1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,400 Speaker 2: Terminal and the Bloomberg Business app. All eyes on tomorrow's 10 00:00:37,440 --> 00:00:40,440 Speaker 2: CPI print, the first major day to release in weeks, 11 00:00:40,760 --> 00:00:43,920 Speaker 2: expected to show inflationary precious mounting on the economy. The 12 00:00:44,040 --> 00:00:46,680 Speaker 2: former Boston Fed president Eric Rosenngrand has seen it all. 13 00:00:46,720 --> 00:00:48,600 Speaker 2: He joins us now for more. Eric, welcome back to 14 00:00:48,640 --> 00:00:51,199 Speaker 2: the program Sir, What are you anticipating to see? What 15 00:00:51,240 --> 00:00:53,440 Speaker 2: do you expect to see tomorrow morning at eight thirty 16 00:00:53,479 --> 00:00:54,000 Speaker 2: Easton time. 17 00:00:55,680 --> 00:00:59,680 Speaker 3: I'm expecting to see that both the CPI and the 18 00:00:59,720 --> 00:01:04,600 Speaker 3: core CPI are at three point one percent. So for 19 00:01:04,680 --> 00:01:08,000 Speaker 3: the overall CPI it was at two point nine percent before. 20 00:01:08,800 --> 00:01:12,440 Speaker 3: That's a bit of an increase. It partly reflects some 21 00:01:12,520 --> 00:01:16,000 Speaker 3: of the pressures coming from tariffs continuing to flow through 22 00:01:16,560 --> 00:01:19,160 Speaker 3: so goods like apparel. 23 00:01:18,760 --> 00:01:20,160 Speaker 4: Furniture, sporting goods. 24 00:01:20,840 --> 00:01:23,720 Speaker 3: But it's also that we're seeing food prices go up 25 00:01:23,760 --> 00:01:27,559 Speaker 3: in a variety of areas, and I think that indicates 26 00:01:27,640 --> 00:01:30,920 Speaker 3: that we're not getting much progress on inflation, that this 27 00:01:30,959 --> 00:01:34,960 Speaker 3: report actually is going to be a continuation of numbers 28 00:01:35,000 --> 00:01:38,160 Speaker 3: that are at three percent or higher rather than moving 29 00:01:38,200 --> 00:01:40,920 Speaker 3: down towards two percent. So that is a challenge for 30 00:01:40,959 --> 00:01:44,200 Speaker 3: the Fed as it tries to weigh how much emphasis 31 00:01:44,200 --> 00:01:46,520 Speaker 3: to put on inflation and how much emphasis to put 32 00:01:46,560 --> 00:01:48,960 Speaker 3: on what's happening in the labor market. 33 00:01:49,080 --> 00:01:51,200 Speaker 2: Well, Eric, let's stay on that theme. Are the sources 34 00:01:51,200 --> 00:01:54,080 Speaker 2: of inflation the this Federal Reserve can ignore. 35 00:01:56,240 --> 00:02:01,200 Speaker 3: I don't think it should ignore. The labor market, while 36 00:02:01,200 --> 00:02:05,240 Speaker 3: it has been softer, is still fairly close to the 37 00:02:05,280 --> 00:02:10,120 Speaker 3: Fed's estimate of full employment. And in some of the areas, 38 00:02:10,560 --> 00:02:14,520 Speaker 3: both in food prices, we've seen cost of electricity going up. 39 00:02:14,880 --> 00:02:18,120 Speaker 3: Some of those trends I think are something we have 40 00:02:18,160 --> 00:02:20,720 Speaker 3: to keep an eye on. And while there have been 41 00:02:21,280 --> 00:02:24,400 Speaker 3: some negative pressures, for example, shelters come in a little 42 00:02:24,440 --> 00:02:27,239 Speaker 3: bit better, natural gas is likely to come in a 43 00:02:27,280 --> 00:02:30,280 Speaker 3: little bit better. I think the overall package. I mean, 44 00:02:30,320 --> 00:02:34,040 Speaker 3: we've been above the two percent inflation target for over 45 00:02:34,120 --> 00:02:37,600 Speaker 3: four years, so at some point the FED has to 46 00:02:37,639 --> 00:02:42,080 Speaker 3: start seeing some improvement inflation. So I would not be 47 00:02:42,160 --> 00:02:46,120 Speaker 3: somebody who would view this as because it's partly coming 48 00:02:46,120 --> 00:02:48,000 Speaker 3: from tariffs, that it should be ignored. 49 00:02:48,360 --> 00:02:53,560 Speaker 5: Eric is a lot of this inflation policy induced, well. 50 00:02:53,440 --> 00:02:57,840 Speaker 3: I think it is partly policy induced. It's certainly fiscal 51 00:02:57,880 --> 00:03:04,079 Speaker 3: policy induced. Tariffs definitely have an impact on what the 52 00:03:04,360 --> 00:03:07,480 Speaker 3: reported prices are going to be. I would also say 53 00:03:07,480 --> 00:03:11,560 Speaker 3: that the immigration policy is a policy that probably means 54 00:03:11,600 --> 00:03:14,720 Speaker 3: that some of the food prices have gone up as 55 00:03:14,800 --> 00:03:17,040 Speaker 3: labor costs have gone up for people that are trying 56 00:03:17,040 --> 00:03:20,360 Speaker 3: to harvest crops, and fruits and vegetables have been an 57 00:03:20,400 --> 00:03:24,520 Speaker 3: area in particular where we've seen rising prices. In terms 58 00:03:24,600 --> 00:03:28,000 Speaker 3: of monetary policy, I think the question is how much 59 00:03:28,040 --> 00:03:31,200 Speaker 3: of the pressures that we're seeing have been accommodated. So 60 00:03:31,280 --> 00:03:34,200 Speaker 3: the FED thinks it's restrictive, but if you think that 61 00:03:34,280 --> 00:03:38,240 Speaker 3: the economy is more productive and that AI may contribute 62 00:03:38,240 --> 00:03:42,040 Speaker 3: to that productivity, then it's a little unclear that we 63 00:03:42,080 --> 00:03:45,400 Speaker 3: should be going back to the same interest rate that 64 00:03:45,480 --> 00:03:49,720 Speaker 3: we were at prior to the pandemic. So the summary 65 00:03:49,760 --> 00:03:53,240 Speaker 3: of economic projections that the Fed puts out is assuming 66 00:03:53,320 --> 00:03:58,920 Speaker 3: that we'll see something Fed funds rate in the long 67 00:03:59,000 --> 00:04:02,280 Speaker 3: run closer to three percent, So that would indicate a 68 00:04:02,320 --> 00:04:04,960 Speaker 3: lot more room. But the fact that we've seen so 69 00:04:05,040 --> 00:04:09,640 Speaker 3: little progress on inflation for the last six months indicates 70 00:04:09,680 --> 00:04:12,320 Speaker 3: that you shouldn't be so confident that you know exactly 71 00:04:12,360 --> 00:04:14,920 Speaker 3: what the real interest rate ought to be. 72 00:04:15,160 --> 00:04:15,360 Speaker 6: Well. 73 00:04:15,400 --> 00:04:17,599 Speaker 5: Not only that, the fact of the matter is the 74 00:04:17,640 --> 00:04:19,320 Speaker 5: FED will be sitting down and they won't have the 75 00:04:19,400 --> 00:04:22,400 Speaker 5: labor market report. They're just going to have this inflation report. 76 00:04:22,440 --> 00:04:24,360 Speaker 5: Do you think it's a mistake if the Fed cuts 77 00:04:24,360 --> 00:04:25,520 Speaker 5: interest rates next week? 78 00:04:27,200 --> 00:04:30,400 Speaker 3: I think that given the softness and labor market, I 79 00:04:30,400 --> 00:04:33,480 Speaker 3: can understand a twenty five basis point cut. I would 80 00:04:33,560 --> 00:04:37,000 Speaker 3: highlight that while we're getting the CPI report, a lot 81 00:04:37,000 --> 00:04:40,440 Speaker 3: of government workers left their jobs at the end of September, 82 00:04:40,960 --> 00:04:43,960 Speaker 3: and a lot of the source data may not be available, 83 00:04:44,040 --> 00:04:47,719 Speaker 3: So this CPI report probably is going to be using 84 00:04:47,760 --> 00:04:51,280 Speaker 3: more estimated results than normal. It will be interesting if 85 00:04:51,279 --> 00:04:55,560 Speaker 3: the report highlights that this data may not be as reliable, 86 00:04:55,600 --> 00:04:58,400 Speaker 3: which means it could be noisier, and if it's noisier, 87 00:04:58,440 --> 00:05:01,400 Speaker 3: it could be a surprise on the side or the downside. 88 00:05:01,800 --> 00:05:04,840 Speaker 3: But it just says as we continue to have pressures 89 00:05:05,200 --> 00:05:08,760 Speaker 3: on statistical organizations having enough people to gather the data, 90 00:05:09,200 --> 00:05:12,320 Speaker 3: that this data may become noisier and harder to rely on. 91 00:05:12,640 --> 00:05:14,920 Speaker 2: Eric, forgive the snark, but how reliable was the data 92 00:05:14,960 --> 00:05:15,520 Speaker 2: when we had it? 93 00:05:17,160 --> 00:05:17,360 Speaker 4: As it? 94 00:05:17,440 --> 00:05:19,920 Speaker 2: Sorry, how reliable was the data when we had it? 95 00:05:21,720 --> 00:05:25,320 Speaker 3: I think the CPI report was a pretty good report. So, 96 00:05:26,040 --> 00:05:32,120 Speaker 3: I mean, they had significant amount of surveys across the country. 97 00:05:32,520 --> 00:05:35,680 Speaker 3: They have had to cut back over time on the 98 00:05:35,720 --> 00:05:38,919 Speaker 3: amount of survey work that they do. They've closed some offices, 99 00:05:40,000 --> 00:05:42,960 Speaker 3: so I think that over the last few years it 100 00:05:43,000 --> 00:05:46,599 Speaker 3: has deteriorated a little bit. But I think if we 101 00:05:46,680 --> 00:05:50,960 Speaker 3: continue to be cutting back on statistical agencies, it'll get 102 00:05:51,000 --> 00:05:52,800 Speaker 3: more unreliable as we go forward. 103 00:05:54,600 --> 00:05:58,080 Speaker 2: Stay with us. More Bloomberg surveillance coming up after this. 104 00:06:06,880 --> 00:06:09,920 Speaker 2: So here's the latest this morning, the President imposing significant 105 00:06:09,960 --> 00:06:13,800 Speaker 2: sanctions on Russia, targeting the country's major oil producers. In 106 00:06:13,839 --> 00:06:15,880 Speaker 2: London off the back of these movest includes Sara Piankie 107 00:06:15,920 --> 00:06:20,680 Speaker 2: of Evakorasi joined US Now for more Sarah, consequences and objectives. 108 00:06:20,760 --> 00:06:23,080 Speaker 2: Let's talk about objectives first. Does this get the president, 109 00:06:23,120 --> 00:06:24,840 Speaker 2: the leader of Russia to the table. 110 00:06:26,120 --> 00:06:26,799 Speaker 1: I will see. 111 00:06:26,880 --> 00:06:29,880 Speaker 6: You know, obviously Trump has been very frustrated with his 112 00:06:30,040 --> 00:06:33,400 Speaker 6: inability to you know, kind of make this happen and 113 00:06:33,440 --> 00:06:39,560 Speaker 6: settle this down. He's obviously looking quite you know, really 114 00:06:39,600 --> 00:06:43,120 Speaker 6: anxious to make progress on this. Certainly this is a 115 00:06:43,200 --> 00:06:46,240 Speaker 6: key step. This has always been sort of one thing 116 00:06:46,320 --> 00:06:49,159 Speaker 6: that folks have thought would bring a Putin more to 117 00:06:49,200 --> 00:06:52,279 Speaker 6: the table. But we're gonna have to see how longed holts, 118 00:06:52,320 --> 00:06:56,760 Speaker 6: how serious it is, how effective it is, and you know, 119 00:06:56,839 --> 00:06:59,560 Speaker 6: until we see how this plays out, I think we 120 00:06:59,560 --> 00:07:01,280 Speaker 6: should be judgment Sarah. 121 00:07:01,279 --> 00:07:03,080 Speaker 5: How do you think this is going to play into 122 00:07:03,120 --> 00:07:05,760 Speaker 5: the trade talks the President's going to have with Shijiping 123 00:07:05,839 --> 00:07:06,640 Speaker 5: in South Korea? 124 00:07:08,320 --> 00:07:09,240 Speaker 1: Well, it's interesting. 125 00:07:10,280 --> 00:07:13,640 Speaker 6: I think that the United States and China have a 126 00:07:13,680 --> 00:07:15,680 Speaker 6: lot of other issues to. 127 00:07:15,720 --> 00:07:17,160 Speaker 1: Focus on right now. 128 00:07:17,760 --> 00:07:22,960 Speaker 6: The anxiety and the escalation has been around something different, 129 00:07:24,280 --> 00:07:28,040 Speaker 6: much more about rare earths and export controls and trying 130 00:07:28,080 --> 00:07:30,760 Speaker 6: to keep these tariffs down. So it's a lot to 131 00:07:30,960 --> 00:07:33,400 Speaker 6: really try to introduce this and to get China to 132 00:07:33,440 --> 00:07:37,200 Speaker 6: take steps on this. I think If the agenda expands 133 00:07:37,240 --> 00:07:39,560 Speaker 6: to this in an aggressive way, China will come back 134 00:07:39,560 --> 00:07:43,480 Speaker 6: with questions about Taiwan, and I think it's. 135 00:07:43,320 --> 00:07:45,720 Speaker 1: Not very likely that we'll see a lot of progress here. 136 00:07:45,920 --> 00:07:49,120 Speaker 5: The trip administration is weighing export restrictions against China when 137 00:07:49,120 --> 00:07:52,240 Speaker 5: it comes to critical software. I asked Everett eisenstat this 138 00:07:52,320 --> 00:07:54,200 Speaker 5: in the last hour, and I love to get your take. 139 00:07:54,440 --> 00:07:57,600 Speaker 5: Is this tangible policy or is this a new leverage 140 00:07:57,640 --> 00:08:00,560 Speaker 5: point that the US wants to use just for negotiating tactic. 141 00:08:02,120 --> 00:08:04,200 Speaker 1: Well, we've certainly heard that in the government. 142 00:08:04,240 --> 00:08:06,960 Speaker 6: Everybody's been asked to sharpen their pencils and to find 143 00:08:07,920 --> 00:08:10,960 Speaker 6: different aspects of things in the export control space that 144 00:08:11,000 --> 00:08:17,040 Speaker 6: would really make China anxious. So look, I think if 145 00:08:17,120 --> 00:08:20,000 Speaker 6: that's where the talks go, we're going to see China 146 00:08:20,000 --> 00:08:22,520 Speaker 6: push back pretty hard on rare earths. I think they 147 00:08:23,080 --> 00:08:27,000 Speaker 6: feel very aggressive and confident right now in that space, 148 00:08:27,560 --> 00:08:30,600 Speaker 6: with good reason. So I think if we're in a 149 00:08:30,640 --> 00:08:34,400 Speaker 6: space in this talk where we are introducing new things, 150 00:08:34,679 --> 00:08:38,000 Speaker 6: that's not a great sign. Perhaps it will help some 151 00:08:38,120 --> 00:08:41,120 Speaker 6: with leverage, but I think we all have to watch 152 00:08:41,160 --> 00:08:45,280 Speaker 6: carefully because I think China is feeling quite bullish on this, 153 00:08:45,960 --> 00:08:49,080 Speaker 6: and the risk is really that we overplay our hands. 154 00:08:49,520 --> 00:08:52,920 Speaker 5: Do you think then that China has more leverage going 155 00:08:52,960 --> 00:08:54,280 Speaker 5: in than the United States does? 156 00:08:56,320 --> 00:08:57,880 Speaker 1: I think both of these. 157 00:08:59,160 --> 00:09:02,520 Speaker 6: Great economic powers have both have leverage. And I think 158 00:09:02,520 --> 00:09:07,120 Speaker 6: what's unique is that when the Trump administration negotiated last 159 00:09:07,160 --> 00:09:11,400 Speaker 6: time with the Chinese, they didn't find that there wasn't 160 00:09:11,440 --> 00:09:15,040 Speaker 6: this dynamic in the conversation, and so I think it 161 00:09:15,160 --> 00:09:17,040 Speaker 6: has been a little bit of an on the job 162 00:09:17,120 --> 00:09:21,520 Speaker 6: learning for some in the administration that China is willing 163 00:09:21,559 --> 00:09:22,600 Speaker 6: to play as aggressively. 164 00:09:22,720 --> 00:09:23,599 Speaker 7: So I don't know. 165 00:09:23,720 --> 00:09:26,400 Speaker 5: They used rare earths back in May. Are you talking 166 00:09:26,400 --> 00:09:29,200 Speaker 5: about when it was just down to agricultural purchases in 167 00:09:29,280 --> 00:09:29,880 Speaker 5: Trump won? 168 00:09:30,520 --> 00:09:32,280 Speaker 1: Yeah, I'm talking about in Trump one point zero. 169 00:09:32,400 --> 00:09:34,839 Speaker 6: I think one of the reasons that the Chinese came 170 00:09:34,880 --> 00:09:37,679 Speaker 6: out so strong with rare earths this time is they 171 00:09:37,679 --> 00:09:40,719 Speaker 6: found last spring it worked really well for them, and 172 00:09:40,800 --> 00:09:44,760 Speaker 6: so I think they are I think they were hoping 173 00:09:44,800 --> 00:09:47,560 Speaker 6: to get more out of the talks than they saw coming, 174 00:09:47,640 --> 00:09:50,839 Speaker 6: and I think it was pretty explicit strategy. I'm not 175 00:09:50,920 --> 00:09:53,520 Speaker 6: quite sure they meant to overheat things quite so much, but. 176 00:09:54,720 --> 00:09:56,959 Speaker 1: I don't know, you know, I think both sides have. 177 00:09:57,000 --> 00:09:59,880 Speaker 6: Something the other team wants, and when you're in that 178 00:10:00,040 --> 00:10:04,240 Speaker 6: situation and baling out both relationships, there's there's risk for escalation. 179 00:10:06,920 --> 00:10:10,439 Speaker 2: Stay with us more Bloomberg Surveillance coming up after this. 180 00:10:19,240 --> 00:10:22,839 Speaker 2: Another name, of course, is Tesla profit falling rising casts 181 00:10:22,880 --> 00:10:25,440 Speaker 2: undermining a record quarter of a vehicle sales, the company 182 00:10:25,480 --> 00:10:29,440 Speaker 2: reporting adjusted earnings down thirty one percent from a year ago. 183 00:10:29,720 --> 00:10:32,520 Speaker 2: Dan Ives of Webbush maintaining and outperform rating on the 184 00:10:32,559 --> 00:10:34,840 Speaker 2: stock with a six hundred dollars price target, saying we 185 00:10:34,920 --> 00:10:38,320 Speaker 2: continue to believe Tesla could reach a two trillion dollar 186 00:10:38,360 --> 00:10:40,800 Speaker 2: market camp in early twenty six in a ballcase scenario, 187 00:10:41,120 --> 00:10:43,360 Speaker 2: and three trillion by the end of twenty six as 188 00:10:43,400 --> 00:10:47,400 Speaker 2: the golden AI chapter takes hold at Tesla. Dan Ives 189 00:10:47,480 --> 00:10:50,120 Speaker 2: joins us now for more Dan how relevant is the 190 00:10:50,120 --> 00:10:53,480 Speaker 2: car making business at Tesla to this stock and how 191 00:10:53,520 --> 00:10:54,800 Speaker 2: relevant should it be? 192 00:10:56,080 --> 00:11:00,120 Speaker 8: Looker means foundational relative to you know, obviously ward are 193 00:11:00,160 --> 00:11:03,480 Speaker 8: doing in the quarter and of course generating cash in 194 00:11:03,559 --> 00:11:07,000 Speaker 8: the business. But the reality is the future is around AI, 195 00:11:07,760 --> 00:11:10,520 Speaker 8: it's around autonomous, it's around robotics. 196 00:11:10,880 --> 00:11:13,560 Speaker 4: I think it's the most important chapter in the history. 197 00:11:13,679 --> 00:11:17,319 Speaker 8: From musk intest so That's why Musk now wartime CEO 198 00:11:17,400 --> 00:11:19,040 Speaker 8: and obviously in new paid package. 199 00:11:19,200 --> 00:11:21,520 Speaker 4: I think that's what investors are focused on any sell 200 00:11:21,559 --> 00:11:22,040 Speaker 4: off here. 201 00:11:22,080 --> 00:11:26,000 Speaker 8: Look, we view autonomous alone is worth the trillion dollars 202 00:11:26,000 --> 00:11:28,640 Speaker 8: of the story. This will when with the video, be 203 00:11:28,720 --> 00:11:31,360 Speaker 8: too the best. You know what I view physical AI 204 00:11:31,520 --> 00:11:32,480 Speaker 8: plays in the market. 205 00:11:32,720 --> 00:11:34,800 Speaker 2: Don I think a lot of people might agree with you. 206 00:11:34,960 --> 00:11:37,719 Speaker 2: The autonomous could be worth a trilly onto someone. It's 207 00:11:37,760 --> 00:11:40,560 Speaker 2: about whether it is for Tesla. What can you point 208 00:11:40,600 --> 00:11:43,439 Speaker 2: to that demonstrates success. What are the metrics you're following 209 00:11:43,520 --> 00:11:46,800 Speaker 2: that justify evaluation this company currently carries. 210 00:11:48,040 --> 00:11:50,640 Speaker 8: Yeah, first off, I mean robotoxin. We've seen it in 211 00:11:50,679 --> 00:11:53,839 Speaker 8: Austin ourselves. You know, I think that you have eight 212 00:11:53,880 --> 00:11:55,440 Speaker 8: to ten cities by the end of the year, and 213 00:11:55,440 --> 00:11:59,120 Speaker 8: we ultimately believe thirty cities in the first half. Then 214 00:11:59,200 --> 00:12:02,480 Speaker 8: you ultimately will what's happened there, the geofns area, the 215 00:12:02,520 --> 00:12:05,560 Speaker 8: safety driver getting removed. It's my view this is all 216 00:12:05,600 --> 00:12:08,320 Speaker 8: heading toward level four right in terms of when you 217 00:12:08,320 --> 00:12:12,319 Speaker 8: think about autonomous and what that means. Is no company 218 00:12:12,480 --> 00:12:16,800 Speaker 8: in the world byd you know, pick any name out there, 219 00:12:17,120 --> 00:12:20,199 Speaker 8: we'll have the scaling scope to compete with Musk and Tesla. 220 00:12:20,280 --> 00:12:23,600 Speaker 8: When it comes to autonomous and cybercabs, that's the future. 221 00:12:24,080 --> 00:12:26,160 Speaker 8: And then optimists, you know, I believe it's going to 222 00:12:26,160 --> 00:12:28,760 Speaker 8: be you know, a key part of this story. That's 223 00:12:28,760 --> 00:12:30,839 Speaker 8: how you're going to get to three trillion dollars market 224 00:12:31,040 --> 00:12:32,280 Speaker 8: next twelve to eighteen months. 225 00:12:32,400 --> 00:12:35,280 Speaker 5: But scaling competition is it? This space dan already looking 226 00:12:35,400 --> 00:12:36,080 Speaker 5: very crowded. 227 00:12:38,280 --> 00:12:40,800 Speaker 8: Look I'd say I mean crowded in terms of Waimo 228 00:12:41,000 --> 00:12:44,240 Speaker 8: being first mover advantage, but they're in what five cities, 229 00:12:44,440 --> 00:12:47,120 Speaker 8: you know, relative to From a scale perspective, I mean, 230 00:12:47,240 --> 00:12:49,000 Speaker 8: I think Tesla is going to own eighty percent of 231 00:12:49,000 --> 00:12:52,960 Speaker 8: the autonomous market and that's why from an investor perspective, Look, 232 00:12:53,000 --> 00:12:54,240 Speaker 8: if you hate Tesla. 233 00:12:53,920 --> 00:12:55,720 Speaker 4: You continue to hate it today, I get it. 234 00:12:56,000 --> 00:12:59,240 Speaker 8: But the reality is that this is a golden age 235 00:12:59,320 --> 00:13:03,120 Speaker 8: for Tesla looking ahead from autonomous to robotics, and that's 236 00:13:03,120 --> 00:13:06,079 Speaker 8: why you talk about November sixth, what's going to be 237 00:13:06,160 --> 00:13:08,280 Speaker 8: the most pay package and then they're going to own 238 00:13:08,400 --> 00:13:11,880 Speaker 8: obviously a big piece of XAI. This is now the 239 00:13:11,920 --> 00:13:17,160 Speaker 8: AI transformation happening in Tesla. Cars obviously are important, but 240 00:13:17,240 --> 00:13:19,680 Speaker 8: that just sets the siege for I think it's gonna 241 00:13:19,679 --> 00:13:20,640 Speaker 8: be historical move. 242 00:13:20,960 --> 00:13:22,319 Speaker 4: Let's talk about the pay package. 243 00:13:22,360 --> 00:13:25,200 Speaker 5: Elon Musk has a very colorful language yesterday on the 244 00:13:25,240 --> 00:13:27,480 Speaker 5: call when it comes to the proxy advisors of some 245 00:13:27,520 --> 00:13:31,760 Speaker 5: of these institutional investors. What does he need to achieve 246 00:13:31,880 --> 00:13:36,199 Speaker 5: in order to get that headline trillion dollar pay package? 247 00:13:36,960 --> 00:13:38,960 Speaker 8: Yeah, and look and go back to like the first 248 00:13:39,000 --> 00:13:41,400 Speaker 8: pay package, the one that's right now caught up in Delaware, 249 00:13:41,480 --> 00:13:44,319 Speaker 8: Like he did everything and more, and it just comes 250 00:13:44,360 --> 00:13:47,360 Speaker 8: down to, like I agree in the fact that the 251 00:13:47,400 --> 00:13:51,440 Speaker 8: biggest asset for Tessa's Musk Musk is Tesa Tessa's Musk. Look, 252 00:13:51,520 --> 00:13:54,040 Speaker 8: you look, obviously some of those are very ambitious in 253 00:13:54,160 --> 00:13:57,000 Speaker 8: terms of where they're ultimately going to hit in terms 254 00:13:57,000 --> 00:13:59,400 Speaker 8: of the targets. But I think mid to high targets 255 00:13:59,440 --> 00:14:04,560 Speaker 8: are hit able, and that's why incentivize him. Make him 256 00:14:04,640 --> 00:14:08,400 Speaker 8: wartime CEO, that's what he's doing. That's whereas laser focused, 257 00:14:08,559 --> 00:14:11,319 Speaker 8: you know, versus maybe some of the dark days when 258 00:14:11,320 --> 00:14:14,319 Speaker 8: he was a TRUA administration. Obviously some of the brand damage. 259 00:14:14,640 --> 00:14:17,679 Speaker 8: And I just think like betting against Musk has been 260 00:14:17,720 --> 00:14:20,320 Speaker 8: the wrong move again again, and I think that's why 261 00:14:20,360 --> 00:14:23,000 Speaker 8: shareholders overwhelming we will. 262 00:14:22,800 --> 00:14:25,480 Speaker 2: Approve this let's just stand the pay package. What's the 263 00:14:25,560 --> 00:14:28,520 Speaker 2: opposition to the pay package. What's your understanding of what 264 00:14:28,560 --> 00:14:30,800 Speaker 2: it is? Besides the fact that it's subsurdly lines that 265 00:14:30,840 --> 00:14:33,560 Speaker 2: kind of doesn't matter. What's the opposition to it? What 266 00:14:33,640 --> 00:14:34,800 Speaker 2: don't people like about it? 267 00:14:36,080 --> 00:14:39,080 Speaker 8: Look, I mean, obviously it's just you know, the view 268 00:14:39,160 --> 00:14:42,280 Speaker 8: from an excess perspective, the actual numbers. 269 00:14:42,520 --> 00:14:44,240 Speaker 4: You know, why do they actually have to do this? 270 00:14:44,360 --> 00:14:47,640 Speaker 8: But I think to some extent it's investors that don't 271 00:14:47,720 --> 00:14:50,640 Speaker 8: understand the Tesla story. And I think any of the 272 00:14:50,640 --> 00:14:54,440 Speaker 8: core believers, any of the core followers, understand that the 273 00:14:54,520 --> 00:14:58,440 Speaker 8: future of Tesla lies in Musk being CEO. And I 274 00:14:58,480 --> 00:15:03,160 Speaker 8: think from pay package perspective, given the targets said high bars, 275 00:15:03,240 --> 00:15:05,600 Speaker 8: that's where you want Musk to You don't want to 276 00:15:05,600 --> 00:15:06,560 Speaker 8: set warl bars. 277 00:15:06,720 --> 00:15:09,360 Speaker 4: And I think that's I think the board stepped up, 278 00:15:09,440 --> 00:15:10,440 Speaker 4: Robin stepped up. 279 00:15:10,760 --> 00:15:13,760 Speaker 8: This is the right pay baggage at the right time 280 00:15:14,360 --> 00:15:16,400 Speaker 8: for what's going to be what i've us a golden 281 00:15:16,480 --> 00:15:18,200 Speaker 8: chapter for Tessel. 282 00:15:20,080 --> 00:15:23,600 Speaker 2: Stay with us. More Bloomberg surveillance coming up after this. 283 00:15:32,840 --> 00:15:35,680 Speaker 2: The S and P five hundred achieving thirty three record 284 00:15:35,800 --> 00:15:38,240 Speaker 2: highs this year, boosting bank profits and pushing the Wall 285 00:15:38,240 --> 00:15:41,360 Speaker 2: Street bonus pool to new heights. The New York State 286 00:15:41,400 --> 00:15:46,120 Speaker 2: Controller Tom Dinapolis saying, quote, well, uncertainty remains around interest rates, inflation, 287 00:15:46,280 --> 00:15:50,120 Speaker 2: and the broader economy. Wall Street looks with another strong year. 288 00:15:50,400 --> 00:15:53,200 Speaker 2: Tom joins us. Now from more, Tom, welcome to the program, sir. 289 00:15:53,200 --> 00:15:54,920 Speaker 2: It's good to get some time with you. Let's just 290 00:15:54,960 --> 00:15:57,480 Speaker 2: talk about how big those numbers are so far this 291 00:15:57,600 --> 00:16:00,280 Speaker 2: year and what kind of benefit that provides to the 292 00:16:00,320 --> 00:16:01,080 Speaker 2: state of New York. 293 00:16:02,080 --> 00:16:05,120 Speaker 7: Now, the numbers are big, and we look at this closely. 294 00:16:05,160 --> 00:16:08,960 Speaker 9: We monitor it because obviously revenue for New York State 295 00:16:09,000 --> 00:16:12,880 Speaker 9: and New York City significantly is derived from what's happening 296 00:16:12,920 --> 00:16:15,040 Speaker 9: on Wall Street. So we always do an annual report 297 00:16:15,040 --> 00:16:17,920 Speaker 9: this time of year on the securities industry in New 298 00:16:18,000 --> 00:16:19,760 Speaker 9: York City. What we find for the first half of 299 00:16:19,760 --> 00:16:23,000 Speaker 9: this year profits of thirty billion dollars. So when you 300 00:16:23,040 --> 00:16:26,000 Speaker 9: consider last year, for the total years about forty nine billion, 301 00:16:26,640 --> 00:16:28,480 Speaker 9: we could be headed for a record. If the current 302 00:16:28,480 --> 00:16:31,120 Speaker 9: trends continue, we could be talking about profits of sixty 303 00:16:31,160 --> 00:16:32,280 Speaker 9: billion dollars this year. 304 00:16:32,400 --> 00:16:34,720 Speaker 2: Tom, is there a risk that we take that for granted? 305 00:16:34,960 --> 00:16:37,360 Speaker 2: As you know, and I'm sure you're following. We've got 306 00:16:37,360 --> 00:16:39,840 Speaker 2: a mayoral race here in New York City, and at 307 00:16:39,840 --> 00:16:42,240 Speaker 2: the top of the pose is a socialist. Now, Tom, 308 00:16:42,280 --> 00:16:44,880 Speaker 2: it's amazing that in the beating heart of American capitalism 309 00:16:45,000 --> 00:16:47,680 Speaker 2: we can have a socialist map. It's not something we've 310 00:16:47,720 --> 00:16:48,760 Speaker 2: risk taking for granted. 311 00:16:50,400 --> 00:16:54,120 Speaker 9: Well, look, New York City, New York State is quite resilient, 312 00:16:54,880 --> 00:16:55,120 Speaker 9: you know. 313 00:16:55,200 --> 00:16:56,960 Speaker 7: So between what. 314 00:16:56,920 --> 00:16:59,200 Speaker 9: May happen in New York City what's happening in Washington, 315 00:16:59,320 --> 00:17:01,280 Speaker 9: New York City is going to stay strong. What I 316 00:17:01,360 --> 00:17:03,840 Speaker 9: think is key in all of this is that New 317 00:17:03,920 --> 00:17:07,720 Speaker 9: York must continue to be the global capital for finance. 318 00:17:08,160 --> 00:17:11,000 Speaker 9: And what I always say to my friends and neighbors 319 00:17:11,000 --> 00:17:12,959 Speaker 9: in New York, however you feel about Wall Street, good 320 00:17:13,040 --> 00:17:16,400 Speaker 9: or band, the reality is the services that we provide 321 00:17:16,400 --> 00:17:19,560 Speaker 9: to the people of our city in our state significantly 322 00:17:19,640 --> 00:17:23,240 Speaker 9: rely on the profits of Wall Street, the business taxes, 323 00:17:23,280 --> 00:17:25,000 Speaker 9: the personal li ink of taxes that are generating the 324 00:17:25,040 --> 00:17:28,200 Speaker 9: employment that's generated. So whatever is going on in the 325 00:17:28,240 --> 00:17:32,560 Speaker 9: larger politics, we want these jobs to be continued to 326 00:17:32,600 --> 00:17:35,119 Speaker 9: be located in New York. There's still more jobs in 327 00:17:35,200 --> 00:17:38,320 Speaker 9: securities industry in New York City than any other city 328 00:17:38,359 --> 00:17:41,639 Speaker 9: in the country. We've seen last year, we saw some 329 00:17:41,680 --> 00:17:43,840 Speaker 9: growth in jobs in New York. This year it looks 330 00:17:43,880 --> 00:17:47,240 Speaker 9: like it might be a slight retrenchment. But this is 331 00:17:47,280 --> 00:17:50,600 Speaker 9: a win for New York State. And no matter who's 332 00:17:50,640 --> 00:17:52,480 Speaker 9: going to be the mayor, no matter who's the president, 333 00:17:53,480 --> 00:17:57,680 Speaker 9: no matter who's the state controller, wall Street, we want 334 00:17:57,880 --> 00:17:59,520 Speaker 9: this to be the home right here in New York 335 00:17:59,560 --> 00:18:01,680 Speaker 9: because we all benefit when Wall Street does well. 336 00:18:01,800 --> 00:18:04,680 Speaker 5: Wall Street does. But does a future mayor Mundani want 337 00:18:04,720 --> 00:18:06,600 Speaker 5: it to be? Do you think he's a possible threat 338 00:18:06,640 --> 00:18:10,080 Speaker 5: to the securities industry's tax revenue if these individuals want 339 00:18:10,080 --> 00:18:11,040 Speaker 5: to leave New York. 340 00:18:12,000 --> 00:18:14,040 Speaker 9: Well, look, we already have an issue of tax payer 341 00:18:14,119 --> 00:18:16,840 Speaker 9: migration having nothing to do with the current mayor's race, 342 00:18:17,200 --> 00:18:17,399 Speaker 9: you know. 343 00:18:17,440 --> 00:18:17,520 Speaker 4: That. 344 00:18:17,680 --> 00:18:21,439 Speaker 9: Being said, when we look at our revenue picture, we 345 00:18:21,480 --> 00:18:25,480 Speaker 9: do a monthly cash report, we call it revenue coming 346 00:18:25,520 --> 00:18:29,280 Speaker 9: into the state, we continue to have tax collections, largely 347 00:18:29,320 --> 00:18:33,040 Speaker 9: because of personal income tax revenue exceeding projections. So I 348 00:18:33,080 --> 00:18:35,399 Speaker 9: know there's a lot of folks predicting gloom and doom, 349 00:18:35,440 --> 00:18:38,119 Speaker 9: but so far, actually the money because of strong personal 350 00:18:38,200 --> 00:18:41,920 Speaker 9: income tax collection coming in higher than projected, and solely 351 00:18:41,960 --> 00:18:43,480 Speaker 9: to the extent that again we don't. 352 00:18:43,640 --> 00:18:47,000 Speaker 7: The election has not happened yet, But if the new. 353 00:18:46,880 --> 00:18:49,760 Speaker 9: Mayor has some ambitious goals as far as addressing or 354 00:18:49,760 --> 00:18:54,280 Speaker 9: affordability more services that need to be paid for, you know, 355 00:18:54,880 --> 00:18:57,200 Speaker 9: I think whoever the mayor is is going to want 356 00:18:57,240 --> 00:19:00,320 Speaker 9: to see Wall Street to be profitable and strong and 357 00:19:00,440 --> 00:19:03,320 Speaker 9: benefit from the taxes that will derive from that. 358 00:19:03,880 --> 00:19:05,720 Speaker 5: You also have come out with a statement about Elon 359 00:19:05,840 --> 00:19:10,400 Speaker 5: Musk's latest trillion dollar paper polls. So you're saying it's excessive, 360 00:19:10,720 --> 00:19:12,960 Speaker 5: But do you think Tesla would be. 361 00:19:12,880 --> 00:19:14,600 Speaker 4: Successful without Musk? 362 00:19:15,119 --> 00:19:17,320 Speaker 5: And there's a number of hurdles he needs to jump 363 00:19:17,400 --> 00:19:19,680 Speaker 5: through to even look at this kind of pay package. 364 00:19:21,080 --> 00:19:25,440 Speaker 9: Well, obviously Musk has been a very key ingredient in Tesla. 365 00:19:26,359 --> 00:19:29,520 Speaker 9: I won't dispute that, but our view has been that 366 00:19:29,640 --> 00:19:32,840 Speaker 9: the board oversight has not been as independent or as 367 00:19:32,840 --> 00:19:34,000 Speaker 9: stringent as it should be. 368 00:19:35,520 --> 00:19:38,560 Speaker 7: How many billions or trillions does one person need to make? 369 00:19:38,720 --> 00:19:43,320 Speaker 9: And you know, my concern is that the compensation package 370 00:19:44,240 --> 00:19:47,439 Speaker 9: may have some broad milestones in there. There really should 371 00:19:47,440 --> 00:19:53,000 Speaker 9: be more clear metrics and you know, to really justify 372 00:19:53,880 --> 00:19:56,040 Speaker 9: this very very generous payout. I mean, how much how 373 00:19:56,119 --> 00:19:58,840 Speaker 9: much money does one person need? And you know, it's 374 00:19:58,880 --> 00:20:01,600 Speaker 9: been very clear from my perspective that some of the 375 00:20:01,640 --> 00:20:05,400 Speaker 9: other activities that mister Musk has been involved in over 376 00:20:05,520 --> 00:20:09,320 Speaker 9: recent months has taken away from his focus on Tesla. 377 00:20:09,520 --> 00:20:11,840 Speaker 9: You've seen a lot of volatility in certainly in terms 378 00:20:11,880 --> 00:20:13,720 Speaker 9: of the stock price. That's a concern to us as 379 00:20:13,720 --> 00:20:16,520 Speaker 9: a shareholder. So we really would like to see more 380 00:20:16,520 --> 00:20:20,040 Speaker 9: independence on the board. We're going to vote against the 381 00:20:20,080 --> 00:20:22,600 Speaker 9: compensation package, going to vote against the board members who 382 00:20:22,600 --> 00:20:23,000 Speaker 9: are up. 383 00:20:24,320 --> 00:20:25,800 Speaker 7: I think that will make the company. 384 00:20:25,520 --> 00:20:28,560 Speaker 9: Stronger if they would take some of our recommendations to heart. 385 00:20:28,640 --> 00:20:31,320 Speaker 5: If they take more recommendations to heart, would you vote 386 00:20:31,320 --> 00:20:31,600 Speaker 5: for it? 387 00:20:33,359 --> 00:20:33,520 Speaker 4: Oh? 388 00:20:33,560 --> 00:20:35,520 Speaker 9: Sure, if they If they come around to our point 389 00:20:35,520 --> 00:20:39,480 Speaker 9: of view in terms of independence and more clear metrics 390 00:20:39,480 --> 00:20:42,600 Speaker 9: in terms of what kind of milestones would have to 391 00:20:42,600 --> 00:20:46,000 Speaker 9: be achieved for compensation package as generous as are proposing, 392 00:20:46,119 --> 00:20:48,840 Speaker 9: we'd certainly reconsider. But you know, I think in terms 393 00:20:48,880 --> 00:20:52,840 Speaker 9: of the dollar amount at this point, and when you 394 00:20:52,840 --> 00:20:56,080 Speaker 9: would look at the concentration of stock ownership that mister 395 00:20:56,160 --> 00:20:59,840 Speaker 9: Musk would have, we'd really continue to diminish any role 396 00:20:59,880 --> 00:21:03,160 Speaker 9: that any other shareholders would have in say of the company. 397 00:21:03,480 --> 00:21:05,120 Speaker 7: You know, I think those are those are concerns. 398 00:21:05,200 --> 00:21:07,120 Speaker 9: My guess is they are not going to come around 399 00:21:07,160 --> 00:21:09,680 Speaker 9: to our point of view between now and November sixth, 400 00:21:09,720 --> 00:21:10,560 Speaker 9: when they have the meeting. 401 00:21:10,760 --> 00:21:12,160 Speaker 2: So I'm going to just press you on the number. 402 00:21:12,280 --> 00:21:15,240 Speaker 2: Why is the number itself relevant? Surely, if we establish 403 00:21:15,280 --> 00:21:18,879 Speaker 2: the appropriate metrics and they're achieved, shareholders benefit from that. 404 00:21:19,240 --> 00:21:20,639 Speaker 2: Why is the number so important? 405 00:21:21,920 --> 00:21:23,720 Speaker 9: Well, look, I think we live in a time where 406 00:21:23,760 --> 00:21:27,760 Speaker 9: people are very concerned about income inequality, and you know, 407 00:21:29,920 --> 00:21:32,320 Speaker 9: despite the challenging times, I mean, you know, coming out 408 00:21:32,320 --> 00:21:34,920 Speaker 9: of COVID, still a lot of people in need. When 409 00:21:34,920 --> 00:21:38,560 Speaker 9: you see the excessive compensation package, I mean, you know, 410 00:21:39,119 --> 00:21:41,720 Speaker 9: credit to mister Musk, He's already one of the richest 411 00:21:41,960 --> 00:21:45,440 Speaker 9: men in the world. How much more rich does one 412 00:21:45,480 --> 00:21:49,240 Speaker 9: person have to be? And you know, if he is 413 00:21:49,280 --> 00:21:51,160 Speaker 9: going to continue to be focused on some of these 414 00:21:51,160 --> 00:21:54,160 Speaker 9: other activities that will divert from Tesla, it seems that 415 00:21:54,240 --> 00:22:00,800 Speaker 9: we're not rewarding performance. Instead, we're rewarding power personality. I 416 00:22:00,800 --> 00:22:03,520 Speaker 9: don't think that's the smartest way for Tesla to be managed. 417 00:22:03,560 --> 00:22:05,080 Speaker 2: Well, I guess the way some people might count to 418 00:22:05,119 --> 00:22:07,000 Speaker 2: that Tom is that if he doesn't pay enough attention 419 00:22:07,080 --> 00:22:09,879 Speaker 2: to the company, he won't hit the metrics anyway, and 420 00:22:09,920 --> 00:22:12,640 Speaker 2: he won't get the money. And isn't this about addressing 421 00:22:12,680 --> 00:22:14,960 Speaker 2: that anyway, because ultimately what you want for him to 422 00:22:14,960 --> 00:22:16,640 Speaker 2: pay more attention to the company. 423 00:22:16,960 --> 00:22:18,240 Speaker 7: How do we get that doing that? 424 00:22:18,800 --> 00:22:19,040 Speaker 4: Well? 425 00:22:19,320 --> 00:22:21,080 Speaker 9: I mean I would question the metrics, you know, I 426 00:22:21,119 --> 00:22:24,480 Speaker 9: think there needs to be more specificity than we've seen 427 00:22:24,520 --> 00:22:28,040 Speaker 9: thus far. And this is a board that, you know, 428 00:22:28,280 --> 00:22:30,880 Speaker 9: from my perspective, is operated more as a captive group 429 00:22:30,960 --> 00:22:33,159 Speaker 9: rather than a truly independent board in terms of their 430 00:22:33,240 --> 00:22:34,040 Speaker 9: oversight role. 431 00:22:34,359 --> 00:22:37,080 Speaker 7: So I think it's a combination of more clear metrics. 432 00:22:36,720 --> 00:22:39,000 Speaker 9: And the compensation package, and I'd like to see more 433 00:22:39,000 --> 00:22:40,800 Speaker 9: independence on the part of the board in terms of 434 00:22:40,840 --> 00:22:44,359 Speaker 9: their oversight of the company generally. I mean, obviously he 435 00:22:44,440 --> 00:22:47,960 Speaker 9: is very key to the company, but the company will 436 00:22:48,280 --> 00:22:51,480 Speaker 9: hopefully be strong enough to survive one person, right who 437 00:22:51,480 --> 00:22:53,439 Speaker 9: knows what the future is going to bring. And I 438 00:22:53,440 --> 00:22:58,760 Speaker 9: think that's where again, appropriate compensation and strong independent board oversight, 439 00:22:59,040 --> 00:23:00,400 Speaker 9: that's what is needed here. 440 00:23:01,840 --> 00:23:05,399 Speaker 2: This is the Bloomberg Surveillance podcast, bringing you the best 441 00:23:05,400 --> 00:23:08,720 Speaker 2: in markets, economics, and geopolitics. You can watch the show 442 00:23:08,800 --> 00:23:11,720 Speaker 2: live on Bloomberg TV weekday mornings from six am to 443 00:23:11,880 --> 00:23:15,560 Speaker 2: nine am Eastern subscribe to the podcast on Apple, Spotify 444 00:23:15,760 --> 00:23:18,000 Speaker 2: or anywhere else you listen, and as always, on the 445 00:23:18,000 --> 00:23:20,440 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.