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Speaker 2: All right, we had some ism manufacturing data came out
Speaker 2: just this morning, a little bit weakerd then expect it.
Speaker 2: Let's bring in Tim Fury, used the chair for the
Speaker 2: Institute for Supply Management. The kids know that. As im
Speaker 2: Tim talk to us about the data we saw today.
Speaker 2: I'm just looking at the headlines. Came in a little
Speaker 2: bit below forecast, a little bit below last period as well.
Speaker 1: Yeah, hi jeessipeball.
Speaker 3: So the best way to describe this report, although our
Speaker 3: number is contracting again, is stable, stagnant, stock sluggish and flat.
Speaker 3: You know the preponderance of the common comments in the
Speaker 3: over the last couple of months, we're kind of on
Speaker 3: the plateau. As you know, your listeners. We started to
Speaker 3: see a grow out back in January. It was a
Speaker 3: week grow out, not a very strong growout. But in
Speaker 3: the month of April and then again the month of May,
Speaker 3: we're basically stuck, and it feels the reason why we're
Speaker 3: stuck is that there is very little demand. And the
Speaker 3: reason that there's very little demand is because people are
Speaker 3: waiting for ray cuts. So when we started the year,
Speaker 3: the ray cuts were actually a tailwind. Now with the
Speaker 3: lack of tail of ray cuts, we're actually.
Speaker 4: Looking at a headwind.
Speaker 3: So the manufacturing sector is pretty much frozen, and they're
Speaker 3: unwilling to really invest in capex and in working capital,
Speaker 3: and to some extent, in people until the horizon clears up.
Speaker 5: So Tim, what does this mean more broadly for the economy?
Speaker 3: Well, you know, I think we're just we're six to
Speaker 3: nine months out ahead of the general economy. So you know,
Speaker 3: we started to grow out in January, as I said,
Speaker 3: which would indicate that maybe the general economy would start
Speaker 3: to see a a better uplift in the fall. But
Speaker 3: with this plateauing, this could be just a manufacturing plateau
Speaker 3: depending on what the FED does on the right side.
Speaker 3: But I don't think we're going to see much movement here.
Speaker 3: I mean, as time goes on and there's a lack
Speaker 3: of demand, there's going to be a lack of work.
Speaker 3: One of the really positive things here the report is
Speaker 3: that we were stable on a revenue basis month to month,
Speaker 3: which is good. But we've been expanding slightly for the
Speaker 3: last three or four months and now we're stable, which
Speaker 3: really means that as your pipeline your backlog declines, you
Speaker 3: have less to work on. We could see that production
Speaker 3: number going to contraction, which would be a whole different story.
Speaker 3: So that's the first story here. I already mentioned a demand.
Speaker 3: It's the weakest new order number we've had in a year.
Speaker 3: Last May's worse at forty two, which is a lot
Speaker 3: worse than forty five, by the way, but so okay,
Speaker 3: we're not as bad as last May. And then you know,
Speaker 3: the positive thing here is on the prices number, where
Speaker 3: although we're still expanding, we're not expanding as much as
Speaker 3: we were in April. And we just finished our forecast
Speaker 3: and our respondents have indicated that for the whole year
Speaker 3: twenty twenty four, we're looking at a one point nine
Speaker 3: percent price growth on the cost of things that they buy,
Speaker 3: of which we've already seen one point six percent so
Speaker 3: far this year. So if you take that, it really
Speaker 3: says that we're looking at essentially not much more of
Speaker 3: a price increase as we close on the year, and
Speaker 3: you know, hopefully that will spur some demand here, but
Speaker 3: I think you know everybody's waiting for a little bit
Speaker 3: more solidity and some positive news here so that people
Speaker 3: will move on. In the meantime, we've gone from a
Speaker 3: profit focused performance here to a profit focused performance here
Speaker 3: with a bigger priority on making sure you're liquid in
Speaker 3: the event something wrong happens. And that's kind of where
Speaker 3: we're at all right.
Speaker 2: Tim, thanks so much for joining us as appreciate getting
Speaker 2: your thoughts here. On ism day, Tim Fury, Chair for
Speaker 2: the Institute for Supply Management, talking about these ice and
Speaker 2: manufacturing numbers came in lighter than expecting. Again, the one
Speaker 2: that jumped out of me, Jess was a new orders
Speaker 2: came into forty five five point four. Consensus was forty
Speaker 2: nine point four, so a big miss there. Last period
Speaker 2: was forty nine point one. So the new orders kind
Speaker 2: of gives you a little bit of a leaning indicator
Speaker 2: weaker than expected.
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Speaker 2: It's stop technology, Let's do it. Why not?
Speaker 5: Also apparently with the New York Post calls the best
Speaker 5: dressed man on.
Speaker 2: Well, that's debatable, dude. I mean, I actually have a
Speaker 2: problem with his wardrobe, and I just I tend to
Speaker 2: look past it. Dan ives joined just because he's a
Speaker 2: big Penn State fan, So I look past it. Dan
Speaker 2: I's managing director Senior Equity analys for web Boast Securities.
Speaker 2: Hey Dan, thanks so much for joining us here. Let's
Speaker 2: talk about chips. And we talked about AI, and you've
Speaker 2: been on front of this AI trade and really getting
Speaker 2: people up the speed on on AI and how to
Speaker 2: play it. But are we still focusing on the chips? Here?
Speaker 2: Is it in video and everybody else?
Speaker 6: I mean, look is there? Ultimately it's Jensen and Nvidia's world.
Speaker 6: Everyone else paying rent? And if you because just plays out,
Speaker 6: no Amduisa, Sue, potentially Intel, others in the semi food chain,
Speaker 6: they will start to see a benefit twenty twenty five,
Speaker 6: twenty six. But for now, there's only one game in town,
Speaker 6: and that's in video and right I just continue to
Speaker 6: see an autobond type of path for Jensen and video.
Speaker 5: Yeah, if anyone watching our YouTube feed can see Dan,
Speaker 5: now it's kind of in a cotton candy sort of
Speaker 5: colored shirt right now, but.
Speaker 2: You know its charcoal gray suit very exactly. That's the
Speaker 2: way I was brought up a long fan.
Speaker 5: Can't You can't get the investment banker out of him?
Speaker 2: No, Dan brings much more color to the whole game. No, Damn.
Speaker 5: Dan always does so speaking, but sucks. Look at the
Speaker 5: socks this morning, the Philadelphia City Conductor Index that moving higher.
Speaker 5: Obviously it houses Bellweather's like in Nvidia, AMD and Intel.
Speaker 5: But talk to us more about TSMC and some of
Speaker 5: these other Nvidia suppliers in Asia and what that really
Speaker 5: means for the development coming off of the back of
Speaker 5: Obviously we're gonna have that ten for one stock split
Speaker 5: for in Nvidia coming to Fruition right before the opening
Speaker 5: of trading on June tenth, So not too far away here, Yeah.
Speaker 6: Jess, I mean our team was in Taiwan last week.
Speaker 6: Parties just getting started, and for TSMC for the for
Speaker 6: the other semi players, I mean, we're seeing demand well
Speaker 6: into twenty twenty five and this is not double ordering.
Speaker 6: I think it just shows this AI revolution is kicked
Speaker 6: off and it's not just the big tech players that
Speaker 6: are going to benefit now, it's the second, third, fourth derivatives.
Speaker 6: And that's what we're seeing play out in tech. I
Speaker 6: have and I have nos that's clearly playing out across NASNAC.
Speaker 2: Hey, Dan, you know, just look looking ahead a little
Speaker 2: bit here. A week from today, I believe that we're
Speaker 2: gonna have that developed conference for Apple. It just seems
Speaker 2: to me that there's a the expectations there. I think
Speaker 2: investors want to be kind of wowed a little bit
Speaker 2: by Apple and maybe some AI discussion. Are we gonna
Speaker 2: get that or are we going to be disappointed? Do
Speaker 2: you think?
Speaker 6: Yeah, Look, we'll be there a week from now. And
Speaker 6: I think it's the biggest event for Cooking Cooper Tino
Speaker 6: in over a decade because this is AI coming app.
Speaker 6: I think most consumers their interaction with generative AI is
Speaker 6: going to be through an Apple device. So this is
Speaker 6: important for developers to lay out the stack, what the
Speaker 6: feature functionality looks like. I think it's your early start
Speaker 6: of an AI app store, and then the drum roll
Speaker 6: to an AI driven iPhone in terms of iPhone sixteen
Speaker 6: will ultimately be iPhone seventy. I think to run us
Speaker 6: on to growth, it's a massive event for Apple.
Speaker 5: What about switching it up and looking over to Tesla
Speaker 5: because I know that's a name that I believe you
Speaker 5: took off of one of your conviction lists earlier this year.
Speaker 5: Where do you see that stuckheaded from here?
Speaker 6: Yeah, it's been in category five storm, but I think
Speaker 6: they're starting to get through it. I think if you
Speaker 6: could demand in China's stabilized and ultimately checked by check,
Speaker 6: I think they're getting rid of some of the overhangings
Speaker 6: That one is late next week. Does must get that
Speaker 6: twenty eighteen compactage approved? I think it does get approved.
Speaker 6: I think that's been a bit of an overhang, and
Speaker 6: then it's really about demand stabilizing and the next part
Speaker 6: of the store, the sub thirty kvehicle as well as
Speaker 6: FSD taking hold. I think that's a big part of
Speaker 6: the valuation to the Tesla store.
Speaker 2: So for it's for Tesla and a you know, a
Speaker 2: lower price car, whether it's sub thirty thousand, whatever the
Speaker 2: price tag is. I mean, and you're modeling, dan, can
Speaker 2: they make money on a per unit basis at that
Speaker 2: price point.
Speaker 6: They can't. I think they can make money up to
Speaker 6: about twenty three to twenty four k. But that's look
Speaker 6: that the scale and scope that's been that's been the
Speaker 6: whole key of success. I mean, despite everything that we've seen,
Speaker 6: it used to be fifty five thousand. Now they can
Speaker 6: make money at twenty two to twenty four thousand. So
Speaker 6: I think that's really something that you're seeing across I
Speaker 6: think the industry, their ability to scale, that's a huge
Speaker 6: part of their advantage. And of course not just here
Speaker 6: but especially in China and around the world.
Speaker 5: Are there particular technical levels you're watching for Tesla's stock
Speaker 5: to see like if the worst of the pain is
Speaker 5: already passed.
Speaker 6: Yeah, I think Look in my mind from a sentiment perspective,
Speaker 6: it has just been as negative as I've seen it
Speaker 6: in a number of years. I think as we get passed,
Speaker 6: wait next week the shareholder meeting, you start see stabilization
Speaker 6: in two Q and three Q, and then I think
Speaker 6: investors start to look into next year. But again, betting
Speaker 6: against Musk, betting against Tesla, that's been the wrong bet.
Speaker 6: Despite you know, I think many that are piled on
Speaker 6: and I think yet it again, this will be proven
Speaker 6: to be more of a golden opportunity to own Tessa
Speaker 6: rather in the start of a negative decline.
Speaker 2: All right, Dan, thanks so much for joining us as
Speaker 2: I always appreciate it. Dan, if he's a managing director
Speaker 2: senior equity analyst at web Bush Securities, joining us here
Speaker 2: talking all things technology. That's one of the great things
Speaker 2: about chatting with Dan. You can kind of go all
Speaker 2: over the tech map and get a conviction comments is
Speaker 2: kind of.
Speaker 5: Way the Wall Street's best dressed according to the New
Speaker 5: York Post. But Paula, we call you the fashion police here.
Speaker 2: Yeah. Total.
Speaker 5: So if you you saw Dan in the Bloomberg headquarters,
Speaker 5: would you stop him last summer? I think somebody came
Speaker 5: in with sandals.
Speaker 4: It was.
Speaker 2: Over your condos clip tops.
Speaker 5: I'd like to come barefoot.
Speaker 2: Yeah, well, Dan, you're right. He was written up in
Speaker 2: the New York Post his uh wonderful wardrobe that he wears.
Speaker 2: Plus it's all around the world because the guy's always.
Speaker 5: All right, you guys a learn about where he buys all.
Speaker 2: Of these up exactly.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us Live
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Speaker 2: SPX up about ten eleven percent this year. SPW the
Speaker 2: Equal Weighted Index up about four and a half percent here,
Speaker 2: so still some of those big names kind of driving
Speaker 2: it here a little bit.
Speaker 5: Also, the S and P five hundred up twenty three
Speaker 5: of the past thirty one week, so that since the
Speaker 5: October low, if you want to go back, that was
Speaker 5: around October twenty seventh when the S and P made
Speaker 5: that low, up about coming into today's trading twenty eight
Speaker 5: percent since that.
Speaker 2: Let's see what the pros are doing here. Margi Battel
Speaker 2: is certainly a pro. She's been doing this for some time,
Speaker 2: has some great perspective market. Bettel is a senior portfolio
Speaker 2: managered all Spring Global Investments, joining us from Boston via
Speaker 2: zoom Markie. When you talk to your clients here, what
Speaker 2: do you tell them about these markets? Should they be
Speaker 2: focusing on the big tech names, should they be broadening
Speaker 2: it out to some other sectors. What kind of discussions
Speaker 2: are you having with your clients these days?
Speaker 4: Well, we still think the tech sector is one of
Speaker 4: the leading sectors because they still have secutor growth and
Speaker 4: cyclical growth behind and so we don't think the sector
Speaker 4: is really overvalued. Considering the growth that they should have
Speaker 4: over the next one two three years. We think they
Speaker 4: still pretty fairly priced and it's still going to be
Speaker 4: one of the fastest growing sectors.
Speaker 7: So it's still a market that's selective.
Speaker 4: We see opportunities in some of the industrials, particularly those
Speaker 4: companies that are linked to somebody the mega trends such
Speaker 4: as the move to the cloud and data centers and reindustrialization,
Speaker 4: reshore and things like that, But a more selective market
Speaker 4: I think is going.
Speaker 5: To continue well, Margie. As the calendar just flipped to June,
Speaker 5: obviously there's different ways to cut kind of seasonality different actors.
Speaker 5: I know people like to talk about the juneswoon or
Speaker 5: even Seliman go away, but obviously if you look over
Speaker 5: the last decade really hasn't worked as well. If you
Speaker 5: use the seag go function in the terminal, you can
Speaker 5: see how the S and P five hundreds only been
Speaker 5: down twice in June over the last decade. So in
Speaker 5: twenty twenty two, during that beer market and then in
Speaker 5: twenty fifteen, obviously that correlated with what was going on
Speaker 5: with some manufacturing slowdowns in China and then obviously those
Speaker 5: highly indebted European countries that was worries of default there.
Speaker 5: But in election year periods, typically the summer can actually
Speaker 5: be a stronger period, but that usually comes when there's
Speaker 5: more clarity as far as who the winner would be
Speaker 5: very different kind of setup that we have this time around.
Speaker 5: But I'm wondering over the next few months, where do
Speaker 5: you see stocks headed from your as far as when
Speaker 5: Paul and I were just talking about the rally that
Speaker 5: the SMP has been on since that October left, well,
Speaker 5: I don't.
Speaker 7: Think you can.
Speaker 4: We always look at the history books to give you
Speaker 4: comfort for how this year is going to work out.
Speaker 4: I think we have just a narrow window for the
Speaker 4: Fed to act if they're going to lower rate before.
Speaker 4: They'll want to be quiet before the election. But typically
Speaker 4: election years a strong years. They may waffle around mid
Speaker 4: year like right now, but no matter who wins, they
Speaker 4: seem to have a strong finish to the end of
Speaker 4: the year.
Speaker 7: So we think that we may see a little bit
Speaker 7: of back and forth here.
Speaker 4: Uncertainty of a fed policy over world, the economy continue
Speaker 4: to show any weakening trends, and then the market I
Speaker 4: think will look to the end of the year and
Speaker 4: be pretty optimistic again.
Speaker 7: So we're looking for a strong finish.
Speaker 2: Margie, how much is that strong finish predicated upon earnings?
Speaker 2: I'd love to get your thoughts on kind of what
Speaker 2: we're seeing in the earnings from corporate America this year
Speaker 2: and what you expect for the remainder of the year.
Speaker 2: Can that be a driver of stocks?
Speaker 4: Well, I think it'll be more of the same companies
Speaker 4: just as last year. They're more or less continuing to surprise.
Speaker 7: With better earnings.
Speaker 4: Profit margins are being maintained. I think that's a little
Speaker 4: benefit from this little above average inflation that's helping companies.
Speaker 4: And really, if you look at the first quarterer, we
Speaker 4: had growth in the GDP of one point three s
Speaker 4: and P revenues are up i think four percent officer
Speaker 4: of ten percent, So I think it shows you that
Speaker 4: the standard and poors our Nasdaq companies are not necessarily
Speaker 4: reflective of what you see for the say the GDP numbers,
Speaker 4: and shows companies can still.
Speaker 7: Grind out profits that are way above the GDP growth.
Speaker 4: So we think that's what we're going to see, is
Speaker 4: more something close to that ten percent earnings growth for
Speaker 4: the year or for the rest of the year.
Speaker 5: What are some of your top questions that you're getting
Speaker 5: from clients right now.
Speaker 4: Well, I think everyone is concerned about interest rates, Will
Speaker 4: the Fed act or won't they act? And what influence
Speaker 4: will that have on the economy. I personally don't think
Speaker 4: it's going to have very much a material impact either way.
Speaker 4: A quarter or point I think will really change the
Speaker 4: direction of the economy. It's pretty strong, and people are,
Speaker 4: of course very concerned about the deficit, how where the
Speaker 4: money will come from, what we need from foreign investors.
Speaker 4: Will that cause treasury rates to go up as the
Speaker 4: government needs to finance very large, very large deficits. I
Speaker 4: think those are the things that people are focusing on,
Speaker 4: really more macro rather than any individual sector.
Speaker 2: Margie. For no particular reason, this studio of radio professionals
Speaker 2: feels like they're experts on the industrial the electrical grid here,
Speaker 2: and a lot of folks feel like, you know, maybe
Speaker 2: utilities are a way to play AI and things like that.
Speaker 2: How do you think about the grid, the power grid
Speaker 2: and how it plays into this economy.
Speaker 7: Well, I think it's funny.
Speaker 4: It's one of the most boring parts of the market
Speaker 4: has become one of the most hot and trendy parts.
Speaker 7: I think the utility companies, I think are.
Speaker 4: Rather limited way to play the growth in power consumption
Speaker 4: that we expect we'll see from economic growth and of
Speaker 4: course from the data centers. And I think a more
Speaker 4: interesting way to take advantage of those trends really is
Speaker 4: which companies will participate in the growth of building the infrastructure,
Speaker 4: hardening the grid, things like that. Again, so that says
Speaker 4: more companies in the industrial space rather than the utility space,
Speaker 4: although you could make a case for some of the
Speaker 4: independent power companies that have excess power that will be
Speaker 4: able to help balance the needs between various regions and
Speaker 4: between say unreliable or variable green sources versus space loads
Speaker 4: such as coal or gas or nuclear.
Speaker 5: When you're looking at utilities companies, typically people think of
Speaker 5: them as obviously the consistent dividends that they pay and
Speaker 5: low volatility, but also in addition to the AI sort
Speaker 5: of play with this. Could this be basically investors seeing
Speaker 5: that peak and rates that's happening when you're seeing a
Speaker 5: particular corner like this that has been rallying since it's
Speaker 5: April nineteenth, lows that we solve for that particular sevenst group.
Speaker 4: Well, really, when you look at the utilities, when you
Speaker 4: look at their price earns ratio, and you look at
Speaker 4: their dividend yields on that basis, they aren't really attractive
Speaker 4: as attractors say. It's as they've been historically compared to
Speaker 4: treasury rates. When you have a tender treasury, say four
Speaker 4: and a half, four and threecord or something like that,
Speaker 4: most dividends on utilities are a lot lower. So they
Speaker 4: really are as competitive as say, as it used to
Speaker 4: be some years ago, where there would be more of
Speaker 4: an interest rate played by buying the utilities to get
Speaker 4: the very high dividend. You'll say, just really, I don't
Speaker 4: think can be as competitive, just as intermedia.
Speaker 2: Treasures push that blue button there. Margie, thanks so much
Speaker 2: for joining us here. Market Bettel, senior portfolio management offspring
Speaker 2: of Global Investments, joining us from Boston via zoom.
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Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
Speaker 2: Jess Mean sitting in for Alex Steele on Paul Sweeney.
Speaker 2: We live here in on our Bloomberg Inactor Brooker Studio.
Speaker 2: You streaming live on the internet, John Tucker, that's the
Speaker 2: internet I've heard of. So I've heard dot com and
Speaker 2: you can search Bielberg podcast and that's where you find it's.
Speaker 2: Peter Vosser joins us. He's the chairman of A b
Speaker 2: b a publicly traded company. A b b N is
Speaker 2: the ticker.
Speaker 4: Uh.
Speaker 2: They are located in Europe and in Zurich. Are good friends?
Speaker 2: Over and switching. My daughter's in Zurich today? Oh really?
Speaker 2: Why on holiday? I have no idea, but that's where
Speaker 2: she has said. I got something. It is it's a
Speaker 2: beautiful city. Peter, talk to us about ABB What are
Speaker 2: the challenges you guys are facing here? So you think
Speaker 2: about to electrify, automate hard, to decarbonize industries. Where's your
Speaker 2: focus of your company these days?
Speaker 8: Well, thanks for having me. It's clearly it's the energy transition,
Speaker 8: which is not only the heart to abate sectors. It's
Speaker 8: in general the move from a more foscile driven and
Speaker 8: that system into electric that you system, and then we
Speaker 8: obviously contribute with our products and systems, which gives us
Speaker 8: energy savings between twenty and forty or even fifty percent.
Speaker 2: So that's one angle.
Speaker 8: The other one is all linked to new technologies around
Speaker 8: automation and robotics, because we are world leading company in
Speaker 8: both areas, and that has to do with the reshuring,
Speaker 8: bringing things closer home again where the markets are, but
Speaker 8: also in some countries, dealing with the demographics because we
Speaker 8: have less and less people working in the working age,
Speaker 8: and therefore robotics and the automation becomes very important. And
Speaker 8: the last one is AI, which will revolutionize obviously all
Speaker 8: what's related to automation.
Speaker 5: In the future, we'll talk to us more about what
Speaker 5: you think is the best way to try to scale manufacturing.
Speaker 5: When it comes to the EVE charging space, I.
Speaker 8: Think what we really need on the emobility side. Let
Speaker 8: me put it this way, is really work on two fronts.
Speaker 8: One is a technical side on the charging side, but
Speaker 8: the other one is also on the user friendiness side,
Speaker 8: so that they become actually more reliable. They are much
Speaker 8: more modern. On the manufacturing side, I think we have
Speaker 8: had clearly in some countries and regions there was some
Speaker 8: scarcity of manufacturing capacity, which I think have been sold.
Speaker 8: Was not an issue for ABB in that sense, but
Speaker 8: it's the product evolution which is very key now. On
Speaker 8: the other side, I think one that should not forget
Speaker 8: that the whole network of electrification needs to be up
Speaker 8: to speed. You cannot just actually consume much more energy.
Speaker 8: You also need to build the transmission lines that the
Speaker 8: power actually comes in. Where we have got let's say
Speaker 8: the charge is installed either for a private passenger cars
Speaker 8: or for busses, ships, trains, whatever.
Speaker 5: You want to call it.
Speaker 8: So I think we need much more infrastructure investments on
Speaker 8: the one side, and really really to actually get to
Speaker 8: ev charging and the passenger cars based on electrification much
Speaker 8: more developed in the future.
Speaker 2: Peter, who are some of your bigger customers that you're
Speaker 2: working with these days?
Speaker 8: We are here in the United States, so we have
Speaker 8: all kinds of manufacturing companies in that sense. But on
Speaker 8: the industrial side, any any company you can think of
Speaker 8: which are they are in manufacturing space. For example, they
Speaker 8: use our electification products, they use our automation products, So
Speaker 8: you have all the industrial companies and that's where we
Speaker 8: make the difference. The other side, utilities are very key.
Speaker 8: As I just said, they need to make sure we
Speaker 8: have an off supply.
Speaker 2: And I know, I'm just looking at our PGeo function
Speaker 2: where I can see where your revenue comes by geography.
Speaker 2: You're everywhere, a third in Europe, a thirde in you know,
Speaker 2: you're all You're truly a global company. Do you see
Speaker 2: certain parts of the world that are more in front
Speaker 2: of you know, kind of making the transition then some others.
Speaker 8: Yeah, I think I would say that Europe has started
Speaker 8: this rather early with the new Green Deal in Europe,
Speaker 8: but also moving into a very different energy systems. Paid
Speaker 8: some price with the wars in Russia, so energy prices
Speaker 8: have gone up and that some rethinking has taken place.
Speaker 2: I think here in the.
Speaker 8: US you quite clearly see the demand is there in
Speaker 8: all industries now supported by the various acts you have here,
Speaker 8: either the Inflation Act or then also the Industrial Act,
Speaker 8: and that is driving investments.
Speaker 2: Now.
Speaker 8: It's much earlier days than in Europe. For example. AHA
Speaker 8: is a little bit of mixed back, I have to say.
Speaker 8: So you see some countries at the leading edge like
Speaker 8: smaller company countries like Singapore. In China, which is our
Speaker 8: second biggest market after the US, you see actually a
Speaker 8: lot of efforts now being put in place to change
Speaker 8: the electric system in China. A lot of EV cars
Speaker 8: are coming in and you can see that those really
Speaker 8: are now generating the growth in China. Y city subdued
Speaker 8: compared to the US at this stage. So indeed, we
Speaker 8: are operating across the world in more than one hundred countries.
Speaker 8: We get good insights. At the moment, the driving forces
Speaker 8: are really the US and Europe, with let's say Asia
Speaker 8: apart from India are lacking somewhat.
Speaker 5: So where else do you go to expand from here
Speaker 5: when you already are in so many places?
Speaker 8: It's quite clearly US is our key number one market
Speaker 8: and that's where we have a developing We have over
Speaker 8: the last ten years, we have put more than fourteen
Speaker 8: billion dollars into the US in terms of investments. We
Speaker 8: have got forty manufacturing sites in twenty states. We're operating
Speaker 8: in all states with our services, et cetera. So that's
Speaker 8: a key market. We see the electrification market in the
Speaker 8: US as key, but also the industrial one, which has
Speaker 8: a lot to do with bringing home let's say, manufacturing
Speaker 8: capabilities and capacity. And then the second one is clearly India,
Speaker 8: which at the moment is in terms of growth outstripping
Speaker 8: all other countries in a big way. They are very
Speaker 8: low in manufacturing capacity and that's where a lot of
Speaker 8: investments now for the high end manufacturing goes in. And
Speaker 8: then the third one will be Europe quite clearly as
Speaker 8: the European change in the energy system, but also the
Speaker 8: demographic issues which we have in Europe which will take
Speaker 8: out about fifty million of working people over the next
Speaker 8: ten years and that needs to be replaced by automation
Speaker 8: and robotics.
Speaker 2: So there's a lot of investments on going there. Peter,
Speaker 2: thank you so much for joining us. Really appreciate you
Speaker 2: coming here. Peter Barso he's the chairman of ABB. The
Speaker 2: ticker symbol put into your Bloomberg from ABB and Trades
Speaker 2: in Switzerland stuck about half a percent today, all time
Speaker 2: high for the stock today. So that's why we get
Speaker 2: the audience for stocks at it all the time high.
Speaker 2: It's got an airy scream billion Swiss frank market caps
Speaker 2: of not too shabby. Peter Bosser from ABB joining us Here.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: Let's talk about global energy, and we do that with
Speaker 2: Ellen Walden. She joins us some transversal. Ellen, I'm seeing
Speaker 2: WTA crude oil off about three point two percent here today,
Speaker 2: it's seventy four dollars and fifty cents. What's your thoughts here, Ellen,
Speaker 2: about the global energy market? What's kind of winning the
Speaker 2: day here? Supply demand? What should we be focusing on?
Speaker 9: I think right now we're seeing kind of some of
Speaker 9: a reaction to opaq pluses recent decision to start to
Speaker 9: maybe unwind the voluntary supply cuts in twenty twenty five.
Speaker 9: So we're not actually talking about a whole lot of oil.
Speaker 9: They're still keeping a lot of their supply cuts in place.
Speaker 9: But I don't think that the market really expected such
Speaker 9: long term guidance from OPEK, and so it's they're reacting
Speaker 9: to that. And it's kind of interesting because gasoline prices
Speaker 9: in the US are also trending downward, which is not
Speaker 9: something we'd usually expect, you know, with this summer driving
Speaker 9: season starting, I think that there's kind of some tension
Speaker 9: here between what is looking Could it could potentially be
Speaker 9: a slightly under supplied market, or if you know, we
Speaker 9: keep seeing inflation running high, then we could even see
Speaker 9: the reverse. And I think the markets are just not
Speaker 9: quite sure at this point, you know, what to expect
Speaker 9: this summer.
Speaker 5: So it seems as if there's no room for more
Speaker 5: supply if the group, when we are talking about OPEC plus,
Speaker 5: wants to defend those prices, let alone push them higher.
Speaker 5: Walk us through the dynamic here of what's set up
Speaker 5: over the next couple of months.
Speaker 9: Yeah, So the group has basically decided to hold their
Speaker 9: current production level steady through the rest of twenty twenty
Speaker 9: four and then starting in twenty twenty five, the plan
Speaker 9: is that they some countries are going well. UAE in
Speaker 9: particular is going to start producing a little bit more
Speaker 9: because their baseline production is going to start to be
Speaker 9: inching up, and other countries like Saudi Arabia and Russia
Speaker 9: and other countries that have made extra voluntary cuts are
Speaker 9: going to slowly start to unwind those mid twenty twenty five.
Speaker 9: So this is really just a very gradual process. And
Speaker 9: I think part of it is because they really didn't
Speaker 9: want to shock the market. They really don't want prices
Speaker 9: to fall. I think they're very happy, or at least
Speaker 9: Saudi Arabia is quite happy with prices in you know,
Speaker 9: in the eighties that generally tends to be prices that
Speaker 9: Saudi Arabia seas is good because the Saudis do not
Speaker 9: want prices to be too high. They're not like, oh,
Speaker 9: we want one hundred and twenty dollars a barrel a country,
Speaker 9: because they see that as basically asking for demand destruction
Speaker 9: and they want to sell their oil, so you know,
Speaker 9: it is kind of a sweet spot that they're trying
Speaker 9: to maintain. I think that prices probably will recover unless
Speaker 9: there's some serious signs of you know, economic trouble, you know,
Speaker 9: heading into say a bit of full blown recession or
Speaker 9: something like that. I do think otherwise we are seeing
Speaker 9: pretty strong demand and I think prices will probably recover.
Speaker 9: You know, Brett will recover to the eighties at least
Speaker 9: the low eighties.
Speaker 2: So Ellen, is it unusual for OPEC to forecast kind
Speaker 2: of production levels, you know, so far in advance, it
Speaker 2: seems like we've been almost on a month to month
Speaker 2: kind of scenario with OPEK and what are they going
Speaker 2: to do with their cuts? But now they're kind of
Speaker 2: giving us some visibility into next year.
Speaker 9: Yeah, it's it's it's like a whole new world because
Speaker 9: we kind of got used to this idea of OPEC
Speaker 9: meets every month. Every month there's a new OPEC meeting.
Speaker 9: Who knows are they going to increase production, decrease it,
Speaker 9: keep it the same, you know, and and so every
Speaker 9: month they kind of had to put this together. And
Speaker 9: I think some people thought that this was a good
Speaker 9: thing because it meant OPEK was, you know, on top
Speaker 9: of the market, ready to make adjustments for everything that
Speaker 9: was happening. But at the same time, there was no
Speaker 9: long term since you know, there's no sense of what
Speaker 9: they were looking for long term. If OPEC really wants
Speaker 9: to be this kind of market manager, you know, ensuring
Speaker 9: price stability, which is really kind of what they want,
Speaker 9: then they need to lay out some kind of long
Speaker 9: term vision. And this is what we've got now. Is
Speaker 9: the market going to go the way OPEK expects absolutely not.
Speaker 9: I think we could say for sure that's the only
Speaker 9: thing we know is that things are not going to
Speaker 9: play out exactly as they planned. But uh, but we
Speaker 9: can What we can know is that this is what
Speaker 9: OPEK wants to happen.
Speaker 5: This is their their goal, and it may not play.
Speaker 9: Out exactly as they have foreseen and they have laid
Speaker 9: out now they've they've gone to a pretty complex set
Speaker 9: of you know, and this month we're going to increase
Speaker 9: by this manta, next month, this Now, it's a very
Speaker 9: complex set of steps. But at the same time, the
Speaker 9: fact that that traders and also consumers have a sense
Speaker 9: of where OPEC wants things to go, I think is
Speaker 9: very very helpful for the long term health of the market.
Speaker 5: What do you think is the most likely outcome to unfold?
Speaker 5: Would it be that just an extension of all existing
Speaker 5: output targets would come to fruition?
Speaker 9: H Well, I think I think that that that's generally
Speaker 9: where they are. You know, things could change though on
Speaker 9: a dime. We could have a major hurricane that knocks
Speaker 9: out production in the Gulf of Mexico for a month
Speaker 9: or more, and then we could see OPEC to act
Speaker 9: and say, hey, we're you know, we're going to increase
Speaker 9: production by two point two million barrels a day starting
Speaker 9: you know, next week. So that's that's definitely the kind
Speaker 9: of thing that is not at all out of the question,
Speaker 9: and so you have to be prepared for this, and
Speaker 9: OPEC is certainly prepared to make adjustments as market conditions warrant.
Speaker 9: But the fact that we know that that barring these
Speaker 9: kinds of things, that if things happen the way they do,
Speaker 9: you know, the way OPEP four seas, then they are
Speaker 9: there's going to be a very kind of slow and
Speaker 9: gentle unwinding of of cuts and there will be more
Speaker 9: supply coming on the market, you know, say by next year.
Speaker 2: At this time, Ellen talk to us about the American
Speaker 2: producers were good friends in Texas and Oklahoma. What are
Speaker 2: they doing in terms of supply these days?
Speaker 9: I think it's stayed to say are good friends in Texas?
Speaker 9: Are not partying like it's twenty fifteen or twenty sixteen.
Speaker 9: This is no longer the same market that we saw
Speaker 9: back then, where it was kind of the wild West
Speaker 9: of production. You know, tons of small companies, everyone was
Speaker 9: just producing, producing, producing. The cash was flowing from the investors.
Speaker 9: The idea was just keep up production targets. You know,
Speaker 9: didn't even matter if you weren't breaking even you know,
Speaker 9: just produce, produced, produce, drill those wells, get those barrels
Speaker 9: out there. You know, meat payroll. Those days are gone.
Speaker 4: They there are way in the rear view mirror.
Speaker 9: We've got, you know, a lot of consolidations. We've got
Speaker 9: people making very smart decisions about where they're drilling and
Speaker 9: exactly how much oil they plan to get from wells.
Speaker 9: There's a lot of very precise imaging going on. A
Speaker 9: lot of these companies are considering exactly what's around them.
Speaker 9: Their acreage has expanded, They're making very educated decisions about
Speaker 9: what wils to bring on the market. They're also facing
Speaker 9: a lot of inflationary pressures. We often think that inflation
Speaker 9: is something that high oil prices cause on the rest
Speaker 9: of us, but these oil companies also feel the effects
Speaker 9: of inflation. And it costs a lot more to drill
Speaker 9: to complete wells than it used to, and so you know,
Speaker 9: we have to take that into consideration when we're looking
Speaker 9: at what's going on. I think the wave of consolidations
Speaker 9: is probably good for the industry. It's definitely much better
Speaker 9: for kind of managing things, keeping prices more stable.
Speaker 5: Than we saw.
Speaker 9: But it's not always so great for jobs because when
Speaker 9: more efficiency comes in, jobs had to get eliminated.
Speaker 2: All right, Ellen, thank you so much for joining us.
Speaker 2: As always, Ellen Wald, she's president of Transversal Consulting and
Speaker 2: Senior Fellow at the Atlanta Council, one of her go
Speaker 2: to voices on global energy.
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