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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Now you're listening to

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Speaker 1: the Bloomberg Intelligence Podcast. Catch us live weekdays at ten

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Speaker 1: am Eastern on Apple Card playing Android Auto with the

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Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: I'm Alexi alongside Paul Sweeney. This is Bloomberg Intelligence Radio.

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Speaker 2: We bring you all the top news and business, economics

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Speaker 2: and finance through a lens of our Bloomberg Intelligence folks,

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Speaker 2: and we have one of them here for it with

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Speaker 2: us right now, Man Deep saying he's Bloomberg Intelligence senior

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Speaker 2: technology analysts. I'm this ASML News, so let me update

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Speaker 2: you on what we see ASML has been halted a

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Speaker 2: few times for volatility. The stock dropped like a stone

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Speaker 2: after cutting its twenty twenty five net sales and gross

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Speaker 2: margin guidance, and its third quarter bookings also missed estimates.

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Speaker 2: And these guys make the machines that you need to

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Speaker 2: make AI chips, Mandeep. Is this a negative sign for

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Speaker 2: a chip demand?

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Speaker 3: I mean, look, when it comes to ASML again, everything

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Speaker 3: is driven by Kapex. And when I say Capex, it's

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Speaker 3: really coming from the foundry guys like TSMC, like Samsung.

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Speaker 3: We know Samsung had layoffs recently, so clearly they are

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Speaker 3: not doing very well. But TSMC is so the fact

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Speaker 3: that their buyers are so concentrated and the geopolitical tensions continue,

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Speaker 3: and you know, the second half estimates the comps are tougher.

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Speaker 3: To me, this is just a sign of expectations kind

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Speaker 3: of going up to the point where you will not

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Speaker 3: see any positive revisions from the print this quarter. And

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Speaker 3: that's what happened with the SML. Expectations had gone up

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Speaker 3: and they didn't surprise to the upside, so we could

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Speaker 3: expect the same from others.

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Speaker 4: The magnitude of the miss on the orders versus the

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Speaker 4: estimate seemed huge to me. Yes, that typical or not

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Speaker 4: to play. When they missed, they really miss.

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Speaker 3: So that's that comes down to how SEMIS typically is

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Speaker 3: when you go back to prior cycles. When these companies miss,

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Speaker 3: they miss big. We've seen that with Micron, we have

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Speaker 3: seen that with some of the other names. But in

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Speaker 3: the case of ASML, the secular drivers are intact. When

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Speaker 3: you think about you know, every foundry looking to use

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Speaker 3: their machines, looking to go to you know, smaller nodes.

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Speaker 3: TSMC actually doing very well, so they are their largest customer.

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Speaker 3: And when you think about you know how well TSMC

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Speaker 3: has done in terms of their AI revenue. I don't

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Speaker 3: think they are cutting back capex, but it's always about

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Speaker 3: that incremental buyer when it comes to these semi companies,

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Speaker 3: especially the ones that are reliant on CAPEX spend, and

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Speaker 3: if you take China out of the equation or the

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Speaker 3: fact that they are restricted in some way, those are

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Speaker 3: some of your incremental buyers. So that's where it has

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Speaker 3: an impact.

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Speaker 2: We have a great function on the terminal. It's SPLC.

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Speaker 2: It's a supply chain analysis, So if you type in

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Speaker 2: as and then go to the supply chain, you can

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Speaker 2: see who their competitors and their customers are. So competitors

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Speaker 2: are Applied Materials, KLA LAM Research, so you can kind

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Speaker 2: of see all of them are going to be down

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Speaker 2: on this news. And then to Mandeev's point, customers are

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Speaker 2: folks like TSMC, Samsung, Intel also although albeit not a

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Speaker 2: huge customer anymore, but you know the problems that Intel

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Speaker 2: has had a semiconductor manufacturing Micron. So watch that stock

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Speaker 2: sk Heinex am I saying Heinex, Yeah, memory yep, and

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Speaker 2: then you have global founderies as well. This is a

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Speaker 2: really ignorant question. Where does in Nvidia sit in this

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Speaker 2: story that we're talking about.

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Speaker 3: Well, Nvidia is sort of the first derivative. So if

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Speaker 3: TSMC is not buying machines from ASML, that means they

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Speaker 3: are not expanding their supply for the latest cost packaging

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Speaker 3: and the foundry side in terms of manufacturing and video's chips.

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Speaker 3: So TSMC determines what kind of capacity expansion they're looking

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Speaker 3: for for twenty twenty five and beyond, and based on

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Speaker 3: that they are placing an order for ASML equipment. So

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Speaker 3: it is a very big sign. And to your point

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Speaker 3: about Intel being a buyer, well, Intel is under pressure

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Speaker 3: to curtail their capex as well, so you're taking a

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Speaker 3: lot of the incremental buyers out of the equation, even

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Speaker 3: though there is no substitute for ASML. So it's not

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Speaker 3: as if ASML is losing market share to anyone. It's

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Speaker 3: just the incremental buyers are fewer compared to where they were.

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Speaker 3: You know, a couple of quarters back.

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Speaker 4: Okay, what I know about AI you can put into

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Speaker 4: a shot class. So answer this question like I'm a

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Speaker 4: five year old. Is this fundamentally changed the AI story

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Speaker 4: for tech?

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Speaker 5: It doesn't.

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Speaker 3: It's just that everyone is expecting some sort of digestion

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Speaker 3: period when it comes to AI. We have had you know,

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Speaker 3: a long up to the right sort of scenario so far.

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Speaker 3: When it comes to generative AI, and everyone expects a

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Speaker 3: pause at some point, their signs are you know, in

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Speaker 3: Vidia chip demand remains insay siable despite the restrictions. But

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Speaker 3: when it comes to you know, semis, the way it

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Speaker 3: works is first your foundry guys are gonna slow down

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Speaker 3: their supply expansion. Then you know and Vidia will see

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Speaker 3: fewer beat and raises, and so there is a derivative

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Speaker 3: aspect to how.

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Speaker 6: It flows through.

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Speaker 3: It doesn't all happen in the same quarter, and to

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Speaker 3: me ESML missing is one of the first signs that

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Speaker 3: you know, things may be cooling down a little bit.

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Speaker 3: It may not get reflected in a video's quarter this

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Speaker 3: time around, but two quarters down the line in Vidia

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Speaker 3: could get affected.

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Speaker 2: Which then also reads the question like which customer is

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Speaker 2: the problem for ASML, Like what are their customer lists

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Speaker 2: are calling them saying like guys, look, we don't really

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Speaker 2: need the equipment, like we know it may not be TSMC,

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Speaker 2: So then is an Intel because that's more of an

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Speaker 2: idiosyncratic Intel issue rather than like a broader AI chip

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Speaker 2: story issue.

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Speaker 3: Yeah, and Intel and Samsung, I mean, look, Samsung, we

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Speaker 3: know isn't doing very well on the manufacturing side. When

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Speaker 3: people talk about generative AI chips and GPUs, everyone is

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Speaker 3: going to TSMC as if there's only game in town.

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Speaker 3: Samsung isn't able to make that latest switch to that

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Speaker 3: latest note for you know, generative AI chips, and that's

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Speaker 3: where we heard Samsung doing a layoff, So clearly they

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Speaker 3: are curtailing their costs. Intel is curtailing their costs. So

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Speaker 3: you take out two of the top buyers of ASML

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Speaker 3: gear and we know they sell you know, multimillion dollar machines,

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Speaker 3: So these are expensive purchases. And it's not as if

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Speaker 3: ASML is losing business, it's just it won't get reflected

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Speaker 3: in the next quarter or you know, the couple of quarters.

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Speaker 4: So this ASML deposit us depository receipts down twelve percent.

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Speaker 4: Is that a reasonable reaction do you think in this market?

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Speaker 4: I think so.

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Speaker 3: I mean, given we are seeing some gross margin compression

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Speaker 3: and for semi's companies, gross margin is huge. Anytime you

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Speaker 3: see gross margin compression, that is your first sign that

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Speaker 3: you know thinks are aren't going your way, and it's

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Speaker 3: it's a sign that the demand is somewhat cooling off

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Speaker 3: or your costs are going up. In this case, I

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Speaker 3: think it is a function of orders getting delayed. And uh,

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Speaker 3: I think the reaction was warranted. Probably you may see

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Speaker 3: an ore reaction today. People may realize they still have

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Speaker 3: a strong mode tomorrow and then buy the stock. But

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Speaker 3: I think the reaction was warrant.

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Speaker 4: We've been looking for this, like a little bit of

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Speaker 4: a pickup.

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Speaker 2: Or a crap or just something right, like not everything

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Speaker 2: in sunshine and roses like all the time, and diy'd

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Speaker 2: be really appreciate it. Thanks for the hustle, Mandy saying,

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Speaker 2: is there anything you don't know? I wonder if we

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Speaker 2: talked to him about.

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Speaker 4: Like Childen technos on Wall Street for real, you need

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Speaker 4: to stuff I was funding back in the day for you.

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Speaker 2: Unbelievable man need Bloomberg intelligion.

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Speaker 4: By the way, he's got a cast on, so who

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Speaker 4: knows what's going on?

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Speaker 2: Oh okay, well we'll get that.

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Speaker 2: And these banks just I know, Rush did today, I

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Speaker 2: mean really really really solid numbers. Although Golden sastock is

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Speaker 2: now down by about seven tenths of one percent. Yeah,

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Speaker 2: that's actually kind of surprising for me, But I'm taking

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Speaker 2: a look at say, Bank of America. That stock is

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Speaker 2: also down now by eight tenths of one percent. But

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Speaker 2: on the surface, these numbers looked really great. City stock, yeah,

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Speaker 2: I thought.

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Speaker 4: And the capital markets, yeah, the capital markets. The trading

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Speaker 4: business I thought did very well. But I know the

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Speaker 4: street likes the more predictable feed business in this special.

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Speaker 2: Yea, But they didn't seem to care about that when

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Speaker 2: it came to JP Morgan, Malls Fargo. You know who

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Speaker 2: might know the answer to this, I think I know

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Speaker 2: Alison Williams, Bloomberg Intelligence senior analysts for global banks and

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Speaker 2: asset managers. So for my you know, let I read

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Speaker 2: here there were really good numbers, and then the stocks

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Speaker 2: were down and tell us why they were, And it.

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Speaker 7: Is all about the expectations. Keep in mind that we

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Speaker 7: did get sort of a change in expectations not necessarily

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Speaker 7: baked into the numbers with the reports on Friday, the

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Speaker 7: very strong trading and fees for JP Morgan, which set

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Speaker 7: the tone, and the banks delivered on today net interest income,

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Speaker 7: which you know for JP Morgan basically they had talked

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Speaker 7: it down in September. Then they beat the numbers and

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Speaker 7: raised four Q guidance, but Jamie still talking negatively about

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Speaker 7: next year. And for Bank of America, really they did

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Speaker 7: exactly what they said. Interest income trought, the number came

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Speaker 7: in and they are not going to talk about guidance

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Speaker 7: for not interesting income until you know the next call

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Speaker 7: for next year. So I think it's I think the

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Speaker 7: stock is probably fine, just reacting to things coming in

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Speaker 7: basically as you know, good but versus sort of raised expectations.

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Speaker 4: What's the expectation here for when you talk to your

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Speaker 4: invest about just regulation of banks, where's that headwind? Because

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Speaker 4: I know it has been a headwind off and on

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Speaker 4: for really since a great financial crisis. Where are we

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Speaker 4: now with the basil?

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Speaker 7: Yeah, it is, and it's depends on the election, Okay

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Speaker 7: at this point, right, so if you know, Trump wins,

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Speaker 7: then the role could be derailed sort of indefinitely. So

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Speaker 7: that would be positive for banks if you know democratic

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Speaker 7: when will sort of continue on the same path. So Basel,

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Speaker 7: you know, the rules were very onerous that were introduced

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Speaker 7: last year. Basically we've we've gotten the signal that they're

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Speaker 7: going to be lighter. You know, we sort of had

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Speaker 7: had those expectations set within the last several weeks, but

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Speaker 7: we're still waiting for that proposal.

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Speaker 2: When we just break down the broader sort of investment banking,

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Speaker 2: can we say M and A's back, so like they

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Speaker 2: seem to be talking good about it, that's not a sentence.

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Speaker 2: They seem to be talking like positively about M and A.

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Speaker 7: So it is, and you know so from Goldman Sachs,

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Speaker 7: who's the leader in EM and A. Very good numbers

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Speaker 7: and the fact that their pipeline is upsequentially.

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Speaker 5: Is very good.

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Speaker 7: But fourth quarter does tend to be seasonally strong, so

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Speaker 7: we do have to see is it, you know, is

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Speaker 7: it just the typical seasonality or is there a little

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Speaker 7: bit more momentum.

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Speaker 4: Are all our friends on Wall Street are thinking get

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Speaker 4: paid like really well.

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Speaker 7: This year, I mean it, you know, bonus bonuses do

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Speaker 7: look good for this year, especially for death fees. I

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Speaker 7: mean really that for September.

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Speaker 2: Yeah, well, underwriting right was was really quite strong across

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Speaker 2: the board. What are some of the questions that you

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Speaker 2: have now? And whichever bank you want to focus on,

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Speaker 2: Like what's a big glaring.

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Speaker 7: So you know, the election is is going to be

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Speaker 7: important in terms of what that means for the for

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Speaker 7: the capital rules. I think that's that's sort of the

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Speaker 7: big structural question. You know, markets are strong. Things look

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Speaker 7: that momentum is likely to continue in the fourth quarter.

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Speaker 7: I think maybe the next thing that we're looking at is,

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Speaker 7: you know, can we get signs of improving long growth

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Speaker 7: because that is really you know, interesting income. That recovery

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Speaker 7: is what investors are looking for. Can we get a

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Speaker 7: momentum there? You know, the other side of the lending

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Speaker 7: business is credit, and all signs are are pointing pretty

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Speaker 7: good right there.

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Speaker 4: All right, As a former city banker, I have an

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Speaker 4: interest in that institution. Where is Jane Fraser in the

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Speaker 4: turnaround of that bank? And does the street believe that

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Speaker 4: she can get it to the point where it generate

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Speaker 4: really competitive returns.

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Speaker 7: You know, I think, you know, the street has been

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Speaker 7: burned so many times for getting their hopes up on

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Speaker 7: City Group over the years, and so City Group is

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Speaker 7: delivering on what they want to do. We saw that

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Speaker 7: in the in the numbers this quarter. They like the

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Speaker 7: other banks, are getting a lot of upside from markets

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Speaker 7: by keeping the costs stable. And so for them it's

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Speaker 7: really you know, these regulatory headwinds which are so hard

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Speaker 7: to predict, and you know, I think the best thing

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Speaker 7: that could have happened to City is this you know,

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Speaker 7: regulatory scrutiny that finally is making them, you know, make

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Speaker 7: a lot of the changes that probably should have been

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Speaker 7: done a long time ago, you know, getting the risk

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Speaker 7: systems together, improving their operating efficiency, which at the end

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Speaker 7: of the day will will be helpful in the long term.

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Speaker 2: On Friday, we talked about a well spargo in particular,

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Speaker 2: and you were saying that the big question you have

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Speaker 2: is when the loans pick up, whend a loans pick up,

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Speaker 2: and what do we learn from say City and Bank

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Speaker 2: of America on that.

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Speaker 7: So it's hard to say, you know, I think that

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Speaker 7: it's it's going forward, right. So the FED cuts happened

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Speaker 7: in the last couple of the weeks of the quarter,

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Speaker 7: so we're not necessarily going to see the impact of

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Speaker 7: that right away. Maybe the Senior Loan Officer survey will

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Speaker 7: give us a little bit of insight when that comes

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Speaker 7: out in a couple of weeks.

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Speaker 4: All Right, we got more inans Stanley tomorrow, I believe.

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Speaker 7: Organ standing tomorrow. They have you know, really raised the

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Speaker 7: bar for them all these all these banks, especially Goldman,

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Speaker 7: strong numbers today, so we'll see if they can deliver

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Speaker 7: on that. They tend to be more skew towards equities trading.

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Speaker 7: That's been the source of strength, So we'll see.

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Speaker 4: And are they going to be like past cycles they

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Speaker 4: being all the big banks like next week all issuing that.

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Speaker 7: Yeah, that tends to be. That tends to be the focus.

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Speaker 7: And one more thing I'll add about them. You know,

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Speaker 7: while the institutional there's a lot of positive momentum, I

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Speaker 7: think it will be all about the wealth flows for them,

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Speaker 7: So they will need to you know, if they get

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Speaker 7: institutional right and ride this way with everyone else, that's great,

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Speaker 7: but they do need to deliver and show that that

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Speaker 7: wealth business is continuing together at which they always which

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Speaker 7: you know, the markets should be very helpful on that

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Speaker 7: front as well.

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Speaker 2: Right, because it's expanding pie that they're all competing for now, Right,

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Speaker 2: it's not like tiny pie that isn't growing at the

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Speaker 2: end of the day. One more question about Goldman and

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Speaker 2: this is a little personal for me because I have

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Speaker 2: a Marcus account for their consumer Did they what they say?

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Speaker 2: Did they say that they're lowering rates a lot and

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Speaker 2: they of.

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Speaker 4: Steel inflows were noted during the four point one Now, yeah,

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Speaker 4: it's just another message.

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Speaker 2: I mean, come on, guys, like they just lowered ones. Anyway,

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Speaker 2: How are they doing on offloading all the risk and

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Speaker 2: stuff for their consumer business? I know that they already

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Speaker 2: offloaded a lot to GM. They took a write down

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Speaker 2: for it or charge for it. Where are they in

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Speaker 2: this process?

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Speaker 7: Yeah, so one step closer with the sale of the

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Speaker 7: of the GM portfolio. They are hanging on to Marcus.

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Speaker 7: But you know, FED lowers rates. That positive for the

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Speaker 7: banks means that there's less competition, less competitive pricing pressure,

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Speaker 7: but for the consumer, you know, not as favorable.

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Speaker 2: You know what I'm gonna do, I'm gonna find something

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Speaker 2: that is competitive. I'm gonna go to those munis like

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Speaker 2: Plasman saying like, see later we're gets some take my

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Speaker 2: money and run free.

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Speaker 8: Yeah, but you can't pull your money out at a

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Speaker 8: moment's notice, Marcus.

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Speaker 2: No, I know, I know, but I'll know, Like in general,

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Speaker 2: I should have known when John Tucker going to Marcus

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Speaker 2: account that that was the top.

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Speaker 6: Yes, you're playing data.

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Speaker 2: Yeah, totally fault. All right, Alison, thanks a lot. We

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Speaker 2: really appreciate. Alison Williams, Bloomberg Intelligence, a senior Global banks

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Speaker 2: and Asset Manager analyst.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Affo car playing Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 4: Let's not bowing. They are back in the news again,

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Speaker 4: and when we talk news. George Ferguson again. George Ferguson,

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Speaker 4: senior Aerospace defense analyst for Bloomberg Intelligence. George, I'd like

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Speaker 4: this move. Boeing puts up a twenty five billion dollar

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Speaker 4: shelf offering gives us some flexibility to shore up it's

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Speaker 4: balance sheet. I know we have to talk about dilution,

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Speaker 4: but tell us what Boeing is doing here with this

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Speaker 4: twenty five billion dollar shelf.

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Speaker 9: Yeah, so I think Kelly Orpberg went out and brought

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Speaker 9: up the big guns, right so, I think he wants

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Speaker 9: to shore up the balance sheet. I think so he

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Speaker 9: can show the union that Boeing has plenty of cash

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Speaker 9: to make it through this strike. I think that's part

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Speaker 9: of a strategy, you know, to get the union back

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Speaker 9: to the table and get them to rethink probably some

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Speaker 9: of their demands.

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Speaker 5: That's that's what I see here.

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Speaker 4: And what is the sense of their balance sheet? Just

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Speaker 4: give us sense, George. I know you've been calling it

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Speaker 4: out and highlighting it for us for quarters. Now talk

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Speaker 4: to us about kind of the cash on their balance sheet,

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Speaker 4: the cash burn. How long can they go before they

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Speaker 4: really do need to think about fresh capital.

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Speaker 9: Yeah, so I think they need capital now, right So,

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Speaker 9: I think it is part of why Kelly or Berg

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Speaker 9: and Boeing and going going to the market, because you know,

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Speaker 9: they just pre announced earnings for the third quarter. Cash

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Speaker 9: balances were right around ten billion. That's about what they've

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Speaker 9: told us they need to operate the kind company. So

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Speaker 9: I think that really put their back up against the wall.

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Speaker 9: As you know, they're managing a dance with the creditors

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Speaker 9: as well, because you know, they're really up against the

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Speaker 9: edge on their investment grade credit rating.

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Speaker 5: So I think it really precluded going to the.

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Speaker 9: Debt markets here, and so you know, I guess the

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Speaker 9: question is too now is it's a stain power right now?

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Speaker 9: Long can Boeing manage with the ten billion? They couldn't

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Speaker 9: manage very long strike, And so to get better negotiating

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Speaker 9: leverage with the unions, I think if you put another

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Speaker 9: ten fifteen billion dollars in the balance sheet here, I

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Speaker 9: think it gives you at least a quarter, probably multiple

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Speaker 9: quarters of potential cash burn. So you can tell the union, look,

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Speaker 9: I'm gonna I'm gonna wait this out into you, you know,

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Speaker 9: bring me some demands that I can make.

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Speaker 2: Just hold that thought for one second, because I want

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Speaker 2: to point out ASML, which is a company that makes

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Speaker 2: lithography machines so you can make AI is now halted

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Speaker 2: after a steep drop and earnings that did not look great.

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Speaker 2: Third quarter net sales did come in higher than estimated,

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Speaker 2: but their third quarter bookings fell below about two point

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Speaker 2: sixty three billion euros, substantially below the estimate. They're also

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Speaker 2: taking a look at twenty twenty five net sales, also

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Speaker 2: below estimates. This is quite interesting read through for AI Again,

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Speaker 2: they make the lithography machines that help make AI chips,

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Speaker 2: and that stock is now halted after falling steeply after

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Speaker 2: those numbers came out at shocking shocking. Right, let's take

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Speaker 2: a look at Videota in video down.

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Speaker 4: Four point four percent just on that news, just in

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Speaker 4: the last couple of minutes.

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Speaker 2: Okay, so not only just from the news over the

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Speaker 2: over the night, George Foy, let you go, how much

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Speaker 2: time does this by Boeing?

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Speaker 5: I think ad buys them at least a quarter, if

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Speaker 5: not more.

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Speaker 9: I mean, look, I think if you're negotiating with the union,

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Speaker 9: I'd be really surprised if the average union member is

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Speaker 9: ready to go a quarter without a job and so,

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Speaker 9: you know, without income.

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Speaker 5: I shouldn't say without a job. They have a job

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Speaker 5: at Boeing, I guess, but without an income. So I

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Speaker 5: think it gives them plenty of staypowner. I think that's

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Speaker 5: what Boeing has.

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Speaker 9: To do here, right, If they're going to get the

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Speaker 9: union to come back to the table and negotiating good faith.

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Speaker 5: They have to be able to say, look, We're not

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Speaker 5: over a barrel. We can wait you out.

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Speaker 10: Now.

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Speaker 9: Let's talk about some of the issues, especially I think

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Speaker 9: the pension plan. Right, the emails talked about a return

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Speaker 9: to pension plan. I don't think any major corporation is

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Speaker 9: given back on a pension plan since they've retired them

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Speaker 9: over the last number.

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Speaker 5: Of decades, so I think they have ready to go

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Speaker 5: the distance to not have that happen.

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Speaker 4: All right, George, thanks so much for joining us. George Ferguson,

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Speaker 4: he's senior Aerospace, Defense and Airlines sentals for Bloomberg Intelligence.

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Speaker 4: Just kind of talking about the Boeing news.

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Speaker 1: Here, you're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 1: live weekdays at ten am Eastern on applecard.

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Speaker 10: Play and Android Auto with the Bloomberg Business ap.

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Speaker 1: You can also listen live on Amazon Alexa from our

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Speaker 1: flagship New York station, Just Say Alexa, playing Bloomberg eleven thirty.

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Speaker 2: Alex Steel here alongside Paul Sweened. This is Boomberg Intelligence Radio.

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Speaker 2: We bring you all the tap news in business, economics

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Speaker 2: and finance through a lens of our Bloomberg Intelligence folks,

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Speaker 2: and we are broadcasting to you live from our inactive

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Speaker 2: Booker Studio right here in Midtown Manhattan. As John Tucker

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Speaker 2: was just talking about, you're looking a crewed off by

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Speaker 2: over four percent, and the only headline that you could

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Speaker 2: really find was perhaps Israel will not be targeting Iranian

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Speaker 2: oil infrastructure, so raises the question are we looking at

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Speaker 2: geopolitical risk being priced out? Also, the IA revised slightly

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Speaker 2: down a demand forecast for this year and next, mostly

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Speaker 2: a China story, but nonetheless. Dan Pickering is Chief investment

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Speaker 2: Officer Pickering Energy Partners. He joins us from Houston, Texas.

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Speaker 2: He's honestly one of the best in the industry. He's

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Speaker 2: been around a long time, He's kind of seen it

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Speaker 2: all and he has a great insight into what companies

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Speaker 2: will do as well. What's your take on crewed off

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Speaker 2: by three bucks?

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Speaker 11: Yeah, Alex, good morning.

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Speaker 12: It's definitely this news that we potentially are not going

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Speaker 12: to see any escalation of violence in the Middle East.

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Speaker 12: If Israel doesn't hit the Iranian oil facilities, then we

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Speaker 12: have kind of continued status quo, which is oil has

439
00:22:12,280 --> 00:22:14,320
Speaker 12: been flowing out of the Middle East with no problem,

440
00:22:14,480 --> 00:22:18,280
Speaker 12: and so we're taking the air out of the risk

441
00:22:18,520 --> 00:22:22,680
Speaker 12: of supply disruption and getting back to a more fundamental market,

442
00:22:22,800 --> 00:22:25,359
Speaker 12: which has been pretty soft over the last couple of months.

443
00:22:25,840 --> 00:22:27,800
Speaker 2: What's the fair price you think for oil?

444
00:22:29,240 --> 00:22:32,320
Speaker 12: Yeah, fair price for oil, I'm an eighty dollars through

445
00:22:32,400 --> 00:22:37,240
Speaker 12: twenty twenty seven, that's my forecast, but I think twenty

446
00:22:37,320 --> 00:22:39,879
Speaker 12: twenty five is going to be tougher. Fair price for

447
00:22:40,320 --> 00:22:44,080
Speaker 12: oil in twenty twenty five is probably seventy give or take,

448
00:22:44,520 --> 00:22:48,200
Speaker 12: maybe a five dollars band around that. If we have

449
00:22:49,119 --> 00:22:52,080
Speaker 12: challenges in the Middle East, all bets are off. If

450
00:22:52,160 --> 00:22:56,639
Speaker 12: it's supply and demand. My expectation kind of seventy to

451
00:22:56,920 --> 00:22:59,600
Speaker 12: seventy to eighty sixty five to seventy five something like that.

452
00:23:00,280 --> 00:23:02,560
Speaker 4: Dan, I always joke or often joke that you know

453
00:23:02,640 --> 00:23:03,879
Speaker 4: my next lefe I want to come back as an

454
00:23:04,000 --> 00:23:06,080
Speaker 4: energy m and a banker. Every Monday we come in.

455
00:23:06,119 --> 00:23:08,560
Speaker 4: It seems to be something on the Bloomberg terminal talk

456
00:23:08,560 --> 00:23:11,960
Speaker 4: to us about consolidation in the energy space. Where are

457
00:23:12,040 --> 00:23:14,440
Speaker 4: we what are you likely to see over the next

458
00:23:14,480 --> 00:23:14,880
Speaker 4: year or two.

459
00:23:16,680 --> 00:23:16,840
Speaker 5: Yeah.

460
00:23:17,000 --> 00:23:18,960
Speaker 12: So it has been a very active M and A

461
00:23:19,119 --> 00:23:24,840
Speaker 12: market with companies focused primarily on four things. They're adding inventory,

462
00:23:25,240 --> 00:23:28,600
Speaker 12: they're going for size, they're looking for scale, and it's

463
00:23:28,640 --> 00:23:32,359
Speaker 12: happening at pretty good values. And so because the market

464
00:23:32,400 --> 00:23:35,040
Speaker 12: has not been that interested in energy, right, it's an

465
00:23:35,119 --> 00:23:37,560
Speaker 12: underperformer last year, it's an underperformer this year.

466
00:23:38,160 --> 00:23:40,120
Speaker 11: Because these stocks are pretty cheap.

467
00:23:40,160 --> 00:23:43,280
Speaker 12: The companies are buying each other, and as they're doing that,

468
00:23:43,760 --> 00:23:47,000
Speaker 12: they're replenishing the inventory that they that they drilled up

469
00:23:47,080 --> 00:23:50,240
Speaker 12: during COVID. They're getting bigger, which is important. You know,

470
00:23:50,720 --> 00:23:53,480
Speaker 12: bigger companies are getting more attention from the market, they're

471
00:23:53,520 --> 00:23:56,040
Speaker 12: getting more profitable, and they're doing it at three or

472
00:23:56,040 --> 00:23:57,200
Speaker 12: four times cash flow.

473
00:23:57,600 --> 00:23:59,920
Speaker 11: All of those attractive things. It's going to keep going.

474
00:24:00,560 --> 00:24:02,919
Speaker 2: Yeah, Dan, that's such a good point because, first of all,

475
00:24:02,960 --> 00:24:04,440
Speaker 2: I want to point out, Paul, you wouldn't want to

476
00:24:04,480 --> 00:24:06,400
Speaker 2: admit an m and a banker like a few years ago,

477
00:24:06,640 --> 00:24:09,040
Speaker 2: there was like a whole that and nothing happening. But

478
00:24:10,000 --> 00:24:11,960
Speaker 2: the idea is, if you're an investor or, you're a

479
00:24:12,040 --> 00:24:14,600
Speaker 2: pension fund or something like, you can't own a huge

480
00:24:14,640 --> 00:24:16,600
Speaker 2: bunch of oil stocks. Like your investors are not going

481
00:24:16,680 --> 00:24:18,480
Speaker 2: to like that. So it's like you have to gussie

482
00:24:18,520 --> 00:24:21,080
Speaker 2: yourself up to be the top one or two oil

483
00:24:21,200 --> 00:24:25,000
Speaker 2: players out there. So to that point, who needs to

484
00:24:25,040 --> 00:24:27,000
Speaker 2: still buy stuff? And who needs to be sold.

485
00:24:28,760 --> 00:24:32,080
Speaker 12: Yeah, I think if you look at all levels, companies

486
00:24:32,119 --> 00:24:35,160
Speaker 12: are trying to get bigger, whether it's Exon buying Pioneer,

487
00:24:35,760 --> 00:24:38,160
Speaker 12: or you move down into as much smaller market caps.

488
00:24:38,280 --> 00:24:41,960
Speaker 12: So I think that we'll continue to see probably fifty

489
00:24:42,080 --> 00:24:44,800
Speaker 12: billion as a give or take the point.

490
00:24:44,640 --> 00:24:46,720
Speaker 11: Of relevance for the broad markets.

491
00:24:47,160 --> 00:24:50,480
Speaker 12: And so my expectation is folks that are below that

492
00:24:50,680 --> 00:24:52,840
Speaker 12: are going to keep buying trying to get to that size,

493
00:24:53,160 --> 00:24:55,480
Speaker 12: and that folks that are sort of smaller than Exon

494
00:24:55,520 --> 00:24:57,959
Speaker 12: are going to going to keep merging. So it's kind

495
00:24:58,000 --> 00:25:02,480
Speaker 12: of across the board right now, Alex. And again, these

496
00:25:02,520 --> 00:25:05,480
Speaker 12: companies will keep buying each other until the market decides

497
00:25:06,320 --> 00:25:08,360
Speaker 12: that they're going to buy the stocks.

498
00:25:09,000 --> 00:25:11,800
Speaker 4: And Dan, you mentioned that the energy stocks have been underperformers.

499
00:25:12,680 --> 00:25:15,280
Speaker 4: What is the bowl case out there for energy? Is

500
00:25:15,320 --> 00:25:16,879
Speaker 4: it simply maybe just valuation here?

501
00:25:18,280 --> 00:25:21,760
Speaker 12: Yeah, the bull case is strong yields, very good free

502
00:25:21,880 --> 00:25:25,200
Speaker 12: cash flow. The companies have turned into real businesses since

503
00:25:25,280 --> 00:25:27,439
Speaker 12: the shale bust, and so they're throwing off a lot

504
00:25:27,520 --> 00:25:29,919
Speaker 12: of cash. We're turning a lot of it to shareholders.

505
00:25:30,240 --> 00:25:32,960
Speaker 12: The other piece is it is an inflation hedge. Nobody's

506
00:25:33,000 --> 00:25:36,600
Speaker 12: thinking about inflation right now unless it comes back. And

507
00:25:37,160 --> 00:25:39,879
Speaker 12: then you have this sort of geopolitical element, which is,

508
00:25:40,200 --> 00:25:43,480
Speaker 12: if things do spiral out of control, you're going to

509
00:25:43,520 --> 00:25:45,359
Speaker 12: want to own some energy stocks, So there's a bit

510
00:25:45,400 --> 00:25:47,280
Speaker 12: of a hedge, and then there's value.

511
00:25:47,359 --> 00:25:49,959
Speaker 11: Those are the two arguments for the energy sector right now.

512
00:25:50,680 --> 00:25:55,400
Speaker 2: Do you think that oil producers will keep producing more oil?

513
00:25:55,520 --> 00:25:58,760
Speaker 2: Let me define that question a little bit. Have they

514
00:25:58,840 --> 00:26:00,880
Speaker 2: run out of the good stuff? And that's another reason

515
00:26:00,880 --> 00:26:02,360
Speaker 2: why we're seeing the m and and I don't want

516
00:26:02,359 --> 00:26:05,399
Speaker 2: to underestimate shale players because we know that innovation and

517
00:26:05,440 --> 00:26:07,840
Speaker 2: technology is huge, but they have a lot of other

518
00:26:07,920 --> 00:26:10,520
Speaker 2: stuff they need to spend on, particularly in the energy transition.

519
00:26:10,920 --> 00:26:15,160
Speaker 2: So can we count on technology to make the rock good?

520
00:26:18,359 --> 00:26:21,159
Speaker 12: The answer is yes, on the margin. There's another lag

521
00:26:21,280 --> 00:26:24,160
Speaker 12: up in efficiencies that's been happening this year. I think

522
00:26:24,240 --> 00:26:29,000
Speaker 12: the reality, though, is that US shale is maturing, and

523
00:26:29,359 --> 00:26:32,480
Speaker 12: what that translates to is likely sort of an upward

524
00:26:32,600 --> 00:26:37,200
Speaker 12: push on cost structures and upward push on commodity price. Remember,

525
00:26:37,760 --> 00:26:40,600
Speaker 12: you know shales now over half of much more than

526
00:26:40,640 --> 00:26:44,600
Speaker 12: half of US production. The Permian alone is six million

527
00:26:44,640 --> 00:26:47,240
Speaker 12: barrels a day. That is a meaningful player in the

528
00:26:47,280 --> 00:26:50,679
Speaker 12: global market, and so as those assets mature, there's an

529
00:26:50,800 --> 00:26:54,640
Speaker 12: upward bias to price. Never count out ingenuity and efficiencies.

530
00:26:55,200 --> 00:26:59,960
Speaker 12: But as this as this industry matures, we're going to

531
00:27:00,080 --> 00:27:02,800
Speaker 12: to see a slow upward push.

532
00:27:03,040 --> 00:27:04,040
Speaker 11: On cost and price.

533
00:27:05,480 --> 00:27:09,040
Speaker 2: And for let you go, Dan, how do you think

534
00:27:09,320 --> 00:27:11,560
Speaker 2: the election is going to affect Big oil at all?

535
00:27:11,680 --> 00:27:13,720
Speaker 2: I know that the talk is going to be like,

536
00:27:13,840 --> 00:27:15,720
Speaker 2: we want oil friendly, blah blah blah, But in reality,

537
00:27:15,760 --> 00:27:18,120
Speaker 2: they're not going to want build a drill, baby drill

538
00:27:18,160 --> 00:27:19,280
Speaker 2: because they don't want to do that. They're going to

539
00:27:19,320 --> 00:27:22,040
Speaker 2: tank the oil price materially. Do you think the election

540
00:27:22,200 --> 00:27:23,480
Speaker 2: matters for oil companies?

541
00:27:26,400 --> 00:27:30,040
Speaker 12: Snipple answers know, Alex. I think that these companies it

542
00:27:30,119 --> 00:27:32,240
Speaker 12: may be a little bit easier or a little bit

543
00:27:32,359 --> 00:27:36,440
Speaker 12: harder to interact and run the business depending on who

544
00:27:36,480 --> 00:27:37,120
Speaker 12: gets elected.

545
00:27:37,600 --> 00:27:39,960
Speaker 11: The reality is that, you.

546
00:27:40,000 --> 00:27:43,480
Speaker 12: Know, politicians have proved that they want low gas prices.

547
00:27:43,520 --> 00:27:46,920
Speaker 12: We're not punishing bad actors globally, We're letting them produce

548
00:27:46,960 --> 00:27:47,359
Speaker 12: their oil.

549
00:27:47,480 --> 00:27:49,920
Speaker 11: We want US oil. We're not going to punish this

550
00:27:50,080 --> 00:27:50,960
Speaker 11: industry too much.

551
00:27:51,359 --> 00:27:53,879
Speaker 12: And the industry itself is not going to step up

552
00:27:54,200 --> 00:27:56,879
Speaker 12: and get super active unless there's a price signal. So

553
00:27:57,440 --> 00:28:00,960
Speaker 12: the election it matters for a sentiment perception. I don't

554
00:28:01,000 --> 00:28:03,240
Speaker 12: think it matters a ton for reality.

555
00:28:03,560 --> 00:28:06,600
Speaker 4: All right, that's great stuff. Dan appreciate it as always.

556
00:28:07,000 --> 00:28:11,359
Speaker 4: Dan Pickering, Chief investment Officer, Pickering Energy Partners. I've known

557
00:28:11,440 --> 00:28:14,360
Speaker 4: Dan as a voice on energy for thirty years. It's yeah,

558
00:28:14,560 --> 00:28:16,680
Speaker 4: And Buddy Man used to work with him. David Bradshaw,

559
00:28:16,760 --> 00:28:19,199
Speaker 4: my energy investment banker. He's my go to guy all

560
00:28:19,280 --> 00:28:19,639
Speaker 4: things there.

561
00:28:19,760 --> 00:28:19,960
Speaker 2: Nice.

562
00:28:20,040 --> 00:28:22,080
Speaker 4: Well, let's get him on too, we will, right will.

563
00:28:23,640 --> 00:28:27,480
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

564
00:28:27,600 --> 00:28:30,520
Speaker 1: weekdays at ten am Eastern on applecar.

565
00:28:30,160 --> 00:28:32,880
Speaker 10: Play and Android Auto with the Bloomberg Business app.

566
00:28:33,040 --> 00:28:35,840
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567
00:28:35,880 --> 00:28:40,240
Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

568
00:28:41,840 --> 00:28:44,600
Speaker 2: So the FED isn't a rate cutting cycle at this point.

569
00:28:44,720 --> 00:28:47,040
Speaker 2: How much they cut TBD, but the idea is that

570
00:28:47,080 --> 00:28:50,280
Speaker 2: they're in a global central bank easing with the exception

571
00:28:50,440 --> 00:28:53,040
Speaker 2: of Japan. Does it make certain aspects of the market

572
00:28:53,640 --> 00:28:56,520
Speaker 2: a little bit easier to stomach, like commercial real estate?

573
00:28:56,600 --> 00:28:58,680
Speaker 2: So I want to check in on that with David Aurback,

574
00:28:58,920 --> 00:29:01,680
Speaker 2: a chief Investment Office sir at Hoya Capital. He joins

575
00:29:01,760 --> 00:29:06,480
Speaker 2: us from Dallas, Texas. How have reads done? If we're

576
00:29:06,520 --> 00:29:09,479
Speaker 2: taking a look since the FED first cut and then

577
00:29:09,520 --> 00:29:11,920
Speaker 2: the trajectory now for this year and next, how are

578
00:29:11,960 --> 00:29:14,440
Speaker 2: reeds performing well?

579
00:29:14,880 --> 00:29:17,760
Speaker 8: In the lead up to the interest rate cut? Reads

580
00:29:17,800 --> 00:29:21,320
Speaker 8: performed very well post FED rate cut. The reds have

581
00:29:21,480 --> 00:29:23,480
Speaker 8: not done so well. They've given back some of that

582
00:29:23,680 --> 00:29:27,160
Speaker 8: return because the tenure treasury is back over four percent

583
00:29:27,240 --> 00:29:28,720
Speaker 8: for the first time since August.

584
00:29:29,800 --> 00:29:31,800
Speaker 6: With the less.

585
00:29:31,720 --> 00:29:35,760
Speaker 8: Likelihood of more significant rate cuts on the calendar this year,

586
00:29:36,520 --> 00:29:40,520
Speaker 8: I wouldn't expect the reads to respond accordingly. Obviously, if

587
00:29:40,520 --> 00:29:43,280
Speaker 8: we can get the ten year back below four percent again,

588
00:29:43,640 --> 00:29:46,320
Speaker 8: that should bode well. And the reason being the cost

589
00:29:46,400 --> 00:29:48,640
Speaker 8: of borrow for the reads is they go to refinance

590
00:29:48,960 --> 00:29:52,320
Speaker 8: becomes more attractive. Reads would obviously be able to borrow debt,

591
00:29:52,480 --> 00:29:54,560
Speaker 8: would like to borrow debt with a four handle or

592
00:29:54,600 --> 00:29:56,280
Speaker 8: a five handle let alone.

593
00:29:56,280 --> 00:29:58,120
Speaker 6: They don't want to borrow at a six handle.

594
00:29:58,280 --> 00:30:00,840
Speaker 8: So any movement at the that is able to go

595
00:30:01,040 --> 00:30:04,360
Speaker 8: lower on the interest rates only provide some tailwinds for

596
00:30:04,440 --> 00:30:05,320
Speaker 8: the reads as a whole.

597
00:30:06,040 --> 00:30:07,720
Speaker 4: David, what was the last fish concert you went to?

598
00:30:10,120 --> 00:30:11,920
Speaker 6: Good to see you, Paul, Thank you so much.

599
00:30:12,320 --> 00:30:15,880
Speaker 8: I was in Colorado at Dix in Labor Day and

600
00:30:16,080 --> 00:30:18,680
Speaker 8: right now my next schedule concert will either be MSG

601
00:30:18,840 --> 00:30:21,200
Speaker 8: in New Year's run or Mexico in February.

602
00:30:21,280 --> 00:30:22,280
Speaker 2: All right, how did you know that?

603
00:30:22,800 --> 00:30:24,360
Speaker 4: It's in the notes? You got to do your work here.

604
00:30:24,520 --> 00:30:26,719
Speaker 4: Put and if you come to Manison Square Garden. If

605
00:30:26,720 --> 00:30:28,000
Speaker 4: you come to the garden, you can see Matt Miller.

606
00:30:28,080 --> 00:30:30,479
Speaker 4: He's there with his all his brothers and McKee.

607
00:30:31,640 --> 00:30:32,560
Speaker 2: Oh no, you're talking of fish.

608
00:30:32,600 --> 00:30:34,479
Speaker 4: I'm kind of the same same thing.

609
00:30:34,600 --> 00:30:35,600
Speaker 2: I mean kind of yeah.

610
00:30:35,640 --> 00:30:36,720
Speaker 6: I thought it's kind of.

611
00:30:37,000 --> 00:30:39,160
Speaker 4: You know, kind of ye did so, all right, David?

612
00:30:39,800 --> 00:30:42,200
Speaker 4: Did the banks? Are they still lending to real estate?

613
00:30:42,280 --> 00:30:42,520
Speaker 1: David?

614
00:30:42,560 --> 00:30:44,120
Speaker 4: If I've got a project, can I go to my

615
00:30:44,200 --> 00:30:45,960
Speaker 4: local bank? And are they going to make me alone?

616
00:30:47,400 --> 00:30:49,760
Speaker 8: Well, for a lot of the reads themselves, remember they're

617
00:30:49,800 --> 00:30:51,520
Speaker 8: able to go out and borrow their own debt. They

618
00:30:51,560 --> 00:30:55,080
Speaker 8: have strong balance sheets obviously on a one off off

619
00:30:55,200 --> 00:30:55,840
Speaker 8: type basis.

620
00:30:55,880 --> 00:30:58,080
Speaker 6: For the individual investor, the answer is going to be

621
00:30:58,280 --> 00:30:58,960
Speaker 6: it depends.

622
00:30:59,400 --> 00:30:59,560
Speaker 10: You know.

623
00:30:59,640 --> 00:31:01,240
Speaker 6: I think with some of the big big.

624
00:31:01,120 --> 00:31:03,840
Speaker 8: Banks, the JP Mortgage, the Bank of Americas, you know,

625
00:31:03,920 --> 00:31:06,120
Speaker 8: they might be more likely to lend depending if the

626
00:31:06,640 --> 00:31:11,960
Speaker 8: borrower qualifies. Obviously on the regional bank level, that becomes

627
00:31:12,000 --> 00:31:14,680
Speaker 8: again on a case by case basis. But the lending

628
00:31:14,840 --> 00:31:17,840
Speaker 8: window is open and the past month, two months alone,

629
00:31:18,240 --> 00:31:20,880
Speaker 8: Reads have been able to borrow you know, takedown. Frankly,

630
00:31:21,040 --> 00:31:23,720
Speaker 8: billions of dollars of new debt. I want to say,

631
00:31:23,760 --> 00:31:26,200
Speaker 8: it's close to like between five and ten billion dollars

632
00:31:26,560 --> 00:31:29,080
Speaker 8: have been raised by a handful of rates, and so

633
00:31:29,960 --> 00:31:30,920
Speaker 8: the money is out there.

634
00:31:31,800 --> 00:31:33,360
Speaker 2: What about residential reads.

635
00:31:34,760 --> 00:31:37,480
Speaker 8: Great place to be because of the housing shortage and

636
00:31:37,600 --> 00:31:40,640
Speaker 8: lack of affordability, It's one of the core focuses of

637
00:31:40,760 --> 00:31:44,520
Speaker 8: our JOYA Housing Index, and so as a result, when

638
00:31:44,560 --> 00:31:47,720
Speaker 8: you think about the lack of affordability, it's the residential reads,

639
00:31:47,760 --> 00:31:50,920
Speaker 8: the apartments, the single family rental guys that benefit. And

640
00:31:51,040 --> 00:31:53,240
Speaker 8: also when you think about some of the other companies

641
00:31:53,280 --> 00:31:55,360
Speaker 8: that are out there, you know, because a person can't

642
00:31:55,360 --> 00:31:58,040
Speaker 8: go out necessarily and buy affordable home, they're putting more

643
00:31:58,680 --> 00:32:01,000
Speaker 8: you know, work into their exist stay home. And so

644
00:32:01,120 --> 00:32:03,400
Speaker 8: again one of the unique funds of stories of the

645
00:32:03,440 --> 00:32:07,080
Speaker 8: Hawaiia Housing Index is because we also include your home depots,

646
00:32:07,120 --> 00:32:11,080
Speaker 8: your lows, your restoration hardwares, because again that affordable product

647
00:32:11,160 --> 00:32:12,800
Speaker 8: isn't out there for the average consumer.

648
00:32:13,280 --> 00:32:15,480
Speaker 4: Can you explain to me how we got to this point, David,

649
00:32:15,480 --> 00:32:17,840
Speaker 4: where they're really we always talk about a housing shortage.

650
00:32:17,960 --> 00:32:19,520
Speaker 4: How do we get there? How hard is it to

651
00:32:19,560 --> 00:32:21,120
Speaker 4: build a multi family apartment?

652
00:32:22,440 --> 00:32:27,200
Speaker 8: Well, the obviously higher rates of impacted construction costs, So

653
00:32:27,280 --> 00:32:29,320
Speaker 8: that's why you're not seeing a lot of new apartment

654
00:32:29,400 --> 00:32:33,680
Speaker 8: projects underway. I also do blame the COVID run up

655
00:32:34,120 --> 00:32:36,960
Speaker 8: taking away some of that housing inventory, since we saw

656
00:32:37,080 --> 00:32:40,160
Speaker 8: you know, flippers and people taking down second homes, guys

657
00:32:40,200 --> 00:32:42,280
Speaker 8: wanting to get out of apartments and you know, taking

658
00:32:42,360 --> 00:32:45,120
Speaker 8: the first home possible. But you know, when you look

659
00:32:45,120 --> 00:32:47,160
Speaker 8: at some of the hottest markets in the country as

660
00:32:47,200 --> 00:32:50,240
Speaker 8: far as rentals, it's in your neck of the woods

661
00:32:50,280 --> 00:32:52,880
Speaker 8: in New York City, it's in Chicago. I saw a

662
00:32:52,960 --> 00:32:55,840
Speaker 8: story that Detroit is one of the hottest rental markets

663
00:32:55,920 --> 00:32:59,640
Speaker 8: right now. And so the housing issue is a chose

664
00:32:59,720 --> 00:33:02,600
Speaker 8: to co nationwide issue. You know, you could point to

665
00:33:02,720 --> 00:33:06,880
Speaker 8: pockets of areas that have more problems versus others because

666
00:33:06,880 --> 00:33:11,200
Speaker 8: again of that affordability angle. But think about a rental project.

667
00:33:11,560 --> 00:33:13,520
Speaker 8: You know, I can rent an apartment here in Dallas

668
00:33:13,600 --> 00:33:15,880
Speaker 8: for a couple of thousand dollars, and that same apartment's

669
00:33:15,880 --> 00:33:18,120
Speaker 8: going to cost me forty five hundred dollars or more

670
00:33:18,600 --> 00:33:21,720
Speaker 8: in Los Angeles or San Francisco. So again the number

671
00:33:21,760 --> 00:33:25,360
Speaker 8: one rule of housing or real estate location, location location.

672
00:33:26,000 --> 00:33:28,200
Speaker 2: When you take a look at the different reads, is

673
00:33:28,240 --> 00:33:30,400
Speaker 2: it going to be in large cap reads, mid cap

674
00:33:30,480 --> 00:33:32,520
Speaker 2: small caps? Like how do you guys look at it?

675
00:33:33,560 --> 00:33:39,040
Speaker 8: We skew our high dividendy Old Index RIET towards small

676
00:33:39,080 --> 00:33:42,200
Speaker 8: and mid cap reads. The reason being reads as a whole,

677
00:33:42,640 --> 00:33:44,520
Speaker 8: they only make up about two percent of the S

678
00:33:44,600 --> 00:33:47,400
Speaker 8: and P five hundred or about seven percent of the

679
00:33:47,560 --> 00:33:50,680
Speaker 8: S and P MidCap four small cap six hundred, So

680
00:33:50,840 --> 00:33:53,520
Speaker 8: we see a lot of opportunities in hidden gems in

681
00:33:53,600 --> 00:33:56,120
Speaker 8: the world of small and mid cap reads that's going

682
00:33:56,160 --> 00:33:59,640
Speaker 8: to kind of provide that, you know, i'd say alpha,

683
00:33:59,760 --> 00:34:03,200
Speaker 8: that performance that you're looking for. We focus on dividends,

684
00:34:03,240 --> 00:34:06,200
Speaker 8: and again it's really those smaller MidCap reates that offer

685
00:34:06,280 --> 00:34:10,560
Speaker 8: the higher dividend yields are also our high dividend field fund.

686
00:34:10,840 --> 00:34:12,759
Speaker 8: I believe this to currently the only ret in real

687
00:34:12,880 --> 00:34:15,720
Speaker 8: estate product that's on the market that offers both common

688
00:34:15,920 --> 00:34:19,120
Speaker 8: and preferred stocks in one rapper. So with us taking

689
00:34:19,200 --> 00:34:22,600
Speaker 8: a ten percent allocation or one third of the names

690
00:34:23,040 --> 00:34:27,320
Speaker 8: of RIET into repreferreds, if you add up small and

691
00:34:27,400 --> 00:34:31,560
Speaker 8: MidCap rates, mortgage red exposure plus our repreferred exposure, we're

692
00:34:31,600 --> 00:34:35,200
Speaker 8: paying a monthly dividend that's annualized just under nine percent.

693
00:34:35,719 --> 00:34:38,160
Speaker 8: And if you just bought a large market cap weighted

694
00:34:38,239 --> 00:34:41,640
Speaker 8: ETF like a VNQ, your yield is probably closer to

695
00:34:41,719 --> 00:34:44,600
Speaker 8: three point eight percent, because again it's really focusing on

696
00:34:44,680 --> 00:34:46,040
Speaker 8: those big large cap names.

697
00:34:46,520 --> 00:34:49,040
Speaker 4: In terms of the dividends, David, what do you guys

698
00:34:49,320 --> 00:34:52,840
Speaker 4: kind of value more dividend payout or dividend growth.

699
00:34:54,160 --> 00:34:57,560
Speaker 8: That's a great question. I mean, I hate to say

700
00:34:57,600 --> 00:34:59,880
Speaker 8: it's a little bit of both. I think to the

701
00:35:00,200 --> 00:35:02,680
Speaker 8: end investor, though, they really want the company to do

702
00:35:02,840 --> 00:35:06,839
Speaker 8: four things. Grow revenues, grow profits, grow dividends, and grow

703
00:35:06,920 --> 00:35:10,000
Speaker 8: annual guidance. For a lot of the reds, because of

704
00:35:10,920 --> 00:35:14,120
Speaker 8: a RED is just a dividend income passed through vehicle,

705
00:35:14,480 --> 00:35:17,440
Speaker 8: so they want to make sure that they are obviously maintaining,

706
00:35:17,600 --> 00:35:22,080
Speaker 8: if not growing that dividend on an annual basis if possible.

707
00:35:22,400 --> 00:35:24,360
Speaker 8: So I think you're kind of looking at both sides

708
00:35:24,400 --> 00:35:26,080
Speaker 8: of it. How do we make sure that we don't

709
00:35:26,200 --> 00:35:28,840
Speaker 8: have to cut our dividend, and what are the tools

710
00:35:28,880 --> 00:35:31,720
Speaker 8: in place that we can put there to grow our dividend.

711
00:35:31,960 --> 00:35:34,200
Speaker 6: And it's really both sides of the equation.

712
00:35:34,640 --> 00:35:38,080
Speaker 8: It's how do we maximize our revenue growth and minimize

713
00:35:38,160 --> 00:35:40,719
Speaker 8: our expense growth? And for like you talk about residential,

714
00:35:41,160 --> 00:35:43,960
Speaker 8: you know, the big issue with residential right now is insurance.

715
00:35:44,360 --> 00:35:47,239
Speaker 8: What we're seeing in Florida unfortunately with the hurricanes and

716
00:35:47,360 --> 00:35:50,960
Speaker 8: property taxes, especially for the single family rental guys. So

717
00:35:51,080 --> 00:35:54,719
Speaker 8: we can minimize their expense growth and maximize revenue growth

718
00:35:54,800 --> 00:35:58,200
Speaker 8: that should hopefully lead to a higher dividend payment in

719
00:35:58,239 --> 00:35:59,640
Speaker 8: investors pockets.

720
00:36:00,000 --> 00:36:01,560
Speaker 2: But you go want it. Also get your take on

721
00:36:01,600 --> 00:36:05,040
Speaker 2: sort of other property sectors within the re market. Retail.

722
00:36:05,280 --> 00:36:07,320
Speaker 2: When I say retail, what am I asking? Is it

723
00:36:07,400 --> 00:36:10,040
Speaker 2: big malls? Is it like smaller retail presence? Like how

724
00:36:10,120 --> 00:36:11,120
Speaker 2: are those reads performing?

725
00:36:11,960 --> 00:36:15,600
Speaker 8: Yeah, they've actually come out pretty well over the past

726
00:36:15,680 --> 00:36:18,440
Speaker 8: couple of years when they were really kind of not

727
00:36:18,760 --> 00:36:21,120
Speaker 8: really well received by investors.

728
00:36:21,400 --> 00:36:22,919
Speaker 6: And I think it's due to a couple of things.

729
00:36:22,960 --> 00:36:25,279
Speaker 8: Again, lack of new supplies, Like we're building a ton

730
00:36:25,320 --> 00:36:28,000
Speaker 8: of new shopping centers coast to coast, you're looking at

731
00:36:28,000 --> 00:36:30,920
Speaker 8: an evolution of the product. A good example is Tanger,

732
00:36:31,640 --> 00:36:35,240
Speaker 8: a typical factory outlet mall. The tenant offerings are different

733
00:36:35,280 --> 00:36:37,040
Speaker 8: today than what you would have seen just a couple

734
00:36:37,120 --> 00:36:40,680
Speaker 8: of years ago. A lot of these companies also, like

735
00:36:40,760 --> 00:36:43,760
Speaker 8: the mall guys, are trying to bring in more experiential

736
00:36:44,080 --> 00:36:46,200
Speaker 8: type offerings, not stuff.

737
00:36:45,920 --> 00:36:47,480
Speaker 6: That you can replicate online.

738
00:36:47,520 --> 00:36:49,720
Speaker 8: And so the goals to try to bring the family

739
00:36:49,840 --> 00:36:52,239
Speaker 8: to the mall, you know, provide them in a lot

740
00:36:52,239 --> 00:36:56,320
Speaker 8: of activities that you've captured that consumer for multiple hours

741
00:36:56,440 --> 00:36:58,759
Speaker 8: in a day. But really, you know, think about your

742
00:36:58,760 --> 00:37:02,160
Speaker 8: typical grocery anchor shopping center. We're going to get groceries

743
00:37:02,200 --> 00:37:05,879
Speaker 8: every single week, right. Obviously we see the inflation side

744
00:37:05,880 --> 00:37:07,480
Speaker 8: of it since the prices of a lot of the

745
00:37:07,600 --> 00:37:10,880
Speaker 8: goods are up, but that anchor tenant, that grocery store,

746
00:37:11,200 --> 00:37:13,480
Speaker 8: it's not there going away really anytime soon.

747
00:37:13,560 --> 00:37:15,920
Speaker 6: Now. Obviously we've got some stop with.

748
00:37:15,960 --> 00:37:19,080
Speaker 8: The Oppersons Kroger merger that is going to kind of

749
00:37:19,320 --> 00:37:22,960
Speaker 8: send some shock waves through the grocery anchor industry. But

750
00:37:23,080 --> 00:37:25,400
Speaker 8: I think with the lot of these reads, with the

751
00:37:25,520 --> 00:37:29,120
Speaker 8: relationships that they have and the experienced management teams, these

752
00:37:29,800 --> 00:37:32,319
Speaker 8: anchor spaces are not going to be dark for very long.

753
00:37:32,880 --> 00:37:35,319
Speaker 2: All right, we appreciate it. Thank you so very much

754
00:37:35,640 --> 00:37:38,280
Speaker 2: for joining us on those reads. David Aurbak, chief investment

755
00:37:38,320 --> 00:37:39,440
Speaker 2: Officer at Hoya Capital.

756
00:37:40,960 --> 00:37:44,799
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

757
00:37:44,920 --> 00:37:47,840
Speaker 1: weekdays at ten am Eastern on applecar.

758
00:37:47,440 --> 00:37:49,920
Speaker 10: Play and Android Otto with the Bloomberg Business.

759
00:37:50,320 --> 00:37:53,160
Speaker 1: You can also listen live on Amazon Alexa from our

760
00:37:53,200 --> 00:37:57,840
Speaker 1: flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.

761
00:37:59,480 --> 00:38:02,799
Speaker 2: Happy to everybody. I'm Alex c alongside Polsweenia John Tucker.

762
00:38:02,880 --> 00:38:05,359
Speaker 2: This is Bloomberg Intelligence Radio. We're broadcasting to you live

763
00:38:05,400 --> 00:38:09,680
Speaker 2: from Interactive Broker Studio right here in Midtown Manhattan. We

764
00:38:09,760 --> 00:38:11,640
Speaker 2: have a great pig Take story out for you. We

765
00:38:11,840 --> 00:38:14,480
Speaker 2: love diving deep into all the topics and subjects that

766
00:38:14,560 --> 00:38:16,960
Speaker 2: you need. It's a great Big Take podcast, and then

767
00:38:16,960 --> 00:38:18,879
Speaker 2: you can also get it on Bloomberg dot Com as

768
00:38:18,920 --> 00:38:22,160
Speaker 2: well as The Terminal and Today's Big Take a Big

769
00:38:22,280 --> 00:38:25,719
Speaker 2: Take story is on how VW so Volkswagen and Mercedes

770
00:38:25,960 --> 00:38:28,640
Speaker 2: are getting just left in the dust by China's evs.

771
00:38:29,160 --> 00:38:32,160
Speaker 2: The whole industry is getting squeezed by these cheap EV's

772
00:38:32,200 --> 00:38:36,360
Speaker 2: from China. How do they recalibrate? Oliver Cook joins us.

773
00:38:36,440 --> 00:38:39,320
Speaker 2: Now Crook, excuse me, Oliver Krook. Bloomberg gear of correspondent

774
00:38:39,400 --> 00:38:42,280
Speaker 2: joins us. Oliver, it's been way too long since we chatted,

775
00:38:42,320 --> 00:38:44,960
Speaker 2: so hello. Indeed, it's so good to see you.

776
00:38:45,960 --> 00:38:46,520
Speaker 4: We know that.

777
00:38:46,560 --> 00:38:49,359
Speaker 2: Volkswagen and Mercedes are struggling and are left in the dust.

778
00:38:49,480 --> 00:38:51,600
Speaker 2: Just how far behind in the dust are they?

779
00:38:52,760 --> 00:38:53,440
Speaker 5: So listen, Alex.

780
00:38:53,480 --> 00:38:55,160
Speaker 13: It defense kind of where you want to approach this

781
00:38:55,320 --> 00:38:57,600
Speaker 13: question from when we talk about the Chinese market, which

782
00:38:57,640 --> 00:39:00,200
Speaker 13: again is a very key market for Mercedes, bm W

783
00:39:00,440 --> 00:39:03,240
Speaker 13: and Volkswagen. This is their biggest market, or has traditionally

784
00:39:03,280 --> 00:39:05,440
Speaker 13: been their biggest market for a very long time. You

785
00:39:05,520 --> 00:39:07,560
Speaker 13: look at just the three third quarter deliveries that we

786
00:39:07,640 --> 00:39:08,480
Speaker 13: got just a couple.

787
00:39:08,320 --> 00:39:08,799
Speaker 5: Of weeks ago.

788
00:39:08,920 --> 00:39:12,080
Speaker 13: BMW alone was down thirty percent in terms of the

789
00:39:12,120 --> 00:39:13,880
Speaker 13: sales that they were making in China, and that is

790
00:39:13,920 --> 00:39:16,640
Speaker 13: their biggest market. So that illustrates the scale of the

791
00:39:16,680 --> 00:39:18,800
Speaker 13: importance of this here. The problem is is that this

792
00:39:18,920 --> 00:39:21,120
Speaker 13: is not just a question of the Chinese slowdown, right.

793
00:39:21,160 --> 00:39:22,560
Speaker 13: This isn't a question of just we're going to put

794
00:39:22,560 --> 00:39:25,320
Speaker 13: some stimulus in demand's going to come back. The nature

795
00:39:25,360 --> 00:39:28,440
Speaker 13: of that demand in China is now changing. So what

796
00:39:28,600 --> 00:39:30,600
Speaker 13: we see now in the Chinese market is that more

797
00:39:30,640 --> 00:39:33,240
Speaker 13: than half of the car is being sold there are evs.

798
00:39:33,320 --> 00:39:35,040
Speaker 13: And so while they still retain a lot of these

799
00:39:35,120 --> 00:39:37,200
Speaker 13: German car companies some of that market share, a good

800
00:39:37,200 --> 00:39:39,279
Speaker 13: amount of that market share, it's really not in the

801
00:39:39,360 --> 00:39:41,120
Speaker 13: EV section and they're not even in the sort of

802
00:39:41,200 --> 00:39:43,360
Speaker 13: top five or ten in the leader board for evs.

803
00:39:43,520 --> 00:39:45,759
Speaker 13: So the question is going forward, how do you get

804
00:39:45,800 --> 00:39:48,400
Speaker 13: competitive again. The problem they have is they had that

805
00:39:48,680 --> 00:39:52,560
Speaker 13: IC market share. It's about winning that electric market share,

806
00:39:52,560 --> 00:39:54,320
Speaker 13: and they're just way behind on the inside of the

807
00:39:54,360 --> 00:39:55,279
Speaker 13: car and the electronics.

808
00:39:55,400 --> 00:39:58,000
Speaker 2: Yeah, the IC is the internal combustion engine part, which

809
00:39:58,080 --> 00:40:00,920
Speaker 2: is the hardest part for these guys. Is it actually

810
00:40:01,560 --> 00:40:05,000
Speaker 2: the battery? Is it just doing it all cheaply? Or

811
00:40:05,160 --> 00:40:07,040
Speaker 2: is it the bending in the metal for the evs?

812
00:40:07,160 --> 00:40:08,120
Speaker 2: Where is the struggle?

813
00:40:09,120 --> 00:40:11,120
Speaker 13: I mean, it's a combination of all of these things.

814
00:40:11,160 --> 00:40:13,440
Speaker 13: There is, of course, are the battery components, even the

815
00:40:13,520 --> 00:40:15,360
Speaker 13: sort of the evs that are sold here in Europe,

816
00:40:15,400 --> 00:40:17,120
Speaker 13: even the ones that are produced here in Europe. The

817
00:40:17,200 --> 00:40:19,720
Speaker 13: batteries are still coming from China. All of the components

818
00:40:19,760 --> 00:40:22,120
Speaker 13: are coming over from China because they've really sort of

819
00:40:22,239 --> 00:40:25,160
Speaker 13: been very proactive with their raw material policy, everything from

820
00:40:25,200 --> 00:40:28,120
Speaker 13: the lithium to this processing that all goes on to China.

821
00:40:28,160 --> 00:40:30,040
Speaker 13: The other issues, of course, the cost base, and we're

822
00:40:30,040 --> 00:40:32,600
Speaker 13: starting to see that hit here in Europe where Volkswagen

823
00:40:32,719 --> 00:40:35,480
Speaker 13: is talking about closing factories for the very first time

824
00:40:35,560 --> 00:40:38,120
Speaker 13: in its history. They're talking about closing a factory in Belgium,

825
00:40:38,440 --> 00:40:40,920
Speaker 13: closing a few factories in Germany. And to understand why

826
00:40:41,040 --> 00:40:43,120
Speaker 13: that's so important, this is a company that has literally

827
00:40:43,320 --> 00:40:45,880
Speaker 13: never done that before in Europe, in large part because

828
00:40:46,000 --> 00:40:48,239
Speaker 13: you know, their supervisory board half of their seats are

829
00:40:48,320 --> 00:40:51,279
Speaker 13: held by sort of union representatives. So if they're moving

830
00:40:51,360 --> 00:40:53,759
Speaker 13: forward and making that decision, it's because things are very

831
00:40:53,880 --> 00:40:55,880
Speaker 13: very challenging the cost base. If you look at the

832
00:40:55,920 --> 00:40:58,560
Speaker 13: hourly wages of its sort of autoworker in Germany, it's

833
00:40:58,600 --> 00:41:00,840
Speaker 13: close to like sixty two year euros an hour. You

834
00:41:00,920 --> 00:41:03,280
Speaker 13: go to Hungary, just not too far away, it's sixteen

835
00:41:03,360 --> 00:41:04,000
Speaker 13: euros an hour.

836
00:41:04,840 --> 00:41:06,960
Speaker 2: Okay, how do they fix it? And that's a silly question,

837
00:41:07,120 --> 00:41:09,400
Speaker 2: but like do they need a massive amount of subsidies

838
00:41:09,440 --> 00:41:12,360
Speaker 2: to stimulate demand or do they need sort of unions

839
00:41:12,400 --> 00:41:14,600
Speaker 2: to get out of their way. What would make this

840
00:41:14,760 --> 00:41:16,360
Speaker 2: process a little bit easier.

841
00:41:17,160 --> 00:41:19,040
Speaker 13: It's going to be a combination of all of those things,

842
00:41:19,080 --> 00:41:20,799
Speaker 13: and one thing that makes it even harder, Alex, if

843
00:41:20,840 --> 00:41:22,520
Speaker 13: you haven't talked about yet, is there actually our new

844
00:41:22,640 --> 00:41:25,120
Speaker 13: EU regulations coming into force at the end of this

845
00:41:25,320 --> 00:41:28,960
Speaker 13: year that basically stipulate that they twenty percent of all

846
00:41:29,000 --> 00:41:31,200
Speaker 13: the cars that they need to sell basically need to

847
00:41:31,239 --> 00:41:33,680
Speaker 13: be EV's. The problem is there's a mismatch between what

848
00:41:33,800 --> 00:41:36,319
Speaker 13: policy makers wants and what the market wants. Right now,

849
00:41:36,520 --> 00:41:38,640
Speaker 13: the market is stuck. These guys are still selling below

850
00:41:38,719 --> 00:41:41,359
Speaker 13: fifteen percent evs. If they fail to hit that twenty

851
00:41:41,400 --> 00:41:43,000
Speaker 13: percent by the end of this year, they're looking at

852
00:41:43,040 --> 00:41:45,960
Speaker 13: potentially billions of euros worth of fines. So that's just

853
00:41:46,000 --> 00:41:48,440
Speaker 13: another sort of overlay there. But this all, you know,

854
00:41:48,480 --> 00:41:50,600
Speaker 13: I mean, the policy sort of dissonance that exists is

855
00:41:50,680 --> 00:41:52,600
Speaker 13: one issue. But really these are car makers that have

856
00:41:52,920 --> 00:41:54,960
Speaker 13: it's partially their own doing, right, They were just far

857
00:41:55,080 --> 00:41:58,120
Speaker 13: behind on this. The former Volkswagen CEO, he really wanted

858
00:41:58,160 --> 00:41:59,399
Speaker 13: to lean into electrification.

859
00:41:59,640 --> 00:42:00,440
Speaker 5: They were into that.

860
00:42:00,480 --> 00:42:02,160
Speaker 13: They got rid of him. They brought in somebody new

861
00:42:02,360 --> 00:42:03,600
Speaker 13: and now they're really paying the price.

862
00:42:04,080 --> 00:42:06,799
Speaker 4: Hol or how much of this is nationalism we've seen

863
00:42:06,840 --> 00:42:09,360
Speaker 4: with Apple with the iPhone. Maybe the concerns that the

864
00:42:09,440 --> 00:42:12,400
Speaker 4: Chinese consumer on the margin doesn't want to buy Western products.

865
00:42:13,440 --> 00:42:14,800
Speaker 13: So listen, I think that that is going to be

866
00:42:14,840 --> 00:42:16,760
Speaker 13: part of it. And of course this is the Chinese

867
00:42:16,880 --> 00:42:19,920
Speaker 13: policymakers have been trying to gear their sort of economy

868
00:42:19,960 --> 00:42:23,200
Speaker 13: to not have the kind of dependency that they've historically had. Remember,

869
00:42:23,239 --> 00:42:25,680
Speaker 13: the Chinese were really sort of welcoming with open arms

870
00:42:25,760 --> 00:42:28,200
Speaker 13: Volkswagen back in the nineteen eighties when they first sort

871
00:42:28,239 --> 00:42:31,239
Speaker 13: of started producing cars in the Chinese market because there

872
00:42:31,360 --> 00:42:34,400
Speaker 13: was no automotive industry in China. What is interesting now

873
00:42:34,440 --> 00:42:36,520
Speaker 13: is you're seeing some of these European car makers now

874
00:42:36,600 --> 00:42:39,239
Speaker 13: sort of inverting that sort of same dynamic where you

875
00:42:39,320 --> 00:42:43,040
Speaker 13: have the partnerships with say Stilantis and Leap Motor, a

876
00:42:43,160 --> 00:42:46,680
Speaker 13: Chinese company have a joint venture here in Europe where

877
00:42:46,719 --> 00:42:49,120
Speaker 13: now Stilandis owns fifty one percent, so that they are

878
00:42:49,160 --> 00:42:51,840
Speaker 13: starting to build Chinese cars at their own plants. And

879
00:42:51,960 --> 00:42:53,439
Speaker 13: that is so we talked about the sort of threat

880
00:42:53,480 --> 00:42:55,719
Speaker 13: to the Chinese market that is also coming very very

881
00:42:55,800 --> 00:42:58,160
Speaker 13: quickly and very soon to the European shores as.

882
00:42:58,080 --> 00:43:01,640
Speaker 2: Well, which is so ironic because if Europe really wanted

883
00:43:01,719 --> 00:43:04,360
Speaker 2: to green stuff fast, they would just import a boltload

884
00:43:04,880 --> 00:43:07,520
Speaker 2: of Chinese EV's on the cheap and have their consumers

885
00:43:07,560 --> 00:43:09,000
Speaker 2: buy them. To your point, then it becomes like a

886
00:43:09,120 --> 00:43:14,160
Speaker 2: nationalist point, Paul, who Okay, who's in the worst who's

887
00:43:14,200 --> 00:43:16,560
Speaker 2: in the best spot of this debacle?

888
00:43:17,320 --> 00:43:18,839
Speaker 13: Are you really really putting me on the spot here?

889
00:43:18,840 --> 00:43:21,160
Speaker 13: We try to get forty five second?

890
00:43:21,160 --> 00:43:22,640
Speaker 2: I mean, listen, I'll tell you this.

891
00:43:22,719 --> 00:43:25,040
Speaker 13: The Lansas is down forty five percent this year. They're

892
00:43:25,080 --> 00:43:26,960
Speaker 13: down almost lost a fifth of their value since a

893
00:43:27,000 --> 00:43:29,719
Speaker 13: profit warding two weeks ago. For thinking about companies that

894
00:43:29,760 --> 00:43:31,040
Speaker 13: are really well physicianed in Europe.

895
00:43:31,080 --> 00:43:31,880
Speaker 5: You think about Tesla.

896
00:43:31,920 --> 00:43:34,400
Speaker 13: They've got manufacturing over in Germany, and guess what they

897
00:43:34,480 --> 00:43:36,800
Speaker 13: make only EV's, so they're able to even sell some

898
00:43:36,920 --> 00:43:39,040
Speaker 13: of those credits when those regulations kick it next year.

899
00:43:39,440 --> 00:43:41,640
Speaker 2: Okay, so you didn't twenty seven seconds? What are you

900
00:43:41,640 --> 00:43:44,400
Speaker 2: complaining about it? He's totally fine, Oliver Cook, Thank you

901
00:43:44,520 --> 00:43:46,400
Speaker 2: so very much, really appreciate it. Great to chat with you.

902
00:43:46,640 --> 00:43:49,560
Speaker 2: Bloomberg Europe a correspondent joining US in the Big Take

903
00:43:49,640 --> 00:43:53,960
Speaker 2: story Volkswagen Mercedes getting left in the dust by China's EV's,

904
00:43:54,040 --> 00:43:56,000
Speaker 2: and you can read more of the story on Bloomberg

905
00:43:56,000 --> 00:43:58,040
Speaker 2: and at bloomberg dot com slash Big Take.

906
00:43:58,280 --> 00:43:59,680
Speaker 4: I didn't even think that would be a risk for

907
00:43:59,680 --> 00:44:01,680
Speaker 4: the West. I thought the brands were so strong over

908
00:44:01,760 --> 00:44:04,960
Speaker 4: there that and the quality was so much better. But

909
00:44:05,200 --> 00:44:06,080
Speaker 4: maybe that's not the case.

910
00:44:06,480 --> 00:44:08,440
Speaker 2: I think maybe it's just a price point. Yeah, me

911
00:44:08,440 --> 00:44:10,279
Speaker 2: at this point, and like everyone wants a super cool,

912
00:44:10,400 --> 00:44:13,080
Speaker 2: luxury hot EV right like that in essence, isn't a problem.

913
00:44:13,120 --> 00:44:14,440
Speaker 2: Like if you want to pay a bazillion dollars for

914
00:44:14,480 --> 00:44:16,279
Speaker 2: a Porsche that has an EV engine, no problem. But

915
00:44:16,360 --> 00:44:17,680
Speaker 2: that's not the issue.

916
00:44:17,840 --> 00:44:19,080
Speaker 4: I didn't. I want the guess.

917
00:44:19,719 --> 00:44:21,239
Speaker 2: Yeah, but you're not going to buy a Porsche. Okay,

918
00:44:21,239 --> 00:44:22,080
Speaker 2: you've bought your Vespa.

919
00:44:22,200 --> 00:44:23,759
Speaker 4: This is different a Vespa, Yes I did.

920
00:44:23,840 --> 00:44:25,040
Speaker 2: Would you buy an EV Vespa?

921
00:44:25,280 --> 00:44:25,320
Speaker 3: No?

922
00:44:25,480 --> 00:44:25,760
Speaker 4: Please?

923
00:44:26,239 --> 00:44:26,279
Speaker 3: No?

924
00:44:26,440 --> 00:44:26,720
Speaker 2: Please?

925
00:44:26,840 --> 00:44:27,080
Speaker 6: Okay.

926
00:44:27,400 --> 00:44:30,160
Speaker 4: Le's kind of thrawl the lines somewhere, but that's so easy.

927
00:44:30,200 --> 00:44:32,080
Speaker 2: It's a little thing. You plug it in anyway.

928
00:44:32,320 --> 00:44:36,839
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

929
00:44:37,040 --> 00:44:39,919
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930
00:44:40,040 --> 00:44:43,399
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931
00:44:43,719 --> 00:44:47,080
Speaker 1: Behart Radio app, tune In, and the Bloomberg Business App.

932
00:44:47,239 --> 00:44:50,240
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933
00:44:50,480 --> 00:44:52,280
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