1 00:00:00,160 --> 00:00:04,040 Speaker 1: Tesla. Welcome to the Bloomberg Markets Podcast Paul Sweeney. Alongside 2 00:00:05,680 --> 00:00:09,160 Speaker 1: every business day we bring you interviews from CEO, market 3 00:00:09,200 --> 00:00:13,520 Speaker 1: crows and Bloomberg experts, along with essential market moving news 4 00:00:14,200 --> 00:00:17,239 Speaker 1: on the Bloomberg Markets Podcast on Apple podcast or wherever 5 00:00:17,360 --> 00:00:22,320 Speaker 1: you listen to podcasting studios. Senior analyst to Wedboach Security 6 00:00:22,400 --> 00:00:26,120 Speaker 1: sporting his Rose Bowl hat hence state big win. We'll 7 00:00:26,120 --> 00:00:27,840 Speaker 1: get to that. I thought they played very well. Good 8 00:00:27,840 --> 00:00:32,960 Speaker 1: goodwin there. Man Deep Singh also joining us in studio here. Um, Dan, 9 00:00:33,080 --> 00:00:35,559 Speaker 1: I know you've been dealing with this issue for all 10 00:00:35,600 --> 00:00:38,800 Speaker 1: the year. Um what do you say to clients? Because 11 00:00:38,840 --> 00:00:42,000 Speaker 1: I know as an equity research analyst, your job over 12 00:00:42,040 --> 00:00:44,640 Speaker 1: the years has been kind of in part, educate your 13 00:00:44,840 --> 00:00:47,879 Speaker 1: clients on the EV market, on the opportunities, on the 14 00:00:47,880 --> 00:00:50,600 Speaker 1: investment opportunities, and the test of story had worked for 15 00:00:50,720 --> 00:00:53,360 Speaker 1: shareholders and your clients so well, and then a lot 16 00:00:53,440 --> 00:00:55,800 Speaker 1: of things have turned here into the last twelve months. Yeah, 17 00:00:55,840 --> 00:00:57,560 Speaker 1: I mean it's been a perfect storm. I mean the 18 00:00:57,600 --> 00:01:01,120 Speaker 1: first part was the most Twitter circuits were driven, but 19 00:01:01,200 --> 00:01:03,600 Speaker 1: this last part has been demand words and you look, 20 00:01:03,680 --> 00:01:07,160 Speaker 1: China's the hearts and loans of the Tesla story. Competition 21 00:01:07,280 --> 00:01:12,200 Speaker 1: clearly increasing within the country. Domestically, you're seeing price cuts 22 00:01:12,240 --> 00:01:14,640 Speaker 1: and some cracks in the armor. And I think right 23 00:01:14,640 --> 00:01:17,120 Speaker 1: now the big worry is you saw the price cut today, 24 00:01:17,520 --> 00:01:20,040 Speaker 1: what does that mean for demand? And especially what does 25 00:01:20,040 --> 00:01:23,080 Speaker 1: that mean for margins. Look, my view is that they've 26 00:01:23,240 --> 00:01:26,800 Speaker 1: actually have now the scale to expand margins, so they 27 00:01:26,800 --> 00:01:30,440 Speaker 1: have flexibility. They could cut prices even another four to 28 00:01:30,520 --> 00:01:34,000 Speaker 1: five percent and margins still, you know, I believe could 29 00:01:34,040 --> 00:01:38,080 Speaker 1: stay relatively range bound. But it's it's all about the 30 00:01:38,080 --> 00:01:41,000 Speaker 1: fear of the unknown. You obviously have a key earnings, 31 00:01:41,120 --> 00:01:45,800 Speaker 1: the key guidance coming around the corner January, and Musk 32 00:01:45,959 --> 00:01:48,760 Speaker 1: is the one that started the five alarm fire. He 33 00:01:49,040 --> 00:01:52,559 Speaker 1: is the only one that could extinguish it. Man deep uh, 34 00:01:52,680 --> 00:01:55,000 Speaker 1: you know that what caught me off guard was the 35 00:01:55,200 --> 00:01:59,360 Speaker 1: huge delta between what apparently Chinese consumers pay for a 36 00:01:59,400 --> 00:02:01,720 Speaker 1: Tesla and what I would pay if I bought one. 37 00:02:01,800 --> 00:02:04,920 Speaker 1: Here are are these apples to apples? Because that would 38 00:02:04,920 --> 00:02:07,880 Speaker 1: make me very, very very angry if I were a 39 00:02:07,960 --> 00:02:11,640 Speaker 1: US consumer knowing that my Chinese counterparts are paying less 40 00:02:11,639 --> 00:02:14,560 Speaker 1: for the same product. Well, so one is a cost 41 00:02:14,600 --> 00:02:18,400 Speaker 1: of manufacturing will differ and because we are talking about 42 00:02:18,400 --> 00:02:21,320 Speaker 1: geo political landscape where you know, people want to move 43 00:02:21,360 --> 00:02:24,200 Speaker 1: their supply chains here. You will have a cost differential 44 00:02:24,280 --> 00:02:27,080 Speaker 1: more and more so this trend is not going away. 45 00:02:27,280 --> 00:02:31,040 Speaker 1: If you're moving things on shore, you will have higher 46 00:02:31,080 --> 00:02:37,560 Speaker 1: costs and then that's so cheaper price tag. That's for 47 00:02:37,680 --> 00:02:40,399 Speaker 1: a made in China test versus a maiden. It's all 48 00:02:40,400 --> 00:02:42,680 Speaker 1: about localized manufactur for got it. So, I mean Dave 49 00:02:42,760 --> 00:02:44,799 Speaker 1: Dan was talking about, you know, some of the challenges 50 00:02:45,200 --> 00:02:48,880 Speaker 1: they're just a test of fundamentally, but he also mentioned 51 00:02:48,919 --> 00:02:50,919 Speaker 1: that one of the big challenges for the stock has 52 00:02:50,960 --> 00:02:54,960 Speaker 1: just been Elon and Twitter. What are you hearing from? 53 00:02:55,000 --> 00:02:57,760 Speaker 1: I don't know the digital advertising community as it relates to, 54 00:02:58,520 --> 00:03:01,320 Speaker 1: you know, really the future of Twitter. Has he paid 55 00:03:01,320 --> 00:03:05,880 Speaker 1: forty four billion dollars for something that may be worth less? 56 00:03:05,919 --> 00:03:09,480 Speaker 1: I mean, look at Fidelity, they marked down Twitter's steak 57 00:03:09,560 --> 00:03:13,000 Speaker 1: by almost fifty So according to them, Twitter should be 58 00:03:13,040 --> 00:03:16,880 Speaker 1: valued at billion. Then forty four billion you'ren't paid for. 59 00:03:17,040 --> 00:03:20,480 Speaker 1: So clearly, when you when you're private investors and they're 60 00:03:20,520 --> 00:03:23,280 Speaker 1: like four or five of them, they're marking down the investment, 61 00:03:23,280 --> 00:03:26,360 Speaker 1: it tells you something. And look, the ad market isn't 62 00:03:26,360 --> 00:03:30,000 Speaker 1: gonna get better anytime soon. And Twitter's positioning, I mean, 63 00:03:30,200 --> 00:03:32,960 Speaker 1: it was all brand advertising and that's the one that 64 00:03:33,120 --> 00:03:36,480 Speaker 1: got hit the most in this downturn. So clearly I 65 00:03:36,520 --> 00:03:39,640 Speaker 1: don't see a way back, you know, anytime soon. This 66 00:03:39,720 --> 00:03:41,560 Speaker 1: year is going to be awful for most of the 67 00:03:41,600 --> 00:03:44,960 Speaker 1: digital ad companies, more so for the ones exposed to 68 00:03:44,960 --> 00:03:48,640 Speaker 1: brand advertising, which is Twitter. So Dan, if if brands 69 00:03:48,680 --> 00:03:51,720 Speaker 1: want to get away from the Elon Musk brand, because 70 00:03:51,720 --> 00:03:55,320 Speaker 1: that's what it is, right, Um, do consumers want to 71 00:03:55,320 --> 00:03:58,320 Speaker 1: get away from the Elon Musk brand because I can't 72 00:03:58,320 --> 00:04:03,440 Speaker 1: imagine uh, you know, left leaning, progressive, middle class UM 73 00:04:03,600 --> 00:04:06,520 Speaker 1: couple wanting to buy a Tesla these days. Well, I 74 00:04:06,520 --> 00:04:09,320 Speaker 1: think brand deteration has been issue. We've talked about two 75 00:04:09,360 --> 00:04:11,840 Speaker 1: black eye from Musk, it's a black eye for Tesla. 76 00:04:12,600 --> 00:04:15,440 Speaker 1: I do think that this can be course corrected. Look, 77 00:04:15,480 --> 00:04:17,720 Speaker 1: if you look at the broader e V market, it's 78 00:04:17,720 --> 00:04:21,599 Speaker 1: still Tesla's world. Everyone else paying rent relative to market share. 79 00:04:21,680 --> 00:04:25,559 Speaker 1: Now competitions increasing. You look into three one three area code, 80 00:04:25,600 --> 00:04:28,240 Speaker 1: GM four and others, and I believe GM can be 81 00:04:28,320 --> 00:04:31,120 Speaker 1: very successful on evs. It's a fork in the road. 82 00:04:31,200 --> 00:04:33,560 Speaker 1: It's a moment of truth from musk and it all 83 00:04:33,720 --> 00:04:38,440 Speaker 1: starts gen you guys set realistic expectations to hit not 84 00:04:38,760 --> 00:04:41,719 Speaker 1: lofty ones. Guy named the CEO to Twitter to start 85 00:04:41,720 --> 00:04:44,359 Speaker 1: to get some sort of hands off here, and then 86 00:04:44,680 --> 00:04:48,120 Speaker 1: I believe the stock starts to correct itself. But right 87 00:04:48,120 --> 00:04:52,560 Speaker 1: now it's it's obviously earnings date for Tesla. Why by 88 00:04:52,560 --> 00:04:55,000 Speaker 1: the way, stepping back and looking at this over the 89 00:04:55,080 --> 00:04:59,600 Speaker 1: last ten, twelve, thirteen years, why has it taken and 90 00:04:59,720 --> 00:05:05,600 Speaker 1: come and automakers so long to get into this business 91 00:05:05,640 --> 00:05:08,520 Speaker 1: that was clearly going to grow like gangbusters. I mean, 92 00:05:08,560 --> 00:05:11,919 Speaker 1: now you see GM and Ford getting into it, Folkswagen 93 00:05:12,000 --> 00:05:15,760 Speaker 1: obviously going full tilt, but over a decade later and 94 00:05:15,800 --> 00:05:18,400 Speaker 1: they're still you know, we had a great story about Toyota. 95 00:05:18,720 --> 00:05:21,000 Speaker 1: They pioneered the space in a sense with the with 96 00:05:21,040 --> 00:05:24,880 Speaker 1: the what's that little thing called? And and they still 97 00:05:25,600 --> 00:05:28,160 Speaker 1: gave up on this market. You know, Nissan had the 98 00:05:28,279 --> 00:05:32,080 Speaker 1: Leaf forever ago and they still haven't invested in what 99 00:05:32,120 --> 00:05:33,960 Speaker 1: they need to in this market. How come is it? 100 00:05:34,000 --> 00:05:36,599 Speaker 1: Is it a conspiracy with the oil producers or what's 101 00:05:36,600 --> 00:05:40,320 Speaker 1: the deal? It's historic as in, like they'll study this 102 00:05:40,520 --> 00:05:43,760 Speaker 1: from decades and decades. It's a historic miss for the 103 00:05:43,800 --> 00:05:49,400 Speaker 1: traditional automakers, and ultimately Musk, you know, from an innovation perspective, 104 00:05:49,480 --> 00:05:52,599 Speaker 1: was really the one that drove Tessa to basically think 105 00:05:52,920 --> 00:05:56,080 Speaker 1: the box and create something that other automakers almost laughed 106 00:05:56,120 --> 00:05:59,320 Speaker 1: at the time. Now, obviously they're following where Tesla is 107 00:05:59,360 --> 00:06:01,480 Speaker 1: and then it comes down to like us two and 108 00:06:01,520 --> 00:06:04,359 Speaker 1: a half percent autos were reviews. So we're still in 109 00:06:04,400 --> 00:06:07,480 Speaker 1: the early days. But ultimately Musk has done what new 110 00:06:07,600 --> 00:06:11,200 Speaker 1: competitor can do. He's created this sort of feel like 111 00:06:11,200 --> 00:06:13,360 Speaker 1: there's got to be some conspiracy. I feel like there 112 00:06:13,360 --> 00:06:15,039 Speaker 1: has to be CEOs were I'm dead with Big Oil 113 00:06:15,040 --> 00:06:17,039 Speaker 1: because at the I p O, at the test I 114 00:06:17,120 --> 00:06:19,640 Speaker 1: p O, we all said, oh no, when the competition 115 00:06:19,680 --> 00:06:22,440 Speaker 1: comes in, they're screwed. And it's been over a decade. Okay, 116 00:06:22,440 --> 00:06:24,240 Speaker 1: we'll give him over a decade head start. No one 117 00:06:24,279 --> 00:06:26,640 Speaker 1: says that. In the business answer per Kevin Tyne and 118 00:06:26,720 --> 00:06:30,320 Speaker 1: the auto analysts for Bloomberg Intelligence, he says that GM 119 00:06:30,440 --> 00:06:32,520 Speaker 1: four they're not in the car business. They're in the 120 00:06:32,680 --> 00:06:36,840 Speaker 1: profitable car business. When they can make a profit on 121 00:06:36,960 --> 00:06:39,440 Speaker 1: a car I either demanded at a certain level and 122 00:06:39,480 --> 00:06:41,640 Speaker 1: the costs at a certain level, that's when they're going 123 00:06:41,680 --> 00:06:44,400 Speaker 1: to get into the market. Elon Musk was a visionary 124 00:06:44,400 --> 00:06:48,120 Speaker 1: for the technology, but he can't make a lot of cars, 125 00:06:48,279 --> 00:06:50,680 Speaker 1: and so now you've got FOURD and GM's and Volkswagen 126 00:06:50,800 --> 00:06:53,720 Speaker 1: your car company. They're like, okay, now I can make 127 00:06:53,720 --> 00:06:56,800 Speaker 1: it profitable, and I can, and we're gonna be all 128 00:06:56,880 --> 00:07:00,120 Speaker 1: in the battery technology got to that point where that 129 00:07:00,160 --> 00:07:02,800 Speaker 1: goes to my question to Dan, like, from a Tesla perspective, 130 00:07:03,000 --> 00:07:06,760 Speaker 1: you got Volkswagen coming in at Jim, where is Tesla's 131 00:07:07,880 --> 00:07:09,960 Speaker 1: I guess niche in the market? Where's the position in 132 00:07:09,960 --> 00:07:12,560 Speaker 1: the market. Yes, they were the first, but now if 133 00:07:12,560 --> 00:07:15,200 Speaker 1: I've got a Porsche, I've got a Mercedes, if I've 134 00:07:15,200 --> 00:07:18,280 Speaker 1: got a four I don't know. Well that's well, that's 135 00:07:18,360 --> 00:07:21,200 Speaker 1: right now the quagmire because you start to go back 136 00:07:21,240 --> 00:07:23,360 Speaker 1: to you got to get a sub thirty k vehicle 137 00:07:23,520 --> 00:07:26,960 Speaker 1: in terms out there to compete. Right from a massive perspective, 138 00:07:27,360 --> 00:07:30,880 Speaker 1: they obviously reviewed as the brand leader, the premium one, 139 00:07:31,200 --> 00:07:33,840 Speaker 1: but now competition come from all angles. And that's why 140 00:07:33,880 --> 00:07:37,200 Speaker 1: two thousand twenty three it is a huge inflection point 141 00:07:37,320 --> 00:07:39,960 Speaker 1: year for them. How they navigate it. And you're saying, 142 00:07:39,960 --> 00:07:41,960 Speaker 1: it's like Man's talking about as you see a reflecting 143 00:07:42,080 --> 00:07:45,640 Speaker 1: the stock. This is really for the first time after 144 00:07:45,800 --> 00:07:49,320 Speaker 1: Cinderella Ride, they got their back against the wall. Can 145 00:07:49,360 --> 00:07:52,080 Speaker 1: I add just one more thing? So Tesla was valued 146 00:07:52,120 --> 00:07:55,720 Speaker 1: as a tech company last year. Now it's being valued 147 00:07:55,720 --> 00:07:59,200 Speaker 1: as an auto company. Suddenly the tech premiums being valued 148 00:07:59,200 --> 00:08:01,160 Speaker 1: as three or four were auto companies, right, because it 149 00:08:01,200 --> 00:08:05,360 Speaker 1: still has a bigger market GM plus Ford plus Toyota, 150 00:08:05,560 --> 00:08:08,480 Speaker 1: which is by the way, the biggest automaker in the world. 151 00:08:08,520 --> 00:08:11,440 Speaker 1: So it's still towers over the biggest automaker in the world. 152 00:08:11,720 --> 00:08:14,040 Speaker 1: And the reason it was valued as a tech companies 153 00:08:14,080 --> 00:08:17,880 Speaker 1: because they have their autonomous driving you know inside. I 154 00:08:17,880 --> 00:08:20,360 Speaker 1: mean basically, they were capturing a lot of data, they 155 00:08:20,400 --> 00:08:23,320 Speaker 1: were making a lot of progress. Suddenly no one seems 156 00:08:23,360 --> 00:08:26,040 Speaker 1: to care about it, and obviously the focus seems to 157 00:08:26,120 --> 00:08:28,840 Speaker 1: have shifted to Twitter when it comes to Musk and 158 00:08:29,000 --> 00:08:31,360 Speaker 1: it's no more you know, a tech company, even though 159 00:08:31,400 --> 00:08:33,840 Speaker 1: I would argue and I agree with Damn that you know, 160 00:08:34,000 --> 00:08:37,400 Speaker 1: Tesla's miles ahead of GM and Wolkswagen and all the 161 00:08:37,440 --> 00:08:40,599 Speaker 1: competitors when it comes to the data and the autonomous 162 00:08:40,600 --> 00:08:44,240 Speaker 1: side of things because they have built this system. It's 163 00:08:44,280 --> 00:08:47,640 Speaker 1: a full stack similar to Apple it's an ecosystem, and 164 00:08:47,720 --> 00:08:50,040 Speaker 1: that's an advantage that's not going of anything. Dan, Do 165 00:08:50,080 --> 00:08:52,880 Speaker 1: you really think we're gonna see legit competition this year? Man? 166 00:08:52,920 --> 00:08:55,120 Speaker 1: I know there's a Porsche Ticon if I want to 167 00:08:55,160 --> 00:08:57,760 Speaker 1: spend two hundred grand I know there's a Ford Lightning 168 00:08:57,760 --> 00:08:59,560 Speaker 1: if I want to wait two years on a on 169 00:08:59,640 --> 00:09:03,680 Speaker 1: a way list. Um. But you know, it just seems 170 00:09:03,720 --> 00:09:08,120 Speaker 1: like either I'm getting a bolt right, or I'm on 171 00:09:08,160 --> 00:09:12,440 Speaker 1: a waiting list, or I'm spending like my kids college tuition. Yeah, 172 00:09:12,480 --> 00:09:15,920 Speaker 1: I think the real competitions in China right now. I 173 00:09:15,960 --> 00:09:18,719 Speaker 1: mean that's where where Neo x ping b y, That's 174 00:09:18,720 --> 00:09:21,520 Speaker 1: where the real competition in the US look. I think 175 00:09:21,640 --> 00:09:23,640 Speaker 1: you obviously have a lot of automakers going to have 176 00:09:23,720 --> 00:09:26,600 Speaker 1: that GM. I do believe it's the real deal. I 177 00:09:26,640 --> 00:09:29,439 Speaker 1: believe that they have a number of vehicles from Cadoact 178 00:09:29,520 --> 00:09:32,520 Speaker 1: that you know some of the other driven in. It's 179 00:09:32,800 --> 00:09:36,640 Speaker 1: not they've done where where marian Tea have done. Is 180 00:09:36,640 --> 00:09:41,240 Speaker 1: is really game changing. But ultimately it's Tesla's market to lose. 181 00:09:41,800 --> 00:09:44,320 Speaker 1: And that's why right now Musk he needs to be 182 00:09:44,360 --> 00:09:47,160 Speaker 1: the pilot on the plane. Can't have a ted Striker 183 00:09:47,200 --> 00:09:51,959 Speaker 1: movement that's for the kids. That's an airplane recerplane reference. 184 00:09:52,000 --> 00:09:54,559 Speaker 1: Go google it. So, Dann, do we have any sense 185 00:09:54,640 --> 00:09:57,120 Speaker 1: that he's gotten that message that it's going to happen. 186 00:09:57,600 --> 00:09:59,240 Speaker 1: I haven't really heard a lot a lot from him. Reason. 187 00:09:59,280 --> 00:10:01,160 Speaker 1: I think that's in ten. I think for the first 188 00:10:01,200 --> 00:10:04,880 Speaker 1: time he's I think behind the scenes, he's trying to 189 00:10:04,960 --> 00:10:08,840 Speaker 1: strategize reading the room, and I think he recognizes Look 190 00:10:09,360 --> 00:10:11,640 Speaker 1: has been deep talks about Twitter. It's not just the 191 00:10:11,720 --> 00:10:15,320 Speaker 1: forty four billion dollar mistake. I'd argue it's a seven 192 00:10:15,520 --> 00:10:19,040 Speaker 1: billion dollar mistake because of the mark Ap ultimately taking 193 00:10:19,080 --> 00:10:22,080 Speaker 1: off of Tesla. That's really taken. So that's why this is. 194 00:10:22,559 --> 00:10:25,920 Speaker 1: This is just the pivotal earnings, probably the most important 195 00:10:25,920 --> 00:10:29,720 Speaker 1: earnings for Musk maybe. Ever, Man, do you do you 196 00:10:29,760 --> 00:10:33,360 Speaker 1: expect serious competition for Tesla in the West? I mean 197 00:10:33,400 --> 00:10:35,800 Speaker 1: I saw a story that Mercedes is going to lead 198 00:10:35,840 --> 00:10:38,360 Speaker 1: the charge with a new UM you know, like a 199 00:10:38,400 --> 00:10:42,400 Speaker 1: supercharger network. But Tesla has had it for a decade, 200 00:10:42,440 --> 00:10:44,040 Speaker 1: and I think a lot of consumers that's one of 201 00:10:44,080 --> 00:10:46,079 Speaker 1: their main concerns. There's just you don't want to get 202 00:10:46,120 --> 00:10:49,080 Speaker 1: stuck UM and it's so hard to find a charging 203 00:10:49,080 --> 00:10:53,320 Speaker 1: station I mean, anytime you're selling a sixty thousand dollar vehicle, 204 00:10:53,800 --> 00:10:55,839 Speaker 1: you have to think what is the potential in the 205 00:10:55,920 --> 00:10:59,840 Speaker 1: average EV starts at sixty dollars and so what is 206 00:10:59,840 --> 00:11:02,520 Speaker 1: the potential installed bates? How many cars can you sell 207 00:11:02,600 --> 00:11:04,600 Speaker 1: at that price point? And I think that's where the 208 00:11:04,640 --> 00:11:07,840 Speaker 1: market will get saturated unless you bring down the price. 209 00:11:07,920 --> 00:11:14,839 Speaker 1: So that's where I see competition, good stuff. Tesla January, Okay, 210 00:11:14,880 --> 00:11:16,800 Speaker 1: that's the line. That's the date. Will focus on Mandy 211 00:11:16,920 --> 00:11:20,360 Speaker 1: seeing senior technology analyst for Bloomberg Intelligence, and Dan I've 212 00:11:20,400 --> 00:11:22,920 Speaker 1: senior equity Annalyso what Bush Securities? Both joining us here 213 00:11:22,920 --> 00:11:26,080 Speaker 1: in our Bloomberg interactor Brooker Studio breaking down the story 214 00:11:26,120 --> 00:11:30,160 Speaker 1: that is Tesla. That is Elon musk Uh stock down 215 00:11:30,240 --> 00:11:33,680 Speaker 1: seven zero over the prior twelve months, so a tough 216 00:11:34,040 --> 00:11:36,839 Speaker 1: another three percent today, another three percent, a tough ride 217 00:11:36,880 --> 00:11:43,559 Speaker 1: for the shareholders of Tesla. Matt, you know it's c 218 00:11:43,720 --> 00:11:46,080 Speaker 1: e S this week Consumer Electronic Show, but let's be honest, 219 00:11:46,080 --> 00:11:49,320 Speaker 1: it's really the auto show with some gadgets around it. Uh. 220 00:11:49,360 --> 00:11:52,120 Speaker 1: Lots of announcements coming out of Vegas here and CS 221 00:11:52,520 --> 00:11:56,600 Speaker 1: including Mercedes Benz partnering partnering with Charge point in North 222 00:11:56,640 --> 00:11:59,079 Speaker 1: America for charging network. And this goes to one of 223 00:11:59,120 --> 00:12:01,120 Speaker 1: the issues I have as I trying to get smart 224 00:12:01,160 --> 00:12:03,480 Speaker 1: on this whole e V businesses. Do we need it 225 00:12:03,559 --> 00:12:06,320 Speaker 1: like as many charging stations as we have gas stations today? 226 00:12:06,360 --> 00:12:08,000 Speaker 1: I don't know how that plays out, but unfortunately we 227 00:12:08,080 --> 00:12:10,480 Speaker 1: got someone who's really in charge of the stuff right 228 00:12:10,520 --> 00:12:12,840 Speaker 1: on the point of a Pasquality romano. He's a CEO 229 00:12:12,880 --> 00:12:15,480 Speaker 1: and president of charge Point, in charge point of Courses 230 00:12:15,520 --> 00:12:19,120 Speaker 1: and your stock Exchange listed company c HPT as a 231 00:12:19,200 --> 00:12:22,160 Speaker 1: taker you can load into your Bloomberg terminal. Pasquality. Thanks 232 00:12:22,160 --> 00:12:23,760 Speaker 1: so much for joining us here. Tell us about you 233 00:12:23,800 --> 00:12:31,080 Speaker 1: deal with Mercedes Benz. Well, it's a it's a I 234 00:12:31,160 --> 00:12:37,720 Speaker 1: think government for drivers everywhere in the United States and Canada. Um, 235 00:12:37,920 --> 00:12:42,200 Speaker 1: what we're doing with them is effectively curating a network 236 00:12:43,000 --> 00:12:46,600 Speaker 1: aligned with the thirty minute retail economy. Um. We really 237 00:12:46,640 --> 00:12:50,640 Speaker 1: believe the drivers need uh, not only charging when they 238 00:12:50,679 --> 00:12:53,280 Speaker 1: were on a road trip, but they need something to do. 239 00:12:53,360 --> 00:12:57,520 Speaker 1: They needed safety, they need um um, they need you know, 240 00:12:57,920 --> 00:13:00,560 Speaker 1: the the usual locoutrements that you would act when you're 241 00:13:00,559 --> 00:13:02,839 Speaker 1: on a road trip. And uh, you know, we're very 242 00:13:02,840 --> 00:13:07,840 Speaker 1: excited that premium brand like Mercedes poses um really dove 243 00:13:07,960 --> 00:13:10,440 Speaker 1: into this and willing to partner with us to really 244 00:13:10,480 --> 00:13:12,959 Speaker 1: curate a great experience for the drivers. So I see 245 00:13:13,320 --> 00:13:17,120 Speaker 1: um a graphic rendering of a Mercedes Benz charging hub 246 00:13:17,160 --> 00:13:21,800 Speaker 1: in Bloomberg Story which looks um, you know, elegant, But 247 00:13:22,280 --> 00:13:26,880 Speaker 1: I can't see the retail um, you know, extravaganza that 248 00:13:26,920 --> 00:13:30,040 Speaker 1: I'm hoping for as a as a died in the 249 00:13:30,040 --> 00:13:33,400 Speaker 1: wool consumer. What should I be looking for at a 250 00:13:33,400 --> 00:13:40,040 Speaker 1: at a charge point experience? Well, I think, uh well, 251 00:13:40,200 --> 00:13:45,000 Speaker 1: what stuff can I get? Look for is what they want? Well, 252 00:13:45,040 --> 00:13:47,360 Speaker 1: it's what they it's it's what drivers really want to do. 253 00:13:47,440 --> 00:13:49,520 Speaker 1: So we're going to align this with brands that exist. 254 00:13:50,640 --> 00:13:55,760 Speaker 1: Uh so, So imagine locating the types of chargers that 255 00:13:55,800 --> 00:13:59,720 Speaker 1: you see on the graphic, aligning those with good brands 256 00:13:59,720 --> 00:14:02,199 Speaker 1: that people want to use when they are on a 257 00:14:02,280 --> 00:14:04,840 Speaker 1: road trip. So this is not about Mercedes Benz developing 258 00:14:04,880 --> 00:14:07,200 Speaker 1: their own food service brands, of their own retail brands. 259 00:14:07,320 --> 00:14:11,680 Speaker 1: It is them sponsoring the placement of stations like that 260 00:14:12,360 --> 00:14:19,240 Speaker 1: at locations that drivers already enjoy frequenting. So like the shop, 261 00:14:19,360 --> 00:14:23,960 Speaker 1: right are we talking about here? Kind Yeah? Well, well 262 00:14:24,240 --> 00:14:27,680 Speaker 1: I think I think there's some place for communions stores. 263 00:14:27,840 --> 00:14:32,760 Speaker 1: But I think uh, you know, uh everything from food, 264 00:14:32,800 --> 00:14:37,680 Speaker 1: you know, food services to coffee to potentially retail. It's 265 00:14:37,680 --> 00:14:40,120 Speaker 1: aligned with something that you can do over about thirty minutes, 266 00:14:40,560 --> 00:14:43,840 Speaker 1: thirty minutes. It's it's it's again, anything that that twenty 267 00:14:44,040 --> 00:14:47,800 Speaker 1: thirty minute retail economy um uh you know can can 268 00:14:47,840 --> 00:14:50,440 Speaker 1: afford you on a and something that's aligned with what 269 00:14:50,520 --> 00:14:52,000 Speaker 1: you want to do on a road trip is where 270 00:14:52,000 --> 00:14:53,800 Speaker 1: we where we're going to place these things. It's gotta 271 00:14:53,800 --> 00:14:56,160 Speaker 1: be like an Apple store. That's must be the number 272 00:14:56,200 --> 00:15:00,920 Speaker 1: one umer destination, right for a thirty minute stop? Yeah, 273 00:15:00,960 --> 00:15:02,560 Speaker 1: you know, I don't. I you know, I think I 274 00:15:02,600 --> 00:15:04,560 Speaker 1: think we already have too many gadgets, But that would 275 00:15:04,560 --> 00:15:07,680 Speaker 1: be a good one. Pasquald helped me understand because I've 276 00:15:07,920 --> 00:15:10,040 Speaker 1: driven exactly one e V in my life and it 277 00:15:10,120 --> 00:15:13,320 Speaker 1: was a good one for def um, it was awesome. 278 00:15:13,320 --> 00:15:17,240 Speaker 1: But how should I think about the rollout of a 279 00:15:17,320 --> 00:15:21,320 Speaker 1: network of charging system stations around this country? Just help 280 00:15:21,320 --> 00:15:24,200 Speaker 1: me put into perspectives. You know, I think about gas 281 00:15:24,200 --> 00:15:26,160 Speaker 1: stations one on every corner, that kind of thing. How 282 00:15:26,200 --> 00:15:30,640 Speaker 1: do I How should I think about the charging system infrastructure? Yeah? 283 00:15:30,680 --> 00:15:32,320 Speaker 1: So charging is a lot. Driving any of the is 284 00:15:32,320 --> 00:15:34,000 Speaker 1: a lot different than driving a gas car, and if 285 00:15:34,000 --> 00:15:37,560 Speaker 1: you pattern match on gas stations, I think you get 286 00:15:37,600 --> 00:15:42,080 Speaker 1: head fake to bit um. The the the charging experience 287 00:15:42,120 --> 00:15:45,520 Speaker 1: for for most of your fuel, most of your electricity 288 00:15:45,560 --> 00:15:47,800 Speaker 1: that's going to take you around where you need to go, 289 00:15:47,960 --> 00:15:51,120 Speaker 1: is going to come in at home, at work, around town. 290 00:15:51,160 --> 00:15:52,880 Speaker 1: You're gonna top it up, kind of like your piece 291 00:15:52,920 --> 00:15:55,160 Speaker 1: of consumer electronics. It's fitting that it was announced to 292 00:15:55,240 --> 00:15:58,720 Speaker 1: see yes because cars are behaving from refueling perspective more 293 00:15:58,760 --> 00:16:02,440 Speaker 1: like your cell phone than they are the gasoline cars 294 00:16:02,440 --> 00:16:06,760 Speaker 1: of old. Now for gas stations, the ones that are 295 00:16:06,840 --> 00:16:11,360 Speaker 1: placed around uh, you know that everyday use for your 296 00:16:11,360 --> 00:16:13,760 Speaker 1: everyday fuel, those really don't have that much reason to 297 00:16:13,840 --> 00:16:16,080 Speaker 1: exist in the long term. In the e V world. 298 00:16:16,080 --> 00:16:19,560 Speaker 1: It's the ones that are road trip position you know, 299 00:16:19,680 --> 00:16:24,000 Speaker 1: in positions between metro areas that you're typically going to 300 00:16:24,080 --> 00:16:25,600 Speaker 1: drive on a road trip when you're going beyond your 301 00:16:25,600 --> 00:16:28,360 Speaker 1: battery range. Those are the ones that are likely to 302 00:16:28,480 --> 00:16:32,400 Speaker 1: develop into EV charging sites. With the proviso that there's 303 00:16:32,680 --> 00:16:35,680 Speaker 1: enough parking, there has to be enough parking. It takes 304 00:16:35,800 --> 00:16:39,760 Speaker 1: four to six times the number of parking spaces because 305 00:16:39,800 --> 00:16:41,840 Speaker 1: you're there longer than you would be at a gas station, 306 00:16:42,320 --> 00:16:44,280 Speaker 1: so you need the real estate. So it's really a 307 00:16:44,320 --> 00:16:47,400 Speaker 1: combination of the gas station locations that are the fueling 308 00:16:47,400 --> 00:16:52,280 Speaker 1: locations that are road trip position, and enough parking. Alright, 309 00:16:52,320 --> 00:16:56,240 Speaker 1: So bottom line, you want to build or Mercedes wants 310 00:16:56,240 --> 00:17:00,520 Speaker 1: to build ten ultra fast chargers, how many is that 311 00:17:00,880 --> 00:17:04,760 Speaker 1: um equate to in the US? And when are you 312 00:17:05,000 --> 00:17:07,920 Speaker 1: When are we going to see like enough that Paul 313 00:17:07,960 --> 00:17:11,679 Speaker 1: feels comfortable, you know, buying an e q V or 314 00:17:11,680 --> 00:17:15,040 Speaker 1: whatever they're called. Well, I mean you can, first of all, 315 00:17:15,080 --> 00:17:18,080 Speaker 1: you can, Uh, we've already got a partnership with Mercedes 316 00:17:18,119 --> 00:17:21,600 Speaker 1: Benz where we're powering the in dash navigation and the 317 00:17:21,680 --> 00:17:26,520 Speaker 1: Mercedes ME charging experience. So you already have access globally 318 00:17:26,760 --> 00:17:30,280 Speaker 1: through Mercedes Benz to about a million charging stations around 319 00:17:30,320 --> 00:17:34,639 Speaker 1: the world. Um and and and so there's there's a 320 00:17:34,640 --> 00:17:38,560 Speaker 1: lot of charging that's already out there. This overlay network 321 00:17:38,720 --> 00:17:44,440 Speaker 1: is essentially a highly curated Mercedes Benz kind of certified experience, 322 00:17:45,080 --> 00:17:48,240 Speaker 1: and uh, you know there's there's there's going to be 323 00:17:48,359 --> 00:17:53,159 Speaker 1: at least twenty four hundred stations. That means ports parking 324 00:17:53,200 --> 00:17:59,359 Speaker 1: spaces at at least four hundred plus sites across the 325 00:17:59,800 --> 00:18:04,119 Speaker 1: United States to enable this right for long haul driving, 326 00:18:04,119 --> 00:18:06,720 Speaker 1: and that's at least. We're going to try to leverage 327 00:18:07,600 --> 00:18:11,960 Speaker 1: other funding from some of the federal and state programs 328 00:18:12,000 --> 00:18:15,080 Speaker 1: that you see that have already launched, and we're trying 329 00:18:15,119 --> 00:18:18,359 Speaker 1: to get businesses, frankly to also subsidize this as well 330 00:18:18,400 --> 00:18:23,200 Speaker 1: and and potentially contribute some funding to stretch the sites 331 00:18:23,240 --> 00:18:26,040 Speaker 1: even further so we can potentially even go beyond four 332 00:18:26,119 --> 00:18:29,720 Speaker 1: hundred sites. Pass quality give us a sense of where 333 00:18:29,720 --> 00:18:34,560 Speaker 1: we are with the evolution of charging batteries. Are we 334 00:18:34,600 --> 00:18:36,280 Speaker 1: are where we're gonna be for a while or is 335 00:18:36,320 --> 00:18:42,080 Speaker 1: there a continuous evolution uh improvement here? Well, the chargers 336 00:18:42,160 --> 00:18:47,440 Speaker 1: themselves are capable of delivering more than today's batteries can take. 337 00:18:47,880 --> 00:18:49,920 Speaker 1: So if you've driven in an electric vehicle, which you'll 338 00:18:49,920 --> 00:18:55,960 Speaker 1: notice is that they start out charging um at a 339 00:18:55,960 --> 00:18:57,800 Speaker 1: at a fairly high rate if the charger can provide 340 00:18:57,800 --> 00:19:01,480 Speaker 1: the energy, and then the charge rate uh drops over 341 00:19:01,560 --> 00:19:04,800 Speaker 1: as the battery gets um more full, the charge rate 342 00:19:04,880 --> 00:19:10,520 Speaker 1: begins to drop, and you're gonna see that behavior um extent. 343 00:19:10,600 --> 00:19:14,280 Speaker 1: So you're gonna see batteries as as battery technology matures, 344 00:19:14,400 --> 00:19:19,199 Speaker 1: and as battery management matures, you're gonna see batteries be 345 00:19:19,280 --> 00:19:22,640 Speaker 1: able to take that higher charge rate for longer periods 346 00:19:22,640 --> 00:19:24,560 Speaker 1: of time, and that will start to really shorten the 347 00:19:24,680 --> 00:19:29,040 Speaker 1: charge cycle. We think that you know technology uh you 348 00:19:29,080 --> 00:19:32,359 Speaker 1: know that's available today that will start showing up in 349 00:19:32,359 --> 00:19:35,800 Speaker 1: in vehicles will get you from a ten percent battery 350 00:19:35,880 --> 00:19:39,520 Speaker 1: level to an eight percent battery level in about eighteen minutes. Okay, 351 00:19:39,640 --> 00:19:43,280 Speaker 1: that's interesting, all right, pascually great stuff, great announcement with 352 00:19:43,359 --> 00:19:47,040 Speaker 1: the Mercedes Benz there Pasquality Romano CEO and president of 353 00:19:47,280 --> 00:19:50,119 Speaker 1: charge Point HPT. Is a ticket to put into your 354 00:19:50,119 --> 00:19:53,760 Speaker 1: Bloomberg professional terminal. Uh. You know, it's just gonna be 355 00:19:53,840 --> 00:19:55,760 Speaker 1: a I guess not a slow build of building out 356 00:19:55,760 --> 00:19:58,440 Speaker 1: this network of charging stations and uh, but it's something 357 00:19:58,480 --> 00:20:00,720 Speaker 1: that I think, you know, it has to happened. Will happen. 358 00:20:03,359 --> 00:20:05,439 Speaker 1: Is the latest on what's going on in work in 359 00:20:05,440 --> 00:20:07,280 Speaker 1: the Ukraine. I guess some of the latest news is 360 00:20:07,320 --> 00:20:11,399 Speaker 1: that Putin calls a surprise thirty six hour Ukraine ceasefire. 361 00:20:11,480 --> 00:20:13,520 Speaker 1: But no one buys that. Nobody buys that. And you know, 362 00:20:13,600 --> 00:20:15,520 Speaker 1: but that's supposedly today and tomorrow, so we'll have to 363 00:20:15,560 --> 00:20:17,639 Speaker 1: see how that plays out. But let's get the latest 364 00:20:17,640 --> 00:20:19,360 Speaker 1: on what's going on over there and how this may 365 00:20:19,480 --> 00:20:22,560 Speaker 1: play out. Mick mulroy, co founder of the Lobo Institute. 366 00:20:23,280 --> 00:20:25,200 Speaker 1: But that's just the beginning. Senior fellow at the Middle 367 00:20:25,240 --> 00:20:29,960 Speaker 1: East Institute, Marine Officer CIA all this kind of craziness, 368 00:20:30,600 --> 00:20:33,480 Speaker 1: but he joins this year, Hey, Mick, what do you 369 00:20:33,560 --> 00:20:37,280 Speaker 1: make of this? Uh? This putin call for a ceasefire. Again, 370 00:20:37,280 --> 00:20:41,920 Speaker 1: as Matt was suggesting, not many people are buying it. Yeah, 371 00:20:41,960 --> 00:20:43,640 Speaker 1: so great to be with you, guys. I am one 372 00:20:43,640 --> 00:20:46,560 Speaker 1: of those people that doesn't buy it. Essentially, I think 373 00:20:46,640 --> 00:20:49,560 Speaker 1: what they were trying to do was to have a 374 00:20:49,600 --> 00:20:52,840 Speaker 1: ceasefar of which the Ukrainians would I would agree to 375 00:20:52,960 --> 00:20:55,920 Speaker 1: what they didn't, so that they could then resupply their 376 00:20:55,960 --> 00:20:58,040 Speaker 1: troops in the front line, which they're having a very 377 00:20:58,040 --> 00:21:01,480 Speaker 1: difficult time doing. So that was essentially, in my opinion, 378 00:21:01,480 --> 00:21:04,159 Speaker 1: why they were doing it. It was never agreed to, 379 00:21:04,320 --> 00:21:07,920 Speaker 1: so it essentially wasn't a ceasefire, and Russia has been 380 00:21:07,960 --> 00:21:11,760 Speaker 1: engaging on the battlefield just like Ukrainians, so it is 381 00:21:11,840 --> 00:21:15,960 Speaker 1: essentially a no go. Does anybody bias cease fires? I 382 00:21:15,960 --> 00:21:18,959 Speaker 1: mean since the Ted offensive is it? Uh? Just something 383 00:21:18,960 --> 00:21:24,720 Speaker 1: that no one really does anymore. So it's increasingly difficult, 384 00:21:25,359 --> 00:21:28,960 Speaker 1: partly because nobody's rest our Russian I mean, they violate, 385 00:21:29,400 --> 00:21:32,480 Speaker 1: They make an agreement and one day and violated the next. 386 00:21:32,960 --> 00:21:35,520 Speaker 1: It's not just in Ukraine, you see that another areas 387 00:21:35,520 --> 00:21:38,439 Speaker 1: of the world. If you might remember all the issues 388 00:21:38,480 --> 00:21:40,680 Speaker 1: when it came to get grain out of the port 389 00:21:40,720 --> 00:21:44,560 Speaker 1: of Odessa, uh, and they just continuously made an agreement 390 00:21:44,600 --> 00:21:48,040 Speaker 1: and then broke it. So it's that does not bode 391 00:21:48,040 --> 00:21:50,240 Speaker 1: well for how this could end. If there's any kind 392 00:21:50,280 --> 00:21:53,760 Speaker 1: of peace agreement, I think the Ukrainians will be very 393 00:21:53,800 --> 00:21:58,720 Speaker 1: skeptical that any of their efforts would actually amount to anything. 394 00:21:58,840 --> 00:22:01,440 Speaker 1: What are the likely scenarior areas for how this ends? Mick? 395 00:22:01,520 --> 00:22:05,800 Speaker 1: What do you think the options are? So from the 396 00:22:05,920 --> 00:22:11,679 Speaker 1: Ukrainian perspective, they have to essentially keep winning. And what 397 00:22:11,760 --> 00:22:14,879 Speaker 1: I mean is the Russians only stand might uh. And 398 00:22:15,080 --> 00:22:18,959 Speaker 1: let's just be specific to President Putin, he only understands might. 399 00:22:19,080 --> 00:22:22,760 Speaker 1: So they have to hit the spring after hopefully getting 400 00:22:22,760 --> 00:22:24,560 Speaker 1: a lot of the equipment that we'll get over there 401 00:22:24,600 --> 00:22:27,720 Speaker 1: and they'll be trained on hard and just start pushing 402 00:22:27,720 --> 00:22:30,440 Speaker 1: the Russians out of the territory that they occupied. They've 403 00:22:30,440 --> 00:22:35,200 Speaker 1: already came about the territory since February, since the Russians 404 00:22:35,200 --> 00:22:38,480 Speaker 1: took their too back. So if the Russians realized that 405 00:22:38,600 --> 00:22:41,640 Speaker 1: just they're just gonna lose, uh, that is potentially how 406 00:22:41,680 --> 00:22:45,480 Speaker 1: they could come to the negotiation table. It's gonna be 407 00:22:45,640 --> 00:22:50,240 Speaker 1: through force, quite preply, you know, Mick. We we heard 408 00:22:50,280 --> 00:22:53,880 Speaker 1: recently from Adamal James Travitis that, you know, the Ukrainians 409 00:22:53,880 --> 00:22:56,000 Speaker 1: have proven that they can in fact win and be 410 00:22:56,040 --> 00:22:58,919 Speaker 1: successful on the ground, but now somehow they have to 411 00:22:58,960 --> 00:23:03,200 Speaker 1: win the air um. How do you think they do that? 412 00:23:05,160 --> 00:23:08,399 Speaker 1: So one way is to get this integrated air missile 413 00:23:08,480 --> 00:23:12,400 Speaker 1: defense system. And what I mean by that integrated it's 414 00:23:12,440 --> 00:23:13,879 Speaker 1: you know what, it could be a drone that shot 415 00:23:13,880 --> 00:23:16,919 Speaker 1: at your cruise. Missis a little hypersonic missile. They have 416 00:23:17,000 --> 00:23:19,320 Speaker 1: to have all the systems that can identify the threat 417 00:23:19,400 --> 00:23:23,440 Speaker 1: and engages in the best possible manner. So Patriot is 418 00:23:23,480 --> 00:23:25,120 Speaker 1: going to be a big part of that. That's really 419 00:23:26,080 --> 00:23:27,800 Speaker 1: one of the best systems on Earth. Takes a little 420 00:23:27,800 --> 00:23:29,479 Speaker 1: while to trade on it, but once they get that, 421 00:23:29,680 --> 00:23:32,399 Speaker 1: you get multiple batteries. It will help them can test 422 00:23:32,440 --> 00:23:34,960 Speaker 1: the air space. The other thing they gotta do is 423 00:23:35,040 --> 00:23:38,800 Speaker 1: the drones that are coming from Roan they're about twenty dollars, 424 00:23:38,800 --> 00:23:40,399 Speaker 1: but right now the only thing they have to shoot 425 00:23:40,400 --> 00:23:43,000 Speaker 1: it down is around five hundred thousand dollars. So even 426 00:23:43,040 --> 00:23:47,159 Speaker 1: if they're successfully shooting these things down, eventually they just 427 00:23:47,240 --> 00:23:50,159 Speaker 1: keep launching sheat and you're in. You deplete your resources. 428 00:23:50,200 --> 00:23:52,800 Speaker 1: So that integration of air defense I think is going 429 00:23:52,880 --> 00:23:57,640 Speaker 1: to be key. So so um, in that case, Um, 430 00:23:57,720 --> 00:23:59,439 Speaker 1: it seems like this is just going to drag on 431 00:23:59,520 --> 00:24:03,520 Speaker 1: and on because you know, we've seen conflicts like this. 432 00:24:04,080 --> 00:24:06,920 Speaker 1: The US was involved in one ourselves in the sixties 433 00:24:06,920 --> 00:24:10,240 Speaker 1: and seventies, right that, you know, where the big power 434 00:24:10,320 --> 00:24:13,520 Speaker 1: doesn't get the message until it's been a decade. Is 435 00:24:13,560 --> 00:24:18,399 Speaker 1: that what what we're looking at here? Possibly? Unfortunately, it 436 00:24:18,520 --> 00:24:21,399 Speaker 1: is possible, like at least in our case, we were democracy, 437 00:24:21,480 --> 00:24:24,480 Speaker 1: so the people will have to say, um, they're not. 438 00:24:24,560 --> 00:24:27,560 Speaker 1: They're an autocracy and they and it's really up to 439 00:24:27,560 --> 00:24:29,800 Speaker 1: one man unless they depose him. Let's they kick him out, 440 00:24:29,840 --> 00:24:32,480 Speaker 1: which is I mean, I don't want to hope for that. 441 00:24:32,520 --> 00:24:34,400 Speaker 1: I mean, but you know, that would be the best 442 00:24:34,480 --> 00:24:37,479 Speaker 1: case scenario in my opinion, But there was I mean, 443 00:24:37,520 --> 00:24:39,679 Speaker 1: he spent a lot of time ensuring that doesn't happen. 444 00:24:39,720 --> 00:24:43,439 Speaker 1: So because of the that situation, this could last for 445 00:24:43,520 --> 00:24:46,399 Speaker 1: decades and it's going to be very difficult to keep 446 00:24:46,440 --> 00:24:48,560 Speaker 1: all the allies together. But it's the right thing to do, 447 00:24:48,640 --> 00:24:52,720 Speaker 1: not only like morally, but for NATO, for the United 448 00:24:52,720 --> 00:24:55,639 Speaker 1: States national security interest to support Ukraine to the end. 449 00:24:55,760 --> 00:24:57,840 Speaker 1: Exactly what I was just thinking, Mick. I mean, as 450 00:24:57,880 --> 00:25:02,520 Speaker 1: we watched this new Congress struggle to even pick a speaker, 451 00:25:04,040 --> 00:25:08,240 Speaker 1: what's the possibility that they wimp out in terms of 452 00:25:08,440 --> 00:25:14,480 Speaker 1: support for Ukraine pretty quickly? So I I, you know, 453 00:25:14,520 --> 00:25:16,840 Speaker 1: I'm not on the political side of this, but I 454 00:25:16,880 --> 00:25:20,320 Speaker 1: think from what I've seen that they will continue to 455 00:25:20,359 --> 00:25:24,840 Speaker 1: have support. There's a small handful that whatever reason, I 456 00:25:24,840 --> 00:25:26,920 Speaker 1: would like to see that cut. But what I would 457 00:25:26,960 --> 00:25:30,480 Speaker 1: tell them is we spent about the equivalent about five 458 00:25:30,520 --> 00:25:34,479 Speaker 1: percent of our national security budget on Ukraine, and they've 459 00:25:34,640 --> 00:25:40,159 Speaker 1: depleted or destroyed of Russian combat power. So even if 460 00:25:40,200 --> 00:25:42,520 Speaker 1: you're looking at it from the U s. National security 461 00:25:42,560 --> 00:25:45,920 Speaker 1: interest alone, that's a pretty good ratio. It's a really 462 00:25:45,920 --> 00:25:49,840 Speaker 1: good ratio. Right, So, um, it's it isn't charity. Just 463 00:25:49,920 --> 00:25:52,399 Speaker 1: like President Zelinsky said when he came to visit us. 464 00:25:52,640 --> 00:25:55,760 Speaker 1: It isn't charity. We are actually they are taking on 465 00:25:55,960 --> 00:26:01,160 Speaker 1: our second most significant adversary and they're winning. Mick, second 466 00:26:01,200 --> 00:26:05,560 Speaker 1: most significant adversary yep, after the Chinese. I guess, so, Mick, 467 00:26:06,080 --> 00:26:07,760 Speaker 1: talk to us about you know, as we think about 468 00:26:07,760 --> 00:26:11,680 Speaker 1: the spring fighting season, there's an announcement that Germany and 469 00:26:11,680 --> 00:26:14,320 Speaker 1: the US are sending you know, Bradley vehicles and the 470 00:26:14,359 --> 00:26:17,320 Speaker 1: comparable German vehicle um and that how that will have 471 00:26:17,359 --> 00:26:20,720 Speaker 1: a significant impact. Is there a scenario where when spring 472 00:26:20,840 --> 00:26:24,280 Speaker 1: rolls around that this Ukrainian military will be able to 473 00:26:24,359 --> 00:26:28,240 Speaker 1: have pushed for the remaining of territory that they lost. 474 00:26:28,280 --> 00:26:33,040 Speaker 1: Can they have that type of rapid success? I think 475 00:26:33,080 --> 00:26:36,880 Speaker 1: it's possible, And certainly they've already shown that they're capable 476 00:26:37,000 --> 00:26:42,200 Speaker 1: soldiers and officers in in in maneuver warfare quite brightly, 477 00:26:42,280 --> 00:26:45,320 Speaker 1: the most modern version of warfare. We're getting them the 478 00:26:45,359 --> 00:26:47,399 Speaker 1: things that they like. For example, you just brought up 479 00:26:47,400 --> 00:26:51,800 Speaker 1: the Bradley. It is not as effective as a tank, 480 00:26:52,640 --> 00:26:54,960 Speaker 1: but it can kill tags, and it's faster and have 481 00:26:55,080 --> 00:26:58,760 Speaker 1: longer range, and it will be a significant factor when 482 00:26:58,760 --> 00:27:01,320 Speaker 1: it comes to their ability to who troops around the battlefield. 483 00:27:01,440 --> 00:27:04,400 Speaker 1: To envelop the Russian forces and to not get basically 484 00:27:04,440 --> 00:27:07,120 Speaker 1: caught a corner by the Russian forces. You've got our 485 00:27:07,480 --> 00:27:09,199 Speaker 1: US setting them, We've got the French setting them, and 486 00:27:09,240 --> 00:27:12,439 Speaker 1: the Germans. And I think if once that's done and 487 00:27:12,480 --> 00:27:14,600 Speaker 1: they show how effectively they can use them, the next 488 00:27:14,640 --> 00:27:16,439 Speaker 1: step would be to give a main battle tank like 489 00:27:16,480 --> 00:27:21,040 Speaker 1: the M one. How about how about the any aircraft? 490 00:27:21,160 --> 00:27:25,840 Speaker 1: Because there's a scenario where NATO or the US provides aircraft. 491 00:27:25,920 --> 00:27:30,520 Speaker 1: Do you think I think there is a scenario the 492 00:27:30,560 --> 00:27:34,520 Speaker 1: longer this, uh, this m constant plays out and in 493 00:27:34,760 --> 00:27:36,880 Speaker 1: the US and NATO are gonna want to see any 494 00:27:36,880 --> 00:27:39,359 Speaker 1: this come to an end, and so it's going to 495 00:27:39,440 --> 00:27:44,520 Speaker 1: be that determination of whether an advanced fighter or aircraft. Obviously, 496 00:27:44,640 --> 00:27:46,920 Speaker 1: I think we'll put caveats that can't be used to 497 00:27:46,960 --> 00:27:50,560 Speaker 1: strike inside Russia, which is a handicap in the Ukrainians 498 00:27:50,560 --> 00:27:53,440 Speaker 1: pretty significant. But we don't want to see this turn 499 00:27:53,480 --> 00:27:56,400 Speaker 1: into a broader war that that would push I think 500 00:27:56,560 --> 00:27:59,000 Speaker 1: the decision makers in the United States to to look 501 00:27:59,000 --> 00:28:02,320 Speaker 1: at our fighter bar my aircraft, um, I think. But 502 00:28:02,359 --> 00:28:04,680 Speaker 1: I think it's going to be in stages like fighting vehicle's, 503 00:28:04,960 --> 00:28:09,280 Speaker 1: main battle tanks, and then potentially more significant advanged uh 504 00:28:10,760 --> 00:28:17,800 Speaker 1: by aircraft in terms of uh Jack Ryan, I was 505 00:28:17,840 --> 00:28:19,960 Speaker 1: wondering what you what you thought, Mick. I mean, we've 506 00:28:19,960 --> 00:28:24,240 Speaker 1: got all these great um new pieces out. Obviously Tom 507 00:28:24,240 --> 00:28:28,240 Speaker 1: Clancy is as older, but you've got Jack Carr right 508 00:28:28,280 --> 00:28:30,760 Speaker 1: now with the Terminal List. I've read all of those books. 509 00:28:30,760 --> 00:28:33,440 Speaker 1: They're pretty awesome, although he's incredibly political and it kind 510 00:28:33,440 --> 00:28:37,440 Speaker 1: of as a turn off. Um, You've got Admiral Travities 511 00:28:37,520 --> 00:28:41,800 Speaker 1: with four, which I thought was amazing and hopefully um 512 00:28:41,840 --> 00:28:44,920 Speaker 1: not too prescient. What do you think about this stuff? 513 00:28:45,400 --> 00:28:47,600 Speaker 1: This fiction? Does any of it appeal to you as 514 00:28:47,640 --> 00:28:51,640 Speaker 1: someone who's been in the biz himself? So A, man, 515 00:28:51,680 --> 00:28:53,440 Speaker 1: I don't. I don't watch the Jack Ryan stuff. But 516 00:28:54,680 --> 00:28:56,720 Speaker 1: four who is the admiral and a friend of mine 517 00:28:56,720 --> 00:29:01,760 Speaker 1: Elliot Ackerman Um who was former Range silverl Star recipients, 518 00:29:01,760 --> 00:29:04,320 Speaker 1: So I would definitely give credits, but for both of 519 00:29:04,320 --> 00:29:07,840 Speaker 1: those guys on on that work. And I'm a fan 520 00:29:08,400 --> 00:29:10,479 Speaker 1: of that. And I'm a real big fan of looking 521 00:29:10,880 --> 00:29:16,040 Speaker 1: ahead because YEA, oftentimes we just focus on the current conflict, 522 00:29:16,120 --> 00:29:17,480 Speaker 1: and that's important. We have to have a lot of 523 00:29:17,480 --> 00:29:19,320 Speaker 1: people doing that, but we always have to have people 524 00:29:19,320 --> 00:29:22,440 Speaker 1: looking for the future because we don't want it to 525 00:29:22,440 --> 00:29:24,480 Speaker 1: be a surprise, because that is one of the elements 526 00:29:24,480 --> 00:29:27,440 Speaker 1: of warfare that you don't want to get wrong. And 527 00:29:27,480 --> 00:29:30,040 Speaker 1: I think so out of those, I would definitely uh, 528 00:29:30,080 --> 00:29:32,760 Speaker 1: I would definitely point to with that. All right, good stuff, 529 00:29:32,960 --> 00:29:34,920 Speaker 1: Hey McK thanks so much for joining us. Really appreciate 530 00:29:34,920 --> 00:29:36,640 Speaker 1: taking your time. You give us some good insight there 531 00:29:36,640 --> 00:29:39,600 Speaker 1: and what's happening on the ground there in Ukraine. Mcmlroy 532 00:29:39,760 --> 00:29:41,960 Speaker 1: he is the co founder of the Lobo Institute. Former 533 00:29:42,080 --> 00:29:44,600 Speaker 1: US marine c i A. He's he's done it all 534 00:29:44,600 --> 00:29:50,280 Speaker 1: on seeing it also, we appreciate getting his perspective. All right, 535 00:29:50,320 --> 00:29:54,280 Speaker 1: let's switch gears. Let's pivot hard to w w E. 536 00:29:54,320 --> 00:29:59,480 Speaker 1: World Wrestling Entertainment. Looks like Mr McVan I'm sorry, McMahon 537 00:29:59,760 --> 00:30:03,040 Speaker 1: is coming back. The founder Jerry Smith, he covers all 538 00:30:03,080 --> 00:30:05,680 Speaker 1: this media stuff, this sports stuff for Bloomberg News. He 539 00:30:05,760 --> 00:30:08,239 Speaker 1: joins us on the phone here, Jerry, what's going on 540 00:30:08,280 --> 00:30:12,480 Speaker 1: at w w E. Yeah, it's been a big shake up, um, 541 00:30:12,560 --> 00:30:17,000 Speaker 1: you know this morning, Um Vince McMahon. Uh. W w 542 00:30:17,040 --> 00:30:19,360 Speaker 1: E pad a statement saying that Vince would be returning 543 00:30:19,400 --> 00:30:22,760 Speaker 1: to the board and as well as two former w 544 00:30:22,760 --> 00:30:26,600 Speaker 1: w E executives and Vince would be removing three other 545 00:30:26,680 --> 00:30:30,800 Speaker 1: board members from the board. So this is a big 546 00:30:30,840 --> 00:30:35,600 Speaker 1: shake up Vince. To back up a little, Vince retired 547 00:30:35,680 --> 00:30:39,560 Speaker 1: from w w E last year, UM amid allegations of 548 00:30:39,680 --> 00:30:45,400 Speaker 1: infidelity and payments that he had made that um you know, 549 00:30:45,440 --> 00:30:48,960 Speaker 1: the company has been investigating. UM. So now he is 550 00:30:49,160 --> 00:30:54,360 Speaker 1: uh isn't that par for the course in w w E. Well, 551 00:30:54,840 --> 00:30:57,600 Speaker 1: so this is a big moment for the company though, 552 00:30:58,040 --> 00:31:01,360 Speaker 1: because Vince has come act and he can do this 553 00:31:01,480 --> 00:31:04,800 Speaker 1: because he is a controlling shareholder of the company. So 554 00:31:05,160 --> 00:31:08,160 Speaker 1: essentially what he says goes. And he wants to come 555 00:31:08,200 --> 00:31:12,560 Speaker 1: back because this is a big moment where w w 556 00:31:12,680 --> 00:31:16,920 Speaker 1: E is trying to renew its media deals. Uh. It's 557 00:31:17,000 --> 00:31:22,200 Speaker 1: matches are broadcast on USA, which is part of Comcast 558 00:31:22,240 --> 00:31:25,600 Speaker 1: and BC Universal as well as on Friday nights on 559 00:31:25,760 --> 00:31:30,280 Speaker 1: Fox and UM you know, there's Uh. He wants to 560 00:31:30,320 --> 00:31:33,080 Speaker 1: be back. He wants to be part of those negotiations. 561 00:31:33,160 --> 00:31:36,400 Speaker 1: And he also said in a statement yesterday he thinks 562 00:31:36,480 --> 00:31:40,360 Speaker 1: that these discussions about a media rights deal could also 563 00:31:40,600 --> 00:31:44,280 Speaker 1: coincide with the potential sale of the company. Um you know, 564 00:31:44,320 --> 00:31:49,240 Speaker 1: And he pointed out that the demand for live events 565 00:31:49,320 --> 00:31:52,600 Speaker 1: has never been greater in the TV business right now, 566 00:31:52,920 --> 00:31:57,160 Speaker 1: and a lot of media companies see value in owning 567 00:31:57,560 --> 00:32:00,760 Speaker 1: the content that they're putting on their station. Is so 568 00:32:00,840 --> 00:32:03,520 Speaker 1: he sees this as an opportunity to potentially negotiate a 569 00:32:03,560 --> 00:32:08,360 Speaker 1: sale of the company, UM, perhaps with NBCUniversal or Fox 570 00:32:08,640 --> 00:32:12,520 Speaker 1: or or maybe some other UM company that is interested. 571 00:32:13,480 --> 00:32:15,280 Speaker 1: So Jerry on that front, I mean that's kind of 572 00:32:15,320 --> 00:32:17,480 Speaker 1: what got my attention as a former banker. I started 573 00:32:17,520 --> 00:32:21,520 Speaker 1: going through, uh, the digital equivalent of the rolodex scene. 574 00:32:21,560 --> 00:32:23,760 Speaker 1: Who would be a potential buyer here? And and as 575 00:32:23,800 --> 00:32:26,560 Speaker 1: you suggested, there's can I think it's a pretty long 576 00:32:26,680 --> 00:32:29,160 Speaker 1: list here because this is some pretty compelling content that's 577 00:32:29,160 --> 00:32:32,400 Speaker 1: shown over a long period of time that you know, 578 00:32:32,680 --> 00:32:35,600 Speaker 1: incredibly loyal fan base, strong support from the sponsors. It 579 00:32:35,600 --> 00:32:38,160 Speaker 1: seems I could be you know, really something that a 580 00:32:38,200 --> 00:32:41,200 Speaker 1: lot of people would kick the tires on. Yeah. I 581 00:32:41,200 --> 00:32:44,560 Speaker 1: mean it has built up an entertainment empire that is 582 00:32:44,920 --> 00:32:49,400 Speaker 1: really quite impressive over the decades. UM. You know, Endeavor 583 00:32:49,440 --> 00:32:52,560 Speaker 1: could be another company, uh that that might be interested 584 00:32:52,600 --> 00:32:57,400 Speaker 1: in ww E. They they own UFC UM you know 585 00:32:57,920 --> 00:33:02,400 Speaker 1: NBC actually by ball the w w E streaming service 586 00:33:02,440 --> 00:33:05,440 Speaker 1: and put it on the NBC streaming service Peacock a 587 00:33:05,440 --> 00:33:09,719 Speaker 1: few years ago. So there's already a deep relationship between 588 00:33:09,760 --> 00:33:13,520 Speaker 1: those two companies. Any sense of when of timing here, 589 00:33:13,560 --> 00:33:16,800 Speaker 1: like how quickly could this whole process move here? Because 590 00:33:16,840 --> 00:33:19,880 Speaker 1: it seems like Vince McMahon is someone is something. If 591 00:33:19,880 --> 00:33:21,760 Speaker 1: he wants to get something done, he can get it done. 592 00:33:21,800 --> 00:33:24,880 Speaker 1: He controls the company. If he wants to sell the company, 593 00:33:25,520 --> 00:33:28,000 Speaker 1: seems like it could happen sooner rather than later. I 594 00:33:28,000 --> 00:33:32,920 Speaker 1: don't know, Yeah, I mean things are already moving fast. 595 00:33:33,000 --> 00:33:35,920 Speaker 1: I mean the report. You know, they put out a 596 00:33:35,960 --> 00:33:40,280 Speaker 1: statement yesterday where Vince said that he would like to 597 00:33:40,320 --> 00:33:43,160 Speaker 1: come back to the board and um, you know, add 598 00:33:43,160 --> 00:33:46,800 Speaker 1: a few board members, um that he's close with. And 599 00:33:46,840 --> 00:33:49,600 Speaker 1: then today a day later, he's on the board and 600 00:33:49,640 --> 00:33:53,440 Speaker 1: those board members that he wanted are are there. So yeah, 601 00:33:53,520 --> 00:33:58,680 Speaker 1: he really um w W E's is fairly unique in 602 00:33:59,000 --> 00:34:03,120 Speaker 1: the media landscape where one man really controls calls all 603 00:34:03,160 --> 00:34:07,600 Speaker 1: the shots and um you know, so, uh, it's hard 604 00:34:07,600 --> 00:34:10,960 Speaker 1: to say exactly what the timing will be. Um, he 605 00:34:10,960 --> 00:34:15,759 Speaker 1: he wants to coincide, Uh, these media rights discussions with 606 00:34:15,920 --> 00:34:19,160 Speaker 1: NBC and Fox about a potential sale Um, but yeah, 607 00:34:19,280 --> 00:34:22,760 Speaker 1: Vince is the he's he calls the shots at w 608 00:34:22,760 --> 00:34:25,359 Speaker 1: w E and how quickly he wants things to move 609 00:34:25,400 --> 00:34:27,239 Speaker 1: along is really up to him. Is it still a 610 00:34:27,280 --> 00:34:29,120 Speaker 1: big draw? I mean it was when I was a 611 00:34:29,200 --> 00:34:34,279 Speaker 1: kid for some people. Um has it? Has it continued 612 00:34:34,320 --> 00:34:39,120 Speaker 1: to be as strong? Uh? Property? Yeah? I mean the 613 00:34:39,239 --> 00:34:43,040 Speaker 1: ratings are are are are still very strong, and I 614 00:34:43,080 --> 00:34:46,439 Speaker 1: mean this is um, you know, just to step back, 615 00:34:46,480 --> 00:34:50,759 Speaker 1: I mean, the whole television landscape now is really um. 616 00:34:50,800 --> 00:34:53,120 Speaker 1: You know, people are cutting the cord. They're getting a 617 00:34:53,120 --> 00:34:55,840 Speaker 1: lot of their dramas and their comedies on streaming services 618 00:34:55,840 --> 00:34:59,480 Speaker 1: like Netflix. But you know, the cable bundle is really 619 00:34:59,520 --> 00:35:03,120 Speaker 1: about five sports and w w E is is an 620 00:35:03,120 --> 00:35:07,399 Speaker 1: attractive property for media companies for that very reason. All right, Jerry, 621 00:35:07,400 --> 00:35:09,560 Speaker 1: great stuff. Really appreciate it. Jerry Smith. He's a media 622 00:35:09,600 --> 00:35:12,239 Speaker 1: reporter for Bloomberg News. Looking at World Ward Wrestling a 623 00:35:12,400 --> 00:35:16,360 Speaker 1: w w E up today, fifty two week high stocks 624 00:35:16,440 --> 00:35:23,360 Speaker 1: up over the trailing twelve months. How about that. You 625 00:35:23,400 --> 00:35:25,920 Speaker 1: had the Eco data today. Jobs numbers came out. I 626 00:35:25,960 --> 00:35:29,279 Speaker 1: thought they were really good. MAT's a little bit not 627 00:35:29,360 --> 00:35:32,280 Speaker 1: so well. No, they were good. I mean we added 628 00:35:32,960 --> 00:35:35,880 Speaker 1: two hundred and twenty three thousand jobs in the month 629 00:35:36,160 --> 00:35:41,680 Speaker 1: and record unemployment at a record low. That's good from 630 00:35:41,719 --> 00:35:45,239 Speaker 1: from a social perspective, right, I'm just saying from a 631 00:35:45,320 --> 00:35:49,120 Speaker 1: market's perspective, from a FED perspective, market, if they want 632 00:35:49,160 --> 00:35:53,959 Speaker 1: to fight inflation, I think they have to get unemployment 633 00:35:54,040 --> 00:35:58,000 Speaker 1: close to the non accelerating inflation rate of unemployment, and 634 00:35:58,040 --> 00:36:00,879 Speaker 1: three and a half percent can't be there ages wage growth. 635 00:36:01,400 --> 00:36:03,120 Speaker 1: Let's just go to some professionals who cares what we 636 00:36:03,160 --> 00:36:06,000 Speaker 1: think had a fixed income for New Edge. Well, if 637 00:36:06,000 --> 00:36:09,360 Speaker 1: he joined us the show in studio today in Jeffrey Cleveland, 638 00:36:09,560 --> 00:36:12,080 Speaker 1: chief US economists of Paidon and Regal, joining us via 639 00:36:12,200 --> 00:36:15,440 Speaker 1: a zoom. Jeff, let's start with you, how did how 640 00:36:15,440 --> 00:36:18,719 Speaker 1: did you take this job's number report? Well, I think 641 00:36:18,760 --> 00:36:22,440 Speaker 1: Matt is correct in that the whole goal that the 642 00:36:22,480 --> 00:36:26,360 Speaker 1: FED is operated on their engineering. They're attempting to engineer 643 00:36:26,840 --> 00:36:31,040 Speaker 1: arise in the unemployment rate to get nominal wage growth 644 00:36:31,080 --> 00:36:34,320 Speaker 1: to slow, and then that's supposed to damp in inflation pressure. 645 00:36:34,400 --> 00:36:37,480 Speaker 1: That's the whole point of all of these rate hikes. 646 00:36:37,520 --> 00:36:40,120 Speaker 1: That that's it, and then boom you you open the 647 00:36:40,360 --> 00:36:43,560 Speaker 1: UH Employment Situation Report at five thirty here on the 648 00:36:43,560 --> 00:36:48,759 Speaker 1: West Coast and the unemployee rate fell, so it's it's 649 00:36:48,800 --> 00:36:51,959 Speaker 1: not working in that sense, right. However, I do think 650 00:36:52,280 --> 00:36:55,680 Speaker 1: it is interesting to consider that it's possible the FED 651 00:36:55,880 --> 00:37:00,080 Speaker 1: is wrong about that inflation story, that inflation was I 652 00:37:00,320 --> 00:37:03,640 Speaker 1: for all sorts of let's we can't use a transitory 653 00:37:04,239 --> 00:37:10,360 Speaker 1: but you know, pandemic specific or two specific reasons, and 654 00:37:10,360 --> 00:37:15,320 Speaker 1: then inflation does fade. And that's your soft landing scenario 655 00:37:15,480 --> 00:37:19,040 Speaker 1: that I think cannot be ruled out we even had. 656 00:37:19,400 --> 00:37:21,800 Speaker 1: I mean, Cloudy Assam has been writing for a while 657 00:37:21,880 --> 00:37:24,520 Speaker 1: about how she thinks the Phillips curve is BS in 658 00:37:25,480 --> 00:37:28,160 Speaker 1: at least some sense, and what she doesn't want is 659 00:37:28,200 --> 00:37:33,480 Speaker 1: for the FED to fight inflation through, you know, destroying 660 00:37:33,520 --> 00:37:37,160 Speaker 1: American lives. And I thought it was interesting. Rag Aram 661 00:37:37,280 --> 00:37:41,000 Speaker 1: Rajan was on Bloomberg Television yesterday and he has come 662 00:37:41,040 --> 00:37:44,200 Speaker 1: out and said he of the r b I and 663 00:37:44,840 --> 00:37:49,080 Speaker 1: um where where he was chief economist at the ruh 664 00:37:49,280 --> 00:37:51,040 Speaker 1: NO and he ran the rb I, and he was 665 00:37:51,080 --> 00:37:52,920 Speaker 1: chief economist at like the I m F or something 666 00:37:52,960 --> 00:37:55,600 Speaker 1: I can't remember, the World Bank, something big. Anyway, he's 667 00:37:55,600 --> 00:37:57,839 Speaker 1: at the Boost Goal in Chicago now and he said, 668 00:37:58,120 --> 00:38:00,640 Speaker 1: you know, the FED has to be ready for inflation 669 00:38:00,680 --> 00:38:05,680 Speaker 1: to come down quickly to you know, low inflation territory 670 00:38:05,840 --> 00:38:10,160 Speaker 1: or even disinflation. Um Ben Emmons, what do you think 671 00:38:10,200 --> 00:38:12,480 Speaker 1: about the situation that FED finds itself in now? Do 672 00:38:12,560 --> 00:38:14,680 Speaker 1: they have to raise unemployment to get inflation down or 673 00:38:14,760 --> 00:38:18,360 Speaker 1: is it coming down naturally? It is coming down naturally 674 00:38:18,440 --> 00:38:21,120 Speaker 1: through the good side of the economy. And I guess 675 00:38:21,200 --> 00:38:26,040 Speaker 1: the dropping energy prices that is consistent now is really 676 00:38:26,080 --> 00:38:29,200 Speaker 1: helping the cause. And that obviously is a one hand 677 00:38:29,320 --> 00:38:32,239 Speaker 1: supportive for real income. On the other hand, it is 678 00:38:32,280 --> 00:38:35,080 Speaker 1: a factor in the economy that leads them to lower 679 00:38:35,120 --> 00:38:38,360 Speaker 1: inflation expectations and therefore the FED gets quicker to the 680 00:38:38,520 --> 00:38:42,239 Speaker 1: goal of two percent inflation over time. But if you 681 00:38:42,280 --> 00:38:44,759 Speaker 1: read the minutes, they're having a heated debate, though I 682 00:38:44,800 --> 00:38:46,680 Speaker 1: think it felt to me I could heat a debate 683 00:38:46,719 --> 00:38:50,520 Speaker 1: about how far to go with tightening or overtightening. And 684 00:38:50,560 --> 00:38:54,040 Speaker 1: if you listen to Ballard yesterday, although his projection is 685 00:38:54,040 --> 00:38:56,239 Speaker 1: coming down a little bit, it's still really high and 686 00:38:56,280 --> 00:38:58,319 Speaker 1: he seems to be really driving the debata. So it 687 00:38:58,360 --> 00:39:02,600 Speaker 1: seems that they with this Goldilocks quoteunquote goldilocks jobs supports 688 00:39:02,960 --> 00:39:07,000 Speaker 1: vindicates a few like yes, moderating wages, maybe someone slowing 689 00:39:07,040 --> 00:39:09,879 Speaker 1: and inflation with strong jobs report should allow us to 690 00:39:09,960 --> 00:39:12,160 Speaker 1: raise rates here at least to restrictive level. And they 691 00:39:12,280 --> 00:39:15,839 Speaker 1: was sure that inflation comes back to tust. So, Jeff, 692 00:39:15,880 --> 00:39:18,160 Speaker 1: how do you think the Federal Reserve behaves over the 693 00:39:18,200 --> 00:39:20,600 Speaker 1: next couple of meetings? What are you looking for again? 694 00:39:20,640 --> 00:39:25,279 Speaker 1: And you know maybe this jobs data impacts that outlook. Well, 695 00:39:25,280 --> 00:39:27,280 Speaker 1: I think it's difficult. You know, I always tell clients 696 00:39:27,280 --> 00:39:29,480 Speaker 1: you have to take off your your investor hat, you 697 00:39:29,480 --> 00:39:31,000 Speaker 1: have to put on the Fed hat. You have to 698 00:39:31,040 --> 00:39:33,200 Speaker 1: see the world the way they see the world. And 699 00:39:33,200 --> 00:39:35,919 Speaker 1: I think has been pointed out there is this very 700 00:39:35,960 --> 00:39:40,279 Speaker 1: strong line throughout the Fed minutes that they by large 701 00:39:40,320 --> 00:39:43,680 Speaker 1: the committee thinks that if the unemployment rate stays low, 702 00:39:44,080 --> 00:39:46,959 Speaker 1: the labor market remains tight, that will feed through into 703 00:39:46,960 --> 00:39:49,760 Speaker 1: nominal wage growth, and that will feed through into the 704 00:39:49,840 --> 00:39:53,760 Speaker 1: non housing services component of core inflation. So goods prices 705 00:39:53,800 --> 00:39:58,200 Speaker 1: may fall, rents may distilerate, but it's that non housing 706 00:39:58,280 --> 00:40:01,520 Speaker 1: component which will still be eli because of the labor 707 00:40:01,560 --> 00:40:04,560 Speaker 1: market story. So they've definitely view inflation through the labor 708 00:40:04,600 --> 00:40:06,239 Speaker 1: market lens. I think you have to keep that in 709 00:40:06,280 --> 00:40:09,239 Speaker 1: mind as an investor, because I think, as we see 710 00:40:09,280 --> 00:40:12,080 Speaker 1: this morning, three and a half percent unemployment, right, you're 711 00:40:12,120 --> 00:40:14,680 Speaker 1: looking at the world through that labor market lens, right 712 00:40:14,760 --> 00:40:17,240 Speaker 1: or wrong, You're going to think we need to remain 713 00:40:17,640 --> 00:40:20,920 Speaker 1: restrictive now, maybe that they don't need to keep hiking, 714 00:40:21,000 --> 00:40:23,839 Speaker 1: maybe they pause in the second quarter, sort of our expectation. 715 00:40:24,520 --> 00:40:27,920 Speaker 1: But do you cut with the unemployment rate of three 716 00:40:27,920 --> 00:40:32,759 Speaker 1: and a half percent. No, I don't think so. Why 717 00:40:33,480 --> 00:40:35,440 Speaker 1: on earth wouldn't you take advantage of a three and 718 00:40:35,480 --> 00:40:39,920 Speaker 1: a half percent unemployment even if you're not fighting inflation, um, 719 00:40:39,960 --> 00:40:41,600 Speaker 1: just to build up dry powder. And I know a 720 00:40:41,640 --> 00:40:44,399 Speaker 1: lot of people been are against that argument, but if 721 00:40:44,400 --> 00:40:46,480 Speaker 1: it were me, I would say, let me save up 722 00:40:46,520 --> 00:40:49,839 Speaker 1: some basis points here. If I get unemployment at three 723 00:40:50,160 --> 00:40:53,719 Speaker 1: point five percent, I'm raising fifty again in February. It's 724 00:40:53,760 --> 00:40:56,400 Speaker 1: exactly through the fast ends. Like this is actually ideal 725 00:40:56,440 --> 00:40:58,800 Speaker 1: scenario for them to say, look our rate heights and 726 00:40:58,920 --> 00:41:01,880 Speaker 1: not the railing the rate the labor market and anyway, 727 00:41:01,920 --> 00:41:04,920 Speaker 1: it's not in any recession. There's not any recession happening 728 00:41:04,920 --> 00:41:08,279 Speaker 1: as we speak. There's slowdown happening, but that's you know, 729 00:41:08,480 --> 00:41:10,840 Speaker 1: natural as you get from a major boom of this 730 00:41:10,920 --> 00:41:14,200 Speaker 1: pandemic that we have, so you can continue to move 731 00:41:14,280 --> 00:41:17,600 Speaker 1: this rate higher. Only they've decided on the slower basis 732 00:41:17,640 --> 00:41:21,160 Speaker 1: may be appropriate because if you do continue with seventy 733 00:41:21,160 --> 00:41:23,399 Speaker 1: five base points at the time on you know, let's 734 00:41:23,440 --> 00:41:25,920 Speaker 1: say are not a three four meetings, that way, you 735 00:41:26,040 --> 00:41:28,560 Speaker 1: probably get more of all. They gotta go fifty at 736 00:41:28,560 --> 00:41:30,839 Speaker 1: the next meeting right then, because if they don't, if 737 00:41:30,880 --> 00:41:34,000 Speaker 1: they only go twenty five, and then inflation comes roaring back, 738 00:41:34,040 --> 00:41:37,280 Speaker 1: then Jerome Pale is Arthur Burns and all bets are off. 739 00:41:37,360 --> 00:41:39,120 Speaker 1: So there's a great question, Matt, that that is the 740 00:41:39,200 --> 00:41:41,520 Speaker 1: toss up here still of twenty five or fifty base 741 00:41:41,560 --> 00:41:44,600 Speaker 1: on list report. As you see the market rallying today, 742 00:41:44,719 --> 00:41:47,240 Speaker 1: it says no, will be twenty five, but there's actually 743 00:41:47,280 --> 00:41:50,840 Speaker 1: a fifty base point rate hikes. What this report is, say, Jeffrey, 744 00:41:50,920 --> 00:41:56,799 Speaker 1: what's the paidon in regal kind of recession call for? Well, 745 00:41:56,840 --> 00:41:59,400 Speaker 1: we look at the yield curve, we look at rate hikes, 746 00:41:59,480 --> 00:42:03,319 Speaker 1: we look at housing. Housing historically is the business cycle. 747 00:42:03,400 --> 00:42:07,000 Speaker 1: So when housing rolls over, you generally have a recession 748 00:42:07,000 --> 00:42:11,520 Speaker 1: that follows housing exactly. So it can happen with the lag. 749 00:42:11,560 --> 00:42:14,360 Speaker 1: I mean you you probably remember very well. Housing to 750 00:42:14,400 --> 00:42:17,360 Speaker 1: meet peaked in summer of oh five or arguably early 751 00:42:17,440 --> 00:42:21,880 Speaker 1: oh six. The recession didn't officially begin until December of 752 00:42:21,880 --> 00:42:24,640 Speaker 1: oh seven, so there can be lags. So we've been saying, hey, 753 00:42:24,640 --> 00:42:27,440 Speaker 1: it might be that the economy skates by without a 754 00:42:27,440 --> 00:42:31,120 Speaker 1: recession in twenty three. Maybe that's a story. The jobs 755 00:42:31,120 --> 00:42:35,080 Speaker 1: report today, certainly, I think, uh talking bolsters that argument. 756 00:42:35,680 --> 00:42:37,279 Speaker 1: The other thing I was gonna say, though, is the 757 00:42:37,320 --> 00:42:40,160 Speaker 1: bondmarket seems to conclude the supporting that maybe there's only 758 00:42:40,200 --> 00:42:41,919 Speaker 1: gonna be a twenty five basis point high, or maybe 759 00:42:41,920 --> 00:42:43,719 Speaker 1: that FED is close to being done, but they hate 760 00:42:43,719 --> 00:42:45,000 Speaker 1: to be the bear of bad news. We still have 761 00:42:45,080 --> 00:42:49,000 Speaker 1: CPI uh coming up next Thursday, I believe, and then 762 00:42:49,160 --> 00:42:53,600 Speaker 1: the FED prefers the employment cost Index over average generally learning. 763 00:42:53,640 --> 00:42:55,560 Speaker 1: So e c I. E c I is coming out 764 00:42:56,800 --> 00:42:59,520 Speaker 1: January thirty one, so right before the next FED meetings. 765 00:42:59,560 --> 00:43:03,359 Speaker 1: So I think there's still uh, this narrative could still 766 00:43:03,360 --> 00:43:05,960 Speaker 1: shift back, you know, if we get a stronger than 767 00:43:05,960 --> 00:43:09,560 Speaker 1: expected course c p I, for example, which is coming out. Wait, 768 00:43:09,640 --> 00:43:13,160 Speaker 1: isn't CPI coming out next week? Is that the specific? Yeah? 769 00:43:14,239 --> 00:43:16,239 Speaker 1: And that's right. I do agree with Jeff, there, like, 770 00:43:17,120 --> 00:43:19,760 Speaker 1: look at the European data today, right, so we peaked 771 00:43:19,760 --> 00:43:21,840 Speaker 1: there were falling off with headline face shows. Yeah, I 772 00:43:21,840 --> 00:43:25,080 Speaker 1: guess prices pomited, but the core rate is pretty sticky there. 773 00:43:25,160 --> 00:43:28,960 Speaker 1: It's not really moving, right, So yeah, we have we 774 00:43:29,040 --> 00:43:31,759 Speaker 1: have somewhat similar here too. And to Jeff's point, like 775 00:43:31,840 --> 00:43:35,240 Speaker 1: this core PC ex housing that's been highlighted by Powell 776 00:43:35,320 --> 00:43:38,040 Speaker 1: not put in the minutes to that's really the number 777 00:43:38,080 --> 00:43:40,279 Speaker 1: to watch. It has come off a little bit in 778 00:43:40,280 --> 00:43:43,600 Speaker 1: the last week reading, but it's way over four percent. 779 00:43:43,640 --> 00:43:46,760 Speaker 1: So is that the four point six percent number set four? Yeah, exactly, 780 00:43:46,800 --> 00:43:49,160 Speaker 1: So it's just too far above target. It's not like 781 00:43:49,200 --> 00:43:50,960 Speaker 1: the official target, but it's like the number of the 782 00:43:51,520 --> 00:43:54,120 Speaker 1: Jeff says, it's it's a wage linked number. And that's 783 00:43:54,120 --> 00:43:59,040 Speaker 1: what we see is traditionally there go to number they're preferred, 784 00:43:59,040 --> 00:44:01,680 Speaker 1: and I never know if they like, uh, they they've 785 00:44:01,760 --> 00:44:03,920 Speaker 1: had They have specified in a number of papers that 786 00:44:04,000 --> 00:44:06,920 Speaker 1: PC is their preferred measure, but they haven't specified if 787 00:44:06,920 --> 00:44:09,960 Speaker 1: it's headline or core or core x housing. Um, I 788 00:44:09,960 --> 00:44:11,759 Speaker 1: guess they don't want to let us in. No, that 789 00:44:12,680 --> 00:44:14,560 Speaker 1: that's the fat watching game here and it keeps us all, 790 00:44:14,840 --> 00:44:18,319 Speaker 1: you know, engaged, and but you know to to that 791 00:44:18,440 --> 00:44:20,960 Speaker 1: is that I actually think that if you if you 792 00:44:21,000 --> 00:44:24,160 Speaker 1: take headline is the broadest measure of inflation, and you 793 00:44:24,200 --> 00:44:27,239 Speaker 1: could need to see negative month to month prints from 794 00:44:27,320 --> 00:44:30,960 Speaker 1: here on, then that's definitely an indication inflation coming down faster. 795 00:44:31,080 --> 00:44:33,680 Speaker 1: So I do think you need to watch that, and 796 00:44:33,719 --> 00:44:36,000 Speaker 1: if you also watch jobless claims every week. I was 797 00:44:36,120 --> 00:44:38,439 Speaker 1: thought of these two measures as you're you know, real 798 00:44:38,480 --> 00:44:40,360 Speaker 1: time gauge on where we are with the economy in 799 00:44:40,480 --> 00:44:42,960 Speaker 1: terms of inflation pressure. Hey, Jeff, you're based in l 800 00:44:43,000 --> 00:44:46,000 Speaker 1: A thirty seconds, how's the economy there? How's the outlook there? 801 00:44:46,000 --> 00:44:48,480 Speaker 1: What are you here when you're a day to day Well, 802 00:44:48,480 --> 00:44:51,080 Speaker 1: we just endured, you know, several days of rain, which 803 00:44:51,080 --> 00:44:53,640 Speaker 1: never rarely happens there. They've got four inches of rain 804 00:44:53,680 --> 00:44:56,560 Speaker 1: in my neighborhood here, so that has been that has 805 00:44:56,560 --> 00:44:59,400 Speaker 1: certainly been the top of the town. I think. Second 806 00:44:59,400 --> 00:45:03,120 Speaker 1: to that, the thing everyone talks about is still the 807 00:45:03,200 --> 00:45:06,239 Speaker 1: labor shortage that companies don't, you know, there's they have 808 00:45:06,320 --> 00:45:09,319 Speaker 1: demand for labor, they can't find enough people who are 809 00:45:09,360 --> 00:45:12,440 Speaker 1: willing or able or that wanted to fill those positions. 810 00:45:12,440 --> 00:45:15,480 Speaker 1: So that's that's pretty dominant um weakness in the housing market, though, 811 00:45:15,520 --> 00:45:19,640 Speaker 1: we are seeing pretty pretty substantial slowdown in activity, sales 812 00:45:19,680 --> 00:45:22,640 Speaker 1: and prices of decilerated so it will probably be the 813 00:45:22,960 --> 00:45:25,280 Speaker 1: top things that are being discussed here on the West Coast. 814 00:45:25,400 --> 00:45:27,760 Speaker 1: Good stuff the moment, all right, Jeff, Great stuff, Jeff Cleveland, 815 00:45:27,840 --> 00:45:30,279 Speaker 1: chief US economist, Payden and Regal and Ben Emmon's head 816 00:45:30,280 --> 00:45:32,440 Speaker 1: of fixing come at New Edge Wealth joining us here. 817 00:45:35,640 --> 00:45:38,719 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 818 00:45:38,760 --> 00:45:42,520 Speaker 1: subscribe and listen to interviews of Apple Podcasts or whatever 819 00:45:42,640 --> 00:45:46,240 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 820 00:45:46,560 --> 00:45:50,040 Speaker 1: at Matt Miller, three peat on false Sweeney, I'm on 821 00:45:50,080 --> 00:45:52,960 Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always 822 00:45:53,040 --> 00:45:54,879 Speaker 1: catch us worldwide at Bloomberg Radio.