Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg P M L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Right now,
Speaker 1: we want to turn our focus to China. Ongoing discussions
Speaker 1: between the US and the world's second biggest economy as
Speaker 1: to how they are going to deal with trade going forward.
Speaker 1: Joining us now, Andy Brown, editorial director for the Bloomberg
Speaker 1: New Economy Forum, Joining us here in the Bloomberg Interactive
Speaker 1: Broker's Studios. Andy, thank you so much for being here.
Speaker 1: You want a really compelling piece about how the US
Speaker 1: may have some allies behind China lines, who are these
Speaker 1: people and why? Yeah? Well, thanks, Lesa's great to be here. Um.
Speaker 1: The the argument is a is A is a pretty simple.
Speaker 1: What China should throw open its economy. It should level
Speaker 1: the playing field. It should dismantle state monopolies. It should
Speaker 1: stop giving preference to state players in terms of subsidies,
Speaker 1: cheap loans, policy advantages, in terms of licensing, standards setting
Speaker 1: and so on. And it should do all this not
Speaker 1: because Donald Trump is asking for it, but because the
Speaker 1: private sector in China is demanding it, and in acceding
Speaker 1: to that internal pressure rather than external pressure, China can
Speaker 1: get its economy out of the funk that it's now in.
Speaker 1: And it's actually in a much much worse funk than
Speaker 1: people imagine. So you don't buy the six GDP growth.
Speaker 1: I don't care what the numbers say. I mean, China's
Speaker 1: economy is slowing, and I think it's stunning the Chinese leadership.
Speaker 1: I think they've been surprised at the extent to which
Speaker 1: Trump's pressure are on trade has exacerbated all of these
Speaker 1: issues structural issues in the Chinese economy. But any some
Speaker 1: of what you're talking about is adopting more Western values
Speaker 1: when it comes to markets in China. And how much
Speaker 1: of that is actually on the table with these trade negotiations,
Speaker 1: I mean, how much is this ultimately going to come
Speaker 1: down to bushels of soybeans? Well, you see, I don't
Speaker 1: really see it as a clash of values between China
Speaker 1: and the United States. You have to remember that all
Speaker 1: of the things that Trump as many of the things
Speaker 1: that Trump is pushing for and the private sector in
Speaker 1: China were promised by C. Jim Ping himself. Don't forget
Speaker 1: he came in five years ago, right he came. He
Speaker 1: had a long career as a bureaucrat in coastal provinces,
Speaker 1: which is really where the private sector in China is
Speaker 1: is concentrated. He comes in, he calls a big has buddies,
Speaker 1: Jack mar you know who runs Ali Baba. He's on
Speaker 1: first name terms with Hank Polson. You know, the business
Speaker 1: community know him. He throws this big Communist party meeting
Speaker 1: Third Planet, and he says we're moving towards markets, and
Speaker 1: he lays it all out, sixty point agenda for opening
Speaker 1: up the economy. And basically this whole plan has been
Speaker 1: gathering dust ever since. Not just that the economy has
Speaker 1: flipped backwards. All of the trade and trends that were
Speaker 1: pointing in it towards markets have gone in the opposite direction.
Speaker 1: He's doubled down on the state. That's right, That's what
Speaker 1: it might The point I was gonna make you. You
Speaker 1: lay at a very intelligent argument in your piece about
Speaker 1: what the Chinese economy should do, what the states should do.
Speaker 1: It appears just from my perspective that they're actually, as
Speaker 1: you said, going the opposite way over the last several years.
Speaker 1: So does the private sector have any influence to really
Speaker 1: push for these reforms? Well, to the extent that these
Speaker 1: status reforms, which are ideologically politically driven, not driven by economics,
Speaker 1: are killing the economy. I mean, the facts are very
Speaker 1: very clear. The state enterprise is not just bad, it's
Speaker 1: shockingly bad. I mean, private businesses on average have a
Speaker 1: three time is the return on assets as their state competitors, right,
Speaker 1: and yet they suck up fift of all the credit
Speaker 1: in the economy. I don't understand what the problem is then,
Speaker 1: I mean, if there's a pressure and if understands the
Speaker 1: need for some of these reforms, and this could actually
Speaker 1: play into what the U S is arguing for why
Speaker 1: hasn't there been an agreement? Well, well, you know, I
Speaker 1: mean the key here is id is ideology, and that
Speaker 1: she Jimping simply can't bring himself to dismantle a system
Speaker 1: which he believes is going to protect the Communist Party
Speaker 1: and keep it in power. Don't forget the Chinese are
Speaker 1: constantly looking for lessons to the collapse of the Soviet
Speaker 1: Union and then what happened after the Soviet Union collapsed.
Speaker 1: Isn't the same kind of communism as Russia. It's a
Speaker 1: very different one now it's not. But they are very determined.
Speaker 1: The Communist Party of China will not go the same
Speaker 1: way as the Communist Party and Russia, which essentially gave up.
Speaker 1: And they see stay it own enterprises being a bullwark
Speaker 1: uh to communist party rule. So is there any scenario
Speaker 1: let's go to let's go to the trade negotiations. Do
Speaker 1: you have how optimistic, if at all, are you about
Speaker 1: the U. S And China reaching any kind of meaningful
Speaker 1: trade agreement. Um, let's just go there and start there. Look,
Speaker 1: I think it's really it's gonna be relatively simple to
Speaker 1: get an agreement which does something about the trade deficits.
Speaker 1: I mean, China can instructed state companies to buy more
Speaker 1: soy beings by US natural gas. Um. You know, we
Speaker 1: saw this big import expo in Shanghai and November see
Speaker 1: jumping instructs. You know, state on ENTERBRASO out. But by
Speaker 1: bye for this type of But this is kind of
Speaker 1: nibbling around, this playing around at the edges there talking
Speaker 1: about structural Now, the incentive, the real incentive for him
Speaker 1: to give ground is this slowing economy. He's got to
Speaker 1: pick the economy up and and so just going forward
Speaker 1: in thirty seconds, how bad will this be the landing
Speaker 1: that people have feared for China. Well, we were already
Speaker 1: looking at something that looks a bit like a hard landing.
Speaker 1: Growth is growth has come off very badly. Um. The
Speaker 1: the the real key is going to be whether she
Speaker 1: Jimping can use the pressure from the United States uh
Speaker 1: in or rather use the pressure that's coming from his
Speaker 1: private sector as an excuse as cover to implement the
Speaker 1: type of reforms that are needed to get the economy
Speaker 1: back on track. Andy Brown, thank you so much for
Speaker 1: being with us and your insights. A great article, uh
Speaker 1: and create comments. Andy Brown is editorial director for The
Speaker 1: Bloom New Economy. For him, he was formerly China editor
Speaker 1: senior corresponding a columnist for The Wall Street Journal. The
Speaker 1: swing has been notable This morning before markets open, City
Speaker 1: Group shares were down two percent immediately after reporting earnings.
Speaker 1: Now shares up by more than three percent as an
Speaker 1: earnings call seems to bolster optimism among investors joining us
Speaker 1: now in our Bloomberg Interactive Broker Studios to discuss is
Speaker 1: Yellmen Iran. He's senior finance writer for Bloomberg News. So, y'ellmen,
Speaker 1: what happened here on the earnings call? Um, Well, you know,
Speaker 1: the earnings numbers aren't aren't bad either. There's there there's
Speaker 1: good stuff to to see in cities earnings. Um. You know,
Speaker 1: fixed income numbers are bad, and everybody initially focused on that,
Speaker 1: but you look at other stuff. Actually it's okay. Um,
Speaker 1: loans are up, deposits are up, NIM, the net interest
Speaker 1: margin is up. So on the banking side, the bank
Speaker 1: is still really doing fine. Markets, as we know, have
Speaker 1: been all over the place and and they have they
Speaker 1: have heard um and so that has hurt the investment
Speaker 1: banking side, the trading side. But the other part of
Speaker 1: the banking is doing well. So the numbers are good.
Speaker 1: And and on the calls, there was a media call
Speaker 1: with the CFO, the outgoing CFO GARSPAC and then the
Speaker 1: annals call is continuing with with CEO started to make
Speaker 1: comments and the CFO is talking now and and there's there.
Speaker 1: They kept saying, both of them kept saying the economy
Speaker 1: in the US and worldwide is not doing bad. The
Speaker 1: real economy has not been impacted. Everything is still on
Speaker 1: four cylinders. It's all really chugging along, and we're not
Speaker 1: seeing client demand go down. So I think that all
Speaker 1: those things maybe you know, people are more optimistic that
Speaker 1: banks are are continuing to do the business for a
Speaker 1: few more quarters. I mean there was one point where
Speaker 1: where the outgoing CFO said, well, you know, if we
Speaker 1: start seeing impact of this, only real economy might be
Speaker 1: towards the end of two thousand nineteen. Okay, so that's
Speaker 1: a few quarters away. You know, there's still time until then.
Speaker 1: Maybe we should be happy. And it's probably what's going on. Well,
Speaker 1: you know, we can't really push that fixed income performance
Speaker 1: under the rug as much as I'm sure management would
Speaker 1: like to. I mean, it's a it's a huge part
Speaker 1: of their capital markets business, and it was the you know,
Speaker 1: the worst quarter they've had in fixed for several years.
Speaker 1: What did they claim as the drivers of that underperformance
Speaker 1: and what is their outlook for twenty nineteen? Like I
Speaker 1: you know, having been on a trading desk, volatilities, my friend,
Speaker 1: that's how I can generate alpha. That clearly wasn't the
Speaker 1: case for city here in the fourth quarter. Well, you know,
Speaker 1: the the commentary on whether volatility is good or bad
Speaker 1: changes according to the numbers they were quarter by every
Speaker 1: bank official. Um so when when volatility helps the bottom line,
Speaker 1: everybody loves it and it's a friend, but but it
Speaker 1: doesn't always and and actually in the same quarter, Uh,
Speaker 1: some banks are aided by it and some aren't. Which
Speaker 1: is part of the game of fixed income market making.
Speaker 1: When you're when you're really buying and selling and the
Speaker 1: spread is where you're making the money, you know you
Speaker 1: can you can get caught in the wrong positions so easily.
Speaker 1: And markets are going down for three days and then
Speaker 1: going up for three days, so you think it's going
Speaker 1: to go down for three more days and it and
Speaker 1: it doesn't. So it's it's tough for these banks. And
Speaker 1: even even if clients and and the typical commentary they
Speaker 1: give is while clients stayed on the sidelines because of
Speaker 1: a lottilty, I don't know if that's really the case.
Speaker 1: It's just again market making in fixed income you and
Speaker 1: you can lose money as well as make bray and
Speaker 1: you just add up those days where you lost sources gain.
Speaker 1: One thing that I'm struck by the Okay, so putting
Speaker 1: market making aside, I'm struck in the first quarter that
Speaker 1: trading volumes are down in credit markets, particularly the risk
Speaker 1: your credit markets, and debt issuance is also way down,
Speaker 1: especially on the risk your tiers, which is actually where
Speaker 1: these banks make a lot of the money, right, I mean,
Speaker 1: risk your deals tend to offer bigger premiums. I'm just
Speaker 1: wondering what gives them confidence that things are turning up, since,
Speaker 1: I mean, from all other empirical data, things are slower
Speaker 1: than the first quarter. The issues is going down, and
Speaker 1: that actually comes to hur r trading as well as
Speaker 1: you said, so so it's normal. I mean, trading can
Speaker 1: be can be better while issuance starts slowing down, but
Speaker 1: eventually the issuance will make a difference. And they do
Speaker 1: make a lot of money on the issuance as well,
Speaker 1: and the issuance um debt and equity are down, so
Speaker 1: so that's being reflected and um so so they kept
Speaker 1: I mean they they're talking about the financial economy not
Speaker 1: doing as well. That's what markets are reflecting, but the
Speaker 1: real economy still going well. Um. But those cannot be
Speaker 1: in in diverging paths. For too long, right, they catch up.
Speaker 1: I mean, the real economy does get impacted by what
Speaker 1: the financial economy is doing. Um and and it's a
Speaker 1: sign too. I mean, as as companies are selling less dead,
Speaker 1: that means they're they're not going to invest in new things,
Speaker 1: and they're not. The economy is not going in a
Speaker 1: great direction. So it's maybe a matter of time. But
Speaker 1: this is you know, markets can be very short term oriented,
Speaker 1: so you know, they could be looking for the next
Speaker 1: couple of weeks instead of a couple of months. Right,
Speaker 1: just real, quickly fifteen seconds. When I think City Bank,
Speaker 1: I think a huge consumer franchise. Did they have any
Speaker 1: commentary about how the consumers doing both here in US
Speaker 1: and outside? They were pretty positive. They said they have
Speaker 1: not felt the consumers pulling back at all in the
Speaker 1: US or other places. Interesting. That is interesting. We'll see
Speaker 1: whether the rest of the banks say this, yeah, exactly,
Speaker 1: and honestly, in very early trading, the rest of the
Speaker 1: banks were declining in sympathy with City Group. It'll be
Speaker 1: interesting to see whether city groups sets odd momentum after
Speaker 1: disappointing earnings. Go figure, and it's rare that City Bank
Speaker 1: leads off the bank earnings week. Usually that's left for
Speaker 1: JP Morgan. That's right, Well, let's see how they do. Yalman, owner,
Speaker 1: and so far they're doing okay. Y'alman, owner and senior
Speaker 1: finance writer for Bloomberg. Thank you so much for being
Speaker 1: with us. Well, the world of sports has transformed from
Speaker 1: hitting a ball to directing a ball on a computer screen.
Speaker 1: Joining us now, Chris Russo, managing director and ahead of
Speaker 1: sports practice at Hula. He and Loki joining us here
Speaker 1: in our Bloomberg directive broker's studios. Chris, let's get a
Speaker 1: lay of the land for as you prepare for mergers
Speaker 1: and as you try to get a sense of where
Speaker 1: the eyeballs are going. Has ears e sports peaked or
Speaker 1: are we just getting started with the adoption of this trend.
Speaker 1: I think we're just getting started with the sports, in
Speaker 1: part because the amount of people playing e sports games,
Speaker 1: attending events, watching and streaming on Twitch has just continued
Speaker 1: to grow. And so over the past eighteen to twenty
Speaker 1: four months, you've seen these new e sports teams created
Speaker 1: by the big publishers like Riot and Activision, and those
Speaker 1: teams have been bought by professional sports team owners and
Speaker 1: some of those valuations are now a hundred and fifty million,
Speaker 1: two hundred million dollars for these teams, and I see
Speaker 1: them continuing to grow because of the audience, passion and
Speaker 1: the great demographics we have any sports. I just can't
Speaker 1: imagine a sport watching other people play games. But I've
Speaker 1: been told time and time again, and I've seen the numbers,
Speaker 1: and I've seen Jeff Wilson, as you mentioned, to make
Speaker 1: an investment. But let's go back to maybe you know,
Speaker 1: the next big m and a trade involving sports might
Speaker 1: just be the regional sports networks that the Walt Disney
Speaker 1: Company acquired from twenty one century Fox. Big numbers, big markets,
Speaker 1: big companies involved. What do you expect that to happen
Speaker 1: and what do you how do you expect that to
Speaker 1: play out? Well, I think there's kind of two ways
Speaker 1: of looking at that opportunity, and these are twenty two
Speaker 1: regional sports networks with great teams that they broadcast and
Speaker 1: great rights. The sort of negative view would be Cable
Speaker 1: going forward is going to be a diminishing place because
Speaker 1: of cord cutting and challenges on subscribers. The positive outlook
Speaker 1: would be there's gonna be streaming opportunities. There's going to
Speaker 1: be gambling potentially incorporated into these broadcasts. So I'm actually
Speaker 1: more bullish on the rs AN opportunity than some other
Speaker 1: folks are. Where the bidding ends up may depend upon
Speaker 1: how many finalists are there and how they drive the price,
Speaker 1: but actually this is a quite uh interesting asset and
Speaker 1: I think ultimately will be be a good one. You know,
Speaker 1: let's see about a little bit, because what you're just
Speaker 1: talking about, and Paul's really good question, and the concept
Speaker 1: of the sports kind of comes together with this idea
Speaker 1: that more people are cutting the cord and that big
Speaker 1: sports companies aren't going with them. They're staying in cable
Speaker 1: and as a result, they're losing some viewers. And perhaps
Speaker 1: this is allowing the sports to take off more because
Speaker 1: that's what's available to people can use. To foresee a
Speaker 1: time in the near future where big teams move to
Speaker 1: online streaming services as well. I do believe that teams
Speaker 1: and leagues will rely more on streaming rights over time
Speaker 1: than they are today. I think you see some of
Speaker 1: that happening now with Amazon having a Thursday Night package
Speaker 1: from the NFL. Other leagues have licensed parts of their
Speaker 1: their packages to the major streaming companies and video companies.
Speaker 1: But I think until the big rights are available, which
Speaker 1: will happen in the next three to five years, you're
Speaker 1: still seeing things around the edges. But with the younger
Speaker 1: viewers spending more time online with mobile devices, I think
Speaker 1: the league's will have to go there and have to
Speaker 1: be robust in those offerings. Let's you know. I know
Speaker 1: Joe Uh Chris worked at the NFL prior to Landlogate
Speaker 1: and nobody uh slices and dices broadcast rites better than
Speaker 1: the NFL. So I suspect, as you mentioned in one
Speaker 1: or whenever that is um that the NFL that I'm
Speaker 1: sure the technology companies will be at the table. Is
Speaker 1: that your thought, it is my thought, And I think
Speaker 1: at the end of the day, people that have our
Speaker 1: companies that have great content will still do well. They
Speaker 1: will just find new ways to exploit the content through
Speaker 1: new platforms doing digital media, and I think it will
Speaker 1: be an opportunity to reach new audiences as this next
Speaker 1: generation of fans evolves. So what do you expect in
Speaker 1: terms of the overall M and A volumes in sports
Speaker 1: media this year? Well, I think that we there will
Speaker 1: be a lot of m and A this year in
Speaker 1: the sports space, in part because warts gambling has emerged
Speaker 1: and that creates a disruption, and that creates new kinds
Speaker 1: of opportunity. We already saw a lot of them and
Speaker 1: a last year around the sports gambling space, fan Duel
Speaker 1: did a transaction, sport Radar, a sport data company, did
Speaker 1: a transaction Genus Sports and other sports data company. You
Speaker 1: see a lot of companies getting prepared for the advent
Speaker 1: of gambling, and as a result, you'll see combinations, new investments,
Speaker 1: and new configurations of companies. So we've seen the league's
Speaker 1: most notably Major League Baseball, but all the professional leagues
Speaker 1: really really kept the gambling at a a you know,
Speaker 1: more than an arms length for generations. Now they seem
Speaker 1: to be embracing it. So can you give us a
Speaker 1: sense of where gambling is in this country? Now? I
Speaker 1: know I live in New Jersey and it's legal linew
Speaker 1: Jersey sports books. Where are we and how do you
Speaker 1: think that's gonna play out? Right now, sports gambling is
Speaker 1: only legal in six or seven states, but many experts
Speaker 1: believe that will increase to twenty to twenty five states
Speaker 1: over the next couple of years. I think initially, as
Speaker 1: you mentioned, the sports leagues were very hesitant and reluctant
Speaker 1: about sports gambling. But now that it is going to
Speaker 1: be legal, they are trying to figure out how they
Speaker 1: can make money but be keep the integrity of the
Speaker 1: games and make sure that gambling is done in a
Speaker 1: responsible way so they preserve the authenticity and integrity of
Speaker 1: these sports. Do either of you gamble to sports gambling?
Speaker 1: Do you actually have occasion? When I'm in Las Vegas? Occasion? Yeah?
Speaker 1: Would you? I mean, but my question is, you know,
Speaker 1: how much would this with the appetite widen or is
Speaker 1: the field already there? Well? You know, in my opinion,
Speaker 1: there are there are a lot of reports out there
Speaker 1: that say the offshore the illegal amount of gambling is
Speaker 1: about a hundred and fifty billion dollars. No one knows
Speaker 1: if that's really true. I think what could happen over
Speaker 1: time is that number gets even bigger because people who
Speaker 1: didn't want to bet on an offshore book or go
Speaker 1: to some website, they didn't know if their money was
Speaker 1: going to come back, now feel it's safe, it's comfortable.
Speaker 1: You've got brands like Fando on DraftKings which people now
Speaker 1: trust and and understand, I think you have potential to
Speaker 1: have this thing get get even bigger than anticipated. And
Speaker 1: what did the um? The ratings I guess for the
Speaker 1: NFL were up a little bit this year so far,
Speaker 1: but they've been a you know, kind of a downward trend.
Speaker 1: How concerned is the NFL in particular about their ratings
Speaker 1: or do they feel like there there are incillary businesses,
Speaker 1: whether it's red zone and other things that might be
Speaker 1: making up for it. Yeah, you know, in my view, um,
Speaker 1: the NFL is doing just fine. Uh. Again, they had
Speaker 1: a good year in terms of ratings, but as you
Speaker 1: mentioned earlier, they're continuing to experiment and look at new platforms,
Speaker 1: new ways to distribute content, and I think they'll continue
Speaker 1: to be very shrewd about how they slice and dice
Speaker 1: rights to let them maximize the opportunity. I think the key, though,
Speaker 1: for the NFL and all of these sort of major
Speaker 1: leagues is to make sure they're serving the next generation
Speaker 1: of fans with the kind of content and on the
Speaker 1: platforms that that those fans want to want to consume it.
Speaker 1: All Right, Chris, I'm gonna put you on the spot
Speaker 1: fifteen seconds. What's the one surprise deal that you think
Speaker 1: will get done in this space this year. Oh boy,
Speaker 1: the one surprise deal. I don't have necessarily one surprise
Speaker 1: a deal. I do think you're going to see a
Speaker 1: lot more sports team activity this year. The last three
Speaker 1: or four years that activity has been pretty slow, only
Speaker 1: two WISH deals a year. I think this year you
Speaker 1: could see four or five deals, in part because I
Speaker 1: think some owners want to take some chips off the
Speaker 1: table with the markets being as strong as they are.
Speaker 1: All right, so so Hedge fun billionaires, get your purses
Speaker 1: ready because you can go buy a sports team. Thank
Speaker 1: you so much for being with us. Chris Russo at
Speaker 1: Hula and Loki's Sports practice. Here with us, we are
Speaker 1: in New York City in our cozy when we're gonna
Speaker 1: active Broker's studios. David Coudla is in a brisk in
Speaker 1: Detroit where it's twenty six degrees and sunny at the
Speaker 1: auto show. And this is the last North American International
Speaker 1: Auto Show that's going to be held in January. They're
Speaker 1: kind of upping their game move thing to a warmer
Speaker 1: month in June. David, thank you so much for being
Speaker 1: with us. David Coudla is founder and chief executive officer
Speaker 1: of Mainstay Capital Management. Before we get into what is
Speaker 1: actually being announced and discussed at the auto show, can
Speaker 1: you just set the tone for us, how how pessimistic
Speaker 1: are different automakers given the overall sort of bleak sales
Speaker 1: picture for for the car industry. Well, there had been
Speaker 1: a lot of pessimism coming into with the slowing global
Speaker 1: economy and fears by some of a recession and a
Speaker 1: possible recession in the US in twenty nineteen, or at
Speaker 1: least a slowing economy in the auto industry is as
Speaker 1: cyclical as they come, and that's sent a lot of
Speaker 1: fears for slowing sales in twenty nineteen, which which we
Speaker 1: do expect UH in the U s and globally. We've
Speaker 1: already seen that slowing sales in China. China had their
Speaker 1: UH first sales decline in over two decades, falling six
Speaker 1: percent last year. We expected to slow this year. That's
Speaker 1: the largest market in the world, and after the four
Speaker 1: best years for US sales ever from we expect sales
Speaker 1: to slow here. And then on Friday, of course, Mary Bara,
Speaker 1: the CEO of GM, came out with some very good
Speaker 1: expectations for Wall Street on what they expect in terms
Speaker 1: of sales and profitability this year. So a very good
Speaker 1: picture out of GM. Uh So what we've heard from
Speaker 1: a lot of the CEOs they expect good. We'll see. So, David,
Speaker 1: you know, the automobile industry has really evolved into a
Speaker 1: technology industry, I mean essentially taken over the CS Consumer
Speaker 1: Electronics Show in Las Vegas every year. Um, what what
Speaker 1: is really the near term realistic technological innovations that are
Speaker 1: creating the most buzz there at the auto show this year? Well,
Speaker 1: it is about electric It is about electrification, It is
Speaker 1: about electric vehicles, and it is about autonomous. But you
Speaker 1: know those still electric vehicles still represent less than one
Speaker 1: percent of the market globally and in the US. Uh,
Speaker 1: those are still products yet to come. A lot coming
Speaker 1: over the next few model years, but still yet to come. Uh.
Speaker 1: You know that what's happening in cars. We see this
Speaker 1: at CS and and we've seen a lot of the introductions.
Speaker 1: I T is playing a bigger, bigger and bigger role
Speaker 1: in terms of the new introductions and in technology, uh,
Speaker 1: in in automotive and in terms of what's new and
Speaker 1: vehicles each year. Design is still is still a big deal.
Speaker 1: Improvements in fuel economy, horsepower, uh, transmission, suspension, all those things.
Speaker 1: But what's happening in terms of I T is becoming
Speaker 1: a bigger, bigger deal and is evolving very rapidly. Uh.
Speaker 1: You know, the cars and the technology we see today
Speaker 1: are our leaps and bounds from just five or seven
Speaker 1: years ago. So David, I know you're big on Michigan
Speaker 1: since that's where you live, but I really and and
Speaker 1: and it rightly, rightfully so, Um, Detroit's Auto Show has
Speaker 1: kind of lost some of its relevance. Paul is mentioning
Speaker 1: the Consumer Electronics Show in Las Vegas, and that really
Speaker 1: is kind of taken on a more dominant role in
Speaker 1: the auto industry. Do you think what is the role
Speaker 1: for the Detroit Auto Show these days? Well, you know
Speaker 1: that the heritage from you know, from where it comes from,
Speaker 1: and um, you know it is you know, probably the
Speaker 1: move to June makes sense from the standpoint of warmer weather,
Speaker 1: being able to actually drive some vehicles, along with coming
Speaker 1: to see them and moving away from h C e
Speaker 1: s which now kind of steals its thunder a week
Speaker 1: ahead of time. Um. The German automakers, except for VW,
Speaker 1: are noticeably absent this year, so it's hopefully that will
Speaker 1: bringe some new life into the Detroit Auto Show, the
Speaker 1: North American International Auto Show. We hope and UH will
Speaker 1: will will help with the resurgence of the show. So David,
Speaker 1: as the automakers continue to ramp up their investment in technology,
Speaker 1: is it too early to maybe gauge who are some
Speaker 1: winners or losers. Who's doing a better job than than
Speaker 1: others of some of the majors. It's it's interesting to
Speaker 1: see the partnerships that are that are coming together Honda
Speaker 1: with General Motors UH the announcement, we expect further announcements
Speaker 1: of Ford and VW UM, you know VW or. We've
Speaker 1: seen UH that really I think General Motors has been
Speaker 1: in a leadership role in both autonomous and UH E
Speaker 1: v UH. We've seen UH for word, you know, when
Speaker 1: we're talking about here in the US, has has has
Speaker 1: been a little bit behind in that game. UM and
Speaker 1: those partnerships that we're seeing because of the cost to
Speaker 1: move from I, I, C, D E v UH and
Speaker 1: the cost for a Thomas significant cost to make that
Speaker 1: transition from what we call what some people call auto
Speaker 1: one point out auto two point oh we call it
Speaker 1: from the legacy business to the future of mobility. Uh,
Speaker 1: it's a very expensive transformation. So these partnerships are going
Speaker 1: to going to be very important. But that's where we're
Speaker 1: seeing the synergies like that is I think that's going
Speaker 1: to be most what will be most important. David Coudla,
Speaker 1: thank you so much for being with us as always.
Speaker 1: David Coudler is chief executive in chief investments tragist at
Speaker 1: Mainstay Capital Management with two and a half billion dollars
Speaker 1: under management. Coming to us from the North American International
Speaker 1: Auto Show in Detroit, it is going to be the
Speaker 1: last one where it's going to be a brisk twenty
Speaker 1: five degrees. Since this is the last one being held
Speaker 1: in January, it is now going to be moving to
Speaker 1: June where it's going to be sunny and people can
Speaker 1: drive through the town with a breeze going through their hair.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
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Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
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