WEBVTT - Tesla Earnings, TikTok's Path Forward 0:00:00.160 --> 0:00:10.480 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories, making news and moving 0:00:16.680 --> 0:00:19.560 markets in the APAC region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.080 the Bloomberg Terminal, and the Bloomberg Business app. 0:00:27.480 --> 0:00:30.840 After the bell, Tesla reported worse than expected profit and 0:00:30.880 --> 0:00:34.440 revenue for a third consecutive quarter. The company continues to 0:00:34.520 --> 0:00:38.839 buckle under the weight of slower demand for electric vehicles. However, 0:00:38.880 --> 0:00:42.600 Tesla said it is accelerating the launch of more affordable models. 0:00:42.920 --> 0:00:45.600 It plans to start production on the cheaper cars before 0:00:45.640 --> 0:00:48.720 the second half of twenty twenty five. That could ease 0:00:48.840 --> 0:00:52.960 deterioration in profit margins and sales. The market sort of 0:00:53.040 --> 0:00:56.720 seized on that as a positive, but Gerber Kawasaki's Ros 0:00:56.760 --> 0:00:59.680 Gerber says he's not sure Tesla can deliver on that 0:00:59.760 --> 0:01:00.600 new claim. 0:01:01.040 --> 0:01:03.400 I just don't believe that statement. I don't see how 0:01:03.400 --> 0:01:07.240 they're going to pull forward production of this vehicle to 0:01:07.319 --> 0:01:10.040 be ready in a year after they just laid off 0:01:10.080 --> 0:01:12.680 fifteen thousand people and a lot of factories and a 0:01:12.720 --> 0:01:15.440 lot of high quality individuals just lost their jobs. So 0:01:15.840 --> 0:01:18.800 I'm kind of curious to you know, we can say things, 0:01:18.800 --> 0:01:21.640 but we know that when Elon says something, it often 0:01:21.680 --> 0:01:24.000 takes four years after the initial comment. 0:01:25.080 --> 0:01:28.920 That's Ross Gerber, the co founder of Gerber Kawasaki, and 0:01:29.000 --> 0:01:33.039 he has formerly been a massive bull on Tesla. And 0:01:33.240 --> 0:01:35.320 as I said, the market really seized on this, because 0:01:35.360 --> 0:01:38.720 Tesla scheres was thirteen percent in late trading. 0:01:39.080 --> 0:01:39.200 Well. 0:01:39.280 --> 0:01:41.640 Joining us now for some discussion on this is Steve Mann, 0:01:41.680 --> 0:01:45.880 Bloomberg Intelligence Global Autos and Industrial's research manager taking a 0:01:45.920 --> 0:01:50.320 closer look. So, as you mentioned, the market, Steve really 0:01:50.360 --> 0:01:54.720 seized on the idea of a cheaper car. So a 0:01:54.760 --> 0:01:57.440 lot of companies have thought about and have tried to 0:01:57.480 --> 0:02:00.480 make cheap evs. Can it really be done? I think 0:02:00.480 --> 0:02:02.720 we have to say that with Tesla, this is a 0:02:02.840 --> 0:02:06.880 CEO who landed spent rockets on a barge. Should we 0:02:06.920 --> 0:02:09.080 believe him? 0:02:09.200 --> 0:02:11.679 Hey, Brian, thanks for having me on. I think I 0:02:11.760 --> 0:02:15.639 think this is a very important earnings release for Tesla. 0:02:16.360 --> 0:02:18.880 Stock's been down forty percent since the minion of the year. 0:02:19.040 --> 0:02:22.480 They really need to come out and really soothe the 0:02:22.520 --> 0:02:26.839 concerns of like basically two groups investors. One those who 0:02:27.040 --> 0:02:31.080 just believe Tesla is an automotive company, not a tech company, 0:02:31.120 --> 0:02:34.720 and there are the other majority that believes this is 0:02:34.800 --> 0:02:38.480 a tech AI company and not so much of an 0:02:38.480 --> 0:02:42.760 auto company. So coming out and you know, announcing that 0:02:43.400 --> 0:02:46.480 you know they're going to launch a more affordable EV 0:02:47.280 --> 0:02:49.880 not in the second half of twenty twenty five, actually 0:02:49.919 --> 0:02:52.120 moved it up to the first half of twenty twenty five. 0:02:53.080 --> 0:02:57.880 That really resonated with I think the automotive group of investors. 0:02:58.280 --> 0:03:00.840 And then I think, more importantly, as you know, this 0:03:01.440 --> 0:03:06.040 stock's valued quite valuation is quite high on the back 0:03:06.080 --> 0:03:10.880 of you know, their AI endeavor, and I think launching 0:03:11.200 --> 0:03:16.239 a more affordable EV is critical to get scale more 0:03:16.360 --> 0:03:19.880 vehicles on the roads to actually help them scale up 0:03:19.960 --> 0:03:22.640 AI training. So I mean it was a really good 0:03:22.800 --> 0:03:27.360 good call for Tesla, really, I mean, the numbers were bad, 0:03:27.400 --> 0:03:29.799 but I think the outlook is positive. 0:03:29.919 --> 0:03:33.160 Maybe I'm going to be a little skeptical and I'm wondering, Steven, 0:03:33.240 --> 0:03:35.360 and you can weigh in on this, whether the move 0:03:35.400 --> 0:03:37.720 the eleven percent move that we had in late trading, 0:03:38.320 --> 0:03:42.320 any amount of that move that may be attributable to 0:03:42.760 --> 0:03:44.880 kind of short covering here because we know, as you 0:03:44.920 --> 0:03:47.480 said earlier, this stock year to date is down by 0:03:47.480 --> 0:03:50.480 more than forty percent, and the street was prepared for 0:03:50.920 --> 0:03:54.560 kind of, you know, pretty bad report here for the quarter, 0:03:54.600 --> 0:03:56.640 and I'm wondering whether maybe a little bit of short 0:03:56.640 --> 0:03:58.200 covering was involved in late trading. 0:03:59.240 --> 0:04:01.800 It seems like. But you know, I think, uh, I 0:04:01.840 --> 0:04:04.640 think your last segment, one of your guests that you know, 0:04:04.760 --> 0:04:07.640 have some reservation in terms of how they're going to 0:04:07.760 --> 0:04:11.680 execute and launching this new vehicle, that that is a risk. 0:04:11.800 --> 0:04:17.480 It's always been testless risk in in execution. But I think, uh, 0:04:17.640 --> 0:04:20.280 you know, I think they're still going ahead with some 0:04:20.320 --> 0:04:23.440 of the new production facilities that they're looking to to 0:04:23.600 --> 0:04:28.400 erect uh in in Mexico. But I think, uh, you know, 0:04:28.480 --> 0:04:31.400 with slowing sales in the Model three and Model Y, 0:04:32.160 --> 0:04:35.400 they're taking advantage of the additional capacity to pull that, 0:04:36.200 --> 0:04:41.320 uh pull that launch of the affordable e V ahead. Now. 0:04:41.520 --> 0:04:44.599 I mean they've I mean it's not new to them, 0:04:44.680 --> 0:04:46.880 they've I think if you look at the Models three, 0:04:46.920 --> 0:04:49.839 they went through production Hell. They also went to through 0:04:49.839 --> 0:04:54.400 production hell for the Model X years ago. They're doing 0:04:54.760 --> 0:04:57.240 they're doing the same thing with cyber truck. And by 0:04:57.279 --> 0:05:01.599 the way, cyber Truck, it's actually got faster than the 0:05:01.680 --> 0:05:05.719 market has anticipated, and cyber Truck has been a huge 0:05:05.800 --> 0:05:07.040 drag on earnings. 0:05:07.240 --> 0:05:10.880 So anyway, Steve, Yeah, I mean part of the problem 0:05:11.080 --> 0:05:14.479 is execution, as you highlight there, and and it's management. 0:05:14.760 --> 0:05:18.520 We had two key executives leave the company now. Today 0:05:19.040 --> 0:05:22.120 Martin Vieca, who's the head of investor relations, announced his 0:05:22.160 --> 0:05:25.920 resignation on the call. Should we be concerned about management there? 0:05:27.200 --> 0:05:30.960 Yeah, I think I think we we We shouldn't. I 0:05:31.000 --> 0:05:34.960 don't think I'm too worried about the management change. You know, 0:05:35.480 --> 0:05:39.679 these individuals have been with the company for a long time, 0:05:40.360 --> 0:05:43.039 since you know, the Model three launch, since the sn 0:05:43.240 --> 0:05:47.200 X launch, since the inception of the company. And you know, 0:05:47.440 --> 0:05:52.200 they have a very good team. Teamwork is I mean, 0:05:52.279 --> 0:05:55.200 it's probably one of the best in the industry, in 0:05:55.200 --> 0:05:58.680 the auto industry. So you know, they still have very 0:05:58.760 --> 0:06:02.880 strong individuals that they've hired over the past you know, 0:06:02.960 --> 0:06:05.440 five years, they've been in a hiring spree in those 0:06:05.520 --> 0:06:08.359 past five years. I think it wouldn't hurt to bring 0:06:08.520 --> 0:06:13.240 some new blood into into UH, into the game and 0:06:13.360 --> 0:06:15.920 UH and and kind of kind of look at look 0:06:15.920 --> 0:06:18.400 in the future and and you know, maybe take take 0:06:18.440 --> 0:06:21.160 the company in a little bit direction and in uh 0:06:21.400 --> 0:06:24.400 in growing the AI and and and the in the 0:06:24.400 --> 0:06:25.479 rest of the auto business. 0:06:25.960 --> 0:06:28.840 He's still, when I say, he Elon Musk is still 0:06:28.880 --> 0:06:31.760 committed to this idea of robot taxis. Do you think 0:06:31.760 --> 0:06:34.839 this is a smart bet given everything that this company 0:06:34.880 --> 0:06:36.880 is dealing with in terms of headwinds right now? 0:06:38.120 --> 0:06:40.960 Well, I still think, uh, robo taxi is still many 0:06:41.040 --> 0:06:43.960 years away. I think in the call, one of the 0:06:43.960 --> 0:06:48.800 things that was discussed was, uh, you know, policy regulations 0:06:48.839 --> 0:06:52.120 around robo taxi and au Thomas driving. I think there's 0:06:52.120 --> 0:06:54.599 still a lot of work with the regulators that needs 0:06:54.640 --> 0:06:57.800 to be done to get that going. But look, it's 0:06:58.360 --> 0:07:02.440 even even the r N the development work that's been 0:07:02.680 --> 0:07:05.480 that's going on today. You know, I don't think they're 0:07:05.480 --> 0:07:07.839 going to get to robo taxi anytime soon. You know, 0:07:07.920 --> 0:07:10.080 in our model, we actually don't think they'll launch in 0:07:10.680 --> 0:07:13.960 until as early as you know, twenty twenty seven, and 0:07:14.080 --> 0:07:18.240 probably won't able to gain you know, revenue and profits 0:07:18.320 --> 0:07:20.480 well into the next decade. So it's going to it's 0:07:20.520 --> 0:07:23.520 gonna take some time, but I think I think the 0:07:23.800 --> 0:07:28.520 launching of the affordable ev really resonated with the investors, 0:07:28.560 --> 0:07:30.720 and that's why you see the stock react to it. 0:07:31.880 --> 0:07:35.240 Our own reporting, as you heard from Ed Ludlow, is 0:07:35.280 --> 0:07:38.440 that they have made some moves to be able to 0:07:38.440 --> 0:07:42.000 to produce these more affordable models early. But one thing 0:07:42.040 --> 0:07:45.240 that wasn't immediately clear was whether or not these models, 0:07:45.520 --> 0:07:48.360 whether this refers to the model too that has been 0:07:48.360 --> 0:07:50.320 talked about in the past. Can you clarify that, is 0:07:50.320 --> 0:07:51.280 that what they're talking about. 0:07:52.480 --> 0:07:56.880 It's actually unclear. You know, it could take a couple 0:07:56.920 --> 0:07:59.640 of forms. It could be a new platform, which is 0:07:59.800 --> 0:08:02.320 the model too that you know the market has been 0:08:02.360 --> 0:08:05.480 talking about. But look, they've done a really good job 0:08:05.520 --> 0:08:09.040 in vertically integrating their manufacturing that have allowed them to 0:08:09.080 --> 0:08:11.760 cut costs and you know, allowed them to be the 0:08:12.000 --> 0:08:14.640 you know, one or two most profit or the one 0:08:14.680 --> 0:08:18.360 or two profitable EV maker in the world. Nobody's nobody's 0:08:18.400 --> 0:08:21.440 generating profits other than you know, Tesla and probably one 0:08:21.520 --> 0:08:26.119 other Chinese company bid uh. So they've done a lot 0:08:26.400 --> 0:08:29.880 in vertical ingrading manufacturing that allows them to cut costs. 0:08:29.920 --> 0:08:36.520 So the other possibility is really adding an upgrade another 0:08:36.720 --> 0:08:40.160 variant to the existing Model three and Model hy and 0:08:40.400 --> 0:08:44.200 that allows them to actually sell that variant at a 0:08:44.240 --> 0:08:47.680 cheaper price. And by the way, this is critical. This 0:08:48.120 --> 0:08:52.680 cheaper model is critical because it allows Tesla to actually 0:08:52.720 --> 0:08:55.720 expand geographic reach very quickly. 0:08:55.720 --> 0:08:58.280 Steve, before we let you go, you mentioned China there 0:08:58.320 --> 0:09:01.280 and byd give me your sense of the challenges that 0:09:01.400 --> 0:09:03.360 lie ahead for for Tesla in China. 0:09:04.880 --> 0:09:08.319 Uh, it's it's it's really tough over there. It's it's 0:09:08.320 --> 0:09:11.560 a very very high, hyper competitive market. But I think 0:09:11.600 --> 0:09:16.040 what's going positive that's going well for Tesla as well 0:09:16.120 --> 0:09:19.520 as the Chinese ev maker is battery price has been 0:09:19.559 --> 0:09:21.959 coming down. If you look at c at L, one 0:09:21.960 --> 0:09:24.680 of the major global battery makers in the world, a 0:09:24.800 --> 0:09:27.800 Chinese glow battery maker in the world, you can see 0:09:27.840 --> 0:09:32.640 their margins have improved while prices have come down. So 0:09:32.679 --> 0:09:36.080 that what it means is that, you know, the efficiency 0:09:36.679 --> 0:09:41.120 the costs of prices of battery are still coming down rapidly. 0:09:41.520 --> 0:09:43.600 Yeah, it's a good thing, all right, Steve, thanks so 0:09:43.679 --> 0:09:47.880 much for joining us as Steve Mann there from Bloomberg Intelligence. 0:09:55.679 --> 0:09:59.000 Joining us now is Jasmine and Berg, principal advisor at 0:09:59.280 --> 0:10:01.960 E Marketer to take a closer look at what this 0:10:02.080 --> 0:10:05.680 TikTok bin would mean. Well, there's so many different angles 0:10:05.720 --> 0:10:08.960 to this, Jasmine. I'm curious about whether or not you 0:10:09.080 --> 0:10:11.640 think that this gets lost in court for a year 0:10:11.760 --> 0:10:14.960 or two, or whether we see some other sharp edged 0:10:15.000 --> 0:10:18.360 moves by China and perhaps a sale. 0:10:19.160 --> 0:10:22.640 Yeah, it's a great question. TikTok has made it clear 0:10:22.760 --> 0:10:26.960 that it intends to launch a legal battle against this bill, 0:10:27.040 --> 0:10:30.800 and I expect it will be a long and drawn 0:10:30.840 --> 0:10:35.480 out and intense battle. So it's definitely not the end 0:10:35.559 --> 0:10:38.319 of TikTok here in the US just yet, even though 0:10:38.320 --> 0:10:41.200 it does certainly feel like the clock is ticking at 0:10:41.280 --> 0:10:45.679 least in terms of how TikTok operates now, because this 0:10:45.800 --> 0:10:50.120 battle could really last for months or even for years. 0:10:50.200 --> 0:10:54.760 And you know, if TikTok does is able to divest, 0:10:54.920 --> 0:10:57.800 even that would be you know, another it would have 0:10:57.920 --> 0:11:00.400 up to a year to find a buyer and to 0:11:00.640 --> 0:11:03.040 make a sale. So you know, there's still quite a 0:11:03.080 --> 0:11:07.880 long road ahead before we see what truly happens to TikTok. 0:11:08.240 --> 0:11:11.520 I'm wondering, given the connections that you have in the industry, 0:11:11.600 --> 0:11:14.480 whether there is an opinion that is developing here on 0:11:14.559 --> 0:11:18.240 what happens to TikTok. Is there a consensus developing or 0:11:18.280 --> 0:11:21.320 is it simply too soon to say so. 0:11:21.400 --> 0:11:24.600 I think there's a consensus around you know, the bill 0:11:24.720 --> 0:11:28.600 inevitably becoming law. I think people are still, you know, 0:11:28.720 --> 0:11:32.720 somewhat torn over what happens after that. There are still 0:11:32.760 --> 0:11:36.000 a lot of ifs and questions that need to be answered. 0:11:36.720 --> 0:11:39.600 And of course, this isn't TikTok's first rodeo. I mean, 0:11:39.640 --> 0:11:42.120 this is an issue that we've all been covering and 0:11:42.480 --> 0:11:44.679 dealing with for you know, the past couple of years, 0:11:44.679 --> 0:11:48.040 with several different attempts to ban TikTok. Of course, this 0:11:48.080 --> 0:11:50.920 one is is very different. It's felt different from the 0:11:50.960 --> 0:11:53.800 start and the speed at which it passed through the 0:11:53.840 --> 0:11:56.719 House and now the speed at which it's advancing through 0:11:56.760 --> 0:11:59.520 the Senate. I mean, it just it feels like a 0:11:59.559 --> 0:12:03.040 different moment, and it's something that at least we are 0:12:03.080 --> 0:12:05.880 looking at much more closely, and the advertisers and the 0:12:05.880 --> 0:12:08.559 brands that I speak to on a regular basis are 0:12:08.559 --> 0:12:10.480 also looking at very closely. 0:12:10.559 --> 0:12:13.720 Right now, Yeah, you wonder who would benefit the most? 0:12:13.800 --> 0:12:16.080 I think a lot of people are saying meta and 0:12:16.160 --> 0:12:19.199 it's interesting with the options that China has, it could 0:12:19.240 --> 0:12:24.280 conceivably try to sell TikTok minus the algorithm and keep 0:12:24.320 --> 0:12:27.080 it out sell it for a diminished amount. That would 0:12:27.320 --> 0:12:33.600 very much hurt American owners, American shareholders in ByteDance itself. 0:12:34.880 --> 0:12:37.800 How do you see the possibilities of a sale and 0:12:37.880 --> 0:12:41.000 whether or not you know that might be the most 0:12:41.080 --> 0:12:43.959 likely outcome is that it gets sold but no algorithm. 0:12:44.960 --> 0:12:47.240 I mean, the algorithm question is a great one, right. 0:12:47.240 --> 0:12:50.000 It's one of the most coveted parts of TikTok, and 0:12:50.200 --> 0:12:52.600 I'm sure there are many companies here that would love 0:12:52.640 --> 0:12:56.400 to get their hands on the algorithm, and to your point, 0:12:56.559 --> 0:12:59.920 it would lessen the valuation of TikTok and perhaps expand 0:13:00.080 --> 0:13:03.080 a list of potential buyers. No matter what, though, I 0:13:03.120 --> 0:13:05.480 do think finding a buyer is going to be a 0:13:05.640 --> 0:13:08.680 difficult task for TikTok. While there are a lot of 0:13:08.679 --> 0:13:10.680 companies again that would like to get their hands on 0:13:10.720 --> 0:13:14.040 the company, it is one that has been heavily scrutinized 0:13:14.080 --> 0:13:17.080 over many years, not only here in the US, but worldwide. 0:13:17.160 --> 0:13:19.600 So this buyer would have to have a strong pocket, 0:13:19.920 --> 0:13:23.080 a strong stomach excuse me, as well as deep pockets 0:13:23.120 --> 0:13:25.439 to be able to buy it, and companies like Meta 0:13:25.440 --> 0:13:27.880 as well as the rest of big tech would pretty 0:13:27.920 --> 0:13:31.440 much be out of the question because of antitrust and 0:13:31.520 --> 0:13:32.760 regulatory concerns. 0:13:33.120 --> 0:13:36.240 Yeah, former Treasury secret see is Steve Menuschen has already 0:13:36.280 --> 0:13:39.959 said that he's assembling a group of investors that would 0:13:39.960 --> 0:13:43.480 make a move to buy TikTok's US operation. Now we 0:13:43.520 --> 0:13:45.839 know that Oracle is already hosting a lot of the 0:13:45.960 --> 0:13:50.560 data that TikTok has for users here in the States, 0:13:50.600 --> 0:13:55.360 which I think approaches around one hundred and seven million users. 0:13:56.400 --> 0:13:59.959 Does Oracle, I know they have about eighty seven billion 0:14:00.200 --> 0:14:03.080 in debt, But would that kind of emerge as a 0:14:03.080 --> 0:14:06.920 company maybe that could take over TikTok or should we 0:14:07.360 --> 0:14:10.160 be thinking about other firms? I mean you mentioned Microsoft 0:14:10.200 --> 0:14:14.480 maybe as a possibility. Meta clearly out of the question. 0:14:15.040 --> 0:14:19.240 Is you know, obviously with antitrust concerns there, But are 0:14:19.280 --> 0:14:22.720 there companies like Oracle that you can see that may 0:14:22.760 --> 0:14:24.720 have a chance at buying TikTok in the US. 0:14:25.920 --> 0:14:27.720 So one of the companies that I think would be 0:14:27.800 --> 0:14:31.000 a good fit, although I don't know how possible a 0:14:31.040 --> 0:14:34.880 deal would be, is Walmart. It did you know propose 0:14:34.920 --> 0:14:40.240 a deal I believe with Oracle in twenty twenty, so 0:14:40.360 --> 0:14:43.000 there is some history there, and TikTok and Walmart, of course, 0:14:43.080 --> 0:14:46.880 also have a long history of working together and partnering together. 0:14:47.000 --> 0:14:50.240 The two of them also need to fend off Amazon, 0:14:50.360 --> 0:14:53.240 so it would be a partnership that, at least in theory, 0:14:53.360 --> 0:14:54.440 would make sense to me. 0:14:55.960 --> 0:14:58.280 You know, there aren't many Chinese companies that have such 0:14:58.320 --> 0:15:01.080 a massive presence in the United State, so it might 0:15:01.120 --> 0:15:05.800 not be all that unusual if TikTok was just sold. 0:15:06.560 --> 0:15:09.640 You mentioned Walmart. That's probably one company that has deep 0:15:09.760 --> 0:15:13.320 enough pockets to consider buying TikTok. But let's talk a 0:15:13.400 --> 0:15:15.760 little bit about how much this company might sell for. 0:15:16.200 --> 0:15:18.240 I might have gotten a little bit out over my skis. 0:15:18.280 --> 0:15:20.720 I told Doug that I thought the company would be 0:15:20.800 --> 0:15:23.720 valued over one hundred billion dollars, and who could really 0:15:23.720 --> 0:15:26.520 afford that. There's only a handful of companies that could, 0:15:26.520 --> 0:15:28.200 and some of them would be blocked because of out 0:15:28.200 --> 0:15:32.040 of trust, as Doug suggested. So what sort of value 0:15:32.240 --> 0:15:33.040 does TikTok have. 0:15:34.400 --> 0:15:37.480 Well, I've seen estimates that range anywhere between forty billion 0:15:37.480 --> 0:15:40.000 and one hundred and fifty billion, again depending on whether 0:15:40.080 --> 0:15:43.720 the algorithm is included. That's a little bit outside of 0:15:43.800 --> 0:15:49.200 the purview that I have. We focus more on advertising, 0:15:49.240 --> 0:15:52.360 which of course is a core part of TikTok's business. 0:15:52.440 --> 0:15:55.040 And if you think about the size of TikTok's AD 0:15:55.040 --> 0:15:57.560 business here in the US, it is by no means 0:15:57.600 --> 0:16:00.760 a small player. We're expecting it to rake in about 0:16:00.800 --> 0:16:04.640 ten billion dollars in US AD revenues in twenty twenty four, 0:16:04.760 --> 0:16:07.440 assuming of course that it does not get banned. So 0:16:07.560 --> 0:16:11.800 it is one of the largest social media ad players 0:16:11.880 --> 0:16:15.040 out there and by no means again a small business. 0:16:15.240 --> 0:16:17.880 So ten billion, how does that compare to what Meta 0:16:18.000 --> 0:16:19.680 rakes in in terms of AD revenue. 0:16:20.760 --> 0:16:24.000 So based on our estimates, we are predicting that Meta 0:16:24.040 --> 0:16:27.080 will rake in about sixty four billion dollars in US 0:16:27.120 --> 0:16:31.400 AD revenues this year. So it is significantly larger still 0:16:31.400 --> 0:16:34.120 than TikTok. But if you think about the time that 0:16:34.160 --> 0:16:37.520 TikTok has been here in the US and how rapidly 0:16:37.640 --> 0:16:40.120 it has grown, it really has been able to cross 0:16:40.160 --> 0:16:43.760 that ten billion dollar mark very very quickly. But back 0:16:43.800 --> 0:16:46.320 to the previous question about whether you know Meta would 0:16:46.320 --> 0:16:48.800 be one of the beneficiaries, of course, it would be, 0:16:48.880 --> 0:16:51.840 but thinking about again the size of its AD business 0:16:51.960 --> 0:16:56.120 versus the side of TikTok's ad business, any reallocated TikTok 0:16:56.160 --> 0:17:00.600 AD dollars would still be pretty much incremental to that 0:17:00.840 --> 0:17:02.800 is already expected to bring in. 0:17:03.480 --> 0:17:06.199 Okay, briefly, the one difference between the House bill and 0:17:06.240 --> 0:17:09.199 the Senate bill is this three hundred and sixty days 0:17:09.240 --> 0:17:14.200 for TikTok to be divested by byte edance. Is three 0:17:14.240 --> 0:17:15.400 hundred and sixty a big deal? 0:17:16.840 --> 0:17:19.040 Well, it's one of the reasons that it was able 0:17:19.240 --> 0:17:21.560 or that it has more support now in the Senate. 0:17:21.880 --> 0:17:25.160 I mean it does give you know, TikTok more time 0:17:25.320 --> 0:17:28.480 to find a potential buyer. So I think it's one 0:17:28.480 --> 0:17:30.919 of the reasons that it was able to be pushed 0:17:31.000 --> 0:17:33.760 through into the Senate and one of the reasons that 0:17:33.800 --> 0:17:35.680 it's more likely to become law now. 0:17:36.000 --> 0:17:37.840 Yeah, and it gets this past the election. I guess 0:17:37.880 --> 0:17:40.960 that's good. Jasmine, thanks so much for joining us, Jasmin Enberg, 0:17:41.040 --> 0:17:51.480 Principal analyst at eMarketer Stosh Graham joins us managing director 0:17:51.560 --> 0:17:54.840 at Graham Capital Wealth Management to take a closer look 0:17:54.880 --> 0:17:58.840 at markets. Stosh equities seem to regain some of the 0:17:59.040 --> 0:18:01.760 momentum that was lost in the month of April. Most 0:18:01.800 --> 0:18:04.399 of the month we were trending to the downside and 0:18:04.480 --> 0:18:07.200 more acute last week. But these two days of gains 0:18:07.480 --> 0:18:10.720 have recouped about half of the five to six percent 0:18:10.800 --> 0:18:13.959 pullback that we saw. City Group says stocks are more 0:18:14.000 --> 0:18:17.160 attractive as the slide removed some of the market fraud. 0:18:17.200 --> 0:18:21.399 How do you see it, well, Brian, in regards to 0:18:21.600 --> 0:18:25.400 market movements, say, for the rest of the year. Certainly 0:18:25.440 --> 0:18:28.600 this pullback has been a point where by the dive, 0:18:29.840 --> 0:18:34.000 by the dip, buyers have come back. I think looking 0:18:34.160 --> 0:18:36.880 into the near term future, you're looking at largely two 0:18:36.920 --> 0:18:41.320 things financial conditions primarily, and then secondarily, can investor sentiment 0:18:42.000 --> 0:18:45.960 still be very positive? We know it's not as positive 0:18:45.960 --> 0:18:49.160 at where it was three to four weeks ago, but 0:18:49.400 --> 0:18:53.680 certainly sediment is still positive compared to historical norms. 0:18:54.119 --> 0:18:58.200 What about purchasing managers sentiment? We had the flash April 0:18:58.240 --> 0:19:01.640 composite PMI from S and P Global. Today, I mean 0:19:01.680 --> 0:19:06.400 we're almost flirting with the line between expansion and contraction. 0:19:06.560 --> 0:19:09.359 In fact, if you look at the measure of orders, 0:19:09.400 --> 0:19:11.640 I mean we dipped into contraction for the first time 0:19:11.680 --> 0:19:14.600 in six months, So the economy is softening. Is that 0:19:14.760 --> 0:19:18.439 enough that would cause the FED maybe to give the 0:19:18.480 --> 0:19:20.640 equity market a little bit of relief here and begin 0:19:20.760 --> 0:19:25.359 to cut rates, let's say, twice before the end of 0:19:25.400 --> 0:19:26.080 the year is out. 0:19:27.520 --> 0:19:32.680 That is the big question, certainly amongst institutional money managers, 0:19:32.680 --> 0:19:35.240 I know, just being on the terminal, that has been 0:19:35.480 --> 0:19:38.320 a primary point of discussion because we have seen a 0:19:38.320 --> 0:19:41.800 material amount of rate cuts come off over the last 0:19:42.600 --> 0:19:47.080 quarter and a half. Look where markets are right now 0:19:47.119 --> 0:19:50.960 and where they were or how they were reacting really 0:19:51.119 --> 0:19:54.280 last five to six months. In this remarkable rally, you 0:19:54.359 --> 0:19:57.800 had a dynamic of which you indirectly referred to it. 0:19:58.400 --> 0:20:02.560 In some situations you had bad economic news being seen 0:20:02.600 --> 0:20:05.400 as good for markets, and then second early you had 0:20:05.440 --> 0:20:09.760 good economic news being used as good news for markets. Again, 0:20:09.880 --> 0:20:11.840 when you have those dynamics, you get a little bit. 0:20:12.080 --> 0:20:15.720 You get worried that markets could be throthy, and when 0:20:15.720 --> 0:20:18.720 you look at investors sentiment and how strong it's been 0:20:18.800 --> 0:20:21.760 over that period of time, the market's taking a breather, 0:20:22.560 --> 0:20:26.960 I think is a natural reaction. But again, looking in 0:20:27.040 --> 0:20:31.359 the near term future, financial conditions are still pretty loose, 0:20:32.280 --> 0:20:35.720 and right now capital markets again are very favorable for 0:20:35.800 --> 0:20:37.959 companies that have strong balance sheets. 0:20:38.520 --> 0:20:41.080 Well, I think Doug raised an interesting point because if 0:20:41.080 --> 0:20:43.439 you think about it, interest rates are not the be 0:20:43.560 --> 0:20:47.679 all and end all. Their one input into the cost 0:20:47.840 --> 0:20:52.440 side of doing business, and inflation is sticky, so we're 0:20:52.440 --> 0:20:54.880 not expecting the FED to really cut. So why would 0:20:54.880 --> 0:20:56.560 stocks you go up? Well, they would go up if 0:20:56.680 --> 0:20:59.840 one of the other inputs, which is growth, is higher. 0:21:00.200 --> 0:21:02.960 And even more important than growth is how the companies 0:21:03.040 --> 0:21:06.240 manage are their earnings higher? So if the earnings are higher, 0:21:06.640 --> 0:21:09.399 you're probably feeling pretty good here. But then if growth 0:21:09.480 --> 0:21:13.400 is faltering, as suggested with the latest uh, the latest 0:21:13.600 --> 0:21:17.080 ism numbers, then it is something to be concerned about. 0:21:17.080 --> 0:21:20.280 I'm not sure that that's entrenched yet, about a weakness 0:21:20.280 --> 0:21:21.719 in growth. How do you see growth? 0:21:22.520 --> 0:21:26.160 No, absolutely, And I would say that is for personally, 0:21:26.240 --> 0:21:28.840 for us in our firm, that is the risk that 0:21:28.920 --> 0:21:32.200 the market is not fully appreciating. I think one of 0:21:32.240 --> 0:21:37.000 the difficult dynamics with using various economic data points, whether 0:21:37.000 --> 0:21:39.680 it's the variety of reports from the jobs report, uh, 0:21:39.760 --> 0:21:44.000 you know we referenced PMI, A lot of these reports 0:21:44.119 --> 0:21:47.080 get revised at a later point in time, and how 0:21:47.119 --> 0:21:49.639 the data is collected, and you're specially you're seeing this 0:21:49.720 --> 0:21:52.879 with the labor market where you have an initial jobs 0:21:52.920 --> 0:21:56.879 report and then a month later, three months later, the 0:21:56.960 --> 0:22:01.000 numbers have been getting revised and generally speaking being revised lower. 0:22:01.160 --> 0:22:04.720 And it's not necessarily due to some nefarist mean, it's 0:22:04.760 --> 0:22:07.800 just the way or the inefficiencies of how the numbers 0:22:08.000 --> 0:22:11.680 or how the data is collected. So while I think 0:22:11.720 --> 0:22:15.000 in the short run, again largely because investment sentiment and 0:22:15.040 --> 0:22:18.719 financial conditions are very favorable, and historically that has been 0:22:18.800 --> 0:22:23.160 your your your most or that's been your strongest variables 0:22:23.160 --> 0:22:26.440 for near term market movements. What we're talking about, which 0:22:26.480 --> 0:22:30.439 would be you know, concerns about a week economy and 0:22:30.600 --> 0:22:35.400 how that can impact financial asset markets and especially equity markets. 0:22:35.160 --> 0:22:37.440 That is that's your intermediate term. So I would say 0:22:37.480 --> 0:22:41.600 six to twelve months that is the risk because earnings growth, 0:22:41.640 --> 0:22:44.760 as you've been alluding to, generally have been pretty strong 0:22:44.800 --> 0:22:46.639 so far this quarter or this earning season. 0:22:46.840 --> 0:22:50.360 So do you seek shelter in companies that have very 0:22:50.359 --> 0:22:53.040 strong balance sheets holding on to a lot of cash 0:22:53.119 --> 0:22:55.400 and I'm thinking of big cap tech, Does that make 0:22:55.560 --> 0:22:58.439 sense to get a little defensive here, under the umbrella 0:22:58.520 --> 0:23:01.760