WEBVTT - Equity Relief Amid a Softening Tone on Powell and Tariffs 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.560 --> 0:00:31.400 Everything we do, folks here is about a conversation with 0:00:31.560 --> 0:00:36.240 people with breadth. There are few in the Western world 0:00:36.360 --> 0:00:38.919 with a breadth of finance, like Cuba and Steinas. I'm 0:00:38.960 --> 0:00:41.519 not going to bore you with a resume. He wandered 0:00:41.520 --> 0:00:44.280 by a school named Oxford a few years ago, did 0:00:44.320 --> 0:00:47.599 some serious work with Bank of England and added tour 0:00:47.760 --> 0:00:52.160 duty at Morgan Stanley. He is definitive on our financial system. 0:00:52.680 --> 0:00:56.680 Tim Adams Scott Bessent ten am, what's a question you 0:00:56.680 --> 0:00:58.440 would ask a secretary treasurer? 0:00:59.400 --> 0:01:01.200 Wow, thanks to having me on look. 0:01:01.440 --> 0:01:04.840 One conversation I'm hearing which doesn't come out in the 0:01:04.840 --> 0:01:07.520 press much is about the strain on cash flow for 0:01:07.560 --> 0:01:08.200 small business. 0:01:08.520 --> 0:01:10.920 You know, it's a huge topic for private equity and 0:01:10.959 --> 0:01:11.560 for banks. 0:01:11.760 --> 0:01:14.160 Right, Let's imagine you put in a ten million order 0:01:14.160 --> 0:01:16.039 in for toys. You now have to pay twenty four 0:01:16.040 --> 0:01:18.679 million dollars if they come from China, you simply don't 0:01:18.720 --> 0:01:21.920 have that cash flow. So my question would be, how 0:01:22.000 --> 0:01:25.240 worried are you about small business not being able to 0:01:25.360 --> 0:01:26.280 stock their shelves? 0:01:26.319 --> 0:01:29.119 Okay, folks, you flunk this in a CFA exam. I've 0:01:29.120 --> 0:01:32.200 done and I've enjoyed it. Working capital, and this is 0:01:32.240 --> 0:01:35.600 to go into the way a business runs. There's a 0:01:35.680 --> 0:01:39.120 thing called the cash conversion cycle. Part. Did you memorize 0:01:39.120 --> 0:01:42.240 that that was with the three ratio and the five ratio? 0:01:42.400 --> 0:01:46.039 Do plat formula que Vestin is your expert at this? 0:01:46.720 --> 0:01:50.800 When you see terror of adjustments, I don't understand how 0:01:50.840 --> 0:01:53.240 you go from three percent to ten percent or one 0:01:53.320 --> 0:01:56.880 hundred percent and your world blows up. I mean that's 0:01:56.880 --> 0:01:57.720 where we are right. 0:01:58.120 --> 0:01:59.480 Well, look, I don't think any of us have seen 0:01:59.520 --> 0:02:02.000 anything like this before. I mean I think I wrote 0:02:02.040 --> 0:02:04.680 a bit about the Nixon shock where obviously Nixon did 0:02:04.680 --> 0:02:08.600 impose a ten percent tariff for four months, for four months, 0:02:08.639 --> 0:02:10.760 but I guess the markets can't stand that, you know, 0:02:10.840 --> 0:02:13.840 wouldn't tolerate four months here and that did is you 0:02:13.919 --> 0:02:16.280 know that did lead to product shortages and to price 0:02:16.360 --> 0:02:20.240 bikes because people couldn't forget cash conversion cycle? 0:02:20.320 --> 0:02:22.400 Do at Walmart. That's the heart of the matter. 0:02:23.280 --> 0:02:26.160 That probably Walmart's not my expertise, But if I think 0:02:26.200 --> 0:02:30.480 about the conversations we're having, the focus is predictlarly around 0:02:30.720 --> 0:02:34.560 retailers small businesses who just don't have the cash buffer. 0:02:34.680 --> 0:02:37.919 If your Walmart, clearly you're really large, you're very sophisticated, 0:02:38.160 --> 0:02:40.160 you do have big cash buffers. But if you're a 0:02:40.160 --> 0:02:42.720 small business running from quarter to quarter to month to month, 0:02:43.120 --> 0:02:44.600 how are you going to be able to pay two 0:02:44.639 --> 0:02:47.440 point four times what you expected when you may be 0:02:47.520 --> 0:02:49.400 worried about not a pubby able to pass it on. 0:02:49.440 --> 0:02:51.840 So what we're picking up is people trying to wriggle 0:02:51.880 --> 0:02:54.480 out of their orders if they can, and at least 0:02:54.560 --> 0:02:58.040 not renew those orders. That's the conversation the Finance is having, 0:02:58.200 --> 0:03:01.280 which I don't see enough in the main impress yet. 0:03:01.160 --> 0:03:03.120 To the extent that the President in this team are 0:03:03.160 --> 0:03:07.040 walking back some of this tariff rhetoric. Has some of 0:03:07.040 --> 0:03:09.000 the damage already been done? Do you think are we 0:03:09.040 --> 0:03:11.400 seeing in the system already just because of the rhetoric? 0:03:12.000 --> 0:03:13.400 So this is so I think this is what we 0:03:13.440 --> 0:03:15.680 distinguished between like sort of the growth shock and then 0:03:15.760 --> 0:03:18.079 kind of let's call it the more institutional shock, what 0:03:18.200 --> 0:03:20.519 all the taboo questions which we wouldn't have asked in 0:03:20.520 --> 0:03:22.680 the past, which now opened. I think in terms of growth, 0:03:22.800 --> 0:03:24.639 it clearly has been a bit of a punch in 0:03:24.680 --> 0:03:27.400 the gut for small business, which is the heartlands of America. 0:03:27.760 --> 0:03:31.160 Larger business are clearly ducking and diving through this. If 0:03:31.200 --> 0:03:35.120 I think about my area, thinking about the finance, finance, Look, 0:03:35.240 --> 0:03:38.000 the volatility has actually been quite good for the investment 0:03:38.040 --> 0:03:40.840 banks because I've been trading, yep. But the business confidence 0:03:42.120 --> 0:03:47.160 that one section. But the lack of conder corporate confidence 0:03:47.560 --> 0:03:50.840 is pushing deals to the right and certainly our conversations 0:03:50.840 --> 0:03:53.360 as some firms think, actually the deal pick up now 0:03:53.400 --> 0:03:55.640 is not till twenty twenty seven, not till twenty twenty seven. 0:03:55.880 --> 0:03:56.960 First, wow. 0:03:57.240 --> 0:03:59.720 Interesting. So I mean, I guess if nothing else, you know, 0:03:59.760 --> 0:04:03.160 we've this a million times before. The markets don't like uncertainty. 0:04:03.440 --> 0:04:05.240 But we're starting to see it in the survey data, 0:04:05.240 --> 0:04:08.040 whether it's the University of Michigan data or that you know, 0:04:08.080 --> 0:04:11.520 the pmis it's out there, right, I mean, it's not 0:04:11.560 --> 0:04:13.680 in the hard data. Maybe the FED looks like but 0:04:13.760 --> 0:04:16.520 we certainly see it in some of the other software data. 0:04:17.040 --> 0:04:18.680 Yeah, I mean, look you I'm sure you know my 0:04:18.720 --> 0:04:21.279 good friend Torston's looks great. On's trying to slice andize this. 0:04:21.360 --> 0:04:23.760 But if you look at you know ships coming into 0:04:23.880 --> 0:04:26.880 La or elsewhere about the stocking that they're down by 0:04:26.920 --> 0:04:28.960 a third to a half, that's clearly a sign of 0:04:30.240 --> 0:04:33.360 stress coming into the system. No, look, I mean at 0:04:33.360 --> 0:04:35.640 the data will come through, but the FED will need 0:04:35.680 --> 0:04:38.240 to be very data to well. Could always be data dependent, 0:04:38.240 --> 0:04:40.400 but it will be the historic data. Markets are clearly 0:04:40.480 --> 0:04:41.599 going to move way faster to. 0:04:41.720 --> 0:04:45.160 Von steinas with US folks, Oliver Wyman can't see the 0:04:45.200 --> 0:04:48.000 importance of this for Global Wall Street even more important 0:04:48.120 --> 0:04:52.200 in fifty minutes, Scott besn't with Tim Adams in Washington, 0:04:52.360 --> 0:04:58.000 hugely anticipated. Okay, you mentioned Torsten Slock, your Apollo management. 0:04:58.040 --> 0:04:59.480 You want to go out a choir, you get the 0:04:59.520 --> 0:05:04.080 Deutsche b brain power of doctor Slock. Wonderful. The bottom line, 0:05:04.080 --> 0:05:06.839 and this is Paul's world, is I don't buy for 0:05:06.920 --> 0:05:11.320 a minute. Everything's wonderful and private equity. What does an 0:05:11.320 --> 0:05:13.760 adult like you do? What are the tea leaves, the 0:05:13.800 --> 0:05:18.360 litmus paper, the measurements you're looking for for stresses in 0:05:18.360 --> 0:05:19.680 private equity. 0:05:19.760 --> 0:05:20.640 It's a great question. 0:05:20.720 --> 0:05:25.200 Look, these are unbelievably entrepreneurial folk, and so they're trying 0:05:25.240 --> 0:05:27.120 to sort of weave their way through this. Look, I 0:05:27.160 --> 0:05:30.520 think the first and second line is really about the 0:05:30.640 --> 0:05:34.039 order books. Has the sales come down, whether I've got 0:05:34.120 --> 0:05:37.000 highly leveraged companies trying to forensically work through that. So 0:05:37.040 --> 0:05:40.039 I think it's about cash conservation and it's about getting 0:05:40.040 --> 0:05:42.359 a cost down. So I'm already picking up people saying 0:05:42.480 --> 0:05:44.600 to all their management teams, have you thought about a 0:05:44.640 --> 0:05:47.080 cost round? What are you doing about that? So that's one, 0:05:47.160 --> 0:05:50.240 But on the other side in credit land, they're actually 0:05:50.279 --> 0:05:52.440 people trying to look this as an opportunity and actually 0:05:52.480 --> 0:05:53.240 trying to buy in. 0:05:53.240 --> 0:05:54.000 Some of the credits. 0:05:54.000 --> 0:05:56.960 A wider spreads than we'd see in eight weeks. 0:05:56.680 --> 0:06:00.720 There's somebody selling those spreads totally. Do they book a 0:06:00.800 --> 0:06:01.560 loss now. 0:06:03.120 --> 0:06:06.080 To again, it depends depends we turn about the private 0:06:06.920 --> 0:06:10.799 Let's be clear, about sixty percent of the new influs 0:06:10.839 --> 0:06:12.880 for the private market firms for the last two years 0:06:12.920 --> 0:06:16.880 has been credit and overwhelming. As we've discussed before, that's 0:06:16.880 --> 0:06:19.680 coming from the insurers. These are steady hands they want 0:06:19.720 --> 0:06:24.119 to deploy in size, but obviously on the equity side 0:06:24.240 --> 0:06:32.400 there more stress in the system. Bo was okay, g okay? 0:06:33.080 --> 0:06:36.640 So you have has Wall Street kind of with the 0:06:36.680 --> 0:06:39.040 earning sessments out there? Has was Street adjusted to this 0:06:39.160 --> 0:06:41.240 no uncertainty or do you still see downside risk to 0:06:41.520 --> 0:06:42.760 earning sessments out there? 0:06:43.200 --> 0:06:43.479 God? 0:06:44.080 --> 0:06:47.040 Look, I think that Let's be clear. Everyone is struggling 0:06:47.080 --> 0:06:49.080 to comprehend the range of scenarios. So to give you 0:06:49.120 --> 0:06:53.280 a simple answer is just it's just inconceivable. I think 0:06:53.360 --> 0:06:56.479 the like what are them the simpler moves, there's like 0:06:57.279 --> 0:06:59.960 the overwhelming conclusion of this where we to to find 0:07:00.040 --> 0:07:02.480 a better way to diversify your portfolio, and that at 0:07:02.480 --> 0:07:04.640 the moment than one way trade is look more towards 0:07:04.680 --> 0:07:07.680 Europe and Asia and look, European banks is stop twenty 0:07:07.680 --> 0:07:08.679 five percent year today. 0:07:08.800 --> 0:07:10.400 Wow, you know, let's be clear, you. 0:07:10.320 --> 0:07:12.800 Know, and I know that may not be the place 0:07:12.920 --> 0:07:15.760 that's now that's a smaller market for you, but I've 0:07:15.880 --> 0:07:19.640 clearly on this side of the pond there are Look, 0:07:19.720 --> 0:07:22.239 I think it comes back to how corporate confidence plays 0:07:22.240 --> 0:07:25.000 out on the stress and the system and how quickly 0:07:25.000 --> 0:07:28.800 the demonstration blinks. These are you know, complex questions which 0:07:28.800 --> 0:07:29.720 you're dealing with every day. 0:07:30.080 --> 0:07:32.800 Sorry, this is this wheelhouse. Hugh Einstein is folks. You 0:07:32.840 --> 0:07:35.440 know you got to start somewhere, and he started by 0:07:35.440 --> 0:07:38.880 being the required fourteen page read every four or five 0:07:38.960 --> 0:07:41.880 days in the European banks. I mean, I'm don't you, folks, 0:07:41.920 --> 0:07:44.600 But Hugh doesn't understand. He's never used a Bloomberg. Here's 0:07:44.600 --> 0:07:47.040 no clue. And the bottom line is I got JP 0:07:47.160 --> 0:07:49.240 Morgan hitting the ball out of the park with a 0:07:49.280 --> 0:07:53.320 priced book of two times in trading at one third 0:07:53.520 --> 0:07:57.240 even after the twenty five percent rally is BMP Perry 0:07:57.280 --> 0:08:01.080 Bar of Paris. I get the idea that the English, 0:08:01.120 --> 0:08:05.040 the French, whatever, banks are off the mat, but do 0:08:05.120 --> 0:08:08.600 they have the growthiness of America? I don't buy it. 0:08:08.800 --> 0:08:09.080 No. 0:08:09.480 --> 0:08:11.680 I toltally by that. So that's a that's a value trade, 0:08:11.720 --> 0:08:13.480 not a growth trade. Look, I think the challenge here 0:08:13.520 --> 0:08:15.640 is this is a growth shock and then somewhat of 0:08:15.640 --> 0:08:18.880 an institutional shock. And I think all the financials I'm 0:08:18.920 --> 0:08:22.040 talking to are working through reworking their plans, but they're 0:08:22.080 --> 0:08:24.320 struggling to sort of be precise because they just don't 0:08:24.440 --> 0:08:27.440 know how quickly the administration will blink on tariffs and 0:08:27.480 --> 0:08:29.320 there for how how big a shock it is to 0:08:29.360 --> 0:08:33.080 the system. But you're right, Tom, we we're Europe's value trade, 0:08:33.080 --> 0:08:33.920 not a growth trade. 0:08:34.000 --> 0:08:36.520 So but you we have seen I guess as recently 0:08:36.559 --> 0:08:39.400 as kind of late last year, very early this year, 0:08:40.840 --> 0:08:43.720 international money, none US money, was coming into the US 0:08:43.760 --> 0:08:46.600 markets in waves. I was really noticeable people were seeing 0:08:46.600 --> 0:08:50.640 in fund flows. Now that seems to have reversed a 0:08:50.679 --> 0:08:55.440 little bit and we're now seeing funds go back into 0:08:55.440 --> 0:08:57.280 your back into other parts of the world. Is that 0:08:57.320 --> 0:09:00.320 a short term trade or is that something morris able? 0:09:00.360 --> 0:09:02.040 Do you think that those funds back out? 0:09:02.800 --> 0:09:06.200 My sense from the international asset owners is that they 0:09:06.240 --> 0:09:08.680 want to continue to repatriate, and I think that's partly 0:09:08.679 --> 0:09:13.240 a concerned tactical concern about the market situation, but it's 0:09:13.240 --> 0:09:16.079 also about weaker dollar. But also there's institutional pressure to 0:09:16.120 --> 0:09:17.720 deploy at home. So if you're the Maple LX, sorry, 0:09:17.760 --> 0:09:21.560 the largest date Canadian funds, they're looking to try and 0:09:21.600 --> 0:09:24.280 help the home by the home building spree that my 0:09:24.360 --> 0:09:26.880 old boss, Prime Minster Karney is going to be doing, 0:09:27.000 --> 0:09:29.680 alongside many other interatives in Europe. Some of the big 0:09:29.679 --> 0:09:32.760 pension funds are looking to help fund the defense spending 0:09:32.800 --> 0:09:34.839 spree about to happen, So all of them are thinking 0:09:34.880 --> 0:09:37.480 strategically they need to have more money back at home. 0:09:37.520 --> 0:09:40.280 Now that's at the margin, but it's definitely more money 0:09:40.280 --> 0:09:40.679 coming back. 0:09:40.760 --> 0:09:43.320 Well, let's rip up the script and an extended conversation 0:09:43.400 --> 0:09:47.160 with Hugh von Steins of Oliver Wine. You know Dan Tannemba, 0:09:47.160 --> 0:09:49.640 I'm so brilliant and sanctions. They've really put together a 0:09:49.720 --> 0:09:52.719 huge team at Oliver Wyman and we're thrilled he could 0:09:52.760 --> 0:09:55.720 join us in our studios today in New York. So 0:09:55.760 --> 0:09:57.760 then let's rip up the strip on this and go 0:09:57.920 --> 0:10:01.520 sixty thousand feet Mark Kearney. Uh, you know there are 0:10:01.520 --> 0:10:04.320 other worthies that are driving our mister Powell, the others 0:10:04.360 --> 0:10:07.640 that are driving our financial system. The heart of the 0:10:07.760 --> 0:10:13.800 matter is the renominal GDP. Finally, back almost to Conrad 0:10:13.880 --> 0:10:16.200 add in our and Viilli Brandt, we got to have 0:10:16.280 --> 0:10:18.679 a Germany with pop Do you buy it? 0:10:20.480 --> 0:10:24.839 I So I think this is the spending of probably 0:10:24.920 --> 0:10:30.000 up to a trillion euros about rearmament, defense and just 0:10:30.080 --> 0:10:33.040 quite frankly, resilience is a real game change. 0:10:33.640 --> 0:10:35.640 I think they're going to execute. 0:10:35.160 --> 0:10:37.640 But I think there will be slower to execute them. 0:10:37.640 --> 0:10:40.240 And the one era we've chattered back for is it's 0:10:40.280 --> 0:10:42.840 not just about government spending. You need private sector spending. 0:10:43.160 --> 0:10:45.920 And the kind of breadth and depth of capital markets 0:10:45.960 --> 0:10:48.480 in Europe are still not the deep depth you want. 0:10:48.960 --> 0:10:50.840 And we need the plumbers. We need the plumbers to 0:10:50.840 --> 0:10:53.640 try and get the system to work much more effectively. 0:10:53.880 --> 0:10:58.280 The let's say, let's say, oh no, if you look 0:10:58.280 --> 0:11:04.120 at the States, there is four trillion of US insurance 0:11:04.160 --> 0:11:07.040 money is in the market to fund the system. European 0:11:07.080 --> 0:11:10.240 insurers have got straight jacketed about how they can put 0:11:10.280 --> 0:11:12.360 money into equities, into venture capital. 0:11:12.480 --> 0:11:15.120 Private equity is the heart of the. 0:11:15.080 --> 0:11:17.760 Matter, folks with he framed far smarter than me, or 0:11:18.440 --> 0:11:22.320 the absolute heart of the matter. Can Europe can the 0:11:22.400 --> 0:11:26.760 old world? Can Rubinian Taileeb's Old world equitize? That's the 0:11:26.800 --> 0:11:27.480 heart of the matter. 0:11:27.720 --> 0:11:28.280 I think it's right. 0:11:28.480 --> 0:11:32.000 Well, it's equitized and providing risk capital because it's really 0:11:32.080 --> 0:11:33.280 about its venture capital. 0:11:33.360 --> 0:11:34.520 It's growing small businesses. 0:11:34.600 --> 0:11:37.200 It's how do you do all these you know, defense 0:11:37.240 --> 0:11:40.079 tech startups. We need a range of risk capital, I mean, 0:11:40.160 --> 0:11:43.360 and the way we the markets it's improving, but we 0:11:43.480 --> 0:11:45.720 need to turbo charge it from here. 0:11:46.040 --> 0:11:49.240 I had a conversation with leguard Is, Trade Minister of 0:11:49.280 --> 0:11:53.240 France ready twenty one years ago, and we were talking 0:11:53.240 --> 0:11:54.640 the same thing we're talking to human. 0:11:54.720 --> 0:11:55.880 Steve's exactly right now. 0:11:55.920 --> 0:11:58.640 So Hugh, in terms of Europe kind of reinvesting in 0:11:58.720 --> 0:12:01.600 their infrastructure, maybe in their military, there's I guess what 0:12:01.600 --> 0:12:05.040 I've heard is Okay, Germany can do it. Poland probably 0:12:05.040 --> 0:12:06.960 could do it just because they had been doing it 0:12:06.960 --> 0:12:10.600 for a while because given their geographic location relative the Russia. 0:12:10.679 --> 0:12:13.000 But can Spain do it? Can Italy do it? Can 0:12:13.080 --> 0:12:15.359 Portugal do it? I mean did they have the wherewithal 0:12:15.480 --> 0:12:16.000 to do that? 0:12:17.920 --> 0:12:20.240 So there's a fiscal question, and then it's kind of 0:12:20.280 --> 0:12:23.160 like do they have the right ecosystem, the skills, the expertise. 0:12:23.400 --> 0:12:25.800 And you can see that actually, because Europe hasn't been 0:12:25.880 --> 0:12:28.880 investing in defense, there's been a real aerospace is good 0:12:29.040 --> 0:12:31.439 because there's a whole cluster around in the south of France. 0:12:31.480 --> 0:12:33.040 Actually you should go and visit to what one time 0:12:33.040 --> 0:12:36.440 around you know where you know the aerospace industry is 0:12:36.440 --> 0:12:38.800 coming from. But elsewhere in terms of drones and some 0:12:38.800 --> 0:12:40.800 of the other areas it's going to come. Look, the 0:12:40.800 --> 0:12:44.640 fiscal challenges are huge, and that's the But in a way, 0:12:44.840 --> 0:12:47.360 what we've seen here is that the fiscal spending has 0:12:47.400 --> 0:12:49.880 been part of the US exceptionalism. The real booster to 0:12:50.000 --> 0:12:53.240 spending here has come also from the government perse right now, wrongly. 0:12:54.040 --> 0:12:55.400 I think we're getting to get some of that in 0:12:55.480 --> 0:12:57.959 cour Europe. Whether we're going to go enough to justify 0:12:58.000 --> 0:13:00.600 the evaluations, it is a bit tougher question un seen us. 0:13:00.600 --> 0:13:01.400 Thank you so much. 0:13:07.280 --> 0:13:10.880 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:13:10.920 --> 0:13:14.120 weekday afternoons from seven to ten am Eastern Listen on 0:13:14.160 --> 0:13:17.840 Applecarplay and Android Otto with the Bloomberg Business app, or 0:13:18.000 --> 0:13:19.640 watch us live on YouTube. 0:13:20.200 --> 0:13:23.000 Joining us now the fun for lunch Bunch crew Lisa 0:13:23.040 --> 0:13:28.439 Matteo and Daniel Lives of of Red Bush. Here and 0:13:28.520 --> 0:13:30.240 a bright pink for those of you on radio. You're 0:13:30.320 --> 0:13:34.120 lucky wearing bright pink today? Comment down, Dan, is this 0:13:34.200 --> 0:13:35.840 a corduroy? Look you're way it is? 0:13:36.160 --> 0:13:38.480 It's it's corduroy. Will I mean a little? It could 0:13:38.520 --> 0:13:43.480 be a little even Sweeney influenced. It's it's Lisa. 0:13:43.520 --> 0:13:46.280 You can't see me wearing that, can you? 0:13:46.440 --> 0:13:49.559 I could see him walking into a showroom at Tesla's showroom. Yes, 0:13:49.760 --> 0:13:50.640 and I'll take one of those. 0:13:50.679 --> 0:13:51.240 I'll take Paul. 0:13:51.240 --> 0:13:53.280 Why don't you leave it up with his worship Dan. 0:13:53.320 --> 0:13:56.120 We had Tesla report earnings last night. We had mister 0:13:56.160 --> 0:13:59.440 Elon Musk on the earnings call. The earnings were very disappointing. 0:13:59.640 --> 0:14:02.040 You have to stock is trading hired? Why is the 0:14:02.080 --> 0:14:02.920 stock trading hired? 0:14:02.960 --> 0:14:03.080 Here? 0:14:03.600 --> 0:14:06.360 I mean numbers were basically took a back seat. We 0:14:06.400 --> 0:14:09.679 already knew was a disaster recorder the reality. This was 0:14:09.720 --> 0:14:11.800 the moment of truth from Musk. 0:14:12.080 --> 0:14:13.600 To basically what I've used. 0:14:13.679 --> 0:14:16.360 It's an off ram to Trump Whitehouse and doage, and 0:14:16.400 --> 0:14:19.160 that's essentially what he did. And he took a major 0:14:19.200 --> 0:14:21.640 step back on doage, says one two days a week. 0:14:21.680 --> 0:14:23.760 I think there's the beginning of the end there and 0:14:23.840 --> 0:14:25.160 going to recommit. 0:14:24.720 --> 0:14:25.840 His CEO of Tessa. 0:14:26.040 --> 0:14:28.200 Look, the reality is, and we've talked about on the show, 0:14:28.800 --> 0:14:32.120 brand damage was at a point he had to read 0:14:32.160 --> 0:14:34.680 the room and if he didn't make this decision now, 0:14:34.960 --> 0:14:37.040 it would have been dark days ahead. And that's why 0:14:37.080 --> 0:14:40.000 the stock's going to be up because now Tessa got 0:14:40.040 --> 0:14:40.800 back at CEO. 0:14:41.800 --> 0:14:44.600 Now Tesla's in a new world of competition. It just 0:14:44.640 --> 0:14:47.560 looks to me as a you know, a lay person. 0:14:47.600 --> 0:14:51.320 Here China is taking over the evy market globally with 0:14:51.360 --> 0:14:52.760 the exception of the United States. 0:14:53.400 --> 0:14:54.400 How does Tessa. 0:14:54.120 --> 0:14:55.680 Deal with by D and others? 0:14:56.120 --> 0:14:59.200 Look, I don't at first, I don't view as you 0:14:59.240 --> 0:15:02.520 know that it's you know, you can't have success from 0:15:02.560 --> 0:15:04.600 Tesla as well as Boyd. I don't have view as 0:15:04.680 --> 0:15:08.400 zero some gunn. But look, Tessa has work cut out 0:15:08.400 --> 0:15:11.320 for them. I mean they they have to have a 0:15:11.360 --> 0:15:13.480 new vehicle that comes out. You have to have the 0:15:13.560 --> 0:15:16.560 refresh in terms of model why and the reality is 0:15:16.640 --> 0:15:19.720 China's forty five percent of out So that is the 0:15:19.760 --> 0:15:21.640 hearts and lungs of Tesla. 0:15:21.680 --> 0:15:23.160 But that's also why it's so important. 0:15:23.680 --> 0:15:27.400 There's only one person that could engineer this turnaround in China. 0:15:27.680 --> 0:15:31.160 It's Musk and I think Elon is probably the best 0:15:31.200 --> 0:15:34.040 I've ever seen of kind of maybe Jeff Bezos as well, 0:15:34.440 --> 0:15:37.920 kind of redirecting investor sentiment where he wants it to go. 0:15:38.000 --> 0:15:39.920 And I think he's saying, don't look at me as 0:15:39.960 --> 0:15:42.640 a metal bender car company, look at me as an 0:15:42.720 --> 0:15:44.560 AI company, robotics company. 0:15:44.800 --> 0:15:45.480 Is that valid? 0:15:45.880 --> 0:15:49.600 I mean, we believe the core value of the future 0:15:49.640 --> 0:15:53.120 of Tesla is autonomous and robotics. And obviously Keen will 0:15:53.120 --> 0:15:55.840 being there on supervised fist in Austin in June. I 0:15:55.880 --> 0:15:57.880 know he's getting ready. And look, I think this is 0:15:58.000 --> 0:16:00.360 just the beginning of what we're going to see in 0:16:00.480 --> 0:16:03.520 terms of autonomous. That to me is a core value. 0:16:04.200 --> 0:16:06.640 You're not gonna do autonomous on fifty eighth Street in 0:16:06.720 --> 0:16:09.120 New York City. I mean, it's just not gonna happen. 0:16:09.600 --> 0:16:13.840 Look, I truly believe over the next three, four or 0:16:13.920 --> 0:16:17.600 five years that autonomous is going to start to represent five, ten, 0:16:17.720 --> 0:16:19.400 fifteen percent on Really. 0:16:19.160 --> 0:16:21.520 Do I say, I don't agree, but he's wearing pink 0:16:21.600 --> 0:16:24.120 I don't agree. Okay, let's go to Intel. We got 0:16:24.120 --> 0:16:27.440 a major story out this morning. This has gone worldwide 0:16:27.680 --> 0:16:31.920 instantly on Bloomberg. This is Intel down sixty six percent 0:16:32.360 --> 0:16:35.440 from the peak, and it's just simple, brilliant reporting by 0:16:35.480 --> 0:16:38.600 Jane Lenny Lee and Ian King. They're Gonnaly have twenty 0:16:38.640 --> 0:16:42.320 percent of their staff the annual report of twenty nineteen. 0:16:42.840 --> 0:16:47.120 We are a world leader, our vision, our commitment to 0:16:47.240 --> 0:16:52.440 corporate responsibility and sustainability. What happened this thing was iconic 0:16:52.760 --> 0:16:53.640 Dunda da du. 0:16:54.080 --> 0:16:55.960 I mean, just think about it. Go back to where 0:16:56.040 --> 0:16:59.120 Nvidio was twenty nineteen, twenty twenty May. If you look 0:16:59.440 --> 0:17:02.760 from gals Singer, it's just the whole corporate structure there, 0:17:02.920 --> 0:17:07.240 the red tape. I mean Intel, it's really a business 0:17:07.320 --> 0:17:09.520 case study for what happens when you go as. 0:17:09.480 --> 0:17:11.919 A CFA business case study it is. 0:17:12.240 --> 0:17:14.240 It's what happened when you're on the treadmill. 0:17:14.640 --> 0:17:15.560 You think no one's going. 0:17:15.560 --> 0:17:20.240 To catch you, Okay, Apple, Apple makes their own chips 0:17:20.359 --> 0:17:22.760 because ultimately that they box out Intel. 0:17:23.240 --> 0:17:26.040 I am a Codec brattfo from Rochester. I lived this 0:17:26.080 --> 0:17:29.320 with Codec. The marketing guys take over, the slick guys 0:17:29.400 --> 0:17:32.640 take over, and the company goes down the tank until 0:17:32.680 --> 0:17:36.240 you're bringing culp from ge or Danaher to ballot out 0:17:36.640 --> 0:17:39.720 their gross strategy. Is they got to get back to 0:17:39.800 --> 0:17:43.760 basics in an engineer driven company. Is that a legitimate 0:17:43.880 --> 0:17:46.280 model or is that just blah blah blah. 0:17:46.440 --> 0:17:48.280 I think it's a model. But I think those days 0:17:48.280 --> 0:17:50.320 have past. I think, I mean, I know that they're 0:17:50.359 --> 0:17:53.200 doing this huge cut that was reported you know Bloomberg, 0:17:54.400 --> 0:17:56.800 but I think the reality is that this is going 0:17:56.840 --> 0:17:59.119 to have to be a breakup. They're going to have 0:17:59.160 --> 0:18:02.480 to restructure the company. You're gonna have to ultimately sunset 0:18:02.520 --> 0:18:06.080 different products, focus on some of the growth areas because 0:18:06.119 --> 0:18:10.360 the reality is for Intel it look, you know about 0:18:10.840 --> 0:18:13.679 dark days. I mean, if you look up disaster in 0:18:13.720 --> 0:18:15.600 the dictionary, you'd see Intel's. 0:18:15.400 --> 0:18:18.479 Okay, my book of the Summer. I think maybe it's 0:18:18.480 --> 0:18:20.080 book of the Year. I can't remember. It was chip war. 0:18:21.200 --> 0:18:25.879 Is Intel competing against Taiwan's cell conductor? Are they competing 0:18:25.920 --> 0:18:30.760 against some amorphous Chinese blob? We don't know who beat them? 0:18:31.000 --> 0:18:32.480 Who defeated Intel? 0:18:32.600 --> 0:18:37.679 I mean AMD in video in video TSMC. I mean 0:18:37.720 --> 0:18:40.399 when you think about Intel had the opportunity and just 0:18:40.440 --> 0:18:44.720 go back to AI, the opportunity to go after AI, 0:18:44.840 --> 0:18:48.600 go back to next generationships. And what they essentially did 0:18:48.800 --> 0:18:51.480 was look, it's in different like they're like a typewriter 0:18:51.640 --> 0:18:57.480 company mid nineties being like this internet window. This is 0:18:57.640 --> 0:19:00.600 ridiculous that people and what happens to years later that 0:19:00.600 --> 0:19:01.480 comings bankrupt. 0:19:01.680 --> 0:19:03.840 So I got yelled at it for that, look and 0:19:04.600 --> 0:19:05.840 dog piles for real. 0:19:06.000 --> 0:19:09.760 But but that but that's really that's the sad thing 0:19:09.840 --> 0:19:13.520 that's happened Intel. And look, yeah, obviously have a new CEO. 0:19:13.760 --> 0:19:16.600 But this is a very you know, it's really the 0:19:16.680 --> 0:19:18.720 collapse of a of a U S iicon. 0:19:18.920 --> 0:19:22.880 Ask a question, Mike Robinson. Cones are hurting, My eyes 0:19:22.880 --> 0:19:23.760 are hurting folks. 0:19:23.880 --> 0:19:26.040 Hey, just a red headline crossing the tape there, Tom, 0:19:26.040 --> 0:19:28.360 I want to get that out. Boeing first quarter negative 0:19:28.480 --> 0:19:30.840