Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News Listen. We went over the
Speaker 1: big headlines that came out just about two hours ago
Speaker 1: about the CDC issuing new masking guidelines for fully vaccinated people.
Speaker 1: Were President Biden Tim come out and talk about it.
Speaker 1: At the same time, there are two new cases of
Speaker 1: blood clots linked to the J and J vaccine, and
Speaker 1: you've got you know, countries around the globe looking to
Speaker 1: help India because we know, as was reminded in kind
Speaker 1: of a newsroom note today that as when we talk
Speaker 1: about the vaccine feels and the virus, it feels pretty
Speaker 1: good in the United States. We've made a lot of progress,
Speaker 1: but you look to some European nations, and you look
Speaker 1: to the developing world, and you look to India, they
Speaker 1: are still struggling big time. And look, that's a really
Speaker 1: important point. The fact is the United States is doing
Speaker 1: really well, but it's among only a handful of countries
Speaker 1: when it comes to vaccinating so many people. Yeah, so
Speaker 1: let's talk about it, and let's talk about where we
Speaker 1: are and where we go from here. So great to
Speaker 1: have back with us. Dr Dave Westerner, he's professor of
Speaker 1: biology at Davidson College. He's on the phone from Davidson,
Speaker 1: North Carolina. Dr Westner, nice to have you back here
Speaker 1: on Bloomberg Business Week with Tim and myself. You know,
Speaker 1: on our planning call today are producer Paul Brennan reminded
Speaker 1: us that the last time we talked with you, we
Speaker 1: were talking about double masking, which is what I often do,
Speaker 1: uh in the office outside the office still and that
Speaker 1: was just a few months ago. Now we're talking about
Speaker 1: conditionally taking off our masks in public. Have we gone
Speaker 1: too far too fast in your view? Yeah, Well, thanks
Speaker 1: for having me back to Yeah, it's situation. Things change,
Speaker 1: Things change, quickly. Um. Yeah, I think given the evidence
Speaker 1: that we have now about how good the vaccines are working, um,
Speaker 1: I think it's worth relaxing some of those restrictions for
Speaker 1: people that are fully vaccinated. I think that the challenges
Speaker 1: you know, if you're out in public, you don't know
Speaker 1: what the vaccine status is of someone else. So I
Speaker 1: think that's where it gets a little bit tricky. And
Speaker 1: it really seemed like with the CDC's presentation today, Professor,
Speaker 1: that the point was to really get those people who
Speaker 1: haven't been vaccinated yet, provide some sort of incentive, and
Speaker 1: to really show them, hey, this thing works so well
Speaker 1: that that these are the things you can do. But
Speaker 1: I'm wondering did it not go far enough? Yeah? I
Speaker 1: think you know, the vaccine rollout I think has gone
Speaker 1: pretty well United States. We had a rocky start. I
Speaker 1: think things now are going pretty well. But the big
Speaker 1: concern is that group of people that are vaccine has
Speaker 1: how do you get them on board to get the vaccines?
Speaker 1: And Yeah, I think you're absolutely right that this this
Speaker 1: is sort of a you know, uh, carrot approach. You look,
Speaker 1: if you get the vaccine, here's some extra things you
Speaker 1: can you can take advantage of so hopefully that will
Speaker 1: commit some people that have been on the fence about
Speaker 1: getting the vaccine. What do you say to people who
Speaker 1: are still afraid about getting the vaccine? Because I know
Speaker 1: people within my sphere that are definitely saying, Yep, I'm
Speaker 1: not comfortable. I'm gonna still wait. Yeah, I think you know,
Speaker 1: follow the evidence. I mean, the evidence suggests these are
Speaker 1: really effective vaccines. The evidence suggests these are really safe vaccines.
Speaker 1: I mean, despite the stories you've heard about the blood
Speaker 1: clots and potential association with the J and J vaccine,
Speaker 1: I mean, everything suggests these are really safe and extremely
Speaker 1: effective vaccines. What about from a public health messaging perspective,
Speaker 1: because there there are questions about whether former President Trump
Speaker 1: should come out and give sort of a big endorsement
Speaker 1: of the vaccine and and really messaging to people who
Speaker 1: follow him closely that this is the right thing to do. Yeah,
Speaker 1: I think those kinds of public announcements certainly help. I saw, say,
Speaker 1: the other day with Foreign President Obama and m Charles
Speaker 1: Barkley and Shaquille O'Neil um, and they were specifically targeting
Speaker 1: the African American community to get vaccines. But yeah, I mean,
Speaker 1: those kinds of public statements by public figures certainly helping,
Speaker 1: and we need more of those. What do you say,
Speaker 1: you know, I think about the science and I did
Speaker 1: uh some reading into the vaccine and the research to
Speaker 1: kind of understand it, if you know, just so that
Speaker 1: I knew what we're dealing with it. What is the
Speaker 1: science behind the process that we got here in terms
Speaker 1: of the vaccines that you think if you you know
Speaker 1: that you can share and remind us all that maybe
Speaker 1: would put some people at ease, because I think there's
Speaker 1: still a feeling Dr Wessner that we rushed through this
Speaker 1: and we did right, but the science isn't brand new
Speaker 1: right exactly. And I think that's an issue we have
Speaker 1: talked about before with when I was on with you.
Speaker 1: Um yeah, I think the the approval of these vaccines
Speaker 1: happened quickly, but I don't think it was rushed. I mean,
Speaker 1: we had trials just like you would with any with
Speaker 1: any drug, any vaccine that's getting approved. You know, there
Speaker 1: are some people in the the Fiser vaccine, some in
Speaker 1: the MODERNA vaccine. Uh, you know, we went through those
Speaker 1: double wind trials. We have good data about the efficacy
Speaker 1: of these vaccines UM and we had good data about
Speaker 1: the safety of these vaccines. Also, I think, you know,
Speaker 1: anytime you're going from forty people to millions of people
Speaker 1: getting vaccine getting vaccinated, you know, there's gonna be the
Speaker 1: chance that you see some issue that one in a
Speaker 1: million event that you're not going to catch, you know,
Speaker 1: even if you have people in a trial. But that's
Speaker 1: always the case with with new pharmaceuticals that are being developed.
Speaker 1: So so I don't think people should worry about the
Speaker 1: process being being rushed um and for the basic science.
Speaker 1: You know, again, the there's been a lot of talk
Speaker 1: about the MADERNA and fives are being these MR and
Speaker 1: A based vaccines, which is something new. It's it's new
Speaker 1: in that we haven't had human vaccines using those technologies before.
Speaker 1: But the basic technology scientists have been looking at, have
Speaker 1: been experimenting with for a couple of decades. It's not
Speaker 1: something that was just invented out of out of the
Speaker 1: air over the last year. And we're not changing genetics
Speaker 1: with these vaccines, despite what, despite what people on Twitter
Speaker 1: get in touch with us about. Right. That's another another
Speaker 1: concern that you hear in various places that because the
Speaker 1: vaccine is injecting RNA into your cells, it's going to
Speaker 1: alter your RNA or also your DNA. That's that's not
Speaker 1: the case. The RNA that's getting into your cells through
Speaker 1: the vaccine is very short lived molecule. It degrades very
Speaker 1: very quickly. It's just in there for a short period
Speaker 1: of time. Your cells are producing some of that spike protein.
Speaker 1: The immune system is recognizing that acting against it, but
Speaker 1: there's no long term change to your cells because these vaccines,
Speaker 1: Professor Westner, let's talk variants. There's a Bloomberg Intelligence report
Speaker 1: out this afternoon from Sam Fazli, our colleague at Bloomberg,
Speaker 1: who says that the virus variant from India seems like
Speaker 1: it responds to ASTRA and likely all vaccines. Are we
Speaker 1: seeing right now any variants able to really get past
Speaker 1: the existing vaccines right now to an extent that should
Speaker 1: be alarming to us. Yeah, that that's a good question,
Speaker 1: And so far it seems like we have not seen
Speaker 1: that um that variant that can that can evade the
Speaker 1: existing vaccines. U The CDC categorizes the vaccines as variants
Speaker 1: of concern and these are the ones we've heard about.
Speaker 1: The UK variant, the Brazilian variants, South African variant, and
Speaker 1: then the higher level from that is the variant of
Speaker 1: high consequence, and that would be a variant that can
Speaker 1: escape the existing vaccines. UM, and so far we don't
Speaker 1: have a variant identified in that in that category. Use,
Speaker 1: different vaccines are going to have different efficacies against different variants.
Speaker 1: That as not as surprise, UM, but so far it
Speaker 1: seems like the certainly the Maderna Advisor vaccines are pretty
Speaker 1: effective against all the all of that variants that we've
Speaker 1: identified so far. How does this work though, terms of
Speaker 1: variance mutating or having viral variants? Right, we have it
Speaker 1: with I'm assuming the common flu. Right, this is why
Speaker 1: the flu vaccine gets tweaked often every year. But when
Speaker 1: is variants normal and manageable versus variants being problematic and
Speaker 1: creating another pandemic. Right, You're absolutely right with the flu analogy.
Speaker 1: We have a new vaccine every year because influenza virus
Speaker 1: mutates very rapidly, and we see slight variations in the
Speaker 1: strain of the flu from from year to year. Generally speaking,
Speaker 1: coronaviruses do not mutate as rapidly as influenza viruses. So
Speaker 1: it's not that big an issue with coronaviruses, but they
Speaker 1: do mutate over time. That's that's natural. You are going
Speaker 1: to see variants, and I think what we have to
Speaker 1: do as as researchers is really stay on top of
Speaker 1: what variants are we seeing in different locations. We've heard
Speaker 1: a lot about genomic sequencing of the bio us. Um.
Speaker 1: That's something the US did not jump on early enough
Speaker 1: in my opinion. Um. But we have to keep that
Speaker 1: that genomic sequencing up so that we can identify those
Speaker 1: variants as they appear and then look to see if
Speaker 1: in fact those are causing infections people who already had
Speaker 1: been vaccinated, indicating that they may be they maybe breakthrough variances.
Speaker 1: Are we doing that? Are we keeping on top of that?
Speaker 1: I think we're doing a better job now that we
Speaker 1: were six months ago. Um. Yeah, I think it's one
Speaker 1: of those those deals where you can't be doing good enough.
Speaker 1: But I think we are doing a better job now
Speaker 1: of of monitoring the appearance of new variants. So one
Speaker 1: thing I've been thinking a lot about is is how
Speaker 1: the pandemic ends now that the United States is on
Speaker 1: a good path to vaccination. While at the same time,
Speaker 1: the rest of the world really isn't How do how
Speaker 1: does this play out? Like, what are we talking about
Speaker 1: a year from now? That's a great question, um. You know,
Speaker 1: I think there's a couple of answers. You know, as
Speaker 1: long as the virus is mutating very rapidly throughout a population,
Speaker 1: whether it's India here in the United States to some
Speaker 1: other place, there's the potential for new, very dangerous variants
Speaker 1: to arise. UM. And I think that's that's one of
Speaker 1: the UM arguments in favor of the US sending vaccine
Speaker 1: doses to to India. UM. Sixty million doses for India
Speaker 1: as a drop in the bucket, I know. But but
Speaker 1: having us help another country get their population vaccinated, UH
Speaker 1: is potentially beneficial for US because it's eliminating the chance
Speaker 1: of new variants appearing someplace else. UM. But that's what
Speaker 1: the other side of the question is. You know, are
Speaker 1: we going to eliminate this virus? And I think everyone
Speaker 1: agrees the answer is no. It's not going to be
Speaker 1: like polio or smallpox or one of these viruses that
Speaker 1: we can almost completely eliminate from the human population. I mean,
Speaker 1: more likely, it's probably going to become a recurrent issue
Speaker 1: that we see much like influence of viruses, dar to
Speaker 1: Western twonds. Do you see if we get to a
Speaker 1: place where the world feels like it used to be? Yeah,
Speaker 1: good question, and um, largely yes, I think. I think
Speaker 1: there may be some things that never go back completely normal,
Speaker 1: but but largely yes. All right, we're gonna leave it
Speaker 1: on that note. I like that optimism. I will do.
Speaker 1: Dr Dave Westerner stay safely Well, Professor of Biology at
Speaker 1: Davidson College, on the phone from David's in North Carolina.
Speaker 1: You know, I feel like Tim, with everything that we do,
Speaker 1: all our conversation, especially when it deals with vaccines and
Speaker 1: COVID specifically, there are caveats. It's just the way it is. Yeah,
Speaker 1: there's so much uncertainty right now, but that's something that
Speaker 1: it seems like we're getting used to, Yeah, exactly, and
Speaker 1: figuring out our way through. You're listening to Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic
Speaker 1: on Bloomberg Radio. This story definitely caught Tim in my attention.
Speaker 1: It's a story online of Bloomberg Business Week. It's about how,
Speaker 1: for almost a decade the movement to push businesses to
Speaker 1: pay at least fifteen dollars an hour. Tim, It's definitely
Speaker 1: gained momentum, but the US is largest employer. They have
Speaker 1: constantly shot the argument down. So let's get into that snow. Yeah,
Speaker 1: that largest employer being Walmart of course, Miss buck Leasy,
Speaker 1: reporter for Bloomberg News, joining us on the phone from London, Thomas,
Speaker 1: thanks so much for joining us on this. Uh. When
Speaker 1: I read the first sentence of this story, I was
Speaker 1: immediately drawn in. Who is Mendy Hughes so menty she
Speaker 1: associate it's Walmart for some years now, and she is
Speaker 1: still earning eleven eighty five dollars an hour, which makes
Speaker 1: her really an outlet for a number of similists similar
Speaker 1: employees at the likes of Amazon and best Buy It.
Speaker 1: And how I gets all of whom pay fifteen dollars now?
Speaker 1: And thanks so much for having me, guys really appreciate it. Yeah,
Speaker 1: no problem. One thing that and one thing the reason
Speaker 1: this what I mean among the many things that just
Speaker 1: kept surprising me word afterward in this was that Mendy
Speaker 1: is is the person who has been working there for
Speaker 1: more than a decade, And what Walmart says about its
Speaker 1: wages is that it's investing in people for careers, not
Speaker 1: for jobs. But her pay seems to indicate that she's
Speaker 1: not being rewarded in that way. That's that's really right.
Speaker 1: So she started out, I believe, on seven dollars an
Speaker 1: hour way back when, and that has increased to eleven
Speaker 1: eighty tide, I think that it's not increasing anywhere nearest
Speaker 1: staff that she would like to see on the basis
Speaker 1: that you know, as the story when she's short on
Speaker 1: launchables or frozen TV, then as you know, she's having
Speaker 1: stopped by the drive through McDonald's to her pick up
Speaker 1: you know, and items from print the venue, from the
Speaker 1: value menu. And also to that point, I think that's
Speaker 1: a number of her colleagues, you know, survive on on
Speaker 1: the food steps. So on that basis, I think it
Speaker 1: certainly would want to be seeing a raise that's commensurate
Speaker 1: with what Walmart's rivals are doing. Walmart's argument as long
Speaker 1: being that really seeking to protect ladder of opportunity, wherein
Speaker 1: you know, people's individual ambitions will be rewarded as they
Speaker 1: rise up in the business. But sounds like Mendy, for example,
Speaker 1: who has very immediate concerns, or who have had very
Speaker 1: immediate concerns, such as say, tearing her out of a
Speaker 1: c L and falling behind on medical bills. They're not
Speaker 1: so much thinking about the next job, but more you
Speaker 1: know what neediately has to happen for them to live
Speaker 1: at the very basic level of dignity. I think, so
Speaker 1: help me out here, Thomas, because I think there are
Speaker 1: probably people who are listening. First of all, the math
Speaker 1: that eighty five works out about four hundred seventy four
Speaker 1: dollars a week, about twenty four thousand, six hundred a year.
Speaker 1: So that's what she's dealing with. And she's got a family. Now,
Speaker 1: I know that there are people listening saying, well, wait
Speaker 1: a minute. You know, maybe she works harder and then
Speaker 1: she can get a better job until make more money
Speaker 1: and more benefits. There's that argument. At the same time,
Speaker 1: you know, you live in different parts of the country.
Speaker 1: These are the jobs available. And this is a company, Walmart.
Speaker 1: It's a wealthy employer, absolutely, and you know, more than
Speaker 1: a wealthy employee, which they certainly are, but you know,
Speaker 1: really the world's wealthiest family, America's largest private employer by far,
Speaker 1: and you know it gives you an idea of what
Speaker 1: it would take to get to fifteen dollars, which they
Speaker 1: have done as an average but not a minimum. That
Speaker 1: is what they announced them in February for several of
Speaker 1: the several associates. I mean, you know, the amount they're
Speaker 1: spending getting to that point, it's only about ten percent
Speaker 1: in maybe even less than ten percent, with the amount
Speaker 1: that they're spending on shared by backs because at the
Speaker 1: same time they're not dis initiative. They also announced twenty
Speaker 1: billion shared by back initiatives. So it's certainly an employer
Speaker 1: to can afford to pay its employees fifteen if it
Speaker 1: wanted to write. As you mentioned, their annual revenue increased
Speaker 1: a thirty five billion to more than or by thirty
Speaker 1: five billion to more than five hundred billion dollars in
Speaker 1: the past year to earn twenty two billion in profit. Listen,
Speaker 1: I am all for capitalism and people making a profit.
Speaker 1: I think it's really wonderful and it's I think the
Speaker 1: basis of our country, no doubt about it. What is
Speaker 1: the argument that Walmart puts out there in terms of
Speaker 1: not being able to pay some of its workers more money.
Speaker 1: I've been at those annual meetings where workers stand up
Speaker 1: and say I work for you full time and I'm
Speaker 1: also getting welfare. How does that make sense? And what
Speaker 1: is the responsibility of an employer like Walmart who is
Speaker 1: facing the big beheamoth of Amazon who says you can
Speaker 1: probably get a cheaper at Amazon for sure. I think
Speaker 1: it's a really interesting question. I mean to your points
Speaker 1: about capitalism, you know, really being the growth engine that
Speaker 1: so many develops economies of, you know, the past countries.
Speaker 1: I think that what we have come to see is
Speaker 1: that you know, you're sort of driving um this this
Speaker 1: economy in a certain direction in the case of Onemas
Speaker 1: because you now you are America's largest private employer, which
Speaker 1: means that you know, you have a responsibility to lift
Speaker 1: a lot of people up um and you know, guarantee
Speaker 1: living to to the people that work for you. Where
Speaker 1: it becomes complicated is that the CEO doesn't millanswers that
Speaker 1: he wants, you know, to really stagger wage increases in
Speaker 1: the way that benefits the UK economy. So that means,
Speaker 1: you know, creating the right level of ambition within the
Speaker 1: company to see people rise um. But as I mentioned earlier,
Speaker 1: you know, people who have a lot more immediate needs,
Speaker 1: including those on food stamps, might not necessarily see it
Speaker 1: that way. Um and in the case of men, need
Speaker 1: sure earlier in to know what if she worked a
Speaker 1: bit harder, a bit longer. I mean, this is something
Speaker 1: you know, just pulling forty hour weeks, those who you know,
Speaker 1: spend standing up the entire time at times. I'm playing
Speaker 1: Devil's advocate. I just hope you know I'm playing Devil's advocate.
Speaker 1: Go ahead, please, absolutely, absolutely, but just just to use
Speaker 1: you know, the specific example, because she is she is
Speaker 1: one of you know, seven hundred and fifty thousand people
Speaker 1: at that level of employments at Walmart. So these are
Speaker 1: incredibly difficult shifts, and you know, they're very critical shifts
Speaker 1: will have been at least over the past year when
Speaker 1: shoppers have come and then have needed the cashier to
Speaker 1: s in the right direction for their life, al their death,
Speaker 1: holl and everything else. Notice it's a very interesting, interesting
Speaker 1: dynamic rob serving at the moment it is Thomas, and
Speaker 1: I'm I'm wondering why the market hasn't actually pushed the
Speaker 1: wages up because Amazon got out ahead of this and
Speaker 1: said fifteen dollar minimum wage, and it has served it
Speaker 1: pretty well Costco. Costco has gone up to sixteen dollars
Speaker 1: an hour, Target has announced increased wages. Why hasn't the
Speaker 1: market done this to Walmart? But that's a really fascinating question. Um,
Speaker 1: I think that you know, it's used to be. I
Speaker 1: suppose all companies in respect were very much on even
Speaker 1: keel paying stw wages, and everybody was just gaving this,
Speaker 1: you know, waiting to stick are out who would take
Speaker 1: the steps to rape it stuff, whether they would remain
Speaker 1: in the outline, you know, in the near or median tern,
Speaker 1: And then all of a sudden, Walmart is sound as
Speaker 1: well as a bit cornered here because everybody has decided
Speaker 1: to lead from them to raise wages, and they are
Speaker 1: you know, I've heard the story, a very clear outline
Speaker 1: in this, and I do wonder, as you know, BSG
Speaker 1: trends gain momentum, whether there will be that added pressure
Speaker 1: on America's largest employer to actually do something about this.
Speaker 1: We shall see. And as you say, for for Mandy Hughes,
Speaker 1: I mean she's looking to leave Walmart, get out of Arkansas,
Speaker 1: and she says, I would love to get out of Arkansas.
Speaker 1: I could afford to move and that's the other tricky part. Listen,
Speaker 1: this is a really important story, Thomas. Thank you so
Speaker 1: much for bringing it to us. Bloomberg News reporter Thomas
Speaker 1: Buckley joining us from London. Check it out at Bloomberg
Speaker 1: dot com. You're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: We got to talk about Tesla, and we got to
Speaker 1: talk about the disc because investors Tim not that impressed
Speaker 1: by Tesla's record profit in the first quarter, record profit.
Speaker 1: Chip shortage that hey, wasn't a big deal to Tesla
Speaker 1: has really been a thing that has really hampered looks
Speaker 1: sidelines some companies. Yeah, exactly, stocks down four present today
Speaker 1: near its low. So let's get into it. How come?
Speaker 1: Ben Kylo is senior research analyst, Britt Baird Kaylo Calo
Speaker 1: excuse me? Ben? Hello? Do you think I would know
Speaker 1: this senior research time? Ben? You know it's been a while.
Speaker 1: I kind of like, well, and and we've probably talked
Speaker 1: for ten years. Tesla. It's okay, I mispronounced my siblings name.
Speaker 1: We should to two worked up about. But I'll let
Speaker 1: you take it from here. We'll talk to us about that.
Speaker 1: You've got an outperform, you've got a price target of
Speaker 1: seven thirty six. Stocks now at seven oh six almost
Speaker 1: seven oh seven to share here, Um, what's what's the
Speaker 1: problem with investors or what do you think that they're
Speaker 1: focusing on and maybe that they shouldn't be been well?
Speaker 1: You know, I think that there's there's always been a
Speaker 1: lot of noise, and I think one of the biggest
Speaker 1: things that we took away from the call last night
Speaker 1: has you know, the Model three is selling more than
Speaker 1: a BMW three series. If we take a step back
Speaker 1: and like we go back to like five years ago
Speaker 1: or seven years ago. I don't want to age us,
Speaker 1: but we can't age if we need go back that far.
Speaker 1: It's like no one thought that we were going to
Speaker 1: get here, right and so uh, you know, the expectations
Speaker 1: are extremely high, obviously with the evaluation of whatever it is,
Speaker 1: six seventy eight billion dollars. Uh, there's a lot uh
Speaker 1: you know, people are asking for UM. But I think
Speaker 1: that you know, the big things taking away from the
Speaker 1: car are number one, demand uh stronger than ever. Number Two,
Speaker 1: the plants that they're building uh in Berlin and Austin
Speaker 1: and then expanding in Shanghai are going to only help
Speaker 1: them with profitability. Um. And I think the third thing
Speaker 1: is that you know you have Ellen that you know,
Speaker 1: he plontificated about Taunament's driving for for a lot of
Speaker 1: the call last night, and you know he just sent
Speaker 1: four people into the space station, and so for him
Speaker 1: to say it's one of the biggest problems to tackle,
Speaker 1: I think that people you know are are are focusing
Speaker 1: on that, um and rightly so you feel like Ben
Speaker 1: and Ellen together dropping the mic. Well, look, I I
Speaker 1: do wonder though, Ben, if this is if this is
Speaker 1: about guidance, is this is this about the company not
Speaker 1: saying how many cars they're going to deliver in I
Speaker 1: think it's just people running up a little fast money
Speaker 1: into the into the quarter and it's a little sell
Speaker 1: office to be expected here up. But to your point him,
Speaker 1: I think, uh, you know, costs are going to come in.
Speaker 1: But I never recovered Amazon, but I imagine you know,
Speaker 1: as Amazon was growing, they start spending more money, and
Speaker 1: so you see on the op X side and operating
Speaker 1: expenses that picked up. And so I think we saw
Speaker 1: some of that with Tesla, and you know in in
Speaker 1: you know, people put points to bitcoin and they made
Speaker 1: some profits of bitcoin and and this and that. But
Speaker 1: that's been the story for you know, eight nine years.
Speaker 1: The earnings have been clean, but they still have earnings.
Speaker 1: Hum and so, uh, you know, I think there's some
Speaker 1: of all that going on. So how concerned have you
Speaker 1: been about all of the new competition? We keep talking
Speaker 1: about the green wave that's going to hit this year.
Speaker 1: It feels like finally, finally the global auto industry as
Speaker 1: well can happen. Oh wait, maybe Ellen's onto something. So
Speaker 1: how do you see it? Is that going to be problematic?
Speaker 1: They're already to be fair to Tesla is losing some
Speaker 1: market share in the US. Yeah, So I think the
Speaker 1: big the big things that we have to watch out
Speaker 1: for is riv and uh private company I think, you know,
Speaker 1: on the on the consumer side as well as on
Speaker 1: the commercial side. I think Rivy and obviously have Amazon
Speaker 1: as a partner and so um and after that, I
Speaker 1: think Folkswagon is probably the most uh a near term
Speaker 1: threat to them. But you know, competition is always something
Speaker 1: that we watched and we don't dismiss it. And uh,
Speaker 1: you know, they're always have been five years behind and
Speaker 1: the scale is one thing that I think that you
Speaker 1: know that a lot of doubters of Tesla have missed
Speaker 1: how you know, how rapidly they've scaled up with those
Speaker 1: factories of what I talked about. Yeah, Ben, Well, what
Speaker 1: kind of expectations are are built into the stock price
Speaker 1: right now, like what our analysts expecting, because that's also
Speaker 1: can be part of this story. Right with what we
Speaker 1: saw yesterday, it was a really great quarter for the company,
Speaker 1: but hey, that's expected with what happened in the company's stock.
Speaker 1: I think I think that there's considerable expectations built into
Speaker 1: the stock um. I do think that you know, one
Speaker 1: of the things that you know is is a call
Speaker 1: option or upside option is you know, I I focus
Speaker 1: on renewable energy as well, and and the the energy
Speaker 1: storage piece of the business, uh, and the momentum that
Speaker 1: has and the software that that they have behind it. Uh,
Speaker 1: it's you know, AI hate to use your buzzwords, but
Speaker 1: behind that and you know, and building out power plants
Speaker 1: on lifing mind batteries and solar I think that that's
Speaker 1: something that's underappreciated there and and it's maybe built into
Speaker 1: that market yep. But it's also offside that. And I'm
Speaker 1: a meet Potato person, so I don't I don't do
Speaker 1: robo taxi kind of stuff or anything like that. But
Speaker 1: that's also that's also probably an offside to it as well.
Speaker 1: By the way, Ben Callo, you've earned the right to
Speaker 1: use buzz words like a I'm just gonna put that
Speaker 1: out there. Ben. Good to hear you again. Thank you
Speaker 1: so much. I always appreciate your insight on names like Tesla.
Speaker 1: Ben Kayla Calo is senior research anless at Bair. He's
Speaker 1: got an outperform rating on the stock price target of
Speaker 1: seven thirties six and as we mentioned though, Tesla seeing
Speaker 1: some pressure. I'm road mac a journal now. But you
Speaker 1: let me drive. Oh no, no, no no, no, please, I'll
Speaker 1: do the right l let me. I want to drive.
Speaker 1: Just drive, baby. It's the questions. Get drying your job.
Speaker 1: This is the drive to the Globe community. Thanks. We'll
Speaker 1: drying us on Bloomberg Radio. Right just about Tim and
Speaker 1: is left and the trading day it is time for
Speaker 1: the drive to the close. Rebecca Corbyn is with US,
Speaker 1: founder and CEO at the strategic consultancy and research firm
Speaker 1: Corman Advisors. She joins US Tim on the phone in Farmington, Connecticut. Rebecca,
Speaker 1: good to have you here. Just got a few minutes
Speaker 1: left in the trading day, but we've got a slew
Speaker 1: of earnings coming our way in just a moment. We've
Speaker 1: got Alphabet, We've got Microsoft, We've got Starbucks, You've got
Speaker 1: a m D. We've got Visa, We've got Texas instruments.
Speaker 1: I'm sure I'm leaving a few out here. How do
Speaker 1: you see kind of the market environment against the earnings environment? Well,
Speaker 1: first of all, Carol and Tim, thank you so much
Speaker 1: for the opportunity to be here with you this afternoon. Listen,
Speaker 1: equities are very strong right now, and um, given where
Speaker 1: we are with regard to coming out of COVID, with
Speaker 1: regard to the true fundamental growth that we're seeing, I
Speaker 1: think there's room to run on these and we're going
Speaker 1: to prove that out dis quarter. We have, heading into
Speaker 1: the quarter percent of investors in analysts that we surveyed
Speaker 1: as part of our Inside the Byside Earnings primer eighty
Speaker 1: investors in a globally we're expecting raises in guidance, and
Speaker 1: our analysis so far is that so many one percent
Speaker 1: of companies have indeed raised guidance, and so we're going
Speaker 1: to continue to see that. So why are we seeing
Speaker 1: that play out in the way that investors are reacting
Speaker 1: because going into today, four or five companies that have
Speaker 1: reported earnings thus far have beat estimates, but on average,
Speaker 1: shares have gained less than one tenth of one percent
Speaker 1: after the reports. This is according to data compiled by Bloomberg.
Speaker 1: Is it just because expectations are so high and this
Speaker 1: is all baked in? Actually, it's because consensus is so low.
Speaker 1: Uh seal Side has been notoriously conservative with regard to COVID.
Speaker 1: UH companies have been handily beating expectations. As of last Friday,
Speaker 1: SMP five Hunter companies that had positive surprises were eighty
Speaker 1: five percent of those companies that have reported against consensus.
Speaker 1: So I think we have we have a couple of
Speaker 1: factors here. We've got consensus, which they're handily beating. But
Speaker 1: why the why stocks are not necessarily on a care
Speaker 1: is because it's the old adage by on the rumors,
Speaker 1: sell the news. These stocks are trading at all time highs.
Speaker 1: The expectations heading into earnings was sixty percent. Investors were
Speaker 1: expecting sequential improvement. Excuse me, seventy five. We're expecting sequential
Speaker 1: improvement and we're expecting beats, and so that's based into
Speaker 1: shares heading into the earnings. That's really been about the
Speaker 1: guides that companies have come out with, and we did
Speaker 1: drill down into those guidance. Companies that raised their guidance
Speaker 1: at the midpoint of three hundred basis points actually saw
Speaker 1: four point four percent increase in their shares. Interestingly, not
Speaker 1: juxtaposed that against companies that raise their guidance in the
Speaker 1: zero to two hundred basis points, So companies that didn't
Speaker 1: as our guidance and companies that did but at our
Speaker 1: lower rate, we're up point nine percent on average. So
Speaker 1: the market is rewarding big guidance outlooks in terms of increases. Interesting, right,
Speaker 1: And I think this is a quarter in particular that
Speaker 1: we want to hear from companies and the c suite
Speaker 1: about outlooks, guidance, visibility, and we're hoping it's going to
Speaker 1: be positive. Having said that, Rebecca, what you folks do
Speaker 1: so well is you do kind of track investors sentiment.
Speaker 1: What is what how do investors feel about this market
Speaker 1: environment right now? Frosty at the mouth, I mean it's
Speaker 1: all about growth. If you look at our word clouds
Speaker 1: over four quarters, it was doom and gloom, gray and
Speaker 1: red and now it's really upbeat. So you know, were
Speaker 1: is it to froth girls happening? Because you know, I
Speaker 1: say think so? Okay, Now I don't think so. I mean, listen,
Speaker 1: we've got coming out of COVID, and you must look
Speaker 1: at sentiment as um a retrospective as well as a
Speaker 1: massive amount of you know, where we were and where
Speaker 1: we're going. You cannot look at it in a vacuum.
Speaker 1: We came out of and we are seeing true fundamental growth.
Speaker 1: Companies are coming out with Q ones in the mainly
Speaker 1: you know, on average the companies have reported in the
Speaker 1: in the high single digit versus guiding to in some
Speaker 1: instances down to flat to low single digits. So we
Speaker 1: are seeing significant increases in growth. However, we also have
Speaker 1: on the opposite side, we've got massive inflation and we've
Speaker 1: got supply change. And what do you mean what do
Speaker 1: you mean by massive inflation? What makes you so? Cost inflation, healthcare, labor, costs, UH, commodities, shipping,
Speaker 1: everything is up. And what's happening is that a lot
Speaker 1: of companies are pulling forward there buys and they're buying inventory,
Speaker 1: so that because they see prices increasing, saying that this
Speaker 1: any inflation that we see as transitory. So you're you're
Speaker 1: saying that's not the case. Well, what would you how
Speaker 1: would you describe transitory? What? Temporary? Temporary? Right? Yes, well, listen,
Speaker 1: it's gonna take right now. We're starting to begin to
Speaker 1: see us inflation. We started hearing about it in Earnest
Speaker 1: two quarters ago, massive increase in inflation as a concern
Speaker 1: with regard to investors, moving from in the third quarter,
Speaker 1: you know, four mentions to now almost six times that
Speaker 1: amount that you know, and that's what they're hearing, that's
Speaker 1: what they're seeing in earnings. But you know, Rebecca, what
Speaker 1: let me just jump in for a second because you
Speaker 1: know what Tim is getting to and this is something
Speaker 1: we have a lot of conversations with and and I
Speaker 1: agree that you know, depending on where you look. And
Speaker 1: we've certainly heard it from CEOs about rising costs and
Speaker 1: they're kind of holding off at least for the moment
Speaker 1: maybe of passing it on to customers. But is it temporary?
Speaker 1: Is its supply change just catching up? Right? We have
Speaker 1: a lot of you know, the manufacturing capability maybe had
Speaker 1: held back because they had to during the pandemic because
Speaker 1: there wasn't demand, or they couldn't get the workers or
Speaker 1: what have you. And they're gonna be cautious before they
Speaker 1: ramp up because they don't want to do it too early.
Speaker 1: Is that some of what's going on, that disconnect between
Speaker 1: supply and demand. And it'll work its way out. I
Speaker 1: don't know whether it's six months. I don't know whether
Speaker 1: it's twelve months. Yeah, well, of course it will work
Speaker 1: its way out. So you know, you have to work
Speaker 1: the cost through the system right and at the end
Speaker 1: of the day it will reach the consumer. But you know,
Speaker 1: there's value chains all over the place, so they are
Speaker 1: you will hear on earnings calls. You have heard on
Speaker 1: earnings calls companies talking about cost actions. They are passing
Speaker 1: on costs. Typically they are saying that that's going to
Speaker 1: take you know, two to three quarters to work its
Speaker 1: way through the system with regard to you know, the
Speaker 1: the early stages, and that usually ends up at the consumer.
Speaker 1: So of course it will work out. And there is
Speaker 1: a lot of scarcity right now, so there's a tremendous
Speaker 1: amount of demand, but there is scarcity, and on top
Speaker 1: of that, we have you know, there's scarcity because of
Speaker 1: the demand. There's scarcity because there wasn't a lot of
Speaker 1: production and there has to ramp in production. And then
Speaker 1: of course you have the port issues that are exacerbating that.
Speaker 1: So you know, it's it's something that companies will work through.
Speaker 1: Is it something that is transitory. It depends on how
Speaker 1: long you think transitory is. It's going to be a
Speaker 1: couple of quarders, but it's any transitory opening, right, Yeah,
Speaker 1: So it doesn't necessarily make you think though that the
Speaker 1: Fed is going to change its out look for interest
Speaker 1: rate raising right based on that. Now, I don't think
Speaker 1: they're going to change their rate based on cost inflation
Speaker 1: at this level, and we'll have to see where things
Speaker 1: net out. We have other issues though, We have a
Speaker 1: pretty significant labor shortage and that's something else that we're identifying.
Speaker 1: So you have a conflux of factors that you know,
Speaker 1: this great growth that's happening, but there are some clouds
Speaker 1: on the horizon with regard to what could potentially stunt that. Yeah, exactly. Hey, listen,
Speaker 1: just twenty seconds left here. The big tech that are reporting,
Speaker 1: we're gonna get ready for Alphabet and Microsoft and quick
Speaker 1: thoughts here, listen, I think tech companies are are always
Speaker 1: going to lead. It's about it's going to be about
Speaker 1: capital allocation and investment. You see a lot of companies
Speaker 1: talking about reinvestment, talking about digitization, talking about really moving
Speaker 1: into that next industry, Supper point out, and I think
Speaker 1: these companies are going to benefit from that. Boy, it's
Speaker 1: like Elon must took a page from your playbook, because
Speaker 1: they definitely have been doing lots of capital allocation and
Speaker 1: capital investments. Certainly one of the names we've been focusing
Speaker 1: on on this Tuesday. Rebecca, Thank you so much, really
Speaker 1: appreciate it. Rebecca Corbin, She's founder and chief executive officer
Speaker 1: of Corbin Advisors, joining us on the phone from Connecticut.
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