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Speaker 2: I'm Alexi alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
Speaker 2: We bring you all the top news and business, economics
Speaker 2: and finance through a lens of our Bloomberg Intelligence folks,
Speaker 2: and we have one of them here for it with
Speaker 2: us right now, Man Deep saying he's Bloomberg Intelligence senior
Speaker 2: technology analysts. I'm this ASML News, so let me update
Speaker 2: you on what we see ASML has been halted a
Speaker 2: few times for volatility. The stock dropped like a stone
Speaker 2: after cutting its twenty twenty five net sales and gross
Speaker 2: margin guidance, and its third quarter bookings also missed estimates.
Speaker 2: And these guys make the machines that you need to
Speaker 2: make AI chips, Mandeep. Is this a negative sign for
Speaker 2: a chip demand?
Speaker 3: I mean, look, when it comes to ASML again, everything
Speaker 3: is driven by Kapex. And when I say Capex, it's
Speaker 3: really coming from the foundry guys like TSMC, like Samsung.
Speaker 3: We know Samsung had layoffs recently, so clearly they are
Speaker 3: not doing very well. But TSMC is so the fact
Speaker 3: that their buyers are so concentrated and the geopolitical tensions continue,
Speaker 3: and you know, the second half estimates the comps are tougher.
Speaker 3: To me, this is just a sign of expectations kind
Speaker 3: of going up to the point where you will not
Speaker 3: see any positive revisions from the print this quarter. And
Speaker 3: that's what happened with the SML. Expectations had gone up
Speaker 3: and they didn't surprise to the upside, so we could
Speaker 3: expect the same from others.
Speaker 4: The magnitude of the miss on the orders versus the
Speaker 4: estimate seemed huge to me. Yes, that typical or not
Speaker 4: to play. When they missed, they really miss.
Speaker 3: So that's that comes down to how SEMIS typically is
Speaker 3: when you go back to prior cycles. When these companies miss,
Speaker 3: they miss big. We've seen that with Micron, we have
Speaker 3: seen that with some of the other names. But in
Speaker 3: the case of ASML, the secular drivers are intact. When
Speaker 3: you think about you know, every foundry looking to use
Speaker 3: their machines, looking to go to you know, smaller nodes.
Speaker 3: TSMC actually doing very well, so they are their largest customer.
Speaker 3: And when you think about you know how well TSMC
Speaker 3: has done in terms of their AI revenue. I don't
Speaker 3: think they are cutting back capex, but it's always about
Speaker 3: that incremental buyer when it comes to these semi companies,
Speaker 3: especially the ones that are reliant on CAPEX spend, and
Speaker 3: if you take China out of the equation or the
Speaker 3: fact that they are restricted in some way, those are
Speaker 3: some of your incremental buyers. So that's where it has
Speaker 3: an impact.
Speaker 2: We have a great function on the terminal. It's SPLC.
Speaker 2: It's a supply chain analysis, So if you type in
Speaker 2: as and then go to the supply chain, you can
Speaker 2: see who their competitors and their customers are. So competitors
Speaker 2: are Applied Materials, KLA LAM Research, so you can kind
Speaker 2: of see all of them are going to be down
Speaker 2: on this news. And then to Mandeev's point, customers are
Speaker 2: folks like TSMC, Samsung, Intel also although albeit not a
Speaker 2: huge customer anymore, but you know the problems that Intel
Speaker 2: has had a semiconductor manufacturing Micron. So watch that stock
Speaker 2: sk Heinex am I saying Heinex, Yeah, memory yep, and
Speaker 2: then you have global founderies as well. This is a
Speaker 2: really ignorant question. Where does in Nvidia sit in this
Speaker 2: story that we're talking about.
Speaker 3: Well, Nvidia is sort of the first derivative. So if
Speaker 3: TSMC is not buying machines from ASML, that means they
Speaker 3: are not expanding their supply for the latest cost packaging
Speaker 3: and the foundry side in terms of manufacturing and video's chips.
Speaker 3: So TSMC determines what kind of capacity expansion they're looking
Speaker 3: for for twenty twenty five and beyond, and based on
Speaker 3: that they are placing an order for ASML equipment. So
Speaker 3: it is a very big sign. And to your point
Speaker 3: about Intel being a buyer, well, Intel is under pressure
Speaker 3: to curtail their capex as well, so you're taking a
Speaker 3: lot of the incremental buyers out of the equation, even
Speaker 3: though there is no substitute for ASML. So it's not
Speaker 3: as if ASML is losing market share to anyone. It's
Speaker 3: just the incremental buyers are fewer compared to where they were.
Speaker 3: You know, a couple of quarters back.
Speaker 4: Okay, what I know about AI you can put into
Speaker 4: a shot class. So answer this question like I'm a
Speaker 4: five year old. Is this fundamentally changed the AI story
Speaker 4: for tech?
Speaker 5: It doesn't.
Speaker 3: It's just that everyone is expecting some sort of digestion
Speaker 3: period when it comes to AI. We have had you know,
Speaker 3: a long up to the right sort of scenario so far.
Speaker 3: When it comes to generative AI, and everyone expects a
Speaker 3: pause at some point, their signs are you know, in
Speaker 3: Vidia chip demand remains insay siable despite the restrictions. But
Speaker 3: when it comes to you know, semis, the way it
Speaker 3: works is first your foundry guys are gonna slow down
Speaker 3: their supply expansion. Then you know and Vidia will see
Speaker 3: fewer beat and raises, and so there is a derivative
Speaker 3: aspect to how.
Speaker 6: It flows through.
Speaker 3: It doesn't all happen in the same quarter, and to
Speaker 3: me ESML missing is one of the first signs that
Speaker 3: you know, things may be cooling down a little bit.
Speaker 3: It may not get reflected in a video's quarter this
Speaker 3: time around, but two quarters down the line in Vidia
Speaker 3: could get affected.
Speaker 2: Which then also reads the question like which customer is
Speaker 2: the problem for ASML, Like what are their customer lists
Speaker 2: are calling them saying like guys, look, we don't really
Speaker 2: need the equipment, like we know it may not be TSMC,
Speaker 2: So then is an Intel because that's more of an
Speaker 2: idiosyncratic Intel issue rather than like a broader AI chip
Speaker 2: story issue.
Speaker 3: Yeah, and Intel and Samsung, I mean, look, Samsung, we
Speaker 3: know isn't doing very well on the manufacturing side. When
Speaker 3: people talk about generative AI chips and GPUs, everyone is
Speaker 3: going to TSMC as if there's only game in town.
Speaker 3: Samsung isn't able to make that latest switch to that
Speaker 3: latest note for you know, generative AI chips, and that's
Speaker 3: where we heard Samsung doing a layoff, So clearly they
Speaker 3: are curtailing their costs. Intel is curtailing their costs. So
Speaker 3: you take out two of the top buyers of ASML
Speaker 3: gear and we know they sell you know, multimillion dollar machines,
Speaker 3: So these are expensive purchases. And it's not as if
Speaker 3: ASML is losing business, it's just it won't get reflected
Speaker 3: in the next quarter or you know, the couple of quarters.
Speaker 4: So this ASML deposit us depository receipts down twelve percent.
Speaker 4: Is that a reasonable reaction do you think in this market?
Speaker 4: I think so.
Speaker 3: I mean, given we are seeing some gross margin compression
Speaker 3: and for semi's companies, gross margin is huge. Anytime you
Speaker 3: see gross margin compression, that is your first sign that
Speaker 3: you know thinks are aren't going your way, and it's
Speaker 3: it's a sign that the demand is somewhat cooling off
Speaker 3: or your costs are going up. In this case, I
Speaker 3: think it is a function of orders getting delayed. And uh,
Speaker 3: I think the reaction was warranted. Probably you may see
Speaker 3: an ore reaction today. People may realize they still have
Speaker 3: a strong mode tomorrow and then buy the stock. But
Speaker 3: I think the reaction was warrant.
Speaker 4: We've been looking for this, like a little bit of
Speaker 4: a pickup.
Speaker 2: Or a crap or just something right, like not everything
Speaker 2: in sunshine and roses like all the time, and diy'd
Speaker 2: be really appreciate it. Thanks for the hustle, Mandy saying,
Speaker 2: is there anything you don't know? I wonder if we
Speaker 2: talked to him about.
Speaker 4: Like Childen technos on Wall Street for real, you need
Speaker 4: to stuff I was funding back in the day for you.
Speaker 2: Unbelievable man need Bloomberg intelligion.
Speaker 4: By the way, he's got a cast on, so who
Speaker 4: knows what's going on?
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
Speaker 2: mean really really really solid numbers. Although Golden sastock is
Speaker 2: now down by about seven tenths of one percent. Yeah,
Speaker 2: that's actually kind of surprising for me, But I'm taking
Speaker 2: a look at say, Bank of America. That stock is
Speaker 2: also down now by eight tenths of one percent. But
Speaker 2: on the surface, these numbers looked really great. City stock, yeah,
Speaker 2: I thought.
Speaker 4: And the capital markets, yeah, the capital markets. The trading
Speaker 4: business I thought did very well. But I know the
Speaker 4: street likes the more predictable feed business in this special.
Speaker 2: Yea, But they didn't seem to care about that when
Speaker 2: it came to JP Morgan, Malls Fargo. You know who
Speaker 2: might know the answer to this, I think I know
Speaker 2: Alison Williams, Bloomberg Intelligence senior analysts for global banks and
Speaker 2: asset managers. So for my you know, let I read
Speaker 2: here there were really good numbers, and then the stocks
Speaker 2: were down and tell us why they were, And it.
Speaker 7: Is all about the expectations. Keep in mind that we
Speaker 7: did get sort of a change in expectations not necessarily
Speaker 7: baked into the numbers with the reports on Friday, the
Speaker 7: very strong trading and fees for JP Morgan, which set
Speaker 7: the tone, and the banks delivered on today net interest income,
Speaker 7: which you know for JP Morgan basically they had talked
Speaker 7: it down in September. Then they beat the numbers and
Speaker 7: raised four Q guidance, but Jamie still talking negatively about
Speaker 7: next year. And for Bank of America, really they did
Speaker 7: exactly what they said. Interest income trought, the number came
Speaker 7: in and they are not going to talk about guidance
Speaker 7: for not interesting income until you know the next call
Speaker 7: for next year. So I think it's I think the
Speaker 7: stock is probably fine, just reacting to things coming in
Speaker 7: basically as you know, good but versus sort of raised expectations.
Speaker 4: What's the expectation here for when you talk to your
Speaker 4: invest about just regulation of banks, where's that headwind? Because
Speaker 4: I know it has been a headwind off and on
Speaker 4: for really since a great financial crisis. Where are we
Speaker 4: now with the basil?
Speaker 7: Yeah, it is, and it's depends on the election, Okay
Speaker 7: at this point, right, so if you know, Trump wins,
Speaker 7: then the role could be derailed sort of indefinitely. So
Speaker 7: that would be positive for banks if you know democratic
Speaker 7: when will sort of continue on the same path. So Basel,
Speaker 7: you know, the rules were very onerous that were introduced
Speaker 7: last year. Basically we've we've gotten the signal that they're
Speaker 7: going to be lighter. You know, we sort of had
Speaker 7: had those expectations set within the last several weeks, but
Speaker 7: we're still waiting for that proposal.
Speaker 2: When we just break down the broader sort of investment banking,
Speaker 2: can we say M and A's back, so like they
Speaker 2: seem to be talking good about it, that's not a sentence.
Speaker 2: They seem to be talking like positively about M and A.
Speaker 7: So it is, and you know so from Goldman Sachs,
Speaker 7: who's the leader in EM and A. Very good numbers
Speaker 7: and the fact that their pipeline is upsequentially.
Speaker 5: Is very good.
Speaker 7: But fourth quarter does tend to be seasonally strong, so
Speaker 7: we do have to see is it, you know, is
Speaker 7: it just the typical seasonality or is there a little
Speaker 7: bit more momentum.
Speaker 4: Are all our friends on Wall Street are thinking get
Speaker 4: paid like really well.
Speaker 7: This year, I mean it, you know, bonus bonuses do
Speaker 7: look good for this year, especially for death fees. I
Speaker 7: mean really that for September.
Speaker 2: Yeah, well, underwriting right was was really quite strong across
Speaker 2: the board. What are some of the questions that you
Speaker 2: have now? And whichever bank you want to focus on,
Speaker 2: Like what's a big glaring.
Speaker 7: So you know, the election is is going to be
Speaker 7: important in terms of what that means for the for
Speaker 7: the capital rules. I think that's that's sort of the
Speaker 7: big structural question. You know, markets are strong. Things look
Speaker 7: that momentum is likely to continue in the fourth quarter.
Speaker 7: I think maybe the next thing that we're looking at is,
Speaker 7: you know, can we get signs of improving long growth
Speaker 7: because that is really you know, interesting income. That recovery
Speaker 7: is what investors are looking for. Can we get a
Speaker 7: momentum there? You know, the other side of the lending
Speaker 7: business is credit, and all signs are are pointing pretty
Speaker 7: good right there.
Speaker 4: All right, As a former city banker, I have an
Speaker 4: interest in that institution. Where is Jane Fraser in the
Speaker 4: turnaround of that bank? And does the street believe that
Speaker 4: she can get it to the point where it generate
Speaker 4: really competitive returns.
Speaker 7: You know, I think, you know, the street has been
Speaker 7: burned so many times for getting their hopes up on
Speaker 7: City Group over the years, and so City Group is
Speaker 7: delivering on what they want to do. We saw that
Speaker 7: in the in the numbers this quarter. They like the
Speaker 7: other banks, are getting a lot of upside from markets
Speaker 7: by keeping the costs stable. And so for them it's
Speaker 7: really you know, these regulatory headwinds which are so hard
Speaker 7: to predict, and you know, I think the best thing
Speaker 7: that could have happened to City is this you know,
Speaker 7: regulatory scrutiny that finally is making them, you know, make
Speaker 7: a lot of the changes that probably should have been
Speaker 7: done a long time ago, you know, getting the risk
Speaker 7: systems together, improving their operating efficiency, which at the end
Speaker 7: of the day will will be helpful in the long term.
Speaker 2: On Friday, we talked about a well spargo in particular,
Speaker 2: and you were saying that the big question you have
Speaker 2: is when the loans pick up, whend a loans pick up,
Speaker 2: and what do we learn from say City and Bank
Speaker 2: of America on that.
Speaker 7: So it's hard to say, you know, I think that
Speaker 7: it's it's going forward, right. So the FED cuts happened
Speaker 7: in the last couple of the weeks of the quarter,
Speaker 7: so we're not necessarily going to see the impact of
Speaker 7: that right away. Maybe the Senior Loan Officer survey will
Speaker 7: give us a little bit of insight when that comes
Speaker 7: out in a couple of weeks.
Speaker 4: All Right, we got more inans Stanley tomorrow, I believe.
Speaker 7: Organ standing tomorrow. They have you know, really raised the
Speaker 7: bar for them all these all these banks, especially Goldman,
Speaker 7: strong numbers today, so we'll see if they can deliver
Speaker 7: on that. They tend to be more skew towards equities trading.
Speaker 7: That's been the source of strength, So we'll see.
Speaker 4: And are they going to be like past cycles they
Speaker 4: being all the big banks like next week all issuing that.
Speaker 7: Yeah, that tends to be. That tends to be the focus.
Speaker 7: And one more thing I'll add about them. You know,
Speaker 7: while the institutional there's a lot of positive momentum, I
Speaker 7: think it will be all about the wealth flows for them,
Speaker 7: So they will need to you know, if they get
Speaker 7: institutional right and ride this way with everyone else, that's great,
Speaker 7: but they do need to deliver and show that that
Speaker 7: wealth business is continuing together at which they always which
Speaker 7: you know, the markets should be very helpful on that
Speaker 7: front as well.
Speaker 2: Right, because it's expanding pie that they're all competing for now, Right,
Speaker 2: it's not like tiny pie that isn't growing at the
Speaker 2: end of the day. One more question about Goldman and
Speaker 2: this is a little personal for me because I have
Speaker 2: a Marcus account for their consumer Did they what they say?
Speaker 2: Did they say that they're lowering rates a lot and
Speaker 2: they of.
Speaker 4: Steel inflows were noted during the four point one Now, yeah,
Speaker 4: it's just another message.
Speaker 2: I mean, come on, guys, like they just lowered ones. Anyway,
Speaker 2: How are they doing on offloading all the risk and
Speaker 2: stuff for their consumer business? I know that they already
Speaker 2: offloaded a lot to GM. They took a write down
Speaker 2: for it or charge for it. Where are they in
Speaker 2: this process?
Speaker 7: Yeah, so one step closer with the sale of the
Speaker 7: of the GM portfolio. They are hanging on to Marcus.
Speaker 7: But you know, FED lowers rates. That positive for the
Speaker 7: banks means that there's less competition, less competitive pricing pressure,
Speaker 7: but for the consumer, you know, not as favorable.
Speaker 2: You know what I'm gonna do, I'm gonna find something
Speaker 2: that is competitive. I'm gonna go to those munis like
Speaker 2: Plasman saying like, see later we're gets some take my
Speaker 2: money and run free.
Speaker 8: Yeah, but you can't pull your money out at a
Speaker 8: moment's notice, Marcus.
Speaker 2: No, I know, I know, but I'll know, Like in general,
Speaker 2: I should have known when John Tucker going to Marcus
Speaker 2: account that that was the top.
Speaker 6: Yes, you're playing data.
Speaker 2: Yeah, totally fault. All right, Alison, thanks a lot. We
Speaker 2: really appreciate. Alison Williams, Bloomberg Intelligence, a senior Global banks
Speaker 2: and Asset Manager analyst.
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Speaker 4: Let's not bowing. They are back in the news again,
Speaker 4: and when we talk news. George Ferguson again. George Ferguson,
Speaker 4: senior Aerospace defense analyst for Bloomberg Intelligence. George, I'd like
Speaker 4: this move. Boeing puts up a twenty five billion dollar
Speaker 4: shelf offering gives us some flexibility to shore up it's
Speaker 4: balance sheet. I know we have to talk about dilution,
Speaker 4: but tell us what Boeing is doing here with this
Speaker 4: twenty five billion dollar shelf.
Speaker 9: Yeah, so I think Kelly Orpberg went out and brought
Speaker 9: up the big guns, right so, I think he wants
Speaker 9: to shore up the balance sheet. I think so he
Speaker 9: can show the union that Boeing has plenty of cash
Speaker 9: to make it through this strike. I think that's part
Speaker 9: of a strategy, you know, to get the union back
Speaker 9: to the table and get them to rethink probably some
Speaker 9: of their demands.
Speaker 5: That's that's what I see here.
Speaker 4: And what is the sense of their balance sheet? Just
Speaker 4: give us sense, George. I know you've been calling it
Speaker 4: out and highlighting it for us for quarters. Now talk
Speaker 4: to us about kind of the cash on their balance sheet,
Speaker 4: the cash burn. How long can they go before they
Speaker 4: really do need to think about fresh capital.
Speaker 9: Yeah, so I think they need capital now, right So,
Speaker 9: I think it is part of why Kelly or Berg
Speaker 9: and Boeing and going going to the market, because you know,
Speaker 9: they just pre announced earnings for the third quarter. Cash
Speaker 9: balances were right around ten billion. That's about what they've
Speaker 9: told us they need to operate the kind company. So
Speaker 9: I think that really put their back up against the wall.
Speaker 9: As you know, they're managing a dance with the creditors
Speaker 9: as well, because you know, they're really up against the
Speaker 9: edge on their investment grade credit rating.
Speaker 5: So I think it really precluded going to the.
Speaker 9: Debt markets here, and so you know, I guess the
Speaker 9: question is too now is it's a stain power right now?
Speaker 9: Long can Boeing manage with the ten billion? They couldn't
Speaker 9: manage very long strike, And so to get better negotiating
Speaker 9: leverage with the unions, I think if you put another
Speaker 9: ten fifteen billion dollars in the balance sheet here, I
Speaker 9: think it gives you at least a quarter, probably multiple
Speaker 9: quarters of potential cash burn. So you can tell the union, look,
Speaker 9: I'm gonna I'm gonna wait this out into you, you know,
Speaker 9: bring me some demands that I can make.
Speaker 2: Just hold that thought for one second, because I want
Speaker 2: to point out ASML, which is a company that makes
Speaker 2: lithography machines so you can make AI is now halted
Speaker 2: after a steep drop and earnings that did not look great.
Speaker 2: Third quarter net sales did come in higher than estimated,
Speaker 2: but their third quarter bookings fell below about two point
Speaker 2: sixty three billion euros, substantially below the estimate. They're also
Speaker 2: taking a look at twenty twenty five net sales, also
Speaker 2: below estimates. This is quite interesting read through for AI Again,
Speaker 2: they make the lithography machines that help make AI chips,
Speaker 2: and that stock is now halted after falling steeply after
Speaker 2: those numbers came out at shocking shocking. Right, let's take
Speaker 2: a look at Videota in video down.
Speaker 4: Four point four percent just on that news, just in
Speaker 4: the last couple of minutes.
Speaker 2: Okay, so not only just from the news over the
Speaker 2: over the night, George Foy, let you go, how much
Speaker 2: time does this by Boeing?
Speaker 5: I think ad buys them at least a quarter, if
Speaker 5: not more.
Speaker 9: I mean, look, I think if you're negotiating with the union,
Speaker 9: I'd be really surprised if the average union member is
Speaker 9: ready to go a quarter without a job and so,
Speaker 9: you know, without income.
Speaker 5: I shouldn't say without a job. They have a job
Speaker 5: at Boeing, I guess, but without an income. So I
Speaker 5: think it gives them plenty of staypowner. I think that's
Speaker 5: what Boeing has.
Speaker 9: To do here, right, If they're going to get the
Speaker 9: union to come back to the table and negotiating good faith.
Speaker 5: They have to be able to say, look, We're not
Speaker 5: over a barrel. We can wait you out.
Speaker 10: Now.
Speaker 9: Let's talk about some of the issues, especially I think
Speaker 9: the pension plan. Right, the emails talked about a return
Speaker 9: to pension plan. I don't think any major corporation is
Speaker 9: given back on a pension plan since they've retired them
Speaker 9: over the last number.
Speaker 5: Of decades, so I think they have ready to go
Speaker 5: the distance to not have that happen.
Speaker 4: All right, George, thanks so much for joining us. George Ferguson,
Speaker 4: he's senior Aerospace, Defense and Airlines sentals for Bloomberg Intelligence.
Speaker 4: Just kind of talking about the Boeing news.
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Speaker 2: Alex Steel here alongside Paul Sweened. This is Boomberg Intelligence Radio.
Speaker 2: We bring you all the tap news in business, economics
Speaker 2: and finance through a lens of our Bloomberg Intelligence folks,
Speaker 2: and we are broadcasting to you live from our inactive
Speaker 2: Booker Studio right here in Midtown Manhattan. As John Tucker
Speaker 2: was just talking about, you're looking a crewed off by
Speaker 2: over four percent, and the only headline that you could
Speaker 2: really find was perhaps Israel will not be targeting Iranian
Speaker 2: oil infrastructure, so raises the question are we looking at
Speaker 2: geopolitical risk being priced out? Also, the IA revised slightly
Speaker 2: down a demand forecast for this year and next, mostly
Speaker 2: a China story, but nonetheless. Dan Pickering is Chief investment
Speaker 2: Officer Pickering Energy Partners. He joins us from Houston, Texas.
Speaker 2: He's honestly one of the best in the industry. He's
Speaker 2: been around a long time, He's kind of seen it
Speaker 2: all and he has a great insight into what companies
Speaker 2: will do as well. What's your take on crewed off
Speaker 2: by three bucks?
Speaker 11: Yeah, Alex, good morning.
Speaker 12: It's definitely this news that we potentially are not going
Speaker 12: to see any escalation of violence in the Middle East.
Speaker 12: If Israel doesn't hit the Iranian oil facilities, then we
Speaker 12: have kind of continued status quo, which is oil has
Speaker 12: been flowing out of the Middle East with no problem,
Speaker 12: and so we're taking the air out of the risk
Speaker 12: of supply disruption and getting back to a more fundamental market,
Speaker 12: which has been pretty soft over the last couple of months.
Speaker 2: What's the fair price you think for oil?
Speaker 12: Yeah, fair price for oil, I'm an eighty dollars through
Speaker 12: twenty twenty seven, that's my forecast, but I think twenty
Speaker 12: twenty five is going to be tougher. Fair price for
Speaker 12: oil in twenty twenty five is probably seventy give or take,
Speaker 12: maybe a five dollars band around that. If we have
Speaker 12: challenges in the Middle East, all bets are off. If
Speaker 12: it's supply and demand. My expectation kind of seventy to
Speaker 12: seventy to eighty sixty five to seventy five something like that.
Speaker 4: Dan, I always joke or often joke that you know
Speaker 4: my next lefe I want to come back as an
Speaker 4: energy m and a banker. Every Monday we come in.
Speaker 4: It seems to be something on the Bloomberg terminal talk
Speaker 4: to us about consolidation in the energy space. Where are
Speaker 4: we what are you likely to see over the next
Speaker 4: year or two.
Speaker 5: Yeah.
Speaker 12: So it has been a very active M and A
Speaker 12: market with companies focused primarily on four things. They're adding inventory,
Speaker 12: they're going for size, they're looking for scale, and it's
Speaker 12: happening at pretty good values. And so because the market
Speaker 12: has not been that interested in energy, right, it's an
Speaker 12: underperformer last year, it's an underperformer this year.
Speaker 11: Because these stocks are pretty cheap.
Speaker 12: The companies are buying each other, and as they're doing that,
Speaker 12: they're replenishing the inventory that they that they drilled up
Speaker 12: during COVID. They're getting bigger, which is important. You know,
Speaker 12: bigger companies are getting more attention from the market, they're
Speaker 12: getting more profitable, and they're doing it at three or
Speaker 12: four times cash flow.
Speaker 11: All of those attractive things. It's going to keep going.
Speaker 2: Yeah, Dan, that's such a good point because, first of all,
Speaker 2: I want to point out, Paul, you wouldn't want to
Speaker 2: admit an m and a banker like a few years ago,
Speaker 2: there was like a whole that and nothing happening. But
Speaker 2: the idea is, if you're an investor or, you're a
Speaker 2: pension fund or something like, you can't own a huge
Speaker 2: bunch of oil stocks. Like your investors are not going
Speaker 2: to like that. So it's like you have to gussie
Speaker 2: yourself up to be the top one or two oil
Speaker 2: players out there. So to that point, who needs to
Speaker 2: still buy stuff? And who needs to be sold.
Speaker 12: Yeah, I think if you look at all levels, companies
Speaker 12: are trying to get bigger, whether it's Exon buying Pioneer,
Speaker 12: or you move down into as much smaller market caps.
Speaker 12: So I think that we'll continue to see probably fifty
Speaker 12: billion as a give or take the point.
Speaker 11: Of relevance for the broad markets.
Speaker 12: And so my expectation is folks that are below that
Speaker 12: are going to keep buying trying to get to that size,
Speaker 12: and that folks that are sort of smaller than Exon
Speaker 12: are going to going to keep merging. So it's kind
Speaker 12: of across the board right now, Alex. And again, these
Speaker 12: companies will keep buying each other until the market decides
Speaker 12: that they're going to buy the stocks.
Speaker 4: And Dan, you mentioned that the energy stocks have been underperformers.
Speaker 4: What is the bowl case out there for energy? Is
Speaker 4: it simply maybe just valuation here?
Speaker 12: Yeah, the bull case is strong yields, very good free
Speaker 12: cash flow. The companies have turned into real businesses since
Speaker 12: the shale bust, and so they're throwing off a lot
Speaker 12: of cash. We're turning a lot of it to shareholders.
Speaker 12: The other piece is it is an inflation hedge. Nobody's
Speaker 12: thinking about inflation right now unless it comes back. And
Speaker 12: then you have this sort of geopolitical element, which is,
Speaker 12: if things do spiral out of control, you're going to
Speaker 12: want to own some energy stocks, So there's a bit
Speaker 12: of a hedge, and then there's value.
Speaker 11: Those are the two arguments for the energy sector right now.
Speaker 2: Do you think that oil producers will keep producing more oil?
Speaker 2: Let me define that question a little bit. Have they
Speaker 2: run out of the good stuff? And that's another reason
Speaker 2: why we're seeing the m and and I don't want
Speaker 2: to underestimate shale players because we know that innovation and
Speaker 2: technology is huge, but they have a lot of other
Speaker 2: stuff they need to spend on, particularly in the energy transition.
Speaker 2: So can we count on technology to make the rock good?
Speaker 12: The answer is yes, on the margin. There's another lag
Speaker 12: up in efficiencies that's been happening this year. I think
Speaker 12: the reality, though, is that US shale is maturing, and
Speaker 12: what that translates to is likely sort of an upward
Speaker 12: push on cost structures and upward push on commodity price. Remember,
Speaker 12: you know shales now over half of much more than
Speaker 12: half of US production. The Permian alone is six million
Speaker 12: barrels a day. That is a meaningful player in the
Speaker 12: global market, and so as those assets mature, there's an
Speaker 12: upward bias to price. Never count out ingenuity and efficiencies.
Speaker 12: But as this as this industry matures, we're going to
Speaker 12: to see a slow upward push.
Speaker 11: On cost and price.
Speaker 2: And for let you go, Dan, how do you think
Speaker 2: the election is going to affect Big oil at all?
Speaker 2: I know that the talk is going to be like,
Speaker 2: we want oil friendly, blah blah blah, But in reality,
Speaker 2: they're not going to want build a drill, baby drill
Speaker 2: because they don't want to do that. They're going to
Speaker 2: tank the oil price materially. Do you think the election
Speaker 2: matters for oil companies?
Speaker 12: Snipple answers know, Alex. I think that these companies it
Speaker 12: may be a little bit easier or a little bit
Speaker 12: harder to interact and run the business depending on who
Speaker 12: gets elected.
Speaker 11: The reality is that, you.
Speaker 12: Know, politicians have proved that they want low gas prices.
Speaker 12: We're not punishing bad actors globally, We're letting them produce
Speaker 12: their oil.
Speaker 11: We want US oil. We're not going to punish this
Speaker 11: industry too much.
Speaker 12: And the industry itself is not going to step up
Speaker 12: and get super active unless there's a price signal. So
Speaker 12: the election it matters for a sentiment perception. I don't
Speaker 12: think it matters a ton for reality.
Speaker 4: All right, that's great stuff. Dan appreciate it as always.
Speaker 4: Dan Pickering, Chief investment Officer, Pickering Energy Partners. I've known
Speaker 4: Dan as a voice on energy for thirty years. It's yeah,
Speaker 4: And Buddy Man used to work with him. David Bradshaw,
Speaker 4: my energy investment banker. He's my go to guy all
Speaker 4: things there.
Speaker 2: Nice.
Speaker 4: Well, let's get him on too, we will, right will.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: So the FED isn't a rate cutting cycle at this point.
Speaker 2: How much they cut TBD, but the idea is that
Speaker 2: they're in a global central bank easing with the exception
Speaker 2: of Japan. Does it make certain aspects of the market
Speaker 2: a little bit easier to stomach, like commercial real estate?
Speaker 2: So I want to check in on that with David Aurback,
Speaker 2: a chief Investment Office sir at Hoya Capital. He joins
Speaker 2: us from Dallas, Texas. How have reads done? If we're
Speaker 2: taking a look since the FED first cut and then
Speaker 2: the trajectory now for this year and next, how are
Speaker 2: reeds performing well?
Speaker 8: In the lead up to the interest rate cut? Reads
Speaker 8: performed very well post FED rate cut. The reds have
Speaker 8: not done so well. They've given back some of that
Speaker 8: return because the tenure treasury is back over four percent
Speaker 8: for the first time since August.
Speaker 6: With the less.
Speaker 8: Likelihood of more significant rate cuts on the calendar this year,
Speaker 8: I wouldn't expect the reads to respond accordingly. Obviously, if
Speaker 8: we can get the ten year back below four percent again,
Speaker 8: that should bode well. And the reason being the cost
Speaker 8: of borrow for the reads is they go to refinance
Speaker 8: becomes more attractive. Reads would obviously be able to borrow debt,
Speaker 8: would like to borrow debt with a four handle or
Speaker 8: a five handle let alone.
Speaker 6: They don't want to borrow at a six handle.
Speaker 8: So any movement at the that is able to go
Speaker 8: lower on the interest rates only provide some tailwinds for
Speaker 8: the reads as a whole.
Speaker 4: David, what was the last fish concert you went to?
Speaker 6: Good to see you, Paul, Thank you so much.
Speaker 8: I was in Colorado at Dix in Labor Day and
Speaker 8: right now my next schedule concert will either be MSG
Speaker 8: in New Year's run or Mexico in February.
Speaker 2: All right, how did you know that?
Speaker 4: It's in the notes? You got to do your work here.
Speaker 4: Put and if you come to Manison Square Garden. If
Speaker 4: you come to the garden, you can see Matt Miller.
Speaker 4: He's there with his all his brothers and McKee.
Speaker 2: Oh no, you're talking of fish.
Speaker 4: I'm kind of the same same thing.
Speaker 2: I mean kind of yeah.
Speaker 6: I thought it's kind of.
Speaker 4: You know, kind of ye did so, all right, David?
Speaker 4: Did the banks? Are they still lending to real estate?
Speaker 1: David?
Speaker 4: If I've got a project, can I go to my
Speaker 4: local bank? And are they going to make me alone?
Speaker 8: Well, for a lot of the reads themselves, remember they're
Speaker 8: able to go out and borrow their own debt. They
Speaker 8: have strong balance sheets obviously on a one off off
Speaker 8: type basis.
Speaker 6: For the individual investor, the answer is going to be
Speaker 6: it depends.
Speaker 10: You know.
Speaker 6: I think with some of the big big.
Speaker 8: Banks, the JP Mortgage, the Bank of Americas, you know,
Speaker 8: they might be more likely to lend depending if the
Speaker 8: borrower qualifies. Obviously on the regional bank level, that becomes
Speaker 8: again on a case by case basis. But the lending
Speaker 8: window is open and the past month, two months alone,
Speaker 8: Reads have been able to borrow you know, takedown. Frankly,
Speaker 8: billions of dollars of new debt. I want to say,
Speaker 8: it's close to like between five and ten billion dollars
Speaker 8: have been raised by a handful of rates, and so
Speaker 8: the money is out there.
Speaker 2: What about residential reads.
Speaker 8: Great place to be because of the housing shortage and
Speaker 8: lack of affordability, It's one of the core focuses of
Speaker 8: our JOYA Housing Index, and so as a result, when
Speaker 8: you think about the lack of affordability, it's the residential reads,
Speaker 8: the apartments, the single family rental guys that benefit. And
Speaker 8: also when you think about some of the other companies
Speaker 8: that are out there, you know, because a person can't
Speaker 8: go out necessarily and buy affordable home, they're putting more
Speaker 8: you know, work into their exist stay home. And so
Speaker 8: again one of the unique funds of stories of the
Speaker 8: Hawaiia Housing Index is because we also include your home depots,
Speaker 8: your lows, your restoration hardwares, because again that affordable product
Speaker 8: isn't out there for the average consumer.
Speaker 4: Can you explain to me how we got to this point, David,
Speaker 4: where they're really we always talk about a housing shortage.
Speaker 4: How do we get there? How hard is it to
Speaker 4: build a multi family apartment?
Speaker 8: Well, the obviously higher rates of impacted construction costs, So
Speaker 8: that's why you're not seeing a lot of new apartment
Speaker 8: projects underway. I also do blame the COVID run up
Speaker 8: taking away some of that housing inventory, since we saw
Speaker 8: you know, flippers and people taking down second homes, guys
Speaker 8: wanting to get out of apartments and you know, taking
Speaker 8: the first home possible. But you know, when you look
Speaker 8: at some of the hottest markets in the country as
Speaker 8: far as rentals, it's in your neck of the woods
Speaker 8: in New York City, it's in Chicago. I saw a
Speaker 8: story that Detroit is one of the hottest rental markets
Speaker 8: right now. And so the housing issue is a chose
Speaker 8: to co nationwide issue. You know, you could point to
Speaker 8: pockets of areas that have more problems versus others because
Speaker 8: again of that affordability angle. But think about a rental project.
Speaker 8: You know, I can rent an apartment here in Dallas
Speaker 8: for a couple of thousand dollars, and that same apartment's
Speaker 8: going to cost me forty five hundred dollars or more
Speaker 8: in Los Angeles or San Francisco. So again the number
Speaker 8: one rule of housing or real estate location, location location.
Speaker 2: When you take a look at the different reads, is
Speaker 2: it going to be in large cap reads, mid cap
Speaker 2: small caps? Like how do you guys look at it?
Speaker 8: We skew our high dividendy Old Index RIET towards small
Speaker 8: and mid cap reads. The reason being reads as a whole,
Speaker 8: they only make up about two percent of the S
Speaker 8: and P five hundred or about seven percent of the
Speaker 8: S and P MidCap four small cap six hundred, So
Speaker 8: we see a lot of opportunities in hidden gems in
Speaker 8: the world of small and mid cap reads that's going
Speaker 8: to kind of provide that, you know, i'd say alpha,
Speaker 8: that performance that you're looking for. We focus on dividends,
Speaker 8: and again it's really those smaller MidCap reates that offer
Speaker 8: the higher dividend yields are also our high dividend field fund.
Speaker 8: I believe this to currently the only ret in real
Speaker 8: estate product that's on the market that offers both common
Speaker 8: and preferred stocks in one rapper. So with us taking
Speaker 8: a ten percent allocation or one third of the names
Speaker 8: of RIET into repreferreds, if you add up small and
Speaker 8: MidCap rates, mortgage red exposure plus our repreferred exposure, we're
Speaker 8: paying a monthly dividend that's annualized just under nine percent.
Speaker 8: And if you just bought a large market cap weighted
Speaker 8: ETF like a VNQ, your yield is probably closer to
Speaker 8: three point eight percent, because again it's really focusing on
Speaker 8: those big large cap names.
Speaker 4: In terms of the dividends, David, what do you guys
Speaker 4: kind of value more dividend payout or dividend growth.
Speaker 8: That's a great question. I mean, I hate to say
Speaker 8: it's a little bit of both. I think to the
Speaker 8: end investor, though, they really want the company to do
Speaker 8: four things. Grow revenues, grow profits, grow dividends, and grow
Speaker 8: annual guidance. For a lot of the reds, because of
Speaker 8: a RED is just a dividend income passed through vehicle,
Speaker 8: so they want to make sure that they are obviously maintaining,
Speaker 8: if not growing that dividend on an annual basis if possible.
Speaker 8: So I think you're kind of looking at both sides
Speaker 8: of it. How do we make sure that we don't
Speaker 8: have to cut our dividend, and what are the tools
Speaker 8: in place that we can put there to grow our dividend.
Speaker 6: And it's really both sides of the equation.
Speaker 8: It's how do we maximize our revenue growth and minimize
Speaker 8: our expense growth? And for like you talk about residential,
Speaker 8: you know, the big issue with residential right now is insurance.
Speaker 8: What we're seeing in Florida unfortunately with the hurricanes and
Speaker 8: property taxes, especially for the single family rental guys. So
Speaker 8: we can minimize their expense growth and maximize revenue growth
Speaker 8: that should hopefully lead to a higher dividend payment in
Speaker 8: investors pockets.
Speaker 2: But you go want it. Also get your take on
Speaker 2: sort of other property sectors within the re market. Retail.
Speaker 2: When I say retail, what am I asking? Is it
Speaker 2: big malls? Is it like smaller retail presence? Like how
Speaker 2: are those reads performing?
Speaker 8: Yeah, they've actually come out pretty well over the past
Speaker 8: couple of years when they were really kind of not
Speaker 8: really well received by investors.
Speaker 6: And I think it's due to a couple of things.
Speaker 8: Again, lack of new supplies, Like we're building a ton
Speaker 8: of new shopping centers coast to coast, you're looking at
Speaker 8: an evolution of the product. A good example is Tanger,
Speaker 8: a typical factory outlet mall. The tenant offerings are different
Speaker 8: today than what you would have seen just a couple
Speaker 8: of years ago. A lot of these companies also, like
Speaker 8: the mall guys, are trying to bring in more experiential
Speaker 8: type offerings, not stuff.
Speaker 6: That you can replicate online.
Speaker 8: And so the goals to try to bring the family
Speaker 8: to the mall, you know, provide them in a lot
Speaker 8: of activities that you've captured that consumer for multiple hours
Speaker 8: in a day. But really, you know, think about your
Speaker 8: typical grocery anchor shopping center. We're going to get groceries
Speaker 8: every single week, right. Obviously we see the inflation side
Speaker 8: of it since the prices of a lot of the
Speaker 8: goods are up, but that anchor tenant, that grocery store,
Speaker 8: it's not there going away really anytime soon.
Speaker 6: Now. Obviously we've got some stop with.
Speaker 8: The Oppersons Kroger merger that is going to kind of
Speaker 8: send some shock waves through the grocery anchor industry. But
Speaker 8: I think with the lot of these reads, with the
Speaker 8: relationships that they have and the experienced management teams, these
Speaker 8: anchor spaces are not going to be dark for very long.
Speaker 2: All right, we appreciate it. Thank you so very much
Speaker 2: for joining us on those reads. David Aurbak, chief investment
Speaker 2: Officer at Hoya Capital.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: Happy to everybody. I'm Alex c alongside Polsweenia John Tucker.
Speaker 2: This is Bloomberg Intelligence Radio. We're broadcasting to you live
Speaker 2: from Interactive Broker Studio right here in Midtown Manhattan. We
Speaker 2: have a great pig Take story out for you. We
Speaker 2: love diving deep into all the topics and subjects that
Speaker 2: you need. It's a great Big Take podcast, and then
Speaker 2: you can also get it on Bloomberg dot Com as
Speaker 2: well as The Terminal and Today's Big Take a Big
Speaker 2: Take story is on how VW so Volkswagen and Mercedes
Speaker 2: are getting just left in the dust by China's evs.
Speaker 2: The whole industry is getting squeezed by these cheap EV's
Speaker 2: from China. How do they recalibrate? Oliver Cook joins us.
Speaker 2: Now Crook, excuse me, Oliver Krook. Bloomberg gear of correspondent
Speaker 2: joins us. Oliver, it's been way too long since we chatted,
Speaker 2: so hello. Indeed, it's so good to see you.
Speaker 4: We know that.
Speaker 2: Volkswagen and Mercedes are struggling and are left in the dust.
Speaker 2: Just how far behind in the dust are they?
Speaker 5: So listen, Alex.
Speaker 13: It defense kind of where you want to approach this
Speaker 13: question from when we talk about the Chinese market, which
Speaker 13: again is a very key market for Mercedes, bm W
Speaker 13: and Volkswagen. This is their biggest market, or has traditionally
Speaker 13: been their biggest market for a very long time. You
Speaker 13: look at just the three third quarter deliveries that we
Speaker 13: got just a couple.
Speaker 5: Of weeks ago.
Speaker 13: BMW alone was down thirty percent in terms of the
Speaker 13: sales that they were making in China, and that is
Speaker 13: their biggest market. So that illustrates the scale of the
Speaker 13: importance of this here. The problem is is that this
Speaker 13: is not just a question of the Chinese slowdown, right.
Speaker 13: This isn't a question of just we're going to put
Speaker 13: some stimulus in demand's going to come back. The nature
Speaker 13: of that demand in China is now changing. So what
Speaker 13: we see now in the Chinese market is that more
Speaker 13: than half of the car is being sold there are evs.
Speaker 13: And so while they still retain a lot of these
Speaker 13: German car companies some of that market share, a good
Speaker 13: amount of that market share, it's really not in the
Speaker 13: EV section and they're not even in the sort of
Speaker 13: top five or ten in the leader board for evs.
Speaker 13: So the question is going forward, how do you get
Speaker 13: competitive again. The problem they have is they had that
Speaker 13: IC market share. It's about winning that electric market share,
Speaker 13: and they're just way behind on the inside of the
Speaker 13: car and the electronics.
Speaker 2: Yeah, the IC is the internal combustion engine part, which
Speaker 2: is the hardest part for these guys. Is it actually
Speaker 2: the battery? Is it just doing it all cheaply? Or
Speaker 2: is it the bending in the metal for the evs?
Speaker 2: Where is the struggle?
Speaker 13: I mean, it's a combination of all of these things.
Speaker 13: There is, of course, are the battery components, even the
Speaker 13: sort of the evs that are sold here in Europe,
Speaker 13: even the ones that are produced here in Europe. The
Speaker 13: batteries are still coming from China. All of the components
Speaker 13: are coming over from China because they've really sort of
Speaker 13: been very proactive with their raw material policy, everything from
Speaker 13: the lithium to this processing that all goes on to China.
Speaker 13: The other issues, of course, the cost base, and we're
Speaker 13: starting to see that hit here in Europe where Volkswagen
Speaker 13: is talking about closing factories for the very first time
Speaker 13: in its history. They're talking about closing a factory in Belgium,
Speaker 13: closing a few factories in Germany. And to understand why
Speaker 13: that's so important, this is a company that has literally
Speaker 13: never done that before in Europe, in large part because
Speaker 13: you know, their supervisory board half of their seats are
Speaker 13: held by sort of union representatives. So if they're moving
Speaker 13: forward and making that decision, it's because things are very
Speaker 13: very challenging the cost base. If you look at the
Speaker 13: hourly wages of its sort of autoworker in Germany, it's
Speaker 13: close to like sixty two year euros an hour. You
Speaker 13: go to Hungary, just not too far away, it's sixteen
Speaker 13: euros an hour.
Speaker 2: Okay, how do they fix it? And that's a silly question,
Speaker 2: but like do they need a massive amount of subsidies
Speaker 2: to stimulate demand or do they need sort of unions
Speaker 2: to get out of their way. What would make this
Speaker 2: process a little bit easier.
Speaker 13: It's going to be a combination of all of those things,
Speaker 13: and one thing that makes it even harder, Alex, if
Speaker 13: you haven't talked about yet, is there actually our new
Speaker 13: EU regulations coming into force at the end of this
Speaker 13: year that basically stipulate that they twenty percent of all
Speaker 13: the cars that they need to sell basically need to
Speaker 13: be EV's. The problem is there's a mismatch between what
Speaker 13: policy makers wants and what the market wants. Right now,
Speaker 13: the market is stuck. These guys are still selling below
Speaker 13: fifteen percent evs. If they fail to hit that twenty
Speaker 13: percent by the end of this year, they're looking at
Speaker 13: potentially billions of euros worth of fines. So that's just
Speaker 13: another sort of overlay there. But this all, you know,
Speaker 13: I mean, the policy sort of dissonance that exists is
Speaker 13: one issue. But really these are car makers that have
Speaker 13: it's partially their own doing, right, They were just far
Speaker 13: behind on this. The former Volkswagen CEO, he really wanted
Speaker 13: to lean into electrification.
Speaker 5: They were into that.
Speaker 13: They got rid of him. They brought in somebody new
Speaker 13: and now they're really paying the price.
Speaker 4: Hol or how much of this is nationalism we've seen
Speaker 4: with Apple with the iPhone. Maybe the concerns that the
Speaker 4: Chinese consumer on the margin doesn't want to buy Western products.
Speaker 13: So listen, I think that that is going to be
Speaker 13: part of it. And of course this is the Chinese
Speaker 13: policymakers have been trying to gear their sort of economy
Speaker 13: to not have the kind of dependency that they've historically had. Remember,
Speaker 13: the Chinese were really sort of welcoming with open arms
Speaker 13: Volkswagen back in the nineteen eighties when they first sort
Speaker 13: of started producing cars in the Chinese market because there
Speaker 13: was no automotive industry in China. What is interesting now
Speaker 13: is you're seeing some of these European car makers now
Speaker 13: sort of inverting that sort of same dynamic where you
Speaker 13: have the partnerships with say Stilantis and Leap Motor, a
Speaker 13: Chinese company have a joint venture here in Europe where
Speaker 13: now Stilandis owns fifty one percent, so that they are
Speaker 13: starting to build Chinese cars at their own plants. And
Speaker 13: that is so we talked about the sort of threat
Speaker 13: to the Chinese market that is also coming very very
Speaker 13: quickly and very soon to the European shores as.
Speaker 2: Well, which is so ironic because if Europe really wanted
Speaker 2: to green stuff fast, they would just import a boltload
Speaker 2: of Chinese EV's on the cheap and have their consumers
Speaker 2: buy them. To your point, then it becomes like a
Speaker 2: nationalist point, Paul, who Okay, who's in the worst who's
Speaker 2: in the best spot of this debacle?
Speaker 13: Are you really really putting me on the spot here?
Speaker 13: We try to get forty five second?
Speaker 2: I mean, listen, I'll tell you this.
Speaker 13: The Lansas is down forty five percent this year. They're
Speaker 13: down almost lost a fifth of their value since a
Speaker 13: profit warding two weeks ago. For thinking about companies that
Speaker 13: are really well physicianed in Europe.
Speaker 5: You think about Tesla.
Speaker 13: They've got manufacturing over in Germany, and guess what they
Speaker 13: make only EV's, so they're able to even sell some
Speaker 13: of those credits when those regulations kick it next year.
Speaker 2: Okay, so you didn't twenty seven seconds? What are you
Speaker 2: complaining about it? He's totally fine, Oliver Cook, Thank you
Speaker 2: so very much, really appreciate it. Great to chat with you.
Speaker 2: Bloomberg Europe a correspondent joining US in the Big Take
Speaker 2: story Volkswagen Mercedes getting left in the dust by China's EV's,
Speaker 2: and you can read more of the story on Bloomberg
Speaker 2: and at bloomberg dot com slash Big Take.
Speaker 4: I didn't even think that would be a risk for
Speaker 4: the West. I thought the brands were so strong over
Speaker 4: there that and the quality was so much better. But
Speaker 4: maybe that's not the case.
Speaker 2: I think maybe it's just a price point. Yeah, me
Speaker 2: at this point, and like everyone wants a super cool,
Speaker 2: luxury hot EV right like that in essence, isn't a problem.
Speaker 2: Like if you want to pay a bazillion dollars for
Speaker 2: a Porsche that has an EV engine, no problem. But
Speaker 2: that's not the issue.
Speaker 4: I didn't. I want the guess.
Speaker 2: Yeah, but you're not going to buy a Porsche. Okay,
Speaker 2: you've bought your Vespa.
Speaker 4: This is different a Vespa, Yes I did.
Speaker 2: Would you buy an EV Vespa?
Speaker 3: No?
Speaker 4: Please?
Speaker 3: No?
Speaker 2: Please?
Speaker 6: Okay.
Speaker 4: Le's kind of thrawl the lines somewhere, but that's so easy.
Speaker 2: It's a little thing. You plug it in anyway.
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