WEBVTT - Inflation, Markets, And Crypto (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.599 at Bloomberg dot com slash podcast. We my coin based 0:00:22.600 --> 0:00:25.480 down twenty two today, so we need to talk a 0:00:25.520 --> 0:00:27.040 little bit about crypto. We're gonna do that in just 0:00:27.080 --> 0:00:29.720 a moment. Bloomberg Markets brought to you by Commonwealth, supporting 0:00:29.720 --> 0:00:32.800 more than two thousand independent financial advisors with the solutions 0:00:32.840 --> 0:00:35.920 they need to grow a thriving business. Commonwealth go where 0:00:35.960 --> 0:00:39.479 you grow. Visit Commonwealth dot com to learn more. Johanna, 0:00:39.479 --> 0:00:42.920 a singer, joins us here in our Bloomberg Interactive Brokers studio. 0:00:42.960 --> 0:00:46.000 She's cross asset reporter from Bloomberg News based in Singapore 0:00:46.520 --> 0:00:48.279 but in New York. This week's we said we need 0:00:48.280 --> 0:00:50.959 to get Joanna in the studio. When there's a ton 0:00:51.040 --> 0:00:53.760 going on, the perfect time for Johanna to come here. 0:00:53.800 --> 0:00:58.200 I mean, want the hell is going on. Sorry for 0:00:58.280 --> 0:00:59.840 saying hell, but you can't talk about hell if you 0:00:59.840 --> 0:01:03.400 can't say hell, right, Um, we have not only the 0:01:03.480 --> 0:01:07.600 drop in Bitcoin, which to me it's not abnormal to 0:01:07.680 --> 0:01:10.800 see this kind of I've been watching it for eleven 0:01:10.880 --> 0:01:14.319 years now and this happens, but um, the move in 0:01:14.440 --> 0:01:18.960 Tara is shocking to me. I mean, still day two, 0:01:19.160 --> 0:01:23.600 I'm stunned that this supposed stable coin can fall to 0:01:23.680 --> 0:01:31.360 this morning twenties on the dollar. It's like x ute no, no, 0:01:31.400 --> 0:01:34.880 the ticker on the Bloomberg terminal. Right, Um, got it? Okay, 0:01:35.040 --> 0:01:38.480 you got it? All right? Okay, So what happened? What? 0:01:38.480 --> 0:01:42.960 What are? What is? There's there's this uh algorithm based 0:01:43.360 --> 0:01:47.240 stable coin. It's supposed to automatically make changes to stick 0:01:47.319 --> 0:01:51.400 exactly to one dollar. It works in combination with another 0:01:52.120 --> 0:01:56.480 um uh coin called Luna, which then I guess buys 0:01:56.560 --> 0:02:00.360 bitcoin and avalanche and other stuff. There's this dude, a 0:02:00.560 --> 0:02:03.320 total bro and I don't like to use that word pejoratively, 0:02:03.560 --> 0:02:06.800 but I will right now. Who is the backer of it? 0:02:07.200 --> 0:02:10.839 He says he might have a solution what's going on? Well, 0:02:11.160 --> 0:02:13.800 this is the thing with these algorithmic stable coins is 0:02:13.840 --> 0:02:18.040 that they work until they don't. And there has been 0:02:18.080 --> 0:02:22.480 this history of these things not doing well, and you know, 0:02:22.560 --> 0:02:25.200 there are a few that have lasted a while, but 0:02:25.320 --> 0:02:29.000 they can blow up in spectacular fashion. And you know, 0:02:29.080 --> 0:02:32.240 people have talked about this where if you have volatile 0:02:32.280 --> 0:02:35.560 assets that you wrap together, sometimes they can be volatile, 0:02:35.639 --> 0:02:38.880 they won't necessarily maintain that desired peg to the dollar. 0:02:39.600 --> 0:02:44.040 So it's really just been quite dramatic. And there are 0:02:44.040 --> 0:02:47.600 a lot of people who put faith in ust doing 0:02:47.639 --> 0:02:50.880 well in having these yields if you stake to it, 0:02:50.960 --> 0:02:55.600 that or more people were counting on that stuff, and 0:02:55.639 --> 0:02:58.120 now it doesn't look like that's happening. And the thing is, 0:02:58.280 --> 0:03:04.400 how do you restore confidence once it's been lost? This 0:03:04.480 --> 0:03:06.800 question about both of you, what's the breakdown? And do 0:03:06.800 --> 0:03:09.480 you think an investor base for a lot of these 0:03:09.520 --> 0:03:13.560 crypto assets, whether it's Big Corner or anything else, institutional 0:03:13.639 --> 0:03:18.160 versus retail. Oh jeez, I don't know numbers per se, 0:03:18.440 --> 0:03:21.840 but institutions have been getting into them. But there are 0:03:21.880 --> 0:03:25.360 a lot of people who are regular investors who just 0:03:25.400 --> 0:03:28.040 looked at it and said, hey, twenty yield sounds awesome. 0:03:28.200 --> 0:03:30.600 I'm gonna put a lot of money in there. And 0:03:30.639 --> 0:03:33.400 I have been hearing just anecdotally about people who have 0:03:33.480 --> 0:03:38.000 lost some decent amount of their savings on stuff like this. Yeah, well, 0:03:38.040 --> 0:03:41.800 I know a ton of people who have to be fair, 0:03:42.200 --> 0:03:44.720 UM made a made a lot of money over the 0:03:44.760 --> 0:03:47.520 last few years, UM that have gotten into this. People 0:03:47.560 --> 0:03:52.080 like my trainer. You know, I have a cameraman who 0:03:52.080 --> 0:03:57.200 have made hundreds. Well no, I don't. Actually I hired 0:03:57.200 --> 0:03:59.240 the guy and then we started hanging out for beers 0:03:59.320 --> 0:04:02.680 and we don't really training. Now we're just buddies, different 0:04:02.760 --> 0:04:04.960 kind of training. But but so you're paying him to 0:04:04.960 --> 0:04:09.920 be your buddy. But these these guys have made a 0:04:09.920 --> 0:04:12.560 lot of a lot of money in crypto, but they're 0:04:12.600 --> 0:04:16.320 into all of these schemes right, anything where they can 0:04:16.360 --> 0:04:20.760 make a sick return or leverage, you know, get leveraged up. 0:04:20.800 --> 0:04:23.440 And also stable coins are a huge part of the 0:04:23.480 --> 0:04:26.120 way they trade. The interesting thing to me, Joanna is 0:04:26.160 --> 0:04:29.760 that while this story is so shocking, we haven't seen 0:04:29.839 --> 0:04:33.200 much of a ripple effect across um the crypto universe. 0:04:34.120 --> 0:04:37.239 We haven't too much. Although some of the other stable 0:04:37.279 --> 0:04:41.599 coins are down just a tad um like Tether. I 0:04:41.600 --> 0:04:44.480 mean it's it's very minimal, but Tether is off you know, 0:04:44.920 --> 0:04:48.240 point one cent or something. But yeah, you're right, that 0:04:48.400 --> 0:04:52.000 the other stable coins, but Tether and usd coin, for instance, 0:04:52.160 --> 0:04:56.200 do claim to be backed by dollars and other assets, 0:04:56.240 --> 0:04:59.560 so it's um, you know, you could say they're kind 0:04:59.600 --> 0:05:02.400 of a frint thing from some of these other algorithmic 0:05:02.480 --> 0:05:05.880 stable coins. But definitely Terra is the one that's getting 0:05:05.880 --> 0:05:07.680 all the attention and seems to be a lot of 0:05:07.720 --> 0:05:12.960 the focus. Of course, the whole crypto complex is down 0:05:13.000 --> 0:05:17.920 significantly in recent days anyway, so that's not helping things either. 0:05:18.279 --> 0:05:20.640 And again I started off with coin basis now off 0:05:20.680 --> 0:05:25.400 twenty three percent today, off seventy eight percent year to date, 0:05:25.480 --> 0:05:27.599 r at a fifty two week low, still a market 0:05:27.600 --> 0:05:30.080 cap of twelve and a half billion. But I'd look, 0:05:30.160 --> 0:05:34.880 the coin base is kind of the everyday person's opportunity 0:05:34.880 --> 0:05:38.440 to get exposure to crypto, and so this kind of 0:05:38.440 --> 0:05:42.479 feels like it's meaningful. It's still could be. So look, 0:05:42.680 --> 0:05:46.480 coin base is still going to be the major exchange 0:05:46.520 --> 0:05:49.039 that Americans used, or one of the major exchanges that 0:05:49.080 --> 0:05:53.160 Americans used to trade crypto. The key here takeaway in 0:05:53.200 --> 0:05:57.040 my opinion for retail or for any investor is don't 0:05:57.120 --> 0:06:00.440 hold your crypto on the exchange. When you get a 0:06:00.440 --> 0:06:04.520 wallet you can use coin bases wallet, which they make 0:06:04.560 --> 0:06:07.880 it easier for you to access, but they hold the 0:06:07.880 --> 0:06:10.680 private key, or you can hold it on an off 0:06:10.720 --> 0:06:13.520 exchange wallet where you have to remember the private key. 0:06:13.560 --> 0:06:17.680 That's the one that I forgot um with my blockchain wallet. 0:06:17.720 --> 0:06:20.640 But the problem is coin based said if they go bankrupt, 0:06:21.240 --> 0:06:26.080 all of your crypto that they hold could be lost. Yeah, 0:06:26.160 --> 0:06:29.520 that is a scary prospect. But you know, it doesn't 0:06:29.520 --> 0:06:33.039 sound like they're anywhere near that point yet, but they are. 0:06:33.600 --> 0:06:36.839 The price is just so dependent on where bitcoin is. 0:06:37.080 --> 0:06:39.760 Coin bases price peaked around at the same time Bitcoin did, 0:06:39.880 --> 0:06:41.640 so you know you've noticed that what I have in 0:06:41.680 --> 0:06:46.520 my hand, cold hard cash. That's how players roll. Johanna 0:06:46.520 --> 0:06:48.560 austing Er, thank you so much for joining us live 0:06:48.600 --> 0:06:51.080 here in the Bloomberg and actor Brooker's studio. Join Austinger, 0:06:51.080 --> 0:06:53.640 a cross asset reporter for Bloomberg News. Bring us the 0:06:53.720 --> 0:07:00.599 latest on the vault crypto space. We've got in trades. 0:07:00.640 --> 0:07:04.520 We had a hot inflation number today. Uh, just kind 0:07:04.560 --> 0:07:06.640 of markets are trying to figure out which way to 0:07:06.680 --> 0:07:08.640 play this year. We do have green on the screen here, 0:07:08.680 --> 0:07:10.920 but again a lot of uncertainty out there. That's kind 0:07:10.960 --> 0:07:13.000 of what we're seeing in the volatility. Doug Baker, He's 0:07:13.000 --> 0:07:16.680 a portfolio management had of preferred securities at Nuvene. They've 0:07:16.680 --> 0:07:19.720 got a couple of shekels under management. Doug, What are 0:07:19.760 --> 0:07:22.920 you and your team? How are you thinking about putting 0:07:22.920 --> 0:07:26.280 money to work these days? Given the inflation print we 0:07:26.320 --> 0:07:28.920 saw this morning, given what we've seen from this Federal 0:07:28.960 --> 0:07:31.080 Reserve over the past couple of months, how are you 0:07:31.080 --> 0:07:34.760 guys approaching the market? Yeah? Absolutely, um so, so thanks 0:07:34.760 --> 0:07:37.360 for having me on um. You know, our views are 0:07:37.360 --> 0:07:39.480 a little bit more sing going as as far as 0:07:39.560 --> 0:07:41.480 as rates are concerned. We we do feel a lot 0:07:41.520 --> 0:07:44.440 as priced into the curve today and and really our 0:07:44.480 --> 0:07:46.760 our outlook as far as the Fed is concerned by 0:07:46.840 --> 0:07:49.360 year end is is a slightly slightly more constructive than 0:07:49.400 --> 0:07:52.040 the market. So we we do feel that the Fed 0:07:52.080 --> 0:07:53.720 will will get to about two and a half percent 0:07:53.760 --> 0:07:56.640 by year end. UM the ten years probably gonna be 0:07:56.720 --> 0:07:59.760 slightly north of three percent by that time, but we 0:08:00.000 --> 0:08:03.120 you feel that what's important important takeaway here is that 0:08:03.240 --> 0:08:05.680 a lot is priced into the curve, and when we 0:08:05.760 --> 0:08:08.520 do look at at rates and where they are today, 0:08:09.160 --> 0:08:12.160 I think some people are are are looking a little 0:08:12.200 --> 0:08:14.640 too bearish lye and and feel that there's a lot 0:08:14.680 --> 0:08:18.040 more move to come. We're we're we're really positioned from 0:08:18.080 --> 0:08:21.480 the perspective that, um, we need to look at what's 0:08:21.520 --> 0:08:24.600 priced in and and trade accordingly. Now we want to 0:08:24.600 --> 0:08:27.480 remain relatively conservative when it comes to interest rate risk 0:08:27.560 --> 0:08:31.360 or duration risk, and you'll see that reflected across our strategies. 0:08:32.800 --> 0:08:37.360 What about investors who want to return here? Absolutely, is 0:08:37.360 --> 0:08:39.840 it a good time to get in? We think so. 0:08:40.040 --> 0:08:42.480 We think credit spreads are actually very attractive in fixed 0:08:42.480 --> 0:08:45.120 income space, whether you're talking about investment grade bonds, high 0:08:45.120 --> 0:08:47.719 heel bonds, and in my space and preferred securities, the 0:08:47.840 --> 0:08:50.760 credit spreads are actually very attractive UM. And when you 0:08:50.760 --> 0:08:54.360 look at the underlying fundamentals, they're they're pretty strong. Corporate 0:08:54.360 --> 0:08:57.560 America really from a liquidity and a leverage perspective isn't 0:08:57.600 --> 0:09:00.080 isn't too extended. And actually the consumers and really a 0:09:00.120 --> 0:09:03.760 good spot too. UM. They had elevated savings rates during 0:09:03.800 --> 0:09:07.120 COVID and are really coming into this environment UM fairly 0:09:07.120 --> 0:09:10.200 well protected to with with some ability to absorb the 0:09:10.240 --> 0:09:12.640 impact of inflation like we saw today, still kind of 0:09:12.679 --> 0:09:16.199 coming in higher than than what most people are expecting, Doug, 0:09:16.280 --> 0:09:17.839 we don't talk a lot on this show. I don't 0:09:17.880 --> 0:09:21.400 think about preferred stocks in general and the preferred market. 0:09:21.840 --> 0:09:24.199 Give us your kind of thirty second elevator pitch for 0:09:24.320 --> 0:09:26.840 preferred How are you guys thinking about that part of 0:09:26.880 --> 0:09:30.120 the market. Yeah, absolutely so. I think it's important that 0:09:30.160 --> 0:09:31.760 one of the first takeaways is that this is a 0:09:31.840 --> 0:09:35.760 high quality investment solution. Most of our issuers are banks 0:09:35.760 --> 0:09:39.679 and insurance companies, and those two categories combined account for 0:09:39.679 --> 0:09:42.280 about eight percent of our issuer base. So at the 0:09:42.360 --> 0:09:44.960 end of the day, these are highly rated, typically and 0:09:45.040 --> 0:09:50.479 highly regulated issuers, and interestingly enough, both of those sectors 0:09:50.800 --> 0:09:54.080 arguably benefit the most from a rising rate environment. So 0:09:54.080 --> 0:09:56.400 so the outlook for the fundamentals in our space are 0:09:56.520 --> 0:09:59.560 pretty strong. Now, a lot of our preferred securities are 0:09:59.559 --> 0:10:02.760 either long dated or perpetual nature, so so the thought 0:10:02.880 --> 0:10:04.920 is by most folks that this must be a long 0:10:05.200 --> 0:10:09.480 duration or high interest rate sensitivity solution, and so some 0:10:09.520 --> 0:10:11.840 people could be a little scared by that, but actually, 0:10:12.320 --> 0:10:15.920 you know, through active management and security selection, you can 0:10:15.920 --> 0:10:21.359 actually put a portfolio together with a very reasonable duration exposure. 0:10:21.640 --> 0:10:24.760 For example, our our mutual fund at at the end 0:10:24.760 --> 0:10:26.880 of the month of March this year was running a 0:10:26.960 --> 0:10:29.920 duration of just over three years. So so I think 0:10:29.920 --> 0:10:35.119 that there are possibilities and UM very attractive ones to 0:10:35.160 --> 0:10:38.400 take advantage of the preferred market and and to do 0:10:38.520 --> 0:10:42.800 so while also managing your your interest rate risk to 0:10:42.920 --> 0:10:46.920 a fairly reasonable level. What do you think about UM 0:10:47.600 --> 0:10:50.480 Europe or other regions than the US. I mean, you 0:10:50.480 --> 0:10:53.320 say preferred, I think about Volkswagen. You say preferred, I 0:10:53.320 --> 0:10:56.319 think about Porsche. Right, these are just they have famous 0:10:56.320 --> 0:10:58.640 preferred stocks. I don't know if you like them particularly. 0:10:58.640 --> 0:11:03.120 Why do they have famous preferreds? That's that's the doctor trades. Yeah, 0:11:03.360 --> 0:11:07.000 vow three at g y okay, yeah so, but but 0:11:07.280 --> 0:11:09.800 it just makes me I mean obviously not banks, although 0:11:09.880 --> 0:11:13.800 they have massive financial arms. UM. What do you think 0:11:13.840 --> 0:11:18.480 about the UH outside of the US? UM right now? 0:11:18.679 --> 0:11:22.000 Sure so, so outside the US banks are still very 0:11:22.120 --> 0:11:25.520 large issuers of preferred It's it's a slightly different categories 0:11:25.640 --> 0:11:28.840 something that we've referred to as contingent capital securities. But 0:11:29.080 --> 0:11:32.520 definitely here in the US, it seems there's a misperception 0:11:32.520 --> 0:11:35.800 about how strong these Western European banks aren't. It shocks 0:11:35.840 --> 0:11:38.480 most people when we put data in front of them, 0:11:38.520 --> 0:11:42.200 and we demonstrate that on average, UH, these banks are 0:11:42.280 --> 0:11:45.720 better capitalized and even our US banks and so so 0:11:45.920 --> 0:11:49.040 we do think that there are tremendous opportunities, especially in 0:11:49.080 --> 0:11:51.960 Western Europe. Now are there a handful of names obviously 0:11:52.000 --> 0:11:55.160 we'd like to avoid and maybe some particular regions indeed, 0:11:55.640 --> 0:11:59.000 but we've we've gone through the Western European bank space 0:11:59.120 --> 0:12:02.280 to pull out things like, hey, how much Russian Ukraine 0:12:02.320 --> 0:12:05.079 exposure is there? What if this was all written down, 0:12:05.600 --> 0:12:08.160 what would that mean for for that segment of our market? 0:12:08.600 --> 0:12:11.360 And and to be honest, with the amount of capital 0:12:11.480 --> 0:12:15.720 that's in the bank system today in Europe, um, they 0:12:15.720 --> 0:12:20.000 should be well positioned to absorb any any sort of 0:12:20.080 --> 0:12:22.920 hit or write down UH and and even the knock 0:12:22.920 --> 0:12:25.400 on effects that we expect to hit the European economy, 0:12:25.679 --> 0:12:29.320 those banks should be well positioned. A reminder for everyone 0:12:29.679 --> 0:12:34.600 US banks, European banks, they're stress tested regularly to to 0:12:34.760 --> 0:12:38.839 determine whether they can survive dire economic conditions worse than 0:12:38.880 --> 0:12:40.559 what we saw in two thousand and eight, two thousand 0:12:40.640 --> 0:12:43.880 and nine. So when people are you know, starting to 0:12:43.960 --> 0:12:48.199 raise the specter of of of a recession, that doesn't 0:12:48.200 --> 0:12:50.480 really bother us too much. In in in in the 0:12:50.520 --> 0:12:53.319 scheme of things, good stuff. Doug Baker bringing it today, 0:12:53.520 --> 0:12:56.920 Doug Baker Portfolio Management had to preferred securities at noeu Ven. 0:13:00.679 --> 0:13:03.840 Let's get over to Michael Dean right now, Bloomberg Intelligence 0:13:03.880 --> 0:13:07.959 autos analysts out of London. He covers Volkswagen has been 0:13:08.000 --> 0:13:11.679 doing a bang up job of it for years. In fact, Um, Michael, 0:13:11.720 --> 0:13:14.760 A lot of the calls that you made UM are 0:13:14.920 --> 0:13:18.560 are now coming true. At the main one of them 0:13:18.559 --> 0:13:20.920 being that UM, folks Wong is finally gonna I p 0:13:21.080 --> 0:13:24.079 O Porsche. Before we get into the Scout announcement, which 0:13:24.080 --> 0:13:28.240 I'm pumped about, UM, talk to us about the Porsche 0:13:28.280 --> 0:13:32.640 I p O and how how important this is, How 0:13:32.640 --> 0:13:35.880 big is this going to be for a company that has, like, 0:13:35.960 --> 0:13:40.160 you know, ten other brands, Hi, good morning. So yes, 0:13:40.559 --> 0:13:42.439 if you look at some you know what's happening to 0:13:42.520 --> 0:13:45.559 Tesla in terms of the market capitalization. If you look 0:13:45.600 --> 0:13:49.000 at Ferrari, you look at the very strong valuations that 0:13:49.000 --> 0:13:51.679 that luxury brand has, and then you look at Volkswagen, 0:13:51.720 --> 0:13:55.120 which is trading on near crisis multiples. It's very important 0:13:55.120 --> 0:13:58.000 for them to do something and by I poing Porsche, 0:13:58.120 --> 0:14:01.920 they can actually extract some value for shareholders and hopefully, 0:14:02.040 --> 0:14:04.199 you know, Porsche will be valued at a similar sort 0:14:04.240 --> 0:14:08.800 of level to to Ferrari Volkwagon. By the way, Volkswagen 0:14:08.840 --> 0:14:12.440 trades for about eighty eight billion euros in total right, 0:14:12.480 --> 0:14:15.760 which is like a tenth of Tesla. How much is 0:14:15.800 --> 0:14:18.480 Porscha going to be worth post ipl so we think 0:14:18.520 --> 0:14:20.600 it could be worth up to eighty billion euros, so 0:14:20.720 --> 0:14:24.360 so almost the market cap of its parent company in total. 0:14:24.480 --> 0:14:27.280 So this is huge for the company. Why is Volkswagen 0:14:27.360 --> 0:14:29.640 trade at such a discount? Dude? Imagine this means you 0:14:29.680 --> 0:14:37.120 get Bentley, Lamborghini, UH Party, CRT, Scolder, Volkswagen. I don't 0:14:37.120 --> 0:14:40.280 know what I'm missing, all for free Audi, all for 0:14:40.600 --> 0:14:44.040 Let me ask the expert, Michael Dean. Why is that? Well, 0:14:44.080 --> 0:14:46.680 you just look at any European auto company or any 0:14:46.800 --> 0:14:50.400 legacy auto company. They're trading on crisis multiples, which means 0:14:50.720 --> 0:14:53.840 that it's effectively the market saying that their their ice business, 0:14:53.880 --> 0:14:57.520 their internal combustion engine business um will take them down 0:14:57.640 --> 0:15:00.280 or or the company won't exist in the future, even 0:15:00.280 --> 0:15:03.280 though they're spending huge amounts and they're going to convert 0:15:03.440 --> 0:15:07.080 very quickly to too battery electric vehicles, so it's a 0:15:07.200 --> 0:15:09.960 very tough market valuation for them at the moment. Well, 0:15:10.200 --> 0:15:11.800 let me talk to you about Herbert DS because I'm 0:15:11.800 --> 0:15:15.520 gonna interview in this afternoon. I've been following this guy 0:15:15.560 --> 0:15:19.120 since he came from BMW. He produced one of my 0:15:19.120 --> 0:15:22.720 favorite motorcycles there, the r N and t UM among 0:15:22.760 --> 0:15:27.240 other things. But now at Volkswagen he has led up. 0:15:27.960 --> 0:15:32.000 Can I say ball to the wall, charge towards electrification, 0:15:32.120 --> 0:15:36.000 towards the future? Um is he? Do you think doing 0:15:36.160 --> 0:15:39.320 doing all the right things now? I think so? I 0:15:39.360 --> 0:15:42.520 mean partly, Um, you know they're big charge into battery 0:15:42.520 --> 0:15:46.360 electric so I think you know, Volkswagen can overtake Tesla 0:15:46.360 --> 0:15:48.560 in terms of volumes for battery electric vehicles in two 0:15:48.600 --> 0:15:51.960 thousand twenty four, but indirectly because of what happened with 0:15:52.080 --> 0:15:56.400 diesel gates, Volkswagen was kind of forced into battery electric vehicles. 0:15:56.440 --> 0:15:59.200 But Deese has sort of taken the helm and he's 0:15:59.280 --> 0:16:02.240 really pushed and you know, they're they're way forward in 0:16:02.360 --> 0:16:05.480 terms of their transition compared to other legacy bronze. He 0:16:05.520 --> 0:16:08.000 has no blood on his hands from diesel Gate. By 0:16:08.000 --> 0:16:10.720 the way. It's personally a sad, a very sad story 0:16:10.760 --> 0:16:13.720 for me because I love a diesel power train. I don't. 0:16:14.200 --> 0:16:18.080 I just adore I still have a diesel. You haven't, 0:16:18.520 --> 0:16:20.800 Isn't it great? My first car that I ever bought 0:16:20.800 --> 0:16:24.240 with my own money was Audi a four two point 0:16:24.280 --> 0:16:26.680 five t D I. I loved it. My new favorite 0:16:26.680 --> 0:16:31.760 power train is GM's Babydramax, a little in line six diesel. 0:16:31.800 --> 0:16:34.840 I think they're fantastic propulsion systems and given where pump 0:16:34.840 --> 0:16:37.520 prices are, I mean the economical as well, So I'm 0:16:37.600 --> 0:16:39.360 very happy to have a diesel at the moment. All Right, 0:16:39.440 --> 0:16:42.240 Michael talked to us just about the car industry in general. Like, 0:16:42.680 --> 0:16:44.680 one of the questions I have is just, you know, 0:16:44.720 --> 0:16:47.120 in the United States, kind of the average production with 0:16:47.160 --> 0:16:50.520 sixteen seventeen million cars a year, I'm told we're not 0:16:50.560 --> 0:16:52.640 going to see that again. How do you think about 0:16:52.640 --> 0:16:56.480 production and inventory levels at the dealers? Matt's gotta wait 0:16:56.520 --> 0:17:00.800 like eighteen months for his truck. Is that the new normal? Yeah? 0:17:00.800 --> 0:17:03.280 It's so interesting at the moment. So, you know, initially 0:17:03.440 --> 0:17:07.680 we had these production shortfalls because the semiconductor constraints. Now 0:17:07.720 --> 0:17:10.199 we've had other supply issues on the back of the 0:17:10.320 --> 0:17:13.360 Ukraine War. So so yeah, we look at the first 0:17:13.440 --> 0:17:16.800 quarter results this year, many automakers their production was down, 0:17:17.440 --> 0:17:20.760 but their margins are up. So they finally realized that 0:17:20.800 --> 0:17:23.000 they don't have to go for volume, and actually it's 0:17:23.000 --> 0:17:26.399 probably a good thing for profitability for the industry. That's 0:17:26.640 --> 0:17:30.760 they're producing fewer cars, they're producing higher marching cars, and 0:17:30.760 --> 0:17:33.680 they're producing less of you know, the smaller saloons, which 0:17:33.680 --> 0:17:37.159 aren't very popular anymore. By the way, I can't wait, um, Michael, 0:17:37.200 --> 0:17:40.280 until you come over here to the US and get 0:17:40.280 --> 0:17:43.000 to ride in my truck. Hopefully I have it by then. 0:17:43.400 --> 0:17:45.760 But let me tell you something about this truck I ordered. 0:17:45.840 --> 0:17:51.080 It just launched in February. It's a g M. Chevy 0:17:51.119 --> 0:17:54.240 Silverado z R two. They priced at sixty seven, sorry, 0:17:54.240 --> 0:17:58.760 sixty six in February. Then at the end of the month, 0:17:58.800 --> 0:18:00.600 at the beginning of March, they probably is to raise 0:18:00.640 --> 0:18:04.320 the price to six. Then at the end of March 0:18:04.359 --> 0:18:07.360 they raised the price again to sixty nine to five. 0:18:07.440 --> 0:18:10.360 So they've raised the price, um, more than three thousand 0:18:10.400 --> 0:18:15.240 dollars in the space of like two months. Is that normal? Yes, 0:18:15.480 --> 0:18:17.960 I've got another example. I was looking to buy the 0:18:18.000 --> 0:18:20.720 BMW I X so that's sort of X five equivalent 0:18:21.320 --> 0:18:24.359 battery electric vehicle. When I first looked it was eighty 0:18:24.440 --> 0:18:26.439 five thou pounds. It's gone up to a hundred and 0:18:26.480 --> 0:18:33.040 five thousand pounds. So the inflation is real. Yes, it's everywhere, 0:18:33.240 --> 0:18:35.280 and they can get these prices. People are willing to 0:18:35.320 --> 0:18:37.359 pay it. Yeah. And you've got to remember the most 0:18:37.440 --> 0:18:40.920 vehicles of finance now, so um, it's whether you extend 0:18:40.960 --> 0:18:42.960 the finance over another year, so you make the monthly 0:18:43.000 --> 0:18:45.400 payment the same, so that it's not really hitting consumers 0:18:45.400 --> 0:18:49.560 pockets at the moment. So are the days over? Michael? 0:18:49.600 --> 0:18:52.040 And we we pull into a lot and it's just 0:18:52.320 --> 0:18:54.920 dozens and dozens and maybe hundreds of cars on a 0:18:54.920 --> 0:18:57.680 dealer's lot, and we get the have a little bit 0:18:57.680 --> 0:19:00.760 of a negotiation over the race you're gonna pay. Are 0:19:00.760 --> 0:19:03.000 those days over for consumers? Yeah? I think so. I 0:19:03.000 --> 0:19:04.840 mean in Europe that was never the model, you always 0:19:04.960 --> 0:19:08.720 ordered the vehicle, and and in the US it's probably 0:19:08.720 --> 0:19:11.040 better for the manufacturers if it goes that way, because 0:19:11.280 --> 0:19:14.119 you know, you probably have more options, and options are 0:19:14.160 --> 0:19:16.840 very profitable as you know for cars, So so for 0:19:16.920 --> 0:19:20.040 long run, profitability. Um, yeah, I think it's better for 0:19:20.080 --> 0:19:21.560 the car makers, and that's the way it's going to 0:19:21.640 --> 0:19:23.359 go in the US as well. All Right, I'm keeping 0:19:23.400 --> 0:19:27.040 my two thousand fourteen BMW five thirty five I in 0:19:27.160 --> 0:19:31.639 Duke Blue with manual transmission. Dude. It's a great engine, 0:19:31.720 --> 0:19:35.040 it's a great transmission, and I don't see anything wrong 0:19:35.080 --> 0:19:38.760 with keeping that. Um, I gotta uh, just a minute 0:19:38.840 --> 0:19:42.680 left here, Michael, What do I ask Herbert D's today? 0:19:42.720 --> 0:19:45.720 What should what should my most important question for the 0:19:45.800 --> 0:19:49.080 CEO of Folkswagon be this afternoon? I just confirmed that 0:19:49.119 --> 0:19:52.680 they're going to ibi Porsche in the fourth quarter. Um, 0:19:52.720 --> 0:19:55.439 that would be the key item of my agenda. But 0:19:55.480 --> 0:19:58.200 also just about battery electric vehicles. So he's talking about 0:19:58.680 --> 0:20:01.520 the cost of batteries or the equivalent cost of of 0:20:01.600 --> 0:20:04.639 a BEV compared to Anne being pushed back maybe a 0:20:04.720 --> 0:20:07.560 year or two. So when will cost be comparable? Originally 0:20:07.600 --> 0:20:10.080 we thought it was gonna be two tho. We forgot talk. 0:20:11.320 --> 0:20:13.719 We forgot to and probably to you, it didn't you 0:20:13.720 --> 0:20:17.240 weren't you weren't um you know, slobbering over a scout 0:20:17.320 --> 0:20:20.280 as a young teen, Michael, because I never had the 0:20:20.320 --> 0:20:22.800 scout you've never had it, but it's so cool for 0:20:22.840 --> 0:20:26.240 the US. I mean, does Volkswagen as a brand really 0:20:26.240 --> 0:20:30.160 have a chance in America? Well, they suddenly do on 0:20:30.160 --> 0:20:32.439 on the Beth side of things, um, and they've got 0:20:32.480 --> 0:20:34.520 good market show at the moment, so they're catching up 0:20:34.560 --> 0:20:37.639 with Tesla. There's suddenly in with a chance on the 0:20:37.720 --> 0:20:40.280 new power trains. Yeah, the battery electric vehicles they had, 0:20:40.320 --> 0:20:43.360 the I D four is quite cool. The microbus, everybody's 0:20:43.400 --> 0:20:45.400 waiting for that. Greg Jarrett's waiting for that to come back, 0:20:45.760 --> 0:20:48.040 and then the and then the new Scout will be 0:20:48.080 --> 0:20:52.520 like a Rivian competitor. Michael Dean, Bloomberg Intelligence analyst, uh, 0:20:52.640 --> 0:20:54.879 covering autos for US at Alan and great to have 0:20:54.960 --> 0:20:57.440 you on the program. Thanks so much for joining us, 0:20:57.600 --> 0:21:00.680 and do tune in later this afternoon. I'm Inberg Television 0:21:00.680 --> 0:21:03.639 and Radio from my interview with the CEO of Folkswagen 0:21:03.680 --> 0:21:12.480 Herberts Professional here doing this stuff for living Christian Ladeau, 0:21:12.720 --> 0:21:16.360 director of investment research at cap Trust. UM Richard, I'm 0:21:16.359 --> 0:21:19.159 just kind of reading some notes here about half of 0:21:19.200 --> 0:21:21.800 the broad US market, we'll call that the Russell three thousand, 0:21:22.000 --> 0:21:26.240 About half are down over from the fifty two week highs. 0:21:26.960 --> 0:21:30.040 That's a bear market? Are are things worse out there 0:21:30.040 --> 0:21:32.159 than we think they are in terms of you know, 0:21:32.240 --> 0:21:36.919 the equity markets? Good morning guys. Yeah, there's there's a 0:21:36.960 --> 0:21:39.640 lot of I don't want to say sketchy, but let's 0:21:39.640 --> 0:21:43.320 say questionable business models in some of those companies. So 0:21:43.480 --> 0:21:46.200 we've we've really had a period of froth that had 0:21:46.240 --> 0:21:50.439 to come down, and we're seeing that in the broad 0:21:50.520 --> 0:21:54.679 swath of industries, mostly in the tech and health care areas. 0:21:55.760 --> 0:21:58.680 But you know, you talked about real economy stocks, those 0:21:58.680 --> 0:22:00.760 are the ones holding up a little bit. Are certainly 0:22:00.800 --> 0:22:04.879 the ones in inflation beneficiary areas like energy and materials. 0:22:06.359 --> 0:22:09.320 All Right, So I don't know if you kind of 0:22:09.359 --> 0:22:11.280 got this message early in your career like I did, 0:22:11.320 --> 0:22:13.280 which is don't fight the Fed, But if you did, 0:22:14.400 --> 0:22:16.560 kind of makes investing hard over the next six to 0:22:16.640 --> 0:22:19.120 twelve eighteen months because we have a federal reserve that's 0:22:19.160 --> 0:22:23.400 certainly in a hiking mode. Indeed it is. And yes, 0:22:23.480 --> 0:22:26.280