Speaker 1: From Mahard where Innovation of Money and Power colle in
Speaker 1: Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: I'm Caroline Hyder Bloomberg's World headquarters in New York, and
Speaker 3: I'm Ed Lovelow in San Francisco.
Speaker 2: This is Bloomberg Technology Happy twenty twenty four.
Speaker 3: Yeah, a brand new year, and coming up on our
Speaker 3: first program of the year, Full market coverage ahead, US
Speaker 3: stocks and bonds. Look, they kickstart the day in.
Speaker 2: The red and we'll look at the movers, weighing on
Speaker 2: the benchmarks as Apple drops amid a Barclay's downgrade on
Speaker 2: calling iPhone demand details ahead, plus.
Speaker 3: The latest read on the health of the EV market.
Speaker 3: That's as Tesla falls behind China's EYD in terms of production.
Speaker 3: That and so much more coming up on the show.
Speaker 3: But first it's check in on the markets, because when
Speaker 3: we know that we've had the push the pull of
Speaker 3: the Apple and the Tesla with of course some of
Speaker 3: those sales maybe up to expectations, but losing when it
Speaker 3: comes to a key Chinese competitor. But and now's that
Speaker 3: currently off by one and quarter percent. Two year yields
Speaker 3: sell off. This is a global bond market sell off.
Speaker 3: We've seen it in the UK over in Europe in particular.
Speaker 3: And remember we've got a lot of corporate issuants coming through.
Speaker 3: Some slight supply side issues probably at play here a
Speaker 3: little bit with the boring costs Bloomberg dollar indext that
Speaker 3: rises on higher. Have we called it right that we're
Speaker 3: going to see as many rate cuts in twenty twenty
Speaker 3: four as the market currently anticipates. Market just recalibrating that
Speaker 3: this morning. Move on, have a look at what's happening
Speaker 3: in the world of crypto, because as the dollar strengthens,
Speaker 3: it's interesting the bitcoin does too. We are up four
Speaker 3: tens percent for bitcoin versus us or actually eclipsing that
Speaker 3: forty five thousand dollars hand or are all important as
Speaker 3: we watch out for that ETF where the SEC approves
Speaker 3: the spot bitcoin ETF.
Speaker 2: Yeah, and the logic follows understandably that most crypto related
Speaker 2: stocks in.
Speaker 4: The equities markets are also higher.
Speaker 2: Some of the familiar names you see high single digit
Speaker 2: gains in the green. One exception to that rule is Coinbase,
Speaker 2: softer by four point four percent. Happen even lower, I
Speaker 2: guess look at the performance of that stock in twenty
Speaker 2: twenty three, and then look at the run up that
Speaker 2: it had from the end of October through to the
Speaker 2: year end. Maybe there is some profit taking or you know,
Speaker 2: rs I think was eighty going into the pre market
Speaker 2: this morning. There's something going on there. We're not entirely
Speaker 2: sure what it is. The biggest single story and downward
Speaker 2: pressure on the market more broadly is Apple. Barkley's downgrading
Speaker 2: to underweight, a new price target slightly lower one hundred
Speaker 2: and sixty dollars per share. They basically said, we're looking
Speaker 2: at the volumes and mix for the iPhone fifteen, we're
Speaker 2: not convinced. They're also saying that if we get an
Speaker 2: iPhone sixteen, we don't see the technological upgrades in that
Speaker 2: generation to move this stock high. Remember, Apple had multiple
Speaker 2: quarters in twenty twenty three where expectations were missed, but
Speaker 2: the stock continued to run up. That's an interesting equation
Speaker 2: going into it, and it's the biggest points drag as
Speaker 2: it stands on both the NAS that one hundred and
Speaker 2: the S and P five hundred this Tuesday morning, and
Speaker 2: look when.
Speaker 3: It's just shy of two point nine trillion dollar market
Speaker 3: cap the odd percentage point does have a huge impact
Speaker 3: on the overall SMP. Let's just talk about all of
Speaker 3: this with Iako Yoshioka put Poto, manager over at Wealth
Speaker 3: Enhancement Group. Is so good to kick off twenty twenty
Speaker 3: four with you, Iaco and just talk to us a
Speaker 3: little bit about some of the impact of these Magnificent seven.
Speaker 3: The impact that Apple had had is fifty percent run
Speaker 3: off in twenty twenty three, and then on the day
Speaker 3: of course, people starting to think that they can really
Speaker 3: continue to outperform. That seems to be questioned.
Speaker 5: Hi Caroline, Happy new year to you. Yes, you know,
Speaker 5: with Apple, it's probably our least favorite among the Magnificent seven.
Speaker 5: You know, tech overall without fifty six percent as a
Speaker 5: sector within the F and P five hundred and twenty
Speaker 5: twenty three. So starting off twenty twenty four with a
Speaker 5: little bit of a breather, not a big surprise here.
Speaker 5: And then with Apple, you know, as Barclay's mentioned in
Speaker 5: their down you know, the slowing of their overall hardware
Speaker 5: sales is going to be a problem. And you know,
Speaker 5: the one thing that keeps the stock up with all
Speaker 5: the buybacks, but you know, when the multiple is closer
Speaker 5: to thirty times. It's just less attractive sort of on
Speaker 5: a you know, going forward basis.
Speaker 2: Here, how much does the reaction in Apple signify a
Speaker 2: broader concern that all of the fantastic growth inequities and
Speaker 2: the tech sect we saw in twenty twenty three it's
Speaker 2: not going to carry through to twenty twenty four.
Speaker 5: Hi, ed, Yes, you know, reversals tend to happen in January.
Speaker 5: You know, we all love to hear about the dogs
Speaker 5: of the Dow and how they tend to perform better
Speaker 5: in January, and so, you know, we do see a
Speaker 5: little bit of profit taking clearly going on today in
Speaker 5: many of these Magnificent seven names. You know, we like
Speaker 5: technology from a long term perspective. I think a lot
Speaker 5: of these names have a lot of growth in them
Speaker 5: over the long term. However, you know, in the short term,
Speaker 5: you know, profit taking happens. It's good to lock in
Speaker 5: some of those great returns that we saw in twenty
Speaker 5: twenty three and pay those taxes in twenty twenty five.
Speaker 2: In order to realize some of those returns last year,
Speaker 2: you needed to buy seven names, the Magnificent Seven. How
Speaker 2: will that be different in twenty twenty four, there were
Speaker 2: so many unique stories within those seven. You know, in
Speaker 2: Video was a really clear AI story on the compute side.
Speaker 2: Can it just continue on or do you have to
Speaker 2: go very specific? Forget the bundle of seven. The magnificent
Speaker 2: one is when you've got to go down.
Speaker 5: Well, in Video was definitely a leader within that magnificent seven,
Speaker 5: up over two hundred and thirty nine percent. I believe
Speaker 5: in twenty twenty three, you know, will that repeat not likely?
Speaker 5: And we have to remember that in twenty twenty two,
Speaker 5: in video was down over fifty percent, and so that
Speaker 5: you know, great growth that we saw in twenty twenty
Speaker 5: three was after significant decline.
Speaker 6: You know.
Speaker 5: Longer term, we continue to like Nvidia and you know
Speaker 5: what they are doing. They continue to grow their total
Speaker 5: addressable market with you know, starting with gaming, leading into
Speaker 5: machine learning and then going on to the data center
Speaker 5: and AI, and so we continue to like that. We
Speaker 5: just don't think that it's going to have the type
Speaker 5: of returns that we experience in twenty twenty three. And
Speaker 5: diversification really wasn't your friend in twenty twenty three. But
Speaker 5: I think going into twenty twenty four, we believe that
Speaker 5: a broadening of the overall market is what's going to
Speaker 5: benefit investors.
Speaker 3: Ah, So talk about that broadening, IACO. Do you go
Speaker 3: broader within the US, do you go for smaller market
Speaker 3: capitalizations or do you go global?
Speaker 4: Yeah?
Speaker 5: I think you go all of it. You know, we
Speaker 5: saw in at the end of twenty twenty three small
Speaker 5: caps had a significant comeback in November and December, having
Speaker 5: you know, I think December small caps are up over
Speaker 5: twelve percent, and so you know how having that diversification
Speaker 5: really helps out. And then you know, I know we
Speaker 5: talked about the dollar sort of rebounding at least recently,
Speaker 5: but you know, the dollar weakness does help out international
Speaker 5: and emerging market stocks. So we expect some of that
Speaker 5: broadening to benefit overall investors, especially as interest rates you know,
Speaker 5: come down, or at least if that's the expectation.
Speaker 3: So you said, how perhaps Apple was you know, the
Speaker 3: least favored among some of those key names. Which one
Speaker 3: is your star forma? Which name do you have to
Speaker 3: hold onto with both hands?
Speaker 5: You know, we really like Microsoft. I think here it's
Speaker 5: a broad again, diversified name. They've got so many areas
Speaker 5: of growth, they continue to grow within cloud. They do
Speaker 5: have the partnership with open Ai in regards to artificial intelligence,
Speaker 5: and so we like all of that. They continue to grow,
Speaker 5: you know, outlook in Microsoft three sixty they have co
Speaker 5: Pilot which launched in November, which will introduce more AI
Speaker 5: capabilities across all of the Microsoft platform, and so we
Speaker 5: continue to like Microsoft over the long term.
Speaker 2: A Yaka Yo Shoka of WELC and Hansman Group. Just
Speaker 2: a terrific way to kick off what I'm sure is
Speaker 2: going to be a ginormous year for the Magnificent seven
Speaker 2: or otherwise, Thank you very much. Turning to the ev
Speaker 2: Or auto makers, Tesla topping Q for delivery estimates, Rivian
Speaker 2: falling short, beating on production. Will start with Tesla with
Speaker 2: our Global Auto's za Or editor Craig Tude's out of London.
Speaker 2: So Tesla does four hundred and eighty four thy five
Speaker 2: hundred and seven EV's in the final three months of
Speaker 2: the year. It beats estimates, It beats the target of
Speaker 2: one point eight million vehicles for the year. But the
Speaker 2: other storyline is that they lose their crown as the
Speaker 2: world's biggest seller of EV's.
Speaker 7: Yeah, that's right, and it wasn't particularly close. In the
Speaker 7: fourth quarter, BYD outsold Tesla by about forty two thousand evs.
Speaker 7: So this was a trend that we really could see
Speaker 7: coming just looking at you know how BYD was trending,
Speaker 7: particularly in China. They really dominate to that market and
Speaker 7: have done so in sort of dramatic fashion very quickly.
Speaker 7: Just a few years ago. You know, this was a
Speaker 7: company that decided to make a full transition to only
Speaker 7: battery electric and plug in hybrid sales for their lineup
Speaker 7: and in very short order managed to pass up Tesla
Speaker 7: in that market. They're now ahead on a global basis,
Speaker 7: and this is a company that you know, you hear
Speaker 7: Elon Musks talk about vertical integration and sort of controlling
Speaker 7: your own destiny, making all of your parts or many
Speaker 7: of your parts in house. BYD does that to an
Speaker 7: even greater extent than Tesla does. They make their own batteries,
Speaker 7: they make chips. So this is a company that has
Speaker 7: kind of you know, out Tesla and Tesla in the
Speaker 7: the last couple of.
Speaker 3: Years and selling at a pace five hundred and twenty
Speaker 3: six four hundred and nine fully electric in the last quarter.
Speaker 3: But there is going to be increasing competition coming on
Speaker 3: its home turf. BYD is selling cheaper cars, it's making
Speaker 3: therefore less profit than Tesla is, and they're likely to
Speaker 3: even more competition coming from China as well. How do
Speaker 3: you think Tesla will fare in that, Craig.
Speaker 7: It's a massively competitive market, and you're right to call
Speaker 7: out that the price differences here between Tesla and BYD
Speaker 7: are hugely different. The estimate for the average transaction price
Speaker 7: for Tesla among analysts survey by Bloomberg is you know,
Speaker 7: something on the order of forty five thousand dollars. BID
Speaker 7: is roughly half that. So this is a very different
Speaker 7: couple of companies. But we are seeing BYD also move
Speaker 7: up market, whereas you know, Tesla has been moving in
Speaker 7: the other direction, right, And so you know, the China
Speaker 7: market is hugely competitive. Musk himself will tell you it's
Speaker 7: the most competitive in the world weather bew ideas able
Speaker 7: to sort of weather that. I think they've you know,
Speaker 7: really made a statement in terms of their ability to
Speaker 7: do so. But it only will get more difficult in
Speaker 7: the year to come, especially as we see, you know,
Speaker 7: some of the cell phone makers in China enter the
Speaker 7: space and do so through contract manufacturing arrangements with some
Speaker 7: of the state owned companies, and that's going to be
Speaker 7: a trend that's really interesting to watch in twenty twenty four.
Speaker 2: Craig I was in the hot seat this morning for Rivian,
Speaker 2: and when I was writing about production and delivery, it
Speaker 2: was interesting the severity of the share reaction. Right, they
Speaker 2: quite comfortably beat their full year production guidance, but you
Speaker 2: were drilling down and made a wonderful chart that looks
Speaker 2: at kind of how sequentially deliveries have started to lag
Speaker 2: a bit.
Speaker 7: Yeah, I think this is a company that you know,
Speaker 7: was really production constraint that was their issue for sort
Speaker 7: of you know, quarter after quarter, which ad you documented
Speaker 7: really well. You know, this is a company that's managed
Speaker 7: to sort out some of the kinks and in production
Speaker 7: and over some of the growing pains the the deliveries,
Speaker 7: you know, part of the equation. They still have some
Speaker 7: work to do and of course, you know, the the
Speaker 7: investors aren't going to look particularly fondly when you outproduce,
Speaker 7: you know, relative to deliveries by the amount that that
Speaker 7: Rivian did in.
Speaker 8: The fourth quarter.
Speaker 7: There's going to be some concern about whether you're pushing
Speaker 7: on a string and whether you may need to cut
Speaker 7: prices you know, in the future, and so that will
Speaker 7: be something for us to watch. Also, I'm you know,
Speaker 7: very curious and whether you know the delivery van production,
Speaker 7: you know, and the change in Rivian being constrained to
Speaker 7: only being able to deliver those to Amazon to just
Speaker 7: you know, very late in the quarter, uh, sort of
Speaker 7: being able to sort of get out of that deal
Speaker 7: and you know, start delivering delivery vehicles to to other customers.
Speaker 7: You know, maybe there was a complication with that in
Speaker 7: the fourth quarter that accounts for this differential.
Speaker 3: We're going to drill in to demand side equation of
Speaker 3: all these things so much more. With that credited out.
Speaker 3: Always great to have you, Thank you, And later on
Speaker 3: the show, we are going to do a real deep
Speaker 3: dive on Tesla in particular Dan Levy from Barkley's going
Speaker 3: to be joining us on his latest thought. And note, meanwhile,
Speaker 3: let's talk about well the other Elon Musk company when
Speaker 3: one of what's six or seven of them, we're going
Speaker 3: to talk X because Fidelity has just cut the valuation
Speaker 3: of the state that it has in the social media company.
Speaker 3: This is the latest in a series of markdowns by
Speaker 3: Fidelity ever since Musk concluded the acquisition of the social
Speaker 3: media platform all the way back in October twenty twenty
Speaker 3: two feels like a lifetime ago. Someone who's been tracking
Speaker 3: that ever since. As Blue Merg's Kurt Wagner and we
Speaker 3: got the numbers, just remind us how much they're cutting
Speaker 3: and what sort of number we're now looking at for
Speaker 3: evaluation of Twitter now.
Speaker 9: Xeh, I believe the cut from the end of November,
Speaker 9: I think it was was around eleven percent, but in total,
Speaker 9: more than seventy percent. The value has been cut down
Speaker 9: since the close of the acquisition. Now you will remember
Speaker 9: that was a forty four billion dollar acquisition at the
Speaker 9: end of twenty twenty two.
Speaker 4: If it's been cut.
Speaker 9: By more than seventy percent, we're now looking at a
Speaker 9: company that at least Fidelity believes is valued closer to
Speaker 9: twelve and a half thirteen billion dollars. And so, you know,
Speaker 9: to put that into a little bit of historical perspective,
Speaker 9: you may remember Caroline back in way back in twenty sixteen,
Speaker 9: Twitter almost ald the Disney almost ald the salesforce. The
Speaker 9: company was around the same value way back then in
Speaker 9: twenty sixteen as it is today per Fidelity. So you know,
Speaker 9: We've just seen a huge erasure of value from X
Speaker 9: since Elon took over.
Speaker 2: The curious thing about this is that Fidelity is one
Speaker 2: of the investment firms that participated in the take private
Speaker 2: deal in the first place. Behind this, I guess we
Speaker 2: don't know, you know, the fact is behind Fidelity's decisional
Speaker 2: how they arrived.
Speaker 4: At that valuation.
Speaker 2: But you've done some reporting on how the financials have
Speaker 2: changed in the last twelve months.
Speaker 9: Yeah, we talked about this, ed if you'll remember, right
Speaker 9: before the new year, right, we had a story come
Speaker 9: out and Bloomberg that the advertising revenue at X is
Speaker 9: projected to be you know, somewhere around two point five billion,
Speaker 9: and that may even be on the high side, right,
Speaker 9: because some of these productions were made earlier in the
Speaker 9: quarter before Elon went on stage at deal Book and
Speaker 9: you know, started swearing at Twitter's advertising partners, and so
Speaker 9: you know, the value of Twitter's business or excuse me,
Speaker 9: the size of Twitter's business has just decreased so much.
Speaker 9: Even just a few years ago before Elon showed up,
Speaker 9: you know, they were bringing in more than five billion
Speaker 9: dollars a year, most of that in advertising revenue. We're
Speaker 9: now talking you know about half of that. And a
Speaker 9: lot of this is quite frankly self inflicted, right. A
Speaker 9: lot of the issues that they've had seem to be
Speaker 9: things they could have avoided with you know, some different approaches,
Speaker 9: I think to the advertising business.
Speaker 3: And to that end, self inflicted wounds as they are
Speaker 3: does ultimately bother the management, the leadership of the erosion
Speaker 3: of value might well bother some of the partners who
Speaker 3: well went in on the deal to take private, but
Speaker 3: ultimately us real pressure being put on turning this company
Speaker 3: around and building back is value.
Speaker 9: Well, they're in a unique position, right, and not only
Speaker 9: are they not a publicly traded company, but a lot
Speaker 9: of their investors are sort of investing in Elon Musk
Speaker 9: and X may be one of part of that investment,
Speaker 9: but they also want to be involved with Elon when
Speaker 9: it comes to SpaceX or neuralink or boring company or
Speaker 9: whatever types of things he does, right, And so I
Speaker 9: think there's a lot more patience from the people who
Speaker 9: invest alongside Elon Musk because they see the bigger picture,
Speaker 9: right and they say, Okay, maybe we are losing some
Speaker 9: money on our X investment right now, but the relationship
Speaker 9: that we've built with Elon. The support that we're giving
Speaker 9: him on that side will pay off in some of
Speaker 9: the other businesses that he runs. Right at least, that's
Speaker 9: how it's working right now now. I don't think there's
Speaker 9: going to necessarily be a willingness to just continue to
Speaker 9: run this into the ground over time, but I think
Speaker 9: he has a little bit more runway than most companies
Speaker 9: would in this situation because of all the other businesses
Speaker 9: that he has.
Speaker 2: Bloomberst Cowagonist Star in the year with the store of
Speaker 2: X the company and platform for me known as Twitter.
Speaker 2: Just as we started twenty twenty three, some things don't change.
Speaker 2: Happy new year to you now. Coming up here on
Speaker 2: Bloomberg Technology, another big, big story, Biden blocks chip making
Speaker 2: equipment to China. Details behind the administration's attempts to curtail
Speaker 2: China's tech advances. That's coming up next. This is Bloombog Technology. Okay,
Speaker 2: it's time for talking tech. First up in the news,
Speaker 2: Dish Network and Echo Star finalizing their merger. The two
Speaker 2: companies close the deal on December thirty.
Speaker 4: First.
Speaker 2: The move comes as Dish chairman Charlie Ergin seeks to
Speaker 2: move away from the dwindling pay TV businesses into wireless
Speaker 2: services to challenges the likes of Verizon AT and T
Speaker 2: and T Mobile and Bido's bid for live streaming company
Speaker 2: Joy lapses. The three point six billion dollar offer did
Speaker 2: not get approval by December thirty, first deadline from regulators
Speaker 2: by whose first announced the present potential acquisition back in
Speaker 2: November of twenty twenty, as the Chinese search giant was
Speaker 2: trying to get into advances in the digital video arena.
Speaker 2: Plus in the UK, BT Group may face some fines.
Speaker 2: The telecom company missed UK deadlines to move data out
Speaker 2: of core network equipment, which was manufactured by China's Huawei.
Speaker 2: The UK banned the usage of Huawei from its telicon
Speaker 2: infrastructure back in twenty twenty over national security concerns.
Speaker 3: Caroc Let's stick on those national security concerns the geopolitics,
Speaker 3: that is China versus or developed nations at the moment
Speaker 3: because chib equipment manufacturer ASML faced over there in the Netherlands,
Speaker 3: it's canceled shipments for some of its machines that were
Speaker 3: headed to China at the request of the Biden administration.
Speaker 3: This is calling to people familiar with the matter for more.
Speaker 3: We're welcomed in Mackenzie Hawkins joining us NOLU from Washington.
Speaker 3: And the interesting thing is they front run basically the
Speaker 3: date that the ban was coming in. They had to
Speaker 3: hold back even when well theory they were still allowed
Speaker 3: to be selling them right exactly.
Speaker 10: So the Dutch government had actually imposed restrictions on these
Speaker 10: machines that were set to go into effect on January first,
Speaker 10: but the Biden administration pressured the Dutch government to cancel
Speaker 10: licenses for ASML through the end of last year because
Speaker 10: they were worried that China could use those chip making
Speaker 10: machines to continue making semiconductor advances.
Speaker 2: This is an instance where it's really important to be
Speaker 2: clear what we're talking about chip making equipment, or more
Speaker 2: specifically the cutting edge of ultra violet lithography machines, and
Speaker 2: this is what ASML defined that as but in layman's terms,
Speaker 2: it is the ability to cram as many transistors onto
Speaker 2: a chip as possible etch on in the smallest form factor.
Speaker 2: And the relevance Mackenzie, as you know, is that reporting
Speaker 2: last year about Huawei and what they were able to
Speaker 2: do at the cutting edge using ASML machine, but some
Speaker 2: different machines exactly.
Speaker 4: So.
Speaker 10: The most advanced chip making machines are so called EUV machines.
Speaker 10: ASML is the only company that makes these machines, and
Speaker 10: the Dutch government has banned ASML from sending those machines
Speaker 10: to China for a long time. But Huawei, China's tech giant,
Speaker 10: was able to produce a ship with its chip making
Speaker 10: partner Smith using DUV machines, which are still highly advanced,
Speaker 10: but a slightly less advanced model that ASML was still
Speaker 10: allowed to ship to China. And so what the US
Speaker 10: had been working with the Dutch government on was a
Speaker 10: set of restrictions on the shipment of those immersion DUV
Speaker 10: machines to Beijing, and the Dutch government implemented such a restriction,
Speaker 10: but gave a lag time to ASML to continue making
Speaker 10: shipments through January. First, the US stepped in and said,
Speaker 10: you need to actually cancel those shipments. And those are
Speaker 10: the conversations that.
Speaker 4: Happened over the last time.
Speaker 2: There is some interesting politics behind this as well. So,
Speaker 2: according to Bloomberg's reporting, US National Security Advisor Jake Sullivan
Speaker 2: phones the Dutch and says, can you get a sm
Speaker 2: to do it? And the Dutch say just phone them yourselves,
Speaker 2: make their request direct.
Speaker 10: Exactly. So first you had Jake Sullivan reaching out to
Speaker 10: the Dutch government. They say contact ASML. The US has
Speaker 10: this conversation with ASML, and then you see the Dutch
Speaker 10: revoke some of these licenses. So you're working with a
Speaker 10: little bit of a workaround here where the Dutch government
Speaker 10: wants to be able to point to the US and
Speaker 10: say this restriction is coming from Washington. And of course
Speaker 10: you saw the US tighten its restrictions on overall chip
Speaker 10: making equipment and advanced computing exports to China earlier this year,
Speaker 10: additionally affecting some Dutch machines, some of the emerging duvelethography
Speaker 10: equipment from ASML. So you have a bit of a
Speaker 10: tension between Washington and Amsterdam as the US plas ahead
Speaker 10: with its chip war against Beijing and the Dutch, the Japanese,
Speaker 10: other governments around the world are sort of dragged.
Speaker 4: Into a well as well.
Speaker 2: Bloomberg's Mackenzie Hawk and it's just terrific reporting. Worth noting
Speaker 2: chip stocks are underpressure today carrec.
Speaker 3: Yeah, particularly in China, those that would depend on such
Speaker 3: sort of EUV lithography. We thank you so much McKenzie
Speaker 3: has always.
Speaker 2: Welcome back to bliogow Technology Ed Lovelow here in San Francisco,
Speaker 2: and I'm.
Speaker 3: Karen Hide in New York. Let's get you a quick
Speaker 3: check on these markets. First day, I've traded A twenty
Speaker 3: twenty four and will there's a little bit of profit
Speaker 3: taking risk coming off the table. Call it what you will.
Speaker 3: We're reassessing how much rates are going to rise all
Speaker 3: fall and how quickly they might be cut. Here in
Speaker 3: the United States in particular, we're looking at therefore two
Speaker 3: year yield that backs up at some seven basis points.
Speaker 3: It's a global bond sell off, and indeed it's in
Speaker 3: everything sell off. Kind of a day equities down and
Speaker 3: bonds were seeing then aw's like one hundred curry off
Speaker 3: by one point four percent. Worst day for generally tech
Speaker 3: stocks is December the twentieth. Now we are seeing bitcoin
Speaker 3: though still getting a little bit of love. We anticipate,
Speaker 3: of course, a spot Bitcoin et have been signed off
Speaker 3: as as soon as June January eighth, January tenth, we're
Speaker 3: looking at it up some three point seven percent, eclipsing
Speaker 3: that forty five thousand dollars handle. Moving on and look
Speaker 3: at some of the individual players that we're looking at,
Speaker 3: because well, when you are seeing a juggernaut such as
Speaker 3: Apple on the downside after a keynote out of Barclays, well,
Speaker 3: no wonder the overall benchmarks fall and we're off by
Speaker 3: more than three percent for a company that's worth well
Speaker 3: at one point three trillion dollars, So no wonder it
Speaker 3: has a key points waiting micro strategy. Of course, a
Speaker 3: lot of the cryptonames on the higher side. As bitcoin
Speaker 3: goes high, we know micro strategy of course, key element
Speaker 3: of the balance sheet is indeed and bitcoin we're up
Speaker 3: eleven percent. Lastly though, just looking at Tesla, and this
Speaker 3: has been the news of the morning. Ultimately Tesla managing
Speaker 3: to live up to the one point eight million for
Speaker 3: the full year in terms of evs sold, but it's
Speaker 3: been eclipsed by a big Chinese player now and we've
Speaker 3: got a dissectors to how much that really matters.
Speaker 4: Yeah, it's interesting that the stocks flat.
Speaker 2: I mean, it's kind of been a way over the
Speaker 2: place since the market open, markedly higher than lower, and
Speaker 2: then higher and then lower again. Let's keep the conversation
Speaker 2: going and bringing Dan Livy Ananist for Barkleys who has
Speaker 2: an equal weight rating on Tesla a two hundred and
Speaker 2: sixty dollars price target.
Speaker 4: What is the storyline for you? Dan?
Speaker 2: You know, you meet the stated one point eight million target,
Speaker 2: But I remember a year ago the first earning score
Speaker 2: of the year in January twenty twenty three, musked outing, well,
Speaker 2: we could do two million maybe, So what does the
Speaker 2: score cards show?
Speaker 4: All told?
Speaker 8: Hey, Edon Carlin, thank you so much for having me. Yeah.
Speaker 1: I think the story of twenty twenty three was that
Speaker 1: we were pulling back from a period of evuphoria. And
Speaker 1: if we just contrast what's going on now versus where
Speaker 1: we were two years ago, where the market was fully
Speaker 1: supply constrained and demand was not at all concerned.
Speaker 8: That's not the case now.
Speaker 1: Now we have questions about demand, even so much to
Speaker 1: the point that Tesla acknowledged on the last earnings call
Speaker 1: that there were some macro concerns and it would not
Speaker 1: be producing as much as it could in its Often
Speaker 1: and Berlin facilities simply because of some of these macro questions.
Speaker 1: And so the story going forward is, you know, how
Speaker 1: do we deal with this period of some demand uncertainty
Speaker 1: within the EB market?
Speaker 2: The storyline that we're leading on at Bloomberg is that
Speaker 2: Tesla's lost its crown to BYD. BYD the sort of
Speaker 2: biggest standalone seller of battery electric vehicles, and we knew.
Speaker 4: That was coming.
Speaker 2: Does it matter if Tesla is eclipsed by BYD, which
Speaker 2: is kind of predominantly focused on the domestic Chinese market.
Speaker 1: It doesn't necessarily matter per se in the sense that
Speaker 1: there is room for multiple players. And if we just
Speaker 1: break apart the markets, yes, BYD eclipse Tesla. This year
Speaker 1: within battery electric vehicles, Tesla still BYD Tesla was at
Speaker 1: one point eight million, I believe BYD on battery electrics
Speaker 1: was one point six million something along those lines, with
Speaker 1: the remainder being plug in hybriardy vehicles. If you look
Speaker 1: at it on a regional base, that's where the dynamics
Speaker 1: really vary, because in the US, Tesla is still the
Speaker 1: dominant EV name.
Speaker 8: You know, in Europe.
Speaker 1: Tesla is still a top three or so player in
Speaker 1: the beeB market. China Tesla is still you know, top
Speaker 1: two or three. It's BYD that's really taken the crown.
Speaker 1: And it's China where we saw a lot of bid
Speaker 1: sales accelerate The other story that we saw merging in
Speaker 1: twenty twenty three was the rise of Chinese exports to
Speaker 1: Europe and to other markets. So, yes, there's more competition
Speaker 1: Tesla from BYD, but there is still room for Tesla
Speaker 1: to grow. It's just a question of in the markets
Speaker 1: where Tesla is serving, where is the demand for that?
Speaker 3: Yeah, and spin us then into twenty twenty four, when
Speaker 3: we're thinking of a BYD getting into Hungary and producing there,
Speaker 3: when we're thinking of two very different price points, ultimately
Speaker 3: remain on top for Tesla in terms of profits and
Speaker 3: revenue because they make more expensive cars. Will Tesla ever
Speaker 3: want to go lower to be able to serve and
Speaker 3: get in on that highly competitive state that there is
Speaker 3: in China or should we be staying in its lane?
Speaker 1: Well, that's ultimately the goal for Tesla, right. That was
Speaker 1: something that they outlined at their investor day last March,
Speaker 1: the path to megascale. Right, you know, twenty twenty four,
Speaker 1: from a volume perspective for Tesla, we're at two million units.
Speaker 8: That's below consensus of two point two million.
Speaker 1: So it is some growth, it's low double digit growth
Speaker 1: versus twenty twenty three, but.
Speaker 8: It is below you know the long.
Speaker 1: Term growth curve Tesla has laid out, and that's really
Speaker 1: because there is not much in the way of do
Speaker 1: incremental product for Tesla in twenty twenty four. Yes, their
Speaker 1: cyber truck that we think that's niche, it's really Model
Speaker 1: three and why, which are somewhat dated models. And so
Speaker 1: really the story for Tesla on volume growth going forward
Speaker 1: is going to be modeled to whenever that is released.
Speaker 1: We have that as you know, sometime in twenty twenty five,
Speaker 1: where they really go down to that lower price point.
Speaker 1: Are ways to go to get to that lower price point,
Speaker 1: they have to drive out a lot of cost to
Speaker 1: get there.
Speaker 3: Let's just go back to this cyber truck because that
Speaker 3: was something that I'm sure frustrated you and many an
Speaker 3: analyst investor is they didn't strip out give us the
Speaker 3: intricacies of how many they actually sold. Was it five
Speaker 3: hundred on the low end, was it five thousand on
Speaker 3: the high end? Was where do you think the cyber
Speaker 3: truck is landing? And doesn't really matter if it's just
Speaker 3: getting people in to have a look at the other cars.
Speaker 8: It was probably a small set of volumes.
Speaker 1: We modeled in something like two hundred units.
Speaker 8: You know possible it was below that number.
Speaker 1: Look, I think Tesla has has been clear that there
Speaker 1: are a number of production challenges along the way that
Speaker 1: need to be met with Cybertruck, and so that's why
Speaker 1: to us, yeah, cybertruck is a different model for them,
Speaker 1: and it does help give some model diversification which they've needed.
Speaker 1: That being said, we'd set our expectations accordingly on cyber truck.
Speaker 1: We're assuming that you know, you're not going to get
Speaker 1: more than twenty thousand units in twenty twenty four.
Speaker 8: Because it is such a slow ramp. There are likely
Speaker 8: some questions as well. On demand.
Speaker 1: We think that it will draw on some consumers who
Speaker 1: want more of a lifestyle type vehicle, But if we
Speaker 1: don't see cyber truck really penetrating that core large pickup.
Speaker 8: Market which is used for work purposes and commercial purposes.
Speaker 2: Dan, I want to go back to the demand question
Speaker 2: and zoom out. You can apply it to the legacy
Speaker 2: auto names Ford and GM. You can bring in Rivin
Speaker 2: you want, But there is certainly a question now about
Speaker 2: the wave of first or early adopters being gone and
Speaker 2: how you just go after the everyday household. Tesla has
Speaker 2: used price cuts as its lever the federal tax credit
Speaker 2: in this country is clearly a big factor. How do
Speaker 2: you model demand for this year.
Speaker 1: Volume the EV market will increase even for the legacy
Speaker 1: players where there are questions on demand and where clearly
Speaker 1: they are slowing the pace of volume, there is still
Speaker 1: going to be growth, you know, from a subsidy standpoint.
Speaker 1: In the US, one key step forward is that the
Speaker 1: seventy five hundred dollars credit will now be made on
Speaker 1: a point of sale basis, meaning you get it immediately
Speaker 1: when you purchase the vehicle as opposed to when you're
Speaker 1: filing your taxes.
Speaker 8: So that can help.
Speaker 1: That being said, there are some vehicles losing eligibility, and
Speaker 1: as you note that, there is clearly a question about
Speaker 1: you know, going from the early adopters to the early majority,
Speaker 1: where now you have to deal with the questions of
Speaker 1: range anxiety and charging availability, and so these are all
Speaker 1: things that need to be addressed. So I think that
Speaker 1: there is clearly still path forward for EV volumes to
Speaker 1: be increasing in in twenty twenty four. It's just that
Speaker 1: the pace of growth is slowing. The other piece of this,
Speaker 1: and you alluded to this on the point of the
Speaker 1: price cut. Tous Look can cut its price because it's
Speaker 1: cost structure allows it to do so. For the legacy automakers,
Speaker 1: they've struggled with evs on the cost front, and there's
Speaker 1: only so much that they can cut on price because
Speaker 1: the costs are what they are.
Speaker 8: So they have some work to do on the cost
Speaker 8: side so.
Speaker 1: That they can sell more volumes at a more appropriate price.
Speaker 3: Cort Danley Vee, it's been so good to get you
Speaker 3: on the back of these production numbers today, of course,
Speaker 3: DANLEYB of Barclay's, we thank you so much and sales
Speaker 3: data at that. Meanwhile, the coming up, we're going to
Speaker 3: be talking about Apple facing a ban on imports of
Speaker 3: its watches. You know, it's on ice of the short term,
Speaker 3: but what about the longer term? The conversation is up
Speaker 3: next with James Gagan Technology Litigator over at Alan and.
Speaker 2: Overary and what's we got, Yeah, quick check at Maderna
Speaker 2: that's really spiking, shares up around sixteen percent as it stands,
Speaker 2: trading at their highest levels since late August of twenty
Speaker 2: twenty three, the news being that the stock has been
Speaker 2: given an upgrade to outperform from performing. Oppenheimer the firms,
Speaker 2: saying they expect to see real return to top line
Speaker 2: sales grow Formerderna in twenty twenty five, and they're talking
Speaker 2: about increased visibility on the sale of COVID nineteen vaccine.
Speaker 2: That's a big move of sixteen percent on Maderna in
Speaker 2: this this Bloomberg Technology.
Speaker 3: Let's just check in on shares of Apple because they
Speaker 3: took a hit and so therefore have the big benchmarks.
Speaker 3: It's all after Barclay's cut the tech giant to underweight
Speaker 3: for the first time since twenty nineteen, following expectations of
Speaker 3: what they see as soft demand for its latest iPhone,
Speaker 3: saying they expect quote a reversion after a year when
Speaker 3: most quarters were missed and the stock out performed nevertheless
Speaker 3: joining us now Bloomberg's. And that's the point, isn't it.
Speaker 3: We just think back to the February earnings that they
Speaker 3: posted twenty twenty three, and they missed the streets expectations,
Speaker 3: but still shares rallied almost fifty percent on the twenty
Speaker 3: twenty three So why does Barklays now think it can't
Speaker 3: manage to pull that out of the bag?
Speaker 11: Yeah, Barkleys has seen some holes in the Apple story.
Speaker 11: I mean, certainly you've had four quarters plus in a
Speaker 11: row of holiday declines. The earnings report that's coming at
Speaker 11: the end of January early February will indicate that Q
Speaker 11: one was either in line, maybe a little bit more
Speaker 11: a little bit less in the prior quarter. You have
Speaker 11: these patent situations which are likely to crop up in
Speaker 11: higher frequency. Now, given the success that Massimo has had
Speaker 11: over the past few months, you're not seeing anything in
Speaker 11: the twenty twenty four product pipeline that is in the
Speaker 11: short term going to juice sales to any considerable degree.
Speaker 11: So they're sensing some fragility there in the Apples story,
Speaker 11: and that's what sent the shares down pretty considerably. You know,
Speaker 11: this Tuesday morning after New Year's Day, there's certainly going
Speaker 11: to be new iPhones. I'm not expecting anything significant the
Speaker 11: bigger picture. There will be some camera improvements on the
Speaker 11: smaller Pro model, but some minor size and preases of
Speaker 11: the displays on both of the hind iPhones. You're going
Speaker 11: to get the biggest iPad revamp in five six years.
Speaker 11: You're also getting the Vision Pro that's going to be
Speaker 11: coming within the next thirty days a month or so.
Speaker 11: But certainly I'm not expecting the vision pros to drive
Speaker 11: a lot of revenue, certainly this year or even.
Speaker 4: In twenty twenty five.
Speaker 11: The iPad should do pretty well for that segment, but
Speaker 11: that has been underperforming the last couple of years or so,
Speaker 11: and the iPhone I would expect to be stagnants. Not
Speaker 11: necessarily in hypergrowth. It is as it has been, you know,
Speaker 11: in prior years.
Speaker 8: But certainly you know.
Speaker 11: It is a risk to bet against Apple because they
Speaker 11: always do seem to find a way to come out
Speaker 11: with numbers that could surprise the street.
Speaker 2: Yeah, the share performance of twenty twenty three would speak
Speaker 2: to that argument. Bloombogs Mark German, thank you very much
Speaker 2: for the latest on the stock. The other story is
Speaker 2: that Apple's facing a ban on imports of its watches.
Speaker 2: The company is now seeking alternate paths to overcome a
Speaker 2: patent infringement loss that forced its most popular Apple Watch
Speaker 2: models off shelves over the holidays. Here to keep the
Speaker 2: conversation going is James Gagan, technology litigator at Alan and Ovary,
Speaker 2: who's practice focuses on high tech intellectual property, international trade competition.
Speaker 2: There are some avenues they can go down on a fix.
Speaker 2: There are some deadlines coming up, but in the first instance,
Speaker 2: it was a wild holiday period where Apple seemed to
Speaker 2: rely on procedural wrangling to push back as best they
Speaker 2: could against that original ITC decision, which was two months ago.
Speaker 12: Yeah, that's right, ed, and thanks very much for having me.
Speaker 12: You know, as someone who practices in the International Trade
Speaker 12: Comme quite a bit, this has been an interesting case
Speaker 12: so follow I think what it shows is that when
Speaker 12: companies like Apple are facing a potential import ban in
Speaker 12: the International Trade Commission, they can actually consider during the
Speaker 12: lawsuit making changes to their product designs and then getting
Speaker 12: authorization to sell those redesigned products, even if the Commission
Speaker 12: would find infringement and order a ban on the current models.
Speaker 12: And this is a common plan B that we see
Speaker 12: often in these cases, at least based on my review
Speaker 12: of the Commission's public decisions, that doesn't appear to have
Speaker 12: happened here. Apple didn't have an authorized backup design it
Speaker 12: could switch to, and so when the Commission decided to
Speaker 12: order that ban on the Series nine and Ultra two
Speaker 12: watches at the end of October, you've seen Apple scrambling
Speaker 12: to implement these emergency strategies over the last several weeks,
Speaker 12: and so I think it shows that when companies don't
Speaker 12: litigate this plan B and they don't have a fallback
Speaker 12: position in these cases, then they're exposing the business to
Speaker 12: lost sales, and I think it limits their options going.
Speaker 3: Forward, and not only just to lost sales, but also
Speaker 3: so probably a mental impact on a consumer that suddenly
Speaker 3: questions that the winning formula and technology of an Apple.
Speaker 3: To that end, if Apple does want certainty in the
Speaker 3: here and the now, what do they need to pursue
Speaker 3: How do we see this being ironed out? Is it
Speaker 3: just about settlement or in agreement with Massimo?
Speaker 12: Well, it could be settlement that would bring certainty, you Caroline.
Speaker 12: But if companies like Apple that are in this position
Speaker 12: want certainty, then they need to implement hardware or software
Speaker 12: changes to the products and then prove that those changes
Speaker 12: do not infringe the patents, and then obtain authorization to
Speaker 12: import and sell these new product versions. And so according
Speaker 12: to Apple, it has already started this process. It's already
Speaker 12: presented redesigns to US customs, and it's said that it
Speaker 12: expects the decision. I think by the end of next week.
Speaker 12: It's confidential. We don't know what that redesign will look like.
Speaker 12: But when companies go this route and they need a
Speaker 12: quick approval to get products back on the market, generally
Speaker 12: they'd want to present customs with a very simple hardware
Speaker 12: or software change that they've already implemented and that there's
Speaker 12: no dispute, doesn't infringe the patterns, and often this means
Speaker 12: removing the infringing future completely from the product. So it
Speaker 12: is possible that Apple could get approval to sell these
Speaker 12: watches again, but they may not have the same features
Speaker 12: that they do right now, including one oxygen monitoring.
Speaker 2: That is the fascinating part for me that we reported
Speaker 2: on December twenty eighth that Apple sees software as being
Speaker 2: the long term fix, but it relates to a specific
Speaker 2: functionality on a hot piece.
Speaker 4: Of hardware, a wearable.
Speaker 2: Who are the people on the other side of the table,
Speaker 2: customs who are reviewing the compromise and then deciding if
Speaker 2: it works or not because it is a software fix
Speaker 2: to hardware functionality.
Speaker 4: That's right.
Speaker 12: So Apple is asking for approval from a specific branch
Speaker 12: of customs that their entire job is to administer these
Speaker 12: exclusion orders from the Commission, So they're very experienced in
Speaker 12: assessing these types of redesigns. But it is true that
Speaker 12: if Apple is proposing some sort of complicated software fix,
Speaker 12: we don't know, but if they are, then it would
Speaker 12: be challenging to get a fix like that through customs
Speaker 12: in the time they have a lot of and so
Speaker 12: you know, for example, Apple may want to present the cleanest,
Speaker 12: most obvious fix that it can to get these products
Speaker 12: back on the market. We know that the Apple Watch
Speaker 12: series SC can be sold because it's not equipped to
Speaker 12: measure blood oxygen levels, and so Apple may be presenting
Speaker 12: a solution with us such as that.
Speaker 3: James Gagan, we thank you for pushing us forward on
Speaker 3: this technology Litigator, someone who knows the ITC well, We
Speaker 3: really appreciate it. Verrett Allen and Ovary.
Speaker 6: There are now other products out there that we can
Speaker 6: use to gain exposure to bitcoin in this moment, and
Speaker 6: it's just a moment of uncertainty between now we think
Speaker 6: and January January eighth to tenth, somewhere in that range perhaps,
Speaker 6: but we're out of an abundance of caution.
Speaker 3: Didn't want to take any risk that abundance of caution
Speaker 3: that Kathy would have. ARC Investor talks about is why
Speaker 3: they exited Grayscale Bitcoin Trust but actually plow their money
Speaker 3: from our next generation ETF instead into pro Shares Bitcoin
Speaker 3: Strategy ETF. All of this, of course on the question
Speaker 3: of whether or not gray scale Bitcoin Trust will indeed
Speaker 3: be converted into an ETF. And all of this, of course,
Speaker 3: the anticipation of an approval of a spot bitcoin ETF
Speaker 3: investment opportunity has been driving the price of bitcoin up
Speaker 3: more broadly past forty five thousand. Uti Yang is here
Speaker 3: to break it all down. So there's the intricacies of
Speaker 3: who and how and when, but ultimately any spot bitcoin
Speaker 3: ETF is going to be good for holders of the
Speaker 3: bitcoin of bitcoin in and of itself.
Speaker 13: Yeah, so we're looking at a big wig coming ahead
Speaker 13: for the bigcoin industry. There's wide expectation there CC will
Speaker 13: make a decision finally on whether they will approve a
Speaker 13: spot bcoin ETF. So we saw bicoin really rallied in
Speaker 13: the past year based on the anti anticipation of this news,
Speaker 13: which analysts thinks will drive institutional funding into bigc one.
Speaker 13: But still there's uncertainty and approval is not one hundred
Speaker 13: percent guaranteed.
Speaker 3: And many embracing paths for a buy the room and
Speaker 3: sell the news kind of fact. Maybe we even see
Speaker 3: a bit of a dip as and when it is infanty,
Speaker 3: it does get approved, But do you know any of
Speaker 3: the details is to actually what happens. Say January eighth
Speaker 3: to tenth, the SEC says yes, will immediately the ETF
Speaker 3: be there for the tradings that take days or weeks
Speaker 3: or months to be executed on.
Speaker 13: We don't know yet if the SEC does approve a
Speaker 13: big one ETF fund. It seems that all the issuers
Speaker 13: and operators that are associated with a big one et
Speaker 13: F are have been preparing to get ready to launch
Speaker 13: and to trade the shares. Coinbase, for example, which is
Speaker 13: the custodian provider for a lot of these pecoin ETF
Speaker 13: issuers told us last week that they're operationalready. Once they
Speaker 13: get the green light, they are able to handle the
Speaker 13: volume and the trades.
Speaker 3: So we'll see.
Speaker 13: It seems like everybody is preparing as if they will
Speaker 13: be able to get approval. But then we'll get to
Speaker 13: see how much trading or how much buying eventually it
Speaker 13: will contribute to Bitcoin.
Speaker 3: And just as I know, my husband is a senior
Speaker 3: manager over there at Coinbase. But meanwhile, Hiang, we thank
Speaker 3: you so much for all the details. We brace ourselves.
Speaker 3: That's going to be busy for the next couple of
Speaker 3: days for her and indeed anyone who's out there in
Speaker 3: the world of crypto and interestingly and of course now
Speaker 3: that does it for our first edition of lue Meg
Speaker 3: Technology twenty twenty four.
Speaker 2: Yeah, one day into the new year. I'm not going
Speaker 2: to say what the story of the year is because
Speaker 2: after twenty twenty three you just wouldn't.
Speaker 4: Take that risk. Recap on the podcast.
Speaker 2: Thank you to listening on apples, Spotify and on the
Speaker 2: Bloomberg platforms from New York and SF.
Speaker 4: This is Bloomberg Technology.