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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple car Playing and broud Otto with the

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

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Looking at Boeing, Boeing burned through three point nine to

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Speaker 2: three billion in cash in the first quarter. That's a

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Speaker 2: less dramatic dream than analys had expected. That's accounting for

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Speaker 2: the stock moving higher as the embattled planemaker continues to

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Speaker 2: slow output to get a handle on its manufacturing issues.

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Speaker 2: So I guess trying to really focus on quality as

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Speaker 2: opposed to as opposed to quantity. George Ferguson, he's been

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Speaker 2: helping us along the way here with this Boeing story.

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Speaker 3: All along.

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Speaker 2: He covers airspace, he covers the airlines for Bloomberg Intelligence.

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Speaker 2: He also is enjoying our Princeton campus.

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Speaker 4: With Hallie Lucis sate show from Princeton is coming is strong.

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Speaker 3: Yeah, we're going to We're going down to Princeton.

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Speaker 2: Absolutely, God forbid you take a train into the world's

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Speaker 2: financial capital.

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Speaker 3: George Ferguson doesn't have to do that. People come to George.

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Speaker 3: George talk to us about what we saw from Boeing

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Speaker 3: in their results. What were the key takeaways for you?

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Speaker 5: So I think we saw it not a lot, not

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Speaker 5: a lot of detail inside here about what matters most

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Speaker 5: going ahead. We did see cash burn for one Q,

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Speaker 5: like you said, you know, combined with capex free cash

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Speaker 5: flow usage, well three point nine billion. CFO had sort

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Speaker 5: of told us that we would see something between four

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Speaker 5: and four and a half billion. That came in lighter

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Speaker 5: than that. The markets, I think are a little bit

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Speaker 5: happier about that, but you can't live here long, right.

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Speaker 5: I guess the big takeaway here too, is that there's

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Speaker 5: about seven billion dollars in cash and equivalence on the

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Speaker 5: balance sheet that's dwindling pretty quickly. They paid four point

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Speaker 5: four billion I think it was in debt during the quarter.

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Speaker 5: So something has to happen, right. They want to they

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Speaker 5: want to buy Spirit Aerosystems. I hear all kinds of

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Speaker 5: conflicting reports, but essentially I think it's break. You know,

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Speaker 5: there's a lot of challenges around negotiating getting Airbus out

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Speaker 5: of Spirit Aerosystems. So Boeing can buy it. They've talked

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Speaker 5: about using cash to buy Spirit or I guess debt maybe.

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Speaker 5: I think it's a company doesn't want to add a

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Speaker 5: lot more debt to their balance sheet. Spirits market cap

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Speaker 5: around four billion, you only have seven billion left in

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Speaker 5: the balance sheet. Something's got to happen. You got to

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Speaker 5: raise some capital here. You can't do this soll cash

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Speaker 5: or you got to use Boeing stock and just the

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Speaker 5: numbers they're getting small, right, the cash numbers are getting small.

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Speaker 5: You're running out a runway here. They need to come

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Speaker 5: up with this plan with the FAA and how they're

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Speaker 5: going to stabilize production, start building airplanes, start generating cash

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Speaker 5: because you can't do this many quarters.

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Speaker 4: So, George Lyne, do you think that there's a risk

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Speaker 4: that we could be hearing about some kind of financing

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Speaker 4: activity from Boeing coming up? I mean, like you just said,

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Speaker 4: I mean it's I think it'd be kind of hard

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Speaker 4: to envision them doing a debt sale right now. That

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Speaker 4: sounds like a little bit of maybe a red flag

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Speaker 4: to me. But if they would do, I don't know.

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Speaker 4: The equity is not worth a whole lot, Like what

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Speaker 4: do you do from here?

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Speaker 5: Yeah, so agreed, I think you know, what I heard

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Speaker 5: from you is that could be hard to do a

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Speaker 5: debt deal here. I think so. I mean, I think

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Speaker 5: they wouldn't let four point four billion get repaid without

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Speaker 5: sort of plumbing the markets and thinking about whether they

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Speaker 5: would do an issuance here. But I mean, you know,

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Speaker 5: you wouldn't want to raise equity here. I feel like

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Speaker 5: it'd be hard to raise debt. You got a lot

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Speaker 5: of You got a lot of money wrapped up at

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Speaker 5: inventory on the balance sheet. Airplanes that have already been

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Speaker 5: built haven't been delivered to customers that they've done. They've

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Speaker 5: shipped some of those in the last quarter, which is

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Speaker 5: free up some cash. But I think you really got

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Speaker 5: to get the manufacturing, you know, process going again and

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Speaker 5: genering cash that way. I think that would get folks

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Speaker 5: more comfortable about giving more debt or equity.

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Speaker 3: I don't know I could get a debt deal done

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Speaker 3: in this marketplace.

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Speaker 4: You personally, Paul, I could go sell.

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Speaker 3: Some Boeing debt back in the day, if I had

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Speaker 3: my seat back, Maybe some investment debt. Sure, no problem,

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Speaker 3: all right, George, talk to us about deliveries. Where are

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Speaker 3: we today? I'm kind of focusing on the seven fifty seven.

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Speaker 2: That's kind of the main beast is, as you've told

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Speaker 2: us in the past, where are we all on you know, deliveries.

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Speaker 3: Today and where do they want to get to? And

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Speaker 3: you have confidence that they can get there.

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Speaker 5: Yeah, So I think we don't necessarily know where we

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Speaker 5: are on deliveries today. We're going to find that out,

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Speaker 5: I hope on the earnings call here in a couple

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Speaker 5: of minutes. Again, I think that a number of the

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Speaker 5: airplanes they delivered in in uh March and in February,

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Speaker 5: we're probably out of inventory that we're already built. So

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Speaker 5: you know, what I'm getting back is what the real

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Speaker 5: build rate is. I've heard numbers in the twenties ish

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Speaker 5: where they want to be. They should be at thirty eight,

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Speaker 5: and they right now a month in the seven thirties

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Speaker 5: Evan breaking to forty two, you know, near the end

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Speaker 5: of the year, had they not had this problem with

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Speaker 5: the panel blowout in the Alaska Airlines. So what I

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Speaker 5: think we heard from the CFO at the Bank of

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Speaker 5: America event, you know, a conference earlier this quarter and

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Speaker 5: one quarter sorry one Q was that they want to

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Speaker 5: be at thirty eight by the end of the year.

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Speaker 5: Look around thirty eight. I think they were doing okay financially.

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Speaker 5: They need to be breaking up into the forties and fifties.

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Speaker 5: That's going to make them a lot more healthy, that's

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Speaker 5: going to make their supplier base a lot healthier. Spirit

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Speaker 5: couldn't really survive down at that thirty ish, you know,

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Speaker 5: thirty eight level of build rate. So again, I think

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Speaker 5: where they where they want to be is up in

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Speaker 5: you know, up in the forties and fifties, where Airbus is.

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Speaker 5: Airbus is getting ready to break into the you know,

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Speaker 5: fifties and sixties. They want to be up there, but

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Speaker 5: they're I mean from a fifty rate, I think they're

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Speaker 5: or a year and a half away at least right now.

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Speaker 4: And of course Airbus has just been like riding this

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Speaker 4: whole Boeing disaster wave quite nicely to their benefits. So

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Speaker 4: going well for our friends abroad over there. But you

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Speaker 4: started off, George by saying that, you know, there's not

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Speaker 4: a whole lot to go off of here that you know.

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Speaker 4: Of course, Boeing didn't provide earnings guidance for the year.

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Speaker 4: We've got some management changes coming up sometime within the year.

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Speaker 4: We know that CEO Dave Calhoun is going to step

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Speaker 4: down by the end of twenty twenty four. Do you

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Speaker 4: think we'll get a little bit more guidance on that

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Speaker 4: on the earnings call?

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Speaker 5: Not sure, right? I think that. I think that if

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Speaker 5: we knew something about the next CEO, I think they

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Speaker 5: probably would have even told us before the earnings call.

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Speaker 5: That's such a huge overhang in this company right now, right,

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Speaker 5: I imagine, you know, we got this announcement. What I mean,

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Speaker 5: it seems like we move in dog years here at Boeing,

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Speaker 5: right one day is like seven anymore? I don't know.

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Speaker 5: I think we got this a month ago, a couple

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Speaker 5: of weeks ago, you know. I imagine there's a lot

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Speaker 5: of work going on the search right now and feeling

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Speaker 5: out constituents as to whether or not the folks they

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Speaker 5: identify are the right people. So, and I think as

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Speaker 5: soon as they know what they that they have someone

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Speaker 5: in place, they'd announce it, because again, it's such a

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Speaker 5: huge overhang. I think they need to get someone in place,

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Speaker 5: and they need to have their plan fleshed out and

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Speaker 5: bring that to the marketplace as soon as possible. I

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Speaker 5: think that's going to create again a lot more comfort

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Speaker 5: with investors. So I don't think they would hold that back.

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Speaker 5: And I don't think that Dave Calhoun's going to be

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Speaker 5: the one that's going to announce it either, And so

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Speaker 5: I don't think anybody on the call would be a

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Speaker 5: person announcing it. But I could be wrong. But again,

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Speaker 5: I don't know that they're anywhere on that right now.

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Speaker 5: And that's super important.

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Speaker 2: Hey, George, Boeing's customers, the big airlines, what are their

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Speaker 2: needs these days?

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Speaker 3: Do they need more aircraft?

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Speaker 2: Like if Boeing was it fifty or sixty percent production,

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Speaker 2: would there be demand there for that?

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Speaker 5: They need more faster, you know, as soon as possible.

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Speaker 5: I guess. Look, I think if you take United as

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Speaker 5: you know, one of the core customers, you know, there's

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Speaker 5: sort of a there's a demand to fleet refresh around

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Speaker 5: the world. Right The new Max is fifteen twenty percent

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Speaker 5: more efficient than the old seven thirty seven or the

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Speaker 5: A three twenty. Airlines want that efficiency as soon as

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Speaker 5: possible in their fleets. The market I think is going

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Speaker 5: to is looking fairly competitive. It may not, you know,

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Speaker 5: this summer may be a little bit less competitive than

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Speaker 5: we expect to give in Boeing's problems and some of

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Speaker 5: the geared turbofan problems at raytheon that knocks on airplanes

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Speaker 5: out of service. But fuels rising, airlines want to be

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Speaker 5: very competitive. They need the most fuel efficient aircraft, so

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Speaker 5: they want them as soon as possible, And like in

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Speaker 5: the United's case, almost everybody is increasing size right. Size

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Speaker 5: of aircraft are rising because pilot's got twenty percent plus,

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Speaker 5: you know, wage increases. You got to find a way

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Speaker 5: to drive down costs. One of the things we heard

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Speaker 5: out of Jet Blue yesterday they're looking for ways to

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Speaker 5: drive down costs. One of the things you always do

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Speaker 5: is increase aircraft size, and therefore you're flying more passengers

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Speaker 5: for the same cost of that pilot up front. That

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Speaker 5: helps you improve efficiencies. They all want it, so they're

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Speaker 5: all trying to find bigger aircraft to fly with more seats.

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Speaker 5: And so yes, airlines want airplanes as soon as possible.

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Speaker 5: If you're a Boeing customer, what also really ticks you

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Speaker 5: off is you look across the street at the folks

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Speaker 5: flying the Airbus airplane and they probably have little to

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Speaker 5: no interruption this summer in their schedules. You're worried about

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Speaker 5: what deliveries you're going to get. And your ability to

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Speaker 5: fly your schedule, and that hurts if you're the bowing customer. Right,

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Speaker 5: the airbus customers.

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Speaker 2: Are smiling all right, George, thanks so much again for

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Speaker 2: giving us an update there on the aerospace airline industry.

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Speaker 2: George Ferguson he covers all the airlines and airspace for

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Speaker 2: Bloomberg Intelligence.

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

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Speaker 3: Right smack in the middle of earning season.

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Speaker 2: I'll tell you that was a very very important earnings

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Speaker 2: release and conference call last night for one Tesla, and.

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Speaker 3: It looks like Elon Musk got the job done. The

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Speaker 3: stocks up fifteen percent.

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Speaker 2: Here today, let's break down what we did see from

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Speaker 2: Tessa and what we did hear from mister Elon Musk.

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Speaker 3: We'll check out with Steve Man.

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Speaker 2: He's a global autos and industrials and analyst for Bloomberg Intelligence.

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Speaker 2: He's down in Princeton, New Jersey. Very comfortable down in Princeton.

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Speaker 2: He's not coming in to New York, he's not taking

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Speaker 2: the train, He's done all that malarkey.

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Speaker 4: But we love the studio guests. When we can get one.

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Speaker 3: Yes and we need to go down to Princeton to

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Speaker 3: our OFFICEA I got to show you that it is awesome.

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Speaker 4: Especially with all of our BI friends, and that we

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Speaker 4: should do a remote broadcast.

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Speaker 3: We're going to do that. I'll put that in the books.

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Speaker 2: We're going to great food and that's where we built

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Speaker 2: BI from day one. Hey, Steve, thanks so much for

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Speaker 2: joining us here. What are your takeaways from what we

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Speaker 2: saw from UH Tesla and the results and what we

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Speaker 2: heard from Elon Musk.

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Speaker 4: Well, thanks, Paul.

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Speaker 6: Uh.

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Speaker 7: It's a sigh of relief. I think for a lot

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Speaker 7: of investors. You know, if you look at the valuation

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Speaker 7: of Tesla, there's actually two groups. You can actually break

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Speaker 7: it down two groups investors. One who thinks is just

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Speaker 7: a Tesla, is just an automotive company. The other really

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Speaker 7: believes in the long term, the AI, the tons vehicle.

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Speaker 7: I think yesterday's call and yesterday's announcement it sues a

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Speaker 7: lot of the concerns that both parties had Yesterday especially

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Speaker 7: with the announcement that they're going to pull forward, not

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Speaker 7: just launch, but pull forward the The launch of the

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Speaker 7: affordable EV.

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Speaker 4: Is that something that you give a lot of credence

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Speaker 4: to Steve because I feel like with Elon and with

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Speaker 4: Tesla and the past, there have been these promises and

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Speaker 4: you know, maybe not all of them have quite come

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Speaker 4: to fruition.

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Speaker 7: I think the you know, so, I think the affordable

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Speaker 7: EV is is a real thing. You know, like you

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Speaker 7: guys talked about earlier robo Taxi. I think there's still

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Speaker 7: needs time for development. But if you look at the

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Speaker 7: affordable EV actually kills two birds in one stone. You know,

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Speaker 7: it actually increases a scale for Tesla, and you know,

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Speaker 7: we're going to see revenue growth, we potentially see profit

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Speaker 7: growth from that affordable EV. And that's exactly what the

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Speaker 7: market needs. It's more affordable vehicles to increase penetration of

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Speaker 7: EV's the other thing that's really important with this affordable

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Speaker 7: EV launches. It actually helps Tesla increases reach globally because

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Speaker 7: you know, you have a lot of emerging markets that

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Speaker 7: you know a lot of people, a lot of consumers

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Speaker 7: there cannot afford an expensive fifty thousand dollars vehicle forty

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Speaker 7: thousand dollars vehicles, So up twenty thirty up thirty thousand

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Speaker 7: vehicle is the right product for them to expand geographically.

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Speaker 2: Steve, what do we know about the economics of such

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Speaker 2: a new or lower cost vehicle? Can they produce that

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Speaker 2: at a profitable basis on a per unit basis?

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Speaker 7: Yeah, there's there's a couple of ways they can approach this.

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Speaker 7: I think, you know, they can develop a totally new platform.

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Speaker 7: But you know, in the other segments I've done with you,

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Speaker 7: we've talked about vertical integration, and vertical integration has actually

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Speaker 7: reduced the cost of you know, car production. So for them,

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Speaker 7: you know, for TESTA, it's the only company that's profitable

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Speaker 7: in producing evs. So the other option is actually think about,

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Speaker 7: you know, what they can do with the three and

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Speaker 7: the Y. You know, can they offer you know, lower trims,

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Speaker 7: maybe even you know, you know, a smaller battery that's

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Speaker 7: going to allow them to cut costs and also you know,

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Speaker 7: make that available to the consumer at a lower price.

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Speaker 4: So this obviously was the best part of the report.

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Speaker 4: This is what the stock is rallying on right now.

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Speaker 4: But you still had elsewhere in the earnings report, we

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Speaker 4: had falling vehicle sales, we had worse than expected revenue

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Speaker 4: and profit and a pretty significant cash burn figure. So

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Speaker 4: I mean, Steve, are you totally optimistic here? What kind

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Speaker 4: of concerns do you still have here?

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Speaker 7: I've always said, you know, I think this year and

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Speaker 7: even into next year, there's some bumps on the road.

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Speaker 7: You know, cyber truck is still ramping up. It's a

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Speaker 7: very difficult vehicle to build. They're still working on those issues.

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Speaker 6: You know.

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Speaker 7: We don't think the EV market actually, especially in the US,

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Speaker 7: will pick back up until twenty twenty five, late twenty

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Speaker 7: twenty five, in the twenty twenty six because the market

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Speaker 7: really needs a lower cost, more affordable EV to entice

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Speaker 7: kind of more new buyers into the market. So long term,

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Speaker 7: long term, I'm very positive. I think I think this

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Speaker 7: this company has done everything right in terms of you know,

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Speaker 7: looking at AI, looking at AV. I still believe the

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Speaker 7: e V, the the e V, uh, you know, shift

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Speaker 7: has actually sailed. We're gonna have evs for the long terms.

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Speaker 3: Uh.

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Speaker 7: And I think that subscription based software based vehicle that

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Speaker 7: they're trying to build is is the right move right

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Speaker 7: strategy for the industry.

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Speaker 2: Steve, what did the elon say or to what extent

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Speaker 2: did he address just kind of the developments in China,

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Speaker 2: how things are developing there from a competitive standpoint, a

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Speaker 2: sales standpoint and all that.

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Speaker 7: Yeah, it's uh, I actually see that. We'll continue to

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Speaker 7: be bumpy.

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Speaker 3: Uh.

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Speaker 7: They probably likely to lose market share, continue to lose

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Speaker 7: some market share there. But I think you know, Tesla

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Speaker 7: is leveraging China, not just for sales, but it's a

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Speaker 7: low cost manufat actoring base for the company. The Shanghai

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Speaker 7: factory still pumps out a million vehicles, close to a

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Speaker 7: million vehicles a year at a very low cost. They

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Speaker 7: still are able to source battery from companies like c

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Speaker 7: at L, the largest EV battery maker in the world,

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Speaker 7: at a very attractive price given their volume. So, you know,

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Speaker 7: China sales will probably slow. There's it's a hyper competitive market,

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Speaker 7: shall me, which is a you know, a major cell

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Speaker 7: phone maker in China. They're launching a vehicles that's also

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Speaker 7: very affordable, so they're gonna see more competition in China.

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Speaker 7: So but again, China is not just a sales for sales,

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Speaker 7: it's a manufacturing, low cost manufacturing base.

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Speaker 8: For them.

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Speaker 4: So something else on the call, Steve that Elon had

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Speaker 4: took a dig at the car makers that are pairing

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Speaker 4: back on the EV production plans and going more to

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Speaker 4: the gas electric hybrids instead. You didn't call them out,

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Speaker 4: but GM and Ford are among those ones. And but

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Speaker 4: it's that really where consumers are going more proportionally right now,

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Speaker 4: more into the plug in hybrid space, or maybe non

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Speaker 4: plug in hybrid, but just hybrids in general versus full

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Speaker 4: on evs.

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Speaker 7: Yeah, I think the consumer I think you know, we

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Speaker 7: did a survey not so long ago. I think what

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Speaker 7: we got from that survey was that I think the

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Speaker 7: consumer needs to trial evs. They actually need to be

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Speaker 7: educated on, you know, how to make EV works work

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Speaker 7: in their daily life. So, you know, PHVs plug in

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Speaker 7: hybrids hybrids is actually good transition into full evs.

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Speaker 4: They alleviate some of.

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Speaker 7: The concerns in terms of range, in terms of the

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Speaker 7: lack of infrastructure that that we you know, that that's

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Speaker 7: for the EV market right now. So PHIV and EV

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Speaker 7: are a good transitional product, but it's not a long

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Speaker 7: term product because if you look at some of the

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Speaker 7: emission standards, it's continued to continue to be tighter and tighter.

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Speaker 7: Eventually hybrids and phgvs are probably won't even meet the lower,

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Speaker 7: the more stringent emission standards down you know, in the

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Speaker 7: next decade.

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Speaker 2: Steve thirty seconds. What's the call here on just Elon?

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Speaker 2: Has he focused on Tesla?

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Speaker 7: He has focused on task Site. There was a question

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Speaker 7: last night on that and he reiterated that, you know,

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Speaker 7: I mean this is his baby, you know, AI his baby,

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Speaker 7: that's his that's his I want to say, that's his

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Speaker 7: dream YEP is to make cars, robots and timeless. So

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Speaker 7: he's he's laser focused on that.

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Speaker 2: All right, good stuff, Steve Man, thanks so much for

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Speaker 2: joining us as always Global Autos and Industrials research channels

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Speaker 2: for Bloomberg Intelligence, joining us from Prince New Jersey via

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Speaker 2: zoom here.

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Speaker 3: And the investors certainly liked what they heard last night. Molly,

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Speaker 3: oh my gosh.

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Speaker 4: Yeah, that stock is ripping today, and how didn't Nora

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Speaker 4: just send I mean it was down quite a bit

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Speaker 4: on the year, so this is uh, I mean, remember,

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Speaker 4: I mean the job cuts too have been like really

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Speaker 4: quite something. In our colleagues, I'm out in San Francisco,

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Speaker 4: Dana Hall and Ed Ludlow and all over that. So

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Speaker 4: I think the marketing division that was the most recent

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Speaker 4: one to go right that we've decided that ads are

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Speaker 4: no longer worth it. Ye, people are just gonna buy

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Speaker 4: the car.

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Speaker 3: Word of mouth.

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Speaker 2: Yeah it's yeah, it's word of mouth and it's the

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Speaker 2: it's the strength of the brand out there.

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Speaker 3: So the stock is up fourteen don't.

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Speaker 4: Know if I really disagree with that.

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Speaker 5: Yeah, I don't.

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Speaker 3: Yeah, I don't you known, you know.

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Speaker 2: So anyway, it's got a market cap of four and

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Speaker 2: twenty five billion dollars, So we'll see how this plays out.

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Speaker 3: So a good day for the shareholders of Tesla.

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

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Speaker 1: weekdays at ten am Eastern on Apple Car playing Android

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Speaker 3: Down Paul Sweeney. We're live on our Bloomberg Interactive Brooker's studio,

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Speaker 3: and we're also.

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Speaker 2: Streaming live on YouTube so that you can hit over

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Speaker 2: to YouTube dot com search Bloomberg Podcast and that's where

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Speaker 2: you find all right. Facebook kids call it.

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Speaker 4: Meta heads the professionals Facebook for me.

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Speaker 2: Stock's up forty percent, year to date, it's up one

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Speaker 2: hundred and thirty percent over the last twelve months. When

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Speaker 2: you see stock that's had that kind of performance.

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Speaker 4: Since the bar high bai, I mean what else do?

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Speaker 6: Yeah?

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Speaker 2: And it means they better, they better really deliver on

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Speaker 2: their earnings. And they're going to report earnings I think

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Speaker 2: after the close tonight. So let's get a little preview.

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Speaker 2: Man Deep saying Joints is here a senior technology channels

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Speaker 2: for Bloomberg Intelligence, joining us here in studio as he does.

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Speaker 2: He does not mail it in from home or from Princeton.

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Speaker 2: He comes into the world.

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Speaker 3: Capital of Big gold Star for that as opposed to

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Speaker 3: his management team, which will leave that Man Deep, Stock's

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Speaker 3: had a heck of a run here. What do they

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Speaker 3: need to do here with their next earnings report?

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Speaker 9: Just keep executing.

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Speaker 8: I mean what they have done over the last eighteen

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Speaker 8: months is one you know, really the focus on cost

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Speaker 8: cuts and the eurof efficiency which was twenty twenty three

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Speaker 8: has really paid.

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Speaker 4: Off aka job cuts.

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Speaker 8: I mean, look, I think you could argue with a

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Speaker 8: lot of the tech companies their cost structure was bloated

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Speaker 8: coming out of the pandemic because they overhired.

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Speaker 9: Looking at the growth and so they had to course correct.

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Speaker 8: In the case of Meta, I mean, this is a

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Speaker 8: great business model, over fifty percent operating margin, and for

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Speaker 8: good reason. I mean, the fixed costs are almost negligible

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Speaker 8: after you know, you have the infrastructure of the scale

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Speaker 8: of what Meta has created, you know, for their family

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Speaker 8: of apps. And so the way I look at it

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Speaker 8: is Instagram clearly still has a ton of runway. The

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Speaker 8: blue app is losing engagement, but they have been able

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Speaker 8: to make up for that with their reals product, and

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Speaker 8: Reels was the equivalent of TikTok. Remember, TikTok really was

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Speaker 8: a scary proposition for them in terms of taking away engagement.

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Speaker 8: They managed to create a product that was comparable to TikTok.

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Speaker 8: And now if the TikTok app is banned, that's actually

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Speaker 8: a great positive because they're gonna get a lot of

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Speaker 8: the creators come over from TikTok to Reels.

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Speaker 4: Is that a lot of why the stock has had

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Speaker 4: the run it's on right now because of the prospect

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Speaker 4: of TikTok being banned or is it really more the

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Speaker 4: Ai story.

438
00:22:15,359 --> 00:22:19,240
Speaker 8: It's actually the execution that they have shown over the

439
00:22:19,320 --> 00:22:22,159
Speaker 8: past twelve months, and as I mentioned cost cuts have

440
00:22:22,320 --> 00:22:26,080
Speaker 8: played a big role because now their EPs expectations have

441
00:22:26,160 --> 00:22:28,600
Speaker 8: gone up forty percent. So in their case for share

442
00:22:28,840 --> 00:22:32,360
Speaker 8: earnings for share, it's not just multiple expansion, it's EPs.

443
00:22:32,480 --> 00:22:36,920
Speaker 8: Growth expectations have also caught up. And I think in

444
00:22:37,040 --> 00:22:39,960
Speaker 8: terms of the top line, they've been able to grow

445
00:22:40,040 --> 00:22:42,760
Speaker 8: top line twenty five percent after laying off twenty five

446
00:22:42,800 --> 00:22:44,880
Speaker 8: percent of the staff. So that tells you how much

447
00:22:45,000 --> 00:22:48,040
Speaker 8: leverage there is in the business model. And look, their

448
00:22:48,160 --> 00:22:52,639
Speaker 8: scale really is what differentiates Meta from like a Snap

449
00:22:52,800 --> 00:22:55,840
Speaker 8: or a pinterest Snap and Pinterests are still struggling.

450
00:22:55,480 --> 00:22:56,199
Speaker 9: With that pricing.

451
00:22:56,720 --> 00:22:59,639
Speaker 8: Not so much for Meta because they have the best

452
00:22:59,720 --> 00:23:02,520
Speaker 8: at targeting and that's what gets reflected in their numbers.

453
00:23:02,800 --> 00:23:05,760
Speaker 2: All right, So you mentioned the TikTok issue, and again

454
00:23:05,960 --> 00:23:10,000
Speaker 2: that legislation, the financial the Aid Package, ninety five billion

455
00:23:10,040 --> 00:23:12,439
Speaker 2: dollar package signed into law by the President today.

456
00:23:12,600 --> 00:23:14,560
Speaker 3: Part of it includes TikTok.

457
00:23:15,359 --> 00:23:18,359
Speaker 2: So we spoke to Matt Shuttingholm, he's our litigation analyts

458
00:23:18,359 --> 00:23:19,679
Speaker 2: for Bloomberg Intelligence yesterday.

459
00:23:19,760 --> 00:23:21,120
Speaker 3: He says, this is going to court.

460
00:23:21,640 --> 00:23:26,200
Speaker 2: When you talk to investors that invest in Meta YouTube,

461
00:23:26,359 --> 00:23:29,880
Speaker 2: all the competitors to TikTok, is there feeling in the marketplace.

462
00:23:29,920 --> 00:23:30,719
Speaker 3: How this might play out.

463
00:23:31,400 --> 00:23:34,720
Speaker 8: Yeah, I think overall it's a net positive for both

464
00:23:34,760 --> 00:23:39,720
Speaker 8: those companies, I mean, Meta and Alphabet YouTube because even

465
00:23:39,760 --> 00:23:43,359
Speaker 8: if let's say the court overturns or decides, you know,

466
00:23:43,520 --> 00:23:47,639
Speaker 8: the app needs to make some remedies and can still operate.

467
00:23:48,760 --> 00:23:51,879
Speaker 8: I think TikTok has a tough problem in terms of

468
00:23:52,040 --> 00:23:55,480
Speaker 8: retaining their creators. So it's one thing, you know, Yeah,

469
00:23:55,560 --> 00:23:58,000
Speaker 8: you've got you know, viewers who come to your app

470
00:23:58,080 --> 00:24:02,080
Speaker 8: for content, but ultimately it's the user generated content that's

471
00:24:02,240 --> 00:24:05,920
Speaker 8: what makes TikTok unique. And if they lose those creators

472
00:24:05,960 --> 00:24:09,720
Speaker 8: over to YouTube or to Instagram, then those creators aren't

473
00:24:09,720 --> 00:24:11,880
Speaker 8: going to come back, even if the app can operate

474
00:24:12,320 --> 00:24:15,920
Speaker 8: down the line. So in the case of Internet, it's

475
00:24:16,119 --> 00:24:20,240
Speaker 8: all about engagement, and the way you maintain engagement is

476
00:24:20,320 --> 00:24:23,960
Speaker 8: through unique content, in this case user generated content.

477
00:24:24,080 --> 00:24:26,360
Speaker 9: So they can't afford to lose those creators.

478
00:24:26,640 --> 00:24:29,680
Speaker 4: Definitely. Yeah, they drive a lot of views in the

479
00:24:29,760 --> 00:24:33,440
Speaker 4: ad space for sure. I mean, I just taking a guess.

480
00:24:33,480 --> 00:24:36,080
Speaker 4: I'm not on TikTok. I'm not that young, cool person,

481
00:24:36,240 --> 00:24:37,280
Speaker 4: but I've heard.

482
00:24:37,200 --> 00:24:39,920
Speaker 3: Our young and cool as opposed to John Tucker. I

483
00:24:40,000 --> 00:24:43,119
Speaker 3: mean assumption that John Talker is not on TikTok, I

484
00:24:43,200 --> 00:24:44,080
Speaker 3: haven't said anything.

485
00:24:44,800 --> 00:24:49,920
Speaker 4: Well, as John John likes to fly through anonymously through

486
00:24:49,960 --> 00:24:50,880
Speaker 4: this John.

487
00:24:51,320 --> 00:24:52,720
Speaker 3: J YouTube guy.

488
00:24:52,800 --> 00:24:55,119
Speaker 2: He goes on and he he You watch the like

489
00:24:55,240 --> 00:24:57,280
Speaker 2: the professors who teach classes and stuff like that.

490
00:24:57,800 --> 00:25:01,600
Speaker 3: You learn a lot of physics courses and you know, oh, that's.

491
00:25:01,440 --> 00:25:07,800
Speaker 4: Really what YouTube was created for. Anyways, keeps moving with Meta.

492
00:25:08,960 --> 00:25:12,600
Speaker 4: Thank you John for joining us today. Mandy coming back

493
00:25:12,680 --> 00:25:15,800
Speaker 4: to Meta here. So we've been talking about this stock rally.

494
00:25:15,840 --> 00:25:18,840
Speaker 4: It's added like close to almost four hundred billion dollars

495
00:25:18,880 --> 00:25:21,840
Speaker 4: in market value on this run. But this stock compared

496
00:25:21,880 --> 00:25:25,119
Speaker 4: to the peers that you were mentioning snap Pinterest, Reddit.

497
00:25:25,280 --> 00:25:26,040
Speaker 5: This is cheap.

498
00:25:26,760 --> 00:25:29,320
Speaker 4: How does that work? Tell us about this earnings multiple?

499
00:25:29,359 --> 00:25:32,080
Speaker 4: And how that's why this stock is trading at a discount.

500
00:25:32,320 --> 00:25:36,880
Speaker 8: Well, so large caps always trade at a slightly lower

501
00:25:37,000 --> 00:25:40,600
Speaker 8: multiple than your small cap companies, and for good reason.

502
00:25:40,720 --> 00:25:44,160
Speaker 8: You know, there's only so much runway you have as

503
00:25:44,320 --> 00:25:47,800
Speaker 8: a company that already generates over one hundred and fifty

504
00:25:47,840 --> 00:25:51,480
Speaker 8: billion dollars in annual revenue. So look, I think in

505
00:25:51,600 --> 00:25:55,520
Speaker 8: the case of Meta, the sentiment yes can be positive

506
00:25:55,760 --> 00:25:58,920
Speaker 8: if they deliver on not only their core business but

507
00:25:59,040 --> 00:26:03,399
Speaker 8: also AI. So right now everyone is focused on what

508
00:26:04,200 --> 00:26:06,720
Speaker 8: additional revenue you can generate from AI. And in the

509
00:26:06,800 --> 00:26:10,280
Speaker 8: case of Meta, they were losing sixteen billion dollars a

510
00:26:10,400 --> 00:26:13,280
Speaker 8: year on Metaverse. Now they seem to have made that

511
00:26:13,400 --> 00:26:16,359
Speaker 8: pivot where they're more focused on AI. They've released a

512
00:26:16,400 --> 00:26:20,119
Speaker 8: third version of their Lama model, which is what everyone

513
00:26:20,400 --> 00:26:21,080
Speaker 8: is focused on.

514
00:26:21,400 --> 00:26:26,040
Speaker 4: Myself, we have to ask what is the MAMA model?

515
00:26:26,119 --> 00:26:26,879
Speaker 4: Please tell us.

516
00:26:27,359 --> 00:26:31,359
Speaker 8: So in the world of generative AI, it's about having

517
00:26:31,520 --> 00:26:34,960
Speaker 8: your own foundational model. Think of open AI as GPT.

518
00:26:35,440 --> 00:26:39,880
Speaker 8: What powers chat GPT is an underlying foundational model where

519
00:26:40,000 --> 00:26:44,399
Speaker 8: you have got a very large size model with you know,

520
00:26:44,760 --> 00:26:48,480
Speaker 8: billions of parameters and weights, and that's what makes it intelligent.

521
00:26:49,040 --> 00:26:53,480
Speaker 8: Now Meta has actually trained its own model using in

522
00:26:53,640 --> 00:26:58,080
Speaker 8: video GPUs and that is comparable to GPT or you know,

523
00:26:59,000 --> 00:27:02,639
Speaker 8: Google Gemini in terms of performance. So what it tells

524
00:27:02,720 --> 00:27:06,600
Speaker 8: you is they're not dependent on anybody to deploy their

525
00:27:06,720 --> 00:27:10,320
Speaker 8: technology or they don't need to partner. In fact, we

526
00:27:10,440 --> 00:27:14,359
Speaker 8: did a survey at BI and Meta emerged as a

527
00:27:14,440 --> 00:27:18,600
Speaker 8: contender for GENAI based search. So think of what chat

528
00:27:18,680 --> 00:27:22,119
Speaker 8: GPT is doing or perplexity is doing. Meta actually is

529
00:27:22,200 --> 00:27:24,440
Speaker 8: being used as a search platform now because they have

530
00:27:24,560 --> 00:27:28,560
Speaker 8: rolled out Meta AI on whatsapppen on Instagram, and over

531
00:27:28,680 --> 00:27:30,760
Speaker 8: time maybe they take share from Google Search.

532
00:27:31,040 --> 00:27:32,200
Speaker 4: And that's what's called Lama.

533
00:27:32,920 --> 00:27:33,960
Speaker 9: Lama is the model.

534
00:27:34,440 --> 00:27:38,399
Speaker 8: We also know why that just harm That's cool, Silicon

535
00:27:38,480 --> 00:27:41,000
Speaker 8: Valuay that Lama model can be used for all types

536
00:27:41,040 --> 00:27:41,760
Speaker 8: of use cases.

537
00:27:41,800 --> 00:27:42,800
Speaker 9: Search is just one of them.

538
00:27:42,880 --> 00:27:44,160
Speaker 4: I'm clearly not an engineer.

539
00:27:44,359 --> 00:27:45,800
Speaker 3: That's beyond me exactly.

540
00:27:46,080 --> 00:27:49,480
Speaker 2: Fortunately, Man deepsins we get to chat with it. Thirty

541
00:27:49,520 --> 00:27:51,040
Speaker 2: seconds left a metaverse.

542
00:27:51,800 --> 00:27:54,199
Speaker 3: We're all on that. You mentioned that it was at

543
00:27:54,200 --> 00:27:55,760
Speaker 3: a Runwright loss of sixteen billion.

544
00:27:57,200 --> 00:27:59,920
Speaker 8: I mean, as long as they keep growing over twenty percent,

545
00:28:00,320 --> 00:28:03,359
Speaker 8: market is forgiving. When it comes to losing four billion

546
00:28:03,440 --> 00:28:04,760
Speaker 8: dollars a quarter, they don't care.

547
00:28:04,880 --> 00:28:06,960
Speaker 3: And that's still the kind of that's still the and

548
00:28:07,160 --> 00:28:08,880
Speaker 3: we don't have any more he's not backing away.

549
00:28:08,920 --> 00:28:10,280
Speaker 9: If he's not backing away and we.

550
00:28:10,280 --> 00:28:12,760
Speaker 8: Don't have any markers on what he's losing four billion

551
00:28:12,840 --> 00:28:15,440
Speaker 8: dollars on, maybe he's subsidizing all the v are in

552
00:28:15,520 --> 00:28:16,520
Speaker 8: the ar glasses that.

553
00:28:16,560 --> 00:28:18,440
Speaker 9: People are buying, and that could be one way you

554
00:28:18,680 --> 00:28:19,200
Speaker 9: justify that.

555
00:28:19,760 --> 00:28:21,600
Speaker 4: I haven't seen what. I don't know if someone single

556
00:28:21,640 --> 00:28:23,399
Speaker 4: person who's on the metaverse, I couldn't tell you a

557
00:28:23,440 --> 00:28:24,200
Speaker 4: single thing about it.

558
00:28:24,720 --> 00:28:26,400
Speaker 9: No, And I think ar glasses.

559
00:28:26,480 --> 00:28:29,000
Speaker 8: I think some people I was talking to that Murray

560
00:28:29,080 --> 00:28:32,320
Speaker 8: she owns one of the air glasses, and there's few

561
00:28:32,359 --> 00:28:33,680
Speaker 8: people who what do you do with them?

562
00:28:34,040 --> 00:28:37,440
Speaker 9: Well, you use it to consume content or to you know,

563
00:28:37,720 --> 00:28:41,160
Speaker 9: just like convenience is laughing here.

564
00:28:41,200 --> 00:28:42,920
Speaker 4: I think he's a use that. I also have no

565
00:28:43,040 --> 00:28:43,920
Speaker 4: idea what's going on.

566
00:28:44,880 --> 00:28:45,840
Speaker 8: You're the same boat as I.

567
00:28:46,560 --> 00:28:48,520
Speaker 2: I'm all right, well just look, I think for the

568
00:28:48,560 --> 00:28:50,680
Speaker 2: stock as long as they don't talk about it, yes,

569
00:28:50,920 --> 00:28:52,600
Speaker 2: that that's good for the stock. Man Deep saying thank

570
00:28:52,600 --> 00:28:56,160
Speaker 2: you for again explaining what's happening in the world of technology.

571
00:28:56,240 --> 00:28:58,080
Speaker 2: Man Deep seeing one of the best tech animals on

572
00:28:58,280 --> 00:29:01,000
Speaker 2: Wall Street, and he covers all the tech stuff I've

573
00:29:01,040 --> 00:29:03,840
Speaker 2: got Anna rog Rana. Also they're doing it from a

574
00:29:03,880 --> 00:29:07,400
Speaker 2: senior perspective. We got technology team all over the globe

575
00:29:07,440 --> 00:29:09,360
Speaker 2: following technology in Asia, Europe.

576
00:29:09,720 --> 00:29:13,160
Speaker 3: What is in Europe? And certainly the US man Deep seen.

577
00:29:14,680 --> 00:29:18,520
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

578
00:29:18,640 --> 00:29:22,160
Speaker 1: weekdays at ten am Eastern on Applecar Play and Android

579
00:29:22,200 --> 00:29:24,920
Speaker 1: Auto with the Bloomberg Business app. You can also listen

580
00:29:25,080 --> 00:29:28,160
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581
00:29:28,560 --> 00:29:31,280
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582
00:29:32,640 --> 00:29:34,640
Speaker 2: We're live here in on O Bloomberg Interactive, Brokers Studio,

583
00:29:34,720 --> 00:29:37,080
Speaker 2: streaming live on YouTube as well to check in on

584
00:29:37,240 --> 00:29:40,719
Speaker 2: bloom YouTube dot com and search Bloomberg Podcasts.

585
00:29:40,800 --> 00:29:41,640
Speaker 3: Bloomberg News.

586
00:29:41,880 --> 00:29:45,160
Speaker 2: Along with Morning Console, they have an ongoing poll where

587
00:29:45,320 --> 00:29:47,560
Speaker 2: they do some polling data as it rates to the

588
00:29:47,640 --> 00:29:50,120
Speaker 2: current political situation and key battleground states.

589
00:29:50,160 --> 00:29:52,400
Speaker 4: That's the key part, right, It's been a really good series. Yeain,

590
00:29:52,480 --> 00:29:55,160
Speaker 4: Gregory Cordy has been all over eighties, our Bloomberg News

591
00:29:55,280 --> 00:29:58,000
Speaker 4: White House and political correspondent, and he's going to join

592
00:29:58,080 --> 00:29:59,760
Speaker 4: us now. Gregory, what can you tell us about the

593
00:29:59,760 --> 00:30:02,480
Speaker 4: big takeaways from this iteration of the poll.

594
00:30:03,440 --> 00:30:05,360
Speaker 10: Yeah, So, as you said, we've been doing this every month.

595
00:30:05,440 --> 00:30:08,400
Speaker 10: This is the seventh iteration of this poll in seven

596
00:30:08,840 --> 00:30:12,400
Speaker 10: key battleground states, and for the first five months it

597
00:30:12,520 --> 00:30:16,280
Speaker 10: was a pretty stable race with former President Trump with

598
00:30:16,360 --> 00:30:19,400
Speaker 10: a slight lead over President Biden. Then after the State

599
00:30:19,440 --> 00:30:21,240
Speaker 10: of the Union address, we got a little bit of

600
00:30:21,280 --> 00:30:26,120
Speaker 10: good economic news and we saw last month President Biden

601
00:30:27,080 --> 00:30:30,240
Speaker 10: pretty much bring it even he was winning or even

602
00:30:30,320 --> 00:30:32,720
Speaker 10: in the ross belt states, the blue Wall states we

603
00:30:32,800 --> 00:30:37,120
Speaker 10: call them of Michigan, Pennsylvania, and Wisconsin made it, gave

604
00:30:37,200 --> 00:30:39,400
Speaker 10: him a fighting chance. But now we're seeing in this month,

605
00:30:39,440 --> 00:30:41,760
Speaker 10: in the April poll sort of reversion back to the

606
00:30:41,840 --> 00:30:45,080
Speaker 10: mean what we had been seeing all along with former

607
00:30:45,120 --> 00:30:48,280
Speaker 10: President Trump having across these seven battle ground states a

608
00:30:48,400 --> 00:30:53,320
Speaker 10: six point lead, and that's significant. Biden can't win this

609
00:30:53,560 --> 00:30:56,719
Speaker 10: without getting at least those blue Wall states and probably

610
00:30:56,800 --> 00:31:01,520
Speaker 10: another one. And he's now down in Pennsylvany within the

611
00:31:01,600 --> 00:31:06,800
Speaker 10: margin of error, but significantly down in Wisconsin. Michigan. Interestingly,

612
00:31:06,960 --> 00:31:09,120
Speaker 10: is this bright spot? And who would have known because

613
00:31:09,520 --> 00:31:11,800
Speaker 10: there are a lot of concerns there about a large

614
00:31:12,320 --> 00:31:16,360
Speaker 10: population of Muslim voters union workers, but he seems to

615
00:31:16,360 --> 00:31:17,120
Speaker 10: be holding his own there.

616
00:31:17,600 --> 00:31:20,000
Speaker 3: Gregory, what are the key drivers are key influencers in

617
00:31:20,080 --> 00:31:23,280
Speaker 3: his poll? What what kind of moves the numbers around?

618
00:31:24,120 --> 00:31:26,120
Speaker 10: It's really the economy and with that, you see that

619
00:31:26,200 --> 00:31:29,040
Speaker 10: with any incumbent president, their numbers move up and down

620
00:31:29,080 --> 00:31:31,400
Speaker 10: with the economy. And what we're seeing in this poll

621
00:31:31,640 --> 00:31:34,680
Speaker 10: is deep pessimism about where we're going to be by

622
00:31:34,720 --> 00:31:37,120
Speaker 10: the end of the year. You see here the numbers,

623
00:31:37,320 --> 00:31:40,400
Speaker 10: UH majorities think that the inflation rate is going to

624
00:31:40,480 --> 00:31:42,760
Speaker 10: be higher by the end of the year, that the

625
00:31:42,800 --> 00:31:46,040
Speaker 10: economy overall is going to be worse, and UH also

626
00:31:46,160 --> 00:31:48,160
Speaker 10: that interest rates are going to be higher by the

627
00:31:48,240 --> 00:31:50,040
Speaker 10: end of the year. Now, these are are this, These

628
00:31:50,040 --> 00:31:52,600
Speaker 10: are voters talking, and they're they're sort of giving us

629
00:31:52,640 --> 00:31:55,680
Speaker 10: their perspective within this political framework where this this might

630
00:31:55,720 --> 00:31:57,720
Speaker 10: differ a little bit from the University of Michigan survey

631
00:31:58,000 --> 00:32:01,080
Speaker 10: when we're talking to consumers and and people making different

632
00:32:01,160 --> 00:32:04,280
Speaker 10: kinds of decisions. But the fact that President Biden is

633
00:32:04,360 --> 00:32:05,920
Speaker 10: so tied to the state of this economy and that

634
00:32:05,920 --> 00:32:07,880
Speaker 10: people are pessimistic about the economy is not a good

635
00:32:07,920 --> 00:32:08,640
Speaker 10: sign for the president.

636
00:32:08,880 --> 00:32:11,440
Speaker 4: This is so fascinating to me as somebody who covers

637
00:32:11,480 --> 00:32:13,680
Speaker 4: the economy, just like the I mean, this is something wait,

638
00:32:13,680 --> 00:32:16,040
Speaker 4: you know, Gregory, we're no stranger to this, but just

639
00:32:16,200 --> 00:32:19,280
Speaker 4: like the mismatch, and like where the economy is actually

640
00:32:19,360 --> 00:32:23,200
Speaker 4: performing and how people actually perceive it to be performing.

641
00:32:23,280 --> 00:32:26,640
Speaker 4: And it's so interesting to me that like this mismatch continues.

642
00:32:26,680 --> 00:32:28,840
Speaker 4: Hear me, We're about to get a GDP report tomorrow

643
00:32:28,920 --> 00:32:32,600
Speaker 4: that's gonna be is it tomorrow? Yeah, tomorrow, it's gonna

644
00:32:32,640 --> 00:32:35,360
Speaker 4: be pretty pretty strong. I mean you're gonna have growth

645
00:32:35,520 --> 00:32:37,880
Speaker 4: like what up in like you know, near the two

646
00:32:37,960 --> 00:32:40,840
Speaker 4: and a half three percent area. The unemployment rate is

647
00:32:40,880 --> 00:32:45,360
Speaker 4: below four percent. Yeah, inflation has been stalling. I guess

648
00:32:45,400 --> 00:32:47,760
Speaker 4: when you say to me that, you know that. So

649
00:32:47,880 --> 00:32:51,480
Speaker 4: a majority of swing state voters see the economy worsening.

650
00:32:52,080 --> 00:32:54,520
Speaker 4: I just wonder, like what metric are they referring to?

651
00:32:54,600 --> 00:32:56,360
Speaker 4: And I know that they're not looking at the economy

652
00:32:56,400 --> 00:32:59,120
Speaker 4: based on like, oh, well, we think manufacturings this, but

653
00:32:59,280 --> 00:33:01,960
Speaker 4: like what what what are they looking at? Is it

654
00:33:02,000 --> 00:33:02,800
Speaker 4: really just inflation?

655
00:33:03,560 --> 00:33:06,479
Speaker 10: Yeah, voters look at the economy differently than economists look

656
00:33:06,480 --> 00:33:09,640
Speaker 10: at the infla economy. And one of the interesting things

657
00:33:09,760 --> 00:33:12,320
Speaker 10: even in this poll, there's an inconsistency and it's a

658
00:33:12,320 --> 00:33:15,480
Speaker 10: little inscrutable. But when you ask people about the national economy,

659
00:33:15,760 --> 00:33:17,720
Speaker 10: two thirds of them to say it's bad. When you

660
00:33:17,720 --> 00:33:21,320
Speaker 10: ask people about their local economy, a majority say it's

661
00:33:21,360 --> 00:33:24,280
Speaker 10: actually pretty good. And so people are differentiating between their

662
00:33:24,320 --> 00:33:28,040
Speaker 10: own personal economic situation and what they see in the

663
00:33:28,160 --> 00:33:32,160
Speaker 10: economy writ large. Why is that it may be because

664
00:33:32,200 --> 00:33:34,400
Speaker 10: of their king off of negative political coverage. It might

665
00:33:34,480 --> 00:33:37,680
Speaker 10: be because we have this political polarization where when they're

666
00:33:37,720 --> 00:33:39,680
Speaker 10: saying the economy is bad, they're really trying to make

667
00:33:39,720 --> 00:33:43,120
Speaker 10: a statement about the president who they don't like. It

668
00:33:43,280 --> 00:33:46,560
Speaker 10: may just be that the they view inflation as a

669
00:33:46,880 --> 00:33:50,160
Speaker 10: national issue and inflation is high. Unemployment they might see

670
00:33:50,200 --> 00:33:52,040
Speaker 10: as a local issue because they have a job and

671
00:33:52,040 --> 00:33:53,560
Speaker 10: their neighbor has a job, and so they might see

672
00:33:53,600 --> 00:33:55,760
Speaker 10: as local issue, and so therefore their local economy is

673
00:33:55,800 --> 00:33:57,640
Speaker 10: doing well. There's a lot to parse out there, but

674
00:33:57,760 --> 00:33:59,800
Speaker 10: certainly people are giving us mixed signals about the state

675
00:33:59,840 --> 00:34:00,960
Speaker 10: of economy.

676
00:34:01,160 --> 00:34:04,200
Speaker 3: And what do you think the Biden administration needs to do?

677
00:34:04,560 --> 00:34:08,480
Speaker 2: Perhaps differently, going to Molly's point about saying, hey, the

678
00:34:08,480 --> 00:34:10,279
Speaker 2: economy is in pretty darn good shape.

679
00:34:10,320 --> 00:34:12,320
Speaker 3: Here's what we've done. How do you think they should

680
00:34:12,440 --> 00:34:13,120
Speaker 3: be messaging this?

681
00:34:14,280 --> 00:34:16,920
Speaker 10: They have been trying with that message for months now,

682
00:34:17,120 --> 00:34:19,640
Speaker 10: and it's been a tough message to get across. At

683
00:34:19,680 --> 00:34:22,800
Speaker 10: one point, they tried to take this pejorative label of

684
00:34:22,880 --> 00:34:25,640
Speaker 10: the economy that Republicans try to brand it with of Bidenomics,

685
00:34:25,920 --> 00:34:28,000
Speaker 10: and turn that into a positive. That did not work.

686
00:34:28,040 --> 00:34:30,799
Speaker 10: They did not change the public perception of Bidenomics, they

687
00:34:30,920 --> 00:34:33,080
Speaker 10: moved a little bit away from that messaging. Right now,

688
00:34:33,920 --> 00:34:36,359
Speaker 10: they can talk all they want about the Infrastructure Bill,

689
00:34:36,400 --> 00:34:39,160
Speaker 10: the Inflation Reduction Act, the Chips Act, all these things

690
00:34:39,200 --> 00:34:42,520
Speaker 10: that we know we've been tracking is starting to make

691
00:34:42,560 --> 00:34:46,400
Speaker 10: a difference, and we'll make a difference in manufacturing on

692
00:34:46,560 --> 00:34:49,680
Speaker 10: sharing a lot of technology. But those aren't really resonating

693
00:34:49,680 --> 00:34:53,800
Speaker 10: with people. People don't really connect with bills being passed.

694
00:34:53,840 --> 00:34:56,360
Speaker 10: They want to see actual stuff getting done, and some

695
00:34:56,440 --> 00:34:58,560
Speaker 10: of that is on a longer time ramps. So maybe

696
00:34:58,600 --> 00:35:00,400
Speaker 10: it's just giving it time. We have six more now.

697
00:35:00,800 --> 00:35:03,320
Speaker 10: But the problem for Biden is that now the second

698
00:35:03,400 --> 00:35:05,680
Speaker 10: quarter of an election year is really when people start

699
00:35:05,760 --> 00:35:08,359
Speaker 10: to make up their minds about the economy, really sort

700
00:35:08,360 --> 00:35:10,719
Speaker 10: of solidify how they think the economy is, and they're

701
00:35:10,719 --> 00:35:12,600
Speaker 10: going to carry that with them into November.

702
00:35:12,880 --> 00:35:14,960
Speaker 4: And another problem with all this too gregory and that

703
00:35:15,040 --> 00:35:17,680
Speaker 4: you point out in the story, is that it really

704
00:35:17,719 --> 00:35:20,960
Speaker 4: doesn't matter, like for whatever reason that the economy is

705
00:35:21,000 --> 00:35:23,800
Speaker 4: performing the way it is, but voter's perception is that

706
00:35:23,920 --> 00:35:26,480
Speaker 4: if it's doing poorly, you put that blame on the president,

707
00:35:26,560 --> 00:35:28,920
Speaker 4: whether it's you know, deserves to be there or not.

708
00:35:29,200 --> 00:35:31,560
Speaker 4: So you know, Biden tried shifting that a bit, you know,

709
00:35:31,680 --> 00:35:34,560
Speaker 4: saying the inflation stuff is stemming from you know, Russia's

710
00:35:34,560 --> 00:35:37,719
Speaker 4: invasion of Ukraine. That message didn't really sit Can he

711
00:35:37,800 --> 00:35:39,680
Speaker 4: really shift the blame elsewhere anymore?

712
00:35:40,600 --> 00:35:42,680
Speaker 10: Yeah, we asked that's a very specific question. In this

713
00:35:42,800 --> 00:35:45,200
Speaker 10: iteration of the poll. We asked who is responsible for

714
00:35:45,400 --> 00:35:47,719
Speaker 10: the economy? And the number one answer, of course, it's

715
00:35:47,760 --> 00:35:51,200
Speaker 10: the president. There is some political polarization there. Republicans are

716
00:35:51,239 --> 00:35:54,319
Speaker 10: more willing to hold him accountable than Democrats. Democrats are

717
00:35:54,400 --> 00:35:56,800
Speaker 10: more likely to say, well, you know, Congress also plays

718
00:35:56,800 --> 00:35:59,680
Speaker 10: a role, the Fed plays a role, Wall Street corporations

719
00:35:59,719 --> 00:36:03,080
Speaker 10: all role. For Republicans, they want to put this entirely

720
00:36:03,120 --> 00:36:05,520
Speaker 10: at the feet of the president. So the issue is

721
00:36:05,520 --> 00:36:07,440
Speaker 10: going to be how to independency, How those swing voters

722
00:36:07,440 --> 00:36:10,279
Speaker 10: see it. Do they give Biden a little bit of

723
00:36:10,360 --> 00:36:13,360
Speaker 10: a pass given that this post pandemic economy has had

724
00:36:13,360 --> 00:36:15,360
Speaker 10: a whole bunch of struggles that may or may not

725
00:36:15,480 --> 00:36:17,480
Speaker 10: be outside the president's control. That's the debate that we're

726
00:36:17,480 --> 00:36:19,560
Speaker 10: going to have to have in the next six months

727
00:36:19,600 --> 00:36:19,719
Speaker 10: or so.

728
00:36:20,000 --> 00:36:22,239
Speaker 3: Gregory, how aware do you think the White House is

729
00:36:22,360 --> 00:36:25,920
Speaker 3: of polling data like this than you so much.

730
00:36:26,920 --> 00:36:29,160
Speaker 10: I don't necessarily want to get into every conversation that

731
00:36:29,239 --> 00:36:31,080
Speaker 10: I have with the White House and the Biden campaign

732
00:36:31,160 --> 00:36:33,000
Speaker 10: on this, but suffice it to say they're very aware.

733
00:36:34,040 --> 00:36:35,719
Speaker 10: You know, the public messaging is going to be. We

734
00:36:35,840 --> 00:36:39,480
Speaker 10: don't dictate policy by the way polls are from day

735
00:36:39,480 --> 00:36:42,640
Speaker 10: to day. But look, they look particularly at these polls.

736
00:36:42,960 --> 00:36:44,480
Speaker 10: You'll see a lot of poles out there that have

737
00:36:45,040 --> 00:36:48,080
Speaker 10: the national number, the popular vote number, and that's actually

738
00:36:48,160 --> 00:36:51,279
Speaker 10: pretty even. Trump and Biden are pretty much neck and

739
00:36:51,360 --> 00:36:53,319
Speaker 10: neck in those national numbers. But because of the way

740
00:36:53,360 --> 00:36:56,200
Speaker 10: the electoral college is constructed, it's these seven states that

741
00:36:56,320 --> 00:36:59,799
Speaker 10: are most likely going to decide this and that's where

742
00:36:59,840 --> 00:37:02,719
Speaker 10: that six point differential makes a difference. And so they're

743
00:37:02,800 --> 00:37:05,560
Speaker 10: looking not just the national numbers. They would obviously like

744
00:37:05,600 --> 00:37:07,279
Speaker 10: to see an upward trend in the national numbers, but

745
00:37:07,320 --> 00:37:10,439
Speaker 10: they're looking state by state by state to see where

746
00:37:10,480 --> 00:37:12,600
Speaker 10: they're doing, where they're up, where they're down. And this

747
00:37:12,760 --> 00:37:14,680
Speaker 10: is going to be especially important going in the summer

748
00:37:14,719 --> 00:37:17,319
Speaker 10: and fall into where they deploy the resources, where they

749
00:37:17,320 --> 00:37:20,239
Speaker 10: spend money on ads, where they put volunteers on the ground,

750
00:37:20,239 --> 00:37:21,799
Speaker 10: where they knock on doors, where they do they get

751
00:37:21,800 --> 00:37:23,360
Speaker 10: out on the vote efforts, and this is going to

752
00:37:23,360 --> 00:37:25,600
Speaker 10: be a very shifting campaign over the next six months.

753
00:37:25,880 --> 00:37:28,320
Speaker 10: We're going to see both the Trump and Biden campaigns

754
00:37:28,360 --> 00:37:30,600
Speaker 10: look at these polls and decide where the poy of

755
00:37:30,600 --> 00:37:33,600
Speaker 10: their resources because this is actually an awfully small chessboard.

756
00:37:34,040 --> 00:37:35,600
Speaker 10: This is not a fifty state campaign. This is a

757
00:37:35,680 --> 00:37:38,359
Speaker 10: seven state campaign and maybe even smaller than that at

758
00:37:38,400 --> 00:37:38,719
Speaker 10: this point.

759
00:37:39,000 --> 00:37:40,600
Speaker 2: And Gregor, is there any reason to think in your

760
00:37:40,600 --> 00:37:44,040
Speaker 2: polling data, do you say anything about the president former

761
00:37:44,080 --> 00:37:47,440
Speaker 2: President Trump's legal issues being a weight on him?

762
00:37:47,520 --> 00:37:48,200
Speaker 3: Doesn't appear to be.

763
00:37:49,600 --> 00:37:51,879
Speaker 10: We asked that, not this month, but the previous month.

764
00:37:52,760 --> 00:37:55,800
Speaker 10: We asked whether people would change their minds if the

765
00:37:55,840 --> 00:37:59,120
Speaker 10: president's convicted on anything, and a majority said that they

766
00:37:59,160 --> 00:38:01,719
Speaker 10: would not vote for Trump if you were convicted on something.

767
00:38:01,800 --> 00:38:04,520
Speaker 10: Now we'll see if he were to be convicted whether

768
00:38:04,560 --> 00:38:08,520
Speaker 10: people might change their minds and discount these Obviously, President

769
00:38:08,520 --> 00:38:10,799
Speaker 10: Trump is out there every day trying to dismiss these

770
00:38:10,840 --> 00:38:16,960
Speaker 10: as partisan political persecutions of him, So we'll have to

771
00:38:17,000 --> 00:38:21,440
Speaker 10: see whether an actual conviction changes that dynamic at all.

772
00:38:21,719 --> 00:38:25,440
Speaker 10: People really aren't differentiating between these cases at all. The

773
00:38:26,280 --> 00:38:28,759
Speaker 10: Alvin Bragg case that's going on Manhattan. Now, the two

774
00:38:28,840 --> 00:38:31,279
Speaker 10: federal cases and the Georgia case. People kind of throw

775
00:38:31,320 --> 00:38:33,759
Speaker 10: them all in the same bucket, and so we'll just

776
00:38:33,840 --> 00:38:36,240
Speaker 10: have to see if there's an actual conviction. How people

777
00:38:36,680 --> 00:38:37,680
Speaker 10: process that information.

778
00:38:37,960 --> 00:38:39,879
Speaker 4: It certainly is a lot to keep track of from

779
00:38:39,880 --> 00:38:42,680
Speaker 4: a voter's perspective, So I can't necessarily say I blame

780
00:38:42,760 --> 00:38:45,759
Speaker 4: them if you do lump them altogether. Something else you

781
00:38:45,920 --> 00:38:48,640
Speaker 4: touched on in this version of the survey, Gregory, is

782
00:38:48,719 --> 00:38:52,360
Speaker 4: abortion and how important that will be in deciding the

783
00:38:52,480 --> 00:38:56,320
Speaker 4: next president. How did that one rank versus the economy.

784
00:38:57,040 --> 00:38:59,080
Speaker 10: This poll was in the field when we had that

785
00:38:59,200 --> 00:39:05,360
Speaker 10: Arizona Supreme Court decision that upheld a nineteenth century abortion

786
00:39:05,520 --> 00:39:08,440
Speaker 10: restriction law that was in effect up until Roe v. Wade,

787
00:39:08,719 --> 00:39:12,000
Speaker 10: the Supreme Court case in nineteen seventy three, and so

788
00:39:12,120 --> 00:39:15,719
Speaker 10: we're reverting back to the pre row law in Arizona.

789
00:39:15,880 --> 00:39:19,400
Speaker 10: Very controversial, obviously, and we do see an uptick of

790
00:39:20,600 --> 00:39:23,520
Speaker 10: voters saying that abortion is a very important issue for them,

791
00:39:23,560 --> 00:39:27,920
Speaker 10: and especially obviously among democratic women, among independent women a

792
00:39:27,960 --> 00:39:30,480
Speaker 10: little less so. But suburban women is the key demographic

793
00:39:30,520 --> 00:39:32,880
Speaker 10: that we all look at. An uptick there and especially

794
00:39:32,920 --> 00:39:35,040
Speaker 10: in Arizona. Now the question is going to be whether

795
00:39:35,440 --> 00:39:38,520
Speaker 10: these are people who already those votes were baked in,

796
00:39:38,719 --> 00:39:42,040
Speaker 10: Those were votes that President Biden was already going to get.

797
00:39:42,960 --> 00:39:45,000
Speaker 10: It may help him, though in terms of enthusiasm. There

798
00:39:45,040 --> 00:39:48,200
Speaker 10: seems to be an enthusiasm gap here, and so Joe Biden,

799
00:39:48,239 --> 00:39:51,040
Speaker 10: even if he's not winning any new voters on the

800
00:39:51,120 --> 00:39:54,680
Speaker 10: abortion issue, he needs that issue to really motivate those

801
00:39:54,760 --> 00:39:58,000
Speaker 10: Democratic voters to show up in November, because there might

802
00:39:58,040 --> 00:40:01,040
Speaker 10: be a lot of reasons why they they Otherwise, Mike

803
00:40:01,080 --> 00:40:02,479
Speaker 10: decide to set this one out all.

804
00:40:02,440 --> 00:40:04,560
Speaker 3: Right, Gregy, thank you so much for joining us. Appreciate

805
00:40:04,640 --> 00:40:05,120
Speaker 3: your reporting.

806
00:40:05,160 --> 00:40:09,160
Speaker 2: Gregory Cordy, white House and political correspondent for Bloomberg News,

807
00:40:09,239 --> 00:40:10,480
Speaker 2: joining us from Washington, DCU.

808
00:40:13,120 --> 00:40:16,959
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

809
00:40:17,080 --> 00:40:20,879
Speaker 1: weekdays at ten am Eastern on Applecardplay and Android Auto

810
00:40:21,000 --> 00:40:23,920
Speaker 1: with the Bloomberg Business. You can also listen live on

811
00:40:24,040 --> 00:40:27,840
Speaker 1: Amazon Alexa from our flagship New York station, Just say Alexa,

812
00:40:28,080 --> 00:40:29,720
Speaker 1: playing Bloomberg eleven thirty.

813
00:40:31,360 --> 00:40:33,520
Speaker 2: Mollie Smith, she's sitting here for Alex Steele this week,

814
00:40:33,560 --> 00:40:35,759
Speaker 2: who's on vacation On Paul Sweeney. You're live here in

815
00:40:35,800 --> 00:40:39,160
Speaker 2: our Bloomberg Interactive Brooker Studio or streaming live on YouTube.

816
00:40:39,200 --> 00:40:39,880
Speaker 3: That's the video.

817
00:40:40,680 --> 00:40:43,280
Speaker 2: So go over to YouTube dot com and search Bloomberg

818
00:40:43,360 --> 00:40:45,040
Speaker 2: Podcast and that's where you will find us.

819
00:40:45,320 --> 00:40:45,799
Speaker 3: You know, Molly.

820
00:40:45,880 --> 00:40:48,040
Speaker 2: One of the most amazing stories to me in financial

821
00:40:48,080 --> 00:40:50,160
Speaker 2: services over the last decade or so has been the

822
00:40:50,200 --> 00:40:51,080
Speaker 2: growth of ETFs.

823
00:40:51,239 --> 00:40:53,239
Speaker 4: Huge just can're.

824
00:40:53,160 --> 00:40:56,440
Speaker 2: Amazed at the fun flows to ETFs and it makes

825
00:40:56,520 --> 00:40:57,080
Speaker 2: a lot of sense.

826
00:40:57,120 --> 00:40:58,399
Speaker 3: And fortunately we have people like Eric.

827
00:40:58,320 --> 00:41:01,239
Speaker 2: Pauchunis at Bloomberg Intelligence who keeps us update on what's

828
00:41:01,280 --> 00:41:03,400
Speaker 2: going on there. But we wanted to talk to one

829
00:41:03,440 --> 00:41:06,520
Speaker 2: of the practitioners in the business. Jennifer Grancio joins us.

830
00:41:06,520 --> 00:41:10,480
Speaker 2: She's global head of distribution at TCW. Little firm on

831
00:41:10,560 --> 00:41:14,160
Speaker 2: the West coast, huge firm on the West face and

832
00:41:14,640 --> 00:41:15,880
Speaker 2: they're into the ETF business.

833
00:41:15,920 --> 00:41:17,960
Speaker 3: Jennifer, thanks for joining us here in our studio.

834
00:41:18,960 --> 00:41:22,719
Speaker 2: What is the TCW ETF business? Tell us kind of

835
00:41:22,920 --> 00:41:24,120
Speaker 2: how you guys are in that business.

836
00:41:25,040 --> 00:41:27,000
Speaker 6: Happy to you, great to be here. So from a

837
00:41:27,040 --> 00:41:29,600
Speaker 6: TCW perspective, a lot of people think of us as

838
00:41:29,760 --> 00:41:32,640
Speaker 6: you know, the core of the fixed income portfolio, which

839
00:41:32,680 --> 00:41:35,279
Speaker 6: we are for many investors with the TCW or met

840
00:41:35,400 --> 00:41:39,279
Speaker 6: West funds, and now we're growing the equity business as well,

841
00:41:39,480 --> 00:41:41,960
Speaker 6: so a lot of that will be ETFs, and we

842
00:41:42,040 --> 00:41:44,320
Speaker 6: also were going to do ETFs in the fixed income space.

843
00:41:44,800 --> 00:41:47,160
Speaker 4: When you say you do ETFs, are you the one

844
00:41:47,560 --> 00:41:50,120
Speaker 4: that you're like deciding what goes into each one or

845
00:41:50,200 --> 00:41:52,320
Speaker 4: like tell us, like what your role is in this marketplace?

846
00:41:52,480 --> 00:41:53,160
Speaker 4: Yeah for sure.

847
00:41:53,320 --> 00:41:57,040
Speaker 6: So so from an equity perspective at TCW, we have

848
00:41:57,280 --> 00:41:59,560
Speaker 6: some great core strategies we run in mutual funds and

849
00:41:59,680 --> 00:42:02,799
Speaker 6: SMA through the end to number one acquisition, and then

850
00:42:02,920 --> 00:42:07,400
Speaker 6: also we're converting a couple of legacy TCW active mutual funds.

851
00:42:07,760 --> 00:42:10,480
Speaker 6: We're going to have a very impressive range of megatrend

852
00:42:10,680 --> 00:42:13,680
Speaker 6: thematic products for clients. And if you think about why

853
00:42:13,800 --> 00:42:15,920
Speaker 6: and what's the role and why does the world need that.

854
00:42:16,640 --> 00:42:19,680
Speaker 6: There's a lot of index ETF option out there. A

855
00:42:19,760 --> 00:42:22,200
Speaker 6: lot of people are very indexed in their portfolios, which

856
00:42:22,239 --> 00:42:25,160
Speaker 6: has this real concentration bias now in large tech, and

857
00:42:25,280 --> 00:42:27,759
Speaker 6: so we're offering the market a range of ETFs on

858
00:42:28,360 --> 00:42:33,400
Speaker 6: energy and power transformation, reshoring of supply chains, artificial intelligence

859
00:42:33,840 --> 00:42:35,600
Speaker 6: that let you take some money out of the core

860
00:42:35,800 --> 00:42:40,280
Speaker 6: and really go after outperformance in alpha in portfolio.

861
00:42:40,400 --> 00:42:42,800
Speaker 3: So by definition are those active ETFs.

862
00:42:42,880 --> 00:42:46,840
Speaker 6: They are very concentrated portfolios and active. And if you

863
00:42:46,880 --> 00:42:50,080
Speaker 6: think about the markets, money's not free anymore. Rates you're

864
00:42:50,160 --> 00:42:52,560
Speaker 6: much higher. So we think the next ten twenty years

865
00:42:52,600 --> 00:42:56,120
Speaker 6: are our great market for active managers that can outperform.

866
00:42:56,400 --> 00:42:59,160
Speaker 6: So all of these ETFs on the thematic side will

867
00:42:59,200 --> 00:43:01,680
Speaker 6: be active. Yeah, so let's talk about some of those themes.

868
00:43:01,680 --> 00:43:03,760
Speaker 6: I mean you had mentioned, you know, related to energy

869
00:43:03,840 --> 00:43:06,520
Speaker 6: transition supply chains. What are some of the ones that

870
00:43:06,640 --> 00:43:08,520
Speaker 6: you guys are really paying a lot of attention to

871
00:43:08,719 --> 00:43:11,560
Speaker 6: right now. Yeah, I mean, those are two big ones,

872
00:43:11,680 --> 00:43:15,120
Speaker 6: and they're not small, tactical, narrow trends. They're huge. They're

873
00:43:15,160 --> 00:43:17,640
Speaker 6: going to be here for many decades. And so one

874
00:43:17,719 --> 00:43:20,600
Speaker 6: of the ETFs is net Z and etz and that's

875
00:43:20,640 --> 00:43:23,799
Speaker 6: about energy and power transformation. And so if you think

876
00:43:23,840 --> 00:43:26,839
Speaker 6: about that, we are going to need to more than

877
00:43:26,960 --> 00:43:30,200
Speaker 6: double our power and energy in the next twenty years.

878
00:43:30,239 --> 00:43:33,840
Speaker 6: So think about that, more than double. And so companies

879
00:43:33,880 --> 00:43:36,400
Speaker 6: that are at the forefront of how we service the

880
00:43:36,520 --> 00:43:39,120
Speaker 6: need and demand and kind of monster demand we have

881
00:43:39,600 --> 00:43:42,440
Speaker 6: for power, as well as companies that are more efficient,

882
00:43:42,760 --> 00:43:45,840
Speaker 6: have a huge opportunity to outperform and so that's a

883
00:43:45,840 --> 00:43:48,960
Speaker 6: big theme. And now in that theme, we own companies

884
00:43:49,440 --> 00:43:53,000
Speaker 6: that are energy better, energy producers. We own Vertive, which

885
00:43:53,120 --> 00:43:57,040
Speaker 6: cools data centers. We own waste and garbage companies that

886
00:43:57,080 --> 00:43:59,480
Speaker 6: are finding ways to create natural gas and energy out

887
00:43:59,480 --> 00:43:59,960
Speaker 6: of landfill.

888
00:44:00,000 --> 00:44:00,160
Speaker 1: Well.

889
00:44:00,320 --> 00:44:03,600
Speaker 6: So it's a very diverse portfolio and very complementary and

890
00:44:03,800 --> 00:44:05,879
Speaker 6: different than what you might hold in an index fund.

891
00:44:06,360 --> 00:44:09,319
Speaker 2: When I started my equity research business way way back

892
00:44:09,360 --> 00:44:11,359
Speaker 2: in the day, it starts within eight you know, back

893
00:44:11,400 --> 00:44:15,600
Speaker 2: in the eighties, it covered railroads. Really, we wrote the

894
00:44:15,800 --> 00:44:19,279
Speaker 2: first research report on Consolidated Railroad, which the company which

895
00:44:19,320 --> 00:44:22,600
Speaker 2: the government, US government was privatizing via an IPO. We

896
00:44:22,640 --> 00:44:24,560
Speaker 2: wrote about two hundred page report on that owned that.

897
00:44:24,600 --> 00:44:25,920
Speaker 4: Stock for you, you want to give us a nice

898
00:44:25,920 --> 00:44:26,840
Speaker 4: summary of that right now.

899
00:44:27,239 --> 00:44:30,880
Speaker 3: Yeah, it was a great cost cutting thing. Taking railroad

900
00:44:30,920 --> 00:44:33,640
Speaker 3: crews from five to two tripled your margins.

901
00:44:34,200 --> 00:44:36,640
Speaker 6: And that's and the other big trend is supply the

902
00:44:36,800 --> 00:44:37,359
Speaker 6: supply chain.

903
00:44:37,480 --> 00:44:37,759
Speaker 3: That's it.

904
00:44:37,840 --> 00:44:39,640
Speaker 2: So I know you've got an ETF on a railroads.

905
00:44:39,640 --> 00:44:42,360
Speaker 2: That's why I bring it up. Is that again I

906
00:44:42,360 --> 00:44:44,279
Speaker 2: think about the railroads in supply chain. I guess we

907
00:44:44,320 --> 00:44:47,320
Speaker 2: all got really smart about supply Chaine and the delicate

908
00:44:47,400 --> 00:44:49,280
Speaker 2: nature of supply chains during the pandemic.

909
00:44:49,320 --> 00:44:50,440
Speaker 3: How do you guys think about that.

910
00:44:50,840 --> 00:44:53,759
Speaker 6: Yeah, So the sort of reassuring of supply chains and

911
00:44:53,840 --> 00:44:56,960
Speaker 6: manufacturing to America and North America is again it's a

912
00:44:57,080 --> 00:45:00,439
Speaker 6: monster trend. It started during COVID. So if I'm deer

913
00:45:00,520 --> 00:45:02,440
Speaker 6: and I'm trying to make a tractor and my bolt

914
00:45:02,520 --> 00:45:04,400
Speaker 6: is made in Asia, i couldn't get my bolt. It

915
00:45:04,480 --> 00:45:07,440
Speaker 6: was really bad for business. So we're seeing that trend

916
00:45:07,560 --> 00:45:10,120
Speaker 6: already having started. And then on top of that, we've

917
00:45:10,160 --> 00:45:13,440
Speaker 6: now got geopolitical issues that make us more nervous about

918
00:45:13,480 --> 00:45:17,400
Speaker 6: doing things like semiconductors outside of the US. So again huge,

919
00:45:17,600 --> 00:45:21,320
Speaker 6: very broad multisector trend. And what we own in sup

920
00:45:21,520 --> 00:45:24,640
Speaker 6: or the reshoring of supply chain ETF is all the

921
00:45:24,680 --> 00:45:27,920
Speaker 6: way from railroads, So how are we going to transport

922
00:45:27,960 --> 00:45:31,640
Speaker 6: things if we're manufacturing all over North America. It's fantastic

923
00:45:31,920 --> 00:45:34,600
Speaker 6: for railroads and they've been undervalued. So that's a big

924
00:45:34,800 --> 00:45:38,200
Speaker 6: performance opportunity. And early in the cycle where I think

925
00:45:38,239 --> 00:45:41,239
Speaker 6: we have three trillion of committed projects of new manufacturing,

926
00:45:41,320 --> 00:45:43,960
Speaker 6: more than we've ever had in the US. Early in

927
00:45:44,000 --> 00:45:45,920
Speaker 6: the cycle, we invest a lot in what we call

928
00:45:46,000 --> 00:45:50,600
Speaker 6: picks and shovels, so Martin, Marrietta, Vulcan companies that make materials.

929
00:45:50,680 --> 00:45:53,759
Speaker 6: So as we build all of these factors factories, pardon me,

930
00:45:54,120 --> 00:45:57,000
Speaker 6: and then we own a lot of semiconductor names as well,

931
00:45:57,080 --> 00:45:59,160
Speaker 6: because all of these factors are going to have AI

932
00:45:59,560 --> 00:46:02,640
Speaker 6: and rows and they have much higher demand for content

933
00:46:02,960 --> 00:46:04,480
Speaker 6: from a semiconductor perspective.

934
00:46:04,640 --> 00:46:06,759
Speaker 4: I wanted to ask you about the AI theme next.

935
00:46:06,800 --> 00:46:08,359
Speaker 4: That's certainly got to be a big one of these

936
00:46:08,440 --> 00:46:11,200
Speaker 4: thematic trends that you're focusing on. So how are you

937
00:46:11,280 --> 00:46:13,200
Speaker 4: positioning around AI right now?

938
00:46:13,360 --> 00:46:15,279
Speaker 6: Yeah, So in the case of AI, it's in those

939
00:46:15,320 --> 00:46:18,040
Speaker 6: two portfolios to some extent. And then we have a

940
00:46:18,120 --> 00:46:21,000
Speaker 6: mutual fund at TCW which we're converting to an ETF,

941
00:46:21,160 --> 00:46:22,320
Speaker 6: So watch the space for that.

942
00:46:23,200 --> 00:46:25,239
Speaker 4: And the advantage of that is it just like you know,

943
00:46:26,160 --> 00:46:28,200
Speaker 4: I guess, because ETFs tend to be a bit cheaper

944
00:46:28,239 --> 00:46:30,520
Speaker 4: for like a more consumer friendly product. Is that the idea?

945
00:46:30,600 --> 00:46:32,920
Speaker 6: Yeah, in this case it's an active fund, so it's

946
00:46:33,480 --> 00:46:36,400
Speaker 6: not a sort of a cheap index fund. But the argument,

947
00:46:36,440 --> 00:46:38,360
Speaker 6: and I think you see a lot of active managers

948
00:46:38,440 --> 00:46:41,920
Speaker 6: converting where it makes sense, is that the market likes CTFs,

949
00:46:42,120 --> 00:46:45,040
Speaker 6: It likes the ability to click through and see the

950
00:46:45,120 --> 00:46:48,840
Speaker 6: underlying holdings on the website, It likes the tax advantages

951
00:46:48,880 --> 00:46:50,839
Speaker 6: of an ETF, And so in the case of these

952
00:46:50,880 --> 00:46:54,320
Speaker 6: mega trends, we see the market in general buying ETFs,

953
00:46:54,400 --> 00:46:57,000
Speaker 6: not funds. So we have a very long track record

954
00:46:57,080 --> 00:47:00,920
Speaker 6: on the TCW Artificial Intelligence Fund and we're converting it

955
00:47:01,000 --> 00:47:02,960
Speaker 6: to an ETF and a little bit like what we

956
00:47:03,040 --> 00:47:05,479
Speaker 6: talked about in the case of net Z and sub,

957
00:47:05,960 --> 00:47:08,520
Speaker 6: the AI fund has an ability to invest in different

958
00:47:08,560 --> 00:47:09,640
Speaker 6: things as we move through time.

959
00:47:09,719 --> 00:47:10,839
Speaker 4: So it's not all big tech.

960
00:47:11,080 --> 00:47:14,480
Speaker 6: It's also systems and enablers and hardware that is going

961
00:47:14,560 --> 00:47:17,520
Speaker 6: to grow aggressively as all these companies are doing more

962
00:47:17,560 --> 00:47:17,879
Speaker 6: in AI.

963
00:47:18,040 --> 00:47:19,600
Speaker 3: So it's safe to say, you, guys at tc there'll

964
00:47:19,600 --> 00:47:22,600
Speaker 3: be a big believers in AI. We are, okay, because

965
00:47:22,600 --> 00:47:22,880
Speaker 3: I was.

966
00:47:23,840 --> 00:47:26,680
Speaker 2: I guess my skeptical self SI and analyst nature is like,

967
00:47:27,640 --> 00:47:28,600
Speaker 2: where did this come from?

968
00:47:29,000 --> 00:47:31,040
Speaker 3: Is this just big data from three or four years ago?

969
00:47:31,440 --> 00:47:32,600
Speaker 3: Is this just big tech?

970
00:47:32,760 --> 00:47:36,000
Speaker 2: Is growing as a percentage of GDP of twenty years ago?

971
00:47:36,360 --> 00:47:37,480
Speaker 2: What's new about AI?

972
00:47:37,960 --> 00:47:40,520
Speaker 6: I think we're in We're in the next evolution of

973
00:47:41,080 --> 00:47:44,680
Speaker 6: training systems, asking systems questions with all these models and

974
00:47:44,840 --> 00:47:47,920
Speaker 6: natural language models asking questions in a way that we

975
00:47:48,080 --> 00:47:50,320
Speaker 6: just get faster and faster and better output. And so

976
00:47:50,480 --> 00:47:53,400
Speaker 6: that's really that's good for everyone. And so it'll start slowly,

977
00:47:53,680 --> 00:47:56,320
Speaker 6: but as more people learn to get that leverage, I

978
00:47:56,400 --> 00:47:58,600
Speaker 6: think we're going to see is it going to see

979
00:47:58,600 --> 00:47:58,920
Speaker 6: a boom?

980
00:47:59,040 --> 00:47:59,200
Speaker 3: Yep?

981
00:47:59,320 --> 00:48:02,200
Speaker 2: And it's you know, we hear every company in the

982
00:48:02,320 --> 00:48:04,640
Speaker 2: S and PT on their confer without it on their

983
00:48:04,680 --> 00:48:07,520
Speaker 2: conference call talking about you know, AI and how it's

984
00:48:07,520 --> 00:48:09,799
Speaker 2: getting to be critical to their business. Jennifer Grancio, thanks

985
00:48:09,800 --> 00:48:11,839
Speaker 2: so much for joining us. Jennifer is a global head

986
00:48:11,840 --> 00:48:14,839
Speaker 2: of distribution for TCW. We appreciate her coming into our

987
00:48:14,840 --> 00:48:17,120
Speaker 2: Bloomberg Interactor Proper Studio in New York City.

988
00:48:17,480 --> 00:48:22,000
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989
00:48:22,200 --> 00:48:25,359
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990
00:48:25,400 --> 00:48:28,560
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991
00:48:28,880 --> 00:48:32,239
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992
00:48:32,400 --> 00:48:35,400
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993
00:48:35,640 --> 00:48:37,400
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