1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,880 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Joining 5 00:00:32,960 --> 00:00:34,680 Speaker 1: us in New York. I'm really pleased to say is 6 00:00:34,720 --> 00:00:38,400 Speaker 1: cal Windberg, High Frequency Economics, chief economist and managing director, 7 00:00:38,440 --> 00:00:40,760 Speaker 1: and he joins us right now. Good morning to you, Carl. 8 00:00:41,000 --> 00:00:42,919 Speaker 1: Pleasure to be here, Thanks for having me on. It's 9 00:00:42,960 --> 00:00:45,239 Speaker 1: the trade war on hold and for how long will 10 00:00:45,280 --> 00:00:47,240 Speaker 1: it be on hold? It is on hold, it will 11 00:00:47,280 --> 00:00:49,479 Speaker 1: be on hold until it's not on hold. There's no 12 00:00:49,520 --> 00:00:52,440 Speaker 1: reason to suspect that it's going to go either well 13 00:00:53,080 --> 00:00:56,640 Speaker 1: or badly. The scorecard is this. I think China is 14 00:00:56,680 --> 00:00:59,560 Speaker 1: having its way with the United States in this conversation, 15 00:01:00,040 --> 00:01:03,400 Speaker 1: and this was a backdown by the United States. It 16 00:01:03,440 --> 00:01:06,840 Speaker 1: avoids a conflict, the tariff war that would have been 17 00:01:06,880 --> 00:01:09,480 Speaker 1: to everybody's disadvantage, and it gives people a time to 18 00:01:09,520 --> 00:01:11,480 Speaker 1: cool off. So I'm all in favor of it, and 19 00:01:11,520 --> 00:01:13,880 Speaker 1: I hope it less and I hope that China and 20 00:01:13,880 --> 00:01:16,319 Speaker 1: the United States can learn to work together rather than 21 00:01:16,520 --> 00:01:18,840 Speaker 1: knock each other's heads. Well, we can discuss how long 22 00:01:18,920 --> 00:01:22,319 Speaker 1: last thing it might be. Finalists explore the vague commitments 23 00:01:22,360 --> 00:01:27,680 Speaker 1: the Chinese pledging to to rebalance the disparity between Chinese 24 00:01:27,680 --> 00:01:31,440 Speaker 1: and the United States trade surplus. Um, how firm is 25 00:01:31,480 --> 00:01:34,160 Speaker 1: that commitment to rebalance that? And what are you expecting 26 00:01:34,160 --> 00:01:38,720 Speaker 1: to see? Car We've send commitments to boost imports of energy, agriculture. 27 00:01:38,959 --> 00:01:41,479 Speaker 1: Are they good things? Yeah, well, they'd be good things 28 00:01:41,520 --> 00:01:43,840 Speaker 1: if they would happen. I don't know exactly how you 29 00:01:44,080 --> 00:01:46,759 Speaker 1: make them happen. I remember John Maynard. I remember reading 30 00:01:46,760 --> 00:01:50,320 Speaker 1: about John Maynard Keynes talking to bertel Lean about why 31 00:01:50,360 --> 00:01:53,520 Speaker 1: Germany doesn't export more? You know, why doesn't Germany export 32 00:01:53,600 --> 00:01:56,200 Speaker 1: were And his idea was that Germany had to impoverage 33 00:01:56,240 --> 00:01:58,840 Speaker 1: its workers to make all of its stuff cheaper. Um. 34 00:01:58,920 --> 00:02:00,360 Speaker 1: I think at the end of the day, you know, 35 00:02:00,400 --> 00:02:03,040 Speaker 1: the United States has to produce more stuff that China wants. 36 00:02:03,320 --> 00:02:06,720 Speaker 1: We have stuff that China wants on the technology side, 37 00:02:06,440 --> 00:02:08,480 Speaker 1: and we're not selling it to them, and that would 38 00:02:08,520 --> 00:02:10,560 Speaker 1: be one way to reduce all of this. And that's 39 00:02:10,600 --> 00:02:12,679 Speaker 1: the Chinese point. And as I said, I think the 40 00:02:12,760 --> 00:02:15,000 Speaker 1: Chinese are really having their way in this conversation. What 41 00:02:15,080 --> 00:02:17,600 Speaker 1: I talk about to what extent the Chinese, the commitments 42 00:02:17,600 --> 00:02:20,400 Speaker 1: of the weekend, how much of that is just an organic, 43 00:02:20,600 --> 00:02:23,280 Speaker 1: natural consequence of more growth in China that they will 44 00:02:23,280 --> 00:02:26,600 Speaker 1: need more foreign agricultural goods, they will need more foreign 45 00:02:26,680 --> 00:02:30,200 Speaker 1: energy sources as well. Undoubtedly that's going to growth, is 46 00:02:30,240 --> 00:02:33,400 Speaker 1: going to help move this conversation forward. They've agreed to 47 00:02:33,400 --> 00:02:36,080 Speaker 1: buy things like energy. All right, we make energy, we 48 00:02:36,120 --> 00:02:38,760 Speaker 1: export energy now in the United States, that's new. We 49 00:02:38,800 --> 00:02:41,799 Speaker 1: have a comparative advantage and if you will over China, 50 00:02:42,160 --> 00:02:44,240 Speaker 1: and so therefore we're going to sell some more of it. 51 00:02:44,280 --> 00:02:46,920 Speaker 1: So I think that's kind of a natural evolution. I 52 00:02:46,960 --> 00:02:49,240 Speaker 1: really do believe that a lot of the substance of 53 00:02:49,280 --> 00:02:51,840 Speaker 1: what we've seen this weekend is really just a face 54 00:02:51,880 --> 00:02:54,560 Speaker 1: saving way for both sides to down from the cliff 55 00:02:55,280 --> 00:02:58,040 Speaker 1: any real commitment to do anything. It just gives everybody 56 00:02:58,040 --> 00:03:00,120 Speaker 1: a way to say, okay, just kidding ha ha, to 57 00:03:00,200 --> 00:03:03,359 Speaker 1: move on with the conversation. I strongly agree. And then 58 00:03:03,400 --> 00:03:08,440 Speaker 1: within the face saving Dr Weinberg is the timeline and 59 00:03:08,480 --> 00:03:13,240 Speaker 1: the Chinese have every advantage, don't they don't They just wait, well, 60 00:03:13,240 --> 00:03:15,920 Speaker 1: they're growing at in a bad year at just under 61 00:03:15,919 --> 00:03:18,120 Speaker 1: seven percent, and the United States and the good year 62 00:03:18,200 --> 00:03:20,320 Speaker 1: is growing at two and a half percent. So you 63 00:03:20,400 --> 00:03:22,160 Speaker 1: do the math on that, and you start off with 64 00:03:22,680 --> 00:03:25,400 Speaker 1: China slightly larger than the U. S economy in terms 65 00:03:25,400 --> 00:03:28,240 Speaker 1: of converting looking at its economy in terms of the 66 00:03:28,240 --> 00:03:30,440 Speaker 1: purchasing power of the money rather than the exchange right 67 00:03:30,480 --> 00:03:32,239 Speaker 1: the way the World Bank looks at it. So they're 68 00:03:32,280 --> 00:03:34,720 Speaker 1: already the largest economy on Earth, and they're just going 69 00:03:34,720 --> 00:03:38,040 Speaker 1: to pull farther and farther ahead with their silk root. 70 00:03:38,280 --> 00:03:40,600 Speaker 1: Their exports are going to grow faster and faster than 71 00:03:40,640 --> 00:03:44,080 Speaker 1: the United States. They have already become the largest economy 72 00:03:44,080 --> 00:03:46,720 Speaker 1: on Earth, and they're on track to become the dominant economy. 73 00:03:46,720 --> 00:03:48,840 Speaker 1: But it was going to pay the the trade hawks. 74 00:03:48,840 --> 00:03:50,960 Speaker 1: What they really wanted was not just to rebounance the 75 00:03:50,960 --> 00:03:52,840 Speaker 1: trade surplus. It was to go after made and shine, 76 00:03:54,080 --> 00:03:57,440 Speaker 1: to go after the protected industries that they want to 77 00:03:57,480 --> 00:04:01,000 Speaker 1: dominate on a worldwide basis. Have we seen a big 78 00:04:01,040 --> 00:04:06,160 Speaker 1: loss for Navarro, Wilbur Ross, and Mr Your good question, 79 00:04:06,480 --> 00:04:10,200 Speaker 1: Greg Villier posits in his Morning Note that Mr Leightheiser 80 00:04:10,200 --> 00:04:13,080 Speaker 1: and Mr Navarro may resign. Yeah, I actually saw the 81 00:04:13,120 --> 00:04:15,600 Speaker 1: same thing in his morning you did, and yeah, you 82 00:04:15,640 --> 00:04:19,120 Speaker 1: were read in and that's very read in. Um, cow 83 00:04:19,680 --> 00:04:22,240 Speaker 1: cow To what extent is it a loss for them 84 00:04:22,279 --> 00:04:24,719 Speaker 1: over the weekend? And also I should add to what 85 00:04:24,839 --> 00:04:28,080 Speaker 1: extent is this actually about a foreign policy goal that 86 00:04:28,120 --> 00:04:31,040 Speaker 1: could come about next month when the United States sits 87 00:04:31,040 --> 00:04:34,040 Speaker 1: down with North Korea? Yeah? So, um, there's a lot 88 00:04:34,080 --> 00:04:36,560 Speaker 1: of questions in the question that you raised, right, I 89 00:04:36,560 --> 00:04:40,560 Speaker 1: mean Navarro, Uh, In my view, all right, his point 90 00:04:40,600 --> 00:04:43,720 Speaker 1: of view has always been wrong. So to have him 91 00:04:43,760 --> 00:04:46,640 Speaker 1: excluded from the administration because what he's doing is not 92 00:04:46,760 --> 00:04:48,360 Speaker 1: working on what he wants to do is not going 93 00:04:48,400 --> 00:04:50,920 Speaker 1: to work, all right, that's a logical extension. It's an 94 00:04:50,920 --> 00:04:53,800 Speaker 1: evolutionary sort of thing. It's not a revolutionary sort of thing. 95 00:04:54,200 --> 00:04:56,440 Speaker 1: But I think that his Mercanti listen approach to U 96 00:04:56,520 --> 00:04:58,640 Speaker 1: S trade is just is just off as far as 97 00:04:58,720 --> 00:05:01,240 Speaker 1: North Korea is concerned. I think the Chinese have a 98 00:05:01,320 --> 00:05:04,000 Speaker 1: very clear upper hand here. The Chinese are saying to 99 00:05:04,040 --> 00:05:06,719 Speaker 1: the North Koreans, you know, we'll give you what you want, 100 00:05:07,040 --> 00:05:08,719 Speaker 1: do what we want you to do, which is to 101 00:05:08,839 --> 00:05:12,080 Speaker 1: make friends with South Korea, and then to annex yourself 102 00:05:12,120 --> 00:05:14,920 Speaker 1: to what we're doing, and that moves South Korea out 103 00:05:14,960 --> 00:05:17,520 Speaker 1: of the US fold. Carl, I want to rip up 104 00:05:17,560 --> 00:05:19,479 Speaker 1: the script, and I know we can do this with 105 00:05:19,520 --> 00:05:22,680 Speaker 1: you because you're prodigious in your your history and ability. 106 00:05:22,839 --> 00:05:25,239 Speaker 1: We have a merger this morning which is pretty cut 107 00:05:25,240 --> 00:05:29,320 Speaker 1: and dry, and it's all these alphabets ge to my 108 00:05:29,440 --> 00:05:33,000 Speaker 1: web co for what is it, John eleven billion dollars 109 00:05:33,000 --> 00:05:36,479 Speaker 1: something like that after tax benefits ten billion dollars. But 110 00:05:36,600 --> 00:05:40,320 Speaker 1: this barely describes the G Transportation flat out. Its back 111 00:05:41,320 --> 00:05:43,240 Speaker 1: is going to be taken out where g E owns 112 00:05:43,279 --> 00:05:48,919 Speaker 1: fifte of the Westinghouse break Company of eighteen sixty nine 113 00:05:49,600 --> 00:05:53,279 Speaker 1: in Pittsburgh, Pennsylvania. Outside of Pittsburgh as well. And the 114 00:05:53,440 --> 00:05:59,640 Speaker 1: fact is these are multi national companies. There are perfect 115 00:05:59,839 --> 00:06:06,560 Speaker 1: manufacturing example of a true multinational vision, which I would 116 00:06:06,560 --> 00:06:11,240 Speaker 1: suggest the President looks at as a discreet, uh domestic 117 00:06:11,279 --> 00:06:15,960 Speaker 1: company outside Pittsburgh. They're not just another break company outside Pittsburgh, 118 00:06:15,960 --> 00:06:19,040 Speaker 1: are they. They're truly multinational. Yeah. I think what you're 119 00:06:19,080 --> 00:06:22,440 Speaker 1: hitting on, Tom is the education that this administration is getting, 120 00:06:22,760 --> 00:06:25,840 Speaker 1: which is that trade is not a domestic issue, all right, 121 00:06:25,920 --> 00:06:29,440 Speaker 1: but most American business is multinational. I mean even my 122 00:06:29,560 --> 00:06:33,800 Speaker 1: little business does two thirds of its revenues come from overseas. 123 00:06:34,120 --> 00:06:37,440 Speaker 1: Production chains are linked. You know, you go after NAFTA, 124 00:06:37,480 --> 00:06:40,200 Speaker 1: for example, as the current administration has, and suddenly they 125 00:06:40,200 --> 00:06:43,760 Speaker 1: allotmobile manufacturers, a core industry in the United States, are saying, WHOA, 126 00:06:43,880 --> 00:06:46,560 Speaker 1: this affects us. We have to to rope it back 127 00:06:46,600 --> 00:06:49,000 Speaker 1: in so that our core businesses aren't affected and the 128 00:06:49,040 --> 00:06:51,760 Speaker 1: whole economy isn't affected. So I think there's an educational 129 00:06:51,800 --> 00:06:54,440 Speaker 1: process going on within the administration, which is why the 130 00:06:54,520 --> 00:06:57,480 Speaker 1: Navarros maybe stepping to this being pushed to the side, 131 00:06:57,680 --> 00:07:00,400 Speaker 1: and bigger, more adults are coming into the and John, 132 00:07:00,440 --> 00:07:03,200 Speaker 1: what's so important about this is I'm going to assume 133 00:07:03,440 --> 00:07:10,920 Speaker 1: within transportation and trains and breaks it's wildly competitive, there's 134 00:07:10,920 --> 00:07:14,000 Speaker 1: got to be like five but from bidding on the 135 00:07:14,040 --> 00:07:17,760 Speaker 1: next train, away from the specifics of one particular industry, 136 00:07:17,880 --> 00:07:20,160 Speaker 1: this was always about whether you want to maintain the 137 00:07:20,200 --> 00:07:22,720 Speaker 1: status quote, not maintain free trade because we don't have 138 00:07:22,760 --> 00:07:25,760 Speaker 1: free trade. Was about whether you maintain the status quo. 139 00:07:25,840 --> 00:07:29,800 Speaker 1: And multinationals in the United States quite clearly benefit from 140 00:07:29,840 --> 00:07:32,360 Speaker 1: the status quot and the view in the C suite 141 00:07:32,440 --> 00:07:34,360 Speaker 1: is don't take the risk with the status quote to 142 00:07:34,400 --> 00:07:37,680 Speaker 1: open up Chinese markets aggressively. They will over time. We 143 00:07:37,720 --> 00:07:40,000 Speaker 1: can wait. We make enough money as it is. This 144 00:07:40,120 --> 00:07:43,600 Speaker 1: administration took a very different stance. This administration looked at 145 00:07:43,600 --> 00:07:46,320 Speaker 1: the Chinese, a very protectionist regime that has leached on 146 00:07:46,360 --> 00:07:49,960 Speaker 1: global trade for over a decade now and more, and said, 147 00:07:49,960 --> 00:07:52,960 Speaker 1: we need to do something aggressively. Now, Carl, as you 148 00:07:52,960 --> 00:07:54,960 Speaker 1: sit there is a business owner that benefits from the 149 00:07:55,000 --> 00:07:58,160 Speaker 1: status quo. Are you basically saying that you're not happy 150 00:07:58,200 --> 00:08:01,440 Speaker 1: with this administration taking the risk aggressively opening up Chinese 151 00:08:01,480 --> 00:08:04,679 Speaker 1: markets when the downside is the status quot could become 152 00:08:04,920 --> 00:08:08,160 Speaker 1: something much much worse. Yeah, well, I think that uh 153 00:08:08,840 --> 00:08:11,360 Speaker 1: ripping up the script, as Tom likes to say, without 154 00:08:11,360 --> 00:08:13,360 Speaker 1: having a new script in its place, is a risky 155 00:08:13,360 --> 00:08:16,280 Speaker 1: business right, And Tom can get away with it because 156 00:08:16,280 --> 00:08:20,360 Speaker 1: he's Tom. But the US economic policy can't get away 157 00:08:20,360 --> 00:08:23,160 Speaker 1: with it because there are many more complicated moving parts. 158 00:08:23,360 --> 00:08:26,280 Speaker 1: And to my mind, the fault in this area of 159 00:08:26,320 --> 00:08:29,640 Speaker 1: the Trump administration has been that they've been willing to 160 00:08:29,720 --> 00:08:32,360 Speaker 1: take things off the table and to break things up, 161 00:08:32,400 --> 00:08:35,600 Speaker 1: to remove elements from pieces from the puzzle without having 162 00:08:35,640 --> 00:08:38,200 Speaker 1: replacement pieces ready to go. And that's been true of 163 00:08:38,200 --> 00:08:40,679 Speaker 1: the China policy. It's been true of NAFTA, where we're 164 00:08:40,679 --> 00:08:43,000 Speaker 1: now seeing them reel that back in as well. All right, 165 00:08:43,040 --> 00:08:45,520 Speaker 1: it was true of Transpacific Partnership where suddenly we want 166 00:08:45,520 --> 00:08:47,280 Speaker 1: to get back in and again it's it's true of 167 00:08:47,360 --> 00:08:50,080 Speaker 1: so many things, because you can't leave a vacuum, because 168 00:08:50,080 --> 00:08:53,120 Speaker 1: if you leave a void, someone like China will step 169 00:08:53,160 --> 00:08:56,040 Speaker 1: into it and fill it for you. Fantastic to have 170 00:08:56,080 --> 00:08:58,480 Speaker 1: you with this this this morning, and really appreciate your time. 171 00:08:58,559 --> 00:09:16,080 Speaker 1: High Frequency Economics Chief Economists and Managing Directory. The book 172 00:09:16,120 --> 00:09:21,559 Speaker 1: is standoff How America became ungovernable, governable. But what matters 173 00:09:21,679 --> 00:09:25,200 Speaker 1: is the author is Bill Schneider. He has definitively put 174 00:09:25,280 --> 00:09:29,880 Speaker 1: history first in our review of America are politics and 175 00:09:29,880 --> 00:09:32,320 Speaker 1: of course the chaos that we're in right now. I 176 00:09:32,360 --> 00:09:34,520 Speaker 1: love the blurb at the beginning. In a little more 177 00:09:34,520 --> 00:09:39,520 Speaker 1: than fifty years, America policies have gone from Camelot to 178 00:09:39,640 --> 00:09:41,760 Speaker 1: Game of Thrones. I guess that really says it all, 179 00:09:42,280 --> 00:09:45,840 Speaker 1: Bill Schneider. Game of Thrones, which character is President Trump playing? 180 00:09:46,120 --> 00:09:48,080 Speaker 1: I haven't seen the game of you're the only one 181 00:09:48,080 --> 00:09:50,480 Speaker 1: who has it, but the but the answer is the 182 00:09:50,559 --> 00:09:54,280 Speaker 1: chaos that's out there. We've seen before. How do you 183 00:09:54,360 --> 00:09:58,360 Speaker 1: get beyond whether someone's a Republican, Democrat, whatever, How do 184 00:09:58,440 --> 00:10:02,160 Speaker 1: we get beyond where we are out to something bordering 185 00:10:02,200 --> 00:10:06,720 Speaker 1: on civility and stability? Normally, the answer is a crisis. 186 00:10:07,040 --> 00:10:09,280 Speaker 1: We're a system that's very difficult to govern. We were 187 00:10:09,320 --> 00:10:12,280 Speaker 1: designed not to be easy to govern. When there's a crisis, 188 00:10:12,320 --> 00:10:15,760 Speaker 1: everything comes into place. You know. For one year after 189 00:10:15,840 --> 00:10:19,320 Speaker 1: nine eleven, Democrats supported President Bush and the country. It 190 00:10:19,360 --> 00:10:22,319 Speaker 1: looked like a consensus was being built because there was 191 00:10:22,360 --> 00:10:24,600 Speaker 1: a crisis in the world and in the United States. 192 00:10:24,920 --> 00:10:27,400 Speaker 1: It didn't last very long because a year after nine eleven, 193 00:10:27,640 --> 00:10:31,120 Speaker 1: President Bush started the rollout for the Iraq War and 194 00:10:31,240 --> 00:10:35,439 Speaker 1: all the old division surfaced once again. I look at 195 00:10:35,480 --> 00:10:37,520 Speaker 1: where we are and helped John Farrell here, the young 196 00:10:37,559 --> 00:10:41,359 Speaker 1: man from the United Kingdom, and that there's this populism 197 00:10:41,400 --> 00:10:43,920 Speaker 1: mood that's out there. We see it everywhere. What is 198 00:10:43,960 --> 00:10:48,680 Speaker 1: the flavor of populism that is the standoff of American politics. 199 00:10:49,000 --> 00:10:52,960 Speaker 1: The flavor of populism is resentment of elites, that's very deep, 200 00:10:53,000 --> 00:10:55,960 Speaker 1: resentments of big word here is and resentment. Yeah, there's 201 00:10:55,960 --> 00:11:00,000 Speaker 1: a lot of resentment. Uh. And in the United States. 202 00:11:00,040 --> 00:11:04,480 Speaker 1: You know, the constituency that Trump mobilized are basically people 203 00:11:04,520 --> 00:11:08,800 Speaker 1: who feel disrespected. They went into a rage over President Obama. 204 00:11:09,320 --> 00:11:12,360 Speaker 1: They called it the Ray the reign of political correctness, 205 00:11:12,400 --> 00:11:16,400 Speaker 1: because political correctness is the belief in diversity and inclusion, 206 00:11:16,720 --> 00:11:19,280 Speaker 1: and a lot of these working class white men think 207 00:11:19,600 --> 00:11:22,839 Speaker 1: inclusion does not include them. That's a really interesting point. 208 00:11:23,120 --> 00:11:25,880 Speaker 1: And so your point, Bill. We've had full presidents two 209 00:11:25,920 --> 00:11:29,880 Speaker 1: Democrats to Republicans that have promised to unite and to 210 00:11:30,080 --> 00:11:34,040 Speaker 1: heal and totally not only failed. Why it's so different 211 00:11:34,080 --> 00:11:36,680 Speaker 1: this time around. We have a president who is governing 212 00:11:36,720 --> 00:11:39,920 Speaker 1: by dividing. Uh. President Trump is doing something no other 213 00:11:39,960 --> 00:11:44,280 Speaker 1: president has done. He ran as a divider by mobilizing 214 00:11:44,320 --> 00:11:48,360 Speaker 1: this angry constituency that feels disrespected. Remember Hillary Clinton called 215 00:11:48,400 --> 00:11:53,200 Speaker 1: them a basket of deplorables. Well, they erupted then in 216 00:11:53,280 --> 00:11:55,600 Speaker 1: that campaign. Uh. And they feel as if no one 217 00:11:55,640 --> 00:11:58,719 Speaker 1: is paying attention to them. The economy that affects them 218 00:11:58,800 --> 00:12:02,720 Speaker 1: is fail ing. Uh. And these people have no place 219 00:12:02,720 --> 00:12:06,280 Speaker 1: in a world of political correctness. Can't he deliver for them? 220 00:12:06,400 --> 00:12:09,360 Speaker 1: We don't know yet. Uh. He the economy is moving 221 00:12:09,400 --> 00:12:12,200 Speaker 1: along nicely, and if that happens and it helps them 222 00:12:12,480 --> 00:12:15,640 Speaker 1: get ahead. Uh, then they'll be very appreciative. But the 223 00:12:15,679 --> 00:12:18,280 Speaker 1: fact is there's very little evidence that the economic growth 224 00:12:18,280 --> 00:12:21,080 Speaker 1: that the country is now enjoying is helping people much 225 00:12:21,120 --> 00:12:22,880 Speaker 1: at the bottom. Where were you were you on the 226 00:12:22,920 --> 00:12:28,160 Speaker 1: CNN set in Yes, the Republican I sat there, remember 227 00:12:28,200 --> 00:12:30,680 Speaker 1: sitting on the coach. The only major network that covered 228 00:12:30,720 --> 00:12:33,120 Speaker 1: it was Dan Rather on CBLS. And there was this 229 00:12:33,200 --> 00:12:37,400 Speaker 1: revolution in absolutely stunning. Is that what we're faced here 230 00:12:37,440 --> 00:12:40,000 Speaker 1: in November? We could be that would be they're talking 231 00:12:40,000 --> 00:12:42,360 Speaker 1: about a blue wave instead of a red wave. That 232 00:12:42,440 --> 00:12:45,480 Speaker 1: was the first time in forty years in that the 233 00:12:45,520 --> 00:12:48,440 Speaker 1: Republicans took over the House of Representatives over Congress. It 234 00:12:48,600 --> 00:12:51,920 Speaker 1: was a revolution. Did anybody see it coming? My recollection 235 00:12:52,040 --> 00:12:55,040 Speaker 1: is pretty much no, no, not really. And we know 236 00:12:55,120 --> 00:12:58,840 Speaker 1: what happened that year. Historically what happened is gun owners 237 00:12:59,440 --> 00:13:01,559 Speaker 1: and there were it just right came out in huge, 238 00:13:01,760 --> 00:13:06,160 Speaker 1: unprecedented numbers, nine million new mid The Blue crew come 239 00:13:06,160 --> 00:13:08,640 Speaker 1: out this time around. That's what we don't know. It 240 00:13:08,640 --> 00:13:12,400 Speaker 1: would include Bill Snyder. You know what's going to happen here? Well, 241 00:13:12,440 --> 00:13:15,280 Speaker 1: you know there's an old rule never make predictions, especially 242 00:13:15,320 --> 00:13:21,000 Speaker 1: about the future. Well, the down right. That was Yogie Barrett. 243 00:13:21,679 --> 00:13:25,880 Speaker 1: I megan right down in the wedding register. How long 244 00:13:25,880 --> 00:13:29,880 Speaker 1: has that taken you? Twenty three minutes to bring up 245 00:13:29,920 --> 00:13:32,280 Speaker 1: the roll away John a question from Bill Snyder. Police, 246 00:13:32,320 --> 00:13:35,320 Speaker 1: they'll just to complete this conversation. The risk for many 247 00:13:35,360 --> 00:13:39,640 Speaker 1: people listening in our audience, investments, business leaders, is that 248 00:13:39,679 --> 00:13:43,160 Speaker 1: if the president can't address the problems that the minorities 249 00:13:43,160 --> 00:13:46,559 Speaker 1: that you've brought up that believe they haven't been listened 250 00:13:46,600 --> 00:13:50,000 Speaker 1: to over the last several decades, if he can't address 251 00:13:50,040 --> 00:13:53,200 Speaker 1: those problems, that this country swings aggressively to the left. 252 00:13:54,440 --> 00:13:56,520 Speaker 1: How big is that risk? Well, I think there is 253 00:13:56,559 --> 00:13:59,440 Speaker 1: a risk that will happen. It very much depends on 254 00:13:59,440 --> 00:14:02,840 Speaker 1: whom the Democrats. Who who catches fire among Democrats? Will 255 00:14:02,880 --> 00:14:06,800 Speaker 1: it be a strong progressive candidate like Elizabeth Warren? They 256 00:14:06,800 --> 00:14:09,360 Speaker 1: could be Joe Biden. He would be the logical next person. 257 00:14:09,600 --> 00:14:12,480 Speaker 1: The problem is he's well into his seventies and he's 258 00:14:12,520 --> 00:14:14,960 Speaker 1: part of the past. We don't know. That's what primaries 259 00:14:14,960 --> 00:14:17,480 Speaker 1: are all about, and they're inherently unpredictable, but some of 260 00:14:17,520 --> 00:14:20,320 Speaker 1: them will always catch fire. The old rule is Democrats 261 00:14:20,320 --> 00:14:23,080 Speaker 1: fall in love and Republicans fall in line. That didn't 262 00:14:23,120 --> 00:14:26,080 Speaker 1: happen in twenty Republicans fell in love with Donald Trump 263 00:14:26,240 --> 00:14:29,480 Speaker 1: and Democrats fell in line behind Hillary Clinton. So even 264 00:14:29,520 --> 00:14:32,560 Speaker 1: those rules aren't necessarily the case. Bill Snyder, thank you 265 00:14:32,600 --> 00:14:35,640 Speaker 1: so much in congratulations. The book is standoff, How America 266 00:14:36,240 --> 00:14:40,720 Speaker 1: became ungovernable, with a fabulous tapestry history to drive forward 267 00:14:41,040 --> 00:14:43,400 Speaker 1: to the mid term elections and then to two thousand 268 00:14:43,720 --> 00:14:47,000 Speaker 1: Tory of course, Bill Schneider at George Mason and for 269 00:14:47,200 --> 00:15:05,080 Speaker 1: years associated and inventing our political coverage and CNN soaring prices, 270 00:15:05,160 --> 00:15:09,440 Speaker 1: widespread hunger, rampant crime, failing health system, and a large 271 00:15:09,480 --> 00:15:14,680 Speaker 1: scale exodus of its citizens. And yet President Nicolas Maduro 272 00:15:15,000 --> 00:15:18,720 Speaker 1: has won a second term as the president of Venezuela. 273 00:15:19,000 --> 00:15:21,320 Speaker 1: Here to tell us more about it is Patricia La 274 00:15:21,600 --> 00:15:26,400 Speaker 1: our Venezuela Bureau chief, joining us now on the phone. Patricia, 275 00:15:26,440 --> 00:15:29,040 Speaker 1: thank you very much for being with us. Uh Do 276 00:15:29,200 --> 00:15:33,680 Speaker 1: people in Venezuela regard the results of the election as 277 00:15:34,080 --> 00:15:38,760 Speaker 1: uh legal? Um? Well, be hard for me to speak 278 00:15:38,760 --> 00:15:41,240 Speaker 1: on behalf of Venezuela, but we did visit a lot 279 00:15:41,280 --> 00:15:44,000 Speaker 1: of voting centers yesterday, and many of them were in 280 00:15:44,040 --> 00:15:47,240 Speaker 1: the western side of Calacas, which is the more popular areas, 281 00:15:47,320 --> 00:15:50,880 Speaker 1: and they were practically empty, many of them. I was 282 00:15:50,960 --> 00:15:53,400 Speaker 1: the only person even there apart from the people that 283 00:15:53,400 --> 00:15:56,360 Speaker 1: were working at the voting center. So clearly you have 284 00:15:56,440 --> 00:16:02,120 Speaker 1: a very disillusioned and uninterested electorate who UM already fighting 285 00:16:02,120 --> 00:16:05,920 Speaker 1: a daily plight to do about just anything, finding food, 286 00:16:06,200 --> 00:16:08,640 Speaker 1: being able to afford food once you can find it. 287 00:16:09,200 --> 00:16:12,760 Speaker 1: Public services are completely collapsed, as running water has become 288 00:16:12,800 --> 00:16:15,920 Speaker 1: a luxury. In Kalaas and most of Venezuela, you have 289 00:16:16,000 --> 00:16:20,120 Speaker 1: power out of just happening for hours. Public transportation is 290 00:16:20,720 --> 00:16:24,120 Speaker 1: becoming more and more difficult, a spare parts are hard 291 00:16:24,160 --> 00:16:27,040 Speaker 1: to find, an important to the country. So of course 292 00:16:27,080 --> 00:16:31,360 Speaker 1: a large large percentage of Venezuelans were completely uninterested in 293 00:16:31,560 --> 00:16:35,240 Speaker 1: yesterday's event. So before we get into smooth the economic 294 00:16:35,240 --> 00:16:39,800 Speaker 1: implications of the continued reign of Maduro, I'm wondering almost 295 00:16:40,680 --> 00:16:45,280 Speaker 1: of the population did vote? Who are his supporters? So, um, 296 00:16:45,400 --> 00:16:48,560 Speaker 1: those are the numbers according to the national like the 297 00:16:49,080 --> 00:16:53,520 Speaker 1: UM authority, but well, you know, it's hard to know. 298 00:16:53,720 --> 00:16:56,360 Speaker 1: Some people do cust out on them UM. But of 299 00:16:56,400 --> 00:17:00,440 Speaker 1: course they do have UM a large government shame that 300 00:17:00,560 --> 00:17:06,400 Speaker 1: encourages people to vote by offering um bonuses or certain prices. 301 00:17:06,440 --> 00:17:09,679 Speaker 1: That there were hundreds of thousands of points outside of 302 00:17:09,720 --> 00:17:14,360 Speaker 1: electoral UH centers yesterday that if you prove that you voted, UM, 303 00:17:14,440 --> 00:17:17,400 Speaker 1: they'll give you, you know, a certain price. They don't 304 00:17:17,440 --> 00:17:19,679 Speaker 1: tell you what it is outwardly, right, but you assume 305 00:17:19,720 --> 00:17:23,320 Speaker 1: that it's just a deposit into your accounts. At some 306 00:17:23,480 --> 00:17:26,520 Speaker 1: of the centers, I even saw people handing out bread 307 00:17:26,560 --> 00:17:30,200 Speaker 1: and water to voters. Um. So yeah, there's this, there's 308 00:17:30,200 --> 00:17:33,399 Speaker 1: a machine that's encouraging people to come out and vote. Okay, 309 00:17:33,600 --> 00:17:35,880 Speaker 1: so let's talk about the implications because I am looking 310 00:17:35,880 --> 00:17:38,800 Speaker 1: at PASA bands that is, the state owned oil company 311 00:17:38,840 --> 00:17:43,840 Speaker 1: that are falling, and the ie that the International Energy 312 00:17:44,400 --> 00:17:48,120 Speaker 1: Agency has been coming out and saying they expect Venezuela 313 00:17:48,160 --> 00:17:54,560 Speaker 1: oil output to decline to an innex basically a negligible amount. 314 00:17:55,080 --> 00:17:57,040 Speaker 1: What's the prospects? Why are you? Why are things so 315 00:17:57,080 --> 00:17:59,720 Speaker 1: bleak and getting bleaker for Venezuela at this point? Yeah? 316 00:17:59,760 --> 00:18:02,399 Speaker 1: So oil production is already at a thirty or forty 317 00:18:03,080 --> 00:18:05,880 Speaker 1: year low. Um, you have many of the oil workers 318 00:18:05,920 --> 00:18:09,200 Speaker 1: just walking out, not only because they're so poorly paid, 319 00:18:09,320 --> 00:18:14,159 Speaker 1: but because they're too hungry and weak to operate heavy machinery. Um, 320 00:18:14,240 --> 00:18:17,960 Speaker 1: you have conical philips uh on a global assault. I 321 00:18:17,960 --> 00:18:21,280 Speaker 1: guess Thataday sat trying to take some of his two 322 00:18:21,320 --> 00:18:25,159 Speaker 1: billion arbitration award that it was granted last month. And you, 323 00:18:25,440 --> 00:18:28,480 Speaker 1: on top of all of that, you have the Venezuela 324 00:18:28,560 --> 00:18:31,160 Speaker 1: under active review for oil sanctions on behalf of the US, 325 00:18:31,240 --> 00:18:34,160 Speaker 1: which would be sort of the deadly blow to an 326 00:18:34,160 --> 00:18:37,320 Speaker 1: economy that's already in crisis. So the outlook is for 327 00:18:37,359 --> 00:18:39,639 Speaker 1: everything to just continue to words them from now on. 328 00:18:41,119 --> 00:18:45,760 Speaker 1: Does the president recognize that your description, and indeed the 329 00:18:45,840 --> 00:18:50,119 Speaker 1: description of most media outlets about what the majority of 330 00:18:50,240 --> 00:18:53,120 Speaker 1: people in Venezuela deal with on a daily basis, does 331 00:18:53,160 --> 00:18:56,560 Speaker 1: he recognize that that is true? No, he does not. 332 00:18:56,680 --> 00:18:59,320 Speaker 1: I don't think he has ever even uttered the word 333 00:18:59,359 --> 00:19:03,159 Speaker 1: hyper influ asan or anything of the stort um everything 334 00:19:03,520 --> 00:19:08,600 Speaker 1: Um that he does sort of agree or admit he 335 00:19:08,680 --> 00:19:14,200 Speaker 1: characterizes it as the war waged from the US against Venezuela. Um, 336 00:19:14,240 --> 00:19:17,840 Speaker 1: he blames everything as a Venezuela being under economic attack 337 00:19:17,960 --> 00:19:20,840 Speaker 1: from other nations across the globe. Okay, but if he 338 00:19:21,280 --> 00:19:24,440 Speaker 1: just sort of move a little further on that, if 339 00:19:24,520 --> 00:19:27,399 Speaker 1: you're under it, let's say, let's say that is, let's 340 00:19:27,440 --> 00:19:32,119 Speaker 1: just take that as his version. Does he admit or 341 00:19:32,240 --> 00:19:35,240 Speaker 1: recognize that there are people who are going hungry, that 342 00:19:35,320 --> 00:19:39,320 Speaker 1: there is no running water, that electricity is intermittent, and 343 00:19:39,560 --> 00:19:43,040 Speaker 1: that no one can afford to buy food? No, I 344 00:19:43,040 --> 00:19:48,080 Speaker 1: mean he'll admitted to a certain extent, but nothing even closed. 345 00:19:48,119 --> 00:19:51,360 Speaker 1: He he will mention some of these, um issues are 346 00:19:51,359 --> 00:19:53,359 Speaker 1: in press conferences and things like that. And the funny 347 00:19:53,359 --> 00:19:56,320 Speaker 1: thing is that he kept repeating that, you know, after 348 00:19:56,359 --> 00:19:59,320 Speaker 1: he was elected, Um, he was going to solve you know, 349 00:19:59,320 --> 00:20:03,119 Speaker 1: a majority these issues. What we're wondering is how have 350 00:20:03,359 --> 00:20:07,639 Speaker 1: those options alluded him so far as to how we 351 00:20:07,680 --> 00:20:12,680 Speaker 1: can continue? The economy is expected to contract nine percent. Uh, 352 00:20:12,760 --> 00:20:16,600 Speaker 1: this dear inflation is said to hit percent. The currency 353 00:20:16,600 --> 00:20:20,280 Speaker 1: has lost more than his value. Right, Um, there are 354 00:20:20,280 --> 00:20:22,359 Speaker 1: a lot of things that he needs to get on 355 00:20:22,400 --> 00:20:25,399 Speaker 1: the right path. Patricia Lah, thank you so much for 356 00:20:25,440 --> 00:20:28,159 Speaker 1: being with us. Good luck to you, and UH it 357 00:20:28,200 --> 00:20:30,680 Speaker 1: sounds pretty hopeless. I'm hoping that there is something else, 358 00:20:31,160 --> 00:20:34,680 Speaker 1: uh that will perhaps help mitigate the situation and perhaps 359 00:20:35,160 --> 00:20:39,360 Speaker 1: cause a change to the at least policies of the leadership. 360 00:20:39,359 --> 00:20:42,560 Speaker 1: Patricia la Venezuela Bureau chief talking to us about those 361 00:20:42,760 --> 00:21:00,199 Speaker 1: Venezuelan elections and chairs of Tesla. They are up right 362 00:21:00,240 --> 00:21:03,360 Speaker 1: now a little bit more than three percent. This comes 363 00:21:03,440 --> 00:21:08,120 Speaker 1: after Elon Muska, the founder and the chief executive of Tesla, 364 00:21:08,200 --> 00:21:14,120 Speaker 1: announces details about two variants of the model of three. Indeed, 365 00:21:14,160 --> 00:21:18,160 Speaker 1: one of those variants is estimated to cost about seventy 366 00:21:18,200 --> 00:21:22,719 Speaker 1: eight thousand dollars. That's twice the price of a base 367 00:21:23,000 --> 00:21:27,959 Speaker 1: Model three. And it reminds me of an old National 368 00:21:28,000 --> 00:21:32,800 Speaker 1: Airlines commercial entitled is this any way to run an airline? 369 00:21:32,920 --> 00:21:35,360 Speaker 1: Is this any way to run a car company? Here 370 00:21:35,400 --> 00:21:38,639 Speaker 1: to help us answer that question, Kevin Tynan, Bloomberg Intelligence 371 00:21:38,840 --> 00:21:44,360 Speaker 1: Senior analyst for Everything's Automotive Kevin always a pleasure. Um. 372 00:21:44,640 --> 00:21:47,440 Speaker 1: I know I'm dating myself by talking about National Airlines, 373 00:21:47,480 --> 00:21:49,480 Speaker 1: but we all know what happened to National Airlines, So 374 00:21:49,560 --> 00:21:54,120 Speaker 1: I'm curious, is this any way to run an automobile company? 375 00:21:54,160 --> 00:21:58,199 Speaker 1: By having the chief executive tweet out, I mean, I 376 00:21:58,240 --> 00:22:00,320 Speaker 1: get you know, it gets you tons of free public listening. 377 00:22:00,359 --> 00:22:02,280 Speaker 1: You never have to do an ad in your life, 378 00:22:02,920 --> 00:22:04,960 Speaker 1: But is this the way to run a company that's 379 00:22:04,960 --> 00:22:09,960 Speaker 1: trying to produce mass automobiles? Well? I look I guess 380 00:22:10,000 --> 00:22:13,120 Speaker 1: that goes all the way up to the President communicates 381 00:22:13,200 --> 00:22:16,720 Speaker 1: via tweet now too, So, um, I think Elon Musk 382 00:22:16,800 --> 00:22:22,440 Speaker 1: is that sort of new generation of CEO tweeting out plans, uh, 383 00:22:22,600 --> 00:22:25,439 Speaker 1: you know, calling analyst bone heads on the call, so 384 00:22:25,800 --> 00:22:30,120 Speaker 1: you know, until until the shareholders react, he'll he'll continue 385 00:22:30,160 --> 00:22:32,600 Speaker 1: to push the envelope in that way. I'm sure. So 386 00:22:32,640 --> 00:22:37,320 Speaker 1: what is your thought about this announcement and the new 387 00:22:37,640 --> 00:22:41,919 Speaker 1: loaded versions of the Tesla Model three. Aren't they just 388 00:22:42,000 --> 00:22:46,280 Speaker 1: having challenges getting the regular model three out there? Well? 389 00:22:46,320 --> 00:22:48,280 Speaker 1: I don't. I'm not sure they want to get the 390 00:22:48,400 --> 00:22:51,600 Speaker 1: regular model three out there when you look at you know, 391 00:22:51,640 --> 00:22:55,919 Speaker 1: the quarterly reports and and you know, running at at 392 00:22:55,920 --> 00:22:59,000 Speaker 1: an operating loss, and you know, the idea is is 393 00:22:59,160 --> 00:23:02,679 Speaker 1: to still be up market until you know they can 394 00:23:02,720 --> 00:23:05,000 Speaker 1: get production. I'm not sure you're ever going to see 395 00:23:05,000 --> 00:23:08,679 Speaker 1: the thirty five thousand dollar vehicle. Um. You know, so 396 00:23:08,720 --> 00:23:12,320 Speaker 1: in that in that way, this makes sense to be selling, 397 00:23:12,880 --> 00:23:15,880 Speaker 1: you know, the premium vehicles. I think two things happen though. 398 00:23:15,920 --> 00:23:20,679 Speaker 1: One is at seventy eight thousand dollars before autopilot even 399 00:23:21,280 --> 00:23:23,399 Speaker 1: um that that's not even included in that seventy eight 400 00:23:23,440 --> 00:23:26,119 Speaker 1: thousand dollar price egg, but at seventy eight thousand dollars, 401 00:23:26,119 --> 00:23:28,800 Speaker 1: you worry about cannibalization of the Model S, which is 402 00:23:28,880 --> 00:23:31,159 Speaker 1: priced a little bit higher. But you know, if you 403 00:23:31,200 --> 00:23:34,399 Speaker 1: look at revenue per unit over the past couple of quarters, 404 00:23:34,400 --> 00:23:37,600 Speaker 1: it's in that eighty you know, eighty to ninety dollar range, 405 00:23:37,600 --> 00:23:40,800 Speaker 1: So you're pushing up against models. The other thing is 406 00:23:40,840 --> 00:23:44,359 Speaker 1: how many of those five hundred thousand deposits we hear 407 00:23:44,359 --> 00:23:46,760 Speaker 1: about all the time. We're people expecting to be able 408 00:23:46,800 --> 00:23:49,520 Speaker 1: to actually get a thirty five thousand dollar vehicle, which 409 00:23:50,040 --> 00:23:53,840 Speaker 1: probably won't be at least until some point of if ever. 410 00:23:54,640 --> 00:23:59,120 Speaker 1: And doesn't this also bring into question the competition models 411 00:23:59,200 --> 00:24:06,720 Speaker 1: from bm W as well as lower price models from Toyota, Nissan, etcetera. Right, Yeah, 412 00:24:06,720 --> 00:24:10,240 Speaker 1: And and I still believe that those manufacturers are only 413 00:24:10,280 --> 00:24:14,879 Speaker 1: halfheartedly involved in the battery electric vehicle market. Um. You know, 414 00:24:14,880 --> 00:24:18,160 Speaker 1: there's announcements and you see this long lead time till 415 00:24:18,200 --> 00:24:20,760 Speaker 1: those get to market, and I think that's just simply 416 00:24:20,800 --> 00:24:24,800 Speaker 1: because the business economics of the drive train uh drivetrain 417 00:24:24,880 --> 00:24:29,000 Speaker 1: technology just don't make sense yet. And basically Tesla proves 418 00:24:29,040 --> 00:24:32,119 Speaker 1: that with every quarterly report. Right, And I think you 419 00:24:32,200 --> 00:24:36,560 Speaker 1: saw General Motors with Chevrolet Bolt, and we were constantly 420 00:24:36,560 --> 00:24:39,680 Speaker 1: hearing how Tesla out sells Bold, and I keep arguing, well, 421 00:24:39,680 --> 00:24:42,880 Speaker 1: they're not trying to sell Chevrolet Bolt. It was an 422 00:24:42,880 --> 00:24:46,359 Speaker 1: experiment of finance experience to see what the economics of 423 00:24:46,400 --> 00:24:50,200 Speaker 1: the technology look like. Knowing it's not profit is profitable 424 00:24:50,280 --> 00:24:52,800 Speaker 1: is why you don't see Chevally Bolt be marketed or 425 00:24:52,800 --> 00:24:55,879 Speaker 1: aggressively sold, because you're losing money on everyone. You you 426 00:24:56,560 --> 00:24:59,399 Speaker 1: that that you do put in customers hands. So the 427 00:24:59,440 --> 00:25:01,600 Speaker 1: idea is is that we can do this. We have 428 00:25:01,680 --> 00:25:03,840 Speaker 1: the technology, it's up on the shelf. If this ever 429 00:25:04,000 --> 00:25:06,320 Speaker 1: looks like it's profitable, we'll put it in a good 430 00:25:06,359 --> 00:25:08,919 Speaker 1: looking vehicle or a compact crossover, which is the best 431 00:25:08,960 --> 00:25:11,399 Speaker 1: selling segment in the US, and we'll sell them like 432 00:25:11,480 --> 00:25:13,679 Speaker 1: we want to sell them. Well, I just also want 433 00:25:13,720 --> 00:25:16,919 Speaker 1: to mention getting this a news item from Greg Jared 434 00:25:16,920 --> 00:25:19,040 Speaker 1: and the Bloomberg news Room that at least one person 435 00:25:19,160 --> 00:25:22,119 Speaker 1: is dead after a Tesla Model S was found in 436 00:25:22,160 --> 00:25:27,280 Speaker 1: a pond on a property in Alameda County on Sunday night. 437 00:25:27,320 --> 00:25:31,600 Speaker 1: This according to the California Highway Patrol. UH this in 438 00:25:31,920 --> 00:25:36,680 Speaker 1: you know Castro, in your Castro Valley um our Tesla 439 00:25:36,800 --> 00:25:40,640 Speaker 1: automobiles getting a pass in terms of what they can 440 00:25:40,800 --> 00:25:45,920 Speaker 1: do versus other electrified or what you might call hybrid 441 00:25:45,920 --> 00:25:50,480 Speaker 1: technology cars can do well. I think, Um, I I 442 00:25:50,800 --> 00:25:54,760 Speaker 1: don't know that that's totally Testla's fault. I think autopilot 443 00:25:54,760 --> 00:25:57,399 Speaker 1: and I don't know if this incident was the autopilot 444 00:25:57,480 --> 00:25:59,639 Speaker 1: was involved. I'm just you know, going over some of 445 00:25:59,680 --> 00:26:03,040 Speaker 1: the ens recently, UM, you know, I think there's certainly 446 00:26:03,280 --> 00:26:06,479 Speaker 1: misinterpretation of what that system can do. And I think 447 00:26:06,520 --> 00:26:10,240 Speaker 1: when you look at even the um most recent crash 448 00:26:10,280 --> 00:26:12,439 Speaker 1: where or the one before the one you just mentioned, 449 00:26:12,440 --> 00:26:15,360 Speaker 1: where it hits a parked fire truck and you're wondering, 450 00:26:16,040 --> 00:26:19,399 Speaker 1: why why does it not see a stopped object and 451 00:26:19,400 --> 00:26:24,160 Speaker 1: and you know stop driving towards it. UM, it just 452 00:26:24,240 --> 00:26:26,679 Speaker 1: tells me that people don't understand autopilot in the way 453 00:26:26,720 --> 00:26:29,159 Speaker 1: it's supposed to work. And you just don't see that 454 00:26:29,280 --> 00:26:33,480 Speaker 1: from from Cadillac and super Cruise. I think for some reason, 455 00:26:33,520 --> 00:26:38,080 Speaker 1: the consumer understands, UH that those are driver aids and 456 00:26:38,160 --> 00:26:42,119 Speaker 1: not expected to be the full control of the vehicle 457 00:26:42,200 --> 00:26:44,760 Speaker 1: given over to the to the driver or to the 458 00:26:44,840 --> 00:26:47,800 Speaker 1: vehicle from the driver. UM. You know, and perhaps that's 459 00:26:47,880 --> 00:26:50,240 Speaker 1: way back in the day when you had Elon Musk's 460 00:26:50,280 --> 00:26:53,119 Speaker 1: wife of the time, you know, dancing in the driver's 461 00:26:53,160 --> 00:26:55,560 Speaker 1: seat with no hands on the wheel. Why that misconception 462 00:26:55,680 --> 00:26:57,600 Speaker 1: is out there, but it certainly seems to be real. 463 00:26:58,640 --> 00:27:01,760 Speaker 1: Is there a misconception of what the consumer wants when 464 00:27:01,760 --> 00:27:06,399 Speaker 1: you have Ford getting rid of pretty much their entire 465 00:27:06,520 --> 00:27:11,440 Speaker 1: sedan lineup going to SUVs and pickups except for the Mustang, 466 00:27:11,520 --> 00:27:17,280 Speaker 1: I believe, uh, where Tesla doesn't have an suv really 467 00:27:17,640 --> 00:27:20,879 Speaker 1: or a pick up right and I and I think 468 00:27:21,160 --> 00:27:24,560 Speaker 1: in in Ford's defense there and I think this is 469 00:27:24,600 --> 00:27:27,760 Speaker 1: industry wide. What you're seeing is certainly the death of 470 00:27:27,800 --> 00:27:31,680 Speaker 1: the coupe in the sedan UM, but also a sort 471 00:27:31,720 --> 00:27:33,600 Speaker 1: of a change in the shape. So we're still going 472 00:27:33,640 --> 00:27:37,119 Speaker 1: to have small vehicles, We're gonna have fuel efficient vehicles. Uh, 473 00:27:37,160 --> 00:27:40,240 Speaker 1: they're just gonna be shaped differently. So rather than what 474 00:27:40,320 --> 00:27:45,040 Speaker 1: we know in for tourists UM or Ford focus, that 475 00:27:45,119 --> 00:27:47,600 Speaker 1: just gets lifted up a little bit, looks a little 476 00:27:47,600 --> 00:27:50,520 Speaker 1: bit more like a like a compact crossover where you 477 00:27:50,520 --> 00:27:52,960 Speaker 1: have the higher ride height that people like a little 478 00:27:52,960 --> 00:27:57,280 Speaker 1: bit more utility and usable space. Um, you know, and 479 00:27:57,320 --> 00:27:59,399 Speaker 1: maybe use a car name or maybe you don't, but 480 00:27:59,440 --> 00:28:03,720 Speaker 1: it's essentially filling that gap of utility that people need. 481 00:28:03,800 --> 00:28:06,879 Speaker 1: It's just not shaped with what we know conventionally to 482 00:28:06,920 --> 00:28:09,439 Speaker 1: be a car. What's what else should we know about 483 00:28:09,520 --> 00:28:12,760 Speaker 1: Tesla that we don't focus on? Is it battery technology? 484 00:28:12,920 --> 00:28:17,240 Speaker 1: Is it the drive range? Is it you know, weather conditions, 485 00:28:17,280 --> 00:28:21,240 Speaker 1: when it gets cold. We note that the range on 486 00:28:21,280 --> 00:28:25,560 Speaker 1: an electric vehicle can change dramatically, you know. I think 487 00:28:25,600 --> 00:28:29,400 Speaker 1: that the product itself, for the most part, other than 488 00:28:29,440 --> 00:28:32,080 Speaker 1: you know, those issues with autopilot dry, I think the 489 00:28:32,119 --> 00:28:36,440 Speaker 1: consumer is is educated and aware or at least comfortable 490 00:28:36,520 --> 00:28:39,040 Speaker 1: with what the vehicles can do. Um. I think the 491 00:28:39,040 --> 00:28:43,280 Speaker 1: biggest misconception is that you know and and in our space, 492 00:28:43,320 --> 00:28:45,480 Speaker 1: it winds up being more about the financials when you 493 00:28:45,560 --> 00:28:47,440 Speaker 1: when you dive into the numbers of the company, and 494 00:28:47,440 --> 00:28:51,200 Speaker 1: that's everything from the volume numbers down to the gross 495 00:28:51,240 --> 00:28:54,720 Speaker 1: margin numbers that everybody talks about, and then the profitability 496 00:28:54,760 --> 00:28:59,000 Speaker 1: of the company going forward. I think this is a 497 00:28:59,120 --> 00:29:04,080 Speaker 1: firm that's really valued like it's of of global volume automaker, 498 00:29:04,360 --> 00:29:07,800 Speaker 1: and it's really not or it's not yet at least 499 00:29:08,440 --> 00:29:11,120 Speaker 1: um you know, in terms of market capped comparing it 500 00:29:11,200 --> 00:29:14,760 Speaker 1: to Ford and in terms of uh, you know, volume, 501 00:29:14,840 --> 00:29:18,280 Speaker 1: comparing it to whoever BMW or General Motors, and it's 502 00:29:18,320 --> 00:29:21,600 Speaker 1: just not in that ballpark yet, um, you know, and 503 00:29:21,640 --> 00:29:24,280 Speaker 1: it's going to take some doing and get there. I 504 00:29:24,360 --> 00:29:27,080 Speaker 1: was just looking at gross margins. Somebody up their target 505 00:29:27,080 --> 00:29:30,680 Speaker 1: price because they are expecting better than what was forecast 506 00:29:30,680 --> 00:29:33,680 Speaker 1: gross margins on Model three and and that's entirely possible. 507 00:29:33,720 --> 00:29:35,200 Speaker 1: But at the end of the day, I keep saying, 508 00:29:35,200 --> 00:29:38,719 Speaker 1: this is an automaker, and you know, gross margins are 509 00:29:38,720 --> 00:29:40,840 Speaker 1: going to be somewhere in that twenty percent range. And 510 00:29:41,040 --> 00:29:45,640 Speaker 1: and I don't see Tesla doing anything production wise, manufacturing 511 00:29:45,680 --> 00:29:51,280 Speaker 1: wise that gets them to that when companies like Toyota, BMW, 512 00:29:51,800 --> 00:29:57,640 Speaker 1: Volkswagen are a Thanks very much, Kevin Tynan, Bloomberg Intelligence 513 00:29:57,800 --> 00:30:07,760 Speaker 1: Senior analysts for all Things Automotive. Thanks for listening to 514 00:30:07,800 --> 00:30:12,360 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 515 00:30:12,400 --> 00:30:18,240 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 516 00:30:18,280 --> 00:30:21,600 Speaker 1: on Twitter at Tom Keene before the podcast. You can 517 00:30:21,640 --> 00:30:24,840 Speaker 1: always catch us worldwide. I'm Bloomberg Radio