WEBVTT - BI Weekend: Six Month Reports, Tesla Safety Issues, Business School Rankings 0:00:01.560 --> 0:00:05.680 This is Bloomberg Intelligence with Scarletfoo and Paul Sweeney. 0:00:05.760 --> 0:00:07.840 How do you think the FED is looking at tariffs? 0:00:08.000 --> 0:00:09.200 The uncertainty of terriffs. 0:00:09.320 --> 0:00:11.240 Let's take a look at the sectors and how they 0:00:11.360 --> 0:00:11.960 performed a. 0:00:11.880 --> 0:00:14.800 Lot of investors getting whip saled every day by news events. 0:00:14.560 --> 0:00:18.280 Breaking market headlines, and corporate news from across the globe. 0:00:18.320 --> 0:00:20.960 Could we see a market disruption of market events? 0:00:21.000 --> 0:00:23.000 So people just too exuberant out there? 0:00:23.160 --> 0:00:25.720 You see some so called low quality stocks driving this 0:00:25.800 --> 0:00:26.560 short term rally. 0:00:26.600 --> 0:00:31.400 Bloomberg Intelligence with Scarlettfoo and Paul Sweeney on Bloomberg Radio, 0:00:31.560 --> 0:00:33.480 YouTube and Bloomberg Originals. 0:00:34.320 --> 0:00:36.959 On today's Bloomberg Intelligence Show, we dig inside the big 0:00:37.000 --> 0:00:39.320 business stories impacting Wall Street and the global markets. 0:00:39.560 --> 0:00:41.920 Each and every week, we provide in depth research and 0:00:42.040 --> 0:00:44.199 data on some of the two thousand companies and one 0:00:44.280 --> 0:00:46.920 hundred and thirty industries our analysts cover worldwide. 0:00:47.040 --> 0:00:49.400 Today, we'll explain how the global business of sports is 0:00:49.440 --> 0:00:51.160 getting bigger fast. 0:00:51.240 --> 0:00:54.200 Plus a look at the yearly Bloomberg BusinessWeek's ranking of 0:00:54.280 --> 0:00:56.320 the best business schools in the country. 0:00:56.440 --> 0:00:59.000 But first, this week, President Trump pushed for a six 0:00:59.080 --> 0:01:02.440 month reporting schedule for publicly traded US companies. This would 0:01:02.480 --> 0:01:05.399 in the current quarterly format to quote, save money and 0:01:05.440 --> 0:01:09.520 allow managers to focus on properly running their companies for more. 0:01:09.560 --> 0:01:12.160 Scarlet Foo and guest host Isabell Lee were joined by 0:01:12.160 --> 0:01:16.320 Michael Casper, Bloomberg Intelligence US equity strategists. They first asked 0:01:16.360 --> 0:01:18.880 Michael to break down what this would mean for earning season. 0:01:19.240 --> 0:01:21.360 Certainly has been an idea that's been floated for quite 0:01:21.360 --> 0:01:25.560 some time among ESG circles, even if you go back 0:01:25.600 --> 0:01:28.360 to the twenty sixteen election, I believe Hillary was floating 0:01:28.360 --> 0:01:32.400 this idea. But it does have some validity in terms 0:01:32.440 --> 0:01:36.200 of aligning you know, shareholder ideas with long term performance 0:01:36.240 --> 0:01:39.119 and management incentives. Right, if management doesn't have to beat 0:01:39.120 --> 0:01:43.639 a quarterly number every quarter, they can more easily focus 0:01:43.680 --> 0:01:45.960 on the longer term, and that certainly has its merits. 0:01:46.000 --> 0:01:48.320 But again, I don't think chan is the best analog 0:01:48.760 --> 0:01:49.360 to make right. 0:01:49.280 --> 0:01:51.680 There, talk to us about the risks that semi annual 0:01:51.760 --> 0:01:54.520 reporting could post, because why haven't we done it? Obviously, 0:01:54.560 --> 0:01:57.520 I'm sure that our regulators and policymakers have way into 0:01:57.520 --> 0:01:58.240 pros and cons. 0:01:58.360 --> 0:02:01.080 Yeah, so it's a it's less flow of information, right, 0:02:01.160 --> 0:02:03.520 So you think about the quarterly reporting schedule, you're getting 0:02:03.520 --> 0:02:06.280 information every three months. As an investor, you can process 0:02:06.320 --> 0:02:09.720 that information more accurately priced things in the market, And 0:02:09.880 --> 0:02:11.919 with a six month time frame, you lose a little 0:02:11.960 --> 0:02:14.640 bit of that, right, And obviously I think consensus estimates 0:02:14.639 --> 0:02:17.920 will be a little bit less let's say, accurate, because 0:02:17.960 --> 0:02:19.919 they have to forecast a six month time period instead 0:02:19.919 --> 0:02:22.239 of a three month time period. So that there are 0:02:22.240 --> 0:02:26.560 some bumps in the road with adopting this, But again, 0:02:26.600 --> 0:02:30.560 if it can align shareholder value with management centis, maybe 0:02:30.680 --> 0:02:32.440 you do get a benefit out of it. 0:02:32.840 --> 0:02:35.960 Would CEOs necessarily like this, I mean, I'm sure everyone 0:02:36.200 --> 0:02:38.960 wants to save time and save money that that was 0:02:39.000 --> 0:02:41.960 something that the President cited as a benefit of moving 0:02:42.040 --> 0:02:44.160 to six months reporting as opposed to three months, But 0:02:44.800 --> 0:02:46.959 in general, is this something that CEOs would favor. 0:02:47.480 --> 0:02:48.800 I don't know if they would favor it. I think 0:02:48.840 --> 0:02:51.160 they'd be pretty indifferent to it. It's still the same 0:02:51.280 --> 0:02:54.080 scheme of you know, you've got a number every six months, 0:02:54.120 --> 0:02:57.200 you've got to beat that number. It's just more aligning 0:02:58.200 --> 0:03:01.519 that goal with with shareholder value, right, So I don't 0:03:01.560 --> 0:03:04.360 know necessarily if they favor one over the other. They 0:03:04.440 --> 0:03:06.239 might think their life is a little bit easier trying 0:03:06.240 --> 0:03:07.600 to beat on a six month time frame than a 0:03:07.639 --> 0:03:09.760 three month timeframe. But I don't know if it really 0:03:10.040 --> 0:03:12.760 affects cost too much. As the President pointed. 0:03:12.520 --> 0:03:15.680 Out, do you think that under the current SEC regime 0:03:15.760 --> 0:03:19.520 that this would actually be approved because to Scarlett's point earlier, 0:03:19.560 --> 0:03:21.360 and we all know this wasn't the first time this 0:03:21.520 --> 0:03:24.760 was floated, But yeah, maybe it will be approved. 0:03:25.000 --> 0:03:27.880 Maybe, I don't know. There's again, it's been a really 0:03:27.960 --> 0:03:31.040 long push of this and back and forth. Should we 0:03:31.080 --> 0:03:33.200 do six months? Should we do annually? Evens there's some 0:03:33.280 --> 0:03:35.880 countries out there that do annual, and it really hasn't 0:03:35.880 --> 0:03:37.680 gained a lot of traction. I think investors in the 0:03:37.760 --> 0:03:40.520 US are really set on the quarterly reporting schedule. They 0:03:40.560 --> 0:03:43.800 really look for those quarterly numbers to drive their analysis, 0:03:44.480 --> 0:03:47.760 and so it's going to meet a lot of resistance 0:03:47.920 --> 0:03:49.160 amongst the investor. 0:03:48.760 --> 0:03:52.240 Community, I think, yeah, especially as more retail investors are 0:03:52.280 --> 0:03:54.680 now investing in the market too. They want to hear 0:03:54.800 --> 0:03:56.840 from the companies directly, and a lot of those companies 0:03:56.880 --> 0:04:00.440 are tailoring their commentary to this new investor class as well. 0:04:00.520 --> 0:04:04.440 Not so much institutional investors, but the individual investors out there. 0:04:04.480 --> 0:04:06.800 Yeah, certainly you've got this huge flow of zero day 0:04:06.840 --> 0:04:10.560 trading options and everybody trading around earnings events, especially in 0:04:10.560 --> 0:04:14.840 the retail space. That's huge. So maybe amongst the constituency, 0:04:14.920 --> 0:04:16.800 obviously they don't have as much of a lobbying voice 0:04:16.800 --> 0:04:20.920 as you know, your big institutional investors, but amongst his constituency, 0:04:21.000 --> 0:04:22.720 maybe there's a little bit of resistance there as well 0:04:22.760 --> 0:04:23.760 from the retail community. 0:04:24.040 --> 0:04:26.479 Would there be a sector or industry that would benefit 0:04:26.640 --> 0:04:29.480 from a semi annual report, good question. 0:04:29.640 --> 0:04:33.360 Oh yeah, I don't know necessarily, if I could pick 0:04:33.360 --> 0:04:36.839 a sector that would benefit the most. I think tech 0:04:36.920 --> 0:04:40.400 obviously has gained the most from the quarterly reporting schedule. 0:04:40.480 --> 0:04:40.640 Right. 0:04:40.680 --> 0:04:43.280 They've done a really good job of managing their earnings 0:04:43.320 --> 0:04:46.680 and consistently beating and you know, we've seen it time 0:04:46.720 --> 0:04:49.560 and time again. IBM was the bastion of this back 0:04:49.560 --> 0:04:52.520 in the nineties and early two thousands financial engineering to 0:04:52.520 --> 0:04:54.840 beat the quarterly number. It's since, I would argue it's 0:04:54.880 --> 0:04:57.040 been Apple and Microsoft have been very good at it. 0:04:57.120 --> 0:04:59.360 So I think Tech's been the biggest beneficiary, So maybe 0:04:59.480 --> 0:05:00.120 the biggest. 0:05:00.360 --> 0:05:03.880 Our Thanks to Michael Casper Bloomberg Intelligence US equity strategist and. 0:05:03.800 --> 0:05:06.240 Speaking of earnings, Paul, we got results from Cracker Barrel 0:05:06.279 --> 0:05:06.679 this week. 0:05:06.720 --> 0:05:10.159 The company offered sales guidance that missed expectation, showing the 0:05:10.200 --> 0:05:13.280 brand is still dealing with a fallout from its controversial 0:05:13.400 --> 0:05:14.920 and short lived logo change. 0:05:15.160 --> 0:05:18.240 For details, we caught up with BI restaurant analyst Michael Halen. 0:05:18.480 --> 0:05:21.240 They were recorded a great quarter. You know, Same Star 0:05:21.360 --> 0:05:24.000 sales were up five point four percent in the restaurants, 0:05:24.040 --> 0:05:27.320 a couple hundred basis points ahead of the street. But 0:05:27.680 --> 0:05:33.359 sales have decelerated pretty significantly here, you know, since August 0:05:33.600 --> 0:05:37.120 in the logo controversy. So you know, thought Julie Messino 0:05:37.200 --> 0:05:40.120 did a great job. I think she's running a steady 0:05:40.120 --> 0:05:43.960 ship right now. And you know, they're focusing on the 0:05:44.040 --> 0:05:46.520 things that they've been focused on from the beginning, which 0:05:46.560 --> 0:05:50.960 is providing better service and higher quality food at a 0:05:51.000 --> 0:05:54.840 good price point. I would say it seems like they 0:05:54.880 --> 0:05:59.240 may have sandbag guidance as well. They basically are extrapolating 0:05:59.400 --> 0:06:02.640 current track grafic trends throughout the rest of the quarter. 0:06:04.080 --> 0:06:07.120 You know, when second measure data that that Bloomberg owns 0:06:07.160 --> 0:06:10.640 that that we follow is showing that traffic may be 0:06:10.720 --> 0:06:14.440 stabilizing here. So I guess, I guess we'll see. 0:06:14.720 --> 0:06:17.360 All right, let's move on to what's going on with 0:06:17.360 --> 0:06:18.200 our friends that darted. 0:06:18.680 --> 0:06:21.560 Yeah, you know Darden. It was an interesting quarter. Sales 0:06:21.600 --> 0:06:28.960 were fantastic, but slightly below you know, very high expectations, 0:06:29.400 --> 0:06:31.480 and the most interesting part of their report was that 0:06:31.520 --> 0:06:36.679 their margins contracted, largely due to beef costs and Uber 0:06:36.760 --> 0:06:41.279 fees because they did this one million free delivery promotions 0:06:41.320 --> 0:06:44.919 supported by you know, Uber eats marketing dollars, right, and 0:06:44.960 --> 0:06:47.600 so it actually made up five percent of sales, and 0:06:47.600 --> 0:06:52.200 that's very impressive for something that's been instituted, you. 0:06:52.160 --> 0:06:53.240 Know, within a year. 0:06:53.440 --> 0:06:57.920 So, yeah, the margins, you know this, this company has 0:06:58.000 --> 0:07:01.279 best in class margins. They've always protected their margins and 0:07:01.360 --> 0:07:04.159 so seeing a same store sales gain that, you know, 0:07:04.200 --> 0:07:07.680 a very strong same star sales gain without the margin expansion, 0:07:08.120 --> 0:07:10.400 I think shocked some investors. 0:07:10.600 --> 0:07:13.160 So what are they planning to do to widen those margins? 0:07:13.360 --> 0:07:16.480 I heard the portions might not be as big? Are 0:07:16.520 --> 0:07:19.720 they looking at possibly raising prices on the menu. 0:07:20.520 --> 0:07:24.680 Well, they're going to raise prices, but not too aggressively. 0:07:24.800 --> 0:07:28.880 So they're very careful about increasing their prices. A big 0:07:28.920 --> 0:07:32.040 reason why we think they're outperforming is that they've increased 0:07:32.040 --> 0:07:36.480 their prices a lot less than competitors since the pandemic, right, 0:07:36.520 --> 0:07:39.560 and so they don't want to lose that advantage. So 0:07:39.680 --> 0:07:42.320 they are going to raise prices this year, but it's 0:07:42.360 --> 0:07:46.360 going to be modest and less than peers. You know, 0:07:46.440 --> 0:07:51.160 you mentioned the smaller entrees. That's really a move to 0:07:51.240 --> 0:07:54.520 boost traffic. So what they're doing is they're taking seven 0:07:54.560 --> 0:07:59.000 of their popular entrees. They're making an additional, lighter menu 0:07:59.080 --> 0:08:02.680 with those seven items. They're shrinking the portion and they're 0:08:02.680 --> 0:08:05.680 lowering the price, and they're hoping that actually brings in 0:08:05.800 --> 0:08:09.800 greater traffic with low income consumers. So shrinking the size 0:08:09.800 --> 0:08:13.200 of the entrees isn't isn't a major plan in terms 0:08:13.240 --> 0:08:16.160 of saving the margins. With the margins, it's going to 0:08:16.240 --> 0:08:21.160 be you know, executing rights. That's what they're known for, 0:08:21.400 --> 0:08:25.680 you know, consistently becoming more productive in their restaurants. That's 0:08:25.680 --> 0:08:27.360 how they're going to try to fund this. You know, 0:08:27.520 --> 0:08:30.520 there will be some slight price increases, and they mentioned 0:08:30.520 --> 0:08:33.720 they could be a little bit more aggressive. If you know, 0:08:33.760 --> 0:08:35.880 the higher beef prices remain stubborn. 0:08:36.160 --> 0:08:37.480 Thanks to bi's Michael Halen. 0:08:38.080 --> 0:08:40.319 We also got earnings from General Mills this week. 0:08:40.559 --> 0:08:43.080 The maker of curios reported a solid quarter but was 0:08:43.120 --> 0:08:44.600 cautious about the road ahead. 0:08:44.840 --> 0:08:48.160 We spoke with b I Consumer Stables analyst Diana rosso Penya. 0:08:48.320 --> 0:08:53.560 They were mainly in line with expectations. It wasn't that 0:08:53.720 --> 0:08:57.640 much of a surprise, but still, you know, the stock 0:08:57.800 --> 0:09:01.160 is a little bit on the south side. People expected 0:09:01.200 --> 0:09:03.600 better news than what they disclosed. 0:09:03.760 --> 0:09:07.160 Yeah, I mean North America sales came under pressure. What 0:09:07.320 --> 0:09:08.200 was the drag there? 0:09:08.720 --> 0:09:13.440 It was mainly on volume. We expected volume declines but 0:09:13.559 --> 0:09:16.520 not to the magnitude that they did. It was down 0:09:16.600 --> 0:09:21.600 four percent on organic on the organic part, so obviously 0:09:21.640 --> 0:09:26.080 consumers are still trading down. They are mentioning that, you know, 0:09:26.160 --> 0:09:31.360 about eight brands of theirs. It was positive, but it's 0:09:31.360 --> 0:09:34.640 still it wasn't enough for the whole segment two to 0:09:34.720 --> 0:09:35.240 pull through. 0:09:35.360 --> 0:09:37.240 What are they doing or what are they saying about 0:09:37.280 --> 0:09:40.599 tariffs and the impact on their costs versus maybe what 0:09:40.640 --> 0:09:43.280 they're trying to pass along to customers. 0:09:42.960 --> 0:09:46.920 So they are upsetting some of the costs with cost savings. 0:09:47.080 --> 0:09:50.080 It's usually going to be They expected to be about 0:09:50.080 --> 0:09:53.240 one to two percent of cogs this year, which is 0:09:53.280 --> 0:09:57.120 a little bit lower than for example, Campbell's expected they 0:09:57.160 --> 0:09:58.559 expected around four percent. 0:09:58.720 --> 0:10:01.640 So you know, they're not there. 0:10:02.720 --> 0:10:05.720 They do not want to raise prices. They want to 0:10:05.720 --> 0:10:08.920 be competitive because obviously volume growth is not happening. 0:10:09.000 --> 0:10:12.040 So yeah, I mean, they're getting competition from more folks. 0:10:12.240 --> 0:10:14.839 I mean, on the one hand, they're benefiting from the 0:10:14.840 --> 0:10:17.040 fact that more people are eating at home, right, but 0:10:17.120 --> 0:10:19.080 yet when we're going to the supermarket, more people are 0:10:19.160 --> 0:10:22.320 choosing those private label brands. What's their sort of you know, 0:10:22.400 --> 0:10:23.400 plan of attack there. 0:10:23.720 --> 0:10:28.280 Yeah, so they're increase in marketing, They're they're hoping for innovation. 0:10:28.920 --> 0:10:29.040 Uh. 0:10:29.240 --> 0:10:33.000 They mentioned that twenty five percent of sales growth will 0:10:33.040 --> 0:10:36.360 come in North America retail will probably come from innovation 0:10:36.520 --> 0:10:40.800 this year. And this is what all everybody's trying to 0:10:40.840 --> 0:10:43.400 get to the problem is. And that was mentioned on 0:10:43.440 --> 0:10:46.480 the call as well, was that even the price increases 0:10:46.520 --> 0:10:48.920 are not as significant as it used to be, they're 0:10:48.960 --> 0:10:49.679 still high. 0:10:50.200 --> 0:10:53.479 So on a basket size. 0:10:53.440 --> 0:10:55.480 You're still paying a lot more than the used to 0:10:55.600 --> 0:10:56.280 two years ago. 0:10:56.920 --> 0:11:00.200 Talk to us about store brands versus kind of the 0:11:00.200 --> 0:11:02.120 the brands. We all grew up with. Here, tell us 0:11:02.120 --> 0:11:04.439 how that's changed over time. Our store brands are becoming 0:11:04.440 --> 0:11:07.200 a bigger, bigger part of the average cart. 0:11:07.760 --> 0:11:12.080 Yes, well, retailers are investing more on their private label. 0:11:12.640 --> 0:11:15.160 It allows them to bring people into the store. Some 0:11:15.240 --> 0:11:19.120 of the brands are have a cult following. I will say, hello, 0:11:19.240 --> 0:11:24.360 Costco so exactly, so people are going to the store 0:11:24.440 --> 0:11:28.920 to buy that particular brand. They're more profitable than national brands, 0:11:29.200 --> 0:11:35.520 So obviously they're still incentive for retailers to deploy some 0:11:35.600 --> 0:11:37.120 of that some of their own I think. 0:11:37.040 --> 0:11:39.960 Some people take it cheek to buy private label, right, Well, 0:11:40.320 --> 0:11:41.480 we're at like a badge of honor. 0:11:42.000 --> 0:11:45.560 Certainly. I was shocked at the price differential. 0:11:45.559 --> 0:11:47.760 Yeah, because they have that pricing power right These stores 0:11:48.000 --> 0:11:50.160 to you know, make their products a lot more attractive. 0:11:50.240 --> 0:11:53.160 Really quick Blue Buffalo, it's their pet food. I was 0:11:53.200 --> 0:11:55.560 surprised to see that that that was not a leader 0:11:55.600 --> 0:11:56.000 for them. 0:11:56.360 --> 0:12:00.280 Yeah, so Wilderness was not is not doing as well 0:12:00.280 --> 0:12:03.760 as they are hoping. Dog food in general has been 0:12:03.960 --> 0:12:07.640 a headwind, not only for them but also for the 0:12:07.720 --> 0:12:14.280 overall industry. Cat food seems to be the leading indicator here, 0:12:14.559 --> 0:12:16.360 which is surprising, but. 0:12:16.640 --> 0:12:18.520 Cat food is outpacing dog food. 0:12:18.640 --> 0:12:21.080 Yes, correct, We have seen this for the past year. 0:12:21.559 --> 0:12:24.640 There seems to be a growth in the cat population 0:12:24.760 --> 0:12:26.480 more than the dog population. 0:12:26.360 --> 0:12:29.320 Thanks to Diana coming out. 0:12:29.360 --> 0:12:33.040 We look at Elon's purchase of one billion dollars worth 0:12:33.080 --> 0:12:34.000 of Tesla shares. 0:12:34.320 --> 0:12:37.280 Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth 0:12:37.280 --> 0:12:39.560 research and data on two thousand companies and one hundred 0:12:39.600 --> 0:12:40.400 and thirty industries. 0:12:40.559 --> 0:12:44.080 You can access Bloomberg Intelligence via bi go on the terminal. 0:12:44.120 --> 0:12:46.480 I'm Alexis Christophers and now Paul Sweeney. 0:12:46.600 --> 0:12:47.680 This is Bloomberg. 0:12:51.800 --> 0:12:56.320 This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 0:12:56.679 --> 0:12:57.959 on Bloomberg Radio. 0:12:58.520 --> 0:13:01.640 I'm Paul Sweeney. Join this week by Alexis Christophers. We 0:13:01.760 --> 0:13:04.440 moved to news from the ev giant Tesla. This week 0:13:04.480 --> 0:13:07.559 Elon Musk purchased about one billion dollars worth of Tesla shares. 0:13:07.400 --> 0:13:09.439 And this comes after the billionaire was awarded one of 0:13:09.520 --> 0:13:12.640 the biggest pay packages in corporate history. For details, host 0:13:12.679 --> 0:13:14.920 Scarlett Foo and guest host Isabelle Lee were joined by 0:13:14.960 --> 0:13:17.240 Bloomberg Global Autos editor Craig Trudell. 0:13:17.400 --> 0:13:20.280 There was an all out push with Robin Denholm the 0:13:20.360 --> 0:13:23.800 chair of the company, speaking with us at Bloomberg Television, 0:13:23.840 --> 0:13:26.480 speaking with you know, the New York Times, the Wall 0:13:26.520 --> 0:13:30.400 Street Journal, all sorts of major news organizations about the 0:13:30.440 --> 0:13:32.959 merits of this pay package that the board is proposing. 0:13:33.000 --> 0:13:35.800 There's going to be a big shareholder vote in November 0:13:35.920 --> 0:13:40.199 on handing you know, Musk, this this potentially up to 0:13:41.040 --> 0:13:44.840 one trillion dollars worth of stock. There's a lot of 0:13:45.160 --> 0:13:47.560 caveats all that that Musk would have to sort of 0:13:48.280 --> 0:13:50.679 you know, pull a rabbit out of the hat again 0:13:50.760 --> 0:13:54.720 after you know, doing so after a twenty eighteen pay 0:13:54.760 --> 0:13:57.800 package where the board laid out out all these really 0:13:57.800 --> 0:14:02.400 ambitious you know, market value and performance milestones. Musk, you know, 0:14:02.640 --> 0:14:04.480 at that time it was kind of perceived as this 0:14:04.600 --> 0:14:09.400 moonshot pay package. He proceeded to knock them all out, 0:14:09.480 --> 0:14:12.760 and they're now calling this next pay package a mark 0:14:12.760 --> 0:14:16.720 shot pay package. So, you know, I think there's this 0:14:16.720 --> 0:14:18.719 This is all sort of part of a piece, right 0:14:18.960 --> 0:14:22.080 of trying to get investors to sort of, you know, 0:14:22.160 --> 0:14:26.760 focus on you know, far out there targets objectives from 0:14:26.800 --> 0:14:29.320 Musks that would make shareholders a whole lot of money. 0:14:29.680 --> 0:14:32.720 And it comes amid you know, real signs of stress 0:14:32.720 --> 0:14:35.240 for the core here and now business for Tesla, where 0:14:35.760 --> 0:14:39.800 their sales have just really struggled this year and there 0:14:39.880 --> 0:14:42.520 haven't really been signs of of sort of meaningful change 0:14:42.520 --> 0:14:44.120 in that trend even into this quarter. 0:14:44.400 --> 0:14:46.880 Right, So this will properly motivate him. I'm so glad 0:14:46.920 --> 0:14:49.040 you brought up the twenty eighteen pay package and some 0:14:49.120 --> 0:14:52.520 of the moonshot milestones that laid out for Elon Musk. 0:14:52.800 --> 0:14:54.760 What was the most I don't want to use the 0:14:54.760 --> 0:14:57.920 word outrageous, but the most ambitious of those milestones, And 0:14:58.400 --> 0:15:01.240 did he s each and every one of them? 0:15:01.520 --> 0:15:05.040 Yeah, I mean in terms of the milestones there, I 0:15:05.120 --> 0:15:07.760 mean just even the market cap figures. I think you know, 0:15:07.800 --> 0:15:10.480 when when they were laid out, you know, it was 0:15:10.600 --> 0:15:12.920 it was just sort of unfathomable that, you know, a 0:15:12.960 --> 0:15:15.560 car company could be, you know, a trillion dollar company, 0:15:16.000 --> 0:15:18.720 and you know, give give the guy credit. He went 0:15:18.760 --> 0:15:22.160 out there and made it happen. You know. I think 0:15:22.760 --> 0:15:26.520 Tesla now is trying to sort of, you know, incentivize 0:15:26.600 --> 0:15:30.320 him to turn Tesla into a company that is many 0:15:30.360 --> 0:15:33.520 multiples of even the VIDIA, the most valuable company in 0:15:34.640 --> 0:15:37.360 the world in the here and now, and yet you know, 0:15:37.400 --> 0:15:39.960 the sort of path to getting there is really uncertain 0:15:40.520 --> 0:15:43.840 because you know, you've heard Musk make these pitches about 0:15:44.120 --> 0:15:48.920 robotaxis and about humanoid robots. But you know, he is 0:15:48.960 --> 0:15:51.880 a long way from accomplishing some of these new objectives 0:15:51.880 --> 0:15:52.920 that the board has set for him. 0:15:53.520 --> 0:15:57.360 This must buying shares personally, is governance concerns or could 0:15:57.360 --> 0:16:01.680 it even actually reinforce skepticism about how closely Tesla's board 0:16:01.960 --> 0:16:04.080 is aligned with his self interest. 0:16:04.480 --> 0:16:07.800 Generally, whenever a CEO or an insider of a company 0:16:07.880 --> 0:16:09.920 is buying shares, that's taken as a good thing and 0:16:09.920 --> 0:16:13.440 not necessarily you know, something to look at skins at 0:16:13.480 --> 0:16:17.600 from a corporate governance perspective. It does, however, I think 0:16:17.640 --> 0:16:20.040 it's worth sort of you know, thinking about this billion 0:16:20.040 --> 0:16:23.800 dollar purchase and context. This is a guy who's you know, 0:16:24.440 --> 0:16:26.440 sort of you know, a billion dollars can be found 0:16:26.480 --> 0:16:29.840 in his couch cushions, right he is is the top 0:16:29.840 --> 0:16:33.760 person on the Bloomberg Billionaire's Index. He's worth about you know, 0:16:33.880 --> 0:16:37.760 four hundred and twenty billion dollars at the moment, and 0:16:38.240 --> 0:16:41.560 so you know just how meaningful this is. With any 0:16:41.600 --> 0:16:43.840 other CEO, you would look at a billion dollar Stoft 0:16:43.840 --> 0:16:46.680 purchase and maybe take you know, take real note of 0:16:46.720 --> 0:16:50.760 that with Musk, Is it that huge a show of confidence? 0:16:50.840 --> 0:16:52.840 Maybe not in the context of, you know, just how 0:16:52.880 --> 0:16:53.760 much wealth he has. 0:16:54.000 --> 0:16:56.400 Our thanks to Craig Drudell, Bloomberg Global Autos Editor. 0:16:56.800 --> 0:16:59.840 Keeping with Tesla, we're going to move now to door safety. 0:17:00.040 --> 0:17:03.000 This week, US auto safety regulators open an investigation into 0:17:03.000 --> 0:17:05.000 whether Tesla door handles are defective. 0:17:05.119 --> 0:17:08.919 And this comes after a Bloomberg exclusive saying NHTSA received 0:17:08.920 --> 0:17:12.040 complaints that Tesla's design features like the door handles are 0:17:12.040 --> 0:17:14.040 confusing occupants and first responders. 0:17:14.160 --> 0:17:16.440 For more, Scarlett Fille and Stacey Vandock Smith were joined 0:17:16.480 --> 0:17:20.040 by Steve Man Bloomberg Intelligence, Global Autos and Industrials Research Channels. 0:17:20.160 --> 0:17:24.720 Well, it is a very serious situations, serious safety situation. Now, 0:17:25.119 --> 0:17:29.240 first of all, there is a manual release from the 0:17:29.280 --> 0:17:33.399 interior of the vehicle. But the safety issue is that 0:17:33.520 --> 0:17:37.000 you can't manually override the electronics and open the door 0:17:37.040 --> 0:17:42.160 from the outside. Now, this is an issue that's I'm 0:17:42.200 --> 0:17:46.960 plaguing the whole industry. It's not just Tesla, okay, and 0:17:47.640 --> 0:17:50.320 you know there's there's a number of automakers have solved 0:17:50.320 --> 0:17:53.760 the issue, and I think Tesla does need to solve 0:17:53.800 --> 0:17:58.280 this issue because you know, you know, people have died 0:17:58.359 --> 0:18:02.359 because of this problem. Here, I think from the investor's perspective, 0:18:02.440 --> 0:18:05.240 there is a solution. There is a number of vehicles. 0:18:05.280 --> 0:18:08.560 For example, the Aldi they have actually solved that issue, 0:18:08.960 --> 0:18:12.280 and they they solved it by you know, having a 0:18:12.320 --> 0:18:16.000 double pull on the latch to actually open the vehicle manually. 0:18:16.080 --> 0:18:19.280 So I think from an investor perspective, it is an issue. 0:18:19.680 --> 0:18:23.359 It needs to be solved, and it's solvable. As you know, 0:18:23.520 --> 0:18:28.600 the trillion dollar pay package and uh and the reieration 0:18:28.800 --> 0:18:32.879 of the company moving towards AI is really getting the 0:18:32.920 --> 0:18:37.760 investor very excited. The robo taxi is rolling out, apparently 0:18:37.800 --> 0:18:41.399 the extended the model Y is selling really well in China. 0:18:41.960 --> 0:18:45.000 So and then in Europe, where we saw a lot 0:18:45.000 --> 0:18:48.800 of decline in ev sales seems to be ticking up. 0:18:48.960 --> 0:18:52.000 But the pay package rewards Elon Musk for thinking really big, 0:18:52.080 --> 0:18:55.840 not dealing with how to unlock car doors. In the 0:18:55.880 --> 0:18:58.879 event of some kind of problem, you say that Audi 0:18:58.920 --> 0:19:01.639 has solved this, Are Tesla engineers going to take their 0:19:01.680 --> 0:19:02.320 queue from Audi? 0:19:03.040 --> 0:19:07.199 Possibly? Really? Yeah, I mean it's it's it's important. It's 0:19:07.280 --> 0:19:10.960 important that they solve this because Tesla, when they roll 0:19:10.960 --> 0:19:14.440 out the robo taxi, safety is an important issue for them, 0:19:14.560 --> 0:19:16.679 and it's an important issue not just for Tesla, I 0:19:16.680 --> 0:19:21.120 think for the whole industry, and it's a reputation that 0:19:21.160 --> 0:19:24.280 they're trying to build, especially you know they're they try 0:19:24.320 --> 0:19:26.880 to roll out robo taxi and you know, they want 0:19:26.920 --> 0:19:31.320 to project themselves as a safe automaker. So I think 0:19:31.359 --> 0:19:34.639 it's going to be a priority list for for Elon 0:19:34.760 --> 0:19:36.600 Musk and the rest of the organization there. 0:19:37.280 --> 0:19:42.919 It does also seem that that people are feeling quite 0:19:43.200 --> 0:19:45.720 optimistic about this stock, but also there's there does seem 0:19:45.760 --> 0:19:49.040 to be a liability issue in addition to a need 0:19:49.080 --> 0:19:51.280 to solve this problem issue. Is that at all concern? 0:19:51.720 --> 0:19:52.480 Yeah, it is. 0:19:52.520 --> 0:19:56.119 It is a liability and I wouldn't be surprised that, 0:19:56.840 --> 0:19:59.600 you know, there's going to be other legal issue that 0:19:59.600 --> 0:20:03.040 that come up. I think from an investor perspective, this 0:20:03.119 --> 0:20:07.840 is normal. Business recalls are normal and there are other 0:20:07.920 --> 0:20:12.560 safety issues that has been recall not just at Tesla, 0:20:12.640 --> 0:20:17.119 but and other automakers. So I think the investor are 0:20:17.200 --> 0:20:21.720 taking this. I don't want to say lightly, but it's 0:20:21.800 --> 0:20:25.400 normal business that we're going to get over this. 0:20:25.480 --> 0:20:28.159 It's a work in progress. Yes, are there other safety 0:20:28.200 --> 0:20:31.360 issues in particular that Tesla needs to focus on pay 0:20:31.400 --> 0:20:35.880 attention to that could, if left unresolved, could become legal 0:20:35.920 --> 0:20:36.760 liability issues. 0:20:37.040 --> 0:20:41.600 Robotaxi there's still a safety driver sitting on a passenger 0:20:41.680 --> 0:20:44.919 seat pretty much on every Robotaxi. I think there is 0:20:45.000 --> 0:20:48.679 discussions of taking the safety driver out at the end 0:20:48.720 --> 0:20:51.240 of the year, but I think they need to tread 0:20:51.480 --> 0:20:56.000 very very carefully, especially for Tesla. It's a high profile company. 0:20:57.119 --> 0:21:00.480 Anything negative is going to damage the reputation, and so 0:21:01.080 --> 0:21:03.960