WEBVTT - Equities, Tesla, and Geopolitics 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.559 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.600 --> 0:00:14.880 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.640 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.400 with the latest version of the Bloomberg Business App. That's 0:00:21.640 --> 0:00:24.360 the Bloomberg Business App. Get it on your phone in 0:00:24.400 --> 0:00:27.720 the Apple App Store or on Google Play. Just download 0:00:27.760 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.920 --> 0:00:34.360 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.600 --> 0:00:39.760 my co host Matt Miller. 0:00:40.200 --> 0:00:44.159 Every business day we bring you interviews from CEOs, market pros, 0:00:44.280 --> 0:00:48.159 and Bloomberg experts, along with essential market movin news. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.920 --> 0:00:55.040 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:55.400 --> 0:00:56.960 Mike Greeg and Paul Sweeney were live here in the 0:00:56.960 --> 0:01:00.760 Bloomberg Interactive Broker Studio or also streaming live on YouTube. 0:01:00.800 --> 0:01:03.000 I believe that's the Internet, So you head over to 0:01:03.040 --> 0:01:05.280 YouTube dot com Search, Bloomberg Radio, and that's where you 0:01:05.360 --> 0:01:07.240 will find this. Mike, I took a look at the 0:01:07.280 --> 0:01:09.399 four one K man. I crushed it this year. 0:01:09.720 --> 0:01:11.800 You were good at this. You were in stocks, I 0:01:11.840 --> 0:01:13.240 take it. Yeah, you were all in. 0:01:13.440 --> 0:01:14.520 Throw it all in the index place. 0:01:14.560 --> 0:01:16.279 You didn't move out to cash and doing. 0:01:16.160 --> 0:01:18.039 After thirty five years, I don't even think about it. 0:01:18.920 --> 0:01:21.160 That's kind of my investment horizon, though that's kind of 0:01:21.240 --> 0:01:23.640 changing as we go along here. But let's talk to 0:01:23.680 --> 0:01:25.520 somebody who really thinks about it a little bit more 0:01:25.560 --> 0:01:28.920 deeply than I do. Gena Martin Adams, chief equity strategist 0:01:28.920 --> 0:01:31.200 for Bloomberg Intelligence, joins us live here in our Bloomberg 0:01:31.200 --> 0:01:34.520 Interactive Broker studio. So Ginette, first of all, explain to 0:01:34.560 --> 0:01:37.640 me what happened from like October nineteenth to year end 0:01:37.840 --> 0:01:40.600 twenty twenty three. Wow, that we had some big moves 0:01:40.640 --> 0:01:41.679 in stocks and bonds. 0:01:42.000 --> 0:01:43.800 Yeah, I mean I think a few things happened. First 0:01:43.920 --> 0:01:46.959 is we were incredibly oversold. Sentiment was very negative. By 0:01:46.959 --> 0:01:49.200 the end of October. Our market pulse index was sitting 0:01:49.240 --> 0:01:52.520 at panic territory, and it's been pretty good at signaling 0:01:52.600 --> 0:01:56.360 some near term wiggles in the equity market panic to manic, 0:01:56.400 --> 0:01:58.400 panic to manic. It was really the story of twenty 0:01:58.440 --> 0:02:00.480 twenty three. We hit another panic button by the end 0:02:00.520 --> 0:02:04.120 of October. At that same time, in the month of October, 0:02:04.240 --> 0:02:06.160 we started to see the bond market turnover, and I 0:02:06.160 --> 0:02:08.280 think that was a really big catalyst for stocks. With 0:02:08.919 --> 0:02:11.640 the surgeon yields that we experienced in the third quarter 0:02:11.720 --> 0:02:15.920 being really painful for equities, The reversal that emerged in 0:02:16.040 --> 0:02:18.959 the bond market by late October early November was pretty 0:02:18.960 --> 0:02:21.920 profound as a driver of risk tolerance in the equity market, 0:02:22.400 --> 0:02:24.600 and it was off to the races for all markets. 0:02:24.680 --> 0:02:27.760 As we finally got comfortable with the idea that the 0:02:28.400 --> 0:02:31.560 end is here for hawkish monetary policy, we're likely to 0:02:31.600 --> 0:02:34.480 move to a much more dubbish stance throughout the course 0:02:34.520 --> 0:02:37.200 of twenty twenty four, and that's what markets started a 0:02:37.240 --> 0:02:38.560 price in the fourth quarter. 0:02:39.000 --> 0:02:41.080 You know, Gina. It was another one of those years 0:02:41.120 --> 0:02:44.120 where it was the huge megacap growth stocks, you know, 0:02:44.160 --> 0:02:46.880 the Magnificent seven or whatever you want to call them, 0:02:46.919 --> 0:02:49.639 really driving the bus. And I feel like it's been 0:02:49.680 --> 0:02:53.400 frustrating for sort of old school value investors to watch 0:02:53.440 --> 0:02:55.920 this happen year after year, there always seems like there's 0:02:56.400 --> 0:02:58.760 you know, a dawn coming for value and value is 0:02:58.800 --> 0:03:02.639 going to start performing. Is this the year for that? 0:03:02.680 --> 0:03:03.120 Do you think? 0:03:03.480 --> 0:03:05.760 You know, I think that value actually really started to 0:03:05.760 --> 0:03:08.239 get its legs all the way back in twenty twenty two. 0:03:08.600 --> 0:03:10.560 And it's a bit of a misnomber that value as 0:03:10.600 --> 0:03:12.959 a terrible performer last year. It really was about market 0:03:13.000 --> 0:03:15.840 cap more than anything. When you market capajust the value factor, 0:03:15.880 --> 0:03:17.960 it was a pretty flat year. It wasn't a great year, 0:03:18.480 --> 0:03:20.480 but it wasn't a horrible year as you would assume 0:03:20.560 --> 0:03:23.440 when you don't market capajus the value factor. So I 0:03:23.440 --> 0:03:27.040 think that's something to consider. Also, really from the October 0:03:27.080 --> 0:03:29.080 low small caps have been on a rip as well, 0:03:29.160 --> 0:03:32.240 So you like to see small caps performing a little 0:03:32.240 --> 0:03:36.400 while value not necessarily because large caps have been performing also, 0:03:37.000 --> 0:03:41.160 but certainly, lower volatility stocks have underperformed high vall stocks, 0:03:41.280 --> 0:03:44.560 high leverage stocks have outperformed low leverage stocks, so we 0:03:44.600 --> 0:03:47.360 are seeing risk tolerance re emerge. Will it be a 0:03:47.440 --> 0:03:49.800 year for value is a really tough call right now. 0:03:49.800 --> 0:03:51.720 I mean, I think when you look at the composition 0:03:51.960 --> 0:03:54.880 of you know, the value indices versus the growth indices, 0:03:55.360 --> 0:03:58.040 the growth industries still have the favor of earnings trends, 0:03:59.120 --> 0:04:02.440 and with policy sort of the policy impediment going away, 0:04:02.480 --> 0:04:04.320 it's really tough to make a call for value to 0:04:04.320 --> 0:04:07.800 be the big outperformer. With the one exception of maybe financials. 0:04:08.000 --> 0:04:11.080 Inside the value index, you do have a pretty strong 0:04:11.160 --> 0:04:15.600 representation from the financials segment. And if the yield curve 0:04:15.640 --> 0:04:19.320 steeps continues to become more upward sloping, that could benefit 0:04:19.360 --> 0:04:22.120 financials materially. I don't know how much investors are going 0:04:22.120 --> 0:04:24.400 to embrace that trade, because everyone's still quite scared of 0:04:24.400 --> 0:04:27.279 what's on the books of the banks. But nonetheless there 0:04:27.320 --> 0:04:29.760 is an opportunity there, and if you can get some 0:04:29.800 --> 0:04:33.520 stabilization in the commodities complex, that could enable the value 0:04:33.560 --> 0:04:34.279 trade as well. 0:04:34.760 --> 0:04:36.440 Git, I want to talk about earnings. I'm looking just 0:04:36.480 --> 0:04:38.080 at the S and P five hundred and on the 0:04:38.120 --> 0:04:41.440 Bloomberg terminal, looks like there's twelve percent kindish type of 0:04:41.520 --> 0:04:44.640 earnings growth forecast for twenty twenty four. How do you 0:04:44.680 --> 0:04:48.839 feel about that number? Should I considered some earnings risks 0:04:48.880 --> 0:04:49.720 still out there in market? 0:04:50.200 --> 0:04:52.240 You know, I think what's happening with earnings is really 0:04:52.240 --> 0:04:55.320 interesting because if you were purely relying on macro factors 0:04:55.320 --> 0:04:57.600 to forecast earnings, you would have gotten the last year wrong, 0:04:57.720 --> 0:05:01.760 completely wrong. It really isn't a macro driven earnings trends. 0:05:01.800 --> 0:05:04.159 And I think that this sort of dichotomy between what 0:05:04.200 --> 0:05:06.279 we talk about all the time, which is the sluggish 0:05:06.320 --> 0:05:09.800 macro economy, and what's happening in the earnings environment creates 0:05:09.839 --> 0:05:12.559 a ton of confusion. But what's really driving earnings growth 0:05:12.600 --> 0:05:15.640 right now is margin improvement. It has very little to 0:05:15.680 --> 0:05:17.560 do with top line growth. It has very little to 0:05:17.800 --> 0:05:19.920 do with some of the broad economic indicators that we're 0:05:19.960 --> 0:05:23.040 following with the one exception of inflation, and inflation has 0:05:23.040 --> 0:05:26.919 been incredibly consequential to determining the earnings outlook over the 0:05:26.920 --> 0:05:30.559 course of the last two years. Inflation's acceleration in twenty 0:05:30.600 --> 0:05:34.560 twenty two contributed to massive downdraft in earnings expectations and 0:05:34.600 --> 0:05:38.240 earnings growth. Inflation's deceleration in twenty twenty three became a 0:05:38.240 --> 0:05:41.760 big tailwind. As long as inflation continues to decelerate, as 0:05:41.800 --> 0:05:44.640 long as PPI in particular decelerates faster than CPI, you 0:05:44.640 --> 0:05:47.800 can count on margin improvement to continue to drive some 0:05:47.880 --> 0:05:50.719 degree of s and p five hundred improvement irrespective of 0:05:50.760 --> 0:05:53.720 what's going on in the broader macro and broader volume 0:05:53.800 --> 0:05:54.640 sales environment. 0:05:55.120 --> 0:05:59.599 Yo Gena. Paul was talking earlier about how many rate 0:05:59.720 --> 0:06:02.559 cuts are actually priced y to the short term interest 0:06:02.640 --> 0:06:05.120 rate market. No one seems to really believe we'll get 0:06:05.160 --> 0:06:09.560 six rate cuts as the current pricing suggests. What does 0:06:09.600 --> 0:06:12.160 that mean for the equity market? If there is, you 0:06:12.800 --> 0:06:16.200 start to get some disappointment from the Fed speakers to 0:06:16.360 --> 0:06:17.640 not expect that much easy. 0:06:17.960 --> 0:06:19.760 Yeah, this goes back to something we were talking about 0:06:19.760 --> 0:06:21.760 a little bit earlier, and that is is the yield 0:06:21.760 --> 0:06:24.599 curve going to continue to upwardly steep in? Because that's 0:06:24.640 --> 0:06:27.320 where you see the risk emanate or sort of work 0:06:27.360 --> 0:06:29.320 it work its way into the equity market. Is if 0:06:29.360 --> 0:06:32.679 the yield curve doesn't behave as anticipated, then you start 0:06:32.720 --> 0:06:36.440 to see much more equity market sort of weakness potentially emerge. 0:06:36.920 --> 0:06:40.240 So the question becomes how much of that rate cut 0:06:40.760 --> 0:06:43.080 is priced into the short end versus the long end? 0:06:43.120 --> 0:06:45.440 What's the term premium we're looking at today, which is 0:06:45.440 --> 0:06:47.880 a whole other set of questions that we need to answer. 0:06:48.320 --> 0:06:50.479 I would say it is a risk going into this year, 0:06:50.520 --> 0:06:54.760 but it's nothing like the risk of oh my gosh, 0:06:54.839 --> 0:06:58.320 the FED has to tighten five times, which we faced 0:06:58.320 --> 0:07:00.560 at the beginning of twenty twenty two. And I think 0:07:00.600 --> 0:07:04.159 that's a really significant point to be made. Is the 0:07:04.240 --> 0:07:06.480 risk of the FED not quite doing as much as 0:07:06.520 --> 0:07:09.800 we hoped is very different than the risk of the 0:07:09.840 --> 0:07:13.000 FED really pushing the brakes on the economy, which is 0:07:13.040 --> 0:07:15.920 a very different environment. So I think in nuance it 0:07:16.000 --> 0:07:17.600 means that we could have a lot of wiggles. It 0:07:17.640 --> 0:07:20.200 could be a choppier market than many are anticipating. It 0:07:20.280 --> 0:07:22.440 certainly is not a market that looks exactly like the 0:07:22.480 --> 0:07:26.360 fourth quarter of twenty twenty three, which was almost idyllic. Yeah, 0:07:27.520 --> 0:07:29.880 we're not going to have the perfect environment to merge. 0:07:29.880 --> 0:07:34.320 It's probably a much choppier environment through the next four 0:07:34.400 --> 0:07:36.600 quarters or so, as we contend with a FED that 0:07:36.680 --> 0:07:39.520 is going to be on again, off again and really 0:07:39.600 --> 0:07:42.520 much more data dependant, perhaps than the market is anticipating. 0:07:43.200 --> 0:07:45.600 Get a little technical here, breath in the market. It 0:07:45.640 --> 0:07:48.200 was terrible, arguably for the first nine months of twenty 0:07:48.280 --> 0:07:51.040 twenty three, the Magnificent seven. It seemed to get better 0:07:51.120 --> 0:07:54.160 there during that year. In rally, we had to you 0:07:54.200 --> 0:07:57.200 know the russell, you know out or form we had 0:07:57.200 --> 0:07:58.720 the even if you look at the S and P 0:07:59.000 --> 0:08:03.200 equal weighted, that outer perform the SPX. So it looks 0:08:03.240 --> 0:08:05.280 like the breath kind of got better in that fourth quarter. 0:08:05.360 --> 0:08:06.800 Is it where we want to see it today? 0:08:07.160 --> 0:08:09.160 It's a lot better. It might actually be a little 0:08:09.160 --> 0:08:11.880 overbought at this point in time, and so I hate 0:08:11.920 --> 0:08:14.320 to be the bearer of bad news or anything. But 0:08:14.360 --> 0:08:15.960 when you get to a point where more than seventy 0:08:15.960 --> 0:08:17.960 five percent of sticks they're trading above their fifty day 0:08:17.960 --> 0:08:21.040 moving average, where RSIs are surging above eighty, which is 0:08:21.040 --> 0:08:24.080 where we were by the end of December, it usually 0:08:24.240 --> 0:08:26.800 is a point that triggers some degree of consolidation in 0:08:26.800 --> 0:08:28.920 the equity market. We're already seeing that at the start 0:08:28.960 --> 0:08:32.480 of this year. So we got a bit overbought on breath. 0:08:32.480 --> 0:08:34.280 I don't want to put too much cold water on it, 0:08:34.320 --> 0:08:37.120 because of course, we want more participation to ultimately fuel 0:08:37.160 --> 0:08:40.760 the market's gains, and seeing more participation across the world 0:08:40.840 --> 0:08:42.920 as well as into lower caps is a very good 0:08:42.960 --> 0:08:47.320 thing for the equity market's longer term trend durability. But 0:08:47.400 --> 0:08:49.880 in the short run it probably does indicate that we're 0:08:49.920 --> 0:08:52.120 a little too overbought, and we're due for some consolidation. 0:08:52.720 --> 0:08:54.800 You know, Gene, It's a time of year where a 0:08:54.800 --> 0:08:58.920 lot of the old seasonality tropes get trotted out dependably 0:08:59.040 --> 0:09:02.439 and reliably, you know, as goes January, as goes rest 0:09:02.480 --> 0:09:03.959 of the year. Some people just look at the first 0:09:04.000 --> 0:09:06.800 week and believe that that's a sign of where we're 0:09:06.800 --> 0:09:08.559 going for the year. Are you a buyer of any 0:09:08.600 --> 0:09:08.800 of that? 0:09:09.640 --> 0:09:12.319 Ah, not hugely. I mean, of course, if you have 0:09:12.360 --> 0:09:14.480 a great January, you've got one month under your belt, 0:09:14.480 --> 0:09:16.200 and so it means that one month out of twelve 0:09:16.240 --> 0:09:18.440 is positive, and so the math works in your favor 0:09:19.080 --> 0:09:21.120 a little bit. So if we do have a pretty 0:09:21.120 --> 0:09:24.760 positive January, generally that indicates that your year as more 0:09:24.920 --> 0:09:28.440 likely to be positive. Yeah. I think we have to 0:09:28.480 --> 0:09:32.280 be a little bit more conscientious about short term changes 0:09:32.320 --> 0:09:34.720 and shifts in the broader macro as well as in 0:09:34.760 --> 0:09:37.640 the earnings landscape, and those tend to dominate a lot 0:09:37.679 --> 0:09:40.800 more in my thought process. I do think that after 0:09:40.840 --> 0:09:42.560 the incredible search we had in the fourth quarter, we're 0:09:42.600 --> 0:09:46.440 due for consolidation. But broadly, all of the trends are 0:09:46.480 --> 0:09:48.960 still very supportive of stocks and really have been since 0:09:49.040 --> 0:09:52.360 late twenty twenty two. It won't be a perfect climb higher, 0:09:52.400 --> 0:09:55.840 but it is worth noting that participation is great. We 0:09:55.880 --> 0:09:58.920 want to see this some improvement and momentum is a 0:09:58.920 --> 0:10:02.079 positive thing, and none of these things are things that 0:10:02.120 --> 0:10:03.520 we want to fade over the long run. 0:10:04.440 --> 0:10:06.400 What's the status of University of Florida football? 0:10:06.640 --> 0:10:06.800 Oh? 0:10:06.840 --> 0:10:09.160 God, do we have to go there? 0:10:09.360 --> 0:10:11.240 I mean, you know, secretly, I was really excited to 0:10:11.280 --> 0:10:14.920 see Michigan beat Alabama. Right, this is the depths of 0:10:14.960 --> 0:10:17.640 my despairs and now looking at other teams because my 0:10:17.679 --> 0:10:20.320 team is no longer in the run. It's been a 0:10:20.400 --> 0:10:22.680 rough couple of years. 0:10:23.840 --> 0:10:24.200 I don't know. 0:10:24.200 --> 0:10:26.080 I would like to say yes, but it's not looking. 0:10:26.400 --> 0:10:28.360 We're optimistic about the market than the Gators. 0:10:28.400 --> 0:10:29.559 It sounds yeah. 0:10:30.120 --> 0:10:34.719 With Gina Martin Adams, chief equity strategist for Bloomberg Intelligence 0:10:34.720 --> 0:10:38.040 and a proud graduate of the University of Florida. 0:10:40.080 --> 0:10:43.440 You're listening to the Team Ken's Are Live program Bloomberg 0:10:43.559 --> 0:10:46.920 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:10:47.000 --> 0:10:50.120 the iHeartRadio app, and the Bloomberg Business App, or listen 0:10:50.200 --> 0:10:52.239 on demand wherever you get your podcast. 0:10:54.400 --> 0:10:58.199 We got some delivery data just recently for some of 0:10:58.200 --> 0:11:02.760 the electric vehicle companies, some kind of Tesla Rivian all 0:11:02.760 --> 0:11:04.319 that type of stuff. Let's get the latest here from 0:11:04.320 --> 0:11:08.120 Steve Man. He's a global auto market research leader for 0:11:08.240 --> 0:11:12.679 Bloomberg Intelligence. He's zooming in from our Princeton campus down 0:11:12.720 --> 0:11:15.480 there in Princeton, New Jersey. Steve, let's start with Tesla here. 0:11:15.520 --> 0:11:19.400 The numbers kind of in line with expectation, but I 0:11:19.440 --> 0:11:23.280 know the news headline is Tesla falls behind BYD and 0:11:23.360 --> 0:11:26.839 quarterly EV sales. You spent many years in Hong Kong 0:11:26.920 --> 0:11:29.800 leading our Bloomberg Intelligence effort there, so you had first 0:11:29.840 --> 0:11:33.040 hand look at the growth and development of the Chinese 0:11:33.720 --> 0:11:36.679 electric vehicle market. Tell us what's happening with Well, first 0:11:36.679 --> 0:11:39.040 of all, like who is by D and how do 0:11:39.080 --> 0:11:40.200 they compete against Tesla? 0:11:41.040 --> 0:11:46.520 Well, yeah, that's right, Paul. By D fourth quarter EV 0:11:46.679 --> 0:11:50.840 sales came in about eight percent, about above Tesla's on 0:11:50.880 --> 0:11:54.280 a global level. So it's pretty significant first time ever 0:11:54.720 --> 0:11:58.520 that the Boi D bet Tesla. Well, by D is 0:11:58.880 --> 0:12:04.760 Warren Buffett back electric vehicle manufacturer. You know, they've they're 0:12:04.880 --> 0:12:10.160 very vertically integrated. They've launched a slew of cheaper, less 0:12:10.200 --> 0:12:14.360 expensive models in the China market. So that's you know, 0:12:14.520 --> 0:12:17.440 probably driven a lot of the sales in the fourth 0:12:17.520 --> 0:12:21.960 quarter on the back of you know, weaker macro macroeconomic conditions. 0:12:22.040 --> 0:12:25.040 So they've done well. BYD has done well, and. 0:12:25.040 --> 0:12:28.880 Yet Steve, we don't see any by D vehicles in 0:12:29.000 --> 0:12:30.640 the US. Correct me if I'm wrong about that, at 0:12:30.679 --> 0:12:33.560 least passenger vehicles. I wonder why that is. Is it 0:12:33.720 --> 0:12:36.760 tariffs or trade war issues? Is it just a business 0:12:36.840 --> 0:12:37.720 decision on their part. 0:12:38.200 --> 0:12:42.839 Oh, it's a combination of all that. I think. More importantly, uh, 0:12:43.000 --> 0:12:47.360 BYD just doesn't have, you know, the distribution network like 0:12:47.520 --> 0:12:49.960 the Big Three and some of the European companies have 0:12:50.400 --> 0:12:52.439 here in the US, so it's really hard for them 0:12:52.480 --> 0:12:56.480 to establish themselves to really build the brand in the US. 0:12:57.120 --> 0:12:59.960 So on top of all the stuff you just talked about, 0:13:00.640 --> 0:13:02.880 they you know, their their focus is really not in 0:13:02.880 --> 0:13:06.800 the US, though they are getting into Europe. They're planning 0:13:06.840 --> 0:13:09.680 to build a plant in Hungary in twenty twenty six. 0:13:09.720 --> 0:13:13.640 It's a low cost producing manufacturing country, so they want 0:13:13.720 --> 0:13:17.280 to kind of break into the European market first then 0:13:17.559 --> 0:13:21.439 think about the US. So you know this this, you 0:13:21.480 --> 0:13:24.160 know we were talking about the the EV sales crown. 0:13:24.240 --> 0:13:27.040 I think it's going to be flip flopping between Tesla 0:13:27.360 --> 0:13:29.880 and and buy D in the next year, maybe into 0:13:29.920 --> 0:13:33.760 twenty twenty five, until you know, BID has a plant 0:13:34.040 --> 0:13:37.200 in Europe. You know, that's the you know, that's when 0:13:37.200 --> 0:13:40.600 they you know, move out of their local comfort zone, 0:13:40.679 --> 0:13:44.480 local market in China and expand overseas. And you know, 0:13:44.600 --> 0:13:47.520 that's probably when they're gonna if if you know, I 0:13:47.600 --> 0:13:50.240 do Bid continue to do well, that's probably when they're 0:13:50.240 --> 0:13:55.319 going to solidify the lead for global EV sales. 0:13:55.640 --> 0:13:57.880 You know. Interesting, I'm looking at an interesting article on 0:13:57.920 --> 0:14:01.520 the Bloomberg terminal today from Bloomberg newsctric car models eligible 0:14:01.559 --> 0:14:04.640 for seventy five hundred dollars tax credit cut to thirteen 0:14:05.000 --> 0:14:08.240 from almost two dozen. The new list excludes vehicles that 0:14:08.360 --> 0:14:11.960 use certain Chinese made parts that can't be good for 0:14:12.280 --> 0:14:13.800 EV sales in the United States. 0:14:14.720 --> 0:14:19.160 No, it's it's interesting because the Inflation Reduction Act was 0:14:19.280 --> 0:14:24.840 supposed to generate or supposed to increase EV sales in 0:14:24.880 --> 0:14:27.480 the US. But it's kind of counterintuitive. But I think 0:14:27.520 --> 0:14:31.480 that's only temporary because what the IRA really is trying 0:14:31.520 --> 0:14:36.240 to do is get us to build a supply chain, 0:14:36.320 --> 0:14:39.880 battery supply chain locally here in the US, so that 0:14:40.800 --> 0:14:45.640 battery prices come down. EV's becomes more affordable for the 0:14:45.720 --> 0:14:48.920 US consumer. So if you look out, if you look 0:14:48.960 --> 0:14:51.880 at all the investments that's been made so far on 0:14:52.000 --> 0:14:55.080 battery plants, a lot of those will actually come online 0:14:55.440 --> 0:14:58.320 in twenty twenty five, twenty twenty six. That's gonna make 0:14:58.400 --> 0:15:03.960 US battery production lot more competitive and probably able to 0:15:03.960 --> 0:15:08.760 produce batteries below what the Chinese are producing at. So 0:15:09.480 --> 0:15:12.520 we think that's right. We think ev sales will probably 0:15:12.720 --> 0:15:15.440 take a break in the next couple of years until 0:15:15.720 --> 0:15:19.640 more models come in plays with play with cheaper batteries, 0:15:20.160 --> 0:15:25.960 and hopefully, hopefully the mindset of the US consumer changes 0:15:26.000 --> 0:15:29.560 a bit and they get they become more warmed up 0:15:29.640 --> 0:15:33.520 to EV's, and hopefully demand will improve twenty twenty five 0:15:33.560 --> 0:15:34.000 and beyond. 0:15:34.520 --> 0:15:38.320 You know, Steve, I rode over the weekend in Rivian 0:15:38.400 --> 0:15:41.760 for the first time. My buddy finally got delivery over Rivian. 0:15:41.920 --> 0:15:43.720 I don't know what you would I think it was 0:15:43.800 --> 0:15:45.520 like five years ago. I got to say, it's an 0:15:45.520 --> 0:15:47.920 impressive car. I mean, I'm know Matt Miller as far 0:15:47.960 --> 0:15:51.000 as reviewing automobiles. But I was impressed. But then I 0:15:51.000 --> 0:15:54.160 read today Steve that Rivian stock is really taking a 0:15:54.200 --> 0:15:58.840 beating today because their deliveries in the fourth quarter missed estimates. Now, 0:15:58.880 --> 0:16:01.640 I know it's a very spensive vehicle. I wonder if 0:16:01.720 --> 0:16:04.880 that's part of the problem or is it execution? Is 0:16:04.880 --> 0:16:08.320 it still supply chain issues? What's going on with Rivian 0:16:08.360 --> 0:16:09.800 that they're missing estimates? 0:16:10.080 --> 0:16:14.760 Yeah, I think it's down ten percent today, and it's 0:16:14.840 --> 0:16:17.840 it's more of an operational issue. I think. You know, 0:16:18.040 --> 0:16:20.479 a few weeks ago, you know, there was an announcement 0:16:21.080 --> 0:16:25.000 that AT and T was going to buy the Rivian trucks, 0:16:25.040 --> 0:16:27.040 and you know, I think everybody got excited to stop 0:16:28.000 --> 0:16:32.360 search quite a bit. I think that's because people thought, 0:16:32.760 --> 0:16:35.440 you know, the break even is actually sooner than later. 0:16:36.520 --> 0:16:39.800 Right now, Rivian actually uses on every card that they 0:16:39.840 --> 0:16:43.920 that they built. Uh So, now that you know they're 0:16:44.320 --> 0:16:47.080 you know, the they kind of they really didn't really 0:16:47.080 --> 0:16:50.720 miss They kind of kind of hit consensus expectation. But 0:16:50.760 --> 0:16:53.680 I think consensus the street was expecting a lot higher 0:16:53.760 --> 0:16:58.760 number a beat. So the you know, the thinking is 0:16:59.120 --> 0:17:03.280 maybe the breaking even point is not gonna be twenty 0:17:03.320 --> 0:17:06.000 twenty four, twenty twenty five, probably in twenty twenty six. 0:17:06.080 --> 0:17:08.800 So the concern is, you know, how are they gonna 0:17:09.320 --> 0:17:11.120 make it through between now and then? 0:17:11.400 --> 0:17:13.639 Yeah, these are one hundred thousand dollars cars too, right, 0:17:13.880 --> 0:17:15.200 there's no room to cut prices. 0:17:15.200 --> 0:17:15.680 AA true. 0:17:15.840 --> 0:17:18.960 I mean Matt Matt Miller was able to arrange a 0:17:19.000 --> 0:17:21.840 week long test for me of the F one fifty Lightning, 0:17:22.119 --> 0:17:24.840 which was an awesome vehicle. And I'm not an EV person, 0:17:24.880 --> 0:17:26.919 I'm not certainly not a truck person. I'm a Wall 0:17:26.960 --> 0:17:27.400 Street person. 0:17:27.520 --> 0:17:29.040 Biller's just farming out vehicles. 0:17:29.240 --> 0:17:33.159 Yeah, but the sticker on this thing was ninety four grand. Yeah. 0:17:33.400 --> 0:17:33.480 Jo. 0:17:33.640 --> 0:17:36.800 Wow, that's just a serious thing. So all right, Steve More, 0:17:36.840 --> 0:17:40.800 Tesla News, their their deliveries. We're pretty much in line 0:17:40.800 --> 0:17:43.560 with estimates. Is that Is that a good performance for 0:17:44.000 --> 0:17:44.680 Tesla here? 0:17:45.640 --> 0:17:49.119 Well, they did revise their guidance and adviser guidance. 0:17:49.240 --> 0:17:49.480 Yes. 0:17:49.600 --> 0:17:51.840 I think Elon Musk at the beginning of twenty twenty 0:17:51.840 --> 0:17:55.840 three was talking about two million, two million unit number. 0:17:56.880 --> 0:17:59.080 You know, they had a bunch of price cuts, the 0:17:59.200 --> 0:18:02.439 drum at the man drum up demand and you know 0:18:02.560 --> 0:18:05.840 they ended up at one point eight. Uh, it's probably 0:18:05.880 --> 0:18:08.320 gonna be a slower growth, like I said earlier, in 0:18:08.320 --> 0:18:10.800 the next couple of years. We think, you know, Tesla 0:18:10.880 --> 0:18:12.800 maybe can able to do two point one, you know, 0:18:12.880 --> 0:18:16.840 especially with uh, you know the price cuts that the 0:18:16.960 --> 0:18:19.360 series of price cuts that they made in twenty twenty three, 0:18:19.480 --> 0:18:23.520 and maybe cyber truck coming online hopefully you know, Uh, 0:18:23.560 --> 0:18:26.159 they can get that going quickly, get that you know, 0:18:26.240 --> 0:18:30.160 new battery plant going quickly and hit that two point one. 0:18:30.240 --> 0:18:33.399 But there is a risk in terms of earnings. Uh, 0:18:33.480 --> 0:18:36.879 it's it's a it's a it's a tall order for Tesla. 0:18:36.920 --> 0:18:37.880 It's a balancing act. 0:18:37.880 --> 0:18:38.040 You know. 0:18:38.080 --> 0:18:40.960 They want to continue to pump the Model three and 0:18:41.119 --> 0:18:44.400 Model wiout get sales up because that's a cash cow 0:18:44.560 --> 0:18:47.040 for them. But at the same time they're going to 0:18:47.119 --> 0:18:51.080 manage ramping up cyber truck and and the next model 0:18:51.119 --> 0:18:53.560 that they want to introduce, which is a compact you know, 0:18:53.640 --> 0:18:57.840 it's dubbed the Model to the compact vehicle. So you know, 0:18:57.920 --> 0:19:00.280 there's a lot of there's a lot of things they 0:19:00.359 --> 0:19:03.480 got to mention twenty twenty four, and you know, I 0:19:03.520 --> 0:19:07.320 think there is there is a risk to to kensensus earnings. 0:19:07.760 --> 0:19:09.520 All right, Steve Mann, thanks so much. For joining us. 0:19:09.520 --> 0:19:12.159 Steve Man. He's a global auto market research leader for 0:19:12.400 --> 0:19:17.800 Bloomberg Intelligence based now in Princeton, New Jersey, after you 0:19:17.800 --> 0:19:22.200 know managing Bloomberg Intelligence in Hong Kong for many years. 0:19:22.480 --> 0:19:26.080 You're listening to the tape cancer Live program Bloomberg Markets 0:19:26.119 --> 0:19:29.520 weekdays at ten am Eastern on Bloomberg Radio, the tune 0:19:29.560 --> 0:19:32.520 in app, Bloomberg dot Com, and the Bloomberg Business App. 0:19:32.560 --> 0:19:35.320 You can also listen live on Amazon Alexa from our 0:19:35.400 --> 0:19:40.400 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:19:41.960 --> 0:19:44.240 Michael Reagan, Paul Sweeney. We're live here in our Bloomerg 0:19:44.280 --> 0:19:46.960 inter Active Brokers studio. We're streaming live on YouTube. It's 0:19:46.960 --> 0:19:49.080 ahead over there if you like YouTube dot com and 0:19:49.119 --> 0:19:50.560 search Bloomberg or Radio. 0:19:50.960 --> 0:19:51.120 Mike. 0:19:51.240 --> 0:19:53.840 If you were a fund manager and you weren't all 0:19:53.880 --> 0:19:56.240 in on the fourth quarter, there's no way you could 0:19:56.240 --> 0:19:57.000 perform last year. 0:19:57.160 --> 0:19:59.280 You have a hard time writing that letter to investors 0:19:59.520 --> 0:20:00.440 at the end last year. 0:20:00.520 --> 0:20:02.639 Exactly right. Let's check in with somebody who does do 0:20:02.680 --> 0:20:05.200 this stuff for loving. Phil Taes. He's the CEO Tay's 0:20:05.240 --> 0:20:07.440