first a modest uproar. Let me brief you on this, folks. Uh.

266
00:14:31,520 --> 00:14:36,359
Speaker 1: Mr Gartman went all bitcoin, he went down in flames,

267
00:14:37,320 --> 00:14:39,520
Speaker 1: and there was a course within the volatility. The last

268
00:14:39,520 --> 00:14:42,920
Speaker 1: couple of weeks, different reports, and we at Bloomberg wrote

269
00:14:42,960 --> 00:14:45,400
Speaker 1: up the story. And you know, I must admit, Dennis,

270
00:14:45,400 --> 00:14:47,760
Speaker 1: the headline was a little of cerbics, saying, you blew

271
00:14:47,880 --> 00:14:51,960
Speaker 1: up your retirement account? Did you jump into the James River? What? What?

272
00:14:51,960 --> 00:14:57,680
Speaker 1: What happened with your retirement? I lost a little over um,

273
00:14:57,960 --> 00:15:00,520
Speaker 1: which to me is really quite disturbing. Yeah, um, I

274
00:15:01,200 --> 00:15:03,320
Speaker 1: suspected a loss of one percent or one and a

275
00:15:03,360 --> 00:15:06,400
Speaker 1: half percent or so. It's probably not going to cause

276
00:15:06,440 --> 00:15:08,800
Speaker 1: me to lose a great good deal of sleep, nor

277
00:15:08,880 --> 00:15:11,440
Speaker 1: has it blown up my retirement funds, nor shall I

278
00:15:11,480 --> 00:15:14,960
Speaker 1: have to go into work longer day longer weeks and

279
00:15:15,160 --> 00:15:19,520
Speaker 1: years to recover. I had a excuse me. I had

280
00:15:19,560 --> 00:15:23,200
Speaker 1: a bad trade. Yeah, I got out, but the headlines

281
00:15:23,240 --> 00:15:26,280
Speaker 1: that Bloomberg had written made it look like I had

282
00:15:26,520 --> 00:15:29,560
Speaker 1: and had been debilitated, and that's simply not to come.

283
00:15:29,680 --> 00:15:31,760
Speaker 1: I talked to our David Litkar, editor on this, and

284
00:15:31,840 --> 00:15:33,680
Speaker 1: he made clear we made some tweaks to that. But

285
00:15:33,760 --> 00:15:36,720
Speaker 1: the idea of Dennis, whether you were done one percent

286
00:15:36,840 --> 00:15:39,200
Speaker 1: or five percent, or you've got closet in a bitcoin

287
00:15:39,280 --> 00:15:43,680
Speaker 1: trade in the heat of down a thousand points in

288
00:15:43,760 --> 00:15:47,200
Speaker 1: the heat yesterday of a swing of five hundred points,

289
00:15:47,240 --> 00:15:51,280
Speaker 1: in two cups of gartment cup of coffee, what should

290
00:15:51,360 --> 00:15:55,400
Speaker 1: people do? You're in a dog trade, you said in

291
00:15:55,400 --> 00:15:58,040
Speaker 1: your newsletter, you were in some bitcoin riot coin thing,

292
00:15:58,080 --> 00:16:01,240
Speaker 1: whatever it was, you were in this a thing. What

293
00:16:01,480 --> 00:16:05,480
Speaker 1: should people do when they're going down in flames on

294
00:16:05,560 --> 00:16:09,120
Speaker 1: an individual trade. Get to the sidelines as fast as

295
00:16:09,120 --> 00:16:12,160
Speaker 1: you possibly can, take your loss and miss admit that

296
00:16:12,200 --> 00:16:16,920
Speaker 1: you had made a mistake for whatever reason, and and

297
00:16:17,000 --> 00:16:18,440
Speaker 1: do the best that you can. But going to the

298
00:16:18,480 --> 00:16:21,920
Speaker 1: sidelines is always the best course of action. And as

299
00:16:21,960 --> 00:16:25,280
Speaker 1: I've always said, there's never just one cockroach. Usually when

300
00:16:25,280 --> 00:16:28,480
Speaker 1: a problem occurs, is followed by others, and the stock

301
00:16:28,520 --> 00:16:31,040
Speaker 1: has continued to fall since then. With with within this,

302
00:16:31,160 --> 00:16:37,360
Speaker 1: Dennis is risk management? Do stop losses work when you're

303
00:16:37,440 --> 00:16:40,080
Speaker 1: going down in riot coin or whatever? It was that quick?

304
00:16:40,120 --> 00:16:43,680
Speaker 1: I mean, I'm sorry, John Ferrell. Technical analysis doesn't work

305
00:16:44,080 --> 00:16:46,960
Speaker 1: when the line is we keep referring to this is

306
00:16:47,080 --> 00:16:49,720
Speaker 1: riot chain? What is this riot blockchain? It was a

307
00:16:49,800 --> 00:16:52,400
Speaker 1: block check company that went all crypto. And I want

308
00:16:52,400 --> 00:16:55,400
Speaker 1: to try and understand why someone like you, Dennis exactly

309
00:16:55,520 --> 00:16:58,320
Speaker 1: was anywhere near this company. Why did you hold this stock?

310
00:16:59,800 --> 00:17:02,080
Speaker 1: I was looking at the chart. I saw something that

311
00:17:02,080 --> 00:17:04,280
Speaker 1: that was pleasing. It had an out of what I

312
00:17:04,359 --> 00:17:07,040
Speaker 1: call an outside reversal two weeks per or. Prior to that,

313
00:17:07,680 --> 00:17:10,560
Speaker 1: uh and UH, I understand that a couple of friends

314
00:17:10,560 --> 00:17:13,440
Speaker 1: of mine from years past were becoming involved. That changed

315
00:17:13,480 --> 00:17:16,400
Speaker 1: my opinion. I thought I could see a decent reward

316
00:17:16,440 --> 00:17:19,560
Speaker 1: and a reasonable risk, and for a while the trade

317
00:17:19,600 --> 00:17:21,440
Speaker 1: was doing really quite well. I think I bought it

318
00:17:21,520 --> 00:17:24,080
Speaker 1: at fifteen and a half. Sixteen sixteen and a half

319
00:17:24,600 --> 00:17:27,160
Speaker 1: added to a winning trade. I think it was up

320
00:17:27,160 --> 00:17:29,680
Speaker 1: to seventeen twenty the night before, and then out came

321
00:17:30,280 --> 00:17:33,280
Speaker 1: that expose a tennis. We talked about technicles here, would

322
00:17:33,320 --> 00:17:36,720
Speaker 1: you seriously exclusively a d put a position on by

323
00:17:36,760 --> 00:17:39,880
Speaker 1: a equity by a stock on technacles alone, without doing

324
00:17:39,880 --> 00:17:42,720
Speaker 1: any fundamental analysis of what this company's up to. It's

325
00:17:42,760 --> 00:17:44,240
Speaker 1: not the first time I've done that. It won't be

326
00:17:44,280 --> 00:17:45,800
Speaker 1: the last time I've done that. There there are a

327
00:17:45,880 --> 00:17:48,159
Speaker 1: number of reasons why I did it, and it was

328
00:17:48,200 --> 00:17:50,680
Speaker 1: a very small amount of money compared to the size

329
00:17:50,680 --> 00:17:54,600
Speaker 1: of my my retirement funds, So yeah, clearly I there

330
00:17:54,640 --> 00:17:56,320
Speaker 1: There have been times in the past when a when

331
00:17:56,320 --> 00:18:00,680
Speaker 1: a simple technical circumstance has has a list has has

332
00:18:01,040 --> 00:18:03,040
Speaker 1: caught my attention, and I have acted. I'm not the

333
00:18:03,080 --> 00:18:05,159
Speaker 1: only things that's ever done that. I won't be the last.

334
00:18:05,520 --> 00:18:08,720
Speaker 1: This is very honest discussion, folks, Dennis Garment, what's so

335
00:18:08,920 --> 00:18:15,320
Speaker 1: poor important? Here is a struggle of partitioning investment from speculation?

336
00:18:15,920 --> 00:18:20,240
Speaker 1: How do you partition gold hedged in euro or a

337
00:18:20,359 --> 00:18:23,760
Speaker 1: long term long bet on the United States of America

338
00:18:24,400 --> 00:18:27,720
Speaker 1: from what's it called? John on his speculation on Riot?

339
00:18:27,800 --> 00:18:31,560
Speaker 1: What riot block chain? How do you can we change

340
00:18:31,600 --> 00:18:33,800
Speaker 1: is the Bloomberg block chain? That would be good for

341
00:18:33,800 --> 00:18:37,760
Speaker 1: the show? Dennis? How do you partition? We would wait,

342
00:18:37,800 --> 00:18:40,439
Speaker 1: we only got forty two listeners. Now, Dennis, how do

343
00:18:40,520 --> 00:18:45,520
Speaker 1: you partition investment from speculation? That's the heart of this discussion.

344
00:18:45,960 --> 00:18:49,080
Speaker 1: I don't think there is a different differentiation between investment

345
00:18:49,080 --> 00:18:52,200
Speaker 1: and speculation. I I learned long ago when I worked

346
00:18:52,240 --> 00:18:53,880
Speaker 1: at the bank as a as a fort ex change

347
00:18:53,880 --> 00:18:56,000
Speaker 1: trader and watched one of the major one of the

348
00:18:56,040 --> 00:18:58,679
Speaker 1: major traders in the bank put positions on for the

349
00:18:58,680 --> 00:19:01,880
Speaker 1: bank's portfolio. When they win against him, they became part

350
00:19:01,920 --> 00:19:04,600
Speaker 1: of the portfolio and became an investment. When he made

351
00:19:04,600 --> 00:19:09,120
Speaker 1: a quick profit, they became a speculation. All trading, all investment,

352
00:19:09,200 --> 00:19:12,120
Speaker 1: begins as a speculation. And usually what I have seen

353
00:19:12,160 --> 00:19:14,560
Speaker 1: over the course of years is that people who allow

354
00:19:14,600 --> 00:19:17,240
Speaker 1: a trade to go against them say that the fundamentals

355
00:19:17,240 --> 00:19:21,000
Speaker 1: have not changed. Something else has changed. You're losing money.

356
00:19:21,320 --> 00:19:23,760
Speaker 1: And that's what separates I think pros from amateurs in

357
00:19:23,800 --> 00:19:27,080
Speaker 1: the business. His pros will lose money more often than

358
00:19:27,119 --> 00:19:30,240
Speaker 1: amateurs will. But pros will lose will make so much

359
00:19:30,240 --> 00:19:31,880
Speaker 1: more on the one or two or three or four

360
00:19:31,920 --> 00:19:34,320
Speaker 1: trades out of the fifteen that they have. And that's

361
00:19:34,359 --> 00:19:49,880
Speaker 1: what's important, and that's what differentiates Dennis Gallman to really

362
00:19:50,000 --> 00:19:54,960
Speaker 1: link in UH science and technology in a way that

363
00:19:55,920 --> 00:19:59,040
Speaker 1: the great response we got yesterday from those older that

364
00:19:59,160 --> 00:20:03,600
Speaker 1: remember where you stopped for space launches, and a lot

365
00:20:03,640 --> 00:20:05,879
Speaker 1: of younger people are saying, well, that's odd, and I'm like, no,

366
00:20:06,000 --> 00:20:08,159
Speaker 1: it's not odd. It's what we used to do and

367
00:20:08,280 --> 00:20:11,159
Speaker 1: through the sixties and even well into the seventies and

368
00:20:11,160 --> 00:20:13,160
Speaker 1: of course up to a grim day with a Challenger

369
00:20:13,880 --> 00:20:17,280
Speaker 1: accident of years ago. But um, we're gonna do that.

370
00:20:17,359 --> 00:20:23,200
Speaker 1: SpaceX scrubbed yesterday the reports our official surveillance aerospace engineer,

371
00:20:23,560 --> 00:20:27,440
Speaker 1: our worst span, David worst Span doesn't when you get

372
00:20:27,480 --> 00:20:30,600
Speaker 1: that much engineering, you don't use your first name. It's

373
00:20:30,640 --> 00:20:35,159
Speaker 1: just surveillance aerospace expert. Our worst span tells us that

374
00:20:35,359 --> 00:20:38,880
Speaker 1: down wind, it looks good today for SpaceX. How does

375
00:20:38,880 --> 00:20:43,360
Speaker 1: it look for Rubber Made. I have discovered that offspring

376
00:20:43,720 --> 00:20:48,720
Speaker 1: like rubber made airtight cartons to keep their slim in.

377
00:20:49,640 --> 00:20:53,560
Speaker 1: So is this the slime report with Newell rubber Made. Well,

378
00:20:53,640 --> 00:20:57,439
Speaker 1: that's just the focus on Newell Brands, which owns rubber

379
00:20:57,480 --> 00:21:02,800
Speaker 1: Made all along with a lot of other UH consumer products.

380
00:21:02,800 --> 00:21:05,440
Speaker 1: It's up two and a half percent in early trading.

381
00:21:06,040 --> 00:21:09,520
Speaker 1: The household product maker appointed too independent directors to its

382
00:21:09,520 --> 00:21:12,480
Speaker 1: board instead of would nominate a third for election this year.

383
00:21:12,880 --> 00:21:18,120
Speaker 1: All this change coming as activist investors Starboard Value wages

384
00:21:18,200 --> 00:21:21,520
Speaker 1: a proxy fight to take over a newle's board. So

385
00:21:22,080 --> 00:21:24,480
Speaker 1: change is coming. It's just a question of how it

386
00:21:24,520 --> 00:21:26,440
Speaker 1: gets there and what it looks like when it's all over.

387
00:21:27,280 --> 00:21:29,800
Speaker 1: You've got a couple of earnings reports out of the

388
00:21:30,200 --> 00:21:32,920
Speaker 1: energy business which are being well received, one of them

389
00:21:32,920 --> 00:21:35,679
Speaker 1: from Apache. It's up one and a half percent. The

390
00:21:35,720 --> 00:21:38,640
Speaker 1: oil and gas producer's fourth quarter earnings and sales beat

391
00:21:38,680 --> 00:21:43,359
Speaker 1: analysts average estimates in Bloomberg Survey and Technic f m C.

392
00:21:43,640 --> 00:21:47,520
Speaker 1: The All Services company up six percent. Earnings before interest, taxes,

393
00:21:47,520 --> 00:21:51,479
Speaker 1: depreciation and amortization for the fourth quarter beat estimates. Ut

394
00:21:51,520 --> 00:21:54,679
Speaker 1: of the technique. FMC also raised this year's forecast for

395
00:21:54,760 --> 00:21:59,320
Speaker 1: EBA don margin a profitability gauge. Hormel Foods, though down

396
00:21:59,359 --> 00:22:02,400
Speaker 1: three percent, anty maker of spam, canned meat and other

397
00:22:02,440 --> 00:22:05,240
Speaker 1: food items, posted earnings and sales for the fiscal first

398
00:22:05,320 --> 00:22:08,359
Speaker 1: quarter that were lower than projections. Hormouse side at higher

399
00:22:08,400 --> 00:22:13,440
Speaker 1: freight costs along with weakness and its Genio turkey business. Uh,

400
00:22:13,560 --> 00:22:18,160
Speaker 1: you've got wayfair lower by fourteen percent, but I don't

401
00:22:18,280 --> 00:22:23,640
Speaker 1: online seller of home furnishings like I kind of absolutely.

402
00:22:24,160 --> 00:22:25,919
Speaker 1: They had a fourth quarter of loss that was wider

403
00:22:25,920 --> 00:22:30,760
Speaker 1: than estimates. Even those sales beat projections. Bigger disappointment at Roku,

404
00:22:30,920 --> 00:22:34,399
Speaker 1: that stock down eighteen percent. The maker of video streaming

405
00:22:34,400 --> 00:22:37,240
Speaker 1: devices gave a first quarter revenue forecast of trailed estimates.

406
00:22:37,240 --> 00:22:40,160
Speaker 1: Bearing my Rokus share price had more than triple since

407
00:22:40,200 --> 00:22:44,000
Speaker 1: the company went public in September. And then you have

408
00:22:44,119 --> 00:22:49,760
Speaker 1: McQuary Infrastructure down almost twenty eight percent. Company owns power, energy,

409
00:22:49,880 --> 00:22:54,119
Speaker 1: and airport services businesses. They're cutting this year's dividend by

410
00:22:54,200 --> 00:22:58,920
Speaker 1: thirty two of fund investments. McQuary had increased its pay

411
00:22:58,920 --> 00:23:03,120
Speaker 1: out every quarter for the past four years, relatively unusual.

412
00:23:03,160 --> 00:23:05,439
Speaker 1: Companies intend only do it once a year. One more. Here,

413
00:23:05,440 --> 00:23:07,280
Speaker 1: we've gotta get to a record. I'll give you a pair.

414
00:23:07,920 --> 00:23:10,280
Speaker 1: Avis Budget Group up ten a half percent the car

415
00:23:10,320 --> 00:23:14,480
Speaker 1: rental Company's fourth quarter earnings, the revenue seed pick up

416
00:23:14,520 --> 00:23:18,080
Speaker 1: in business worldwide and higher rates in the America's and

417
00:23:18,400 --> 00:23:22,840
Speaker 1: rival Hurts Global Holdings is up in the David Wilson,

418
00:23:22,880 --> 00:23:25,120
Speaker 1: thank you so much on the car rental front. Uh

419
00:23:25,160 --> 00:23:27,199
Speaker 1: today this is a joy. Here's we're gonna do, folks

420
00:23:27,480 --> 00:23:29,359
Speaker 1: for the next hour. We've spent a lot of time

421
00:23:30,080 --> 00:23:36,679
Speaker 1: on technology manufacturing, on the oddities, the true oddities of

422
00:23:37,240 --> 00:23:40,040
Speaker 1: well hearkens back to the sixties, even the fifties, but

423
00:23:40,080 --> 00:23:43,359
Speaker 1: the sixties and into the seventies, which is throwing things

424
00:23:43,480 --> 00:23:46,520
Speaker 1: into space. We begin our coverage now of a scrub

425
00:23:46,520 --> 00:23:50,240
Speaker 1: mission yesterday. George Ferguson will join us from Bloomberg with

426
00:23:50,440 --> 00:23:55,200
Speaker 1: really smart discussion of the defense contractors and um, the

427
00:23:55,240 --> 00:23:58,560
Speaker 1: flight industry, if you will. But we are thrilled down

428
00:23:58,600 --> 00:24:01,359
Speaker 1: to bring in Gene mon Stir. He's a loup ventures

429
00:24:01,400 --> 00:24:03,280
Speaker 1: of course, you know him for years of Piper Jeffrey

430
00:24:03,560 --> 00:24:06,840
Speaker 1: Gina got two Apple questions quickly here before we move

431
00:24:06,880 --> 00:24:11,239
Speaker 1: over to Tesla and SpaceX and all that. Um. The

432
00:24:11,359 --> 00:24:14,480
Speaker 1: update on Apple seems to be, first of all, the

433
00:24:14,600 --> 00:24:19,160
Speaker 1: mystery of their use of cash. If you noted a

434
00:24:19,320 --> 00:24:24,600
Speaker 1: change in the executive leadership of Apple in what they

435
00:24:24,760 --> 00:24:31,480
Speaker 1: feel about cash. Unfortunately, I wish I could report a change,

436
00:24:31,800 --> 00:24:35,520
Speaker 1: but it's the majority called seventy of the cash is

437
00:24:35,520 --> 00:24:38,399
Speaker 1: going to go back to shareholders in the form of

438
00:24:38,440 --> 00:24:40,920
Speaker 1: a likely a much bigger share buy back. There's probably

439
00:24:40,960 --> 00:24:44,040
Speaker 1: a one time dividend that's coming, but the majority is

440
00:24:44,080 --> 00:24:47,120
Speaker 1: going to come back. As a somebody who's been following tech,

441
00:24:47,200 --> 00:24:49,960
Speaker 1: we would love to see Apple go and make some

442
00:24:50,080 --> 00:24:52,720
Speaker 1: big M and A deals and buy something like Tesla.

443
00:24:52,800 --> 00:24:55,080
Speaker 1: That would make the most amount of sense. But even

444
00:24:55,119 --> 00:24:57,840
Speaker 1: though things have changed a lot under Tim Cook, the

445
00:24:57,880 --> 00:25:02,040
Speaker 1: company is much more transparent. This need for cash, this

446
00:25:02,800 --> 00:25:06,440
Speaker 1: uh near death experience that the company had almost twenty

447
00:25:06,520 --> 00:25:10,560
Speaker 1: years ago, hasn't changed the fundamentals of what they're gonna Well,

448
00:25:10,600 --> 00:25:12,440
Speaker 1: you know, I know people would say, well they should

449
00:25:12,440 --> 00:25:14,440
Speaker 1: go by this, or that I'm not informed. I guess

450
00:25:14,520 --> 00:25:17,439
Speaker 1: some would say Twitter as well. I should point out

451
00:25:17,560 --> 00:25:20,119
Speaker 1: right now, folks were just getting images here from the

452
00:25:20,200 --> 00:25:25,560
Speaker 1: Vandenburg Air Force Base in California, and of course at

453
00:25:25,680 --> 00:25:28,440
Speaker 1: nine oh six am let mean work back eight seven

454
00:25:28,560 --> 00:25:31,920
Speaker 1: six or six am in California and the black sky

455
00:25:32,080 --> 00:25:34,960
Speaker 1: the early morning, and really an image out of the

456
00:25:35,040 --> 00:25:39,640
Speaker 1: sixties with the liquid oxygen, the gaseous oxygen streaming off

457
00:25:40,160 --> 00:25:43,159
Speaker 1: with a very slight wind to the left of the

458
00:25:43,200 --> 00:25:46,720
Speaker 1: Falcon rocket in the unmanned module at the top with

459
00:25:46,800 --> 00:25:49,240
Speaker 1: three satellites in it. And that's really the first image

460
00:25:49,800 --> 00:25:52,639
Speaker 1: we have again from another time and place in American

461
00:25:53,160 --> 00:25:57,360
Speaker 1: science history. Gene, let's rip up the script. Then why

462
00:25:57,359 --> 00:26:01,320
Speaker 1: would Apple by Tesla. They're very good, it's selling six

463
00:26:01,400 --> 00:26:06,399
Speaker 1: hundred dollars seven hundred dollar units called iPhones and other things.

464
00:26:06,880 --> 00:26:09,760
Speaker 1: Why would they want the headaches of moving an automobile.

465
00:26:11,359 --> 00:26:14,399
Speaker 1: The simple answer is that it's a massive market and

466
00:26:14,520 --> 00:26:17,200
Speaker 1: big companies, and Apple is gonna do about two hundred

467
00:26:17,240 --> 00:26:20,000
Speaker 1: and seventy billion revenue this year, one of the biggest

468
00:26:20,040 --> 00:26:23,200
Speaker 1: companies in the world. They need to find massive markets

469
00:26:23,240 --> 00:26:26,080
Speaker 1: to grow into. I want to emphasize I think that

470
00:26:26,200 --> 00:26:29,720
Speaker 1: an Apple Tesla combination makes a ton of sense, but

471
00:26:29,760 --> 00:26:31,720
Speaker 1: it's a fairy tale that that's ever going to happen.

472
00:26:31,720 --> 00:26:34,040
Speaker 1: And the reason why you're looking at it with just

473
00:26:34,280 --> 00:26:37,640
Speaker 1: these images of the Falcon launch getting ready, is that

474
00:26:37,880 --> 00:26:41,919
Speaker 1: Elon Musk would never sell. He's very passionate about say,

475
00:26:42,359 --> 00:26:45,080
Speaker 1: he has kind of four endeavors going on in all

476
00:26:45,080 --> 00:26:48,119
Speaker 1: of them, but he's most passionate auto, so he simply

477
00:26:48,160 --> 00:26:50,560
Speaker 1: won't sell. So the answer to your question, Tom is

478
00:26:50,880 --> 00:26:54,560
Speaker 1: otto is gonna be just this massive upheaval. We all

479
00:26:54,600 --> 00:26:56,919
Speaker 1: know it's coming. When you see a car on the

480
00:26:57,040 --> 00:27:00,440
Speaker 1: road today, think of a horse and buggy because that's

481
00:27:00,480 --> 00:27:03,320
Speaker 1: going to be the difference between the cars we're driving

482
00:27:03,359 --> 00:27:05,080
Speaker 1: today and the ones we're gonna drive in ten years

483
00:27:05,080 --> 00:27:07,720
Speaker 1: and Apple season opportunity, so they will play in this

484
00:27:08,040 --> 00:27:12,800
Speaker 1: autonomous transportation space. Who is probably some sort of autonomous shuttle,

485
00:27:13,320 --> 00:27:17,679
Speaker 1: but not a position within your wonderful note on the

486
00:27:17,720 --> 00:27:20,199
Speaker 1: future of my horse and buggy and no gene, I

487
00:27:20,240 --> 00:27:26,240
Speaker 1: do not remember the horse and buggy is the manufacturing process.

488
00:27:26,400 --> 00:27:32,800
Speaker 1: Apple invented a manufacturing process for constructing their Miracle phones.

489
00:27:33,640 --> 00:27:39,040
Speaker 1: Elon Musk is reinventing a manufacturing process at Tesla slash SpaceX.

490
00:27:39,359 --> 00:27:44,119
Speaker 1: How do the two dovetail well? When you think about

491
00:27:44,160 --> 00:27:47,480
Speaker 1: the future of manufacturing and cars, um, I think a

492
00:27:47,480 --> 00:27:49,600
Speaker 1: lot of people just think about putting wheels on an

493
00:27:49,600 --> 00:27:53,360
Speaker 1: axle and a chassis. But the real guts of this

494
00:27:53,480 --> 00:27:56,159
Speaker 1: is a computer. When you talk to people at Tesla,

495
00:27:56,200 --> 00:27:58,359
Speaker 1: they say they're not a car manufacturer, they're a computer

496
00:27:58,480 --> 00:28:03,200
Speaker 1: on wheels manufacturers. And so a computer has CPUs has

497
00:28:03,200 --> 00:28:07,679
Speaker 1: computer vision uh Tesla and not Tesla's case lider, but

498
00:28:07,800 --> 00:28:11,080
Speaker 1: also this critical piece of the battery. And when you

499
00:28:11,119 --> 00:28:14,560
Speaker 1: think about how this whole transition plays out around electric

500
00:28:14,640 --> 00:28:19,640
Speaker 1: vehicles and autonomous vehicles, you speaking of tear up the script,

501
00:28:19,760 --> 00:28:21,960
Speaker 1: you really need to do that in terms of how

502
00:28:22,000 --> 00:28:26,400
Speaker 1: these cars are produced, and so uh Elon Musk describes

503
00:28:26,480 --> 00:28:29,560
Speaker 1: it as a manufacturing hell that they're going through with

504
00:28:29,680 --> 00:28:34,120
Speaker 1: ramping the Model three production. Unfortunately, the other automakers, despite

505
00:28:34,119 --> 00:28:36,960
Speaker 1: their hundred years of knowledge of building cars, are going

506
00:28:37,000 --> 00:28:39,680
Speaker 1: to have to go through a similar path to get

507
00:28:39,720 --> 00:28:43,080
Speaker 1: to the other side because the importance of battery computers

508
00:28:43,080 --> 00:28:47,640
Speaker 1: and that interesting g Munster with us. Right now we're

509
00:28:47,640 --> 00:28:49,800
Speaker 1: looking at the image of the space X. Of course,

510
00:28:49,800 --> 00:28:52,800
Speaker 1: it is a brilliant white rocket. It is not the

511
00:28:52,840 --> 00:28:56,760
Speaker 1: Falcon Heavy some of you may have known the launch

512
00:28:56,840 --> 00:29:00,640
Speaker 1: of a few uh weeks ago with three E tubes

513
00:29:01,000 --> 00:29:04,120
Speaker 1: is the main stage and the two side stages of

514
00:29:04,160 --> 00:29:07,000
Speaker 1: the Falcon Heavy. This is not the Falcon Heavy. This

515
00:29:07,080 --> 00:29:10,720
Speaker 1: is really harketing back almost Atlas in the programs well

516
00:29:10,760 --> 00:29:15,640
Speaker 1: before Mercury, almost Explorer of of of of a very

517
00:29:15,680 --> 00:29:18,120
Speaker 1: thin i should say, Jupiter, excuse me, of a very

518
00:29:18,160 --> 00:29:21,680
Speaker 1: thin rocket, and on top top of it a huge payload.

519
00:29:21,680 --> 00:29:24,959
Speaker 1: The payload on top um is forty three ft by

520
00:29:25,000 --> 00:29:28,080
Speaker 1: seventeen feet, which is not Apollo like, but it is

521
00:29:28,120 --> 00:29:31,880
Speaker 1: certainly genormous. Uh and and can put a lot of

522
00:29:31,960 --> 00:29:35,800
Speaker 1: weight into space, which if you're in commercial is what

523
00:29:35,880 --> 00:29:39,160
Speaker 1: you want to do. So we're waiting there with the oxygen,

524
00:29:39,200 --> 00:29:42,120
Speaker 1: the feathery oxygen steaming off the gas to the left

525
00:29:42,480 --> 00:29:45,600
Speaker 1: of our image of SpaceX at Vandenburgh, I mean Alitsa O.

526
00:29:45,640 --> 00:29:48,440
Speaker 1: Bramo would Center Studios not to talk on bonds or

527
00:29:48,960 --> 00:29:51,000
Speaker 1: the dynamics of the market, but we get ready for

528
00:29:51,080 --> 00:29:55,000
Speaker 1: a SpaceX launch with this gene monster of Loop Ventures,

529
00:29:55,560 --> 00:29:58,600
Speaker 1: of course, with his acute focus on Tesla and their

530
00:29:58,640 --> 00:30:03,520
Speaker 1: manufacturing process, and now joining us George Ferguson from Bloomberg Intelligence,

531
00:30:03,560 --> 00:30:07,840
Speaker 1: head of all of our aerospace and defense coverage. George Ferguson,

532
00:30:07,880 --> 00:30:10,160
Speaker 1: When I look at space EX and I look at

533
00:30:10,160 --> 00:30:14,840
Speaker 1: tech Tesla, is this an all Elon Musk venture or

534
00:30:14,920 --> 00:30:18,720
Speaker 1: are there subcontractors the world of lockeed Martin. Are they

535
00:30:18,760 --> 00:30:23,920
Speaker 1: involved in this at all? Uh in in Elon Musk SpaceX. No, right,

536
00:30:24,000 --> 00:30:28,200
Speaker 1: they have a competitor, United Launch Alliance a turn with Boeing,

537
00:30:29,320 --> 00:30:31,719
Speaker 1: so they are competitive, but they're not involved in station.

538
00:30:32,200 --> 00:30:34,560
Speaker 1: Is this anything to do with the defense industry or

539
00:30:34,600 --> 00:30:37,520
Speaker 1: is Elon Musk inventing this out of thin Elon Muski

540
00:30:37,600 --> 00:30:41,320
Speaker 1: and Air. You know, when you look at the manifest

541
00:30:41,360 --> 00:30:43,080
Speaker 1: for satellites that are going to go up and have

542
00:30:43,200 --> 00:30:46,080
Speaker 1: gone up, he's taken a fair amount of market share

543
00:30:46,080 --> 00:30:50,400
Speaker 1: because he's providing lift into orbit much cheaper. He's definitely

544
00:30:50,440 --> 00:30:53,120
Speaker 1: doing it for defense, uh you know, at the defense

545
00:30:53,160 --> 00:30:56,240
Speaker 1: contractor for for the Defense Department. So he's in there

546
00:30:56,280 --> 00:30:58,480
Speaker 1: as well as in the commercial business as well. When

547
00:30:58,480 --> 00:31:01,120
Speaker 1: you look at the shot folks in thanks to Gizmoto

548
00:31:01,240 --> 00:31:05,000
Speaker 1: for a great photograph of the launch site, George, it's

549
00:31:05,120 --> 00:31:08,760
Speaker 1: not Cape Canaveral like. It's asconced beautifully on the shores

550
00:31:08,800 --> 00:31:12,160
Speaker 1: of the Pacific Ocean, and it's small, and there's a

551
00:31:12,160 --> 00:31:15,160
Speaker 1: couple of trailers and a couple of buildings and some lights,

552
00:31:15,200 --> 00:31:18,880
Speaker 1: and you know, it's just sort of like a commercial venture.

553
00:31:19,800 --> 00:31:23,400
Speaker 1: When will this be commercially successful or is it? Is

554
00:31:23,440 --> 00:31:27,120
Speaker 1: it now? Well? I mean, I guess I would say

555
00:31:27,160 --> 00:31:30,280
Speaker 1: that the United Launch Alliance, which is the Boeing and

556
00:31:30,360 --> 00:31:34,600
Speaker 1: Lockey adventure, is commercially viable. It's it creates a profit.

557
00:31:34,680 --> 00:31:37,959
Speaker 1: We we can't see profits inside SpaceX, and he's providing

558
00:31:38,040 --> 00:31:41,760
Speaker 1: much cheaper lift. My sense is that he's got much less,

559
00:31:41,840 --> 00:31:45,360
Speaker 1: much less profitability in here, but he clearly wants to

560
00:31:45,360 --> 00:31:47,760
Speaker 1: take it much further. I think the United Launch Alliance

561
00:31:47,760 --> 00:31:50,280
Speaker 1: would want to take it, the Sense contractors want to

562
00:31:50,280 --> 00:31:53,280
Speaker 1: take it. And he's building actually a spaceport down in

563
00:31:53,320 --> 00:31:58,400
Speaker 1: Texas that would be entirely commercial. So well, I'm just wondering,

564
00:31:58,880 --> 00:32:02,640
Speaker 1: how does Elon usk managed to have a launch so

565
00:32:02,720 --> 00:32:07,200
Speaker 1: much cheaper than the Defense Department? Well, you know, and

566
00:32:07,480 --> 00:32:09,560
Speaker 1: I think a good portion of that is going to

567
00:32:09,600 --> 00:32:14,120
Speaker 1: be about the reusable market very rocket, uh, and that's

568
00:32:14,160 --> 00:32:16,280
Speaker 1: why you know, it's key when he's sort of launching

569
00:32:16,280 --> 00:32:18,720
Speaker 1: these things and bringing back the components, bringing back the

570
00:32:18,720 --> 00:32:22,360
Speaker 1: boosters that he can reuse though that that's a big portion,

571
00:32:22,920 --> 00:32:26,320
Speaker 1: you know, Plussy, he really doesn't suffer from the large

572
00:32:26,320 --> 00:32:29,080
Speaker 1: bureaucracy that you'd have inside of bowing a a a

573
00:32:29,160 --> 00:32:32,560
Speaker 1: locky part, right, So, George Ferguson with us and uh,

574
00:32:32,920 --> 00:32:35,400
Speaker 1: Gene Munster as well. You've seen the gantry pull back

575
00:32:36,160 --> 00:32:39,400
Speaker 1: from the Falcon rocket with a payload up top. Again,

576
00:32:39,480 --> 00:32:42,280
Speaker 1: this is a Spanish satellite and the huge buzz of

577
00:32:42,320 --> 00:32:45,440
Speaker 1: two smaller satellites which are very much having to do

578
00:32:45,520 --> 00:32:48,920
Speaker 1: with the future of Internet. It is least a gorgeous

579
00:32:48,960 --> 00:32:51,760
Speaker 1: site is an all white rocket with the I'm going

580
00:32:51,800 --> 00:32:56,120
Speaker 1: to suggest gaseous oxygen UH drifting off into space and

581
00:32:56,160 --> 00:32:59,320
Speaker 1: with the UH gantry pulled away, we're gonna bring up

582
00:32:59,320 --> 00:33:01,240
Speaker 1: the audio. Ken ing up the audio if you can

583
00:33:01,720 --> 00:33:05,280
Speaker 1: on this SpaceX launch. We're about twenty seconds I'm told

584
00:33:05,360 --> 00:33:10,320
Speaker 1: away here from the count town again the larger fairings

585
00:33:10,400 --> 00:33:19,040
Speaker 1: up top. Here he is the launch of SpaceX twenty

586
00:33:24,600 --> 00:33:31,040
Speaker 1: fift Falcon eyes can figure for play ten nine eight

587
00:33:31,760 --> 00:33:50,920
Speaker 1: seven six five four three two one Eagle of Penchy

588
00:33:51,000 --> 00:34:08,960
Speaker 1: Downer age to stay over posted nominal. Yeah. Thanks for

589
00:34:09,080 --> 00:34:13,440
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

590
00:34:13,640 --> 00:34:19,320
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

591
00:34:19,920 --> 00:34:23,200
Speaker 1: I'm on Twitter at Tom Keene before the podcast. You

592
00:34:23,280 --> 00:34:26,640
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio