WEBVTT - Pompeo on Ukraine Corruption, Coronavirus Update 0:00:00.440 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.480 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.880 --> 0:00:13.480 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.639 not to mention our hundred journalists and analysts more than 0:00:16.680 --> 0:00:19.280 a hundred and twenty countries. You can download Bloomberg Business 0:00:19.320 --> 0:00:22.200 Week on iTunes, SoundCloud, or Bloomberg dot Com. You can 0:00:22.200 --> 0:00:24.520 also listen to our radio show weekdays at two pm 0:00:24.520 --> 0:00:28.880 Eastern only on Bloomberg Radio. Bloomberg Chief Washington Correspondent Kevin's 0:00:28.920 --> 0:00:32.800 Surreally host Bloomberg sound On has been traveling with Secretary 0:00:32.800 --> 0:00:35.919 of State Mike Pompeo. Kevin spoke to the Secretary an 0:00:35.920 --> 0:00:40.080 exclusive interview from Jamaica. Kevin started by asking the Secretary 0:00:40.159 --> 0:00:43.680 about her on backed Hezbollah finding a foothold in South America. 0:00:45.000 --> 0:00:48.440 When you see the scope and reach of what the 0:00:48.479 --> 0:00:51.440 Islamic Republic of Run regime has done, you can't forget. 0:00:51.479 --> 0:00:54.200 They tried to kill someone in the United States of America. 0:00:54.720 --> 0:00:59.680 They've conducted assassination campaigns in Europe. This is a global phenomenon. 0:00:59.720 --> 0:01:03.320 When we say that Iran is the leading destabilizing force 0:01:03.400 --> 0:01:06.240 in the Middle East and throughout the world, it's because 0:01:06.240 --> 0:01:09.080 of this terror activity that they have now spread as 0:01:09.080 --> 0:01:11.440 a cancer all across the globe. This past week, as 0:01:11.440 --> 0:01:13.839 you've traveled the world, we started in Germany and Berlin, 0:01:13.880 --> 0:01:16.759 where you met with world leaders, including German Chancellor Angela Merkel. 0:01:17.880 --> 0:01:20.960 You talked I'm sure you talked about Iran, but as 0:01:20.959 --> 0:01:24.320 you know, Europe has not always followed the same strategic 0:01:24.720 --> 0:01:26.920 route as the United States when it comes to iron. 0:01:26.959 --> 0:01:29.959 Did your meetings with European leaders moved the needle in 0:01:30.000 --> 0:01:33.120 that direction at all? Yes, their look there, we've been clear. 0:01:33.160 --> 0:01:35.520 We've had a different view on the right way to 0:01:35.560 --> 0:01:38.839 proceed to mature that Iran never gets a nuclear weapon, 0:01:38.880 --> 0:01:40.960 that their missile program is contained, and that this terror 0:01:41.000 --> 0:01:44.400 regime we were just talking about is pushback. They've never 0:01:44.440 --> 0:01:46.720 wavered from the shared objective. That just had a different 0:01:46.800 --> 0:01:49.800 view about about how to proceed. But if you've seen 0:01:50.200 --> 0:01:52.440 what Iran has done even in the past few weeks, 0:01:52.720 --> 0:01:55.920 but that's nuclear extortion. They're now threatening to leave the NPT. 0:01:56.560 --> 0:01:59.440 So I did we I talked with my European counterparts 0:01:59.480 --> 0:02:02.000 while I was or they have now uh taken a 0:02:02.040 --> 0:02:04.440 step under the j c p o A to invoke 0:02:04.520 --> 0:02:08.000 the dispute resolution mechanism. I think not only they, but 0:02:08.120 --> 0:02:11.239 the world can now see that this rogue regime has 0:02:11.600 --> 0:02:15.480 no intention of complying with the central tenants of what 0:02:15.600 --> 0:02:18.880 that agreement contained, and the world must unite to ensure 0:02:18.919 --> 0:02:20.959 that Iran never has a nuclear When I saw President 0:02:21.000 --> 0:02:23.520 McCrone say that yesterday, I know he means that now 0:02:23.560 --> 0:02:25.440 we need to work together to achieve When you say 0:02:25.440 --> 0:02:28.280 they have no intention, than than how do you get 0:02:28.360 --> 0:02:31.080 Tamron to go to the United Nations, to come to 0:02:31.160 --> 0:02:34.200 the United Nations to work with the international community aside 0:02:34.240 --> 0:02:39.360 from the sanctions and the various military response options. Ultimately, 0:02:39.560 --> 0:02:43.640 the people of Iran will get what they so richly deserve, 0:02:44.120 --> 0:02:46.919 a regime that behaves in ways that are consistent with 0:02:46.960 --> 0:02:50.040 the value sets of the Iranian people. In the end, 0:02:50.200 --> 0:02:52.839 the Iranian people will demand their government. You see see 0:02:52.880 --> 0:02:55.119 it in the protests. You see it when they walk 0:02:55.160 --> 0:02:58.679 around American flags that were put down by the Islamic 0:02:58.720 --> 0:03:00.840 Republic's leadership and in a them to so they can 0:03:00.880 --> 0:03:03.840 show pictures of Iranian people walking over American flags, and 0:03:03.880 --> 0:03:05.480 in fact, people go out of their way not to 0:03:05.560 --> 0:03:09.880 do that. Uh. This isn't about Iran versus the United States. 0:03:10.240 --> 0:03:12.360 This is about a regime that has treated its own 0:03:12.360 --> 0:03:15.079 people terribly. The world can see it. It's a regime 0:03:15.120 --> 0:03:17.240 that even now the i a e. Is trying to 0:03:17.280 --> 0:03:20.200 figure out how nuclear material got to places that the 0:03:20.240 --> 0:03:23.200 Iranian leadership said it would not be. Uh. And so 0:03:23.280 --> 0:03:26.360 this is a global risk. President Trump started his remarks 0:03:26.440 --> 0:03:31.000 at the night after an American response by saying, Iran 0:03:31.040 --> 0:03:34.240 will never have a nuclear weapons or primary purpose, but 0:03:34.320 --> 0:03:36.200 we have a broader set of objectives to We just 0:03:36.240 --> 0:03:38.200 want them to behave like a normal nation and re 0:03:38.520 --> 0:03:41.880 enter the society, the community of nations, and and traveling 0:03:41.880 --> 0:03:43.840 with you all week, I mean, I'm struck by just 0:03:43.920 --> 0:03:48.120 the range of hotspot issues around the world that are 0:03:48.120 --> 0:03:50.560 going on, and back home, the only thing that they're 0:03:50.560 --> 0:03:53.360 talking about his impeachment and the Senate impeachment trial. Did 0:03:53.400 --> 0:03:56.440 that come up at all in your conversations with world leaders? 0:03:56.480 --> 0:04:00.520 And has the Senate impeachment trial endangered US interests and 0:04:00.600 --> 0:04:03.920 reputation around the world? You know, Kevin, it hasn't come 0:04:04.000 --> 0:04:05.800 up today except where I received a question at a 0:04:05.800 --> 0:04:08.119 press conference about it. So, and you said you would 0:04:08.160 --> 0:04:12.000 testify it. Yeah. I've said consistently if the law required 0:04:12.040 --> 0:04:16.400 me to testify, I would do so. Uh. You know, 0:04:16.440 --> 0:04:19.360 it hasn't come up. It almost never comes up in 0:04:19.640 --> 0:04:22.279 meetings with my counterparts. There's too many important things going 0:04:22.279 --> 0:04:24.840 on in the world. America is too close a partner 0:04:24.880 --> 0:04:28.360 today have with countries in the Caribbean reaching here in Kingston. Uh. 0:04:28.400 --> 0:04:30.120 They care about so much that we do. They're such 0:04:30.160 --> 0:04:33.240 good friends and allies. They see the noise in Washington, 0:04:33.360 --> 0:04:35.440 but it is not something they would think in the 0:04:35.480 --> 0:04:37.320 time that we have between us, that they would raise. 0:04:37.400 --> 0:04:40.640 How Democrats are saying that Rudy Giuliani orchestrated a shadow 0:04:40.680 --> 0:04:45.160 foreign policy And can you assure diplomat serving overseas all 0:04:45.200 --> 0:04:48.679 around the world in dangerous places, that that's not the case. Yeah. 0:04:48.920 --> 0:04:52.960 The foreign policy we were executing then is the same 0:04:53.000 --> 0:04:56.320 foreign policy we're executing today. With respect to Ukraine. It's 0:04:56.320 --> 0:04:58.600 an important country. It sits at this cross roads. It's 0:04:58.640 --> 0:05:02.120 under enormous pressure from Rush. President Trump has taken actions 0:05:02.160 --> 0:05:06.280 to counter Russia the President Obama refused to take. We've 0:05:06.320 --> 0:05:09.280 provided defensive systems for the Ukrainian people so that they 0:05:09.279 --> 0:05:14.159 can defend themselves. We've supported this new leader, President Zelinsky, 0:05:14.440 --> 0:05:17.479 in his efforts to stamp out corruption and to build 0:05:17.560 --> 0:05:21.760 his democracy. Were continuing to do that. Our policy with 0:05:21.839 --> 0:05:25.440 respect to Ukraine has been set on the fundamental principles 0:05:25.480 --> 0:05:29.120 of reducing the footprint of corruption and helping the Ukrainian 0:05:29.120 --> 0:05:32.640 people build up a democracy while under threat from the 0:05:32.680 --> 0:05:34.599 Russians in the east and southeast. You said that you 0:05:34.640 --> 0:05:37.440 look forward to going there, that you have other issues 0:05:37.480 --> 0:05:39.520 that you want to discuss with them, or is that 0:05:39.600 --> 0:05:41.520 still the case. Yeah, I'm going to get there. I'm 0:05:41.520 --> 0:05:43.720 gonna get there before too long. I had a trip 0:05:43.720 --> 0:05:45.839 planned and then we had an issue arise in the 0:05:45.839 --> 0:05:49.039 Middle East that had to attend to. UH. While that 0:05:49.120 --> 0:05:50.640 issue is not behind us, there's still a lot of 0:05:50.640 --> 0:05:54.760 work to do there, and that is our chief Washington corresponded. 0:05:54.839 --> 0:05:58.919 Kevin Creali speaking with Secretary of State Mike Pompeo. Kevin 0:05:58.960 --> 0:06:01.919 has been traveling with the Secretary of State, as he noted, 0:06:02.279 --> 0:06:06.240 on this sort of WorldWind tour of the world. They 0:06:06.240 --> 0:06:09.719 spoke today in Jamaica. Obviously very much on the news, 0:06:09.839 --> 0:06:14.240 very much on the impeachment News. Ukraine obviously is right 0:06:14.360 --> 0:06:17.440 in the sphere of influence that the Secretary of State 0:06:17.960 --> 0:06:20.839 plays into, so him saying that he will make a 0:06:20.880 --> 0:06:23.920 trip there before too long, given its importance, and a 0:06:24.000 --> 0:06:26.440 reminder that there are some kind of big, major foreign 0:06:26.440 --> 0:06:28.279 policy issues that are still out there right and that 0:06:28.520 --> 0:06:31.840 have been kind of plaguing certainly this administration for some time. 0:06:31.920 --> 0:06:41.040 So we'll see where that goes. Brands Energy, we do 0:06:41.120 --> 0:06:44.320 want to talk a bit about energy. It's been an 0:06:44.320 --> 0:06:46.800 interesting market to watch and I think it's timely. I 0:06:46.839 --> 0:06:49.320 think about the launch of our Green not interesting if 0:06:49.360 --> 0:06:53.799 you're in it, if you're long, if you're short, you're great, um, 0:06:53.839 --> 0:06:55.840 But it's interesting in a week where Davas is all 0:06:55.880 --> 0:06:58.640 about climate change and we are seeing the energy space 0:06:58.680 --> 0:07:02.800 certainly be disrupted by alternative energy. It was the worst 0:07:03.000 --> 0:07:06.240 performing sector major industry sector in the S and P 0:07:06.400 --> 0:07:09.880 five last year and it's continuing to be at the 0:07:09.880 --> 0:07:13.760 bottom of the pack. In Ryan Kelly has to deal 0:07:13.800 --> 0:07:16.400 with all of this and find the opportunities. He's senior 0:07:16.480 --> 0:07:19.760 vice president portfolio manager at Hennessy Funds. He's back in 0:07:19.800 --> 0:07:24.120 our Bloomberg Interactive Broker studio studio. It's not easy right now, right, 0:07:24.120 --> 0:07:26.240 and sitting here thinking if I wanted to know all that, 0:07:26.280 --> 0:07:29.080 I just want to stated, thanks very much. Can I 0:07:29.080 --> 0:07:32.360 have my butt off to get a recitation of how 0:07:32.440 --> 0:07:35.080 bad the market? Here's my therapy session. No, but I 0:07:35.080 --> 0:07:38.080 mean running a gas um and utility, our guest utility 0:07:38.120 --> 0:07:42.240 fund not easy. UM, It's it's actually going okay, it's 0:07:42.360 --> 0:07:45.840 it's it's confusing. UM. Certainly, if you're talking just about 0:07:46.240 --> 0:07:49.880 the overall energy sector, about oil, about natural gas prices, 0:07:50.080 --> 0:07:53.680 those of all plummeted energy is pretty tough last year. Obviously, 0:07:53.680 --> 0:07:56.960 as you just alluded to, UM, the natural gas side 0:07:56.960 --> 0:08:00.840 has actually been doing pretty well in one regard because 0:08:00.840 --> 0:08:04.480 of these low prices. It's very good for the end customer. 0:08:04.680 --> 0:08:07.440 It's very good for the natural gas distribution companies, it's 0:08:07.520 --> 0:08:10.200 very good for the utilities. And our fund focuses on 0:08:10.960 --> 0:08:15.240 utilities in general and natural gas utilities specifically. So what 0:08:15.320 --> 0:08:20.280 we have is that because we've had so such affordability, abundance, 0:08:20.600 --> 0:08:23.840 accessibility of natural gas for many years. Here, Uh, it 0:08:23.920 --> 0:08:26.520 means actually that natural gas you do, the utilities are 0:08:26.520 --> 0:08:28.360 doing pretty well, and the fund is up about two 0:08:28.440 --> 0:08:31.000 point eight percent in the past month. So at the 0:08:31.000 --> 0:08:33.760 beginning of the year. Last year was up about two 0:08:33.760 --> 0:08:35.920 and a half percent. Performance though, do you feel like 0:08:36.720 --> 0:08:38.520 it's not where you'd like it to be? Yeah, performance 0:08:38.559 --> 0:08:40.800 could have been better overall for the whole year last year. 0:08:40.960 --> 0:08:45.280 The fund is the SMP of course up. That's a 0:08:45.679 --> 0:08:49.079 big laggard. UM and Uh. I think that what's going 0:08:49.120 --> 0:08:51.400 on is that we also have some more some larger 0:08:52.000 --> 0:08:55.080 major pipeline companies that move natural gas around the country. 0:08:55.360 --> 0:08:58.600 They're related both to oil and natural gas, so there's 0:08:58.960 --> 0:09:01.160 issues there that's been holding a speck And forgive me, 0:09:01.200 --> 0:09:02.679 I think I said two and a half percent last year, 0:09:02.679 --> 0:09:04.520 and I did just mean year to date, right, year 0:09:04.600 --> 0:09:07.160 to day. Yes, but as you said, it was double 0:09:07.200 --> 0:09:10.320 digit games last year. Yes, yes, Um and uh. And 0:09:10.400 --> 0:09:12.520 interestingly though, when you just look at the fundamentals of 0:09:12.559 --> 0:09:17.240 the companies, UM. The utility space for the last three 0:09:17.320 --> 0:09:20.280 quarters has been has had the highest growth and earnings 0:09:20.280 --> 0:09:23.000 out of any of the sectors, which is pretty pretty crazy. 0:09:23.040 --> 0:09:25.520 This year, it's or this quarter on a year over 0:09:25.559 --> 0:09:28.960 your basis, it's expected to be up nine on an 0:09:29.000 --> 0:09:31.480 EPs point of view, which is not the sort of 0:09:31.480 --> 0:09:34.280 growth that we're seeing elsewhere in the market. To be sure. Well, 0:09:34.320 --> 0:09:37.000 let's talk about some of those names. One literally close 0:09:37.040 --> 0:09:40.760 to home Duke Energy. Uh tell us about that. Yes, Well, 0:09:40.800 --> 0:09:42.920 I think that a couple of ways that you can 0:09:42.920 --> 0:09:46.000 play this this spaces is to buy the bigger utilities. 0:09:46.080 --> 0:09:50.240 Utilities have a real opportunity now to switch from UM 0:09:50.520 --> 0:09:56.160 more traditional fossil fuel type sources to renewables. Duke Duke 0:09:56.320 --> 0:09:59.559 Energy d u K is in the process of doing that. 0:09:59.600 --> 0:10:02.600 They have very lofty goals of transforming themselves over the 0:10:02.640 --> 0:10:04.439 next thirty years, and I think there's gonna be a 0:10:04.520 --> 0:10:07.800 nice long runway for that company. It's also a nice 0:10:08.080 --> 0:10:10.640 large company, seventy billion in market cap, a pretty good 0:10:10.679 --> 0:10:13.559 pe compared to peers. So I think that there's some opportunities. 0:10:13.559 --> 0:10:17.440 I think people forget, Like how massive that the dividends. 0:10:18.080 --> 0:10:19.640 I think you're saying. I was looking at the dividend. 0:10:19.640 --> 0:10:22.920 It's almost four percent, So dividend eiels are a big 0:10:22.960 --> 0:10:26.360 part of the utility play UM and and you know, 0:10:26.360 --> 0:10:28.920 it's interesting. I do think about these big utilities and 0:10:28.960 --> 0:10:33.280 the transition from UM you know, traditional fuels if you will, 0:10:33.400 --> 0:10:38.120 or fossil fuels to alternatives. I mean, how twenty years 0:10:38.360 --> 0:10:41.920 is that it takes years, decades, decades because of the 0:10:41.960 --> 0:10:44.720 infrastructure build out, because of the infrastructure, And you know, 0:10:44.760 --> 0:10:46.360 one thing I'd maybe like to talk a little bit 0:10:46.360 --> 0:10:49.559 about is that this future energy complex that we're looking 0:10:49.600 --> 0:10:53.600 at is probably going to be predominantly renewables and natural gas. 0:10:53.880 --> 0:10:55.880 And that's some of the debate that's going on now, 0:10:55.960 --> 0:10:58.240 and I think some of the misinformation that's out there 0:10:58.280 --> 0:11:01.079 is that natural gas is very important part of all 0:11:01.120 --> 0:11:05.520 of this. We've gotten to uh lost two percent in 0:11:05.559 --> 0:11:08.480 greenhouse gas emissions last year because natural gas has been 0:11:08.480 --> 0:11:12.480 replacing coal in large scale power plants. So um, this 0:11:12.520 --> 0:11:15.599 is a decades long process to get to more renewables. 0:11:15.640 --> 0:11:18.480 About twelve percent or so of our overall energy is 0:11:18.520 --> 0:11:22.400 produced from renewables right now. It could get to twenties 0:11:22.440 --> 0:11:26.000 to even thirty over time, but it's going to take 0:11:26.040 --> 0:11:28.800 a lot to get there. You don't think there's an urgency. 0:11:28.920 --> 0:11:30.560 I've just got to push a little bit. With climate change, 0:11:30.559 --> 0:11:32.240 we only have about thirty seconds. But I do feel 0:11:32.240 --> 0:11:34.640 like that there's an urgency all of a sudden. Maybe 0:11:34.640 --> 0:11:37.200 it's the fires in Australia or California or what have you, 0:11:37.720 --> 0:11:40.079 But I mean, I feel like the clock is ticking. 0:11:40.280 --> 0:11:41.880 I think there is an urgency. I think that we're 0:11:41.880 --> 0:11:44.199 getting rid of coal. I think that we're producing a 0:11:44.240 --> 0:11:47.319 lot less energy out of oil. Those are two great things. 0:11:47.679 --> 0:11:50.960 But I think that, um, the amount of infrastructure you'd 0:11:50.960 --> 0:11:55.000 have to change or to go straight to renewables is phenomenal. 0:11:55.040 --> 0:11:57.880 In fact, we'll be hurting the environment until we got there, 0:11:58.000 --> 0:12:00.160 so we need to do it a little bit more 0:12:00.400 --> 0:12:03.160 at a measured pace. All Right, We're gonna leave it. 0:12:03.200 --> 0:12:05.360 They're great stuff. Get to catch up with you. Ryan Kelly, 0:12:05.360 --> 0:12:08.560 Senior Vice president portfolio manager for Hennessy Funds, looking after 0:12:08.600 --> 0:12:11.679 the Gas Utility Fund. I want to watch for sure. 0:12:13.040 --> 0:12:20.680 So Deep, No Body, So Wow, A bold call for 0:12:20.720 --> 0:12:24.000 the walk in music for this song. But it is 0:12:24.040 --> 0:12:28.040 all about the shorts. Just ask Elon Musk. He is 0:12:28.080 --> 0:12:32.160 the subject of this week's cover story. It's all about 0:12:32.240 --> 0:12:37.440 Tesla and those shorts for the moment being proven dramatically wrong. 0:12:37.520 --> 0:12:41.920 Dana hall pennd the story. She covers the company day 0:12:41.920 --> 0:12:44.360 to day, and this is just an amazing step back 0:12:44.440 --> 0:12:46.920 story about everything going on there. She joins us from 0:12:46.960 --> 0:12:49.280 our nine sixty studio in San Francisco. Joe Webber, the 0:12:49.360 --> 0:12:52.280 editor of the magazine. He's here in our Bloomberg Interactive 0:12:52.280 --> 0:12:55.000 Broker studio. Dana, First of all, congrats on this story. 0:12:55.080 --> 0:12:56.800 It's such a great read, you know, Carol, and I 0:12:56.880 --> 0:12:59.640 got to read it ahead of it over the weekend 0:12:59.640 --> 0:13:03.040 as it sort of in process, and it's just such 0:13:03.080 --> 0:13:08.599 a tale in many ways that captures the spirit of 0:13:08.640 --> 0:13:10.959 where this company is. Tell us what you set out 0:13:11.000 --> 0:13:14.200 to do. Sure, well, I've been covering Tesla for quite 0:13:14.400 --> 0:13:17.320 quite a long time at this point, and unfortunately for 0:13:17.400 --> 0:13:19.760 my mental health, spend a lot of time on Twitter, 0:13:20.200 --> 0:13:23.319 which is really where the Tesla conversation takes place. I mean, 0:13:23.400 --> 0:13:26.720 it is the water cooler for this company. Elon tweets, 0:13:27.200 --> 0:13:29.920 the fans tweet, the shorts tweet, and you know, over 0:13:29.920 --> 0:13:31.960 the past couple of years, I started seeing this tesla 0:13:32.040 --> 0:13:35.160 q hashtag more and more. It really kind of accelerated 0:13:35.960 --> 0:13:38.920 after the Solar City buy out and uh and then 0:13:39.040 --> 0:13:42.640 kind of erupted in with a whole go private debacle 0:13:42.840 --> 0:13:45.320 and I just sort of tried to figure out, well, Okay, 0:13:45.559 --> 0:13:48.079 who is Tesla Q? Who are these guys, and like, 0:13:48.120 --> 0:13:52.240 there's so many different characters. Um. But when Tesla filed 0:13:52.240 --> 0:13:55.440 a restraining order against Skabushka. I sort of found my 0:13:55.559 --> 0:13:58.240 character and just tried to spend as much time as 0:13:58.280 --> 0:14:01.880 possible understanding really what his motivation was. And I think 0:14:01.880 --> 0:14:04.320 what's what's really fascinating is that, you know, a lot 0:14:04.360 --> 0:14:07.160 of these people are not actual short sellers. Some of 0:14:07.200 --> 0:14:10.079 them are just skeptics, and they really don't buy the 0:14:10.160 --> 0:14:15.040 kind of mythology around musk that has been created. Scaboush, 0:14:15.080 --> 0:14:19.960 What who is that? Dane so Scabushka. His real name 0:14:20.000 --> 0:14:23.160 is Randy Pothy. He is a graduate student in ann Arbor. 0:14:23.680 --> 0:14:27.840 He's a fascinating guy. He speaks five languages. He's getting 0:14:27.840 --> 0:14:31.760 a doctoral dissertation in Asian Languages and Culture. But he 0:14:31.800 --> 0:14:34.680 grew up in Fremont, which is where Tesla has its factory. 0:14:35.200 --> 0:14:38.440 And in eighteen when a lot of people were questioning 0:14:38.480 --> 0:14:41.920 the ability of Tesla to manufacturer it's Model three, he 0:14:42.080 --> 0:14:45.160 was in this rare position to actually check things out 0:14:45.320 --> 0:14:48.120 because you know, his parents still live in Fremont. So 0:14:48.160 --> 0:14:51.880 he started tweeting out these pictures of production that people 0:14:51.920 --> 0:14:54.560 took very seriously. I mean you would see on the 0:14:54.560 --> 0:14:58.400 Tesla fanboy forums, you know, all these messages like Scabushka 0:14:58.920 --> 0:15:03.520 production numbers and they were remarkably accurate. And uh so 0:15:03.680 --> 0:15:06.120 he just sort of became this intriguing figure. Well in 0:15:06.120 --> 0:15:08.840 triguing And didn't you actually talk to us about the 0:15:08.880 --> 0:15:10.680 first time you reached out to him data, because I 0:15:10.680 --> 0:15:13.640 think this is interesting too. I mean, he had information, 0:15:13.720 --> 0:15:15.960 right he was tracking this company that to some extent 0:15:16.320 --> 0:15:19.280 could be helpful. Oh sure, Well, I mean, so you 0:15:19.280 --> 0:15:21.200 know a lot of short sellers do a lot of research, 0:15:21.440 --> 0:15:23.240 but a lot of them are based in New York 0:15:23.320 --> 0:15:26.120 and they're and they're you know, fantastic and in terms 0:15:26.120 --> 0:15:28.960 of like digging into financials and filings and you know, 0:15:29.000 --> 0:15:31.080 they look at things on the on the balance sheets. 0:15:31.080 --> 0:15:33.960 Scabush was actually someone who was clearly like going to 0:15:34.000 --> 0:15:37.120 the factory every day or had a beat on what 0:15:37.160 --> 0:15:39.120 was happening at the factory. And I live in the 0:15:39.160 --> 0:15:41.160 Bay Area, and so there was this whole thing where, 0:15:41.680 --> 0:15:43.920 you know, it was clear that Tesla was building some 0:15:44.000 --> 0:15:47.000 kind of new tent to house its production line. I 0:15:47.080 --> 0:15:49.840 kept hearing from employees, you know, Ellen's building a tent 0:15:49.960 --> 0:15:53.240 out back. So um. And at the same time, Scabushka 0:15:53.320 --> 0:15:56.440 was sort of posting these photographs. So I was actually 0:15:56.480 --> 0:15:59.520 at the Fremont bart station looking at this tent, and 0:15:59.560 --> 0:16:01.720 I wasn't positive if I was looking at like the 0:16:01.800 --> 0:16:04.680 new tent or an old tent, And so I sent 0:16:04.800 --> 0:16:06.160 him a picture and I was like, am I looking 0:16:06.200 --> 0:16:08.800 at the right thing? And he confirmed it? And I really, 0:16:08.840 --> 0:16:11.560 I mean I was, you know, legitimately trying to kind 0:16:11.560 --> 0:16:13.480 of cultivate him as a source. I asked him if 0:16:13.480 --> 0:16:15.520 he wanted to meet, but he always declined and I 0:16:15.560 --> 0:16:18.760 didn't meet him until much later. So talk to us 0:16:18.760 --> 0:16:24.120 more about tesla Q, because that is like they're on Twitter. 0:16:24.600 --> 0:16:26.720 They are sort of amazing and sort of this hive 0:16:26.840 --> 0:16:30.400 mind ability to kind of look at Tesla and Ellen 0:16:30.560 --> 0:16:33.480 from all these different angles, and they've actually impacted the 0:16:33.480 --> 0:16:36.840 stock over the time. But yet life has gotten very 0:16:36.880 --> 0:16:41.360 expensive for short sellers of late as Tesla's stock has 0:16:41.400 --> 0:16:45.320 sort of started to soar. What uh, what do you 0:16:45.320 --> 0:16:47.840 make of where we're tesla Q stands now and what 0:16:47.920 --> 0:16:50.440 are they saying about what could happen in the year 0:16:50.440 --> 0:16:52.760 to come, especially on a day right as you know, Dana, right, 0:16:52.960 --> 0:16:58.440 we saw a Tesla market cap a hundred billions, surpassing VWI. Yeah, 0:16:58.480 --> 0:17:02.120 that's real psychological logical milestone. Sure, well, I guess I 0:17:02.120 --> 0:17:04.399 would say that, you know, once you sort of I 0:17:04.400 --> 0:17:07.120 mean a lot of folks within Tesla Q, I mean 0:17:07.320 --> 0:17:11.040 they they view Musk through the lens of fraud or 0:17:11.119 --> 0:17:14.160 fabrication or a cult of personality, And once you see 0:17:14.200 --> 0:17:16.919 him through that lens, it's very difficult to kind of 0:17:16.960 --> 0:17:19.919 be moved from that. Just like you know, the fans 0:17:19.960 --> 0:17:22.480 who see him as like, you know, our great hope 0:17:22.520 --> 0:17:24.359 for for solving climate change, I mean, they will not 0:17:24.400 --> 0:17:27.080 be moved either. So it's very it's a very bifurcated community. 0:17:27.119 --> 0:17:29.439 But I think, you know, short sellers would probably say 0:17:29.560 --> 0:17:32.280 or yes, the stock is on a terror but but 0:17:32.359 --> 0:17:36.359 it's completely divorced from fundamentals. And you know, just because 0:17:36.400 --> 0:17:38.320 the stock is high doesn't mean that the company is 0:17:38.359 --> 0:17:42.720 ever going to be sustainably profitable. Clearly, Tesla reported a 0:17:42.800 --> 0:17:45.240 profit in the third quarter. They're going to report earnings 0:17:45.280 --> 0:17:47.320 next week. But you know, will will the company ever 0:17:47.359 --> 0:17:50.080 have a profitable year like that? That remains to be seen. 0:17:51.080 --> 0:17:58.639 And why ultimately is this stock, this company so binary? 0:17:58.880 --> 0:18:00.399 You know, we and I know we have ski this 0:18:00.440 --> 0:18:02.240 all the time, but I keep coming back to this 0:18:02.320 --> 0:18:05.600 idea that there's essentially no one who's like yeah, right, yeah, 0:18:05.640 --> 0:18:09.240 like it just doesn't happen, So why is it. I 0:18:09.240 --> 0:18:11.080 think it's like a two for one, right, So you 0:18:11.119 --> 0:18:15.000 can short Apple, you can short Netflix, you can short Amazon. 0:18:15.160 --> 0:18:18.919 But people who aren't really like shorting Tim Cook or 0:18:18.960 --> 0:18:21.480 Bezos or you know, like they're they're really I mean, 0:18:21.480 --> 0:18:25.480 this is really about Elon, and Elon himself trolls the 0:18:25.480 --> 0:18:28.199 short sellers all the time, and so it's become this 0:18:28.320 --> 0:18:31.600 long running war that is very personal between both sides, 0:18:31.720 --> 0:18:34.240 and it's people are people are shorting the company because 0:18:34.280 --> 0:18:37.520 they fundamentally do not believe you know, Elon and the 0:18:37.560 --> 0:18:40.320 hype that he has created around himself, and so they 0:18:40.400 --> 0:18:44.200 fundamentally have have issues with him as the chief executive 0:18:44.560 --> 0:18:47.200 and with the company. The go private thing was just 0:18:47.280 --> 0:18:48.800 kind of like the icing on the cake. I mean, 0:18:48.840 --> 0:18:51.800 once that happened, like tesla Q just doubled down and 0:18:51.840 --> 0:18:53.359 they will not be moved. You know, they will not 0:18:53.400 --> 0:18:55.120 be moved. Now to be clear, some of that, I mean, 0:18:55.400 --> 0:18:58.120 people everyone has a very different trading thing. Some some 0:18:58.200 --> 0:19:01.159 people are swing traders, they trade every day, some or 0:19:01.200 --> 0:19:04.439 puts some options. I mean some some people like they 0:19:04.520 --> 0:19:06.560 might consider themselves a short but they might not have 0:19:06.600 --> 0:19:08.760 an act of short position at this moment. I mean, 0:19:08.960 --> 0:19:11.520 you know, that gets into like everyone has a fundamentally 0:19:11.560 --> 0:19:14.760 different strategy when it comes to how they trade. Okay, so, Dan, 0:19:14.880 --> 0:19:19.359 I'm closing question for you. You cover elon tesla so closely. 0:19:19.920 --> 0:19:22.480 This was a kind of a longer, longer term story 0:19:22.520 --> 0:19:25.600 that uh that you know is your first cover for 0:19:25.640 --> 0:19:31.679 the magazine. What did you learn? That's a really good question. 0:19:31.720 --> 0:19:35.040 I mean, I guess what I learned was just how 0:19:35.560 --> 0:19:39.960 kind of diverse this community of tesla Q is. I mean, 0:19:39.960 --> 0:19:42.679 to be honest, when I first saw Scobushka's tweets, I 0:19:42.720 --> 0:19:45.440 thought that this guy was either a supplier or a contractor, 0:19:46.119 --> 0:19:48.880 or an employee or a former employee. Like I never 0:19:48.880 --> 0:19:50.439 would have guessed in a million years that he was 0:19:50.440 --> 0:19:52.439 a graduate student. You know, I thought, for sure, this 0:19:52.480 --> 0:19:54.680 guy must have some kind of in with the company. 0:19:54.720 --> 0:19:58.600 But his research was so profoundly good. And then when 0:19:58.600 --> 0:20:00.640 I met him, I was like, wait, you're a graduate 0:20:00.680 --> 0:20:03.399 student writing a doctoral listener. You're like, you're just like 0:20:03.440 --> 0:20:07.720 a guy, just like a guy exactly. It's a great story, 0:20:07.760 --> 0:20:11.080 a must read. The cover story in this week's magazine, 0:20:11.119 --> 0:20:13.879 Joel Webber, Thanks to you, Editor Bloomberg Business Week at 0:20:13.920 --> 0:20:16.440 Dana Hall, she wrote the story. Tech reporter for Bloomberg 0:20:16.560 --> 0:20:19.400 joining us from San Francisco. Need it out right now 0:20:19.520 --> 0:20:22.960 as we speak. This is Bloomberg Business Week with Carol 0:20:23.040 --> 0:20:27.119 Messer and Jason Kelly on Bloomberg Radio. Certainly, one of 0:20:27.119 --> 0:20:29.840 the big stories that continues to be on everyone's radar 0:20:29.960 --> 0:20:33.440 is about the respiratory virus over in China. China ramping 0:20:33.520 --> 0:20:36.080 up its efforts to contain it. Uh the virus so 0:20:36.119 --> 0:20:39.680 far killing at least seventeen people, infecting hundreds as the 0:20:39.720 --> 0:20:43.560 outbreak has spread beyond Asia. China State broadcaster CCTV her 0:20:43.640 --> 0:20:46.440 Charlie talking about this earlier, reporting that the death toll 0:20:46.480 --> 0:20:48.879 has nearly doubled from a previous total as I mentioned, 0:20:48.920 --> 0:20:53.240 of nine. And there were two preliminary positive reports of 0:20:53.280 --> 0:20:56.160 this virus in Hong Kong, another diagnosis in the US, 0:20:56.240 --> 0:20:59.439 patients under examination in Mexico and Russia. So well, it 0:20:59.480 --> 0:21:01.600 feels on what contained we are hearing more and more 0:21:01.920 --> 0:21:05.200