1 00:00:00,600 --> 00:00:12,560 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 2 00:00:12,640 --> 00:00:14,400 Speaker 1: with Alex Steinhl and Paul'sweenye. 3 00:00:14,480 --> 00:00:17,720 Speaker 2: The real app performance has been the US corporate high yield. 4 00:00:17,880 --> 00:00:20,239 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:20,280 --> 00:00:24,079 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:23,560 --> 00:00:27,160 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:27,240 --> 00:00:29,840 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:30,080 --> 00:00:31,040 Speaker 4: These are two. 9 00:00:31,000 --> 00:00:33,120 Speaker 2: Big time blue chip companies. 10 00:00:33,280 --> 00:00:36,920 Speaker 3: The window between the peak and cut changing super fast. 11 00:00:37,040 --> 00:00:41,960 Speaker 1: Bloomberg Intelligence with Alex Steinel and Paul'sweenye on Bloomberg Radio. 12 00:00:43,520 --> 00:00:45,959 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 13 00:00:46,000 --> 00:00:48,360 Speaker 2: business stories impacting Wall Street and the global markets. 14 00:00:48,440 --> 00:00:50,920 Speaker 3: Each and every week we provide research and data on 15 00:00:50,960 --> 00:00:52,720 Speaker 3: some of the two thousand companies and one hundred and 16 00:00:52,720 --> 00:00:55,080 Speaker 3: thirty industries our analysts cover worldwide. 17 00:00:55,160 --> 00:00:57,520 Speaker 2: Today, we'll look at why the ride sharing company Uber 18 00:00:57,760 --> 00:00:59,800 Speaker 2: reported better than expected orders last quarter. 19 00:01:00,080 --> 00:01:01,360 Speaker 3: L as we'll look at earnings from one of the 20 00:01:01,400 --> 00:01:04,039 Speaker 3: world's biggest producers of heavy machinery, Caterpillar. 21 00:01:04,319 --> 00:01:07,200 Speaker 2: First, we begin with the diversified holding company Berkshire Hathaway. 22 00:01:07,319 --> 00:01:09,679 Speaker 3: The company recently slashed at steak in Apple by almost 23 00:01:09,680 --> 00:01:12,160 Speaker 3: fifty percent. Now it was part of a massive second 24 00:01:12,200 --> 00:01:14,920 Speaker 3: quarter sellings bree that sent billionaire Warren Buffets cash pile 25 00:01:15,000 --> 00:01:18,280 Speaker 3: to a record two hundred and seventy six point nine billion. 26 00:01:18,000 --> 00:01:20,720 Speaker 2: Dollars for more. Guest host Jessman and I were joined 27 00:01:20,720 --> 00:01:24,840 Speaker 2: by Matthew Palozola, Bloomberg Intelligence senior analysts Property and Casualty Insurance, 28 00:01:25,120 --> 00:01:28,440 Speaker 2: and Matthew began by discussing why Buffett may have decided 29 00:01:28,480 --> 00:01:29,600 Speaker 2: to trim mistake in Apple. 30 00:01:29,760 --> 00:01:31,440 Speaker 5: They kind of telegraphed a little bit that they were 31 00:01:31,440 --> 00:01:34,240 Speaker 5: probably going to sell more at their annual meeting in May. 32 00:01:35,280 --> 00:01:38,840 Speaker 5: Buffett had warned about tax rates going up potentially in 33 00:01:38,880 --> 00:01:41,640 Speaker 5: the future and maybe taking some gains off the table. 34 00:01:42,120 --> 00:01:44,120 Speaker 5: Tim Cook was actually sitting there and the audience was 35 00:01:44,200 --> 00:01:45,800 Speaker 5: kind of funny, and that they had sold I think 36 00:01:45,840 --> 00:01:48,480 Speaker 5: it was like ten to thirteen percent of their holdings 37 00:01:48,480 --> 00:01:51,280 Speaker 5: at that time, and they got questions on it, and 38 00:01:51,280 --> 00:01:54,080 Speaker 5: it just seemed body language wise that they would be 39 00:01:54,120 --> 00:01:57,400 Speaker 5: selling a little more. So I think tax rates, he 40 00:01:57,720 --> 00:02:00,280 Speaker 5: if it's been a little weary on exposure to China 41 00:02:00,400 --> 00:02:01,040 Speaker 5: for some company. 42 00:02:01,080 --> 00:02:02,360 Speaker 6: So I think those two played a. 43 00:02:02,280 --> 00:02:05,600 Speaker 7: Big role and actually had mentioned to you before when 44 00:02:05,640 --> 00:02:07,559 Speaker 7: we're off air, kind of trying to pick your brain 45 00:02:07,640 --> 00:02:10,680 Speaker 7: because Apple, if just for people to remind them, it 46 00:02:10,760 --> 00:02:13,359 Speaker 7: was underperformed the S and P five hundred tremendously in 47 00:02:13,400 --> 00:02:15,280 Speaker 7: the first quarter. It was one of its worst quarters 48 00:02:15,280 --> 00:02:17,760 Speaker 7: relative to the index, probably like the fourth or fifth 49 00:02:17,800 --> 00:02:19,880 Speaker 7: worse since the dot com bubble burst. But then it 50 00:02:20,000 --> 00:02:23,120 Speaker 7: bottomed in April and has been up close to thirty 51 00:02:23,160 --> 00:02:25,160 Speaker 7: percent since then, and so the S and P five 52 00:02:25,240 --> 00:02:27,360 Speaker 7: hundred that span has only been up about four percent. 53 00:02:27,720 --> 00:02:30,320 Speaker 7: So you were saying you didn't think even just the 54 00:02:30,400 --> 00:02:32,280 Speaker 7: rally that we've seen was as much of a factor 55 00:02:32,400 --> 00:02:34,040 Speaker 7: either as far as why they turn their stick. 56 00:02:34,200 --> 00:02:35,760 Speaker 5: Yeah, I don't think so. I mean, more buff it's 57 00:02:35,760 --> 00:02:38,240 Speaker 5: not out there trying to time the market one way 58 00:02:38,360 --> 00:02:41,799 Speaker 5: or another. And you know, he looks at these stock 59 00:02:41,880 --> 00:02:45,520 Speaker 5: investments as if he's, you know, buying the company. So 60 00:02:45,919 --> 00:02:48,080 Speaker 5: he also said at the annual meeting he expected Apple 61 00:02:48,120 --> 00:02:51,040 Speaker 5: to be their biggest holding at the end of this year. 62 00:02:51,320 --> 00:02:52,040 Speaker 4: It still is. 63 00:02:52,200 --> 00:02:55,440 Speaker 5: So, I mean, it was that stock was about forty 64 00:02:55,480 --> 00:02:58,720 Speaker 5: percent of their portfolio before this move. So I'm not 65 00:02:58,760 --> 00:03:01,000 Speaker 5: surprised to see him take some cost of. 66 00:03:00,720 --> 00:03:02,880 Speaker 2: How much cash did they have at Berkshire Hathaway today 67 00:03:02,880 --> 00:03:05,560 Speaker 2: and so any any ideas what they might do. 68 00:03:05,560 --> 00:03:09,200 Speaker 5: With it always a tough one, Paul. It's I think 69 00:03:09,240 --> 00:03:12,200 Speaker 5: at a two hundred and seventy eight billion dollars, which 70 00:03:12,200 --> 00:03:13,840 Speaker 5: I thought was a mistake when I first saw it, 71 00:03:13,880 --> 00:03:17,400 Speaker 5: because they were at like less than two hundred before 72 00:03:17,840 --> 00:03:20,120 Speaker 5: the sale of the apples, like brought in a lot 73 00:03:20,160 --> 00:03:23,560 Speaker 5: of cash. Higher interest rates have taken a lot of 74 00:03:23,560 --> 00:03:27,360 Speaker 5: pressure off them holding cash. I was calculating that just 75 00:03:27,400 --> 00:03:31,000 Speaker 5: a simple after tax return on the cash would help 76 00:03:31,040 --> 00:03:33,720 Speaker 5: their earnings by at least five percent next year, right, 77 00:03:33,760 --> 00:03:34,960 Speaker 5: so just holding it. 78 00:03:34,880 --> 00:03:35,560 Speaker 1: Will be okay. 79 00:03:35,920 --> 00:03:37,600 Speaker 5: They bought a big steak and chob that would be 80 00:03:37,880 --> 00:03:41,280 Speaker 5: an interesting megadal and not really predicting that would happen, 81 00:03:41,400 --> 00:03:44,560 Speaker 5: but just seeing that, I mean, I think the next 82 00:03:44,600 --> 00:03:48,320 Speaker 5: deal Buffett does probably something we don't even really understand 83 00:03:48,320 --> 00:03:51,480 Speaker 5: what it is, like, you know, makes unique parts for 84 00:03:51,560 --> 00:03:53,720 Speaker 5: some materials or something like that. 85 00:03:54,040 --> 00:03:56,880 Speaker 7: It's interesting too because at a certain point they're holding 86 00:03:56,920 --> 00:03:59,280 Speaker 7: an apple was so big that it took up basically 87 00:03:59,280 --> 00:04:02,400 Speaker 7: half of its portfolio. So for in your kind of view, 88 00:04:02,440 --> 00:04:04,160 Speaker 7: does it make sense to make a move like. 89 00:04:04,120 --> 00:04:06,280 Speaker 5: That, Yeah, I mean you know, I don't know if 90 00:04:06,280 --> 00:04:09,120 Speaker 5: anyone wants to have one stock makeup, you know, half 91 00:04:09,120 --> 00:04:12,280 Speaker 5: of their portfolio. He had said he would love to 92 00:04:12,320 --> 00:04:14,839 Speaker 5: have owned the whole company at one point or something. Also, 93 00:04:14,920 --> 00:04:16,920 Speaker 5: keep in mind Bank of America was also their second 94 00:04:16,920 --> 00:04:18,719 Speaker 5: biggest holding them and selling a lot of that in 95 00:04:18,720 --> 00:04:21,200 Speaker 5: the third quarter, So I do think he's really looking 96 00:04:21,240 --> 00:04:21,960 Speaker 5: at concentration. 97 00:04:22,760 --> 00:04:25,200 Speaker 2: So some reporting, I think it was in the Times 98 00:04:25,320 --> 00:04:28,479 Speaker 2: about Bill Gates and Warren Buffett relationship maybe not as 99 00:04:28,560 --> 00:04:30,440 Speaker 2: tight as before, any thoughts there. 100 00:04:30,960 --> 00:04:34,440 Speaker 5: So what has been happening is Buffett's part of the 101 00:04:34,480 --> 00:04:36,440 Speaker 5: Giving pledge where he gives away a bunch of his 102 00:04:36,839 --> 00:04:37,839 Speaker 5: wealth over time. 103 00:04:38,040 --> 00:04:40,159 Speaker 2: And I am not I'm going to spend every least dollar. 104 00:04:40,600 --> 00:04:42,880 Speaker 5: I'm not either, I don't have enough wealth to give away. So, 105 00:04:43,560 --> 00:04:46,440 Speaker 5: but he was giving a lot of his money annually 106 00:04:46,480 --> 00:04:50,000 Speaker 5: to the Bill Gates Foundation. What happened, I don't remember 107 00:04:50,040 --> 00:04:51,240 Speaker 5: when it was. I think it was probably the end 108 00:04:51,279 --> 00:04:54,960 Speaker 5: of last year. He had announced that he would when 109 00:04:54,960 --> 00:04:58,440 Speaker 5: he passes away, that his children are going to inherit 110 00:04:59,400 --> 00:05:02,160 Speaker 5: the share in a foundation to be used for charity. 111 00:05:02,240 --> 00:05:05,560 Speaker 5: I think I think before that the Gates Foundation was 112 00:05:06,640 --> 00:05:08,440 Speaker 5: I don't know if it was official, but was at 113 00:05:08,480 --> 00:05:10,240 Speaker 5: least thought was going to get some of that. I 114 00:05:10,279 --> 00:05:12,440 Speaker 5: don't know about the relationship between the two of them. 115 00:05:12,480 --> 00:05:13,040 Speaker 1: I just know. 116 00:05:13,120 --> 00:05:16,839 Speaker 5: That that was the case, and I think, you know 117 00:05:16,880 --> 00:05:20,279 Speaker 5: he's given tens of billions to the Gates Foundation over time. 118 00:05:20,320 --> 00:05:24,080 Speaker 2: Anyway, our thanks to Matthew Palisola, Bloomberg Intelligence Senior Analyst 119 00:05:24,200 --> 00:05:25,680 Speaker 2: for Property and Casualty Insurance. 120 00:05:26,160 --> 00:05:28,920 Speaker 3: We moved next to the media and entertainment company Walt Disney. 121 00:05:29,200 --> 00:05:32,440 Speaker 2: This week, Disney reported mixed third quarter results and weakness 122 00:05:32,520 --> 00:05:34,800 Speaker 2: had its fame theme parks all set its first ever 123 00:05:34,839 --> 00:05:36,400 Speaker 2: profit in streaming for more. 124 00:05:36,400 --> 00:05:39,120 Speaker 3: We were joined by gither On Ganatan, Bloomberg Intelligence analyst 125 00:05:39,200 --> 00:05:39,960 Speaker 3: on US media. 126 00:05:40,279 --> 00:05:43,160 Speaker 2: We first asked for Geitha's reaction to Disney's numbers. 127 00:05:43,480 --> 00:05:46,800 Speaker 8: As expected, there was weakness in the parts segment. But 128 00:05:46,839 --> 00:05:49,880 Speaker 8: I think what kind of spooking investors is not just 129 00:05:49,960 --> 00:05:53,600 Speaker 8: the magnitude. So they had expected kind of flatish profits 130 00:05:53,680 --> 00:05:56,599 Speaker 8: for the quarter that they just reported. They actually reported 131 00:05:56,920 --> 00:06:00,240 Speaker 8: a three percent profit decline. But I think I think 132 00:06:00,279 --> 00:06:03,679 Speaker 8: what is more disconcerting is that they expect to see 133 00:06:03,760 --> 00:06:07,120 Speaker 8: kind of this lingering weakness in the park segment, so 134 00:06:07,160 --> 00:06:11,159 Speaker 8: they're saying a mid single digit operating income decline again 135 00:06:11,240 --> 00:06:13,880 Speaker 8: in the next quarter, and they expect the softness to 136 00:06:14,000 --> 00:06:17,839 Speaker 8: last out a few more quarters. So obviously the consumer 137 00:06:17,960 --> 00:06:20,200 Speaker 8: is not going to come back in a big way 138 00:06:20,440 --> 00:06:22,480 Speaker 8: for at least another three four quarters. And I think 139 00:06:22,520 --> 00:06:24,680 Speaker 8: that is definitely creating some nervousness. 140 00:06:24,720 --> 00:06:26,440 Speaker 3: Did I tell you I canceled my Disney trip? 141 00:06:26,680 --> 00:06:26,960 Speaker 6: Whoa? 142 00:06:27,720 --> 00:06:29,360 Speaker 3: I was like, you know what, I don't want to 143 00:06:29,400 --> 00:06:31,919 Speaker 3: spend six grand on this. And I wasn't even like 144 00:06:31,960 --> 00:06:34,560 Speaker 3: going anywhere fancy. I was just like, this is ridiculous 145 00:06:34,560 --> 00:06:35,960 Speaker 3: for four days, no kidding. 146 00:06:36,040 --> 00:06:38,440 Speaker 2: Yeah, did you know? Did you tell your daughter this? 147 00:06:38,800 --> 00:06:40,440 Speaker 3: I didn't tell we were going to be good, So 148 00:06:40,520 --> 00:06:44,080 Speaker 3: I really saved myself on that one. Yeah. But we 149 00:06:44,200 --> 00:06:46,320 Speaker 3: know that the consumer is slowing, right, We got that 150 00:06:46,360 --> 00:06:49,720 Speaker 3: from Comcast, for example, in their parks. But they made 151 00:06:49,760 --> 00:06:51,960 Speaker 3: a profit in streaming. I mean, come on, isn't that 152 00:06:52,000 --> 00:06:53,000 Speaker 3: what we really care about? 153 00:06:53,360 --> 00:06:57,039 Speaker 8: That is streaming profitability has been a big focus. They 154 00:06:57,160 --> 00:07:00,000 Speaker 8: have turned the corner and it's obviously going to continue 155 00:07:00,160 --> 00:07:03,520 Speaker 8: to be a big earnings growth driver. Remember just yesterday 156 00:07:03,520 --> 00:07:07,280 Speaker 8: they actually raised prices or they're planning to raise prices 157 00:07:07,320 --> 00:07:10,080 Speaker 8: across all of their streaming tiers, including as much as 158 00:07:10,600 --> 00:07:13,800 Speaker 8: a twenty five percent hike on their ad supported tier. 159 00:07:14,160 --> 00:07:16,760 Speaker 8: So you know, this is going to become a significant 160 00:07:16,760 --> 00:07:19,560 Speaker 8: earnings growth driver going forward. And then one of the 161 00:07:19,600 --> 00:07:22,000 Speaker 8: things that we've really been complaining about with Disney, and 162 00:07:22,200 --> 00:07:25,760 Speaker 8: I think investors have also been a little bit worried about, 163 00:07:25,840 --> 00:07:27,640 Speaker 8: has been kind of their content engine. 164 00:07:27,680 --> 00:07:29,280 Speaker 9: But they're really kind of back with the bank. 165 00:07:29,400 --> 00:07:31,640 Speaker 8: So you know, obviously they had the huge success of 166 00:07:31,680 --> 00:07:33,880 Speaker 8: Inside Out too in the quarter that they just reported, 167 00:07:34,200 --> 00:07:36,840 Speaker 8: and then now you have Marvel's Deadpool and Wolverine, which 168 00:07:36,880 --> 00:07:38,960 Speaker 8: I think is your favorite Alex and that, Yeah, it 169 00:07:39,000 --> 00:07:41,320 Speaker 8: is so Githa. 170 00:07:41,560 --> 00:07:43,800 Speaker 2: Going back to Alex's point, I mean, if somebody like 171 00:07:43,800 --> 00:07:47,320 Speaker 2: an ox steal cancels a Disney theme park trip concerned 172 00:07:47,360 --> 00:07:50,960 Speaker 2: about price, is there a fundamental concern that this is 173 00:07:51,320 --> 00:07:53,440 Speaker 2: just kind of outpriced themselves out of the market, that 174 00:07:53,480 --> 00:07:54,600 Speaker 2: they're starting to hurt demand. 175 00:07:54,920 --> 00:07:58,120 Speaker 8: Yeah, that definitely is is a huge concern right now. 176 00:07:58,160 --> 00:07:59,960 Speaker 8: Poland so I think what we're going to see is 177 00:08:00,040 --> 00:08:02,360 Speaker 8: they obviously are not going to be able to raise prices. 178 00:08:02,360 --> 00:08:05,920 Speaker 8: We were seeing something like a forty percent increase in 179 00:08:05,960 --> 00:08:09,120 Speaker 8: per capita spending, you know, across the park for many, 180 00:08:09,120 --> 00:08:11,240 Speaker 8: many quarters. But I think what they kind of did 181 00:08:11,360 --> 00:08:14,600 Speaker 8: was they over forecasted demand and under forecasted the reversal 182 00:08:14,720 --> 00:08:17,920 Speaker 8: from from that pent up pandemic demand, And so that 183 00:08:18,080 --> 00:08:20,160 Speaker 8: is what we really are going to see play out 184 00:08:20,200 --> 00:08:23,040 Speaker 8: over the next few quarters. Having said that, though, I mean, 185 00:08:23,280 --> 00:08:26,120 Speaker 8: you know, yes, the domestic park business is going to 186 00:08:26,120 --> 00:08:29,760 Speaker 8: see some softness, but they do have the cruise business, 187 00:08:29,800 --> 00:08:31,560 Speaker 8: which obviously is going to take off in a big way. 188 00:08:31,600 --> 00:08:33,800 Speaker 8: They have three new ships that are coming on board 189 00:08:34,200 --> 00:08:37,600 Speaker 8: over the next few quarters, So they are expecting some 190 00:08:37,720 --> 00:08:40,360 Speaker 8: of that softness in the domestic parks to kind of 191 00:08:40,360 --> 00:08:43,040 Speaker 8: get offset. But again it's going to be kind of 192 00:08:43,040 --> 00:08:43,840 Speaker 8: a wait and see. 193 00:08:43,920 --> 00:08:46,400 Speaker 3: Our thanks to keith I Mronggannath and Bloomberg Intelligence analyst 194 00:08:46,480 --> 00:08:48,120 Speaker 3: on US media, we moved. 195 00:08:48,000 --> 00:08:51,880 Speaker 2: To earnings from America's leading health solutions company see vs Health. 196 00:08:52,080 --> 00:08:54,680 Speaker 3: This week's CBS lowered it's twenty twenty four earnings outlook 197 00:08:54,720 --> 00:08:55,839 Speaker 3: for the third straight quarter. 198 00:08:56,080 --> 00:08:58,600 Speaker 2: The company also announced cost cutting measures to save two 199 00:08:58,679 --> 00:09:01,559 Speaker 2: billion dollars over several year. This comes to as healthcare 200 00:09:01,640 --> 00:09:02,680 Speaker 2: costs continue to soar. 201 00:09:02,920 --> 00:09:05,520 Speaker 3: For more, we were joined by Jonathan Palmer Bloomberg intelligence 202 00:09:05,520 --> 00:09:07,720 Speaker 3: and your healthcare analysts, and we first asked him for 203 00:09:07,800 --> 00:09:09,880 Speaker 3: his take on CBS's quarterly results. 204 00:09:10,280 --> 00:09:13,600 Speaker 10: Yeah, so this is the third consecutive downward revision to earnings, 205 00:09:13,640 --> 00:09:16,120 Speaker 10: and it started with four Q earnings and one Q 206 00:09:16,320 --> 00:09:18,960 Speaker 10: than two Q. And really it all comes back to 207 00:09:19,280 --> 00:09:21,760 Speaker 10: higher medical costs. And so if you think about CVS, 208 00:09:21,800 --> 00:09:24,199 Speaker 10: there's three legs at the stool. Here, there's the ETNA business, 209 00:09:24,200 --> 00:09:26,720 Speaker 10: which is there big and sure, there's a PBM care mark, 210 00:09:26,920 --> 00:09:29,440 Speaker 10: and the pharmacy that we all think about. The pharmacy 211 00:09:29,520 --> 00:09:33,280 Speaker 10: stable there's some pressure and consumer the PBM's doing pretty well. 212 00:09:33,520 --> 00:09:36,760 Speaker 10: But the medical business, the benefits business, is seeing all 213 00:09:36,800 --> 00:09:40,120 Speaker 10: these revisions downward as people are visiting their doctor more. 214 00:09:40,280 --> 00:09:43,440 Speaker 3: So basically this is like if I own CVS Medical, 215 00:09:43,559 --> 00:09:45,320 Speaker 3: I go to my doctor, I pay my forty buck 216 00:09:45,360 --> 00:09:49,080 Speaker 3: cope or whatever, and then they bill CBS for that. 217 00:09:49,800 --> 00:09:52,360 Speaker 10: Well, so the insurer this is on the Medicare side, 218 00:09:52,400 --> 00:09:55,000 Speaker 10: the Medicare van plan. So a lot more seniors are 219 00:09:55,040 --> 00:09:57,320 Speaker 10: visiting their doctors and that trend we saw it at 220 00:09:57,320 --> 00:09:59,200 Speaker 10: the end of last year and we thought it would 221 00:09:59,200 --> 00:10:02,000 Speaker 10: maybe subside by the midpoint of this year, but it's 222 00:10:02,000 --> 00:10:04,320 Speaker 10: still elevated. Going into the back half and it's causing 223 00:10:04,320 --> 00:10:05,480 Speaker 10: a lot of trouble for CBS. 224 00:10:06,080 --> 00:10:07,680 Speaker 3: Sorry, no, I was gonna say, but don't think it 225 00:10:07,720 --> 00:10:10,040 Speaker 3: reimbursed by the government. Like how does that work though? 226 00:10:10,200 --> 00:10:12,400 Speaker 10: Well, so, the way the plans work is they bid 227 00:10:12,440 --> 00:10:14,640 Speaker 10: a certain amount and then that's how they get paid. 228 00:10:14,679 --> 00:10:17,640 Speaker 10: And so if the trend trends higher, they don't make 229 00:10:17,679 --> 00:10:20,160 Speaker 10: quite as much money based on what they bid initially 230 00:10:20,200 --> 00:10:20,880 Speaker 10: on the plans. 231 00:10:21,440 --> 00:10:24,040 Speaker 2: So what can the company do to kind of Yeah, 232 00:10:24,160 --> 00:10:24,840 Speaker 2: so there's. 233 00:10:24,640 --> 00:10:26,760 Speaker 10: A couple of things they can do. They can exit markets. 234 00:10:27,000 --> 00:10:29,720 Speaker 10: They can ratchet down the benefits that they're providing, so 235 00:10:29,800 --> 00:10:32,280 Speaker 10: Medicare advantage is a little bit different than traditional medicare, 236 00:10:32,280 --> 00:10:34,520 Speaker 10: and that they can offer things like dental and vision. 237 00:10:34,920 --> 00:10:38,040 Speaker 10: They can ratchet some of those extra benefits down, but 238 00:10:38,080 --> 00:10:40,480 Speaker 10: it takes time because these are planned cycles, so like 239 00:10:40,480 --> 00:10:42,280 Speaker 10: we won't see any benefit until next year. 240 00:10:43,440 --> 00:10:45,840 Speaker 3: This is like the whole issue with people living longer, right, 241 00:10:46,120 --> 00:10:49,640 Speaker 3: Like you have people living longer they're on medicare, right, 242 00:10:49,679 --> 00:10:51,320 Speaker 3: and then this is kind of what happens. How do 243 00:10:51,360 --> 00:10:54,040 Speaker 3: we solve for this though? Long term? How does a 244 00:10:54,080 --> 00:10:55,920 Speaker 3: company solve for this longer term? 245 00:10:56,240 --> 00:10:58,680 Speaker 10: Yeah, I think it's getting a better handle around the 246 00:10:58,760 --> 00:11:03,479 Speaker 10: trends and how they price they're offering. Interestingly enough, CVS 247 00:11:03,520 --> 00:11:05,920 Speaker 10: just let go of the executive who's in charge of 248 00:11:05,920 --> 00:11:08,520 Speaker 10: this benefits and the CEO and CFO are stepping in 249 00:11:08,559 --> 00:11:11,200 Speaker 10: to run the day today. So there's a lot of 250 00:11:11,200 --> 00:11:12,600 Speaker 10: work to be done in a lot of wood to chop. 251 00:11:12,640 --> 00:11:16,319 Speaker 3: There may be a dumb question who are CBS's competitors, 252 00:11:16,360 --> 00:11:18,280 Speaker 3: considering they're in so many businesses. 253 00:11:18,520 --> 00:11:21,400 Speaker 10: Well, on the pharmacy side, it's Walgreens, it's Walmart, it's 254 00:11:21,520 --> 00:11:25,880 Speaker 10: cost Co. On the PBM side, it's Signa's express Scripts, 255 00:11:26,320 --> 00:11:29,000 Speaker 10: United Health's Optum, and then it's the whole smattering of 256 00:11:29,040 --> 00:11:31,240 Speaker 10: insurers from Humanity and United Health. 257 00:11:31,280 --> 00:11:36,200 Speaker 2: Signa elevance political risk, Johnathan, I know your industry cares 258 00:11:36,200 --> 00:11:38,960 Speaker 2: who's in the White House, who's in Congress. What's the 259 00:11:39,000 --> 00:11:40,560 Speaker 2: feeling from the healthcare steg. 260 00:11:40,640 --> 00:11:45,000 Speaker 10: Yeah, we generally are our regulatory analyst in Washington, Dwayne 261 00:11:45,040 --> 00:11:47,760 Speaker 10: Wright doesn't see too much risk through this election cycle. 262 00:11:48,160 --> 00:11:50,840 Speaker 10: You know, everybody talks about drug prices. Biden put in 263 00:11:50,880 --> 00:11:54,080 Speaker 10: the IRA that's come to pass. There's a lot of 264 00:11:54,080 --> 00:11:57,560 Speaker 10: saber rattling around PBMs, but usually nothing actually happens at 265 00:11:57,600 --> 00:11:59,560 Speaker 10: the end of the day. It's more about the headline 266 00:11:59,640 --> 00:12:02,840 Speaker 10: risk there, so we're not too worried about the regulatory 267 00:12:02,920 --> 00:12:04,600 Speaker 10: landscape going into the election cycle. 268 00:12:04,960 --> 00:12:06,640 Speaker 2: What's the best part of your space, what's the name 269 00:12:06,760 --> 00:12:08,839 Speaker 2: or the area that people are most enthused about. 270 00:12:09,000 --> 00:12:11,760 Speaker 10: Yeah, So on the healthcare technology side, there's a lot 271 00:12:11,800 --> 00:12:14,560 Speaker 10: of interest there. You know, AI's kind of creeped into everything, 272 00:12:14,600 --> 00:12:17,000 Speaker 10: and there was recently an IPO of a company called 273 00:12:17,040 --> 00:12:22,720 Speaker 10: tempest Ai that does diagnostics and provides data to drug manufacturers, 274 00:12:22,720 --> 00:12:24,680 Speaker 10: so they're kind of marrying those two data sets in 275 00:12:24,679 --> 00:12:25,600 Speaker 10: a very interesting way. 276 00:12:25,880 --> 00:12:28,960 Speaker 2: Our thanks to Jonathan Palmer, Bloomberg Intelligence senior healthcare analysts. 277 00:12:29,240 --> 00:12:31,360 Speaker 3: Coming up, we're going to break down why Google recently 278 00:12:31,360 --> 00:12:33,400 Speaker 3: lost an antitrust lawsuit in the US. 279 00:12:33,520 --> 00:12:36,440 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing end 280 00:12:36,480 --> 00:12:38,599 Speaker 2: up with research and data on two thousand companies in 281 00:12:38,720 --> 00:12:41,480 Speaker 2: one hundred and thirty industries. You can access Bloomberg Intelligence 282 00:12:41,559 --> 00:12:42,760 Speaker 2: via bi go in the terminal. 283 00:12:42,880 --> 00:12:46,240 Speaker 3: I'm Paul Sweeney and I'm Alex Steele, and this is Bloomberg. 284 00:12:50,559 --> 00:12:50,679 Speaker 6: Now. 285 00:12:51,280 --> 00:12:55,160 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 286 00:12:55,240 --> 00:12:57,880 Speaker 1: weekdays at ten am Eastern on Apple car Play, and 287 00:12:57,880 --> 00:13:00,520 Speaker 1: then broun Otto with the Bloomberg Business app based on 288 00:13:00,600 --> 00:13:03,880 Speaker 1: demand wherever you get your podcasts or watch us live 289 00:13:03,960 --> 00:13:05,319 Speaker 1: on YouTube. 290 00:13:06,000 --> 00:13:08,240 Speaker 3: We move now to earnings from the right sharing company 291 00:13:08,320 --> 00:13:09,319 Speaker 3: Uber Technologies. 292 00:13:09,440 --> 00:13:11,880 Speaker 2: Uber reported better than expected orders in the second quarter, 293 00:13:11,920 --> 00:13:14,439 Speaker 2: with continued strength and demand for right share and delivery 294 00:13:14,440 --> 00:13:15,319 Speaker 2: services for more. 295 00:13:15,360 --> 00:13:18,079 Speaker 3: We were joined by Mandeep Saying, Bloomberg Intelligence, senior tech 296 00:13:18,120 --> 00:13:18,920 Speaker 3: industry analyst. 297 00:13:19,200 --> 00:13:22,599 Speaker 2: We first asked Mandy first, key takeaway from Uber's results. 298 00:13:22,559 --> 00:13:26,400 Speaker 4: Good print, solid top line growth. I think the fact 299 00:13:26,480 --> 00:13:30,120 Speaker 4: that we're talking about a business that's generating forty billion 300 00:13:30,200 --> 00:13:33,040 Speaker 4: dollar rund rate in a year. I mean, clearly they 301 00:13:33,080 --> 00:13:35,680 Speaker 4: have the scale. The question for me when it comes 302 00:13:35,720 --> 00:13:39,200 Speaker 4: to Uber five years down the line, you know, long 303 00:13:39,280 --> 00:13:42,920 Speaker 4: term play, how disrupted their business model is going to 304 00:13:42,920 --> 00:13:46,520 Speaker 4: be from the rollout of autonomous vehicles and robo taxis 305 00:13:46,559 --> 00:13:50,080 Speaker 4: and Scott's right to help you to talk about it. But 306 00:13:50,160 --> 00:13:53,120 Speaker 4: when you look at Veimo and how successful they've been 307 00:13:53,200 --> 00:13:55,760 Speaker 4: in the three cities that they've launched, I mean, the 308 00:13:56,160 --> 00:13:59,360 Speaker 4: part of the call was about how Uber is integrating 309 00:13:59,480 --> 00:14:01,439 Speaker 4: Vemo inside their app. 310 00:14:01,600 --> 00:14:02,240 Speaker 11: What is Wemo? 311 00:14:02,679 --> 00:14:06,960 Speaker 4: Wemo is Google's autonomous driving unit. I mean they have 312 00:14:07,040 --> 00:14:10,920 Speaker 4: about three hundred cars in San Francisco, similarly in a 313 00:14:10,960 --> 00:14:14,160 Speaker 4: couple of other cities Arizona, and what they have shown 314 00:14:14,320 --> 00:14:17,480 Speaker 4: is their technology is ready for primetime. I mean, they 315 00:14:17,520 --> 00:14:20,240 Speaker 4: have to get regulatory approvals to do it at scale, 316 00:14:20,520 --> 00:14:23,920 Speaker 4: but that changes the unit economics completely. Right now, we 317 00:14:23,960 --> 00:14:26,920 Speaker 4: are talking about a business model where cost per mile 318 00:14:27,120 --> 00:14:31,600 Speaker 4: is like five to seven dollars. Weimo can at scale, 319 00:14:31,760 --> 00:14:34,160 Speaker 4: they can do it three or four times cheaper. So 320 00:14:34,200 --> 00:14:37,840 Speaker 4: suddenly the take rate model gets to disrupted. Now again 321 00:14:38,040 --> 00:14:41,080 Speaker 4: it's not hit primetime, but that's what Tesla is striving for, 322 00:14:41,600 --> 00:14:43,760 Speaker 4: and the risk for Uber and Lyft is they will 323 00:14:43,800 --> 00:14:45,000 Speaker 4: get disintermediated. 324 00:14:45,560 --> 00:14:48,160 Speaker 3: Okay, So it's not the fact that Uber would just 325 00:14:48,160 --> 00:14:50,680 Speaker 3: go get a bunch of robotaxis and use them and 326 00:14:50,800 --> 00:14:54,000 Speaker 3: eventually payoff over time because they're not paying drivers. It's 327 00:14:54,040 --> 00:14:54,880 Speaker 3: not that scenario. 328 00:14:55,160 --> 00:14:58,920 Speaker 4: It's not that scenario because both these companies want to 329 00:14:59,000 --> 00:15:02,320 Speaker 4: roll out the robot axies themselves as opposed to using 330 00:15:02,320 --> 00:15:05,920 Speaker 4: an Uber and even if Uber was to get involved, 331 00:15:06,120 --> 00:15:08,640 Speaker 4: their take rates would be way lower than thirty percent. 332 00:15:08,760 --> 00:15:12,000 Speaker 4: Right now, they are getting thirty percent of every ride. 333 00:15:12,120 --> 00:15:14,640 Speaker 4: Let's say it's a fifty dollars ride, Uber makes at 334 00:15:14,720 --> 00:15:18,000 Speaker 4: least thirty percent. That's a pretty healthy take rate, you know, 335 00:15:18,040 --> 00:15:21,880 Speaker 4: autonomous driving equation. First, Tesla wants to go solo. They 336 00:15:21,880 --> 00:15:24,320 Speaker 4: don't want to partner with any of the right sharing guys. 337 00:15:24,600 --> 00:15:28,840 Speaker 4: That's one risk Vemo is on Uber. But my senses 338 00:15:28,960 --> 00:15:32,080 Speaker 4: they also want to kind of broaden out their reach 339 00:15:32,120 --> 00:15:35,440 Speaker 4: and they will deploy their technology themselves. And in fact, 340 00:15:35,440 --> 00:15:39,520 Speaker 4: Alphabet allocated five billion dollars in capex this quarter on 341 00:15:39,640 --> 00:15:40,600 Speaker 4: Vemo's rollout. 342 00:15:40,640 --> 00:15:42,880 Speaker 2: So all right, I mean, all right, it's bad enough 343 00:15:42,920 --> 00:15:44,920 Speaker 2: that I get in the car with somebody I've never met, 344 00:15:44,960 --> 00:15:47,720 Speaker 2: a total stranger that's crazy enough to think about. 345 00:15:48,000 --> 00:15:48,600 Speaker 6: Am I getting in. 346 00:15:48,600 --> 00:15:52,120 Speaker 2: A car that's a robo taxi? Is that really going 347 00:15:52,160 --> 00:15:52,520 Speaker 2: to be a thing? 348 00:15:52,520 --> 00:15:55,760 Speaker 4: And so when I mean, these vehicles are monitored. 349 00:15:55,760 --> 00:15:56,600 Speaker 12: So by the way, I have. 350 00:15:56,600 --> 00:15:58,240 Speaker 2: A vest with scooter by the way, so I don't 351 00:15:58,320 --> 00:15:59,560 Speaker 2: necessarily need them for the shore. 352 00:15:59,640 --> 00:16:02,080 Speaker 4: But go ahead, but just go to San Francisco right now. 353 00:16:02,160 --> 00:16:05,520 Speaker 4: You can order a Veimo ride. You can, you can 354 00:16:05,920 --> 00:16:09,960 Speaker 4: and just get that experience. I think every consumer who 355 00:16:10,000 --> 00:16:13,440 Speaker 4: has taken a Mo ride loves that experience. Uber talked 356 00:16:13,440 --> 00:16:16,480 Speaker 4: about they acknowledged the thread on their call, but they 357 00:16:16,520 --> 00:16:18,760 Speaker 4: also think the rollout will be slow, and they are 358 00:16:18,800 --> 00:16:22,520 Speaker 4: positioning themselves by seeking all these partnerships. They're partnering with 359 00:16:22,600 --> 00:16:25,480 Speaker 4: BYD for one hundred thousand vehicles, that was big news 360 00:16:25,600 --> 00:16:26,160 Speaker 4: last week. 361 00:16:26,440 --> 00:16:29,120 Speaker 3: Well, then why would it be exclusionary, Like if Tesla 362 00:16:29,240 --> 00:16:32,160 Speaker 3: rolls it out themselves. It just means more competition. It 363 00:16:32,200 --> 00:16:35,240 Speaker 3: doesn't mean it's exclusionary like with Lyft. Like you guys 364 00:16:35,480 --> 00:16:37,800 Speaker 3: price compare with Lyft, there's room for more than. 365 00:16:37,720 --> 00:16:40,240 Speaker 4: Just one there is, but then it goes back to 366 00:16:40,320 --> 00:16:44,040 Speaker 4: being the scale player and having that thirty percent take rates. 367 00:16:44,280 --> 00:16:47,800 Speaker 4: The reason why Uber has done much better than Lyft 368 00:16:47,880 --> 00:16:50,400 Speaker 4: is because it's a scale player and it can charge 369 00:16:50,400 --> 00:16:53,280 Speaker 4: that thirty percent take rates because it has the liquidity 370 00:16:53,280 --> 00:16:56,880 Speaker 4: in its marketplace, the supply demand matching, the best ETAs, 371 00:16:56,960 --> 00:16:59,920 Speaker 4: the most options that it can offer to its riders. 372 00:17:00,080 --> 00:17:03,320 Speaker 4: So like marketplaces are all about scale, the moment you 373 00:17:03,400 --> 00:17:06,800 Speaker 4: have more than three or four competitors right now, it's 374 00:17:06,800 --> 00:17:09,240 Speaker 4: a duopoly. And still we see how badly Lyft is 375 00:17:09,280 --> 00:17:12,000 Speaker 4: doing relative to Uber. If you have more competition, that's 376 00:17:12,040 --> 00:17:14,000 Speaker 4: not good news. But again this is for the route. 377 00:17:14,040 --> 00:17:18,280 Speaker 4: This quarter was solid. Nothing goes wrong for Uber until 378 00:17:18,800 --> 00:17:22,640 Speaker 4: this Robotaxi rollout plays out. So we're talking a few quarters. 379 00:17:22,280 --> 00:17:24,680 Speaker 2: Out scenario market cap for Uber one hundred and thirty 380 00:17:24,680 --> 00:17:28,920 Speaker 2: two billion, market cap for Lyft four billion. What happened well? 381 00:17:29,040 --> 00:17:32,520 Speaker 4: I mean, Uber clearly has the scale and door Nash 382 00:17:32,560 --> 00:17:35,920 Speaker 4: has done similarly very well on the food delivery side. 383 00:17:35,960 --> 00:17:38,719 Speaker 4: So you've got two scale players when it comes to 384 00:17:38,800 --> 00:17:42,720 Speaker 4: right sharing and food delivery, and they have the most supply. 385 00:17:43,280 --> 00:17:46,800 Speaker 4: I mean, one challenge with this business model is gross 386 00:17:46,800 --> 00:17:49,920 Speaker 4: margins can never be as attractive as your software companies, 387 00:17:50,200 --> 00:17:52,520 Speaker 4: and that's what we keep finding with Uber. It's like 388 00:17:52,760 --> 00:17:55,199 Speaker 4: there's still a forty percent gross margin business at an 389 00:17:55,240 --> 00:17:56,080 Speaker 4: aggregate level. 390 00:17:56,240 --> 00:17:59,120 Speaker 3: Our thanks to Man Deep Saying, Bloomberg Intelligence senior tech 391 00:17:59,119 --> 00:18:00,240 Speaker 3: industry analyst. 392 00:18:00,400 --> 00:18:03,080 Speaker 2: We moved to big tech and Google. This week, a 393 00:18:03,200 --> 00:18:06,560 Speaker 2: US district court judge rule that Google illegally monopolized the 394 00:18:06,600 --> 00:18:08,480 Speaker 2: search market through exclusive deals. 395 00:18:08,640 --> 00:18:10,800 Speaker 3: This handed the US government a win in its first 396 00:18:10,840 --> 00:18:13,600 Speaker 3: major antitrust case against a tech giant in more than 397 00:18:13,600 --> 00:18:14,359 Speaker 3: two decades. 398 00:18:14,480 --> 00:18:16,600 Speaker 2: For more, we were joined by Jennifer Ree, a Bloomberg 399 00:18:16,600 --> 00:18:18,280 Speaker 2: Intelligence senior litigation analyst. 400 00:18:18,480 --> 00:18:21,400 Speaker 3: We first asked jen to explain what exactly the accusation 401 00:18:21,440 --> 00:18:22,359 Speaker 3: against Google was. 402 00:18:22,720 --> 00:18:25,399 Speaker 9: Google basically was found to be a monopolist in general 403 00:18:25,440 --> 00:18:28,280 Speaker 9: search services, and I think that's probably no surprise, right 404 00:18:28,320 --> 00:18:31,399 Speaker 9: we all use Google. I think they have eighty or 405 00:18:31,440 --> 00:18:35,520 Speaker 9: ninety percent of the search queries and market share. But specifically, 406 00:18:36,000 --> 00:18:39,840 Speaker 9: what was found to be illegal was Google paying many 407 00:18:39,920 --> 00:18:45,040 Speaker 9: other third parties, including Apple, Mozilla, Samsung, other OEMs to 408 00:18:45,119 --> 00:18:48,200 Speaker 9: set Google Search as the default search engine at all 409 00:18:48,200 --> 00:18:51,320 Speaker 9: the access points that where you need to access the Internet, 410 00:18:51,359 --> 00:18:54,919 Speaker 9: so for instance, behind a browser, behind Mozilla Firefox, or 411 00:18:54,920 --> 00:18:58,160 Speaker 9: behind Apple Safari. And so what the judge said is well, 412 00:18:58,200 --> 00:19:01,480 Speaker 9: by placing Google as the default, this really blocks out 413 00:19:01,520 --> 00:19:05,200 Speaker 9: all the other competitors, the search engine competitors. And at 414 00:19:05,200 --> 00:19:07,600 Speaker 9: the end of the day, they can't get better if 415 00:19:07,640 --> 00:19:10,680 Speaker 9: they can't get to customers, because search engines get better 416 00:19:10,880 --> 00:19:13,280 Speaker 9: based on the number of searches done, and Google's got 417 00:19:13,320 --> 00:19:16,480 Speaker 9: all those searches locked up. And that was anti competitive 418 00:19:16,520 --> 00:19:20,240 Speaker 9: because it was exclusionary and probably hindered innovation, might have 419 00:19:20,359 --> 00:19:24,000 Speaker 9: hindered choice and you know, possibly hindered equality. 420 00:19:24,640 --> 00:19:28,919 Speaker 2: Are there some remedies that might be really owners on Google. 421 00:19:29,359 --> 00:19:31,639 Speaker 9: The remedies have yet to be hashed out, and you know, 422 00:19:31,720 --> 00:19:34,160 Speaker 9: that process could take six months, it could take even 423 00:19:34,200 --> 00:19:37,000 Speaker 9: another year before we know what they are. And then 424 00:19:37,040 --> 00:19:39,720 Speaker 9: Google will likely appeal and can seek to stay any 425 00:19:39,760 --> 00:19:42,640 Speaker 9: remedy pending the appeal. And if that happens, you're looking 426 00:19:42,680 --> 00:19:45,800 Speaker 9: at several years before there's any impact at all. But 427 00:19:45,840 --> 00:19:48,240 Speaker 9: at the end of the day, the remedies could be onerous. 428 00:19:48,480 --> 00:19:52,080 Speaker 9: First of all, the DOJ will seek structural change. I 429 00:19:52,119 --> 00:19:54,280 Speaker 9: don't think they could win it here, but one of 430 00:19:54,320 --> 00:19:56,520 Speaker 9: the requests they might have of the judge is to 431 00:19:56,600 --> 00:19:59,800 Speaker 9: break apart parts of Google's business. Again, I think that's 432 00:19:59,800 --> 00:20:02,320 Speaker 9: all long shot here. I don't think it'll happen. I 433 00:20:02,320 --> 00:20:04,360 Speaker 9: think it's more likely that what the judge will say 434 00:20:04,400 --> 00:20:07,920 Speaker 9: is Google, you can't pay anymore to have that default position. 435 00:20:08,480 --> 00:20:10,399 Speaker 9: And maybe the judge will say, Google, you have to 436 00:20:10,400 --> 00:20:12,440 Speaker 9: share some of your data with some of these other 437 00:20:12,480 --> 00:20:15,439 Speaker 9: search engines or maybe some other new nascent search engine 438 00:20:15,480 --> 00:20:18,120 Speaker 9: that comes into being after this remedy phase is finished. 439 00:20:18,720 --> 00:20:21,040 Speaker 3: Okay, So if that's the case, I wonder does this 440 00:20:21,240 --> 00:20:24,720 Speaker 3: change if President Trump wins the White House or is 441 00:20:24,720 --> 00:20:25,840 Speaker 3: this kind of like locked in. 442 00:20:26,880 --> 00:20:29,640 Speaker 9: You know, it's such an interesting issue right now. Alex 443 00:20:29,720 --> 00:20:34,000 Speaker 9: because one might have said, if an administration changes from 444 00:20:34,040 --> 00:20:37,239 Speaker 9: democratic to Republican, it could change and there might be 445 00:20:37,280 --> 00:20:39,920 Speaker 9: more of a likelihood of a settlement. But you have JD. 446 00:20:40,119 --> 00:20:43,879 Speaker 9: Vance as president former President Trump's vice presidential pick, and 447 00:20:44,000 --> 00:20:48,040 Speaker 9: he actually is aligned with the idea of breaking up Google. 448 00:20:48,080 --> 00:20:50,920 Speaker 9: He's pretty anti big tech. I don't know how much 449 00:20:50,920 --> 00:20:54,720 Speaker 9: he would influence the policy decisions of a Trump DOJ 450 00:20:55,119 --> 00:20:58,720 Speaker 9: or FTC, but if he did, he would be all 451 00:20:58,720 --> 00:21:01,960 Speaker 9: in on continuing to go after Google. So I think 452 00:21:02,000 --> 00:21:05,440 Speaker 9: that possibility of some kind of a settlement that's easier 453 00:21:05,520 --> 00:21:07,480 Speaker 9: on Google happening down the road is low. 454 00:21:07,760 --> 00:21:07,960 Speaker 4: Jen. 455 00:21:08,040 --> 00:21:09,680 Speaker 2: I think if you stopped any person on the street, 456 00:21:09,720 --> 00:21:10,480 Speaker 2: they would say, I. 457 00:21:10,440 --> 00:21:11,520 Speaker 6: Got no problem with Google. 458 00:21:11,640 --> 00:21:14,320 Speaker 2: They're actually, it's great, It's changed my life for the better. 459 00:21:15,200 --> 00:21:17,080 Speaker 2: Is this one of those issues where there it's a 460 00:21:17,200 --> 00:21:19,879 Speaker 2: solution in search of a problem here, and does that 461 00:21:19,960 --> 00:21:21,879 Speaker 2: factor into remedies? 462 00:21:22,400 --> 00:21:25,200 Speaker 9: You know, it's exactly you're thinking like a lawyer now, 463 00:21:25,240 --> 00:21:30,520 Speaker 9: because there's a lot of commentary when this case was 464 00:21:30,560 --> 00:21:32,920 Speaker 9: brought that the DOJ brought the case but they really 465 00:21:32,960 --> 00:21:35,280 Speaker 9: don't have a solution, and they brought it before they 466 00:21:35,359 --> 00:21:37,640 Speaker 9: knew what the solution would be. We're going to get 467 00:21:37,680 --> 00:21:40,000 Speaker 9: into what they're going to suggest the solution. But Paul, 468 00:21:40,080 --> 00:21:43,280 Speaker 9: exactly why you said, you know, people love Google, and 469 00:21:43,320 --> 00:21:45,480 Speaker 9: this is exactly why I think the judge wouldn't do 470 00:21:45,560 --> 00:21:47,720 Speaker 9: something structural, because he's not going to want to mess 471 00:21:47,760 --> 00:21:51,040 Speaker 9: that up. People like Google. Google's essentially a free product, 472 00:21:51,080 --> 00:21:54,160 Speaker 9: at least for people, not for advertisers, and it functions 473 00:21:54,280 --> 00:21:57,359 Speaker 9: very well. And despite having a monopoly position, the judge 474 00:21:57,359 --> 00:22:01,160 Speaker 9: did acknowledge that Google continues to innovate in the search area. 475 00:22:01,240 --> 00:22:04,960 Speaker 9: So I think because of the desirability for consumers of 476 00:22:05,000 --> 00:22:07,919 Speaker 9: the Google search engine, we're not going to see something structural. 477 00:22:08,160 --> 00:22:10,320 Speaker 9: But I do think obviously the judge is going to 478 00:22:10,320 --> 00:22:12,280 Speaker 9: have to impose some remedy because he found that the 479 00:22:12,280 --> 00:22:13,919 Speaker 9: company is acting anti competitively. 480 00:22:14,200 --> 00:22:17,520 Speaker 3: This is a weirdly unfair question to ask you, is 481 00:22:17,560 --> 00:22:20,440 Speaker 3: big tech too big? Like do we have a big 482 00:22:20,480 --> 00:22:22,040 Speaker 3: tech problem? 483 00:22:22,240 --> 00:22:25,040 Speaker 9: Well, I think that's what the current administration thinks. Yes, 484 00:22:25,760 --> 00:22:28,720 Speaker 9: But you know, there's a disalignment here with our Supreme Court, 485 00:22:29,000 --> 00:22:31,679 Speaker 9: because our Supreme Court has ruled over and over that 486 00:22:31,760 --> 00:22:34,440 Speaker 9: it's not illegal in the United States to have a monopoly, 487 00:22:34,600 --> 00:22:36,720 Speaker 9: and in fact, that's what we want all companies to 488 00:22:36,760 --> 00:22:39,120 Speaker 9: work toward because that's what will cause them to innovate 489 00:22:39,400 --> 00:22:41,960 Speaker 9: and try to gain market share by lowering their prices. 490 00:22:42,359 --> 00:22:44,679 Speaker 9: So at the end of the day, just being big 491 00:22:44,880 --> 00:22:47,800 Speaker 9: isn't illegal. The problem is the conduct of a company 492 00:22:47,840 --> 00:22:50,240 Speaker 9: that's really big, and that's really what the DOJ and 493 00:22:50,320 --> 00:22:51,320 Speaker 9: FDC are going after. 494 00:22:51,440 --> 00:22:53,720 Speaker 2: Right now, How about other tech companies, what does this 495 00:22:53,800 --> 00:22:54,560 Speaker 2: mean for them? 496 00:22:54,760 --> 00:22:58,560 Speaker 9: You know, I think it's atmospherics because there are different facts, 497 00:22:58,560 --> 00:23:01,879 Speaker 9: different issues, different markets, in different market positions. You know, 498 00:23:01,880 --> 00:23:05,520 Speaker 9: the case against Amazon against Meta, case against Apple, they're 499 00:23:05,600 --> 00:23:08,240 Speaker 9: quite different, and these cases rest on the facts and 500 00:23:08,280 --> 00:23:11,439 Speaker 9: the specifics. But what this does do, at least for Google, 501 00:23:11,520 --> 00:23:13,639 Speaker 9: we have one more case coming up, a big one 502 00:23:13,840 --> 00:23:17,400 Speaker 9: against its ad tech stack that's going to trial this September. 503 00:23:17,680 --> 00:23:20,320 Speaker 9: And now Google's been found to have monopolized two different 504 00:23:20,359 --> 00:23:23,040 Speaker 9: parts of its business. It's play store and now Search. 505 00:23:23,359 --> 00:23:28,080 Speaker 9: So psychologically, you know, it could influence a judge to think, well, 506 00:23:28,119 --> 00:23:30,919 Speaker 9: they've been found to engage anti competitively in two areas, 507 00:23:30,960 --> 00:23:32,280 Speaker 9: why not in a third as well? 508 00:23:32,680 --> 00:23:34,399 Speaker 3: You know, Paul, this goes to your ara too. I 509 00:23:34,440 --> 00:23:37,400 Speaker 3: was reading that big tech's AI problem is just going 510 00:23:37,440 --> 00:23:40,320 Speaker 3: to buy smaller companies and getting their talent right, and 511 00:23:40,359 --> 00:23:42,359 Speaker 3: I wonder if that has to kind of go away 512 00:23:42,440 --> 00:23:44,640 Speaker 3: now because if you have this kind of DOJ. 513 00:23:44,960 --> 00:23:47,840 Speaker 2: Yeah, it's interesting. I mean, I think what I understand 514 00:23:47,840 --> 00:23:49,720 Speaker 2: from people like gen is that some of these big 515 00:23:49,760 --> 00:23:51,880 Speaker 2: tech comies that their hands are really tied in terms 516 00:23:51,880 --> 00:23:52,680 Speaker 2: of big deals at least. 517 00:23:52,760 --> 00:23:55,639 Speaker 9: Yeah, Jen, do you think, oh, absolutely, their hands have 518 00:23:55,680 --> 00:23:58,240 Speaker 9: been tied for the last three years. Things could change 519 00:23:58,280 --> 00:24:00,719 Speaker 9: a little bit with the new administration. I think there 520 00:24:00,800 --> 00:24:03,439 Speaker 9: is no doubt no matter who's elected, there will be 521 00:24:03,520 --> 00:24:07,000 Speaker 9: some change in the leadership positions the decision makers at 522 00:24:07,040 --> 00:24:09,720 Speaker 9: the Department of Justice and Federal Trade Commission, and that 523 00:24:09,800 --> 00:24:12,480 Speaker 9: could change things. But I do think big tech is 524 00:24:12,480 --> 00:24:14,480 Speaker 9: still going to have a lot of trouble going forward 525 00:24:14,520 --> 00:24:16,080 Speaker 9: trying to do any kind of a big deal. 526 00:24:16,480 --> 00:24:19,240 Speaker 2: Thanks to Jennifer Ree, Bloomberg Intelligence senior litigation. 527 00:24:18,960 --> 00:24:21,439 Speaker 3: Analysts coming up on the program a conversation with the 528 00:24:21,520 --> 00:24:24,240 Speaker 3: CEO of Energy Vault on storing energy. 529 00:24:24,440 --> 00:24:27,440 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing INFF 530 00:24:27,480 --> 00:24:29,639 Speaker 2: research and data on two thousand companies in one hundred 531 00:24:29,680 --> 00:24:32,679 Speaker 2: and thirty industries. You can access Bloomberg Intelligence via b 532 00:24:32,880 --> 00:24:34,040 Speaker 2: I go on the terminal. 533 00:24:34,080 --> 00:24:36,960 Speaker 3: I'm Paul Sweeney and I'm Alex Steele, and this is Bloomberg. 534 00:24:42,480 --> 00:24:46,359 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 535 00:24:46,440 --> 00:24:49,960 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 536 00:24:50,000 --> 00:24:52,760 Speaker 1: Auto with the Bloomberg Business app. You can also listen 537 00:24:52,880 --> 00:24:56,000 Speaker 1: live on Amazon Alexa from our flagship New York station. 538 00:24:56,359 --> 00:24:59,119 Speaker 1: Just say Alexa Play Bloomberg eleven thirty. 539 00:25:00,359 --> 00:25:02,679 Speaker 3: We move next to Caterpillar, one of the world's biggest 540 00:25:02,680 --> 00:25:04,040 Speaker 3: producers of heavy machinery. 541 00:25:04,320 --> 00:25:07,240 Speaker 2: The company is seen as a bell weather for industrial activity, 542 00:25:07,320 --> 00:25:09,919 Speaker 2: and this week Caterpillar reported second quarter earnings that showed 543 00:25:10,000 --> 00:25:13,600 Speaker 2: resilience that's despite growing worries about the global economy. To 544 00:25:13,600 --> 00:25:16,640 Speaker 2: help recap, we were joined by Christopher Cilino, Bloomberg Intelligence 545 00:25:16,640 --> 00:25:19,359 Speaker 2: senior US machinery analyst. We first asked Chris what he 546 00:25:19,400 --> 00:25:21,080 Speaker 2: made of Caterpillar's most recent quarter. 547 00:25:21,520 --> 00:25:23,720 Speaker 11: I think there are a lot of positives to take 548 00:25:23,760 --> 00:25:26,479 Speaker 11: away from this report, and I think investors could probably 549 00:25:26,800 --> 00:25:30,200 Speaker 11: you breathe a little sigh of relief. The margins were 550 00:25:30,240 --> 00:25:32,280 Speaker 11: really quite impressive. I mean they were up more than 551 00:25:32,280 --> 00:25:35,440 Speaker 11: one hundred basis points, even with the softer top line. 552 00:25:35,440 --> 00:25:39,720 Speaker 11: This quarter with better than expected profitability really across all 553 00:25:39,760 --> 00:25:43,399 Speaker 11: of its businesses with particular strengths, and the Energy and 554 00:25:43,440 --> 00:25:46,320 Speaker 11: Transportation unit again that really continues to be a big 555 00:25:46,400 --> 00:25:49,600 Speaker 11: driver for them. We saw dealer inventories come down kind 556 00:25:49,640 --> 00:25:52,359 Speaker 11: of a little bit more than we normally seasonally would, 557 00:25:52,480 --> 00:25:55,560 Speaker 11: which is a positive sign. And then also the backlog 558 00:25:55,600 --> 00:25:58,840 Speaker 11: improved sequentially, which I think will probably help alleviate some 559 00:25:58,880 --> 00:26:01,399 Speaker 11: of those fears around the more or severe slow down 560 00:26:02,200 --> 00:26:05,520 Speaker 11: and inventory build, which has been a big concern among investors. 561 00:26:05,800 --> 00:26:08,680 Speaker 2: Chris talk about geography or the any pockets of strength 562 00:26:08,880 --> 00:26:10,720 Speaker 2: or notable weakness around the world. 563 00:26:11,160 --> 00:26:14,280 Speaker 11: Yeah, so if you think, you know, Europe has been 564 00:26:14,320 --> 00:26:17,399 Speaker 11: weak for KAT for quite some time, We're starting to 565 00:26:17,400 --> 00:26:20,399 Speaker 11: hear of some potential green shoots over there, but you know, 566 00:26:20,600 --> 00:26:23,120 Speaker 11: I think KAT kind of dispelled some of those that 567 00:26:23,680 --> 00:26:27,400 Speaker 11: it's a little too early for talk of a recovery there, 568 00:26:27,880 --> 00:26:32,120 Speaker 11: so kind of bouncing along the bottom. China obviously continues 569 00:26:32,160 --> 00:26:36,120 Speaker 11: to be at pretty depressed levels. You know, historically China's 570 00:26:36,119 --> 00:26:39,920 Speaker 11: been five to ten percent of consolidated revenue at KAT 571 00:26:40,440 --> 00:26:43,119 Speaker 11: will be well below that five percent lower end of 572 00:26:43,160 --> 00:26:46,600 Speaker 11: the band this year. And then North America, while you know, 573 00:26:46,640 --> 00:26:49,080 Speaker 11: some of the retail numbers this quarter were a little 574 00:26:49,080 --> 00:26:52,040 Speaker 11: bit softer than they had anticipated, particularly with some of 575 00:26:52,080 --> 00:26:55,760 Speaker 11: the rental dealers not maybe restocking as much as they 576 00:26:55,960 --> 00:27:02,000 Speaker 11: had anticipated. That continues to probably be the resilient area 577 00:27:02,040 --> 00:27:05,880 Speaker 11: of the business for Caterpillar this year. But i'd also 578 00:27:05,920 --> 00:27:09,240 Speaker 11: call out actually Latin America was surprisingly strong this quarter 579 00:27:09,640 --> 00:27:10,560 Speaker 11: on the back of Brazil. 580 00:27:11,119 --> 00:27:14,520 Speaker 2: So how much visibility does a company like Caterpillar have, 581 00:27:15,080 --> 00:27:17,480 Speaker 2: Chris and what are they saying about their visibility? 582 00:27:18,080 --> 00:27:22,159 Speaker 11: Yeah, so the backlog increased sequentially here about two and 583 00:27:22,200 --> 00:27:26,040 Speaker 11: a half percent in the quarter, were almost at twenty 584 00:27:26,119 --> 00:27:29,680 Speaker 11: nine billion dollars. That gives them roughly, you know, three 585 00:27:29,960 --> 00:27:33,160 Speaker 11: months of coverage, a little bit longer. It was longer 586 00:27:33,240 --> 00:27:37,760 Speaker 11: le time. Products like some of the energy and transportation products, 587 00:27:37,880 --> 00:27:40,280 Speaker 11: those have much longer lee time, but I think of 588 00:27:40,320 --> 00:27:43,800 Speaker 11: it as roughly three months. Orders did come down a 589 00:27:43,920 --> 00:27:46,320 Speaker 11: touch in the quarter, but you know, we saw some 590 00:27:46,400 --> 00:27:49,560 Speaker 11: sequential improvement. There no signs of really kind of a 591 00:27:49,640 --> 00:27:54,119 Speaker 11: more precipitous decline, which I think has been a concern 592 00:27:54,200 --> 00:27:56,040 Speaker 11: just given some of the prints that we've seen from 593 00:27:56,040 --> 00:27:59,840 Speaker 11: some other machinery names that really brought down their construction 594 00:28:00,040 --> 00:28:02,600 Speaker 11: outlooks for the year. That really doesn't seem to be 595 00:28:02,680 --> 00:28:03,560 Speaker 11: the case here. 596 00:28:03,840 --> 00:28:05,520 Speaker 3: So that's sort of their top line. How did they 597 00:28:05,520 --> 00:28:08,639 Speaker 3: manage their cost profile, margins, et cetera. 598 00:28:09,800 --> 00:28:13,439 Speaker 11: Margins were phenomenal, and I think that's my takeaway. Yeah, 599 00:28:13,560 --> 00:28:16,400 Speaker 11: I mean, if you look at energy and transportation one, 600 00:28:16,600 --> 00:28:19,720 Speaker 11: pricing continues to be the biggest driver of the margin 601 00:28:19,760 --> 00:28:23,120 Speaker 11: performance for the enterprise overall. But if you look into 602 00:28:23,320 --> 00:28:27,080 Speaker 11: the energy and transportation unit margins well ahead of the 603 00:28:27,080 --> 00:28:32,359 Speaker 11: street that is pricing and a little bit favorable mix. 604 00:28:32,440 --> 00:28:35,639 Speaker 11: You also have lower freight costs, you have lower material costs. 605 00:28:36,119 --> 00:28:39,480 Speaker 11: Execution here continues to be quite good, So I'd expect 606 00:28:39,520 --> 00:28:42,280 Speaker 11: that strength really to continue throughout the balance of the year. 607 00:28:42,920 --> 00:28:45,400 Speaker 11: And as you alluded to earlier, you know, they well 608 00:28:45,440 --> 00:28:48,440 Speaker 11: the Caterpillar doesn't give explicit guidance. They're basically telling us 609 00:28:48,520 --> 00:28:50,320 Speaker 11: that this year is going to be a lot stronger 610 00:28:50,360 --> 00:28:53,720 Speaker 11: than they had anticipated, with margins above their long term framework. 611 00:28:53,760 --> 00:28:56,040 Speaker 11: Earnings are going to be stronger than they had anticipated 612 00:28:56,360 --> 00:28:59,840 Speaker 11: even coming into the quarter. So certainly, the margin performance 613 00:29:00,160 --> 00:29:00,960 Speaker 11: it was quite good. 614 00:29:01,320 --> 00:29:03,600 Speaker 2: Chris, How about the competitive landscape out there? Who does 615 00:29:03,840 --> 00:29:06,760 Speaker 2: KAT compete with and how's that share game going globally? 616 00:29:08,480 --> 00:29:11,240 Speaker 11: It's primary. You know, there's a number of regional players, 617 00:29:11,320 --> 00:29:15,080 Speaker 11: Kamatsu being the biggest one over in Japan, but they're 618 00:29:15,200 --> 00:29:18,840 Speaker 11: a big competitor here in the United States, particularly on 619 00:29:18,880 --> 00:29:24,520 Speaker 11: the mining side, but also construction. You have Volvo CNH 620 00:29:24,600 --> 00:29:28,160 Speaker 11: Industrial and then obviously Deer here in the United States 621 00:29:28,720 --> 00:29:32,560 Speaker 11: that kind of round out more of the local construction piers. 622 00:29:32,960 --> 00:29:35,080 Speaker 11: There's a number of other players in Asia, whether it 623 00:29:35,080 --> 00:29:40,080 Speaker 11: be a Hatachi and a few others, but it's really 624 00:29:40,240 --> 00:29:44,080 Speaker 11: Caterpillar is the market leader and really can think about mining, 625 00:29:44,120 --> 00:29:46,840 Speaker 11: it's essentially a doopoly and the mining truck business with 626 00:29:46,880 --> 00:29:47,680 Speaker 11: them in Kamatsu. 627 00:29:48,720 --> 00:29:51,720 Speaker 3: When we take a look at what Caterpillar tracks like, 628 00:29:51,760 --> 00:29:53,920 Speaker 3: I'm thinking I like looking at it because it feels 629 00:29:53,960 --> 00:29:56,479 Speaker 3: like a nice global growth barometer. Is it a global 630 00:29:56,520 --> 00:29:57,200 Speaker 3: growth barometer? 631 00:29:57,360 --> 00:29:57,440 Speaker 4: Like? 632 00:29:57,480 --> 00:30:00,320 Speaker 3: If earnings grow at Caterpillar and their outlook is does 633 00:30:00,320 --> 00:30:03,360 Speaker 3: that mean the global GDP is good? What's your correlation 634 00:30:03,560 --> 00:30:03,800 Speaker 3: for that? 635 00:30:04,720 --> 00:30:04,920 Speaker 8: Yeah? 636 00:30:04,960 --> 00:30:08,200 Speaker 11: No, you're you're absolutely right. It is a global economic 637 00:30:08,240 --> 00:30:10,560 Speaker 11: bell weather. You know, half the business is still here 638 00:30:10,600 --> 00:30:13,440 Speaker 11: in North America, but you think of it roughly twenty 639 00:30:13,480 --> 00:30:17,720 Speaker 11: percent Emia and twenty percent Asia. And then Latin America, 640 00:30:17,800 --> 00:30:20,800 Speaker 11: like I said, down around roughly ten percent of the business, 641 00:30:20,840 --> 00:30:25,200 Speaker 11: but it certainly is is a bell weather for economic growth. 642 00:30:25,320 --> 00:30:28,600 Speaker 11: And you know, North America continues to be probably one 643 00:30:28,600 --> 00:30:31,040 Speaker 11: of the more resilient regions globally because of all this 644 00:30:31,120 --> 00:30:34,440 Speaker 11: infrastructure spending that we have that has certainly kind of 645 00:30:34,440 --> 00:30:37,280 Speaker 11: offset some of the weakness on the commercial side of 646 00:30:37,280 --> 00:30:40,200 Speaker 11: the business. And then obviously it seems like we're you know, 647 00:30:40,440 --> 00:30:42,680 Speaker 11: kind of approaching a bottom on the residential side, so 648 00:30:42,720 --> 00:30:45,800 Speaker 11: maybe that provides a tailwind as we move into twenty five. 649 00:30:46,000 --> 00:30:50,000 Speaker 2: Our thanks to Christielino, Bloomberg Intelligence Senior US Machinery antallys. 650 00:30:49,680 --> 00:30:52,840 Speaker 3: Let's move now to my favorite space. Energy. So how 651 00:30:52,840 --> 00:30:54,960 Speaker 3: to store energy is huge because if you want to 652 00:30:55,000 --> 00:30:58,080 Speaker 3: diversify what energy you're using, like wind, solar, and hydrogen, 653 00:30:58,120 --> 00:31:00,719 Speaker 3: you really need big, big batteries to be to store it. 654 00:31:00,960 --> 00:31:03,360 Speaker 3: And storing energy for long periods of time has proved 655 00:31:03,360 --> 00:31:05,080 Speaker 3: to be very difficult and expensive. 656 00:31:05,440 --> 00:31:08,480 Speaker 2: One company that's trying to change that is Energy Vault 657 00:31:08,680 --> 00:31:11,440 Speaker 2: nysee ticker NRGV. 658 00:31:12,000 --> 00:31:13,120 Speaker 6: Earlier this week, we were. 659 00:31:13,080 --> 00:31:16,280 Speaker 2: Joined by Energy Vault CEO Rob Pconi, and we first 660 00:31:16,360 --> 00:31:19,280 Speaker 2: asked Rop to describe what exactly his company does. 661 00:31:19,600 --> 00:31:23,440 Speaker 6: So we broadly focus on energy storage and we focus 662 00:31:23,480 --> 00:31:27,560 Speaker 6: on it with varying technologies and software. So we do 663 00:31:27,680 --> 00:31:32,080 Speaker 6: shorter duration energy storage using latimon. We do long duration 664 00:31:32,200 --> 00:31:35,800 Speaker 6: energy storage meaning things to get sort of in a six, eight, twelve, 665 00:31:35,840 --> 00:31:38,680 Speaker 6: even twenty four hour so full day types of storage 666 00:31:38,720 --> 00:31:43,520 Speaker 6: with a unique gravity solution where we lift in lower 667 00:31:43,560 --> 00:31:47,360 Speaker 6: blocks or will shift water from different heights. And we 668 00:31:47,440 --> 00:31:51,960 Speaker 6: also do ultralong duration meaning multi day storage using green 669 00:31:52,040 --> 00:31:53,600 Speaker 6: hydrogen and microgrids. 670 00:31:54,840 --> 00:31:59,680 Speaker 12: Who are your customers, rob Our main customers are first 671 00:31:59,720 --> 00:32:02,800 Speaker 12: and four almost utilities, so we can sell directly to utilities, 672 00:32:03,640 --> 00:32:06,320 Speaker 12: and we also sell to independent. 673 00:32:05,880 --> 00:32:09,400 Speaker 6: Power producers, so the ones that will for example, build 674 00:32:09,400 --> 00:32:12,520 Speaker 6: out solar wind and pair storage with that and have 675 00:32:12,680 --> 00:32:16,240 Speaker 6: long term contracts with utilities. And the third group are 676 00:32:16,600 --> 00:32:20,680 Speaker 6: the large industrial users. So our investors include people like 677 00:32:20,720 --> 00:32:24,440 Speaker 6: Saudi Aramco a HP, the largest mining group in the world, 678 00:32:25,000 --> 00:32:27,640 Speaker 6: and groups that are looking to make their own clean 679 00:32:27,760 --> 00:32:31,040 Speaker 6: energy transition or that have desires to make streen hydrogen 680 00:32:31,240 --> 00:32:34,760 Speaker 6: for example, where you can make that using solar an electoralizer, 681 00:32:34,840 --> 00:32:38,960 Speaker 6: but you need long duration storage. So because our technologies 682 00:32:39,000 --> 00:32:43,280 Speaker 6: focus across a series of durations, we can actually meet 683 00:32:43,280 --> 00:32:45,520 Speaker 6: a lot of those needs and hence serving those three 684 00:32:45,560 --> 00:32:46,440 Speaker 6: market segments. 685 00:32:46,800 --> 00:32:50,160 Speaker 3: So let's go back to the gravity storage solution thing. 686 00:32:50,240 --> 00:32:52,160 Speaker 3: So this is from an article here at boomer from 687 00:32:52,160 --> 00:32:53,640 Speaker 3: a few years ago, but it describes it and I 688 00:32:53,680 --> 00:32:57,200 Speaker 3: feel like accurately and pretty well. An electric crane hoists 689 00:32:57,280 --> 00:33:00,400 Speaker 3: up blocks of concrete and stacks them into a tower 690 00:33:00,440 --> 00:33:03,280 Speaker 3: when power is plentiful, when power is needed, it uses 691 00:33:03,360 --> 00:33:07,040 Speaker 3: gravity to take the structure apart brick by brick, and 692 00:33:07,080 --> 00:33:11,080 Speaker 3: the weight of the descending blocks converts kinetic energy into electricity. 693 00:33:11,440 --> 00:33:13,960 Speaker 3: That sounds really hard and complicated. 694 00:33:15,240 --> 00:33:17,640 Speaker 6: You know what, gravity has been around for a while. 695 00:33:17,880 --> 00:33:20,240 Speaker 6: I tell people it's not an idea, it's the law. 696 00:33:20,400 --> 00:33:24,200 Speaker 6: So the whole physics of moving weights up and down 697 00:33:24,240 --> 00:33:26,680 Speaker 6: has been around. But you're right to do that in 698 00:33:26,720 --> 00:33:29,880 Speaker 6: a way that's economical to do that now with software 699 00:33:29,920 --> 00:33:33,800 Speaker 6: where we can automate that entire process and dynamically look 700 00:33:33,800 --> 00:33:37,719 Speaker 6: at the timing and dynamically accelerate and accelerate that lifting 701 00:33:37,720 --> 00:33:41,800 Speaker 6: and lowering. And also we actually don't use concrete, so 702 00:33:41,800 --> 00:33:44,760 Speaker 6: we avoid it because it's not really sustainable. It's one 703 00:33:44,760 --> 00:33:47,280 Speaker 6: of the contributors. I think seven to eight percent to 704 00:33:47,320 --> 00:33:50,600 Speaker 6: greenhouse gases. So we actually have a material science team 705 00:33:51,120 --> 00:33:54,280 Speaker 6: and worked with SEMX to use dirt and even waste 706 00:33:54,280 --> 00:33:57,960 Speaker 6: materials like coal ash, even concrete debris are the things 707 00:33:57,960 --> 00:34:01,960 Speaker 6: that would go into land fills. We can utilize that 708 00:34:02,080 --> 00:34:04,880 Speaker 6: to make these large blocks that are twenty five metric tons, 709 00:34:04,880 --> 00:34:07,880 Speaker 6: So we try and avoid materials that are not sustainable 710 00:34:08,680 --> 00:34:11,000 Speaker 6: to make those very same blocks. 711 00:34:11,960 --> 00:34:15,279 Speaker 2: So how is I guess your business changing to try 712 00:34:15,280 --> 00:34:19,640 Speaker 2: to meet the changing sources and uses of energy these days? 713 00:34:20,800 --> 00:34:23,000 Speaker 6: About it? It's a great question, and it is one 714 00:34:23,000 --> 00:34:27,840 Speaker 6: of the challenges. It's definitely focused globally on countries wanting 715 00:34:27,880 --> 00:34:31,480 Speaker 6: to achieve energy independence, and to do that you need 716 00:34:31,520 --> 00:34:34,680 Speaker 6: to be able to produce locally. Hence our gravity solution 717 00:34:35,160 --> 00:34:38,600 Speaker 6: that's more long duration, of course, is ideal because you 718 00:34:38,640 --> 00:34:41,520 Speaker 6: can produce most of that from local materials, local labor. 719 00:34:41,560 --> 00:34:44,239 Speaker 6: I mean it's construction, you're building a building. When you 720 00:34:44,239 --> 00:34:46,160 Speaker 6: get to the short duration, which is most of the 721 00:34:46,200 --> 00:34:48,719 Speaker 6: market today, and we know about lithium ion, so that's 722 00:34:48,800 --> 00:34:52,160 Speaker 6: two to four hours, that's this time shifting people trying 723 00:34:52,160 --> 00:34:55,080 Speaker 6: to manage you're relying on the rare metals, which I 724 00:34:55,080 --> 00:34:58,680 Speaker 6: believe Paul, what you're referring to and that's where through 725 00:34:58,719 --> 00:35:00,960 Speaker 6: mechanisms like the IR that was put in place in 726 00:35:01,000 --> 00:35:04,640 Speaker 6: the US, they're trying to get that localized. And to 727 00:35:04,719 --> 00:35:07,279 Speaker 6: deal with that, you have to come up with mechanisms 728 00:35:07,719 --> 00:35:10,040 Speaker 6: to try to bring some of that production local as 729 00:35:10,120 --> 00:35:12,480 Speaker 6: much as you can in terms of getting content, and 730 00:35:12,160 --> 00:35:17,400 Speaker 6: that's been a big focus area and leveraging technologies like hydrogen. 731 00:35:17,440 --> 00:35:21,440 Speaker 6: For example, gree hydrogen can be made sustainably. We're using 732 00:35:21,480 --> 00:35:24,000 Speaker 6: that to back up the city of Calistoga in northern 733 00:35:24,040 --> 00:35:27,960 Speaker 6: California and near Napa to provide a sustainable backup solution 734 00:35:28,160 --> 00:35:30,719 Speaker 6: for two to four days that otherwise would have taken 735 00:35:30,800 --> 00:35:34,200 Speaker 6: natural gas. So it's a combination of technologies you really 736 00:35:34,239 --> 00:35:38,000 Speaker 6: have to use to solve this issue of reliance on 737 00:35:38,200 --> 00:35:40,799 Speaker 6: either you know, a few countries in the world or 738 00:35:40,840 --> 00:35:42,280 Speaker 6: a few rare word metals. 739 00:35:43,080 --> 00:35:44,960 Speaker 3: So if I just look at your stock, it's had 740 00:35:45,000 --> 00:35:48,080 Speaker 3: a tough road since it's spack, right. I mean, clearly 741 00:35:48,120 --> 00:35:49,960 Speaker 3: there was a lot of enthusiasm in the beginning. You 742 00:35:50,000 --> 00:35:52,440 Speaker 3: had a nice pop, and that's been really tough. In 743 00:35:52,440 --> 00:35:55,200 Speaker 3: the last earnings estimate and the last earnings for second quarter, 744 00:35:55,239 --> 00:35:59,440 Speaker 3: the headline is revenue missing estimates. How do you how 745 00:35:59,440 --> 00:36:02,040 Speaker 3: do you manage this at this time? It's expensive to 746 00:36:02,080 --> 00:36:04,400 Speaker 3: probably get all this done, even though the demand we 747 00:36:04,520 --> 00:36:05,640 Speaker 3: know is still there. 748 00:36:07,080 --> 00:36:09,600 Speaker 6: Yeah, the demand is high, and the capital markets have 749 00:36:09,719 --> 00:36:13,000 Speaker 6: been very challenging, in particular if you go back to 750 00:36:13,080 --> 00:36:15,640 Speaker 6: mid twenty twenty two, when the interest rate environment changed 751 00:36:15,719 --> 00:36:18,960 Speaker 6: and really fundamentally, I think the risk appetite for new 752 00:36:19,000 --> 00:36:24,120 Speaker 6: emerging growth companies like ours really soured and changed. And 753 00:36:24,160 --> 00:36:27,360 Speaker 6: for us, we focused on execution, and you know, we 754 00:36:27,360 --> 00:36:28,960 Speaker 6: had one hundred and forty eight million in our first 755 00:36:29,040 --> 00:36:32,239 Speaker 6: year revenue twenty twenty two, our second year almost three 756 00:36:32,360 --> 00:36:35,000 Speaker 6: hundred and fifty millions. We more than doubled the size 757 00:36:35,000 --> 00:36:37,520 Speaker 6: of the company. But at the end, investors are really 758 00:36:37,520 --> 00:36:41,520 Speaker 6: focused on cash flow and minimizing risk. We've guided that 759 00:36:41,520 --> 00:36:44,160 Speaker 6: that's going to happen next year, So in our third 760 00:36:44,200 --> 00:36:46,879 Speaker 6: full year of revenue, we're going to be cash flow 761 00:36:46,920 --> 00:36:50,120 Speaker 6: positive and even at positive. And I think until that happens, 762 00:36:50,160 --> 00:36:52,880 Speaker 6: a lot of investors are on the sidelines. And what 763 00:36:52,920 --> 00:36:55,080 Speaker 6: we can do is what we're doing, which is executing 764 00:36:55,680 --> 00:36:57,719 Speaker 6: per customers and in different regions of the world, we 765 00:36:57,719 --> 00:37:01,640 Speaker 6: announced new deals. In Australia, we announced a large gravity 766 00:37:01,680 --> 00:37:04,200 Speaker 6: project in Italy at a coal mine, and I think 767 00:37:04,320 --> 00:37:07,280 Speaker 6: filling up that order book Alex is going to be fundamental, 768 00:37:07,360 --> 00:37:10,240 Speaker 6: so investors see it's not about if, it's just about 769 00:37:10,280 --> 00:37:12,919 Speaker 6: when and as we fill that order book, then when 770 00:37:12,920 --> 00:37:16,400 Speaker 6: that catflow roadmap becomes very clear, which we're getting there 771 00:37:16,440 --> 00:37:18,919 Speaker 6: at twenty twenty five, which is what we guided, I think, 772 00:37:18,920 --> 00:37:21,880 Speaker 6: then we'll see investor free entering the star that was. 773 00:37:21,960 --> 00:37:23,880 Speaker 3: Energy Vault CEO Rob Paconi. 774 00:37:24,239 --> 00:37:28,719 Speaker 1: This is the Bloomberg Intelligence podcast, available on apples, Spotify, 775 00:37:28,920 --> 00:37:31,840 Speaker 1: and anywhere else you will get your podcasts. Listen live 776 00:37:31,920 --> 00:37:35,520 Speaker 1: each weekday ten am to noon Eastern on Bloomberg dot Com, 777 00:37:35,640 --> 00:37:39,040 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 778 00:37:39,160 --> 00:37:42,279 Speaker 1: You can also watch us live every weekday on YouTube 779 00:37:42,400 --> 00:37:44,240 Speaker 1: and always on the Bloomberg terminal