Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Let's talk about a little some fun, a little bit
Speaker 2: something new, and that is the meta verse. That's something
Speaker 2: that we associate with Meta. The company the Facebook actually
Speaker 2: changed their names Go Figure from Facebook to Meta, even
Speaker 2: though Facebook is still ninety nine point nine percent of
Speaker 2: the company's revenue.
Speaker 1: But you go Figure.
Speaker 2: A consultant got involved there at some point. I'm sure
Speaker 2: Dana Brown joins us. He's a president of the America's
Speaker 2: for HTC. He joined his life here on a Bloomberg
Speaker 2: Interactive broker studio. Dan, you guys got got a lot
Speaker 2: of experience in this a few years. Just kind of
Speaker 2: the metaverse. What does the metaverse? And I'm speaking for
Speaker 2: all metaverse shareholders here, and I own like lots of stock.
Speaker 2: Let's say I'm a big institutional shareholder. I don't know
Speaker 2: what my company's name means. What is the metaverse to you?
Speaker 3: That's super interesting?
Speaker 4: The metaverse is really this long term vision right, where
Speaker 4: we interact in a digital space together, much like we
Speaker 4: do with the Internet today. You will be able to
Speaker 4: use this in the future with products and wearables and
Speaker 4: glasses that do things like augmented reality, virtual reality.
Speaker 3: All the same time.
Speaker 4: We're in a space of the metaverse today that's very
Speaker 4: applicable to enterprise businesses, applic real world application.
Speaker 5: You're doing it already, that's right, idea, right, I mean,
Speaker 5: Mark Zuckerberg, I think if I can speculate a little, Paul,
Speaker 5: I'm gonna say they were in a period where they
Speaker 5: just didn't want to be called Facebook anymore. It kind
Speaker 5: of sucked to be Facebook at that time, so they
Speaker 5: picked a new name, any name, and that's where they landed.
Speaker 5: They're not really doing metaverse stuff yet, except for the
Speaker 5: fact that they had bought Oculus Rift and they're spending guys,
Speaker 5: and they're spending a ton of money on it. But Dan,
Speaker 5: you guys at h TC are already doing things right.
Speaker 5: You're allowing what pilots to practice fighter jets or brain
Speaker 5: surgeons to practice messing around in your head.
Speaker 6: With what headsets.
Speaker 4: So we build virtual reality products, also mixed reality products,
Speaker 4: which is a wearable glasses that much just like glasses
Speaker 4: where you can actually interact with the real world objects
Speaker 4: as well as digital objects. Right. But we have been
Speaker 4: doing this for the last six plus years, and we
Speaker 4: have been working in healthcare with doctors, nurses, training, simulation, healthcare,
Speaker 4: with rehabilitation. We have made improvements in speed of training,
Speaker 4: speed of learning. We have made significant improvements in just
Speaker 4: overall performance human performance. And that's what our brand actually
Speaker 4: stands for. It actually stands for innovation, technology and humanity,
Speaker 4: and we want to bring value to a lot of
Speaker 4: real world applications for immersive solutions.
Speaker 5: So if we're going to compare what you're doing HTC
Speaker 5: to another company, I wouldn't choose Meta, No, I would
Speaker 5: choose Apple. And what I assume they're the direction. I
Speaker 5: assume they're going to go with whatever product they come
Speaker 5: out with. Whenever they do, you're looking to actually apply
Speaker 5: it to human lives and the way we can use
Speaker 5: them today, not like I can have a tail and
Speaker 5: bounce around some fantasy land.
Speaker 7: Right.
Speaker 3: Yeah, I think you know.
Speaker 4: Initially too, there's there is that fun gaming and entertainment
Speaker 4: side of it. But we have a lot of gaming
Speaker 4: and entertainment products out there vuying for our attention, I think,
Speaker 4: and also we assume our customers are using it to
Speaker 4: benefit them.
Speaker 3: They are not the product.
Speaker 5: We're talking to Dan O'Brien, he's the president of the
Speaker 5: Americas and he's talking to us about technology that his
Speaker 5: company has developed and is using. We keep thinking of
Speaker 5: the metaverse as the future, but this is where professionals
Speaker 5: are participating in it now. Dan, what do you what
Speaker 5: do you do with the actual product? Do you if
Speaker 5: you want to say, help a brain surgeon practice surgery,
Speaker 5: do you sell a box of these things to.
Speaker 6: You know, yeah, like.
Speaker 5: Or or a university, or do you have them coming
Speaker 5: and work with you? How do you do it?
Speaker 4: So we actually have multiple models, but we actually the
Speaker 4: most popular model is when another company, uh, you know,
Speaker 4: we have companies like mind VR, we have x R Health,
Speaker 4: we have multiple surgical partners. Those companies are actually integrated
Speaker 4: inside of these hospitals or integrated inside of you know,
Speaker 4: we have surgical theater. They're integrated into what they write
Speaker 4: the software for your hardware and then they will actually
Speaker 4: integrate and actually put that solution inside of the hospital.
Speaker 3: We will promote that solution.
Speaker 4: It could be a very specific SKEW, or we could
Speaker 4: actually put together a SKU that has a lot of
Speaker 4: different types of training materials on it and simulations on
Speaker 4: it that works across multiple areas of the company.
Speaker 5: And I feel like I know what a SKEW is,
Speaker 5: but I don't really.
Speaker 3: Sorry, Well, that's.
Speaker 4: Just a boxed version of the product. So when they
Speaker 4: open that product, that's what it actually is.
Speaker 2: It's in stock keeping units us in the day's retail.
Speaker 2: So give us your sense of the future of the
Speaker 2: VR headset. What's a look like now, what are its
Speaker 2: capabilities now, and how do you see that evolving going forward?
Speaker 3: So like even our latest x ray.
Speaker 4: Elite headset that we just launched a few months ago,
Speaker 4: this is a wearable headset that fits on the front
Speaker 4: and the back of your head, and it's still larger
Speaker 4: and a little bit bulky, but you can actually take
Speaker 4: the back off and have it in glasses only mode.
Speaker 4: It's about the same weight as an iPhone, so very comfortable.
Speaker 3: Light it needsy to use.
Speaker 4: In the future, where we are going is we're going
Speaker 4: to integrate five G technology, just like a smartphone into
Speaker 4: these wearable glasses, and you will have a connected product
Speaker 4: that is actually connected to a private network. You know,
Speaker 4: it could be Bloomberg's private network as well as you know.
Speaker 3: A public network.
Speaker 4: And I think then you will start to see what
Speaker 4: we call that hockey sticks scale in terms of consumer adoption.
Speaker 4: But right now we are very much in business professional
Speaker 4: use case similar smartphones. I was one of the original
Speaker 4: guys making smartphones, you know, well before iPhone and well
Speaker 4: before Android phones, and I worked on the original Android phone.
Speaker 3: Now like how that went in terms of adoption.
Speaker 4: We started with professional, We started with those professional use cases.
Speaker 4: We've brought value to those customers, efficiencies, cost savings, and
Speaker 4: then we actually brought it into consumer. Once we actually
Speaker 4: brought in the consumer.
Speaker 2: Where we own that timeline, do you think for it
Speaker 2: like a real consumer and will be a brand that
Speaker 2: we know well.
Speaker 4: I think Apple coming in is going to be a
Speaker 4: great addition to the market, right that is, it's endorsing
Speaker 4: to the market. But they're going to start with professional
Speaker 4: as well. They're going to start with professional creatives as well.
Speaker 6: I think, what are you going to compete with?
Speaker 5: So is HTC going to compete with Apple and whatever
Speaker 5: Oculus rift is now?
Speaker 7: Oh?
Speaker 4: Absolutely, I mean we consider all of us, you know,
Speaker 4: very worthy rivals. We're all trying to remove hurdles from
Speaker 4: the industry for that mass adoption, and we're all approaching
Speaker 4: it differently, which is great.
Speaker 5: I think I figured you're aimed at probably a different
Speaker 5: customer segment then maybe Tim Cook.
Speaker 4: Yeah, and I think you know, we're looking at customers
Speaker 4: that this is a product that we can sell, that
Speaker 4: they will bring in, that they will save money, they
Speaker 4: will save time efficiency.
Speaker 3: You know, we look at companies like Bell Helicopter.
Speaker 4: It normally takes them five to seven years to prototype
Speaker 4: and new helicopter they did it in six months and
Speaker 4: so saved over one hundred million dollars. You know, we're
Speaker 4: using it with architecture and construction firms. We're looking at
Speaker 4: those different ways that we can actually bring massive value now.
Speaker 4: And then we look at okay, great, let's integrate this
Speaker 4: scaling technology like five G technology into these headsets. And
Speaker 4: quite honestly, we're one of the only companies in the
Speaker 4: world that can actually do that.
Speaker 6: Awesome.
Speaker 2: Yeah, great stuff, all right, we appreciate it. Dan O'Brien
Speaker 2: coming into our live into our Bloombergame Actor Broker Studio.
Speaker 2: Dan O'Brien, he's a president of the Americas for HTC
Speaker 2: talking about meta and the metaverse.
Speaker 1: More importantly, you're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us Live weekday afternoons from three to six Eastern Listen.
Speaker 8: On Bloomberg dot com, the iHeartRadio app and Bloomberg Business app,
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Speaker 2: Wait, you can't be a good time to be a
Speaker 2: central banker these days. You're raising rates everywhere. I don't
Speaker 2: care if you're at the FED or the Bank of
Speaker 2: England or the ECB. Nobody wants to talk to you.
Speaker 2: Nobody's somebody the dinner parties. You know you're not getting
Speaker 2: the Christmas cards because you're raising range and you're making
Speaker 2: life tough for people. But nowhere it seems to some
Speaker 2: more difficult to be a central banker than in Brazil.
Speaker 2: So let's bring in the reporter on this story. Maria
Speaker 2: and Luisa Caputum, a brazil economics reporter for Bloomberg News.
Speaker 2: She joins us on zoom from our sal Paolo bureau.
Speaker 2: And this is a big take story. And Matt and
Speaker 2: I love the big take stories on the Bloomberg terminal
Speaker 2: because they're so well researched and written so Maria, tell
Speaker 2: us what's going on in Brazil. The president and the
Speaker 2: head of the central bank there, they're not on the
Speaker 2: same page, are they.
Speaker 7: Yeah, Well, I'm coming from you, right from Brasilia, actually,
Speaker 7: which is the war, the central banking space, the political
Speaker 7: capital over Brazil.
Speaker 9: So here in.
Speaker 7: Brazil, interest rates are basically a six year high, close
Speaker 7: to fourteen percent, and they have been steady since September.
Speaker 7: We have to remember that Brasil was one of the
Speaker 7: first central banks to hike rates in the midst of
Speaker 7: the pandemic, and it's slowly working out because we are
Speaker 7: seeing that inflation is ceasing from a twelve percent peak
Speaker 7: last year to around four percent, but it's still very
Speaker 7: much above a central bank's target. And you know, the
Speaker 7: team led by Roberto Camposneto, who is the central bank
Speaker 7: chief here, has given at this point no indication that
Speaker 7: they plan to cut rates or haven't even discussed that.
Speaker 7: And they're getting a political heat from back because President
Speaker 7: and Lewis in as La Silva, who took over in January,
Speaker 7: is not liking that scenario like at all.
Speaker 5: Well, you have also a very colorful person in office,
Speaker 5: as you tend to do in Brazil, but this guy
Speaker 5: just got out of the big house, right. Lula spent
Speaker 5: some time in prison for corruption and then was reelect
Speaker 5: as president, which is an amazing story by itself. Now
Speaker 5: he is really attacking Neto, the head of the central bank.
Speaker 5: Is there any way that Neto just says, Okay, you
Speaker 5: rather have inflation, I'll just cut rates again. I mean,
Speaker 5: Lula would be in a horrible position if that happened
Speaker 5: as well.
Speaker 3: Wouldn't he.
Speaker 7: Well, we have to remember that Lula is present now
Speaker 7: for the third time, but it's the first time that
Speaker 7: he's dealing with an.
Speaker 9: Autonomous central bank.
Speaker 7: To the law of the grants autonomy to the central
Speaker 7: bank here in Brazil is relatively new. It was a
Speaker 7: brilliant twenty twenty one. So this is the first time
Speaker 7: that Lula comes into office with that, with that percent
Speaker 7: of the.
Speaker 9: Central bank that he didn't himself choose.
Speaker 7: And the thing is that also Lula during his campaign,
Speaker 7: he made a big point of promising to deliver prosperity.
Speaker 9: Economic prosperity specifically.
Speaker 7: And now we're seeing that most channelists are betting that
Speaker 7: growth is going to be much lower than last year,
Speaker 7: is going to be around one percent, and that is
Speaker 7: you know, going straight into not what he promised, not
Speaker 7: what Lula promise, which was you know where we were
Speaker 7: all going to have beer and beef, you know, barely easy.
Speaker 7: And I think the main thing that Lula is seeing
Speaker 7: right now is that his obstacle is interest rates. Interest
Speaker 7: rates at a really high level. But on the other side,
Speaker 7: Tempus Mental has been arguing that there's reasons for them
Speaker 7: to hold the rate steady, and it's resources that in
Speaker 7: some cases I think are similar to our countries, especially
Speaker 7: in advanced economies, because core measures, when you strip out
Speaker 7: energy prices and some food items.
Speaker 9: They are running pretty high.
Speaker 7: And most analysts still believe that consumer price increases are
Speaker 7: going to accelerate beyond the Central Banks goal even like
Speaker 7: all through twenty twenty five. So they are not seeing
Speaker 7: at this point a space to deliver an.
Speaker 9: Easying cycle that is sustainable and that is credible.
Speaker 2: So Maria and your story, I really like the part
Speaker 2: about this meat packer. Minerva sa. It's tough to get
Speaker 2: some financing in Brazil. I mean, these higher rates are
Speaker 2: really impacticing, really impacting businesses. And so you've got a
Speaker 2: story about this meat packing company. Tell us about that.
Speaker 7: Yeah, And not only the meat packer will also talk
Speaker 7: to a businessman who have a like toystore business there,
Speaker 7: like for with four hundred employees, and it was getting
Speaker 7: hired for him as well.
Speaker 9: Like he actually told us that it.
Speaker 7: Was easier for her for him in the society, was
Speaker 7: cheaper for him to get a personal loan than a
Speaker 7: business loan for his company. And the thing is that
Speaker 7: in this political vialle that we're seeing between Lula and
Speaker 7: the Central Bank chief, the people that are caught in
Speaker 7: the middle are households. We're seeing from even like central
Speaker 7: bank stops itself, levels of household dead that.
Speaker 9: Are nearing record highs.
Speaker 7: Interest rates rise in this country where I know you're
Speaker 7: not gonna be leieve me, but this is the truth.
Speaker 7: Like interest rates on credit cards are like four hundred percent,
Speaker 7: so yeah, really really high. So we are seeing that
Speaker 7: businesses are taking out all of these out of this.
Speaker 7: But at the same time, that's how manage our policy works, right,
Speaker 7: it tries to slow down to the economy mainly through
Speaker 7: the credit channel. So we're seeing the impacts of that.
Speaker 5: Wow, don't put anything on your credit card right exactly,
Speaker 5: or if you do pay it off.
Speaker 9: On I pay my credit bills sometimes, so I'm fine.
Speaker 6: Yeah.
Speaker 5: Yeah, that the toy maker story was great, well bad
Speaker 5: in that the toymaker got stiffed by Marissa Loja. What
Speaker 5: is that like a department store? Right, and so a
Speaker 5: lot of these people he had to take a personal loan.
Speaker 5: The meat packers supplying its suppliers with cash right now
Speaker 5: giving them loans.
Speaker 6: How long is this going to last?
Speaker 5: How long does compost Nettos say he's going to have
Speaker 5: to keep rates high before he brings inflation down, which.
Speaker 6: We should point out isn't that high? Right?
Speaker 5: It was twelve percent, which is unbearably high. It's now
Speaker 5: like four percent, which is getting closer and closer to normal.
Speaker 7: Yeah, but their goal is three percent, and the infision
Speaker 7: expectations are still pointing that infission is going to pick
Speaker 7: up to around six percent by the end of this year.
Speaker 7: They're going to run above the targets through twenty twenty five.
Speaker 7: So at this point we don't have from thees Central
Speaker 7: Bank communication any clear signal.
Speaker 9: That they have discussed rycots.
Speaker 7: What we have is from in ester some markets expectations.
Speaker 7: You know, most people are batting that the first rayga
Speaker 7: is going to come in August September something like that.
Speaker 7: The governmental design of La Sila is working to create
Speaker 7: that space as well for the central bank two lower rates.
Speaker 9: They're just discussing a bill to.
Speaker 7: Show up public finances that if it is finally approved
Speaker 7: in Congress, could also open the space for reigas. But
Speaker 7: nowhere near you know, like the last months of the year,
Speaker 7: so we're thinking second half of the year possibly.
Speaker 2: Right, So, Maria, how are these economic challenges Are they
Speaker 2: impacting the standing of President Lula at all? Is it's
Speaker 2: becoming something, yes, to get really worried about.
Speaker 7: Well, he is worried in the sense that, you know,
Speaker 7: one of his main promises in the campaign was that,
Speaker 7: you know, economic prosperity, and the fact that he won
Speaker 7: an election for a very thin margin, I think it's
Speaker 7: putting more pressure on him to the liver on some
Speaker 7: of his promises. So we are seeing, yes, like in
Speaker 7: the in the side of the government, this push, this
Speaker 7: hastiness to the liver on this economic prosperity and other
Speaker 7: promises that they did on the campaign.
Speaker 9: We are seeing as well in analysts.
Speaker 7: You know, in in on the back of better agriculture numbers,
Speaker 7: revised up the estimates for economic growth this year, but
Speaker 7: still like relatively you know, like slowly slowly that it
Speaker 7: is going that it was like last year. You know,
Speaker 7: they're revising up to iran one point five percent and
Speaker 7: last year it was close to three percent, so we're
Speaker 7: still very far away from that.
Speaker 5: All right, Maria, thanks so much for joining us.
Speaker 6: Maria.
Speaker 5: Eloiso Capuro Aloisa Kapuro there talking to us from Brazilia
Speaker 5: about what's going on in terms of you know, their
Speaker 5: president attacking their central bank leader. It's a situation you
Speaker 5: could imagine in a number of regions. I don't think
Speaker 5: president we had several years back, we had it with
Speaker 5: President Trump, President Biden. I don't think we would do
Speaker 5: it so publicly, but we have had senators do it.
Speaker 4: Right.
Speaker 5: Elizabeth Warren is pretty, is pretty Lula da Silva in
Speaker 5: the way she attacks Jerome.
Speaker 6: Powell and our fed.
Speaker 2: Yeah, it's interesting, so we'll have to see it. The're supposed
Speaker 2: to be independent. But this is the Big Take story,
Speaker 2: and you can check that out on the terminal on
Speaker 2: Bloomberg dot com slash Big Take.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 3: K Yes.
Speaker 5: And it's the last year to see that as well.
Speaker 5: I mean in this form right. The Grateful Dead has
Speaker 5: sort of morphed into debt in company with John Mayer
Speaker 5: on lead guitar. They've got a new drummer, uh from Primis.
Speaker 5: I believe he comes from Primus, and so they kind
Speaker 5: of picked up the pace a little bit when they
Speaker 5: played in Cornell a couple weeks ago. And I'm excited
Speaker 5: to see the shows this summer, but that's not the point.
Speaker 5: We're talking about trucks, and Paul, you were saying, you know,
Speaker 5: when you think about mid sized trucks, there's really only
Speaker 5: one name that comes to mind, but there's so much
Speaker 5: new competition, Chevy most notably, I think with the Colorado
Speaker 5: and the Canyon from GMC before. It is bringing the
Speaker 5: Ranger back. It's brought the Ranger back, but it's bringing
Speaker 5: a new Ranger. And I actually talked to the guy
Speaker 5: who runs production of the mid size pickup program at
Speaker 5: for Jim boundback last week.
Speaker 6: Let's know what he had to say.
Speaker 10: We're expecting a really strong response from our customers. As
Speaker 10: I mentioned, since the original launch of Ranger Raptor, there's
Speaker 10: been incredible customer sentiment and push to get it here
Speaker 10: to the US. So certainly right out of the gates,
Speaker 10: we expect very very strong demand and we expect that
Speaker 10: to continue based on our experience with the other Ranger products,
Speaker 10: but also the other Raptor products across the portfolio. You know,
Speaker 10: it's something like a Raptor that really speaks to what
Speaker 10: customers love. And these are the types of products and
Speaker 10: the types of derivatives that customers love and they just
Speaker 10: can't live without.
Speaker 5: All Right, So Ranger, the new Ranger is coming to America.
Speaker 5: There's going to be a Raptor version. Now, there's a
Speaker 5: Raptor version of the F one fifty of the Ranger,
Speaker 5: of the Bronco. It's like more off road capable. Rumored
Speaker 5: to be a Raptor version of the Mustang coming up.
Speaker 5: But the reason we're talking about this is because Keith
Speaker 5: Notughton wrote a story for Bloomberg BusinessWeek Toyota, Ford and
Speaker 5: GM fight for mid side truck dominance. We've got Joel
Speaker 5: Weber here in the studio, editor in chief. So Joel
Speaker 5: tell us about the.
Speaker 11: Story America loves trucks, So I hear like full Stop
Speaker 11: and the Ford F series We've written about before that
Speaker 11: the revenue that that F one fifty makes is just unbelievable,
Speaker 11: and keeps written about that. What really stuck out to
Speaker 11: me here, though, is this mid size category has almost
Speaker 11: been forgotten and Toyota has just had it on lockdown.
Speaker 11: The Taco Paul you mentioned earlier that Tacoma is probably
Speaker 11: the favorite of this category. Blows anything anybody else has
Speaker 11: out and everybody is coming for a piece of Toyota, right, Keith, that.
Speaker 12: Is absolutely right. I mean, you know F series, the
Speaker 12: F one fifty you talked about, Joel, has been the
Speaker 12: top selling full sized pickup truck for forty six years. Well,
Speaker 12: in the mid size category, Toyota outsells Ford four to one.
Speaker 12: They outsell Chevy two to one. I mean, the Tacoma
Speaker 12: has just owned the mid size market. Part of that
Speaker 12: is because Ford and General Motors both abandoned that market
Speaker 12: in the early part of the century when sales started
Speaker 12: heading south. So Toyota stayed there and they consolidated everything
Speaker 12: that was left behind, and now it's this juggernut of
Speaker 12: a market. Between twenty ten and twenty twenty, the mid
Speaker 12: sized truck market doubled in sales and there's still more
Speaker 12: growth to come, but it's slowing. So what's happening is
Speaker 12: everybody is redesigning their trucks. The Tacoma is getting its
Speaker 12: first full redesign in eight years. And so yeah, and
Speaker 12: we have a new ranger, as match just said, and
Speaker 12: GM came out with new mid sized trucks earlier this year.
Speaker 12: So you have all this fresh product, all going after
Speaker 12: this market segment that has huge profit margins and you know,
Speaker 12: a growing owner base.
Speaker 6: And it don't cost a million dollars.
Speaker 3: Right.
Speaker 5: This is the thing about the F series. I know
Speaker 5: it's fantastic, and if you take them all together, then
Speaker 5: the best selling vehicle.
Speaker 6: But that's I think cheating a little. Isn't fit in
Speaker 6: a garage though.
Speaker 5: The F one fifty that I was testing last week,
Speaker 5: I was driving the Raptor R and it was amazing
Speaker 5: because it's a super charged V eight. There's no way
Speaker 5: in hell it would fit.
Speaker 6: In my garage.
Speaker 5: You know, and I have a pretty big garage, but
Speaker 5: but you can't.
Speaker 12: That's the attraction of these mid sized trucks is that
Speaker 12: you know they can still tow a bunch. You can
Speaker 12: still throw your bikes or your kayaks or your surfboards
Speaker 12: in the bed and go off in an adventure or.
Speaker 6: Go to Starbucks, which is what people really do with trucks.
Speaker 12: Yes, but they're very appealing to guys, and it's it
Speaker 12: is mostly a male market for these trucks who like
Speaker 12: to go on weekend adventures or home depot or do
Speaker 12: it yourself projects or whatever. And and that's just a
Speaker 12: booming market. And you can fit the thing in your garage.
Speaker 12: That's huge.
Speaker 5: So the one thing that I've noticed about the Taco
Speaker 5: and people I talk to who buy it, they sell
Speaker 5: it with a sixpe. Even the new one's gonna come
Speaker 5: with a six speed. Our own Greg Jarrett bought one
Speaker 5: because he said it was the only one he could
Speaker 5: find on the market with a six speed.
Speaker 6: I'm pretty sure a six speed manual with manual.
Speaker 5: Yes, I'm pretty sure that the Colorado had a stick
Speaker 5: shift option as well, but I know that Ranger doesn't.
Speaker 5: And I was with Keith in Detroit a couple of
Speaker 5: days ago, and I was.
Speaker 6: Talking to.
Speaker 5: Kumarka Haltra, who runs the ic business Reford, and he said,
Speaker 5: there's just no take rate. People don't buy the stick shift,
Speaker 5: but it's still It's like, even if I buy the automatic,
Speaker 5: I'm proud that my vehicle could have been purchased in manual.
Speaker 5: There's like a cool factor that I think they miss
Speaker 5: out on.
Speaker 12: Yeah, well, but you mentioned price, and price is a
Speaker 12: huge issue. This has always been an affordable market. That's
Speaker 12: part of the success of the Tacoma, which is why
Speaker 12: they're still going to offer a stick shift version because
Speaker 12: that's going to be a lower priced version. But all
Speaker 12: these new entrants coming in are testing the upper levels
Speaker 12: of the price band for mid sized trucks. That Ranger
Speaker 12: Raptor that you're so excited about, matt that starts at
Speaker 12: fifty seven thousand dollars, that's luxury price. So the Tacoma currently,
Speaker 12: they haven't given us the new ones pricing yet, but
Speaker 12: it currently starts at twenty eight grand. Well Ford is
Speaker 12: moving away from the twenty eight grand Ranger. They're going
Speaker 12: to start at thirty four grand because they now they
Speaker 12: have that little Maverick pickup truck, and they don't want
Speaker 12: the two stepping on each other. So you know the
Speaker 12: thing about the mid sized trucks is they used to
Speaker 12: be this affordable way to get a you know, sort
Speaker 12: of a burly pickup truck. They're getting more expensive.
Speaker 11: Okay, but one thing that's still missing is the plug in.
Speaker 11: That's right, what's up with that?
Speaker 12: Yeah, So you know what the people who drive these
Speaker 12: trucks like to do is they like to toast stuff
Speaker 12: and they like to go off road. And that's making
Speaker 12: this one of the last categories to electrify because big,
Speaker 12: heavy batteries underneath your truck make it hard to tow.
Speaker 12: The range really reduces when you're towing with the battery,
Speaker 12: and it also makes it tough to go off road
Speaker 12: because you're slamming into the ground and you don't want
Speaker 12: to hurt that battery. So you know, you have to
Speaker 12: add all this. That's what the F one fifty lightning does.
Speaker 12: It adds all this, you know, protective cage around the
Speaker 12: battery so it doesn't get damaged when you're going or that,
Speaker 12: and that adds weight. So so weight and cost or
Speaker 12: the things that that I'm told are keeping the mid
Speaker 12: sized truck from getting electrified.
Speaker 5: If you want to jump in your truck, Paul and
Speaker 5: drive out to Joshua Tree for three or four days
Speaker 5: of mushrooms, right, yeah, there's nowhere to charge it there.
Speaker 6: So that's the problem.
Speaker 2: Put a solar pad on the top, So Keith.
Speaker 11: There's got to be there's got to be a station
Speaker 11: out there somewhere. You find it when you're on mushrooms.
Speaker 2: But so Keith, again, you point out your story that
Speaker 2: Toyota and the Tacoma really owned this space for a
Speaker 2: while here. What is their response. What's their competitive response,
Speaker 2: because it seems like they've got some competition now, or
Speaker 2: maybe they didn't so much.
Speaker 12: That's right, Oh, well, they're absolutely responding. You know, they
Speaker 12: let this truck go for eight years without really updating it.
Speaker 12: It was really getting old school. It didn't have you know,
Speaker 12: the digital dashboard that everybody has, the touch screens that
Speaker 12: have become standard features in every automobile. Well now that
Speaker 12: Tacoma does and it has you know, it's going to
Speaker 12: have the rugged off road ones. There's a trail one,
Speaker 12: you know, there's a high performance one. So they're going
Speaker 12: to go the full spectrum and offer new technology. The
Speaker 12: technology on the Tacoma had been getting a little long
Speaker 12: in the tooth, but with all this new competition coming in,
Speaker 12: they need to protect their flank.
Speaker 11: Okay, so the other thing about Toyota not exactly known
Speaker 11: for electric, but they are for hybrids. And so I'm curious,
Speaker 11: how what's this strategy really look like. It seems like
Speaker 11: you could basically double down on hybrid while everything else
Speaker 11: starts to go electric and just keeping that the Tacoma
Speaker 11: for another eight years maybe, right.
Speaker 12: Right, right, that's a really important point. This new Tacoma
Speaker 12: will have a hybrid. It'll be the only hybrid in
Speaker 12: the mid sized truck category. So Toyota is going to
Speaker 12: be the first to semi electrify a mid size pickup truck.
Speaker 12: And I talked to a very loyal Tacoma owner who
Speaker 12: drives at twenty sixteen and he can't wait to get
Speaker 12: into that hybrid. He just thinks that sounds perfect. He
Speaker 12: lives in northern California. He's a camper hiker. You know,
Speaker 12: he wants that truck.
Speaker 11: And so he know it's where the judging station is
Speaker 11: that you're.
Speaker 5: It's you know, it's interesting to me across a range
Speaker 5: of products. Keith that these companies don't put out hybrid
Speaker 5: or electric versions when they introduced him, you know, like
Speaker 5: Bronco for example.
Speaker 6: Why on earth did they not do it?
Speaker 5: Is it just because it takes so long to develop
Speaker 5: a product that you know, they started seven or eight
Speaker 5: years ago, and whoever was in charge then didn't think
Speaker 5: as it was important as we realize it is now.
Speaker 10: Yeah.
Speaker 12: Well, I also you can't undersell the whole off road aspect.
Speaker 12: They wanted the Bronco to have excellent off road credentials
Speaker 12: that were better than the Wranglers, and if you put
Speaker 12: a heavy battery underneath the vehicle, it hurts its ability
Speaker 12: to go off road, so that's what they did. But
Speaker 12: all of these things are going to get electrified eventually.
Speaker 12: The mid size pickup truck market, according to LMC Automotive,
Speaker 12: we'll go electric in about twenty six twenty seven, with
Speaker 12: Toyota and Rivian and Tesla coming with their own mid size.
Speaker 12: We're not talking about the cyber truck. We're talking about
Speaker 12: some other Tesla pickup truck that is smaller in size,
Speaker 12: and we're.
Speaker 5: Not talking about Taco. Is the Taco Does that mean
Speaker 5: they could introduce an electric version at a later date.
Speaker 13: I mean the electricoco itself just for the rest true,
Speaker 13: but yes, there will be an electric Taco mid decade,
Speaker 13: according to MC Automotive.
Speaker 2: All right, here's dumb question day, because I'm not a
Speaker 2: car guy. Do these car companies do they sell trucks
Speaker 2: outside of the US? The people outside of the US
Speaker 2: buy trucks.
Speaker 12: Yeah, that's a that's actually a great question specific to
Speaker 12: this category. People outside the United States do not buy
Speaker 12: big F series trucks, the big trucks, the Ram, you know,
Speaker 12: the Silverado, those are North American vehicles. But what people
Speaker 12: outside of the US do buy are these medium sized trucks.
Speaker 12: The Ranger is a global vehicle. The Tacoma is a
Speaker 12: global vehicle. It's actually the sun of the high lux truck, which.
Speaker 2: The indestructible pickup truck right global.
Speaker 12: Latoya's global pickup trucks, so these things. You know, Thailand
Speaker 12: is the biggest pickup truck market in the world because
Speaker 12: they all drive around in these medium sized pickup truce everywhere.
Speaker 12: Everywhere else in the world there are pickups. They're just
Speaker 12: not as crazy big as they hear, I.
Speaker 2: Can't imagine like trying to park a pick up truck
Speaker 2: in some of these European cities where that's parking on
Speaker 2: the curves.
Speaker 12: Yeah, that's why the midsize work.
Speaker 5: Okay, all right, I got it now, all right, So
Speaker 5: very interesting stuff, Keith.
Speaker 6: It's a great story.
Speaker 5: It's coming out in uh BusinessWeek what it's in the
Speaker 5: current issue or the forthcoming issue, So it'll be on Thursday,
Speaker 5: hits the newstands on Thursday, and you can see it
Speaker 5: on Bloomberg dot com slash BusinessWeek as well.
Speaker 11: You know what I love about this this Raptor photo
Speaker 11: that's in the story.
Speaker 8: A little bit of air?
Speaker 7: Did you do that?
Speaker 6: Was that you driving that? Matt Novo? You know what
Speaker 6: I was trying to figure out on the on the Raptor.
Speaker 8: Uh.
Speaker 5: You know, they charge a lot more for the Raptor
Speaker 5: version of anything on the Bronco, for example, the Raptor
Speaker 5: version costs more than twenty thousand dollars more than the
Speaker 5: wild track. But I looked and saw that they have
Speaker 5: different shocks, they have forged control arms, they have an
Speaker 5: entirely different frame, so it's not just about badging in
Speaker 5: that case.
Speaker 6: What do you think, Keith?
Speaker 12: Yeah, Well, the Bronco Raptor starts at eighty five thousand dollars.
Speaker 8: So that's pretty rare starts at But it's.
Speaker 11: Amazing that you can just slap a raptor on it
Speaker 11: and it's like across the line. Just to upgrade up,
Speaker 11: I mean is.
Speaker 5: They have to do a lot of other stuff. So
Speaker 5: they kind of created a new truck for the Bronco raptor.
Speaker 12: Yeah, I guess, but the margins are magnificent, which is
Speaker 12: why Ford is raptorizing everything.
Speaker 6: What do you think, what do you.
Speaker 11: Think the Bloomberg terminal raptor would do?
Speaker 6: That would be awesome.
Speaker 3: You can bring your terminal with.
Speaker 2: You to Joshua Tree exactly, all right, guys. Joe Weber,
Speaker 2: Editor Bloomberg BusinessWeek. Here in our bloomberga interactor broker studio.
Speaker 2: Keith Morton the author of this cool story. Keith On,
Speaker 2: auto reporter for Bloomberg News on zoom from Detroit, and
Speaker 2: as Matt was saying, you can key story will be
Speaker 2: featured in the forthcoming issue of BusinessWeek magazine. You can
Speaker 2: read it now on the Bloomberg or at Bloomberg dot
Speaker 2: com slash BusinessWeek so or you.
Speaker 6: Can just type BusinessWeek dot com.
Speaker 5: I've discovered Oh okay, because then you're just automatically pushed
Speaker 5: by some Internet god, Internet God to Bloomberg dot Com, Slash, Business.
Speaker 3: Week, Bromarco.
Speaker 1: Journal. How about you let me drive?
Speaker 2: No, no, no, no, honey, please, I want to drive.
Speaker 10: It's a good question.
Speaker 1: This is the drive to the clothes. Do well, young
Speaker 1: don on Bloomberg Radio.
Speaker 6: All right, this is the drive to clothes.
Speaker 5: I'm Matt Miller in for Tim Stenemac Paul Swenyan for
Speaker 5: Carol Masser, and we want to welcome in Eric Clark,
Speaker 5: he's a portfolio manager at Rational Dynamic Brands fund on
Speaker 5: Zoom from San Diego to talk to us about the
Speaker 5: market action and his expectations.
Speaker 2: It's j Yeah.
Speaker 6: Can people live in San Diego?
Speaker 2: Just visit? Visit Sandiego?
Speaker 6: Wait can't you? Don't you have to be like Nae
Speaker 6: enable aviator to live there. Do they have other industry?
Speaker 14: Eric, that was a former life. Yeah, there's a lot
Speaker 14: of biotech. That's about it, though, a lot of surfing.
Speaker 5: The luckiest lot of world live in San Diego.
Speaker 6: All right, So that sounds awesome.
Speaker 5: But the situation that we're in here on the East Coast,
Speaker 5: specifically in Washington, d c is not so great. What's
Speaker 5: your take on the debt ceiling standoff?
Speaker 14: Well, they are very predictable, aren't they. They love to
Speaker 14: wait until the last minute and keep kicking the can
Speaker 14: down the road, and all of us have to be
Speaker 14: held hostage by all of their crazy actions.
Speaker 2: All right, let's say we get to the other side
Speaker 2: of this. Do I want to be offensive or defensive?
Speaker 2: Because I have a lot of strategist saying there's still
Speaker 2: a lot of unknowns out there. You want to stay defensive.
Speaker 2: Maybe some big cat names, some dividend playing names, some
Speaker 2: fortress balance sheets. How do you think about it?
Speaker 14: I mean, we're brands and consumer investors. So the nature
Speaker 14: of being a mega brand is that they tend to
Speaker 14: be very high quality companies anyway, So we're we're pretty
Speaker 14: balanced by kind of offense and defense currently, So we
Speaker 14: have some good staples and and healthcare exposure, but we
Speaker 14: also have some good exposure to traditional consumer spending brands
Speaker 14: that are a little more offense, growth oriented, a little
Speaker 14: higher beta. So I like the balance for now.
Speaker 5: All right, So your brands oriented rational, dynamic brands? Fun
Speaker 5: we have the clue there, What are the what are
Speaker 5: the mega brands? That you like, what are the mega
Speaker 5: brands that we that that we should be paying the
Speaker 5: most attention to.
Speaker 14: Well, I mean, you know, it depends on what part
Speaker 14: of consumption we're talking about, but I mean across tech,
Speaker 14: you know, Apple and.
Speaker 5: Well, uh, he froze or he's taking a pause to
Speaker 5: collect his thoughts.
Speaker 6: No, he looks still frozen.
Speaker 2: To me, he's frozen completely. I see what you're looking.
Speaker 2: You're looking at the zoom thing. Yeah, I can see
Speaker 2: he's got like the pine tree ocean.
Speaker 6: I think that's probably just a barrier.
Speaker 5: We got you, We got you back, Okay, we lost
Speaker 5: you for a second. You were talking about the big
Speaker 5: tech mega trends. Uh, you said Apple, and I think
Speaker 5: you were about to say Amazon. Then you froze up.
Speaker 14: Oh, Apple, Amazon, Meta, the old Facebook and then the
Speaker 14: traditional Microsoft Google, those kinds in the tech world. But
Speaker 14: then there's great brands and consumer you know, uh, with
Speaker 14: Costco or Nike or Lulu, and many of those are
Speaker 14: on sale currently too.
Speaker 12: Eric.
Speaker 2: I just before we went on, I was just telling
Speaker 2: Matt I just downloaded to my phone the the movie
Speaker 2: Air about Nike and the Air Jordans. So I'm looking
Speaker 2: forward to being watching that on my long commute back
Speaker 2: to the Jersey Shore tonight, which I'll stack up against
Speaker 2: San Diego anytime, by the way, So you get the winter, dude,
Speaker 2: You've got Nike on your list for very good reason.
Speaker 2: Arguably one of the greatest brands out there. What's the
Speaker 2: risk to a company that's so you know, so dependent
Speaker 2: upon a brand? But boy, you got to protect that
Speaker 2: If something goes wrong, Oh boy, I don't know how
Speaker 2: you recover. So how do you guys think about that risk,
Speaker 2: the risks to a brand?
Speaker 14: Well, I think you know, one of the things we
Speaker 14: monitor and measure, you know, as much as possible is
Speaker 14: brand relevancy, and we kick out things that are becoming irrelevant.
Speaker 14: Let's think of under armor, and let's keep focusing on
Speaker 14: the things that are just in the top of consumer's mind.
Speaker 14: And you look at revenue, you look at free cash bill,
Speaker 14: you look at market share. You know, all that kind
Speaker 14: of data speaks to which brands are still staying relevant.
Speaker 14: And the good news is if you're still relevant and
Speaker 14: you're still an important consumer spending category, then even when
Speaker 14: the stocks are on sale, you know that eventually consumers
Speaker 14: will start spending there. And so Nike is clearly the
Speaker 14: most relevant brand across all sectors. I mean, it's just
Speaker 14: so dominant that they were able to focus more on
Speaker 14: on direct to consumer because the brand's so powerful, I
Speaker 14: don't necessarily need to go to foot Locker, which is
Speaker 14: rapidly becoming irrelevant.
Speaker 2: So I'm more of a Walmart guy Eric. But of
Speaker 2: course Matt's all about the luxury brands. He's very comfable
Speaker 2: down you know, Madison Avenue, Fifth Avenue. How I see
Speaker 2: LVMH is on your list there, and I would think
Speaker 2: luxury just generally speaking, would be a really good China
Speaker 2: reopening play. Is that kind of how you're looking at it?
Speaker 14: Well, it is, but you know it's just more of
Speaker 14: a it's an upper income, wealthy consumers. As consumers start
Speaker 14: to make more money, there's these aspirational brands that people love,
Speaker 14: and there mes and a lot of the brands under
Speaker 14: Louis Vuitton. You know, I put you know, Lulu into
Speaker 14: kind of the mass market aspirational brand, but you know
Speaker 14: that would be up there like a Ferrari as well.
Speaker 14: So there's you know, we tend to focus on lower income.
Speaker 14: What are they using from a needs perspective? I would
Speaker 14: put Walmart into that category, and then you know, in
Speaker 14: the middle income group, and then the upper income group,
Speaker 14: and then all the way up to the wealthy. And
Speaker 14: so when you can extract great brands from each one
Speaker 14: of those different income brackets, that tends to be a
Speaker 14: pretty good portfolio overall.
Speaker 6: Is there a segment of the consumer that you're worried about?
Speaker 5: I mean, someone who's buying a Ferrari, I'm not worried
Speaker 5: about no matter what kind of recession we have, But
Speaker 5: you know, someone who now could afford Lululemon may not
Speaker 5: be able to in five or six months.
Speaker 14: Yeah, it's possible. I mean within the portfolio. I would
Speaker 14: say that we're not nearly as broad as we normally
Speaker 14: are across spending categories because consumers, we've all been overspending
Speaker 14: for the last eighteen months, and eventually, one we get
Speaker 14: tired of it, and two we can't keep doing it.
Speaker 14: So then we have to separate our what do I
Speaker 14: absolutely have to have usually groceries, general merchandise, food, you know,
Speaker 14: and then what do I want to do that I'm
Speaker 14: willing to spend my money on here, And then let's
Speaker 14: avoid the things that we're deferring, like maybe more. You know,
Speaker 14: even in home improvement, lows and home people have struggled
Speaker 14: the last couple of quarters. Furniture, you know, electronics, things
Speaker 14: like that. So we're you know, with with better prices.
Speaker 14: Then I'll be get getting more broadly exposed to some
Speaker 14: of those categories again. But for now, we're really focused
Speaker 14: on things that have resilience, that are discretionary and that
Speaker 14: we absolutely have to have, like we're going to a
Speaker 14: concert that we love, and then things we need via
Speaker 14: you know, going out to restaurants and doing some summer
Speaker 14: vacation and the staples of life.
Speaker 2: If you will, all right, Eric, thank you so much.
Speaker 6: We appreciate it.
Speaker 2: Eric Clark, he's a portfolio manager at Rational Dynamic Brands.
Speaker 2: Fun that's a really cool strategy. You're focusing on big brands.
Speaker 2: He joined us on zoom from Sunny San Diego.
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