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Speaker 2: The Bloomberg Dollar Index is that the highs of the
Speaker 2: year so far. You're a dollar is one oh seven.
Speaker 2: You have, Yes, the year is a little bit stronger
Speaker 2: against the dollar. But man, it was a really tough
Speaker 2: week over the last week with the turmoil in French politics.
Speaker 2: Luckily we have an expert with us. Marcus Ashworth is
Speaker 2: joining us. He is from Bloomberg Opinion. I haven't talked
Speaker 2: to you Marcus in I don't know ten months.
Speaker 3: Yeah, it's been ages too long, too long.
Speaker 2: It is so good to hear your voice. Okay. We
Speaker 2: love about you is because you have opinions. What do
Speaker 2: you make of what's unfolding in France right now?
Speaker 3: Such a shy retiring title on it.
Speaker 4: How what do I make of it?
Speaker 3: I mean, look, it's not a crisis yet anyway. I
Speaker 3: think it's a problem which was three years out in
Speaker 3: the future in twenty seven. Whoever's going to replace mac Rol,
Speaker 3: he's just rolled the dice and brought it forward by
Speaker 3: three years. It's trying to solve for probably a bigger
Speaker 3: problem now earlier and getting a better result, perhaps he hopes.
Speaker 3: What it has highlighted is that there's been a long,
Speaker 3: deep seated, ever growing fiscal problem in France where they've
Speaker 3: they've hidden essentially, I mean, not how to get away
Speaker 3: with it for ages and ages. First, we had a
Speaker 3: Fitch down grade in October, we got a S and
Speaker 3: P down grade in the end of May, and we've
Speaker 3: got Moodies now having a sort of little think about
Speaker 3: really do do they genuinely think France is worth a
Speaker 3: double A two? So that's because the fiscal deaths in
Speaker 3: France has risen to five point five percent of GDP,
Speaker 3: and more importantly, it's debt g UP is starting to rise.
Speaker 5: It again.
Speaker 3: They had this been great hope of this downward glide
Speaker 3: path of both France and Italy. That's not happening. It
Speaker 3: hadn't done happen at all last year when quite the
Speaker 3: other way, and doesn't look like it's going to get
Speaker 3: better for least down for this twenty twenty seventh period.
Speaker 3: So no one thinks that even the current situation would
Speaker 3: own seen any physical improvement with potential of a non
Speaker 3: Macron sort of controlled prime minister and government. That means
Speaker 3: that quite the reverse is going to get even worse,
Speaker 3: and that isn't great use for France, isn't great use
Speaker 3: to the European Union. They hate political volitility. They get
Speaker 3: very spooky, particularly of a potentially eurosceptic or you know,
Speaker 3: pro leaving the European Unions it once worked party might
Speaker 3: get into some form of power. They get very antsy.
Speaker 3: So that's why you're best to sell or get that
Speaker 3: or stay out of France until it settles down. June
Speaker 3: seventh will get the June July seventh, Sorry, we'll get
Speaker 3: the second round final results the parliamentary elections. Macron's staying
Speaker 3: around with other three years.
Speaker 6: I love the whole snap election thing. I like because
Speaker 6: we're over here in the US, We're going month after
Speaker 6: month year just to get to November. So I kind
Speaker 6: of like this whole snap election thing here. But what's
Speaker 6: behind Marcus? Do you think that the rise of Marine
Speaker 6: le pen and the far right? Is it what we're
Speaker 6: seeing just around the world. Is it political, is it economical?
Speaker 7: What's kind of really dru.
Speaker 3: I mean, I don't think you can call her far right.
Speaker 3: To my mind, she's a socialist. She's pretty hard left, okay,
Speaker 3: and the fact that she's a national so called champion,
Speaker 3: and that's what she wants to push, you know, French
Speaker 3: pension rights, welfare rights, she's very pro union. So in
Speaker 3: some senses, I know it's easy to label them far right.
Speaker 3: But the point here is is that you know what
Speaker 3: clearly she's standing for. It is a sense of enough
Speaker 3: already from the French people on mass immigrant This is
Speaker 3: happening in Italy, this has definitely happened in the UK,
Speaker 3: It's happening ever in Europe, and it's happening in the US.
Speaker 3: So look, this is a global problem. Isn't going to
Speaker 3: get solved anytime soon, but you know you're going to
Speaker 3: get Look what's happened in the UK. We're getting Richie
Speaker 3: Sinak going to get bounced out because he's failed to
Speaker 3: live up to anything he said he would do. But
Speaker 3: we're having similar across the European elections, where the results
Speaker 3: tended to favor the more should we say, anti immigration
Speaker 3: parties whether some of them are left or right is
Speaker 3: a subjective point. But look, it's this is just bad
Speaker 3: fiscal situations getting worse combined with you know, that awful
Speaker 3: thing that European politics really doesn't like is that fear
Speaker 3: that the European Union, that euro project might come under question.
Speaker 3: And that's when investors, which you believe very much in
Speaker 3: this whole France German bedrock and that eving has been
Speaker 3: calmed down. We've got the EU isshing bonds by the
Speaker 3: gazillion in the middle, lots of pandemic programs spraying money everywhere,
Speaker 3: and yet it isn't enough. And that's a little bit
Speaker 3: of a worry. I personally, I see it as a
Speaker 3: little reality check and maybe in the long run this
Speaker 3: might be better for Europe if they can get their
Speaker 3: act together. I don't see it as a proper euro
Speaker 3: crisis or anything like it.
Speaker 2: Have you noticed or are you hearing flows coming out
Speaker 2: of Europe into the US because of the political issues there.
Speaker 2: I mean, we have our own mess.
Speaker 3: But what we do have is Convidiot, Alex, you've got
Speaker 3: it all already. What more do you want? You can't
Speaker 3: want more of our money?
Speaker 2: Yes I do, I want all of your money.
Speaker 3: Everyone in Europe is already already over the way in
Speaker 3: the US. Look I mean, I would say it's more
Speaker 3: like the US investors who might have been tempted to
Speaker 3: get out of the US and diversified long last, coming
Speaker 3: up to your elections, may have been tempted to sort
Speaker 3: of go into Europe and have a little sniff, particularly
Speaker 3: around banks and things like that. That's why the worst
Speaker 3: performance so far being French banks. They're being able to
Speaker 3: He's spanked. For the reason why I've been spank is
Speaker 3: because I think there's a very popular situation for US
Speaker 3: investors looking to play the old rebound there, and that
Speaker 3: I think is what we've seen. We've seen some fast
Speaker 3: money exit stays left. I don't think European investors are
Speaker 3: going to go anywhere. I think Japanese had already long
Speaker 3: thought very carefully about the so called budden plus strategy,
Speaker 3: where you bought French bonds, you locked him like with Germany,
Speaker 3: you've got in an extra bit of yield that works
Speaker 3: a few years ago, not so much anymore, but yeah,
Speaker 3: there may be a little bit. And so I was saying,
Speaker 3: is I just don't think any new money is going
Speaker 3: to come in until July seventh. Why would it. It's
Speaker 3: crazy to take more risks you need to, and you've
Speaker 3: got no visibility on the outcome. There's likely to be
Speaker 3: one or two more bumps in the road before we
Speaker 3: have a clear idea of the way the French system works.
Speaker 3: You have this first round on June the thirtieth, and
Speaker 3: then and only then you get it clear out clarity
Speaker 3: of what who goes forward into the second round and
Speaker 3: you can work out which personalities are going to be
Speaker 3: doing probably better or worse with more accurate polling. But
Speaker 3: that will come clearer as it days go by. I
Speaker 3: know that this afternoon actually France has thunder a little
Speaker 3: bit better against Germany. French yels have actually gone nowhere
Speaker 3: in the last week of a bit. It's just the
Speaker 3: German yields have fallen hard because they're following, Yes, you've
Speaker 3: got Alex, they're following the US deals lower. It's all
Speaker 3: about the US.
Speaker 7: Seem told you told you, hey, Marcus.
Speaker 6: It was just a few weeks ago when mister maccron
Speaker 6: hosted a basically come back to France conference where David
Speaker 6: Solomon Goldman Sachs was there and mister moynihand.
Speaker 5: From Bank of America.
Speaker 7: I mean, is France open for business? Are people investing in?
Speaker 3: They're still mark the spot. This is where Jamie Diamond stood.
Speaker 3: Now we have a little competition. Funnily off, the first
Speaker 3: thing that a labor government, almost certain in the UK,
Speaker 3: are going to do is good, do exactly this. Come
Speaker 3: to the UK. Everything's brilliant, come back to your business.
Speaker 3: So that part has been very good at this and
Speaker 3: definitely there's been some signs that not so much that
Speaker 3: the city's losing jobs, but that France is attracting more
Speaker 3: financial jobs. It's quite great tax breaks to go there.
Speaker 3: At the same time, clearly they want to promote all
Speaker 3: foreign direct investment and arguably financial big movers you know, Silhadel,
Speaker 3: JP Morgan, Back of American et cetera. Are responding a
Speaker 3: little bit to the challenge. And one interesting thing is
Speaker 3: I think that Macromo is going to relax a bit
Speaker 3: on the how much that severance pay has to be
Speaker 3: in France. Whi's one of the big things that the
Speaker 3: banks don't like is that the cost of actually losing
Speaker 3: people and they change their minds on their expansion plans.
Speaker 3: But for the moment, Yeah, I think they've done a
Speaker 3: good job in France and probably outside of London. Paris
Speaker 3: is the logical place for the most financial companies and
Speaker 3: banks are particularly to go. But you know, again they
Speaker 3: don't need this att of published It's not very good
Speaker 3: for them.
Speaker 2: Mark's always a pleasure. It was so good to chat
Speaker 2: with you. Definitely miss all your commentary. Marcus Ashworth of
Speaker 2: Bloomberg Opinion, And I have to say my Father's Day
Speaker 2: dinner last night, for some reason, doing business in France
Speaker 2: came up in the conversation and about unions and I
Speaker 2: was like, what does this mean? Like are are we
Speaker 2: a peak union? Like what is the significance of regular
Speaker 2: people on the upper West side talking about.
Speaker 6: Yeah, I mean again, we had that conference, you know,
Speaker 6: in Paris or in France a few weeks ago, and
Speaker 6: again all the big heavyweight from Wall Street Global Wall
Speaker 6: Street were there and it just said basically we were
Speaker 6: open for business. And you know a lot of the
Speaker 6: big financial firms have moved some jobs out of London
Speaker 6: into Paris in additions to other European capitals. But you
Speaker 6: just think about the taxes and some of the social
Speaker 6: programs and is it really open for business, and can
Speaker 6: they attract significant foreign global investment into that country?
Speaker 3: So?
Speaker 2: Or is it like the open more open? It's going
Speaker 2: to be versus other countries, right, like the cleaner shirt.
Speaker 7: And I'm saying now it's everything's on hold until July.
Speaker 5: Yeah, we get that vote.
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Speaker 2: One stock that's doing some stuff is Micron. It got
Speaker 2: some price targets raised, it's going to report earnings next week,
Speaker 2: and it is just having an awesome day and an
Speaker 2: awesome ride. Let's get to take care from Kim Forrest.
Speaker 2: She is founder in CIO Book of Capital Partners. She
Speaker 2: joins us, Now, hey, Kim, Micron, what do you think
Speaker 2: about it?
Speaker 8: I absolutely love it, but maybe not at an entry
Speaker 8: point right now. It goes up and it goes down.
Speaker 8: This is a very volatile stock, but it's certainly one
Speaker 8: to keep your eye on. And you can ask me
Speaker 8: why why. I have two letters for you.
Speaker 2: AI okay, but why like to tell me more? Tell
Speaker 2: me more?
Speaker 4: Because of AI? This company makes the device is that
Speaker 4: build out data center memory? Okay? Or you know where
Speaker 4: data lives.
Speaker 8: And if there's one thing I know about AI, it's
Speaker 8: that it eats data like you wouldn't believe. So if
Speaker 8: you believe in AI, you should believe in the makers
Speaker 8: of nand and de ram memory devices.
Speaker 4: So there you go. That's why I like it, he kim.
Speaker 6: At a cocktail party, so many comes up to you
Speaker 6: and says, how do I invest in AI?
Speaker 7: Where do you steer them?
Speaker 2: Or you're at the wrong cocktail party? But go ahead?
Speaker 8: Yes, actually you know I try to go incognito at
Speaker 8: cocktail parties.
Speaker 4: But that's okay.
Speaker 8: Well, I always say invest carefully and I have a
Speaker 8: reasonable timeline. And I think those are the two things
Speaker 8: that people right now are probably forgetting by I don't know,
Speaker 8: making in video go up by thirty percent since the split?
Speaker 4: Does that seem right to you? I'm thinking no? But whatever.
Speaker 8: So what you really have to look for is the
Speaker 8: chain of areas that AI touches. And again, one of
Speaker 8: them is in Nvidia the tip that drives the models,
Speaker 8: and that's certainly important, but there's going to be a
Speaker 8: whole lot more infrastructure around it, and even things like
Speaker 8: I know this could be a big irol, but Telecom
Speaker 8: is probably going to have to markedly increase its capacity
Speaker 8: for wireless consumers because we're going to be consuming a
Speaker 8: lot more data, storing a lot more data, and these models,
Speaker 8: as I say, use a ton of data. So anything
Speaker 8: in that chain is fair game right now for investing
Speaker 8: in AI.
Speaker 2: We would never irol you for saying Telecom, but based
Speaker 2: on the fact that you say, you know Micron can
Speaker 2: be really volatile, you don't want to buy at these levels.
Speaker 2: You want to buy on dips. Are you noticing a
Speaker 2: lack of dips a our dips becoming less frequent at
Speaker 2: this point?
Speaker 4: Yes?
Speaker 8: And I think it's because you know, we're what are
Speaker 8: we thirty six months into discovering chat or not even
Speaker 8: that long, eighteen months into discovering chat, GPT, something like that,
Speaker 8: So people are really still looking for how do I
Speaker 8: how do I.
Speaker 4: Invest in that? You can't buy open AI.
Speaker 8: You can buy in video, but that feels a little stretched,
Speaker 8: So where else do you look? And I say, and
Speaker 8: AMD is also fair for this because they're going to
Speaker 8: not only be a competitor for Nvidia, but also make
Speaker 8: some of the products that go on an end device.
Speaker 8: We keep forgetting, like the user has to be able
Speaker 8: to connect to these models, and that's really important in
Speaker 8: your search for where the outsized growth may be.
Speaker 6: So, Kim, what is NetApp and why do you like it?
Speaker 6: Other than the fact that it's up forty one percent
Speaker 6: year to date.
Speaker 8: Well, I mean that's really helpful, right, but all joshing aside,
Speaker 8: you know, the nerdiest. I mean, it's almost like a
Speaker 8: math joke, right, like a finance joke.
Speaker 4: But I digress. No, seriously, it's back to storage, storage
Speaker 4: of data. Now.
Speaker 8: Net app makes enterprise storage devices, and I think the
Speaker 8: enterprise is going to have to store a whole lot
Speaker 8: more data to be made to make AI work for it.
Speaker 8: So that's why we really like net app, and just
Speaker 8: the trends in the world becoming more digitized. Businesses need
Speaker 8: to have stable, safe and reliable storage appliances and that's
Speaker 8: what net app provides.
Speaker 2: Kim, what else do you like aside from the AI trend? Like,
Speaker 2: if that's a nice trend, you got the momentum, you know,
Speaker 2: you got to find your levels et cetera. Aside from that,
Speaker 2: if I wanted to buy stuff.
Speaker 4: Where would it be, buy stuff in tech or not?
Speaker 2: No, outside of tech.
Speaker 8: Outside of tech, well, I'm kind of loving because I
Speaker 8: like to buy low and sell high. I'm looking at
Speaker 8: energy and I like Exxon Mobile because it has just
Speaker 8: bought some land in the Permian base through its recent acquisition,
Speaker 8: so that's good. And I'm somebody that believes in giving
Speaker 8: yourself some margin, some room for error.
Speaker 4: And we might like.
Speaker 8: Ev cars, but it's unclear that, you know, automobiles and
Speaker 8: trucks are going to go away immediately, so I think
Speaker 8: the timeline for energy is much longer. And the big
Speaker 8: energy companies are also investing heavily in alternative energy as well.
Speaker 8: So we're going to always need energy. We like our
Speaker 8: things that use it. Yeah, so I like to invest
Speaker 8: in that as well.
Speaker 2: Yeah, And you have the gross yield three point five percent,
Speaker 2: so you're still getting something there, Kim. I'm wondering, though,
Speaker 2: in energy, do you feel like you can own more
Speaker 2: than one stock, because in talking to people on the street,
Speaker 2: it feels like part of the reason behind all the
Speaker 2: consolidation that's not fundamental is that portfolio managers just can
Speaker 2: on a lot of them. So those companies need to
Speaker 2: make themselves very attractive people like you to be like,
Speaker 2: I'm gonna pull the trigger on this guy right now.
Speaker 8: I don't feel like I want to have a huge
Speaker 8: overweight to it. We run a sector neutral model for
Speaker 8: our flagship product, and what we do is we have
Speaker 8: one energy pick because I like concentrated positions, so we
Speaker 8: enter a position around three percent. And that's why I
Speaker 8: always try to go for best in class because this
Speaker 8: is a commodity. You're not going to be able to
Speaker 8: catch the wave on buying low and selling high because
Speaker 8: you know oil is doing whatever it's doing. So I
Speaker 8: just try to go for the very best company with
Speaker 8: the widest range of products. And that to me is
Speaker 8: excellent because it takes everything from getting it out of
Speaker 8: the ground into your truck, into your car. But also
Speaker 8: they do chemicals as well, so they have a very
Speaker 8: large product suite that addresses a lot of needs.
Speaker 4: That's why I like it.
Speaker 6: Kim, how do you feel about just valuation kind of
Speaker 6: across the market here? I mean a lot of folks
Speaker 6: are saying this is the market's rally really hard over
Speaker 6: the last you know, call it nine twelve months, we've
Speaker 6: seen good earnings growths, you know, certainly, but has the
Speaker 6: earnings growth has been good enough to kind of keep
Speaker 6: pace with where we are?
Speaker 7: So how do you think about valuation?
Speaker 4: Well, I think the valuation.
Speaker 8: You can talk yourself into things being barely or even
Speaker 8: a little bit below valuation if you believe, and this
Speaker 8: is a big if the Feed is going to cut rates.
Speaker 8: And this is the math part of the segment here.
Speaker 8: Once we have lower rates, we get higher multiples. It's
Speaker 8: just how it works because we discount those cash flows
Speaker 8: back at a lower interest rate, not a higher interest rate,
Speaker 8: and you have to accept higher multiples.
Speaker 4: And I think that's part of.
Speaker 8: This game in this market right now is just about
Speaker 8: every last person, retail investor and institutional investors are all
Speaker 8: assuming the fed's going to cut sooner rather than later.
Speaker 2: When the FED cuts, what then looks interesting in a
Speaker 2: way that it doesn't look now like is that when
Speaker 2: small caps finally get some action.
Speaker 4: I hope so.
Speaker 8: I love small caps, and I think you should be
Speaker 8: invested in small caps regardless of what the FED is doing.
Speaker 8: It was awfully hard when the FED was raising rates
Speaker 8: and being into small caps, but good things happen to small, highly.
Speaker 4: High quality companies.
Speaker 8: And what I mean by that is they either grow
Speaker 8: into big companies because they have what it takes to
Speaker 8: satisfy customers and grow, or they get bought by larger companies.
Speaker 8: And both of those things are going to happen when
Speaker 8: rates decrease. That is, companies being more willing to buy
Speaker 8: to acquire product life or companies that they want to
Speaker 8: add to their portfolio, or just growth in general should
Speaker 8: start going once that rate cut happened. So all good
Speaker 8: things come from rate cuts, apparently.
Speaker 6: Kim Farrest, founder and chief investment officer, Capital Partners, located
Speaker 6: in Pittsburgh. Kim Forest, Founder, chief investment officer there. So, uh,
Speaker 6: there's another investor loving the AI trade. M And you know,
Speaker 6: I guess it's not just the chips. You can go
Speaker 6: software places, whether it's Microsoft or somebody else.
Speaker 2: You know, some of the sele exactly we seed.
Speaker 7: Some hardware companies call it out.
Speaker 2: So the telecom angle that you had, the energy angle, which.
Speaker 6: We have the energy angle on utilities and in the
Speaker 6: power trade, it just seems like you can bend this
Speaker 6: thing any way you like to.
Speaker 7: Support where you are.
Speaker 2: And I feel like The theory is that you know,
Speaker 2: at some point we'll come back down to earth. But
Speaker 2: then you have Julian and Manual all upgrading. His forecast
Speaker 2: is six thousand, being like the A I trade. It's
Speaker 2: just it's it's too sticky. Yep, and that I feel
Speaker 2: like you're finally seeing that analyst capitulation at the end
Speaker 2: of the day to the broader market angle.
Speaker 3: Yep.
Speaker 6: Absolutely, And we look at the markets today for Lisa
Speaker 6: Bromwo's listening.
Speaker 7: Who hates this term punched on the SMP five hundred.
Speaker 6: Nothing happening near the Dallas AF fifty nine points, nastas
Speaker 6: off one point.
Speaker 7: Not a lot of happening out there on the e greyfront,
Speaker 7: but that's okay.
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Speaker 7: We're just talking about AI. Let's siguius.
Speaker 6: Tom Keen would say right to some more AI discussioner
Speaker 6: Mark Bergan. He is a technology reporter for Bloomberg News,
Speaker 6: joining us from zoom from London. Which is a technology
Speaker 6: how we all know. Mark, thanks so much for joining
Speaker 6: us here Google Ai. What's their strategy?
Speaker 9: Thanks for having me. I think you know the good
Speaker 9: way put their their strategy in some ways is they're
Speaker 9: trying to longer be in their back foot, right. I
Speaker 9: think that with the past two years, and that our
Speaker 9: story this morning looks at how Google and deep Mind
Speaker 9: really set the infrastructure and then the base layer for
Speaker 9: this sort of AI boom that we've had, and then
Speaker 9: Chat Gebt kind of took all the glory in some ways,
Speaker 9: and so in their playing ketchup in you'd say, not
Speaker 9: necessarily on the technical side, but there's certainly now you know,
Speaker 9: Chat Schebt and all iterations from the different companies building
Speaker 9: language models like Anthropic and cohere, they're all sort of
Speaker 9: threatening Google Search in a way that really hasn't happened
Speaker 9: in almost two decades. And so their their strategy is
Speaker 9: I would say defensive at this point.
Speaker 2: How does it get on the offense? What does it
Speaker 2: need to do to sort of change that narrative?
Speaker 9: Yeah, I think you know, the story we looked at
Speaker 9: today was a lot about this mergers that they've Google
Speaker 9: put in place a year ago. So they've had out
Speaker 9: here in London is deep Mind, which can widely consider
Speaker 9: like the world's leading AI lab and has for the
Speaker 9: past decade effectively been the best funded university running in
Speaker 9: the world. They basically been a research lab. They put
Speaker 9: out some great breakthroughs like alpha Go alpha fold around
Speaker 9: protein folding, but they're not and it haven't been deeply
Speaker 9: integrated and connected with kind of Google's commercial and profit center,
Speaker 9: Google Brain, which was the competing AI lab or that
Speaker 9: they also had in California that was a little bit
Speaker 9: more tied to a lot of the popular Google services,
Speaker 9: and they've been merged that for the past year under
Speaker 9: Demosacipus here who runs all of Google AI. It's had
Speaker 9: kind of a bumby road so far, but I think
Speaker 9: their their plan is to continue to ship things like
Speaker 9: Gemini their big foundational model, tweak that and start kind
Speaker 9: of integrating a lot of this research directly into commercial services.
Speaker 6: Mark What does Google say about that chat GPT and
Speaker 6: just as as a fundamental all threat to the core
Speaker 6: Google search business, what do they how do they respond
Speaker 6: to that?
Speaker 3: Yeah?
Speaker 9: I mean, you know, Google publicly is is great about
Speaker 9: never is talking about their rivals by name. I said anyways,
Speaker 9: they say nothing, and I think I think that that's
Speaker 9: something they've talked about for a long time. Is that
Speaker 9: sort of their their token phrase that soon the butcha
Speaker 9: uses that the search is the last kind of biggest
Speaker 9: moonshot for Google. I think they are thinking, and you know,
Speaker 9: they're thinking a lot about what that search interface looks like.
Speaker 9: You know, how they're going to adapt to if consumers
Speaker 9: move to things like chat, GPT and and Gemini, what
Speaker 9: is in what does that mean for Google Search ads business,
Speaker 9: which is still the line's share of its revenue. They've
Speaker 9: had some some clear mishaps, the pretty ugly snaff foosh
Speaker 9: and since the launch of of Gemini this year, right
Speaker 9: like there was that kind of famous incidents where they
Speaker 9: were some of the responses were encouraging people to put
Speaker 9: glue on pizza, right, there were these They described this
Speaker 9: as sort of like this is kind of early stage
Speaker 9: in this technology and some some some stumbles that they've had,
Speaker 9: but you know, they are the world's leaders in search,
Speaker 9: and this is something where you know, they have a
Speaker 9: lot of deep they have a lot of deep responsibility
Speaker 9: to get this right, not just for their business but
Speaker 9: for people's trust in using Google.
Speaker 2: Well, that's what's so difficult, right, It's like all the
Speaker 2: technology is changing so fast, but you still need to
Speaker 2: like do it. So it's it's you're like we're watching
Speaker 2: it in real time. Paul and I were just talking
Speaker 2: about a Washington Post article that was on the weekend
Speaker 2: and talked about how all the AI models cannot answer
Speaker 2: it who won the presidential election in the US in
Speaker 2: twenty twenty, And I'm just wondering, like how these advanced
Speaker 2: technologies solve for problems that they're using these large language models,
Speaker 2: which is basically like, you know, me and Paul talking
Speaker 2: are regular people talking? Does that also mess them up?
Speaker 4: Yeah?
Speaker 9: I think you know this is it reminds me a
Speaker 9: little bit of It's a slightly different technology obviously, but
Speaker 9: you know, they're in twenty sixteen, have this big mess
Speaker 9: where if there was there was a popular or there's
Speaker 9: a blog or this kind of fringe blog that said
Speaker 9: that if I remember this correctly, it's been a long time,
Speaker 9: but it was that that Hillary Clinton won the election
Speaker 9: in twenty sixteen, right, and that was at the top
Speaker 9: of for briefly and momentarily top of Google News results.
Speaker 9: And they've dealt with this sort of problem around misinformation,
Speaker 9: around totally not credible sources being at the top of
Speaker 9: Google Search. You're singing problems that are now dealing with.
Speaker 9: I saw a story today about Google images and like
Speaker 9: consensual porn. I mean, these these problems I think are
Speaker 9: being multiplied because with these tools of that generative a
Speaker 9: I do, which Google talks a lot of as being revolutionary,
Speaker 9: it also just makes content production so much easier. And
Speaker 9: so there's this multitude of content now and and Google
Speaker 9: has been this sort of their primary services to organize this,
Speaker 9: and that has a lot of messy problems, especially when
Speaker 9: open Ai has kind of forced in Microsoft. This forced
Speaker 9: Google is to move a lot faster than they have
Speaker 9: been in years past, and we've seen some clear stumbles
Speaker 9: from that.
Speaker 6: So mark that that does Google feel like they can
Speaker 6: just solve this problem or makeup ground simply by spending more,
Speaker 6: because certainly they have plenty of cash to spend.
Speaker 4: I think that's right.
Speaker 9: I think, you know, I would say that they have
Speaker 9: the capax to be able to do that. I mean,
Speaker 9: so so does Microsoft. I think you know, Google's logic
Speaker 9: here is twofold, right, they have They clearly have a
Speaker 9: lot of engineering talent and and a lot of experience
Speaker 9: on this, right, Like they there I said earlier that
Speaker 9: they have to launch this paper. They wrote this paper
Speaker 9: that launched this entire generative AI boom. They have decades
Speaker 9: of experience of actually like doing cutting a JI and
Speaker 9: and I think they also have proprietary data that a
Speaker 9: lot of companies don't have, right, Like they have not
Speaker 9: just the main services you know, Google, Maps, YouTube, search, Gmail, Right,
Speaker 9: just like that corpus of data they have that's able
Speaker 9: to sort of train AI services. That's something that really
Speaker 9: know other company has. I think the question has always
Speaker 9: been for them, you can they translate that into something
Speaker 9: like for their cloud business right where they're in third place? Now,
Speaker 9: this that actual that data set advantages that translate into
Speaker 9: commercial sales not necessarily clear, but I think that's sort
Speaker 9: of what they always point to, is is we have
Speaker 9: the talent and we have the sort of the big
Speaker 9: this infrastructure in place that's been in there for decades.
Speaker 2: Well, it's a really good piece. You guys should all
Speaker 2: check it out. It was in Bloomberg BusinessWeek today. What
Speaker 2: are you working on next? Now?
Speaker 9: Well it's summer here in Europe, so nothing to say that,
Speaker 9: I'll tell the story for tomorrow. I think there's, you know,
Speaker 9: one thing that was we mentioned briefly in this this story.
Speaker 9: There's I think it's really interesting is a lot of
Speaker 9: applications in AI are moving not just from kind of
Speaker 9: generating images and texts and chatbots, but into the material sciences.
Speaker 9: That's something that the DeepMind is working on a lot.
Speaker 9: I think there's a tension we talk about in the
Speaker 9: story today between you know, whether or not the company
Speaker 9: should be how much time that allocates to working on
Speaker 9: Gemini competing with open AI versus working on something that
Speaker 9: would kind of push the envelope and working to say
Speaker 9: that biology or pharmaceutical industry and Deep mind Googles shifted
Speaker 9: more research towards towards the sort of open AI competition.
Speaker 9: I think that's created this way for a lot of
Speaker 9: new companies moving into biology and chemistry and applying AI
Speaker 9: to the lab. I think that's really interesting.
Speaker 10: Yeah.
Speaker 2: I think we saw that in cancer research too, Like
Speaker 2: you're basically can be copilots. So you still need doctors,
Speaker 2: you still need all the researchers, but they can be copilots.
Speaker 2: And that idea of thinking about that was quite interesting. Hey, Mark,
Speaker 2: really appreciate it. Look forward tomorrow's article as well. Mark Bergan,
Speaker 2: Bloomberg Technology reporter joining us from the UK.
Speaker 4: I don't know.
Speaker 2: I still don't get it.
Speaker 6: I mean, just to ask a person what practical application
Speaker 6: of AI, and I don't get a nice.
Speaker 2: Consistent It's just that's a cool thing about it all
Speaker 2: developing at once, but it doesn't make it easier for
Speaker 2: people like Layman's like us to understand.
Speaker 6: Again, if you just roll back three, four or five
Speaker 6: years ago, I think this was big data. We called
Speaker 6: it big data, and to me, this is just the
Speaker 6: next iteration of making smarter, smarter analysis of all the data,
Speaker 6: structured data and unstructured data. You think the Internet, all
Speaker 6: that unstructured data, chats you know, you know, all those
Speaker 6: types of emails and all that kind of stuff, and
Speaker 6: what is that data? How can you use that data
Speaker 6: to become more efficient?
Speaker 7: I don't know.
Speaker 6: That's a long way of answering. If you can't do
Speaker 6: it in like twenty words or less, you don't understand it.
Speaker 7: Right, I'm in that camp.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: Thirty AM Alex Deal alongside Paul Sweeney is a Boomberg
Speaker 2: and Tell Just Radio. We bring you all the top
Speaker 2: news and business and finance through our lens of our
Speaker 2: Bloomberg Intelligence analysts. They cover two thousand companies in one
Speaker 2: hundred and thirty industries worldwide. I also get to bring
Speaker 2: in some of my oil CEOs and I get to,
Speaker 2: you know, ale explain to Paul like oil stuff, which
Speaker 2: I always appreciate, and joining us in the studio. I
Speaker 2: have a very special guest for us. It's president and
Speaker 2: CEO of Weatherford Greech Salagram. Weatherford is an oil services company.
Speaker 2: It does international, it does domestic, It does onshore, it
Speaker 2: does offshore. It also has a leg in the energy transition.
Speaker 2: What makes this company unique is that it went bankrupt
Speaker 2: in twenty nineteen. Greiche took over in twenty twenty, and
Speaker 2: the stock has crushed this year. It's up by the
Speaker 2: whole over the last year. It's up ninety percent. It's
Speaker 2: beaten all of its peers, it's beaten the Oil Services Index,
Speaker 2: and even one analyst over at City said that the
Speaker 2: turnaround at Weatherford post pandemic has been nothing short of remarkable.
Speaker 2: And these analysts don't hand out that kind of compliment
Speaker 2: very often. Greece. It's so good to see you. Thank
Speaker 2: you for stopping by.
Speaker 10: Alex, great to see you again, and Paul is great
Speaker 10: to meet you. Thank you so much for having me.
Speaker 2: So how's it going?
Speaker 5: Like what?
Speaker 2: So, it's been quite a four years for you. You
Speaker 2: came in the bankruptcy, Yeah, to turn it around. Where
Speaker 2: are you in this turnaround? What more do you think
Speaker 2: you still have to go?
Speaker 4: Etc?
Speaker 10: No, A great question. Look, it's been a terrific four years.
Speaker 10: The team's done an incredible job. I think very few
Speaker 10: people could have dreamt where it would be today and
Speaker 10: what was possible.
Speaker 3: You know.
Speaker 10: The way I think about it is, the turnaround's mostly done.
Speaker 10: You know, we've gotten the company out of the ditch,
Speaker 10: we have stabilized everything, we've fixed the balance sheet. So
Speaker 10: the journey so far has been from broken to good.
Speaker 10: The next phase of the journey is really the good
Speaker 10: to great journey, and that's what I'm actually very excited
Speaker 10: about because if we've been able to do all of
Speaker 10: the things that we've done over the past four years
Speaker 10: with a lot of constraints, a lot of shackles, you know,
Speaker 10: the exciting part is what we can do without that.
Speaker 2: So when you go from good to great, does that
Speaker 2: mean like a lot of buybacks and dividends?
Speaker 4: Does that mean?
Speaker 3: Yeah?
Speaker 11: What is that?
Speaker 10: Look, it's a lot of different things, but ultimately it
Speaker 10: is creation of value, and it's creational value for our customers,
Speaker 10: for our employees, and most of all for our shareholders.
Speaker 10: But it's doing that with continued focus on greater cash generation,
Speaker 10: which comes from better margins, better improvement in the way
Speaker 10: we manage our networking capital, but also ultimately better investments.
Speaker 10: So our real goal is to make sure that we've
Speaker 10: got world classes that are done on invested capital.
Speaker 6: Now that I see as an outsider to the energy industry,
Speaker 6: I see a lot of M and A activity there,
Speaker 6: and being a former banker myself, that's what hits my
Speaker 6: radar screen. How do you guys think about M and
Speaker 6: A for your business now that you are on maybe
Speaker 6: firmer footing correct?
Speaker 10: You know, for the first three years, MNA was a
Speaker 10: bad word. You know, Weatherford actually grew up on a
Speaker 10: built up on a series of acquisitions and a lot
Speaker 10: of issues with that, especially around the lack of integration.
Speaker 10: So the first three years that I've been in the role,
Speaker 10: we really focused on the organic capabilities of the company,
Speaker 10: building out the portfolio, making sure fix the operating intensity
Speaker 10: and the rigor around the company. But we have now
Speaker 10: gotten to a point where M and A has become
Speaker 10: a very important salient topic. We actually just exercise that
Speaker 10: muscle for the first time. We announced three small acquisitions
Speaker 10: back in February, so two in the wireline technology space,
Speaker 10: one in a very exciting space, and Intervention, which really
Speaker 10: gives us capability in slaughter recovery and plug an abandonment,
Speaker 10: which is a very key part of that energy transition.
Speaker 10: So we have started to do that and I think
Speaker 10: there will be more to come because we've now got
Speaker 10: a balance sheet that allows us to do that, and
Speaker 10: more importantly, a team that understands the importance of integration
Speaker 10: and is learning how to build that into the opening
Speaker 10: cadence of the company.
Speaker 2: And just to give our listeners a sense, your services
Speaker 2: are the life site, like, how do your services differ
Speaker 2: than say, one of your competitors, and how do you
Speaker 2: sort of invest for the life cycle of a welfare customer.
Speaker 10: Sure, so in oil field services, there's a lot of
Speaker 10: companies that do a lot of things similarly. So we've
Speaker 10: got what ferentiates us. We've got a portfolio that provides
Speaker 10: core ofs services, so everything from drilling services to wireline
Speaker 10: et cetera. But we're also able to complement that with
Speaker 10: what we call specialty services, things like managed pressure drilling,
Speaker 10: tubular running services, intervention services, et cetera that very few,
Speaker 10: if anyone, has. So that combination of broad based services
Speaker 10: that allow us to go toe to toe with the
Speaker 10: larger peers in the sector as well as then these
Speaker 10: specialty products and specialty services give us that differentiation and
Speaker 10: also allow us to have higher margins.
Speaker 6: You know, I keep joking to alex with oil at
Speaker 6: eighty dollars a barrel, I'm going to drive down to
Speaker 6: Texas and start drilling some holes. I mean, isn't the
Speaker 6: cost like forty bucks in eighty dollars. I can make
Speaker 6: some money there, but I don't see a whole lot
Speaker 6: of drilling activity. What's going to take it for the
Speaker 6: industry to take advantage of these prices here.
Speaker 10: Look, I think the industry has really really embraced this
Speaker 10: concept of delivering returns for shareholders, and so I think
Speaker 10: there's a lot of discipline, especially around managing capital within
Speaker 10: the industry's it's further exacerbated by the wave of M
Speaker 10: and A that's happening, which again goes back to driving
Speaker 10: higher returns. So I don't think in the US there's
Speaker 10: going to be necessarily a sea change at the range
Speaker 10: of oil prices that we are seeing right now, which
Speaker 10: I think in the long term is actually good for
Speaker 10: our sector, especially it creates a balance versus the seesaw
Speaker 10: effect that you see in the cyclicality that we've seen
Speaker 10: in the past. We also have a very robust international market.
Speaker 10: So for Weatherford, less than twenty percent of our revenues
Speaker 10: come from North America. The bulk of it is really
Speaker 10: an international orientation, international leverage. So we see a very
Speaker 10: healthy market. Now the US is still the largest market
Speaker 10: in the world. We see a lot of activity, but
Speaker 10: it is something that is driven by capital discipline by
Speaker 10: our customers, which is a good thing.
Speaker 2: And we have M and A too. Does that eventually
Speaker 2: lead into less business for oral services companies because in theory,
Speaker 2: maybe an Exxon pioneer going to drill ten wells rather
Speaker 2: than twenty.
Speaker 10: Yeah. I think, look, we are seeing a lot of
Speaker 10: drilling efficiencies, we are seeing the recount go down. But
Speaker 10: I think it all comes down to differentiation. As long
Speaker 10: as companies can differentiate and deliver value to allow our
Speaker 10: customers to make greater headway on their efficiencies to generate
Speaker 10: higher returns, I think they'll always be business.
Speaker 4: Again.
Speaker 10: It is the largest market still.
Speaker 6: I mean I'm looking at your income savent I mean
Speaker 6: roughly half your revenue Eastern Hemisphere, half Western Hemisphere. It
Speaker 6: gives the economics of both of those, your domestic markets
Speaker 6: versus your international Yeah.
Speaker 10: You know, historically North America was a very profitably challenged
Speaker 10: or challenged market for us on a profitability basis. Yeah, right,
Speaker 10: So our team's done a fabulous job over the past
Speaker 10: few years really changing the way we run the North
Speaker 10: America business. So today the profitability across all of our geographies,
Speaker 10: all of our regions is pretty much imbalance. So and
Speaker 10: I think, you know, I've always said the litmus test
Speaker 10: of our turnaround has been what's happened in the North
Speaker 10: America market. Over the past year, we've seen revenues decline
Speaker 10: in North America, but the profitability has actually gone up.
Speaker 10: So that's a real testament to what we've been able
Speaker 10: to do at Weatherford and the opening rigor the opening
Speaker 10: intensity that the team is put in.
Speaker 2: What are you doing on the energy transition space? Where
Speaker 2: do you play in that?
Speaker 10: Yeah? So, first of all, Alex, for US, it starts
Speaker 10: with this whole space of plug in abandonment. We think
Speaker 10: that's going to be what does that actually mean? Yeah,
Speaker 10: so what that is is the responsible decommissioning of mature
Speaker 10: oil and gas well So as oil and gas fields
Speaker 10: stop producing, customers want to make sure that those wells
Speaker 10: are plugged properly so that you don't have any risk
Speaker 10: of leaks from them and you don't have any environmental damage.
Speaker 10: So we play a big role in that, and we've
Speaker 10: both sterted our portfolio with the acquisition that I just
Speaker 10: talked about earlier this year. So that's a huge space
Speaker 10: and we think that'll be something that will play out
Speaker 10: over several years. So you know, that's number one. The
Speaker 10: second element for US is geothermal energy. We've been a
Speaker 10: leader in geothermal for over two decades, mostly driven by
Speaker 10: our capability in high temperature tools. We've had a capability
Speaker 10: leading to very high differentiation in high temperature, which, as
Speaker 10: you can imagine, is important in geothermal. But we're now
Speaker 10: extending that beyond just drilling, so multiple aspects of the
Speaker 10: geothermal loop. We've got partnerships with organizations like Seraphie with Ever,
Speaker 10: which is a Canadian company doing some very novel work
Speaker 10: in geothermal. As geothermal shifts from this whole notion if
Speaker 10: you've got to be somewhere near a volcanic region to
Speaker 10: now in multiple parts of the world, you know, in
Speaker 10: cities as well. I was in Hamburg about a year
Speaker 10: ago where they're brilling wells in the middle of the
Speaker 10: city itself, you know, providing district heating, et cetera. So
Speaker 10: geothermal is a big platform for us. The next one
Speaker 10: is CCUS. Now, CCUS is a huge ecosystem.
Speaker 2: Carbon capture utilizations nice.
Speaker 10: Yeah, it's a huge, huge ecosystem. We don't play in
Speaker 10: a lot of it, but where we do places in
Speaker 10: the storage and monitoring aspect of it. So again this
Speaker 10: is where our technological capabilities lend themselves more directly. So
Speaker 10: that's a huge space for us sort of leading to
Speaker 10: that or away from that, but somewhat tied is whole
Speaker 10: emissions management and emissions monitoring. We recently just announced a
Speaker 10: agreement and MoU that we signed with Honeywell in this
Speaker 10: whole methane emissions management which brings Honeywell state of the
Speaker 10: art technological capability, especially around sensing our access to our
Speaker 10: customers oil fields. We're also the only ofs player to
Speaker 10: have its own SCARA system, a data acquisitions system built
Speaker 10: on top of our production optimization platform. So that's an
Speaker 10: area that I'm very excited about. And last but not least,
Speaker 10: solutions mining, so that's a big area for us.
Speaker 2: Garrise, we really appreciate it. Thank you so much for
Speaker 2: stopping by. It's so good to get your perspective and
Speaker 2: it's good to get started chatting again and all the
Speaker 2: opportunities there and like I said, Wetherford really autperforming all
Speaker 2: of its peers in the last year. Garish Salaground, President
Speaker 2: and CEO of Weatherford International.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and androud
Speaker 1: Outo with the Bloomberg Business. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station. Just
Speaker 1: say Alexa play Bloomberg eleven.
Speaker 2: Thirty Alex Deal here with Carl Sweeney. This is Bloomberg
Speaker 2: Intelligence Radio. We bring you all the news and business
Speaker 2: and economics through a lens of our Bloomberg Intelligence analysts.
Speaker 2: We also every Monday at this time tap Bloomberg ne EF.
Speaker 2: Their research covers commodities, power, transport, industry, buildings, AG sectors, technology,
Speaker 2: anything that we need to know as we kind of
Speaker 2: transition our energy and security and energy transition throughout the world.
Speaker 2: And I should point out that every time they release
Speaker 2: their EV Global Outlook, it is the thing that is
Speaker 2: quoted by Wall Street analysts. You go to Wall Street
Speaker 2: Analysts and they are using BNF's data from evs to
Speaker 2: model their own opinion. So we wanted to dig a
Speaker 2: little deeper the release. The report was released last week.
Speaker 2: Corey Kanter is BNF lead US Electric Vehicle analyst. Corey,
Speaker 2: thank you for joining. What was your overall takeaway like, okay,
Speaker 2: EV growth will be x and then what was it
Speaker 2: for the US?
Speaker 5: Yeah? No, thanks for having me, Alex.
Speaker 11: Great to be back here with you and Paul I
Speaker 11: think the big takeaway is that EV sales growth is
Speaker 11: happening on evenly across different regions in the world. Maybe
Speaker 11: not a surprising finding if you're following EV's on a
Speaker 11: day to day basis, but moving forward, we expect that
Speaker 11: to be a bit of the same. To give you
Speaker 11: a sense of where we see things going, we basically
Speaker 11: have both the near term out look and a long
Speaker 11: term out look. The near turnout look ends in twenty
Speaker 11: twenty seven, and so what we expect is by twenty
Speaker 11: twenty seven, global passenger EV sales will be about thirty
Speaker 11: million in our base case called the economic transition scenario,
Speaker 11: and a probably better metric of that is thinking about
Speaker 11: EV share a passenger vehicle sale. So we'll move from
Speaker 11: a world where one in five cars sold is electric
Speaker 11: to a world where one and three is about thirty
Speaker 11: three percent, up from eighteen percent last year. By twenty forty,
Speaker 11: we expect that about seventy three percent of all new
Speaker 11: car sales will be electric. But there's a long way
Speaker 11: to go. And then on the US question, always good
Speaker 11: to compare it. I think to China and Europe, US
Speaker 11: passenger EV's SHAREFF sale last year was around ten percent.
Speaker 11: We expect the next two years to see a bit
Speaker 11: of a slower growth, So only about twelve percent of
Speaker 11: new car sales should be electric this year, rising to
Speaker 11: about twenty nine percent by twenty twenty seven. Seems pretty good,
Speaker 11: but if you look at Europe in China, it's going
Speaker 11: to be much higher there. So by twenty twenty seven
Speaker 11: we expect about sixty percent of new car sales to
Speaker 11: be electric in China and forty one percent in Europe.
Speaker 11: And when we talk about passenger evs at B and EF,
Speaker 11: that's both battery electric and plug in hybrid electric vehicles.
Speaker 6: So plug and talk to us about those plug in hybrids.
Speaker 6: It it feels like a lot of folks are suggesting
Speaker 6: that might be a very vital interim step for at
Speaker 6: least in the US.
Speaker 7: In terms of the transition to EV. Is that how
Speaker 7: you think about it?
Speaker 5: Paul? A really good question. I also co wrote the
Speaker 5: plug and Hybrid section of the report.
Speaker 11: We do a kind of deep dive which we do
Speaker 11: with a few different deep dives every year, and what
Speaker 11: we call thematic highlights.
Speaker 5: I think around p haves the question.
Speaker 7: Really is pheabs Yeah, Phea, plug again?
Speaker 3: Hybrids?
Speaker 5: Okay, plug in hybrids, Okay, is how good are they
Speaker 5: going to be?
Speaker 11: If you look at the plug and hybrids in China,
Speaker 11: they're all electric mode, meaning they're kind of electric mileage
Speaker 11: they get before they have to turn on that gas
Speaker 11: engine is about twice as high in China currently as
Speaker 11: it is in the US.
Speaker 5: So quite simply, China is making not only.
Speaker 11: Better fully electric vehicles, but better plug and hybrids. We
Speaker 11: still think that there is some role for p havebs
Speaker 11: to play this decade in markets like the US in Japan.
Speaker 11: But what I've been big on pushing on is the
Speaker 11: product that we're getting today is not necessarily as good
Speaker 11: as it should be. So when you hear automakers say, oh, well,
Speaker 11: maybe we'll do more hybrids or do more plug and
Speaker 11: hybrids instead of fully electric vehicles, I think a fair
Speaker 11: response would be to say, well, in Europe and China
Speaker 11: they're getting far more all electric mileage than here, so
Speaker 11: can you deliver some of that more.
Speaker 5: High quality product.
Speaker 11: Ultimately, we do a bunch of different scenario analysis in
Speaker 11: the full report, and one downside of plug in hybrids
Speaker 11: is that if you go down that route and people
Speaker 11: aren't charging them enough, which is harder to do. Because
Speaker 11: of the lower all electric range, you could end up
Speaker 11: in a scenario where you're having a lot higher oil
Speaker 11: demand use than if you just switch to fully electric vehicles,
Speaker 11: and that would not be good for your climate targets.
Speaker 2: When do you think the tipping point is when EV's
Speaker 2: become more of mass adoption here in the US.
Speaker 11: So what we've pointed that historically is this idea of
Speaker 11: upfront price parody. We're seeing total cost of ownership parody,
Speaker 11: including fueling already being hit in many different regions in
Speaker 11: terms of upfront costs. It really depends if you're comparing
Speaker 11: apples to apples, right, you see a lot more evs
Speaker 11: in that kind of low forty thousand dollars price range
Speaker 11: now high thirties. I think once you get to the
Speaker 11: low thirty thousand dollars price point, Really, according to our analysis,
Speaker 11: when we're looking at kind of a generic BEV versus
Speaker 11: a generic ice vehicle, we see it happening in the
Speaker 11: US over let's say the next three to four years,
Speaker 11: really twenty twenty six to twenty twenty eight. But really,
Speaker 11: if you're comparing a Tesla model Y to towards a
Speaker 11: lot of its competitor vehicles or model three.
Speaker 5: You're getting pretty close.
Speaker 11: But that's where you start to see I think higher
Speaker 11: adoption where you won't have to necessarily have a premium
Speaker 11: and price.
Speaker 5: You also get a lot of good leasing deals today
Speaker 5: on EV's but.
Speaker 11: It's a bit messier to kind of figure that out
Speaker 11: because you've got dealer markups, you've got different rates.
Speaker 5: But big picture, that upfront price parity.
Speaker 7: How about the charging infrastructure in the United States?
Speaker 6: To what extent is that been holding back the adoption
Speaker 6: of evs here and kind of how do we expect
Speaker 6: that to evolve?
Speaker 11: Yeah, I think that's the biggest difference between Europe and China.
Speaker 11: Our EVY Outlook for folks who aren't familiar has whole
Speaker 11: sections on charging infrastructure, how much investment is going to
Speaker 11: be needed moving forward, But really just taking a base
Speaker 11: level stat TESLA remains the number one provider of charging
Speaker 11: infrastructure here in the US in terms of reliability, in
Speaker 11: terms of number of fast charging stations, and then there
Speaker 11: isn't really a clear cut number two, three, four, five.
Speaker 11: My colleague Ryan Fisher does a bunch of great presentations
Speaker 11: on this, and one of actually the most impressive find
Speaker 11: is US and Europe actually have a similar amount of
Speaker 11: chargers between the top six kind of charging infratructure operators,
Speaker 11: but Europe has an additional five hundred operators after that
Speaker 11: that really supply the bulk of the market.
Speaker 5: So again, we want to see more of that infrastructure
Speaker 5: built out.
Speaker 11: There's been a lot of reporting around the federal funds
Speaker 11: rolling out really slowly because they've had to go through
Speaker 11: state RFPs. But yeah, that's the number one issue holding
Speaker 11: back probably the US market, maybe even moving past the
Speaker 11: upfront cost issue.
Speaker 2: Oh we only about a minute left. But at least
Speaker 2: with my ic car, right, I can trade it in
Speaker 2: and I can get value for it. Do we know
Speaker 2: how this market evolves for evs?
Speaker 5: Yeah?
Speaker 11: I mean I did a residual value note with the
Speaker 11: team at BADF maybe about two years ago, and the
Speaker 11: market looks so different than that's when Tesla prices were
Speaker 11: going ten to fifteen percent above their kind of selling price.
Speaker 11: And so now you've seen because Tesla brought its prices
Speaker 11: down that residuals for a lot.
Speaker 5: Of evs have crashed.
Speaker 11: I think it's going to be something that continues to
Speaker 11: develop to find out how long batteries are going to last.
Speaker 2: I do I know that yet?
Speaker 5: It varies.
Speaker 11: I mean, we don't have I think any research here
Speaker 11: where we've said that this is what we find amongst
Speaker 11: all the kind of evs in the market. But right,
Speaker 11: if your battery holds up longer than people expect, you'd
Speaker 11: expect to see maybe more residual value. If not, you know,
Speaker 11: you could see more of an issue. But yeah, it's
Speaker 11: an outstanding question, like so much of the space. But
Speaker 11: to your point, Alex, that's why you want to see more,
Speaker 11: you know, look into battery life over time.
Speaker 2: Yeah, exactly. I think that's gonna be really interesting. All right, Corey,
Speaker 2: Thanks Lott. We really appreciated Corey kant be enough lead
Speaker 2: you as electric vehicle analysts joining us on their new report.
Speaker 2: Definitely check it out. It's what all the it's what
Speaker 2: all the street winds up quoting as we sort of
Speaker 2: go through this energy transition with the questions that we
Speaker 2: all have. I don't know how long have you had
Speaker 2: your phone?
Speaker 7: I can burying battery life just five years?
Speaker 2: Maybe five years? Okay, so let's just say five years.
Speaker 2: I'm assuming a car battery is gonna be a lot
Speaker 2: better than your phone battery. I don't know, But I
Speaker 2: don't know if you're forced to, like, if you're forced
Speaker 2: to re up your car because of the battery, I
Speaker 2: know that feels different. That feels different than like, Oh,
Speaker 2: I just got to replace my brakes and welco into
Speaker 2: the Apple Store. Maybe I'm wrong, Yeah, exactly.
Speaker 4: All right.
Speaker 2: This is Bloomberg Intelligence. Happy Monday, everybody.
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