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Speaker 2: Shares of United Airlines they are surging. They are up
Speaker 2: sixteen percent. As Charlie mentioned, that's the most of more
Speaker 2: than three years. You got to go back to November
Speaker 2: of twenty twenty to see that kind of a move.
Speaker 2: This is after the carrier forecast more than it's better
Speaker 2: than expected profit this quarter, tempering concerns that Boeing aircraft
Speaker 2: delays and regulatory pressure will put expansion plans at risk.
Speaker 2: So that's what's going on with United. We talked about it.
Speaker 2: We broke those numbers after the closed last night.
Speaker 3: Yeah.
Speaker 4: Meantime, Boeing is the subject of two Congressional committee hearings
Speaker 4: today on the company safety culture in the wake of
Speaker 4: a near catastrophic accident in January, as well as two
Speaker 4: crashes of seven thirty seven Max aircraft a few years ago,
Speaker 4: and also Carol on its relationship with regulators yeah.
Speaker 2: It's a full plate. Senator Richard Blumenthal, Democrat from the
Speaker 2: state of Connecticut, who chairs the second Session Congressional Session today,
Speaker 2: says today's hearing is the first of several who weighed
Speaker 2: in earlier.
Speaker 5: There are mounting serious allegations that Boeing has a broken
Speaker 5: safety culture and a set of practices that are unacceptable.
Speaker 5: These whistleblowers have come forward at great personal risk.
Speaker 4: That was, of course, Senator Richard Blumenthal, Democrat from the
Speaker 4: state of Connecticut, he chairs the session today, with more
Speaker 4: on all of it. Let's bring in a Bloomberg Intelligence
Speaker 4: senior Aerospace, Defense and Airlines analyst, George Ferguson, who joins
Speaker 4: us from Arizona, Georgia. First up, I want to talk
Speaker 4: about Boeing in the hearings today. The hearing this morning
Speaker 4: was the first of two in Washington today to explore
Speaker 4: Boeing safety record. The second panel focus claims by a
Speaker 4: Boeing engineer turned whistleblower who alleges that the company has
Speaker 4: cut corners on the production of its seven eighty seven Dreamliner.
Speaker 6: What do you.
Speaker 4: Watch for during events like this? What should our audience
Speaker 4: watch for during events like this?
Speaker 7: So on the Dreamliner specifically. You know, I think what
Speaker 7: we're watching for is to figure out whether or not
Speaker 7: this is part of an earlier issue that Boeing had
Speaker 7: with the seven eight seven, with joining the fuselage pieces.
Speaker 7: They negotiated or discussed with the FA the right way
Speaker 7: to fix a shimming problem they had with the airplane.
Speaker 7: They you know, what we've heard is they'd fixed that
Speaker 7: problem and they had a better process in place to
Speaker 7: join the aircraft together. So if this is part of
Speaker 7: that same issue that I'd say, you know, for investors,
Speaker 7: then it's it's there's nothing here. If it's an additional
Speaker 7: issue with the seventy eight seven and not that shimming problem,
Speaker 7: then I'd be concerned. Right then it's going to be
Speaker 7: additional costs for Boeing and it could lead to concerns
Speaker 7: about safety and flying the airplane.
Speaker 2: You know, I think about it, and just watching all
Speaker 2: of the issues that have kind of hit Boeing over
Speaker 2: the last few years, it's like, why are they having
Speaker 2: these problems? And I do wonder, George, if you think
Speaker 2: these committee hearings will help get to the bottom of it,
Speaker 2: especially when one of the things that lawmakers are concerned
Speaker 2: about is that the FAA has been too soft on
Speaker 2: the company, and I'm curious if you could weigh in
Speaker 2: on that, if you agree that maybe Boeing has been
Speaker 2: too cozy with its regulators.
Speaker 7: Yeah, I think even more than cozy. Right, So the
Speaker 7: sense I really get is the relationship between Boeing and
Speaker 7: the regulator, the FAA, for many many years, has been
Speaker 7: one of Boeing being in a superior position. You know,
Speaker 7: I think they Boeing probably had more engineering talent than
Speaker 7: the FAA, and I think they you know, sort of
Speaker 7: told the FA what they thought was needed rather than
Speaker 7: you know, how to sort of a one on one
Speaker 7: balanced relationship with the FA. And that's clearly going to
Speaker 7: have to change. The FA has had its challenges too,
Speaker 7: through through the pandemic that they've had a lot of turnover,
Speaker 7: They've lost some some talent there as well. They have
Speaker 7: the batfill, so that that creates more you know, that
Speaker 7: creates a problem too with the with that whole relationship.
Speaker 7: So I mean, I think, you know, again, I think
Speaker 7: we've heard this previously. We've also heard previously from the
Speaker 7: FAA that the safety systems that Bowe were broken, that
Speaker 7: people uh you know, were centivized, not to speak up there,
Speaker 7: and you know, if they spoke up, they would potentially
Speaker 7: be you know, have some sort of recourse brought against
Speaker 7: them if people were concerned about safety over moving aircraft
Speaker 7: through uh through production.
Speaker 6: So I think.
Speaker 7: Congress is getting to something that we already know. But
Speaker 7: Congress is probably rightfully concerned because this is the most
Speaker 7: important aerospace company, aerospace manufacturer, fuselage manufacturer in the country.
Speaker 2: So good, this is a good part of the process
Speaker 2: to getting to the bottom of what's wrong at Boeing.
Speaker 2: In your view, this is this this should result in
Speaker 2: getting to the bottom of it.
Speaker 7: I guess I'd like to see. I'm going to look
Speaker 7: for more out of the FAA and it's and it's investigations.
Speaker 7: You know, Congressional hearings can get a little bit political,
Speaker 7: so there's going to be some grand standing and things
Speaker 7: like that, right, But I think Congress is rightfully you know,
Speaker 7: expressing their view that hey, something is broken and we
Speaker 7: want do attention paid to it, and it needs to
Speaker 7: be fixed. It's in the best interest in the country.
Speaker 7: Along that road, we'll get you know, some political actors
Speaker 7: in the whole game.
Speaker 4: Okay, George, So let's think about potential outcomes here post
Speaker 4: FA investigation, given that we've already seen leadership turnover at Boeing.
Speaker 4: The CEO Dave Calhoun is on his way out by
Speaker 4: the end of the year. We saw reshuffling of executive
Speaker 4: ranks is there as well. So what could potential outcomes
Speaker 4: be post FA investigation, Like what could repercussions be.
Speaker 7: So I don't know what rep cushions and I haven't
Speaker 7: really sort of dialed into my analysis repercussions. One I'm
Speaker 7: more dialed into into my analysis is you know, adjustments
Speaker 7: to the Boeing production process, and that is going to
Speaker 7: include I think a lot more oversight both from the FAA,
Speaker 7: and I think the FA is going to expect Boeing
Speaker 7: to do a better job of overseeing the factory floors
Speaker 7: and ensuring safety and quality, which I think is going
Speaker 7: to slow things down. But it's important. You got to
Speaker 7: build quality products in aerospace or nobody's going to trust
Speaker 7: your product. And I think it's interesting that the FAA
Speaker 7: did give the exercise to Boeing to propose how they
Speaker 7: were going to improve it, because you know, I guess
Speaker 7: they could sort of scrutinize from there what Boeing comes
Speaker 7: up with and it'll be interesting to see if they
Speaker 7: have additional measures they want to put on top of it.
Speaker 7: But I think a lot of it's going to be
Speaker 7: training and oversight.
Speaker 2: All right, let's talk about United, because man, this stock
Speaker 2: is up sixteen percent, the most since November of twenty twenty.
Speaker 2: In terms of the size of the jump that we're seeing.
Speaker 2: Earnings came out after the close yesterday. A lot of
Speaker 2: it has to do with the outlook. But tell us
Speaker 2: how you see it and how you look at this quarter,
Speaker 2: and they, of course, we're dealing with some of those
Speaker 2: challenges that Boeing has been dealing with because of the
Speaker 2: grounding of planes and so on.
Speaker 7: Yeah, so I guess the way I look at United
Speaker 7: is it was a nice quarter. I totally agree. I
Speaker 7: think they did more premium seat sales this quarter. They've been,
Speaker 7: you know, these airplanes, they've been taking delivery of the
Speaker 7: larger aircraft, their aircraft that have premium seats in it.
Speaker 7: Right now, in the marketplace, you want to be offering
Speaker 7: premium seats. I think there's maybe a little too much
Speaker 7: basic economy seating, but there's not enough premium, it appears,
Speaker 7: and I think that helped drive the quarter. I would
Speaker 7: note that when we look at the yields they're making on,
Speaker 7: for example, their domestic business, their yields came up, you know,
Speaker 7: a couple I think it was almost three percent, where
Speaker 7: Delta was flatish. But the absolute yield, which is the
Speaker 7: price paid you know, per mile, but the price the
Speaker 7: customer pays per mile flown. If you look at the
Speaker 7: actual yields, there's still beneath Delta for United, which tells
Speaker 7: me that there's more room to grow, which I think
Speaker 7: the market is probably responding to more room to grow
Speaker 7: those premium offerings, you know, to get better yields out
Speaker 7: of it. And I think that that's a lot of
Speaker 7: what's going on here now. Obviously Boeing problems are going
Speaker 7: to mean less aircraft delivery for United this year, although
Speaker 7: they appear to be tapped into eight three twenty one
Speaker 7: from Airbus. So the continue to increase the size of
Speaker 7: their aircraft, which has improves their efficiency and again allows
Speaker 7: them these premium seats of front that they can command
Speaker 7: a better price for. And I think that's that's working
Speaker 7: for them. They're they're closing that gap. I would note
Speaker 7: too real quick that United is still valued if I
Speaker 7: just look at quickly on a pe ratio, there's still
Speaker 7: valued below delta, you know, so that I think that's
Speaker 7: what you're seeing a reaction to in the marketplace.
Speaker 4: George, how should investors think about the FAA review that's
Speaker 4: already begun at this point regarding safety incidents?
Speaker 7: For United has a lot of reviews going on, right
Speaker 7: and so it really does and look again, all important again.
Speaker 7: I think the regulator has been through a couple rough
Speaker 7: years during the pandemic, and hopefully this means they're getting
Speaker 7: their footing underneath them and getting out and influencing these
Speaker 7: you know this these marketplaces or these industries. Look United
Speaker 7: has every incentive to do, uh, do the utmost for
Speaker 7: safety inside their network. I think they had a spate
Speaker 7: of challenges. I think there's been a lot of turnover
Speaker 7: at all the airlines during the pandemic, and the maintenance
Speaker 7: turnovers hard because you've got to train new people, You've
Speaker 7: got to make sure they're very thorough. My guess is
Speaker 7: we're going to find out is that turnover created the problem.
Speaker 7: But I would expect that you know, maybe there's some
Speaker 7: uh you know, some processes that United has to tighten
Speaker 7: up but I think you're going to find out it's
Speaker 7: again it's an employee turnover issue. In that time to
Speaker 7: get better as people are more trained and understand their
Speaker 7: job better and turnover goes down.
Speaker 2: All right, great stuff, so appreciate you, weigh in Bloomberg
Speaker 2: Intelligence Senior Aerospace, Defense and Airlines analyst George Ferguson joining
Speaker 2: us from Arizona. We mentioned shares of United up about
Speaker 2: sixteen percent here, the most in terms of the percentage
Speaker 2: gain since we've seen going all the way back to
Speaker 2: November of twenty twenty. But the whole airline sector tim
Speaker 2: looking at the S and P five hundred Supercomposite Airline Index,
Speaker 2: it is up almost five percent. Today's session, you're.
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Speaker 4: Well earlier this year, Bloomberg News reporting stress on the
Speaker 4: nation's electric rids is accelerating at an unprecedented clip. Demand
Speaker 4: is climbing just as aging infrastructure strains under the massive
Speaker 4: overhaul needed to adapt to renewable energy. The convergence is
Speaker 4: making it harder to maintain safe, reliable power quality, and
Speaker 4: some regulators and utilities are not tracking the problem all right.
Speaker 2: And so last fall, the Department of Energy announced up
Speaker 2: to three and a half billion dollars in funding to
Speaker 2: upgrade the US grid. This topic among the many at
Speaker 2: this week's Bloomberg ANYF Annual Energy and Climate Summit. Our
Speaker 2: next guest participated in a panel at the event. It
Speaker 2: was entitled Leveraging largest ever grid investment to Enhance Resilience.
Speaker 2: So there is a lot going on with us. In
Speaker 2: the studio to talk about the nation's grid is Maria Robinson.
Speaker 2: She's director of the Grid Deployment Office at the US
Speaker 2: Department of Energy. I feel like I don't even need
Speaker 2: to ask you how bad is the grid because I
Speaker 2: feel like we do stories on it all the time
Speaker 2: about how bad it is, but how bad is it really?
Speaker 8: So we're facing a lot of different problems here on
Speaker 8: the grid.
Speaker 2: Today.
Speaker 8: You are talking about we have new demand. It's great
Speaker 8: that we're bringing manufacturing back to the United States, but
Speaker 8: that's a strain on the electric grid. The electric grid
Speaker 8: is aging. It's not just older than me it's older
Speaker 8: than my grandparents. So then we're looking at ways that
Speaker 8: we need to upgrade our existing infrastructure while continuing to
Speaker 8: build new ones. I think of it. We released a
Speaker 8: report just yesterday on advanced and innovative grid deployment mechanisms
Speaker 8: of being able to take advantage of some of the
Speaker 8: existing infrastructure and figuring out ways at relatively low cost to.
Speaker 2: Upgrade what we currently have. The joke that I make
Speaker 2: is so we cannot do upgrades. It's not like a
Speaker 2: massive rebuild.
Speaker 8: Right, we have to do both. Okay, we are definitely
Speaker 8: going to have to continue to build in order to
Speaker 8: meet all the demands, but we can take advantage of
Speaker 8: those existing rights of way, right, we don't have to
Speaker 8: deal with as much permitting, which we all know is
Speaker 8: a really difficult topic to deal with. But you know,
Speaker 8: oftentimes folks are taking our existing lines and replacing the
Speaker 8: metal part that's inside of it. It's called a conductor,
Speaker 8: and oftentimes they're just replacing that like for like instead
Speaker 8: of upgrading it to a newer technology that can move
Speaker 8: more electrons every single day.
Speaker 2: And so it's so funny. There's a story in the Bloomberg.
Speaker 2: It's probably a connection with this, but it's a central
Speaker 2: transmission line is getting a twenty first century upgrade, and
Speaker 2: it's about a startup that's created a wire that's lighter
Speaker 2: and can carry it to three times more electricity. I mean,
Speaker 2: we talk about this with battery usage, right for evs,
Speaker 2: about just about making things even chips, right, accelerators, making
Speaker 2: them more productive, making them more energy efficient.
Speaker 8: Like this is what it's about, exactly. And so all
Speaker 8: these great technologies are already out there. They're really proven
Speaker 8: in the field. We just need the market to pick
Speaker 8: them up.
Speaker 4: Is it more of a state issue right now? I mean,
Speaker 4: I think if states that have struggled with their grids
Speaker 4: Texas and California certainly come to mind. Is it a
Speaker 4: federal issue or is it a utility issue?
Speaker 8: It's all three. The fun part about the electric grid
Speaker 8: is that it doesn't follow political lines.
Speaker 6: Right.
Speaker 8: We have an eastern interconnect a western interconnect, and they
Speaker 8: don't follow necessarily. They're like time zones, right, They just
Speaker 8: sometimes split a state down the middle. So we have
Speaker 8: to figure out how we mix some federal policy with
Speaker 8: individual state policy. Some states are really looking to decarbonize
Speaker 8: and the way they want to build their grid might
Speaker 8: be different than their neighbor who has different goals ultimately,
Speaker 8: and so we're trying to mix and match all those
Speaker 8: different priorities in order to make sure that we have
Speaker 8: a strong grid that can withstand anything.
Speaker 2: There's nothing like a federal incentive or a tax break
Speaker 2: or something to get us to do something, whether you're
Speaker 2: a company where you're an individual. So what are the
Speaker 2: incentives that you guys or that utilities need to actually
Speaker 2: adopt better technologies and some of the technologies that you
Speaker 2: guys are talking about.
Speaker 8: So there are certainly some ways from the regulatory structure
Speaker 8: that utility commissioners at the state level or at the
Speaker 8: federal level could incentivize the use of some of these
Speaker 8: different technologies.
Speaker 2: They do we need to really make it happen.
Speaker 8: I think we need to make a bit of a
Speaker 8: push here, just because we have so much to deal
Speaker 8: with over the next three to five years, and that's
Speaker 8: when we can deploy some of these technologies while we're
Speaker 8: still building out major transmission lines that you know take
Speaker 8: ten to twelve years.
Speaker 4: Is this a national security issue?
Speaker 8: It certainly is a national security issue, and this is
Speaker 8: something that we continue to face every day. Our grid
Speaker 8: is one of our greatest assets that we have in
Speaker 8: our country and making sure that we can withstand cybersecurity attacks,
Speaker 8: physical attacks, and just frankly weather. One of the biggest
Speaker 8: issues is wildfires and making sure that we can prevent
Speaker 8: those from happening moving forward.
Speaker 2: Yeah, we were talking about this another story that's on
Speaker 2: the Bloomberg today that's about that. You know how investors
Speaker 2: have looked at the debt at utilities as kind of
Speaker 2: a sure thing in the past, right in terms of investing,
Speaker 2: but because of what's happening with climate change, that is
Speaker 2: not necessarily the case. That there's a lot more questions
Speaker 2: that are out there in terms of the unpredictability and
Speaker 2: the costs that are mounted against some of the nation's utilities.
Speaker 8: And I think part of this is incent trying to
Speaker 8: incentivize utilities, and they're really coming around to realize this.
Speaker 8: You're not going to if a pole gets knocked down
Speaker 8: from one hundred and fifty mile an hour WINS, you're
Speaker 8: not going to replace it with another pole like was
Speaker 8: there before that could get knocked down. You want something
Speaker 8: that can stand two hundred and fifty mile an hour WINS.
Speaker 8: And so we have to make sure that the regulatory
Speaker 8: structure is there in place to allow them to think
Speaker 8: in a forward leaning way.
Speaker 2: What can I just ask you? So, what is that
Speaker 2: regulatory structure?
Speaker 8: So there are these very fun organizations called utility commissions
Speaker 8: public utility commissions. They're the people who decide how much
Speaker 8: you pay on your electricity bill and on your gas bill.
Speaker 8: And those are the folks that hold utilities accountable and
Speaker 8: also figure out how those costs are being allocated to
Speaker 8: regular folks like us and to major industry as well.
Speaker 4: How much are we talking here? If you could wave
Speaker 4: a magic wand and get enough funding to completely upgrade
Speaker 4: the grid in the US, how much would it be?
Speaker 8: So we are really lucky under the bipartisan infrastructure law,
Speaker 8: the Inflation Reduction Act rate my office has about twenty
Speaker 8: two billion dollars to upgrade the grid. We talked about
Speaker 8: three and a half of it going out last year.
Speaker 8: To be honest, that's a drop in the bucket. Every year,
Speaker 8: utilities spend about twenty three billion dollars just to maintain
Speaker 8: their existing assets in order to continue to upgrade. What
Speaker 8: we do find though, is that some of those costs
Speaker 8: could just be shifted instead of paying to replace l
Speaker 8: like for like, we could be paying a slightly lower
Speaker 8: cost even to do some of those upgrades. And that's
Speaker 8: where we have to continue to push the market as much.
Speaker 4: As west so is twenty plus billion dollars enough.
Speaker 8: Twenty bus plus billion I think per year. But you know,
Speaker 8: we're blessed with having Inflation Reduction Act money and by
Speaker 8: Parson Infrastructure Law of course that expires after a period
Speaker 8: of time.
Speaker 2: Is there a chance that we're all going to end
Speaker 2: up paying as users consumers that to in other words,
Speaker 2: to help pay for this, that we are going to
Speaker 2: pay higher utility costs.
Speaker 8: I think if folks are smart and we do good planning,
Speaker 8: and we think years out and make sure that we're
Speaker 8: being preventive about it, that we're not going to bear
Speaker 8: the cost. I think about how much a cost for
Speaker 8: recovery after a major storm at the lights go out?
Speaker 8: How many billions of dollars of revenue is y here
Speaker 8: we are?
Speaker 2: So what like hope do you have that it kind
Speaker 2: of changes?
Speaker 8: I do have a lot of hope. I think that
Speaker 8: folks are really come this issue is coming to a
Speaker 8: head for the first time at least in my career.
Speaker 8: Folks are really realizing that our grid needs a lot
Speaker 8: of investment. Everyone focuses on the generation side. They're excited
Speaker 8: about new plants and new gas, and new solar and
Speaker 8: new wind.
Speaker 4: I hate to end on this, but what's like one
Speaker 4: scenario that keeps you up at night?
Speaker 8: There are a lot of scenarios that keep me up
Speaker 8: at night. Hurricane season keeps me up at night. Hurricane
Speaker 8: seas and it absolutely keeps me up at night. And
Speaker 8: so we just want to make sure that we can
Speaker 8: invest in our grid as much as possible, to make
Speaker 8: sure that instead of the light's going out for five hours,
Speaker 8: they only go off for five minutes.
Speaker 2: Well, Maria Robinson, thank you so much. Reality check there,
Speaker 2: director of the Grid Deployment Office at the US Department
Speaker 2: of Energy.
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Speaker 4: Well Line is the operator of a shared e bike
Speaker 4: and scoter network. It's backed by Uber and it's seeing
Speaker 4: its business growing. Bloomberg News reports that the privately held
Speaker 4: company is planning to invest more than fifty five billion
Speaker 4: dollars this year to expand its global fleet and add
Speaker 4: more than thirty thousand net new bikes across North America,
Speaker 4: Europe and Australia, while also replacing aging ones. That story
Speaker 4: last week by Bloomberg's Natalie Young, We've got with us
Speaker 4: Wayne Tang, the CEO of Lime. He joins us from
Speaker 4: New York. Wayne, good to have you with us this afternoon.
Speaker 4: Really interesting to see this story, especially at a time
Speaker 4: when the micromobility industry has hit so many speed bumps.
Speaker 4: I mean, we're talking about Bird Global and its bankruptcy,
Speaker 4: super pedestrian shutting, US operations, Lift on City Bike popular
Speaker 4: here in New York City. It's been looking for a
Speaker 4: strategic partner or to sell its bike sharing business. Why
Speaker 4: is the story of Lime different right now?
Speaker 6: Yeah?
Speaker 9: I think that I actually think that the story of
Speaker 9: Line is different for it because we've really focused in
Speaker 9: on the things that truly matter. I think every company
Speaker 9: asks this site, what are the two or three things
Speaker 9: that allow you to win customers differentially from competitors and growth, profitability.
Speaker 6: And for our industry.
Speaker 9: The three things that matter are one the quality and
Speaker 9: durability of hardware, two best in class operation enabled by technology,
Speaker 9: and three our relationships with cities and governments. And across
Speaker 9: all three of these things, Line has been the best
Speaker 9: in class on all of them. On hardware, for example,
Speaker 9: all of our competitors buy off the shelf Chinese hardware,
Speaker 9: data outsource the scooters and e bikes. Every scooter and
Speaker 9: eedbyke at Line, we've developed in house and we manufacture
Speaker 9: with our controlled manufacturing partners. What this means is that
Speaker 9: we get to design them so that we can focus
Speaker 9: on the things that writers care about, and whenever there's
Speaker 9: an issue with a bike or scooter, we can make
Speaker 9: quick changes to the next.
Speaker 6: Production line to improve it.
Speaker 9: If one of the challenge there's a big conflict of
Speaker 9: interest when you buy off the shelfs scooters and bikes.
Speaker 9: If my business is to sell you more scooters and bikes,
Speaker 9: I have very little incentive to make them last as
Speaker 9: long as possible and to use as few spare parts
Speaker 9: as possible. So over the last five years, while lines
Speaker 9: scooters and bikes have continued to improve in our reliability
Speaker 9: and durability, our scooters and bikes on average last more
Speaker 9: than five years from just over a month five years ago.
Speaker 9: Our competitors have not seen that type of improvements or hardware,
Speaker 9: and in the course of the last five years, our
Speaker 9: p and L and financial results are completely diverse.
Speaker 6: So because of these investments.
Speaker 2: So you are profitable, correct?
Speaker 6: Yes?
Speaker 9: We last year we deliver over ninety million dollars of
Speaker 9: adjusted EVADAH, which is up five x versus twenty twenty two.
Speaker 2: What's your outlook in terms of our expectations when it
Speaker 2: comes to growth going forward and what is fueling growth
Speaker 2: top and bottom line.
Speaker 9: Yeah, so twenty twenty three, our top line grew by
Speaker 9: thirty two percent. It's actually our thirty or in a
Speaker 9: row of thirty plus percent growth and we expect to
Speaker 9: see that level of growth continue to the future. So, Tim,
Speaker 9: you mentioned that we're going to make a fifty plus
Speaker 9: on investments and e bikes because we're seeing huge demand
Speaker 9: from writers and cities for more e bikes all around
Speaker 9: the world. Last year, while our top line grow by
Speaker 9: thirty two percent, are e bike business double and we're
Speaker 9: seeing this all throughout the world and part part of
Speaker 9: the major reason is because cities have committed to transition
Speaker 9: their transportation system towards a green transportation future, and as
Speaker 9: we're seeing with electric cars, sales are not hitting expectations.
Speaker 9: The only way for us to hit our Paris climbing
Speaker 9: of core goals is to drastically reduce our reliance on
Speaker 9: cars and lines. E bike fleet is a good way
Speaker 9: and often cheaper way for writers to access electric bikes
Speaker 9: all around the world.
Speaker 2: But when I go back to what Tim you Know said,
Speaker 2: you know, Bird Global went bankrupt super pedestrian, shutting US operations,
Speaker 2: thinking about the sale of its European business. This is
Speaker 2: according to tech Crunch, and then you got City Bike
Speaker 2: that was looking for a strategic partner. It is interesting.
Speaker 2: It feels like the challenges and one of the challenges
Speaker 2: is banned. I'm curious how what your approach to policy
Speaker 2: given some of the recent eastcooter banks, and I do
Speaker 2: wonder too within your business what's growing more? Is it
Speaker 2: scooters or is it bikes.
Speaker 9: Bikes is actually growing faster than the scooters, so we
Speaker 9: are actually not seeing a lot of bands. There's only
Speaker 9: there is one decision in Paris to take to exit
Speaker 9: scooters from Paris, but since then we've actually doubled our
Speaker 9: e bike fleet in Paris, as Paris is looking for
Speaker 9: green transportation ahead of the Olympics, and we now have
Speaker 9: more e bikes on the streets of Paris than we
Speaker 9: did with scooters before the so called scooter band, and
Speaker 9: since then we've seen no other city follow suit. In fact,
Speaker 9: we see every single city we work with either extend
Speaker 9: or expand their scooter and e bike operations. So we're
Speaker 9: seeing the opposite effect, which is cities are actually adopting
Speaker 9: microability faster with time.
Speaker 4: I'm wondering too well. I want to ask a little
Speaker 4: bit about new vehicle types here because there are also
Speaker 4: some new areas that you're working on, including new vehicle types,
Speaker 4: also a new business line when it comes to advertising.
Speaker 4: Starting with advertising, what do you have planned there?
Speaker 9: So, I think one of the differences between Lime's business
Speaker 9: model and traditional docked bike so you all mentioned Motivate
Speaker 9: from Lyft. If you look at traditional dock bike businesses, yeah,
Speaker 9: the only profitable part of the business is the advertising business,
Speaker 9: and they typically and so one of the big differences
Speaker 9: for Line is that we actually make money in our
Speaker 9: core operations, and so when we look at the advertising business,
Speaker 9: it's a proven business model for a lot of bikes
Speaker 9: your businesses.
Speaker 6: We've just never historically tapped into it.
Speaker 9: But if we do go into it, it would be additive
Speaker 9: to the core business because I think of the one
Speaker 9: of the challenges a lot of these business have done
Speaker 9: is that they have not improved their core operations and
Speaker 9: they simply relied on advertising and make up for losses
Speaker 9: and their co operations.
Speaker 6: That is not what Lion is doing.
Speaker 9: We make money in our core e bike, east grout
Speaker 9: or rental, and we see advertising as a add on
Speaker 9: to our core business.
Speaker 4: And what about those new vehicles types, these new accessible
Speaker 4: vehicles that you're piloting in some areas of the world
Speaker 4: right now.
Speaker 9: Yes, I think one of the advantages that Line passed
Speaker 9: because we have an internal hardware team is that we
Speaker 9: get to experiment with lots of different hardware modes. And
Speaker 9: one of the things we learned with the e bikes
Speaker 9: versus the scooter is that different types of hardware types
Speaker 9: can appeal to different riders differently. So, for example, bikes
Speaker 9: will see a more gender balance between women and men
Speaker 9: and as slightly older ridership than scooters, which are probably
Speaker 9: a little bit younger and more men than women.
Speaker 2: Because we're afraid of a scooter. I'm just gonna say so.
Speaker 9: Right as we're investing more hardware, we're also looking at
Speaker 9: how do we expand the appeal of microability to more writers,
Speaker 9: different age groups, different use cases, and so'll you're continue
Speaker 9: to see this invest in new hardware form factors we
Speaker 9: have what.
Speaker 4: Does that look like if it's not a bike, it's
Speaker 4: not a scooter, what is it.
Speaker 2: You could share with us.
Speaker 6: So the way we think about.
Speaker 9: This is that the target trips linked for line trips
Speaker 9: is trips under five miles. Sixty percent of car trips
Speaker 9: are under five miles. And then so our question is
Speaker 9: what do people do on these trips. They can go
Speaker 9: to the grocery stores, go to work, go to school,
Speaker 9: you know, go visit a family.
Speaker 6: And what can't we do today?
Speaker 9: So, for example, if you want to go to a
Speaker 9: grocery store, you have your groceries on you, it's hard
Speaker 9: to ride back and a scooter, but in our e bikes,
Speaker 9: we have the basket and it's a good place to
Speaker 9: put the grocery store whatever things you've bought. So we're
Speaker 9: going to continue to look at like, oh so right now,
Speaker 9: if it gets very cold wherever it rains, it becomes
Speaker 9: harder to use.
Speaker 6: An E bike or EA scooter.
Speaker 9: Are there ways we can make lin scooters and bikes
Speaker 9: usable during rain and even during winter? And people typically
Speaker 9: don't want to use this for longer distances, but can
Speaker 9: we make a mode that is good for long distance
Speaker 9: travel as well? So the way we think about.
Speaker 2: This, yeah, go ahead, please no, no, no, finish your thought
Speaker 2: please please girl.
Speaker 9: Now I think about is how do we continue to
Speaker 9: tackle different use cases that writers may want to use
Speaker 9: microability for.
Speaker 2: It pretty cool looking forward to when you want to
Speaker 2: share more, draw us a picture. We would love to know. Hey,
Speaker 2: got thirty seconds left here? Do you have to go
Speaker 2: public though to fuel the expansion and growth that you're
Speaker 2: talking about? Ultimately, just quickly if you could.
Speaker 6: We don't need to go public to fuel it.
Speaker 9: So one of the things that one of the big
Speaker 9: reasons why we're investing fifteen million dollars when all of
Speaker 9: our competitors and industry is pulling back, it's because we
Speaker 9: actually generated nearly one hundred million dollars even out that
Speaker 9: we can leverage to invest in our growth and expansion
Speaker 9: line is profitable in self.
Speaker 6: Sustaining, so we're at a.
Speaker 9: Point where we don't need to raise more money. In fact,
Speaker 9: I think one of the problems with the industry that I
Speaker 9: would say with the BC industry generally, is that there's
Speaker 9: been so much cheap money coming in and then there's
Speaker 9: been a growth that all costs against a drive towards profitability.
Speaker 9: This is actually bad for business because bad companies don't
Speaker 9: go wait, they just go raise more cheap capital. Okay,
Speaker 9: so that's not how we want to run our business.
Speaker 9: And we don't need to go public to fund our growth. Okay,
Speaker 9: we generate enough profits to fund our.
Speaker 2: Okay, five seconds though, do you want to go public?
Speaker 6: Of course?
Speaker 2: Okay, that's all I needed to know. Hey, Wayne, thank
Speaker 2: you so much. Look forward to next time. Wayne Tang,
Speaker 2: he's the CEO at Lime.
Speaker 6: The journal.
Speaker 2: Now about you let me drive?
Speaker 1: Oh no, no, no, no, honey, please, I.
Speaker 6: Want to drive. It's good question that.
Speaker 1: This is the drive to the clothes down to me
Speaker 1: think well Byron.
Speaker 4: On Bloomberg Radio, it's that time already, Carol, that we
Speaker 4: drive to the clothes.
Speaker 2: Yeah, yeah, I do believe it. And kind of an
Speaker 2: interesting tone today, and we're trying to make sense of it,
Speaker 2: because we have seen yields back off a little bit,
Speaker 2: of course, kind of a re assessment following j. Powell's
Speaker 2: comments yesterday. But you've got a ten year note four
Speaker 2: fifty eight, okay, on a two year note below five
Speaker 2: at four point nine three. So we moved up from
Speaker 2: a move down from what we've saw kind of some
Speaker 2: early moves earlier in the session.
Speaker 4: Aboudaill do Little, our chief markets correspondent, essentially saying earlier
Speaker 4: that equities are catching up to what yields have been
Speaker 4: telling us.
Speaker 2: Yeah.
Speaker 4: We also talked a little bit about AI early on
Speaker 4: in our program today, which is kind of where I
Speaker 4: want to start with our next guest, because he says
Speaker 4: that when it comes to AI, the early winners and
Speaker 4: losers may seem obvious, but the truth is that we
Speaker 4: are just getting started. Those are the words of Aaron Kennon,
Speaker 4: who's the co founder and CEO at Clear Harbor Asset Management.
Speaker 4: They've got more than one point five billion dollars in
Speaker 4: assets under management. Aaron joins us once again from Stamford, Connecticut,
Speaker 4: erin how are you doing great?
Speaker 3: Tim, Thanks for having me back.
Speaker 7: Good to have you back with us.
Speaker 4: I do want to start with AI and we'll get
Speaker 4: to markets in just a second. You know, it's something
Speaker 4: we talk about all the time. Of course, the winners
Speaker 4: are very clear. When you say we're just getting started.
Speaker 4: What do you mean by that, Well, I mean.
Speaker 3: AI has been with us for a long time. We
Speaker 3: have begun to focus on it and sort of the
Speaker 3: sort of popular landscape of you know, how is it
Speaker 3: impacting certain aspects of our life? And I just think,
Speaker 3: you know, like like like many things, we have to
Speaker 3: be careful as investors to to chase certain themes because
Speaker 3: there will be probably many winners, but also perhaps many
Speaker 3: more losers. And and I think we're in the early
Speaker 3: innings of the AI revolution. Like I said, that has
Speaker 3: that has been ongoing for a long time. I mean
Speaker 3: Andy jasse over at Amazon Amazon was was articulating this,
Speaker 3: uh last week in his annual letter. We even heard
Speaker 3: it from Banks CEO Jamie Diamond. We're hearing it from
Speaker 3: the behemoths on the consumer staple side, like Procter and
Speaker 3: Gamble and even util and so AI is is a
Speaker 3: broad theme. I think in the in the news, we've
Speaker 3: tend to focused on it just in the context of
Speaker 3: technology and software well.
Speaker 2: It's funny that you say that. I think it was
Speaker 2: also David Solomon over Goldman who said something to the
Speaker 2: effective AI. Yeah, all of the investment, Well we're thinking about,
Speaker 2: you know, all the financing that's going to be need
Speaker 2: to make that investment in AI. So it is interesting.
Speaker 2: And I have to say, is we go through earnings,
Speaker 2: we joke a little bit because it just feels like
Speaker 2: every earnings release or every you know, C suite on
Speaker 2: their calls is somehow sprinkling it into the conversation. So
Speaker 2: it's like it does feel a little kind of funny
Speaker 2: at times. Having said that, though, how do you think
Speaker 2: about it, because it does feel like, you know, we
Speaker 2: did a story about Microsoft and using it to help
Speaker 2: with coding and it's made a lot of advancements using
Speaker 2: chatchypt right open AI's chatty BT to actually make advancements
Speaker 2: in coding and helping its software engineers. So being put
Speaker 2: to use. So how do you, Aaron figure out, Okay,
Speaker 2: what's the smart part of this trend where I want
Speaker 2: to position my clients and my investors.
Speaker 3: That's a great question. I mean, it's a challenging one
Speaker 3: to answer in a few seconds, for sure. But suffice
Speaker 3: it to say, we're going to see major productivity gains
Speaker 3: and that old crew positively to the bottom line, perhaps
Speaker 3: provide better balance sheets for many companies and employment challenges
Speaker 3: for particular segments of the economy. This has happened time
Speaker 3: and time again as we moved into the age of
Speaker 3: the Internet and the two thousands, as we move from
Speaker 3: horse and buggy to an automobile, and we're going to
Speaker 3: see challenges but also opportunities within AI. But you point
Speaker 3: to something quite interesting, which is some engineers are being
Speaker 3: laid off because they're creating artificial intelligence that reacts and
Speaker 3: acts in the way that a human engineer would act.
Speaker 3: And so you maybe a few months ago you think, well,
Speaker 3: engineers are going to be in high demand, and that
Speaker 3: certainly may still be the case, but they're also being
Speaker 3: somewhat perhaps in a year or two that they could
Speaker 3: be disintermediated by AI itself, which is really an interesting thought.
Speaker 2: Well, if you go back, right, even a couple of
Speaker 2: years or something more like hey kids, you know, or
Speaker 2: hey parents, tell you kids they should go be coders,
Speaker 2: right because we're all going to need it because everything
Speaker 2: is digitized, if you will, So it is fascinating to
Speaker 2: see how the narrative has quickly changed. Having said that,
Speaker 2: the narrative around what the Fed may do has changed dramatically,
Speaker 2: and we've seen that representation in dramatic moves when it
Speaker 2: comes to you as treasury yields and it impacts everything
Speaker 2: the US dollar. It's gold, gold. You were watching Tim
Speaker 2: Tee's ahead of you coming on about gold up about
Speaker 2: fifteen percent so far this year. You look at gold,
Speaker 2: is it something that's investible for you and your clients.
Speaker 3: Absolutely, It's been a really interesting year. And it's only,
Speaker 3: of course April to see the dollar move up, call
Speaker 3: it five percent in gold, which tends to move in
Speaker 3: inverse to the dollar of fifteen percent. It suggests to
Speaker 3: me that there are other things happening in the marketplace.
Speaker 3: And I would argue, although the data is a little
Speaker 3: less than transparent on this point, that emerging market central
Speaker 3: banks are certainly most I shouldn't say certainly are most
Speaker 3: likely the culprits behind the bid up in the gold market.
Speaker 3: We've seen some evidence that China is the most significant
Speaker 3: buyer of gold at the moment, and I think there
Speaker 3: are a couple of reasons for this. One is we're
Speaker 3: seeing more non dollar transactions occurring in the midst of
Speaker 3: this sort of Ukraine war and friction with China. You
Speaker 3: have China trading energy and commodities with Russia in ren
Speaker 3: and b you have Russia trading oil with India and rupees,
Speaker 3: and so I think it's sort of putting into question
Speaker 3: the degree to which the dollar remain the prevailing lead
Speaker 3: currency in the world. I mean, certainly that trend is
Speaker 3: still in place. The dollar is the global reserve currency,
Speaker 3: but it's trended downward from I don't know, seventy five
Speaker 3: to eighty percent maybe in nineteen fifty two, below sixty
Speaker 3: percent today, and that trend probably will continue declining into
Speaker 3: the future. And I think that's, you know, part of
Speaker 3: what's going on in the goldfront. The other big point
Speaker 3: here too, is that our fiscal house is not in order.
Speaker 3: And the last time we had interest rates where they
Speaker 3: are today on a like a two year rolling basis
Speaker 3: was back about seventeen years ago when our debt to
Speaker 3: GDP was sixty percent, and today it's over one hundred
Speaker 3: and twenty percent. So the notion that you know, the
Speaker 3: dollar is in good stead relative to gold is being
Speaker 3: put into question, and there are of course many other
Speaker 3: variables to talk about there, but those are some of
Speaker 3: the key ones that come to mind.
Speaker 4: Well, Aaron, we only have thirty seconds left, but I
Speaker 4: do want to talk about today's market. The S and
Speaker 4: P five hundred on track for a close days four
Speaker 4: days of decline. If it does indeed close lower with it,
Speaker 4: which it looked like like it will do, buying opportunity
Speaker 4: right now.
Speaker 3: I think in the long run, you want to own
Speaker 3: well managed, well positioned equities, for sure. But if you
Speaker 3: look at the breadth of the market, which had been
Speaker 3: winding out going into the end of the quarter, it's
Speaker 3: it's not any longer. If you look at the top
Speaker 3: four names in the market that have led the rally
Speaker 3: of six percent in the SMP, TIM, Nvidia, Meta, Microsoft,
Speaker 3: and Amazon, they represent seventy two percent of the current
Speaker 3: year to date return of six percent. You know, last
Speaker 3: year that number was forty three percent. The top four
Speaker 3: names led only forty three percent of the total return,
Speaker 3: and so it's certainly a narrow rally. But if you
Speaker 3: look beneath the hood at the broader SMP, at the
Speaker 3: broader market, it's cheaper. It's only trying to get sixteen.
Speaker 4: Times, we got to run Aeron Kennon over at Clear
Speaker 4: Harbor Asset Management. This is Bloomberg.
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