1
00:00:00,840 --> 00:00:04,000
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

2
00:00:04,040 --> 00:00:05,240
Speaker 1: my co host Matt Miller.

3
00:00:05,640 --> 00:00:09,600
Speaker 2: Every business day we bring you interviews from CEOs, market pros,

4
00:00:09,720 --> 00:00:13,600
Speaker 2: and Bloomberg experts, along with essential market moving news.

5
00:00:14,160 --> 00:00:17,279
Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

6
00:00:17,400 --> 00:00:20,520
Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

7
00:00:21,320 --> 00:00:23,520
Speaker 1: All right, let's check in with Gena Martin Adams because

8
00:00:23,520 --> 00:00:25,479
Speaker 1: we just got through and we're getting through a week

9
00:00:25,520 --> 00:00:28,560
Speaker 1: of a big, big time earnings here. Gina Martin Adams

10
00:00:28,640 --> 00:00:33,120
Speaker 1: joins as she's the chief US chief strategist for calling

11
00:00:33,159 --> 00:00:39,159
Speaker 1: all the markets equity markets for Bloomberg Intelligence. Gina again, another,

12
00:00:39,479 --> 00:00:42,160
Speaker 1: a great first half of the year, a good July

13
00:00:42,320 --> 00:00:45,440
Speaker 1: here for these markets. We're getting into earnings. As you

14
00:00:45,479 --> 00:00:47,440
Speaker 1: step back a little bit, how do you think about

15
00:00:47,440 --> 00:00:48,240
Speaker 1: these markets here?

16
00:00:49,360 --> 00:00:51,960
Speaker 3: Yeah, I think the markets have largely followed along with

17
00:00:52,000 --> 00:00:54,960
Speaker 3: earnings trends, believe it or not. Because when you exclude

18
00:00:54,960 --> 00:00:57,360
Speaker 3: the energy sector from the S and P five hundred,

19
00:00:57,400 --> 00:01:00,240
Speaker 3: it's important to keep in mind that energy is is

20
00:01:00,280 --> 00:01:02,520
Speaker 3: an input cost for most of the rest of the sector.

21
00:01:02,600 --> 00:01:04,840
Speaker 3: So we want to exclude the energy sector and what

22
00:01:04,959 --> 00:01:08,000
Speaker 3: we find is earnings trends are actually improving pretty materially

23
00:01:08,080 --> 00:01:09,840
Speaker 3: for the rest of the groups and the index, at

24
00:01:09,880 --> 00:01:12,640
Speaker 3: least relative to where they were last year, and that

25
00:01:12,720 --> 00:01:15,720
Speaker 3: improvement has been pretty continuous throughout twenty twenty three. At

26
00:01:15,760 --> 00:01:19,440
Speaker 3: the very least, earnings are much less bad than anyone

27
00:01:19,480 --> 00:01:22,679
Speaker 3: has anticipated for the groups that are outside of energy,

28
00:01:23,160 --> 00:01:26,760
Speaker 3: and that seems to be powering a pretty significant market advance.

29
00:01:27,440 --> 00:01:30,680
Speaker 4: And is that why to your point, powering this advance

30
00:01:30,720 --> 00:01:33,720
Speaker 4: that we've seen, we're investors already looking ahead and seeing

31
00:01:33,720 --> 00:01:37,080
Speaker 4: that improvement, especially when you were talking about Energy masking

32
00:01:37,120 --> 00:01:39,240
Speaker 4: those improvements. I know that when you're looking at the

33
00:01:39,280 --> 00:01:42,960
Speaker 4: earnings revision momentum data on your team. Michael Casper was

34
00:01:43,000 --> 00:01:45,320
Speaker 4: talking to me about how, particularly when you're looking at

35
00:01:45,360 --> 00:01:48,720
Speaker 4: discretionary in industrials, those were the two key groups that

36
00:01:48,760 --> 00:01:51,600
Speaker 4: were leading those growth downturns at the beginning of last year.

37
00:01:51,760 --> 00:01:54,120
Speaker 4: But now those are starting to be marked up highers,

38
00:01:54,160 --> 00:01:57,000
Speaker 4: so more of those cyclically oriented corners of the market.

39
00:01:57,320 --> 00:02:00,120
Speaker 4: Did investors already foresee that? And that's why we in

40
00:02:00,200 --> 00:02:03,120
Speaker 4: part saw that big rebound at the beginning of this year.

41
00:02:03,920 --> 00:02:06,600
Speaker 3: Yeah, I think what happened was by the end of

42
00:02:06,760 --> 00:02:10,680
Speaker 3: last year, investors were largely pricing a pretty significant recession

43
00:02:10,720 --> 00:02:13,880
Speaker 3: in earnings to continue throughout twenty twenty three. So remember

44
00:02:14,120 --> 00:02:17,440
Speaker 3: X Energy, we did see earnings start to crash really

45
00:02:17,480 --> 00:02:20,440
Speaker 3: throughout twenty twenty two. By the end of last year,

46
00:02:20,560 --> 00:02:23,000
Speaker 3: really all hope for any kind of rebound was gone

47
00:02:23,240 --> 00:02:26,600
Speaker 3: and investors were only anticipating that earnings would get worse.

48
00:02:27,280 --> 00:02:29,440
Speaker 3: But what we've seen so far this year is the

49
00:02:29,480 --> 00:02:33,120
Speaker 3: turn in inflation has been very, very consequential for turning

50
00:02:33,160 --> 00:02:36,280
Speaker 3: around the sentiment towards select industries and most of the

51
00:02:36,480 --> 00:02:38,600
Speaker 3: X energy industries in the S and S and P

52
00:02:38,720 --> 00:02:43,240
Speaker 3: five hundred. Last year, remember when inflation was accelerating very rapidly,

53
00:02:43,720 --> 00:02:47,680
Speaker 3: and producer prices in particular were accelerating extremely quickly relative

54
00:02:47,720 --> 00:02:51,680
Speaker 3: to consumer prices. Most US companies were experiencing some degree

55
00:02:51,680 --> 00:02:54,799
Speaker 3: of inflation distress. At the same time, it was very

56
00:02:54,840 --> 00:02:57,760
Speaker 3: clear that tech and tech like industries were over hired,

57
00:02:58,240 --> 00:03:00,720
Speaker 3: had too many employees relative to the haste of sales

58
00:03:00,720 --> 00:03:03,200
Speaker 3: growth that they were experiencing, and needed to write size

59
00:03:03,240 --> 00:03:06,079
Speaker 3: the ships. So we saw that occurred late last year.

60
00:03:06,200 --> 00:03:09,000
Speaker 3: Early this year we started to see inflation pressures ease

61
00:03:09,560 --> 00:03:11,920
Speaker 3: and the combination of those two things has resulted in

62
00:03:12,000 --> 00:03:15,640
Speaker 3: much better performance across the space. Some of the segments that,

63
00:03:15,760 --> 00:03:19,200
Speaker 3: as as you point out, are very sensitive to inflation,

64
00:03:19,480 --> 00:03:24,280
Speaker 3: like some of the consumer discretionary's, consumer staples, industrials, communications,

65
00:03:24,320 --> 00:03:28,919
Speaker 3: even healthcare companies, have experienced a great degree of inflation reprieve.

66
00:03:29,880 --> 00:03:32,000
Speaker 3: The result of that is likely to show up in

67
00:03:32,240 --> 00:03:35,080
Speaker 3: better earnings growth into later this year and into twenty

68
00:03:35,080 --> 00:03:38,080
Speaker 3: twenty four, and I think that is starting to get

69
00:03:38,080 --> 00:03:40,640
Speaker 3: embedded in prices. I would not say that this has

70
00:03:40,680 --> 00:03:44,480
Speaker 3: been anticipated. I think that most investors are still quite

71
00:03:44,480 --> 00:03:47,760
Speaker 3: skeptical with respect to the macro outlook. Most investors are

72
00:03:47,760 --> 00:03:50,119
Speaker 3: looking at top line growth and very concerned about where

73
00:03:50,120 --> 00:03:53,240
Speaker 3: the economy is headed. But what's happening beneath the top

74
00:03:53,280 --> 00:03:56,040
Speaker 3: line is very very important and consequential their earnings trends.

75
00:03:56,040 --> 00:03:57,920
Speaker 3: And I think that's been the lesson of twenty twenty three.

76
00:03:58,520 --> 00:04:00,560
Speaker 1: Hey, Gina, I'm just looking at the SP five hundred

77
00:04:00,560 --> 00:04:04,040
Speaker 1: and off of the October low. We're up almost twenty

78
00:04:04,080 --> 00:04:06,760
Speaker 1: eight percent. Yeah, is that a bull market that I

79
00:04:06,960 --> 00:04:08,400
Speaker 1: just haven't been talking about.

80
00:04:09,280 --> 00:04:11,839
Speaker 3: Yeah, it's a great point. We actually did some work

81
00:04:11,880 --> 00:04:14,880
Speaker 3: on this this week. That gain from the October low

82
00:04:14,920 --> 00:04:18,880
Speaker 3: to date retraces seventy six more than seventy six percent

83
00:04:19,000 --> 00:04:21,479
Speaker 3: of the peak to trap decline. When we look back

84
00:04:21,480 --> 00:04:24,240
Speaker 3: in history and we look at all bear markets, that is,

85
00:04:24,400 --> 00:04:26,359
Speaker 3: all times the S and P five hundred has dropped

86
00:04:26,360 --> 00:04:29,640
Speaker 3: at least twenty percent, we look at those points in

87
00:04:29,680 --> 00:04:32,080
Speaker 3: time in which the SMP started to recover, and a

88
00:04:32,120 --> 00:04:35,080
Speaker 3: seventy six percent retracement of the peak to trough decline

89
00:04:35,080 --> 00:04:38,839
Speaker 3: after every single bear market since history, in US history

90
00:04:38,880 --> 00:04:43,240
Speaker 3: since nineteen twenty nine, suggests that that critical level never

91
00:04:43,320 --> 00:04:44,159
Speaker 3: gets broken again.

92
00:04:44,400 --> 00:04:44,560
Speaker 5: Right.

93
00:04:44,960 --> 00:04:47,240
Speaker 3: What we actually find is over the next year, a

94
00:04:47,360 --> 00:04:50,919
Speaker 3: role market continues. It is a critical marker for a

95
00:04:50,960 --> 00:04:53,120
Speaker 3: continuation of the bull market. You just don't see a

96
00:04:53,160 --> 00:04:56,600
Speaker 3: seventy six percent retracement and then a retest of new

97
00:04:56,680 --> 00:04:59,320
Speaker 3: lows or retest of those foam or former lows within

98
00:04:59,360 --> 00:05:02,720
Speaker 3: the next year. So, you know, our work would suggest

99
00:05:02,920 --> 00:05:06,560
Speaker 3: very consistently the degree to which we've rebounded is a

100
00:05:06,680 --> 00:05:10,520
Speaker 3: very bullish marker, at least historically. Now, you know, every

101
00:05:10,520 --> 00:05:12,520
Speaker 3: time there's a chance that this time is different. The

102
00:05:12,560 --> 00:05:14,760
Speaker 3: one thing that is different this time is the lack

103
00:05:14,800 --> 00:05:18,039
Speaker 3: of recovery in small caps the other thing we've never

104
00:05:18,120 --> 00:05:21,279
Speaker 3: seen in US history is small caps recover so little

105
00:05:21,839 --> 00:05:24,640
Speaker 3: of their peak to trough decline while large caps are

106
00:05:24,680 --> 00:05:28,000
Speaker 3: recovering so much. So we want to watch small caps

107
00:05:28,040 --> 00:05:30,080
Speaker 3: really carefully because I do think that that is an

108
00:05:30,160 --> 00:05:32,000
Speaker 3: area of risk in the market. If we can't get

109
00:05:32,000 --> 00:05:34,880
Speaker 3: some participation from small caps, we can't get that positive

110
00:05:34,880 --> 00:05:38,840
Speaker 3: signal out of small caps continuing to turn a bit higher,

111
00:05:39,360 --> 00:05:41,200
Speaker 3: we could be in for a rocky road ahead.

112
00:05:41,560 --> 00:05:45,159
Speaker 4: And Gina, you've written about recently about how this sort

113
00:05:45,200 --> 00:05:48,520
Speaker 4: of gloom coming into this year about the economy is

114
00:05:48,560 --> 00:05:51,000
Speaker 4: really a distraction when you're thinking about from the point

115
00:05:51,000 --> 00:05:54,520
Speaker 4: of view from an equity perspective, in what it means

116
00:05:54,520 --> 00:05:57,800
Speaker 4: when you're looking more towards what corporate America is signaling

117
00:05:57,800 --> 00:06:01,159
Speaker 4: on the profit outlook. Why do you think this typically

118
00:06:01,360 --> 00:06:03,800
Speaker 4: continues to happen when you look back at history and

119
00:06:03,839 --> 00:06:07,760
Speaker 4: potentially even just be a losing strategy for investors if

120
00:06:07,800 --> 00:06:10,640
Speaker 4: they're obsessing over what the timing could be on a

121
00:06:10,680 --> 00:06:13,040
Speaker 4: recession when all of a sudden, especially like you were

122
00:06:13,040 --> 00:06:16,400
Speaker 4: talking about energy excluded from s and P five hundred

123
00:06:16,440 --> 00:06:18,239
Speaker 4: outlook really improving moving forward.

124
00:06:18,880 --> 00:06:21,240
Speaker 3: Yeah, And this is I think is so key for

125
00:06:21,320 --> 00:06:24,120
Speaker 3: investors to really understand, and we were reminded of this

126
00:06:24,240 --> 00:06:28,000
Speaker 3: all year this year. The economy and the earning stream

127
00:06:28,080 --> 00:06:30,560
Speaker 3: are not the same thing, and stocks trade on earnings

128
00:06:30,640 --> 00:06:34,279
Speaker 3: and the outlook for earnings. Very clearly, we've seen earnings

129
00:06:34,320 --> 00:06:37,560
Speaker 3: growth come in much better than anticipated, like I said,

130
00:06:37,640 --> 00:06:42,039
Speaker 3: less bad than anticipated, but frankly, earnings have improved considerably

131
00:06:42,080 --> 00:06:44,840
Speaker 3: relative to what was priced in the equity market late

132
00:06:44,920 --> 00:06:48,880
Speaker 3: last year. And that is really important because the economists

133
00:06:48,880 --> 00:06:51,320
Speaker 3: are still thinking, well, we are going to we may

134
00:06:51,440 --> 00:06:54,480
Speaker 3: scaze by without falling into recession, but there's still a

135
00:06:54,520 --> 00:06:57,640
Speaker 3: lot of chatter about the macro outlook. Many people are

136
00:06:57,680 --> 00:07:00,279
Speaker 3: still really wringing their hands over what's going to happened

137
00:07:00,320 --> 00:07:03,560
Speaker 3: in the economy, and that really kind of misses the point,

138
00:07:03,720 --> 00:07:08,160
Speaker 3: because there just is there are commonalities, certainly, and if

139
00:07:08,160 --> 00:07:10,760
Speaker 3: the economy does fall into recession, there will be pain

140
00:07:10,800 --> 00:07:13,960
Speaker 3: points in the earning stream that emerge. But for now,

141
00:07:14,120 --> 00:07:16,679
Speaker 3: what is important is that margins appear to have formed

142
00:07:16,680 --> 00:07:19,080
Speaker 3: a bottom. They're starting to improve a little bit here.

143
00:07:19,600 --> 00:07:22,560
Speaker 3: We seem to be stable enough in the economy to

144
00:07:22,600 --> 00:07:26,600
Speaker 3: create some stability in the top line revenue for the index.

145
00:07:26,680 --> 00:07:29,800
Speaker 3: We're always on guard for something to change. But those

146
00:07:29,840 --> 00:07:31,960
Speaker 3: earnings are what really drives stock prices, and I think

147
00:07:31,960 --> 00:07:35,240
Speaker 3: this is so important. You know, the even the percentage

148
00:07:35,280 --> 00:07:38,520
Speaker 3: share of industries impact on the equity market is so

149
00:07:38,760 --> 00:07:42,440
Speaker 3: very different than the percentage share of those industries' impact

150
00:07:42,520 --> 00:07:45,680
Speaker 3: on the economy at large that trying to use the

151
00:07:45,720 --> 00:07:49,200
Speaker 3: economy as a forecasting tool for the market proves to

152
00:07:49,240 --> 00:07:51,080
Speaker 3: be a really dicey business.

153
00:07:51,600 --> 00:07:53,160
Speaker 1: All right, Gina, it looks like we're back in the

154
00:07:53,200 --> 00:07:55,960
Speaker 1: business focusing on earnings, maybe a little bit less so

155
00:07:56,200 --> 00:07:58,760
Speaker 1: on the FED. And that's a good thing because maybe

156
00:07:58,760 --> 00:08:02,120
Speaker 1: we get some earnings momentum here, Gina. Martin Adams, chief

157
00:08:02,160 --> 00:08:05,480
Speaker 1: equity strategist for Bloomberg Intelligence, joining us, giving us a

158
00:08:05,520 --> 00:08:07,400
Speaker 1: great overview of the market as we kind of pour

159
00:08:07,520 --> 00:08:11,320
Speaker 1: through these earnings, you know, really kicking in this week

160
00:08:11,360 --> 00:08:13,560
Speaker 1: in size, including today and then well through the next

161
00:08:13,560 --> 00:08:14,200
Speaker 1: couple of weeks.

162
00:08:14,240 --> 00:08:15,400
Speaker 6: So maybe a.

163
00:08:15,400 --> 00:08:18,080
Speaker 1: Little bit better than expected outlook on earnings, just what

164
00:08:18,120 --> 00:08:18,880
Speaker 1: to see how comes in?

165
00:08:19,280 --> 00:08:22,000
Speaker 4: And you brought up the Dow Jones industrial average actually

166
00:08:22,040 --> 00:08:24,600
Speaker 4: heading in today. It had been up for eight consecutive sessions.

167
00:08:24,680 --> 00:08:27,400
Speaker 4: It was as long as winning streak in about four years,

168
00:08:27,480 --> 00:08:30,800
Speaker 4: and so heading for potentially a ninth consecutive session for

169
00:08:30,920 --> 00:08:32,640
Speaker 4: also looking at more of those sickle co oriented and

170
00:08:32,640 --> 00:08:33,480
Speaker 4: pores in the market.

171
00:08:33,720 --> 00:08:36,040
Speaker 1: Yeah, I'd like to see that, And Gina suggested that's

172
00:08:36,040 --> 00:08:37,200
Speaker 1: a good thing to see a little bit of a

173
00:08:37,240 --> 00:08:38,720
Speaker 1: broadening out from the tech.

174
00:08:38,800 --> 00:08:42,319
Speaker 7: So that's good. You're listening to the team. Ken's a

175
00:08:42,480 --> 00:08:46,160
Speaker 7: live program Bloomberg Markets weekdays at ten am Eastern on

176
00:08:46,200 --> 00:08:50,000
Speaker 7: Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App,

177
00:08:50,200 --> 00:08:52,840
Speaker 7: or listen on demand wherever you get your podcasts.

178
00:08:54,480 --> 00:08:57,280
Speaker 1: Let's talk about earnings here, and let's talk about healthcare earnings.

179
00:08:57,720 --> 00:08:59,640
Speaker 1: We can do that with Ann Hines. She's from a

180
00:08:59,679 --> 00:09:03,640
Speaker 1: Zoo America's she's a managing director and senior healthcare services

181
00:09:03,800 --> 00:09:07,200
Speaker 1: equity analysts there. And thanks so much for joining us

182
00:09:07,360 --> 00:09:10,800
Speaker 1: via the phone here healthcare services, give us a sense

183
00:09:10,840 --> 00:09:14,079
Speaker 1: of about how this group has traded over the last

184
00:09:14,360 --> 00:09:17,079
Speaker 1: couple of years. Just give us a sense how investors

185
00:09:17,080 --> 00:09:20,880
Speaker 1: and how you position the healthcare services providers out there

186
00:09:20,920 --> 00:09:21,880
Speaker 1: to investors.

187
00:09:22,760 --> 00:09:25,240
Speaker 6: Sure, I would say this group has traded.

188
00:09:25,520 --> 00:09:29,440
Speaker 5: It's a tale of two groups mainly managed here in hospitals,

189
00:09:30,080 --> 00:09:34,520
Speaker 5: and it's really based on utilization remember during COVID baseline

190
00:09:34,600 --> 00:09:38,800
Speaker 5: utilization that's what everyone refers to. Healthcare utilization before COVID

191
00:09:39,520 --> 00:09:43,000
Speaker 5: was really below pre pandemic levels. And if you even

192
00:09:43,160 --> 00:09:45,400
Speaker 5: go even further, if you do it by payer mix,

193
00:09:45,440 --> 00:09:49,800
Speaker 5: whether it's commercial, whether it's Medicare advantage, whether it's Medicaid.

194
00:09:50,400 --> 00:09:55,640
Speaker 5: Definitely Medicare advantage, and Medicaid beneficiaries were not seeking care,

195
00:09:55,760 --> 00:09:56,520
Speaker 5: they didn't want to.

196
00:09:56,440 --> 00:09:57,319
Speaker 6: Go to the hospital.

197
00:09:57,880 --> 00:10:00,800
Speaker 5: Now we get to twenty twenty three and it's probably

198
00:10:00,800 --> 00:10:03,760
Speaker 5: the first year since the pandemic that trends and normal

199
00:10:04,160 --> 00:10:06,800
Speaker 5: people are going back to get to the doctors.

200
00:10:06,840 --> 00:10:07,680
Speaker 6: They're going back.

201
00:10:07,559 --> 00:10:11,280
Speaker 5: To get elective procedures, hip proscedures, things that they really

202
00:10:11,320 --> 00:10:15,320
Speaker 5: postponed during the pandemic. That's really good for any provider,

203
00:10:15,480 --> 00:10:22,080
Speaker 5: so HGA, big hospital companies, Tenant, Universal Surgery Partners. You know,

204
00:10:22,120 --> 00:10:25,160
Speaker 5: I don't came a medtech but meta companies, any company

205
00:10:25,160 --> 00:10:28,000
Speaker 5: that provides healthcare. It's been a little bit more difficult

206
00:10:28,000 --> 00:10:31,280
Speaker 5: for managed care companies this earning season, especially managed care

207
00:10:31,280 --> 00:10:35,679
Speaker 5: companies that have exposure to Medicare because it's the Medicare beneficiaries,

208
00:10:36,040 --> 00:10:38,959
Speaker 5: they tend to use the system more and they were

209
00:10:39,000 --> 00:10:40,920
Speaker 5: the ones that really didn't want to go into the

210
00:10:40,960 --> 00:10:45,160
Speaker 5: system during the pandemic, So we're seeing increased utilization which

211
00:10:45,200 --> 00:10:47,920
Speaker 5: is really heard in the stocks here to date, whereas

212
00:10:47,920 --> 00:10:50,520
Speaker 5: you have the hospital providers that are really outperforming.

213
00:10:51,000 --> 00:10:53,520
Speaker 4: And to your point, I mean looking at stocks like

214
00:10:54,040 --> 00:10:58,840
Speaker 4: Humanity ticker symbol HUM that's down about thirteen percent year

215
00:10:58,880 --> 00:11:03,080
Speaker 4: to date. Also looking over at what's happening with un AH,

216
00:11:03,200 --> 00:11:05,640
Speaker 4: also down about five percent, but the other side of

217
00:11:05,679 --> 00:11:09,440
Speaker 4: that HCA Healthcare that's up about twenty percent, and then

218
00:11:09,600 --> 00:11:14,199
Speaker 4: Tenant Healthcare looking at that ticker symbol THC up almost

219
00:11:14,240 --> 00:11:17,320
Speaker 4: sixty percent. How much longer do you think when we're

220
00:11:17,320 --> 00:11:20,080
Speaker 4: looking at those types of stocks like Tenant and then

221
00:11:20,200 --> 00:11:23,400
Speaker 4: also when it comes to HCA, how long and how

222
00:11:23,480 --> 00:11:25,400
Speaker 4: much more room it could have for those stocks to

223
00:11:25,480 --> 00:11:26,440
Speaker 4: keep moving higher.

224
00:11:27,720 --> 00:11:30,240
Speaker 5: I would argue there is room to move higher for

225
00:11:30,280 --> 00:11:34,000
Speaker 5: two reasons. One earnings, and I like to prefer the

226
00:11:34,080 --> 00:11:38,280
Speaker 5: baseline earnings pre pandemic ex COVID. They are still hampered

227
00:11:38,320 --> 00:11:40,880
Speaker 5: because of labor costs. So to put it in perspective,

228
00:11:41,559 --> 00:11:44,599
Speaker 5: before the pandemic, HDA has been about nine hundred and

229
00:11:44,679 --> 00:11:47,600
Speaker 5: ninety million on temporary labor and at the height of

230
00:11:47,600 --> 00:11:50,440
Speaker 5: the pandemic, the company has been two point five billion.

231
00:11:50,840 --> 00:11:54,520
Speaker 5: That's a twelve percent EBITA headwind, a headwind to EBITA,

232
00:11:55,080 --> 00:11:57,640
Speaker 5: and if you annualize the last quarter, it's still a

233
00:11:57,720 --> 00:11:59,520
Speaker 5: two billion, so it's very elevated.

234
00:11:59,640 --> 00:12:02,520
Speaker 6: So there's there's a lot of drivers for upside.

235
00:12:02,720 --> 00:12:06,560
Speaker 5: For a company like HGA and Tenant because temporary labor

236
00:12:06,679 --> 00:12:10,080
Speaker 5: is coming down slowly, but it's coming down. And then

237
00:12:10,120 --> 00:12:13,080
Speaker 5: you also have this pent up demand utilization that's coming

238
00:12:13,120 --> 00:12:15,720
Speaker 5: back to the system. And if you look at Medicare,

239
00:12:16,000 --> 00:12:19,240
Speaker 5: they were I would say you have probably a two

240
00:12:19,320 --> 00:12:23,320
Speaker 5: year window of people catching up with procedures that they

241
00:12:23,320 --> 00:12:24,560
Speaker 5: didn't do during the pandemic.

242
00:12:26,080 --> 00:12:28,800
Speaker 1: So as you talk to your institution, investor, clients, and

243
00:12:28,840 --> 00:12:31,040
Speaker 1: what are the topics that come up the most, what

244
00:12:31,120 --> 00:12:34,520
Speaker 1: do you find yourself explaining or you know, kind of

245
00:12:34,559 --> 00:12:35,640
Speaker 1: discussing with your clients.

246
00:12:36,400 --> 00:12:37,239
Speaker 6: I'm utilization.

247
00:12:37,400 --> 00:12:41,360
Speaker 5: So it's all about healthcare utilization, but also pricing what

248
00:12:41,600 --> 00:12:44,920
Speaker 5: managed care companies price into their bids for twenty twenty

249
00:12:44,960 --> 00:12:48,440
Speaker 5: four and did capture this utilization. I think all the

250
00:12:48,480 --> 00:12:51,040
Speaker 5: companies expected utilization.

251
00:12:50,559 --> 00:12:51,360
Speaker 6: To come back.

252
00:12:51,840 --> 00:12:53,960
Speaker 5: I think they probably expected it to come back more

253
00:12:54,000 --> 00:12:58,160
Speaker 5: over twenty twenty three twenty twenty four in twenty twenty five,

254
00:12:58,280 --> 00:13:01,760
Speaker 5: and a reason for that is nursing is an issue.

255
00:13:01,880 --> 00:13:03,439
Speaker 6: A lot of nurses left the field.

256
00:13:04,120 --> 00:13:06,880
Speaker 5: It caused capacity constraints, and I think what we're seeing

257
00:13:06,880 --> 00:13:11,040
Speaker 5: in twenty twenty three is more capacity opening that people

258
00:13:11,080 --> 00:13:14,920
Speaker 5: probably expected. So I would think that's the main thing.

259
00:13:15,000 --> 00:13:17,800
Speaker 5: And to your question, how long can the hospitals run?

260
00:13:18,200 --> 00:13:21,640
Speaker 5: And I would argue companies that have earning upside, they

261
00:13:21,720 --> 00:13:22,920
Speaker 5: usually go up and not down.

262
00:13:24,080 --> 00:13:26,320
Speaker 1: So just so on the on the labor front, I

263
00:13:26,320 --> 00:13:28,480
Speaker 1: mean at granted, I mean you just think back to

264
00:13:28,520 --> 00:13:31,680
Speaker 1: the pandemic and the conditions under which all the healthcare

265
00:13:31,720 --> 00:13:34,400
Speaker 1: providers had to operate. I mean they're just you know, saints,

266
00:13:34,440 --> 00:13:37,400
Speaker 1: every one of them. But as you mentioned, a high

267
00:13:37,480 --> 00:13:40,920
Speaker 1: toll on turnover in that space. So is this an

268
00:13:40,920 --> 00:13:45,560
Speaker 1: industry that just chronically is short on nurses and maybe

269
00:13:45,559 --> 00:13:48,080
Speaker 1: to lesser extent, doctors. Is that something that's kind of

270
00:13:48,080 --> 00:13:50,880
Speaker 1: a chronic issue for the industry to a.

271
00:13:50,960 --> 00:13:55,079
Speaker 5: Agree, But what happened during the pandemic is that you

272
00:13:55,120 --> 00:13:57,240
Speaker 5: have what we have a permanent nurse, a permanent nurse

273
00:13:57,280 --> 00:13:59,960
Speaker 5: that obvious works full time, and then you have nurse

274
00:14:00,200 --> 00:14:02,800
Speaker 5: who like to travel they get paid a little bit

275
00:14:03,520 --> 00:14:05,360
Speaker 5: a little bit more on an hour, but they tend

276
00:14:05,400 --> 00:14:07,679
Speaker 5: to travel. And what happened during the pandemic there was

277
00:14:07,720 --> 00:14:11,320
Speaker 5: such a high demand, you had this phenomena that permanent

278
00:14:11,400 --> 00:14:16,360
Speaker 5: nurses went temporary to get the higher hourly rage. Like

279
00:14:16,400 --> 00:14:19,680
Speaker 5: to primitent perspective, a nurse might make fifty dollars an hour,

280
00:14:19,840 --> 00:14:22,880
Speaker 5: but at the height pandemic, they were making.

281
00:14:22,680 --> 00:14:24,000
Speaker 6: Two hundred and fifty dollars an hour.

282
00:14:24,400 --> 00:14:26,360
Speaker 5: I think what we're seeing is that some of these

283
00:14:26,440 --> 00:14:29,440
Speaker 5: nurses that left their permanent position, they're coming back to

284
00:14:29,720 --> 00:14:34,560
Speaker 5: full time positions in the workforce. But there's also a

285
00:14:34,640 --> 00:14:37,840
Speaker 5: part that the average age of the nurses about fifty.

286
00:14:38,600 --> 00:14:41,480
Speaker 5: Maybe that nurse is working less hours, less shifts.

287
00:14:42,080 --> 00:14:43,760
Speaker 6: So it's a combination of both.

288
00:14:45,480 --> 00:14:47,760
Speaker 4: And to Ball's point, because he was asking about some

289
00:14:47,800 --> 00:14:50,600
Speaker 4: of the top questions you're getting, what about the top

290
00:14:50,680 --> 00:14:54,280
Speaker 4: concerns among some of your clients as far as what

291
00:14:54,320 --> 00:14:57,000
Speaker 4: this could mean as far as the outlook moving forward.

292
00:14:57,960 --> 00:15:00,680
Speaker 5: I would say the top concerns, like get is on

293
00:15:00,760 --> 00:15:03,760
Speaker 5: the managed care sector because they have a few headwinds

294
00:15:03,800 --> 00:15:07,640
Speaker 5: coming up. There's some changes to Medicare reimbursement that would

295
00:15:07,760 --> 00:15:10,880
Speaker 5: impact Medicare advantage plans, and the big thing is all

296
00:15:10,880 --> 00:15:14,400
Speaker 5: also Medicaid we determinations because I'm sure you know the

297
00:15:14,440 --> 00:15:17,680
Speaker 5: Medicaid rolls to well during the pandemic. Because of the

298
00:15:17,680 --> 00:15:21,160
Speaker 5: public health emergency, states would not allow to redetermine anyone

299
00:15:21,160 --> 00:15:24,360
Speaker 5: on Medicaid and that ended in April, and over the

300
00:15:24,400 --> 00:15:27,160
Speaker 5: next twelve to fourteen months, states will be rolling.

301
00:15:28,520 --> 00:15:30,880
Speaker 6: Beneficiary is off. And that just causes a.

302
00:15:30,840 --> 00:15:33,040
Speaker 5: Lot of uncertainty with numbers because a lot of these

303
00:15:33,040 --> 00:15:36,720
Speaker 5: companies didn't benefit benefit from the public health emergency.

304
00:15:37,640 --> 00:15:40,520
Speaker 1: All right, and top picks, what are you talking to

305
00:15:40,560 --> 00:15:43,760
Speaker 1: your clients about? What do you like right here going forward?

306
00:15:44,640 --> 00:15:46,800
Speaker 5: So I would say a top pick on the managed

307
00:15:46,840 --> 00:15:50,200
Speaker 5: care side are Signa and Elevance and singing that for

308
00:15:50,280 --> 00:15:52,960
Speaker 5: two reasons. One, they don't have a lot of Medicare

309
00:15:52,960 --> 00:15:56,760
Speaker 5: advantage exposure, so a lot of the changes to reimbursement's

310
00:15:56,800 --> 00:15:58,600
Speaker 5: not going to impact them. And they also don't have

311
00:15:58,760 --> 00:16:02,600
Speaker 5: a lot of Medicaid determined exposure. So the two biggest

312
00:16:02,640 --> 00:16:04,280
Speaker 5: worries in the managecure sector they don't.

313
00:16:04,160 --> 00:16:05,120
Speaker 6: Have a lot of exposure to.

314
00:16:05,680 --> 00:16:08,120
Speaker 5: There is some risk with PBM legislation, but I would

315
00:16:08,200 --> 00:16:12,240
Speaker 5: argue that's already based in valuation at about ten times

316
00:16:12,240 --> 00:16:13,680
Speaker 5: twenty twenty four earnings.

317
00:16:14,680 --> 00:16:15,440
Speaker 6: I also like.

318
00:16:15,520 --> 00:16:18,760
Speaker 5: I still like HGA, just because despite the run, there

319
00:16:18,840 --> 00:16:20,920
Speaker 5: is a lot of upside to earnings in my opinion

320
00:16:21,520 --> 00:16:23,680
Speaker 5: for twenty twenty three and twenty twenty four.

321
00:16:24,000 --> 00:16:27,840
Speaker 4: And when you're talking about legislation, are there anything in

322
00:16:27,880 --> 00:16:30,760
Speaker 4: particular coming up on Capitol Hill that you think infesstors

323
00:16:30,760 --> 00:16:32,960
Speaker 4: should keep their eyes on when it comes to potential

324
00:16:33,160 --> 00:16:35,680
Speaker 4: maybe regulations that could affect some of these companies.

325
00:16:36,680 --> 00:16:41,880
Speaker 5: Yes, so Congress wants to pass PPM legislation that has

326
00:16:41,920 --> 00:16:46,280
Speaker 5: that will result in increased regulatory scrutiny on the PBM.

327
00:16:46,440 --> 00:16:49,880
Speaker 5: So companies with the biggest exposure would be United Healthcare

328
00:16:50,560 --> 00:16:55,360
Speaker 5: CBS and Signa that's pretty well known. But the question

329
00:16:55,440 --> 00:16:57,880
Speaker 5: is that if there's going to be a legislative vehicle.

330
00:16:58,440 --> 00:17:01,239
Speaker 5: I believe there will be a legislator vehicle in December.

331
00:17:01,560 --> 00:17:04,639
Speaker 5: And I'm also a believer that this has been a

332
00:17:04,680 --> 00:17:07,000
Speaker 5: headline of us for a long time, and I think

333
00:17:07,040 --> 00:17:11,000
Speaker 5: any type of legislation that passes will have not going

334
00:17:11,000 --> 00:17:13,200
Speaker 5: to walk to twenty twenty six, which will allow these

335
00:17:13,200 --> 00:17:18,080
Speaker 5: PBMs to change language and their contracts. So when all

336
00:17:18,080 --> 00:17:19,960
Speaker 5: of a sudden done. I actually don't think it will

337
00:17:19,960 --> 00:17:22,440
Speaker 5: have a meaningful impact on EPs, and it should remove

338
00:17:22,440 --> 00:17:25,320
Speaker 5: a headline risk and we should get more details on that,

339
00:17:25,440 --> 00:17:27,880
Speaker 5: but not until December. But that's the major thing because

340
00:17:27,920 --> 00:17:31,000
Speaker 5: typically in healthcare, when there's a balance of power in Washington,

341
00:17:31,560 --> 00:17:33,679
Speaker 5: not a lot of healthcare legislation is passed.

342
00:17:34,520 --> 00:17:37,479
Speaker 1: And just about thirty seconds here, drug distributors, you're neutral

343
00:17:37,520 --> 00:17:40,280
Speaker 1: on that group? Why really?

344
00:17:40,480 --> 00:17:41,000
Speaker 6: Valuation?

345
00:17:41,119 --> 00:17:43,640
Speaker 5: They've had a great run for a long time and

346
00:17:44,520 --> 00:17:48,600
Speaker 5: they're reaching their ten year highs. Earnings visibility is very good.

347
00:17:49,359 --> 00:17:51,399
Speaker 5: But I do think it's a crowded sector. It's a

348
00:17:51,400 --> 00:17:53,480
Speaker 5: sector that a lot of journalists went in over the

349
00:17:53,480 --> 00:17:55,560
Speaker 5: past couple of years when there was a lot of

350
00:17:56,280 --> 00:17:59,000
Speaker 5: uncertainty in the market. But they are great companies and

351
00:17:59,000 --> 00:18:00,520
Speaker 5: it's more valuation anything.

352
00:18:00,680 --> 00:18:02,399
Speaker 1: All right, And thanks so much for giving us some

353
00:18:02,400 --> 00:18:05,840
Speaker 1: of your time. An Heinz's senior healthcare Services Equity. An

354
00:18:06,040 --> 00:18:07,880
Speaker 1: she's a managinging director over at Mizuho.

355
00:18:08,240 --> 00:18:11,359
Speaker 7: You're listening to the tape. Cat's are live program Bloomberg

356
00:18:11,440 --> 00:18:15,000
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

357
00:18:15,080 --> 00:18:18,320
Speaker 7: tune in app, Bloomberg Dot com and the Bloomberg Business App.

358
00:18:18,359 --> 00:18:21,159
Speaker 7: You can also listen live on Amazon Alexa from our

359
00:18:21,160 --> 00:18:26,240
Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

360
00:18:27,320 --> 00:18:29,680
Speaker 4: We want to switch things up for our next segment

361
00:18:29,800 --> 00:18:34,040
Speaker 4: and do an energy outlook. And I'm excited because we

362
00:18:34,200 --> 00:18:39,040
Speaker 4: do have in studio here Jonathan Maxwell, who's CEO at

363
00:18:39,119 --> 00:18:42,840
Speaker 4: Sustainable Development Capital, who's joining us to discuss the outlook

364
00:18:42,880 --> 00:18:46,840
Speaker 4: on oil and the renewable energy markets, particularly with the

365
00:18:46,880 --> 00:18:50,040
Speaker 4: growth of tessel this year in the emergence of v evs.

366
00:18:50,160 --> 00:18:52,320
Speaker 4: But before I actually get into that, I have to

367
00:18:52,400 --> 00:18:57,520
Speaker 4: ask you about Ukraine. And we're seeing wheat prices soaring today.

368
00:18:57,600 --> 00:18:59,760
Speaker 4: It's actually their three day gain is more than ten

369
00:18:59,760 --> 00:19:02,280
Speaker 4: per after the US did warn that Russia has laid

370
00:19:02,359 --> 00:19:05,800
Speaker 4: mines at Ukrainian grain ports. Now you've written a book

371
00:19:05,880 --> 00:19:09,320
Speaker 4: recently tied to Ukraine. What's your take on this and

372
00:19:09,359 --> 00:19:11,280
Speaker 4: how does this mean in what does it mean for

373
00:19:11,320 --> 00:19:12,800
Speaker 4: the energy and commodity space.

374
00:19:13,200 --> 00:19:17,159
Speaker 8: I think it has a huge story around resources and

375
00:19:17,240 --> 00:19:23,240
Speaker 8: conflict over resources. Ukraine was really the conduit prior to

376
00:19:23,240 --> 00:19:27,680
Speaker 8: the Russia Ukraine crisis for Russia's exports of oil and

377
00:19:28,280 --> 00:19:31,320
Speaker 8: sorry of gas. Into Europe its pipe. It was piped

378
00:19:31,359 --> 00:19:35,520
Speaker 8: through Ukraine. Europe needed to get forty percent of its

379
00:19:35,560 --> 00:19:41,400
Speaker 8: gas from Russia. That's over. We saw energy prices skyrocket

380
00:19:41,680 --> 00:19:44,200
Speaker 8: last year. We saw energy in Europe. We saw energy

381
00:19:44,240 --> 00:19:47,080
Speaker 8: security become front page news in a way that it

382
00:19:47,160 --> 00:19:51,879
Speaker 8: never had before. So the link between Ukraine and resources

383
00:19:52,920 --> 00:19:56,360
Speaker 8: was the big headline last year was energy. Now, there

384
00:19:56,400 --> 00:20:00,360
Speaker 8: was a deal struck which kept grain exports and other

385
00:20:00,840 --> 00:20:05,320
Speaker 8: really critical resource exports going out of Ukraine. But Ukraine

386
00:20:05,359 --> 00:20:09,760
Speaker 8: is one of the most important resource stories in the world.

387
00:20:10,200 --> 00:20:14,280
Speaker 8: After America became energy independent in twenty nineteen, really this

388
00:20:15,080 --> 00:20:19,159
Speaker 8: resource arena has shifted now into eastern Europe. You know,

389
00:20:19,359 --> 00:20:22,720
Speaker 8: Russia and Ukraine are really the nexus for the balancing

390
00:20:22,760 --> 00:20:25,639
Speaker 8: demand around or supply and demand around oil and gas

391
00:20:26,200 --> 00:20:28,720
Speaker 8: on the one hand, another resources like grain on the other.

392
00:20:28,840 --> 00:20:33,159
Speaker 8: So what we're seeing is a conflict which is partly

393
00:20:33,280 --> 00:20:36,720
Speaker 8: driven by conflict over resources, but also it's having a

394
00:20:36,760 --> 00:20:38,280
Speaker 8: dramatic impact on pricing.

395
00:20:38,800 --> 00:20:42,600
Speaker 1: All right, So, as sustainable development capital, you guys look

396
00:20:42,640 --> 00:20:46,320
Speaker 1: at kind of I guess this challenge about being sustainable,

397
00:20:46,320 --> 00:20:48,639
Speaker 1: being eco friendly a little bit differently. Talk to us

398
00:20:48,640 --> 00:20:51,199
Speaker 1: about the types of investments you make there. What do

399
00:20:51,240 --> 00:20:53,320
Speaker 1: you like to what do you think you can add value?

400
00:20:53,520 --> 00:20:53,680
Speaker 6: Right?

401
00:20:53,760 --> 00:20:57,560
Speaker 8: Well, you know, one of the major responses that came

402
00:20:57,600 --> 00:20:59,200
Speaker 8: up telling it back to Russia Ukraine. One of the

403
00:20:59,240 --> 00:21:02,119
Speaker 8: major responses happened last year is given the fact that

404
00:21:02,240 --> 00:21:04,800
Speaker 8: energy was being constrained in Europe, what should we do

405
00:21:04,880 --> 00:21:05,280
Speaker 8: about it?

406
00:21:05,480 --> 00:21:05,800
Speaker 4: So what?

407
00:21:06,359 --> 00:21:10,200
Speaker 8: So there was a huge response build more energy, add

408
00:21:10,240 --> 00:21:14,960
Speaker 8: more into the system, mostly renewable energy, until until it

409
00:21:15,000 --> 00:21:18,200
Speaker 8: became clear how long that would take and how much

410
00:21:18,320 --> 00:21:20,920
Speaker 8: money that would take, and the fact that that wasn't

411
00:21:20,920 --> 00:21:23,640
Speaker 8: going to address energy security in the short term. In fact,

412
00:21:23,680 --> 00:21:27,640
Speaker 8: there was an echo of the European Commissioner for Energy's

413
00:21:27,640 --> 00:21:31,080
Speaker 8: response from the twenty fourteen invasion, which was really important

414
00:21:31,080 --> 00:21:33,639
Speaker 8: in Europe last year. They said, for every every unit

415
00:21:33,720 --> 00:21:37,480
Speaker 8: of gas that we don't use, is two point six

416
00:21:37,600 --> 00:21:39,840
Speaker 8: units of gas we don't need to buy from Russia.

417
00:21:39,920 --> 00:21:43,840
Speaker 8: So the implication was, actually, we're wasting so much energy,

418
00:21:44,000 --> 00:21:47,159
Speaker 8: and about seventy percent of energy gets lost somewhere between

419
00:21:47,160 --> 00:21:49,520
Speaker 8: getting extracted and used. But if you can stop, that's

420
00:21:49,560 --> 00:21:49,920
Speaker 8: the number.

421
00:21:49,960 --> 00:21:50,159
Speaker 7: I like.

422
00:21:50,160 --> 00:21:51,560
Speaker 1: That's because I remember that from last time.

423
00:21:52,000 --> 00:21:53,560
Speaker 7: One more time slowly for the Yeah.

424
00:21:53,920 --> 00:21:57,000
Speaker 8: So in the United States, the Lawrence Livermore National Laboratory

425
00:21:57,400 --> 00:22:00,760
Speaker 8: has charts each year produced everything year that show how

426
00:22:00,800 --> 00:22:03,320
Speaker 8: much energy gets lost from the point of extraction to

427
00:22:03,440 --> 00:22:07,000
Speaker 8: end use. About ten percent gets lost extracting and converting it.

428
00:22:07,320 --> 00:22:11,119
Speaker 8: About fifty percent gets lost in heat because energy is

429
00:22:11,160 --> 00:22:13,480
Speaker 8: generated typically in one place and used in a very

430
00:22:13,480 --> 00:22:15,679
Speaker 8: different place, and you can't do anything with the heat.

431
00:22:15,880 --> 00:22:18,840
Speaker 8: And then another ten percent gets lost in transmission and distribution.

432
00:22:19,119 --> 00:22:21,520
Speaker 8: This is the basic fact of the way that we've

433
00:22:21,520 --> 00:22:24,440
Speaker 8: done energies centralized energy systems, not just in the US,

434
00:22:24,480 --> 00:22:27,000
Speaker 8: but in the UK, Europe, everywhere, and that is the

435
00:22:27,080 --> 00:22:28,679
Speaker 8: part of the problem that needs to be solved.

436
00:22:28,720 --> 00:22:28,880
Speaker 7: Here.

437
00:22:28,920 --> 00:22:31,080
Speaker 8: We are trying to add more energy into the system,

438
00:22:31,160 --> 00:22:34,760
Speaker 8: but the system's broken. It's unbelievably inefficient. And if we

439
00:22:34,760 --> 00:22:37,760
Speaker 8: can generate energy close to or at the point that's

440
00:22:37,800 --> 00:22:41,080
Speaker 8: needed and stop wasting so much at the point of use,

441
00:22:41,200 --> 00:22:43,960
Speaker 8: ten twenty percent plus is typically wasted at the point

442
00:22:44,000 --> 00:22:47,719
Speaker 8: of use, that's one of the most important largest sources

443
00:22:47,760 --> 00:22:53,400
Speaker 8: of productivity economic gain, let alone carbon emission reductions available

444
00:22:53,480 --> 00:22:53,880
Speaker 8: and worth.

445
00:22:54,359 --> 00:22:57,200
Speaker 4: So then what is the key to reducing energy ways

446
00:22:57,280 --> 00:22:58,840
Speaker 4: to meet climate goals?

447
00:22:58,920 --> 00:22:59,400
Speaker 6: Ultimately?

448
00:23:00,200 --> 00:23:04,400
Speaker 8: So I think the first point is generate energy were

449
00:23:04,440 --> 00:23:07,080
Speaker 8: it close to or at the point of view. So

450
00:23:07,920 --> 00:23:09,200
Speaker 8: let's look at the big problems.

451
00:23:09,280 --> 00:23:09,399
Speaker 7: Right.

452
00:23:09,440 --> 00:23:11,800
Speaker 8: Electricity is being greened, which is great, but it gets

453
00:23:12,160 --> 00:23:15,440
Speaker 8: used mostly a residential context. If you look at industry,

454
00:23:15,520 --> 00:23:18,320
Speaker 8: eighty five percent of industry is driven by fossil fuels,

455
00:23:18,400 --> 00:23:20,639
Speaker 8: ninety eight percent of transports. So what can you do

456
00:23:20,720 --> 00:23:23,280
Speaker 8: about that? You can generate the energy close to the

457
00:23:23,280 --> 00:23:25,720
Speaker 8: point of use. So if you even if you're using

458
00:23:25,760 --> 00:23:27,880
Speaker 8: natural gas, capture the heat and use it for heat

459
00:23:27,920 --> 00:23:31,720
Speaker 8: processing an industry. If you can do that by recycling

460
00:23:31,720 --> 00:23:34,439
Speaker 8: waste gases. On one of our funds, we earn a

461
00:23:34,520 --> 00:23:39,280
Speaker 8: huge recycling project up in Indiana, Gary, Indiana where we

462
00:23:39,320 --> 00:23:42,280
Speaker 8: recycle flue gases and use that to power the steel mills.

463
00:23:42,720 --> 00:23:46,639
Speaker 8: So these sorts of a solar on site, solar on

464
00:23:46,760 --> 00:23:49,800
Speaker 8: site storage, it's a massive part of the solution. The

465
00:23:49,880 --> 00:23:52,800
Speaker 8: second part is actually just stopping wasting so much inside

466
00:23:52,800 --> 00:23:58,520
Speaker 8: of buildings, motors, controls, lighting. You know, these are heating, ventilation,

467
00:23:59,080 --> 00:24:02,840
Speaker 8: air conditioning, cool as the warm weather heats up the world.

468
00:24:02,880 --> 00:24:04,320
Speaker 8: So these are the things that are going to make

469
00:24:04,359 --> 00:24:07,639
Speaker 8: a tremendous difference and can be done quickly. It takes

470
00:24:08,119 --> 00:24:10,640
Speaker 8: years to build a new renewable power system. We need

471
00:24:10,640 --> 00:24:12,600
Speaker 8: to do as much of that as possible, but it

472
00:24:12,640 --> 00:24:16,880
Speaker 8: takes months, maybe a couple of years to do any

473
00:24:16,960 --> 00:24:19,080
Speaker 8: of the things that I'm discussing in terms of generating

474
00:24:19,200 --> 00:24:21,600
Speaker 8: energy on site or indeed reducing demand.

475
00:24:21,400 --> 00:24:25,119
Speaker 1: For So, what's a recent investment that your funds have

476
00:24:25,240 --> 00:24:27,320
Speaker 1: made that you're very excited about.

477
00:24:27,640 --> 00:24:30,720
Speaker 8: So I was in Upstate New York yesterday. We've owned

478
00:24:31,080 --> 00:24:34,080
Speaker 8: one of the largest district energy systems in the United States,

479
00:24:34,320 --> 00:24:36,680
Speaker 8: and that provides energy on site to one hundred and

480
00:24:36,760 --> 00:24:41,280
Speaker 8: twenty customers in Rochester Business Park. We own an investment

481
00:24:41,920 --> 00:24:45,440
Speaker 8: in a company here in Manhattan which is called Onyx Renewables,

482
00:24:45,480 --> 00:24:49,119
Speaker 8: which does solar and storage nationwide, and that produces on

483
00:24:49,280 --> 00:24:52,520
Speaker 8: site generation on people's rooftops, car ports, or in the ground,

484
00:24:52,560 --> 00:24:56,520
Speaker 8: but were connected directly to buildings producing low carbon, low

485
00:24:56,560 --> 00:25:00,679
Speaker 8: cost energy solutions. On the electric vehicle side, this is

486
00:25:00,720 --> 00:25:06,320
Speaker 8: a huge opportunity electric vehicles around eighty percent efficient versus

487
00:25:06,320 --> 00:25:10,560
Speaker 8: about thirty percent efficient.

488
00:25:08,440 --> 00:25:12,879
Speaker 1: Efficient versus thirty percent efficient for internal combustion. Yeah, so

489
00:25:13,160 --> 00:25:15,320
Speaker 1: do you how do you define that? Like, what's what's efficient?

490
00:25:15,480 --> 00:25:15,640
Speaker 7: Right?

491
00:25:15,680 --> 00:25:18,640
Speaker 8: So, if you track the energy, the primary energy coming

492
00:25:18,680 --> 00:25:20,439
Speaker 8: out of a well what they call well to wheel,

493
00:25:20,600 --> 00:25:22,679
Speaker 8: and you sort of you track the journey of the

494
00:25:22,720 --> 00:25:26,720
Speaker 8: molecule to exactly what survives through the engine get lost

495
00:25:27,000 --> 00:25:29,960
Speaker 8: through the generation, transmission, et cetera. It's roughly thirty percent.

496
00:25:30,000 --> 00:25:33,719
Speaker 8: And an internal combustion engine what they call wind to wheel,

497
00:25:33,760 --> 00:25:36,240
Speaker 8: that is taking the electricity out of a renewable power

498
00:25:36,280 --> 00:25:39,639
Speaker 8: plant and the electricity broadly survives to get into the

499
00:25:39,640 --> 00:25:43,000
Speaker 8: car and then that is then converted into power that

500
00:25:43,080 --> 00:25:46,600
Speaker 8: actually goes along and moves this vehicle along. So it's

501
00:25:46,640 --> 00:25:51,280
Speaker 8: it's very efficient. It's also frankly, yes, it will help

502
00:25:51,480 --> 00:25:54,240
Speaker 8: reduce demand hopefully and displace fossil fuel use, but it

503
00:25:54,280 --> 00:25:58,240
Speaker 8: also cuts pollution in town. So even even if you're

504
00:25:58,280 --> 00:26:01,240
Speaker 8: not into the climate and you're ailing too and you

505
00:26:01,280 --> 00:26:05,080
Speaker 8: don't like greenwashing or green hushing, then surely you don't

506
00:26:05,080 --> 00:26:07,520
Speaker 8: want your kids to grow up in cities there were

507
00:26:07,560 --> 00:26:10,000
Speaker 8: three or four times the level considered safe by the

508
00:26:10,000 --> 00:26:13,320
Speaker 8: World Health Organization, like my hometown of London because of

509
00:26:13,320 --> 00:26:16,160
Speaker 8: the cars to Texas and buses. So it's those sorts

510
00:26:16,160 --> 00:26:18,920
Speaker 8: of things where you've got efficiency combined with better outcomes

511
00:26:18,920 --> 00:26:19,399
Speaker 8: for people.

512
00:26:20,960 --> 00:26:22,680
Speaker 1: We're having you back the next time you're in New York.

513
00:26:22,720 --> 00:26:23,840
Speaker 1: I know you said you're back here a lot and

514
00:26:23,960 --> 00:26:27,080
Speaker 1: back in New Orkrin get continue this conversation. Jonathan Maxwell's CEO,

515
00:26:27,160 --> 00:26:30,320
Speaker 1: co founder Sustainable Development Capital.

516
00:26:30,359 --> 00:26:33,040
Speaker 4: I like the Capital book out in the US and December.

517
00:26:34,400 --> 00:26:38,240
Speaker 7: You're listening to the Team Can't Live program Bloomberg Markets

518
00:26:38,280 --> 00:26:41,399
Speaker 7: weekdays at ten am Eastern on Bloomberg dot Com, the

519
00:26:41,440 --> 00:26:44,600
Speaker 7: iHeartRadio app, and the Bloomberg Business App, or listen on

520
00:26:44,680 --> 00:26:46,760
Speaker 7: demand wherever you get your podcasts.

521
00:26:48,560 --> 00:26:51,000
Speaker 1: So let's head down to Washington, DC. Joe Matthew, radio

522
00:26:51,040 --> 00:26:53,919
Speaker 1: and TV host Bloomberg's sound on in Bloomberg's Balance of

523
00:26:54,080 --> 00:26:58,600
Speaker 1: Power joins us. Joe, You and Anne Marie Hordern interviewed

524
00:26:58,680 --> 00:27:01,359
Speaker 1: Chris Christie on Bounce of Power last night. Here's a

525
00:27:01,359 --> 00:27:03,000
Speaker 1: clip of your discussion.

526
00:27:02,800 --> 00:27:06,840
Speaker 9: At our nation's secrets hanging out at Marvaco and at

527
00:27:07,040 --> 00:27:09,840
Speaker 9: his Bedminster golf club. Think about the risk that that

528
00:27:09,880 --> 00:27:13,119
Speaker 9: puts our men and women in uniform and our intelligence

529
00:27:13,160 --> 00:27:14,040
Speaker 9: officers ad.

530
00:27:14,359 --> 00:27:17,120
Speaker 1: That was a new Former New Jersey Governor Chris Christie's

531
00:27:17,119 --> 00:27:20,520
Speaker 1: also at presidential hopeful for twenty four. Joe talked to

532
00:27:20,560 --> 00:27:23,200
Speaker 1: us about kind of some of the highlights from your

533
00:27:23,240 --> 00:27:24,959
Speaker 1: discussion with mister Christy.

534
00:27:25,920 --> 00:27:28,159
Speaker 10: Well, we tried to take a different approach, as you

535
00:27:28,240 --> 00:27:31,200
Speaker 10: might have noticed, because every time I see Chris Christy

536
00:27:31,320 --> 00:27:34,320
Speaker 10: or hear Chris Christy in an interview, the entire thing

537
00:27:34,359 --> 00:27:36,119
Speaker 10: is about Donald Trump, and of course you have to

538
00:27:36,200 --> 00:27:38,800
Speaker 10: ask him about the front runner. But we tried to

539
00:27:38,800 --> 00:27:40,760
Speaker 10: be a little bit different here for our audience on

540
00:27:40,800 --> 00:27:43,160
Speaker 10: Luberg and actually talk about a couple of issues. I've

541
00:27:43,200 --> 00:27:46,720
Speaker 10: never heard him be asked about the economy, about inflation,

542
00:27:47,000 --> 00:27:50,880
Speaker 10: his thoughts on J. Powell, his thoughts on geopolitics, how

543
00:27:50,920 --> 00:27:54,680
Speaker 10: he would handle China, his thoughts on Taiwan. A lot

544
00:27:54,720 --> 00:27:57,800
Speaker 10: of things that we frankly learned for the first time

545
00:27:58,000 --> 00:28:00,359
Speaker 10: in that conversation last evening, and we you've got to

546
00:28:00,359 --> 00:28:02,840
Speaker 10: take a pretty deep dive with him on a number

547
00:28:02,920 --> 00:28:05,200
Speaker 10: of issues here. So yeah, when it comes to Donald Trump, look,

548
00:28:05,240 --> 00:28:08,080
Speaker 10: he's a former prosecutor and his view is that we

549
00:28:08,160 --> 00:28:11,040
Speaker 10: have already seen what could be the most damaging case

550
00:28:11,040 --> 00:28:13,640
Speaker 10: against him. That cut that you just played, he's talking

551
00:28:13,640 --> 00:28:15,959
Speaker 10: about the classified documents case, and he sees that as

552
00:28:16,000 --> 00:28:19,280
Speaker 10: the most damning legal action that the president former president

553
00:28:19,320 --> 00:28:21,000
Speaker 10: is facing right now, even as we wait for yet

554
00:28:21,119 --> 00:28:23,679
Speaker 10: another indictment likely to drop according to Donald Trump in

555
00:28:23,680 --> 00:28:24,440
Speaker 10: the next few days.

556
00:28:24,680 --> 00:28:27,800
Speaker 4: How do you think this shapes up for the race

557
00:28:27,880 --> 00:28:30,119
Speaker 4: for the election, especially when you're looking at this latest

558
00:28:30,119 --> 00:28:32,800
Speaker 4: poll from Warders where it has Trump up about forty

559
00:28:32,840 --> 00:28:35,040
Speaker 4: seven percent of support him on Republicans, and then you

560
00:28:35,080 --> 00:28:39,000
Speaker 4: look at Desanta's at abound nineteen percent, and kind of

561
00:28:39,000 --> 00:28:40,720
Speaker 4: what you think this could mean as far as from

562
00:28:40,720 --> 00:28:42,000
Speaker 4: a sentiment perspective.

563
00:28:43,560 --> 00:28:45,440
Speaker 10: Well, you know, first of all, I would just caution

564
00:28:45,560 --> 00:28:48,520
Speaker 10: everybody to throw a little bit of salt at you know,

565
00:28:48,640 --> 00:28:51,040
Speaker 10: more than one grain at any national poll right now,

566
00:28:51,080 --> 00:28:53,360
Speaker 10: because you know, if I bring you back to where

567
00:28:53,400 --> 00:28:55,880
Speaker 10: we were in the race in twenty sixteen, right now,

568
00:28:55,920 --> 00:28:58,640
Speaker 10: you'd be asking me when Jeb Bush was going to

569
00:28:58,640 --> 00:29:01,240
Speaker 10: move into the White House. You'd be asking me when

570
00:29:01,280 --> 00:29:04,400
Speaker 10: Scott Walker might be doing the same thing. Donald Trump,

571
00:29:04,440 --> 00:29:06,800
Speaker 10: I believe was around four percent at that point. Now

572
00:29:06,840 --> 00:29:10,680
Speaker 10: we cannot argue with this remarkable lead, this powerful lead

573
00:29:10,680 --> 00:29:13,240
Speaker 10: that Donald Trump has at the moment. You're asking the

574
00:29:13,280 --> 00:29:15,480
Speaker 10: right question about number two though, and we're watching Ron

575
00:29:15,520 --> 00:29:18,960
Speaker 10: DeSantis attempt to relaunch reset his campaign. He actually laid

576
00:29:18,960 --> 00:29:22,360
Speaker 10: off some workers, found himself spending too much money and

577
00:29:22,520 --> 00:29:27,360
Speaker 10: hard to rationalize a polling data set that's been dropping

578
00:29:27,480 --> 00:29:31,000
Speaker 10: essentially since he announced officially that he was coming into

579
00:29:31,040 --> 00:29:33,720
Speaker 10: the campaign. So Ron DeSantis is dealing with an identity

580
00:29:33,720 --> 00:29:35,320
Speaker 10: issue right now. He's trying to go out there and

581
00:29:35,360 --> 00:29:38,000
Speaker 10: do more mainstream media talk to people other than those

582
00:29:38,000 --> 00:29:41,360
Speaker 10: who agree with him, and it's really, frankly unclear. He's

583
00:29:41,360 --> 00:29:43,280
Speaker 10: got a massive apparatus in a lot of money, but

584
00:29:43,320 --> 00:29:45,800
Speaker 10: it's unclear that he can catch up to Donald Trump

585
00:29:45,800 --> 00:29:47,719
Speaker 10: at this stage of the race. It's going to require

586
00:29:47,720 --> 00:29:50,120
Speaker 10: an event, and I'll remind everybody's a big one next month,

587
00:29:50,120 --> 00:29:52,440
Speaker 10: and that's the debate, the first Republican debate that'll be

588
00:29:52,480 --> 00:29:55,600
Speaker 10: in Milwaukee that the RNC is running. And by the way,

589
00:29:55,640 --> 00:29:58,200
Speaker 10: the aforementioned Chris Christy is among candidates who made the

590
00:29:58,200 --> 00:30:00,280
Speaker 10: cut to go on that stage, but so far has

591
00:30:00,320 --> 00:30:03,360
Speaker 10: not taken the pledge as the RNC is asking everyone

592
00:30:03,400 --> 00:30:06,280
Speaker 10: to support the eventual nominee, because if you're Chris Christy,

593
00:30:06,320 --> 00:30:07,880
Speaker 10: you can't say you're going to vote for Donald Trump

594
00:30:07,920 --> 00:30:08,760
Speaker 10: if he does this again.

595
00:30:09,040 --> 00:30:09,200
Speaker 7: Right?

596
00:30:09,360 --> 00:30:12,640
Speaker 1: Interesting, All right, So, Joe, based upon your discussions with

597
00:30:12,640 --> 00:30:15,080
Speaker 1: Amory and the governor last night, what do you think

598
00:30:15,280 --> 00:30:20,280
Speaker 1: Governor Christy views as maybe his strategy going into the selection.

599
00:30:20,320 --> 00:30:22,560
Speaker 1: A lot of folks are just suggesting he's nothing more

600
00:30:22,600 --> 00:30:25,040
Speaker 1: than someone to just beat up on Donald Trump. But

601
00:30:25,240 --> 00:30:26,400
Speaker 1: what did you live last night?

602
00:30:27,200 --> 00:30:28,920
Speaker 10: I'm glad you asked that. It's the first question that

603
00:30:28,960 --> 00:30:31,280
Speaker 10: I asked him. You know, everyone knows that you're here

604
00:30:31,320 --> 00:30:33,000
Speaker 10: to be that you're the guy who's here to punch

605
00:30:33,040 --> 00:30:36,479
Speaker 10: Donald Trump in the nose rhetorically, that's your brand. And

606
00:30:36,520 --> 00:30:38,440
Speaker 10: many would argue, by the way, there would never have

607
00:30:38,520 --> 00:30:40,640
Speaker 10: been at Donald Trump without Chris Christie. You remember he

608
00:30:40,800 --> 00:30:42,880
Speaker 10: was to tell it like it is candy. Now he's

609
00:30:42,880 --> 00:30:47,280
Speaker 10: facing somebody who actually became president on that idea. But

610
00:30:47,480 --> 00:30:49,360
Speaker 10: there needs to be more than that. And when I

611
00:30:49,360 --> 00:30:51,280
Speaker 10: asked him about what is it that you know beyond

612
00:30:51,360 --> 00:30:55,440
Speaker 10: anti Trump? What is your brand? He said one word truth.

613
00:30:56,200 --> 00:30:58,120
Speaker 10: I'm the only guy up there who will tell you

614
00:30:58,160 --> 00:31:00,520
Speaker 10: the truth. Now, when you put that against some of

615
00:31:00,560 --> 00:31:04,200
Speaker 10: the policy positions that we discussed, you might actually have

616
00:31:04,240 --> 00:31:06,600
Speaker 10: a package there that a voter could consider. But when

617
00:31:06,920 --> 00:31:08,760
Speaker 10: you're looking at him, between six and eight percent of

618
00:31:08,800 --> 00:31:10,800
Speaker 10: the polls right now, he has yet to connect the

619
00:31:10,840 --> 00:31:12,600
Speaker 10: dots with voters in that way.

620
00:31:13,160 --> 00:31:17,240
Speaker 4: Have we heard from the Biden administration about Trump's legal

621
00:31:17,280 --> 00:31:18,240
Speaker 4: woes right now.

622
00:31:19,200 --> 00:31:21,360
Speaker 10: They're really careful to not talk about it. They don't

623
00:31:21,360 --> 00:31:24,280
Speaker 10: want anyone to think that there's any contact between the

624
00:31:24,280 --> 00:31:26,840
Speaker 10: President and Merrick Garland at the DOJ, never mind the

625
00:31:26,840 --> 00:31:30,160
Speaker 10: Special Council. These degrees of separation are really important to

626
00:31:30,160 --> 00:31:33,400
Speaker 10: the White House here because they're being accused of weaponizing

627
00:31:33,440 --> 00:31:35,440
Speaker 10: the Department of Justice. Even the Speaker of the House

628
00:31:35,480 --> 00:31:37,120
Speaker 10: said that the only reason it happened, he said, is

629
00:31:37,120 --> 00:31:40,600
Speaker 10: because Donald Trump's poll numbers are higher, which is a

630
00:31:40,600 --> 00:31:43,080
Speaker 10: little bit ridiculous because this investigation has been going on

631
00:31:43,120 --> 00:31:45,800
Speaker 10: for a lot longer than Donald Trump had this lead

632
00:31:45,800 --> 00:31:48,280
Speaker 10: in the polls. So for the White House, you know what,

633
00:31:48,320 --> 00:31:50,560
Speaker 10: they treat it just like they do the FED. They differ.

634
00:31:51,560 --> 00:31:54,440
Speaker 1: Joe, you're in Washington, DC, you're based in DC. You

635
00:31:54,520 --> 00:31:58,160
Speaker 1: talk to everybody here. What is your sense at this

636
00:31:58,320 --> 00:32:01,680
Speaker 1: early stage and what the Republican Party would like to see,

637
00:32:01,720 --> 00:32:03,520
Speaker 1: How would they like to see things develop, Who would

638
00:32:03,520 --> 00:32:05,480
Speaker 1: they like their nominee to be?

639
00:32:05,600 --> 00:32:06,040
Speaker 7: Do you think.

640
00:32:07,440 --> 00:32:11,440
Speaker 10: Impossible to answer because it's such a splintered party right now,

641
00:32:11,440 --> 00:32:14,360
Speaker 10: and that's really a challenge. If you're running the RNC,

642
00:32:14,560 --> 00:32:17,000
Speaker 10: you're trying to figure this out exactly, because thirty percent

643
00:32:17,080 --> 00:32:20,200
Speaker 10: are just hard locked behind Donald Trump. Even if he

644
00:32:20,200 --> 00:32:22,400
Speaker 10: does shoot somebody on Fifth Avenue, as he says, we're

645
00:32:22,440 --> 00:32:24,920
Speaker 10: starting to believe him there that they will not budge.

646
00:32:25,080 --> 00:32:27,560
Speaker 10: So now you're dealing with roughly seventy percent of the electorate,

647
00:32:28,000 --> 00:32:30,440
Speaker 10: and the more candidates jump in this thing, they're splintering

648
00:32:30,440 --> 00:32:32,720
Speaker 10: it along the way. I'm not sure anyone is resonating

649
00:32:33,240 --> 00:32:35,920
Speaker 10: other than Donald Trump in a significant way that you

650
00:32:35,960 --> 00:32:38,160
Speaker 10: could see them actually becoming the nominee. Yet, we have

651
00:32:38,240 --> 00:32:40,560
Speaker 10: to get some debates under our belt. We need something

652
00:32:40,600 --> 00:32:43,680
Speaker 10: to happen here. And I would also challenge the conventional

653
00:32:43,720 --> 00:32:46,440
Speaker 10: wisdom on the idea of another indictment for Donald Trump.

654
00:32:46,480 --> 00:32:48,080
Speaker 10: Well that may help him in the near term raise

655
00:32:48,120 --> 00:32:50,800
Speaker 10: money and lift his polls, we could be looking at

656
00:32:50,800 --> 00:32:52,880
Speaker 10: a very different dynamic with him walking into a re

657
00:32:52,960 --> 00:32:55,040
Speaker 10: election cycle if we call it that for him, as

658
00:32:55,040 --> 00:32:59,720
Speaker 10: a former president carrying four or five indictments, it would

659
00:32:59,720 --> 00:33:04,280
Speaker 10: be historic and there's no historical measure to how that

660
00:33:04,400 --> 00:33:05,520
Speaker 10: might impact the electorate.

661
00:33:06,640 --> 00:33:08,960
Speaker 1: And just from the same question from the Democratic side,

662
00:33:09,440 --> 00:33:13,920
Speaker 1: is a Democratic Party united behind President Biden making another

663
00:33:14,000 --> 00:33:14,440
Speaker 1: run here?

664
00:33:15,520 --> 00:33:17,760
Speaker 10: You know, as much as it's going to be, there's

665
00:33:17,800 --> 00:33:21,560
Speaker 10: no clear alternative. And while some have asked, if you know,

666
00:33:21,640 --> 00:33:24,440
Speaker 10: the president should drop out here and bring in a

667
00:33:24,480 --> 00:33:27,320
Speaker 10: younger Democrat, no one exactly is raising their hands for

668
00:33:27,400 --> 00:33:28,840
Speaker 10: that right now. So I think as long as he

669
00:33:28,880 --> 00:33:31,440
Speaker 10: wants to do this, it's probably his. But if you

670
00:33:31,480 --> 00:33:36,360
Speaker 10: look at the poll yesterday from Quinnipiac University, it found

671
00:33:36,360 --> 00:33:39,440
Speaker 10: that nearly half I believe it was forty seven percent

672
00:33:39,480 --> 00:33:44,240
Speaker 10: of voters from both parties would like to see somebody

673
00:33:44,280 --> 00:33:47,960
Speaker 10: other than not only the names we're talking about, Paul,

674
00:33:48,000 --> 00:33:51,280
Speaker 10: but they want to see a third party candidate, and

675
00:33:51,320 --> 00:33:53,040
Speaker 10: that brings us to this whole idea of the No

676
00:33:53,240 --> 00:33:56,560
Speaker 10: Labels Party. They held a big event in New Hampshire

677
00:33:56,600 --> 00:34:00,480
Speaker 10: this week with Joe Manchin, and that's the one thing

678
00:34:00,520 --> 00:34:03,080
Speaker 10: that upsets Democrats when you ask them about a third party,

679
00:34:03,560 --> 00:34:06,600
Speaker 10: they say that is the most surefireway to reelect Donald Trump.

680
00:34:07,040 --> 00:34:08,880
Speaker 10: That is what would keep Joe Biden out of the

681
00:34:08,880 --> 00:34:09,359
Speaker 10: White House.

682
00:34:09,400 --> 00:34:12,320
Speaker 1: All right, Joe, great, great analysis as always Joe Matthew.

683
00:34:12,800 --> 00:34:15,520
Speaker 1: He is host of Bloomberg Sound On and Bloomberg's Balance

684
00:34:15,560 --> 00:34:18,160
Speaker 1: of Power, Bounce of Power on Television, Sound On on Radio.

685
00:34:18,200 --> 00:34:22,560
Speaker 1: So Joe Matthew is our multimedia Washington, DC source, and

686
00:34:22,600 --> 00:34:26,719
Speaker 1: he and Annry Hordern last evening spoke with the presidential candidate,

687
00:34:27,520 --> 00:34:31,120
Speaker 1: Chris Christi, former governor of my home state New Jersey.

688
00:34:31,680 --> 00:34:33,279
Speaker 1: So lots to talk about there. It's going to be

689
00:34:33,360 --> 00:34:35,640
Speaker 1: a fascinating run into the twenty twenty four election.

690
00:34:35,760 --> 00:34:36,440
Speaker 6: It definitely is.

691
00:34:36,520 --> 00:34:40,280
Speaker 4: And then him calling out how those classified documents case

692
00:34:40,400 --> 00:34:42,439
Speaker 4: is the worst of the Trump charges at this point.

693
00:34:42,560 --> 00:34:44,200
Speaker 1: Yeah, that's me to going to see how that plays.

694
00:34:44,239 --> 00:34:46,120
Speaker 1: I will have obviously full coverage going forward.

695
00:34:46,480 --> 00:34:49,600
Speaker 7: You're listening to the tape. Can's are live program Bloomberg

696
00:34:49,640 --> 00:34:53,239
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

697
00:34:53,320 --> 00:34:56,560
Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

698
00:34:56,600 --> 00:34:59,399
Speaker 7: You can also listen live on Amazon Alexa from our

699
00:34:59,400 --> 00:35:04,040
Speaker 7: flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.

700
00:35:05,320 --> 00:35:08,240
Speaker 1: Jess meant Paul Sweeney here in the Bloomberg Interactive Brokers studio.

701
00:35:08,280 --> 00:35:11,160
Speaker 1: We are streaming on YouTube. You can just go over

702
00:35:11,200 --> 00:35:14,040
Speaker 1: to YouTube and just search Bloomberg Global News and that

703
00:35:14,080 --> 00:35:16,200
Speaker 1: I'll bring you right to the feed. In this hour,

704
00:35:16,560 --> 00:35:19,279
Speaker 1: we are joined in studio with Barry Riodholts. He's a

705
00:35:19,320 --> 00:35:22,440
Speaker 1: host of Masters in Business, little podcast he does with

706
00:35:22,480 --> 00:35:24,680
Speaker 1: the good folks at Bloomberg. Has also got a day

707
00:35:24,760 --> 00:35:27,160
Speaker 1: job with Ridholt's wealth management. Barry, thanks so much for

708
00:35:27,239 --> 00:35:27,839
Speaker 1: joining us here.

709
00:35:27,920 --> 00:35:29,799
Speaker 11: My pleasure. Always a blast to be here.

710
00:35:29,840 --> 00:35:31,719
Speaker 1: All right, let's kick it off real quick here because

711
00:35:31,760 --> 00:35:33,640
Speaker 1: one of the names that Charlie was just mentioning, and

712
00:35:33,680 --> 00:35:37,120
Speaker 1: that thing was Netflix. After the closed last night reported

713
00:35:37,160 --> 00:35:40,360
Speaker 1: some numbers stock us off nine percent. The revenue guidance

714
00:35:40,560 --> 00:35:42,640
Speaker 1: missed here, So that's kind of the big issue, and

715
00:35:42,680 --> 00:35:45,120
Speaker 1: it just kind of calls into question the whole profitability

716
00:35:45,160 --> 00:35:47,000
Speaker 1: of the streaming business. And we want to bring in

717
00:35:47,040 --> 00:35:49,719
Speaker 1: somebody who really knows this business well, Mark Douglass. He's

718
00:35:49,719 --> 00:35:52,000
Speaker 1: a president and CEO of Mountain. He joins us via

719
00:35:52,120 --> 00:35:54,960
Speaker 1: zoom here. So, Mark, what did you take away from

720
00:35:55,520 --> 00:35:57,680
Speaker 1: what we heard from the company last night and what

721
00:35:57,719 --> 00:36:05,680
Speaker 1: we saw on their results.

722
00:36:02,000 --> 00:36:05,480
Speaker 12: Migration of building mode in terms of password sharing. The

723
00:36:05,480 --> 00:36:08,560
Speaker 12: way I think of the password sharing, it's like a

724
00:36:08,600 --> 00:36:11,799
Speaker 12: revenue backlock for Netflix that they can tap into. I

725
00:36:11,800 --> 00:36:16,160
Speaker 12: don't think they're likely pushing one hundred percent on ending

726
00:36:16,200 --> 00:36:19,920
Speaker 12: password sharing. They have an incentive to do it slowly

727
00:36:20,040 --> 00:36:23,320
Speaker 12: and then have like essentially it's backlock. The app business

728
00:36:23,320 --> 00:36:26,080
Speaker 12: still has some effort to ramp up, but I think

729
00:36:26,120 --> 00:36:28,799
Speaker 12: the fact that they missed revenue hit earnings is an

730
00:36:28,800 --> 00:36:33,680
Speaker 12: indication that you're going to see increased earnings at Netflix

731
00:36:33,719 --> 00:36:37,359
Speaker 12: because the new consume, the new consumers have paying that

732
00:36:37,400 --> 00:36:40,080
Speaker 12: they're coming off the password sharing, They have no increased costs,

733
00:36:40,400 --> 00:36:42,960
Speaker 12: they have very little increased costs with the app business,

734
00:36:43,000 --> 00:36:44,920
Speaker 12: that all of that revenue is going to go straight

735
00:36:44,920 --> 00:36:45,920
Speaker 12: to the bottom line.

736
00:36:46,000 --> 00:36:48,879
Speaker 11: So let's put some flesh on the bones. What are

737
00:36:49,000 --> 00:36:54,920
Speaker 11: Netflix estimates of how many households are sharing passwords and

738
00:36:55,000 --> 00:36:59,920
Speaker 11: how many potential new subscribers does this layout What sort

739
00:36:59,960 --> 00:37:01,399
Speaker 11: of revenue bump could we say?

740
00:37:03,080 --> 00:37:07,200
Speaker 12: I don't offhand know the exact numbers. I know it's

741
00:37:07,239 --> 00:37:12,320
Speaker 12: a very significant portion of the users that use Netflix,

742
00:37:12,560 --> 00:37:14,680
Speaker 12: you know or doing password sharing. I remember a few

743
00:37:14,760 --> 00:37:17,160
Speaker 12: years ago there was a meme when one of their

744
00:37:17,200 --> 00:37:20,040
Speaker 12: shows went viral right before Christmas, and it was like,

745
00:37:20,120 --> 00:37:23,600
Speaker 12: how did fifty million people watch that movie with only

746
00:37:23,640 --> 00:37:26,880
Speaker 12: ten you know, Netflix passwords? So I think, you know,

747
00:37:27,120 --> 00:37:31,239
Speaker 12: everyone is sharing and Netflix is going to essentially do

748
00:37:31,320 --> 00:37:35,960
Speaker 12: a migration over time from password sharing to fully paid

749
00:37:35,960 --> 00:37:39,239
Speaker 12: subscriptions and do it now with that supported likely being

750
00:37:39,640 --> 00:37:42,279
Speaker 12: right in the mix, which generates even more revenue for

751
00:37:42,320 --> 00:37:43,800
Speaker 12: them and thus more profit.

752
00:37:44,200 --> 00:37:48,359
Speaker 11: I honest understand, I'm watching Drive to Survive in the den.

753
00:37:48,480 --> 00:37:50,840
Speaker 11: My wife puts something on in the bedroom and I

754
00:37:50,880 --> 00:37:54,000
Speaker 11: get kicked out on Netflix. Yet everybody else seems to

755
00:37:54,040 --> 00:37:57,319
Speaker 11: be seems to be sharing this. So how long do

756
00:37:57,320 --> 00:37:59,920
Speaker 11: you think it'll take for them to migrate a substantial

757
00:38:00,080 --> 00:38:03,520
Speaker 11: number of these people onto the platform as paying customers.

758
00:38:03,800 --> 00:38:05,440
Speaker 12: I think they could do it in three months, but

759
00:38:05,520 --> 00:38:07,560
Speaker 12: I think if I were them, I'd take three years

760
00:38:07,719 --> 00:38:11,920
Speaker 12: and just always have this additional revenue stream. It sounds

761
00:38:11,920 --> 00:38:14,680
Speaker 12: like your household has been identified as one with no

762
00:38:14,719 --> 00:38:16,120
Speaker 12: password sharing a lot top.

763
00:38:16,000 --> 00:38:16,399
Speaker 7: Of the list.

764
00:38:16,400 --> 00:38:18,400
Speaker 12: I would have made it exactly.

765
00:38:19,719 --> 00:38:23,480
Speaker 4: If you look at this stock Tickerson Ball nf Lex,

766
00:38:23,520 --> 00:38:25,560
Speaker 4: it's been up more than one hundred percent of the

767
00:38:25,560 --> 00:38:27,880
Speaker 4: past twelve months. If to Paul's point, you look at

768
00:38:27,880 --> 00:38:30,480
Speaker 4: it today down nine percent, this would be its worst

769
00:38:30,480 --> 00:38:32,960
Speaker 4: percentage decline of this year, and the worse since April

770
00:38:33,000 --> 00:38:35,840
Speaker 4: of twenty twenty two. How much of this is also

771
00:38:35,960 --> 00:38:38,279
Speaker 4: it's had such a huge run, would you expect it

772
00:38:38,320 --> 00:38:39,799
Speaker 4: to see it pull back like this on a day

773
00:38:39,800 --> 00:38:42,000
Speaker 4: like today after it got it turned its results.

774
00:38:42,320 --> 00:38:45,000
Speaker 12: Yeah, I mean absolutely, And I think last year was

775
00:38:45,040 --> 00:38:48,400
Speaker 12: an overreaction and that you know, the part of the

776
00:38:48,400 --> 00:38:50,480
Speaker 12: reason they had such a big run up is because

777
00:38:50,560 --> 00:38:53,399
Speaker 12: they fell off. The stock fell off at clift nine

778
00:38:53,440 --> 00:38:56,120
Speaker 12: percent is not falling off a clift. It's a decline.

779
00:38:56,239 --> 00:38:58,640
Speaker 12: And I honestly, I think you're going to see people

780
00:38:58,680 --> 00:39:01,279
Speaker 12: buying into the stock. I personally am going to buy

781
00:39:01,320 --> 00:39:04,920
Speaker 12: into the stock. I think it's I just expect this

782
00:39:05,000 --> 00:39:08,600
Speaker 12: to start a new era of increased earnings and Netflix

783
00:39:08,680 --> 00:39:13,600
Speaker 12: because of the profitability of the password sharing subscribers and

784
00:39:13,719 --> 00:39:16,640
Speaker 12: the advertise and the advertising business.

785
00:39:16,719 --> 00:39:18,160
Speaker 7: So I think you're going.

786
00:39:18,120 --> 00:39:20,120
Speaker 12: To see, you know, this be a temporary blip and

787
00:39:20,160 --> 00:39:23,120
Speaker 12: then they start to you see the stock price start

788
00:39:23,160 --> 00:39:23,640
Speaker 12: to increase.

789
00:39:23,880 --> 00:39:27,200
Speaker 4: What about other streaming platforms and those types of stocks.

790
00:39:27,200 --> 00:39:29,920
Speaker 4: We're not gonna have Disney's earnings results until August ninth,

791
00:39:29,960 --> 00:39:32,400
Speaker 4: but obviously when you're thinking about some of its rivals,

792
00:39:32,440 --> 00:39:35,520
Speaker 4: maybe Roku, what about those particular types of stocks and

793
00:39:35,640 --> 00:39:37,920
Speaker 4: are those potentially ones that you're buying or maybe selling.

794
00:39:38,600 --> 00:39:41,480
Speaker 12: I think Netflix is kind of kind of uniquely positioned.

795
00:39:41,600 --> 00:39:44,560
Speaker 12: I think there's opportunity obviously at Disney Plus, but then

796
00:39:44,560 --> 00:39:47,520
Speaker 12: you're also buying in the Disney parks and all these

797
00:39:47,840 --> 00:39:51,040
Speaker 12: Disney films, and there's a lot of complexity and a

798
00:39:51,080 --> 00:39:55,120
Speaker 12: lot of issues there. Netflix is best when they operate

799
00:39:55,280 --> 00:39:59,000
Speaker 12: like a tech company and not a Hollywood studio. And

800
00:39:59,080 --> 00:40:02,799
Speaker 12: so the password sharing, the advertise, these are things that

801
00:40:02,960 --> 00:40:06,359
Speaker 12: they are really led out of Mountain View, you know,

802
00:40:06,520 --> 00:40:09,759
Speaker 12: in the tech side of Netflix. And whenever they do that,

803
00:40:09,840 --> 00:40:13,040
Speaker 12: they lead the industry and innovation and then start to

804
00:40:13,120 --> 00:40:15,600
Speaker 12: lead the industry in terms of growth. And that's happening

805
00:40:15,640 --> 00:40:18,680
Speaker 12: now and that's I think that one statement is what

806
00:40:18,920 --> 00:40:23,480
Speaker 12: I think makes Netflix, you know, like above their peers.

807
00:40:23,480 --> 00:40:25,840
Speaker 12: So they say, and why I like the company.

808
00:40:26,000 --> 00:40:28,279
Speaker 1: Hey, Mark, you're one of the really thought leaders in

809
00:40:28,320 --> 00:40:30,840
Speaker 1: the digital advertising space. Give us a sense of just

810
00:40:30,880 --> 00:40:34,520
Speaker 1: how you think this streaming advertising business is going to

811
00:40:34,560 --> 00:40:35,000
Speaker 1: play out.

812
00:40:35,640 --> 00:40:39,239
Speaker 12: Yeah, I think it's been very challenging. There's lots of

813
00:40:39,320 --> 00:40:43,560
Speaker 12: demand to advertise on Netflix, but they have to navigate

814
00:40:43,600 --> 00:40:46,359
Speaker 12: do they have rights on all the shows? And then

815
00:40:46,400 --> 00:40:48,759
Speaker 12: there are a lot of big agencies involved, the big

816
00:40:48,760 --> 00:40:52,799
Speaker 12: holding companies like WPP and Nomniicom, and so you know,

817
00:40:52,880 --> 00:40:57,279
Speaker 12: they're they're underway. The content is very attractive the consumers

818
00:40:57,360 --> 00:41:00,000
Speaker 12: that you know, the ads almost become like a new

819
00:41:00,200 --> 00:41:02,640
Speaker 12: show because you're still not used to sing an ad

820
00:41:03,040 --> 00:41:05,960
Speaker 12: on Netflix. So I think it's going to take roughly

821
00:41:06,040 --> 00:41:09,080
Speaker 12: eighteen months from when they started let in Q four

822
00:41:09,600 --> 00:41:13,160
Speaker 12: to like really truly ramp that up as they navigate

823
00:41:13,239 --> 00:41:17,080
Speaker 12: kind of those relationships. But they're off to a good starter,

824
00:41:17,160 --> 00:41:19,839
Speaker 12: and I think they have a lot of headroom that

825
00:41:20,080 --> 00:41:24,120
Speaker 12: actually creates headwinds for everyone else. If Netflix gains share

826
00:41:24,120 --> 00:41:28,120
Speaker 12: and advertising, another network is going to lose share. The

827
00:41:28,200 --> 00:41:33,400
Speaker 12: overall brand advertising industry is actually not growing, and so

828
00:41:33,440 --> 00:41:36,120
Speaker 12: they're gonna not The industry as a whole is going

829
00:41:36,200 --> 00:41:39,080
Speaker 12: to have to find new customers in order to make

830
00:41:39,160 --> 00:41:40,520
Speaker 12: up for increased competition.

831
00:41:41,000 --> 00:41:43,680
Speaker 1: All right, Mark, great some of your time. Really appreciate

832
00:41:43,840 --> 00:41:47,040
Speaker 1: getting your perspective, your analysis. Mark Douglas, he's a president

833
00:41:47,160 --> 00:41:49,279
Speaker 1: and CEO of Mountain. He joined us via Zoom. Always

834
00:41:49,320 --> 00:41:50,279
Speaker 1: appreciate getting his thoughts.

835
00:41:50,520 --> 00:41:53,600
Speaker 7: You're listening to the tape. Catch a live program Bloomberg

836
00:41:53,640 --> 00:41:57,200
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

837
00:41:57,320 --> 00:42:00,600
Speaker 7: Tune It Up, Bloomberg dot Com, and the Bloomberg You

838
00:42:00,680 --> 00:42:03,920
Speaker 7: can also listen live on Amazon Alexa from our flagship

839
00:42:03,960 --> 00:42:08,440
Speaker 7: New York station. Just say Alexa play Bloomberg eleven thirty.

840
00:42:09,440 --> 00:42:12,640
Speaker 1: Let's switch gears to the other big earning story of

841
00:42:12,719 --> 00:42:16,120
Speaker 1: the day. Tesla stocks off six point six percent, a

842
00:42:16,120 --> 00:42:20,000
Speaker 1: little bit of some margin challenges there for Elon Musk.

843
00:42:20,080 --> 00:42:22,400
Speaker 1: Let's put it in perspective here, folks. The stock is

844
00:42:22,480 --> 00:42:24,000
Speaker 1: up one hundred and twenty percent year to date, so

845
00:42:24,040 --> 00:42:27,440
Speaker 1: giving back six percent is nothing. Let's bring in Kevin Tynan.

846
00:42:27,800 --> 00:42:31,480
Speaker 1: He covers all the auto industry for Bloomberg Intelligence, joining

847
00:42:31,520 --> 00:42:36,479
Speaker 1: us via Zoom from the Princeton HQ for Bloomberg Intelligence. Kevin,

848
00:42:36,480 --> 00:42:39,239
Speaker 1: what was your takeaway here? I mean price wars they

849
00:42:39,280 --> 00:42:40,719
Speaker 1: have repercussions, don't they?

850
00:42:42,040 --> 00:42:42,360
Speaker 11: Sure?

851
00:42:42,640 --> 00:42:45,400
Speaker 13: Yeah, And I think, look, that's been the deal in

852
00:42:45,400 --> 00:42:49,200
Speaker 13: the auto industry for a century plus. And I think

853
00:42:49,239 --> 00:42:51,960
Speaker 13: the problem with Tesla is that this makes them look

854
00:42:52,040 --> 00:42:56,000
Speaker 13: like an automaker, which is probably their biggest fear. So

855
00:42:56,040 --> 00:42:57,600
Speaker 13: I think what you're going to start to hear now

856
00:42:57,719 --> 00:43:01,000
Speaker 13: is all this talk of AI and full self driving

857
00:43:01,160 --> 00:43:04,720
Speaker 13: and autonomous being you know, the path in the future,

858
00:43:04,760 --> 00:43:07,920
Speaker 13: because when you look at the results and the margins specifically,

859
00:43:08,640 --> 00:43:11,480
Speaker 13: you know eighteen percent at the gross line, ten percent

860
00:43:11,520 --> 00:43:14,400
Speaker 13: at the operating line. It's those are automaker margins.

861
00:43:16,040 --> 00:43:18,560
Speaker 4: And something I was curious about too, is when you're

862
00:43:18,600 --> 00:43:22,680
Speaker 4: looking at Tesla's deliveries earlier this month, they did hit

863
00:43:22,719 --> 00:43:25,520
Speaker 4: a record number after obviously those price cuts in the

864
00:43:25,560 --> 00:43:28,840
Speaker 4: stock continue to go on a tear after it rose

865
00:43:28,920 --> 00:43:32,279
Speaker 4: well above those February highs last month, and the next

866
00:43:32,320 --> 00:43:35,680
Speaker 4: resistance level isn't until right over three hundred dollars. So

867
00:43:35,760 --> 00:43:37,600
Speaker 4: does this make sense when you already saw a big

868
00:43:37,680 --> 00:43:40,399
Speaker 4: run like that, especially after the deliveries and numbers came

869
00:43:40,400 --> 00:43:42,840
Speaker 4: in better than expected, that you'd see another pullback like

870
00:43:42,840 --> 00:43:44,680
Speaker 4: this in the stock. Yeah.

871
00:43:44,719 --> 00:43:49,160
Speaker 13: Well, see what happens is he Elon Musk talks about

872
00:43:49,800 --> 00:43:56,719
Speaker 13: sacrificing profitability for that volume growth. Obviously you see that

873
00:43:56,800 --> 00:44:00,480
Speaker 13: coming right, This is for all automakers in the space

874
00:44:00,560 --> 00:44:03,000
Speaker 13: now are going to be dealing with the same exact thing.

875
00:44:03,080 --> 00:44:06,840
Speaker 13: So he sort of telegraphed the idea that they're doing

876
00:44:06,840 --> 00:44:09,160
Speaker 13: this on purpose, right, we just want to maintain that

877
00:44:09,200 --> 00:44:14,040
Speaker 13: fifty percent growth rate, which they probably won't hit, you know, so,

878
00:44:14,040 --> 00:44:17,600
Speaker 13: so it's almost forgiven and telegraphed to the to the

879
00:44:17,640 --> 00:44:20,920
Speaker 13: point of yeah, don't worry about margins. You know, we're

880
00:44:20,920 --> 00:44:23,279
Speaker 13: going to direct your eye to this volume growth and look,

881
00:44:23,360 --> 00:44:24,759
Speaker 13: record deliveries.

882
00:44:24,239 --> 00:44:24,880
Speaker 6: For the quarter.

883
00:44:25,680 --> 00:44:27,880
Speaker 13: But again, you know, all that does is make you

884
00:44:27,960 --> 00:44:31,360
Speaker 13: an automaker that has no price power by giving up

885
00:44:31,480 --> 00:44:35,200
Speaker 13: margin and puts you in the pack with pedestrian margins

886
00:44:35,239 --> 00:44:39,359
Speaker 13: like everybody else. So I even I thought like, even

887
00:44:39,400 --> 00:44:43,000
Speaker 13: if this quarter were worse in terms of margin and profitability,

888
00:44:43,160 --> 00:44:44,920
Speaker 13: it would still be okay in the eyes of the

889
00:44:44,920 --> 00:44:46,759
Speaker 13: market because he told you he was going to do

890
00:44:46,840 --> 00:44:49,239
Speaker 13: that right, not that he had control of it, but

891
00:44:49,239 --> 00:44:51,040
Speaker 13: he but he telegraphed it. He told you he was

892
00:44:51,040 --> 00:44:53,880
Speaker 13: going to do it, and it and it's what happened,

893
00:44:53,920 --> 00:44:55,960
Speaker 13: record deliveries in the quarter. And it's like, oh, look,

894
00:44:56,400 --> 00:45:01,160
Speaker 13: executing right according to the plan. But it's really an

895
00:45:01,160 --> 00:45:05,040
Speaker 13: issue now where now your margins are like everybody else,

896
00:45:05,120 --> 00:45:06,799
Speaker 13: is where do you go from here? Do you keep

897
00:45:06,840 --> 00:45:11,239
Speaker 13: cutting or do you stand on price and take the

898
00:45:11,320 --> 00:45:12,040
Speaker 13: volume hit.

899
00:45:12,760 --> 00:45:16,680
Speaker 11: Kevin Barry rittolts here. I was intrigued a couple of

900
00:45:16,800 --> 00:45:19,359
Speaker 11: days ago, or maybe it's already a week or two ago,

901
00:45:20,120 --> 00:45:23,920
Speaker 11: when Tesla announced they were opening up their network of

902
00:45:23,960 --> 00:45:29,959
Speaker 11: superchargers to forward and gm evs. How big a deal

903
00:45:30,080 --> 00:45:33,480
Speaker 11: is that and is that a potential revenue stream for

904
00:45:33,600 --> 00:45:34,840
Speaker 11: Tesla in the future.

905
00:45:35,960 --> 00:45:42,080
Speaker 13: Yeah, look, there's there's tax credits to Tesla for opening

906
00:45:42,120 --> 00:45:45,799
Speaker 13: that up. Give that gives them some favorable treatment within

907
00:45:46,320 --> 00:45:49,920
Speaker 13: Inflation Reduction Act to be able to do that. All

908
00:45:49,960 --> 00:45:53,000
Speaker 13: the other automakers didn't have to invest in that technology.

909
00:45:53,840 --> 00:45:57,040
Speaker 13: I'm just not sure how much profitability there is going

910
00:45:57,120 --> 00:46:00,799
Speaker 13: forward in charging. And maybe it's not an Apple stapp comparison,

911
00:46:00,880 --> 00:46:03,880
Speaker 13: but you know, we've heard it before. Nobody owns gasoline

912
00:46:03,880 --> 00:46:06,279
Speaker 13: stations and there's actually no money in the pumping of

913
00:46:06,360 --> 00:46:08,799
Speaker 13: the gas right and back in the day, those were

914
00:46:08,840 --> 00:46:11,040
Speaker 13: the service bays that were connected to the gas station.

915
00:46:11,120 --> 00:46:15,000
Speaker 13: Now it's the convenience store that sells Lotto tickets connected

916
00:46:15,040 --> 00:46:18,160
Speaker 13: to the gasoline station. So you know, if there were

917
00:46:18,200 --> 00:46:20,920
Speaker 13: to be this explosion in demand, I'm not sure how

918
00:46:20,960 --> 00:46:23,800
Speaker 13: great a margin you would be getting at the actual pump.

919
00:46:24,080 --> 00:46:26,000
Speaker 13: I think the value there is that you're going to

920
00:46:26,080 --> 00:46:29,879
Speaker 13: have a captive audience for however much time forty five

921
00:46:29,920 --> 00:46:33,960
Speaker 13: minutes to hours, and it may be the licensing of

922
00:46:34,000 --> 00:46:37,560
Speaker 13: the retail space around the charge points that actually makes

923
00:46:37,600 --> 00:46:38,120
Speaker 13: the money.

924
00:46:39,320 --> 00:46:41,640
Speaker 4: I want to get your thoughts to switch things up

925
00:46:41,640 --> 00:46:43,880
Speaker 4: a little bit. But also on Carvon, I'm looking at

926
00:46:43,920 --> 00:46:47,560
Speaker 4: that ticker symbol CVNA. It was up more than about

927
00:46:47,600 --> 00:46:50,160
Speaker 4: forty percent yesterday on that news that it will restruct

928
00:46:50,200 --> 00:46:52,799
Speaker 4: your debt and sell stock in this comeback bit. It's

929
00:46:52,800 --> 00:46:55,520
Speaker 4: one of those sort of pandemic type of really volatile

930
00:46:55,520 --> 00:46:57,680
Speaker 4: stocks that we've seen. What's your outlook here when you're

931
00:46:57,680 --> 00:47:00,160
Speaker 4: looking from an earnings perspective on a stock like A.

932
00:47:01,040 --> 00:47:05,520
Speaker 13: Yeah, see, that's one that you know that business to

933
00:47:05,600 --> 00:47:09,000
Speaker 13: me is just very focused. It's online only and it's

934
00:47:09,040 --> 00:47:11,560
Speaker 13: pre owned only. So when you compare Carbon to the

935
00:47:11,600 --> 00:47:15,240
Speaker 13: other full line dealerships, you know in Automation or Penske

936
00:47:15,360 --> 00:47:18,240
Speaker 13: Auto Group or Group one or Lithia, you know, there's

937
00:47:18,400 --> 00:47:21,799
Speaker 13: places that they can go when they use market is

938
00:47:21,800 --> 00:47:24,440
Speaker 13: bad or when the new market is bad. You know,

939
00:47:24,440 --> 00:47:27,120
Speaker 13: there's parts and service, there's finance and insurance. So there's

940
00:47:27,160 --> 00:47:29,680
Speaker 13: a lot of revenue diversity for those companies that Carvana

941
00:47:29,760 --> 00:47:32,399
Speaker 13: doesn't have. And this run up in the past couple

942
00:47:32,440 --> 00:47:36,960
Speaker 13: of days. Ideally, I'm struggling to find the structural difference

943
00:47:37,080 --> 00:47:41,640
Speaker 13: in the company today versus before this announcement, and I'm

944
00:47:41,719 --> 00:47:43,520
Speaker 13: not sure it's there. And when you look at their

945
00:47:43,719 --> 00:47:47,200
Speaker 13: you know, retail run rate unit sales, you know it's

946
00:47:47,239 --> 00:47:49,440
Speaker 13: a it's about a three hundred thousand, a little bit

947
00:47:49,440 --> 00:47:51,600
Speaker 13: more than three hundred thousand units, And they've talked about

948
00:47:51,600 --> 00:47:54,680
Speaker 13: getting to two million and scaling, and that doesn't look

949
00:47:54,719 --> 00:47:56,319
Speaker 13: like it's going to And that's in the ballpark of

950
00:47:56,360 --> 00:47:59,520
Speaker 13: what CarMax does used only and it doesn't look like

951
00:47:59,560 --> 00:48:02,320
Speaker 13: they're going to there anytime soon. So all these online

952
00:48:02,520 --> 00:48:07,960
Speaker 13: used only vehicle retailers have really backed off the scale

953
00:48:08,000 --> 00:48:10,080
Speaker 13: and growth for growth sake, to say, we need to

954
00:48:10,120 --> 00:48:12,880
Speaker 13: focus a little bit on margin and profitability in the interim.

955
00:48:13,520 --> 00:48:17,480
Speaker 11: So when we see the slew of new competitors, whether

956
00:48:17,520 --> 00:48:21,799
Speaker 11: it's Mercedes or Hyundai or even some of the big

957
00:48:21,880 --> 00:48:28,520
Speaker 11: Chinese manufacturers, is it unrealistic for anyone who's running a

958
00:48:28,560 --> 00:48:34,320
Speaker 11: first mover EV company to expect to maintain just what's

959
00:48:34,440 --> 00:48:38,399
Speaker 11: been a dominant market share. Isn't it inevitable that they

960
00:48:38,480 --> 00:48:43,000
Speaker 11: have to become a smaller player tesla versus the rest

961
00:48:43,040 --> 00:48:43,560
Speaker 11: of the world.

962
00:48:45,120 --> 00:48:47,879
Speaker 13: Yeah, Look, I think that the issue is is that

963
00:48:48,160 --> 00:48:51,799
Speaker 13: if there were profitability there, you know, like you said,

964
00:48:51,800 --> 00:48:55,000
Speaker 13: the Mercedes, the Volkswagens, the Toyotas of the world would

965
00:48:55,080 --> 00:48:58,600
Speaker 13: be there. The issue is that the mixshift that we've had,

966
00:48:58,680 --> 00:49:01,239
Speaker 13: especially in the US the ten years, has been two

967
00:49:01,280 --> 00:49:04,479
Speaker 13: truck from car, and that was profitable on the first day.

968
00:49:04,960 --> 00:49:08,440
Speaker 13: Now automakers do need to figure out how to sell

969
00:49:08,480 --> 00:49:11,279
Speaker 13: the same vehicles at higher prices because a lot of

970
00:49:11,280 --> 00:49:14,080
Speaker 13: that mixshift truck from car is wrung out and it

971
00:49:14,120 --> 00:49:17,480
Speaker 13: comes from technology, whether it's autonomous or electric. The problem

972
00:49:17,520 --> 00:49:20,560
Speaker 13: is it's higher transaction prices, but the margins aren't as

973
00:49:20,600 --> 00:49:23,360
Speaker 13: good or don't exist at all yet, So it's a

974
00:49:23,440 --> 00:49:28,000
Speaker 13: very messy transition. At this point, everybody's being forced to

975
00:49:28,160 --> 00:49:31,279
Speaker 13: go EV, but it doesn't carry the profitability that your

976
00:49:31,360 --> 00:49:34,120
Speaker 13: existing legacy technology does, and that's why we're slow in

977
00:49:34,120 --> 00:49:34,680
Speaker 13: this country.

978
00:49:34,960 --> 00:49:37,719
Speaker 1: All right, Kevin, thanks so much. As always, we loved

979
00:49:37,920 --> 00:49:40,480
Speaker 1: talking to Kevin Tyny getting the latest on the autobiz,

980
00:49:41,200 --> 00:49:44,200
Speaker 1: including our good friends at Tessa. Kevin Tyny, senior automotive

981
00:49:44,200 --> 00:49:48,000
Speaker 1: analysts for Bloomberg Intelligence, joining us from Princeton, New Jersey.

982
00:49:50,280 --> 00:49:53,359
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

983
00:49:53,400 --> 00:49:57,160
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

984
00:49:57,239 --> 00:49:58,280
Speaker 2: podcast platform.

985
00:49:58,320 --> 00:49:58,760
Speaker 7: You prefer.

986
00:49:59,120 --> 00:50:02,400
Speaker 2: I'm Matt Miller. I'm on Twitter at Matt Miller nineteen

987
00:50:02,480 --> 00:50:03,240
Speaker 2: seventy three.

988
00:50:03,560 --> 00:50:05,920
Speaker 1: And I'm Faul Sweeney. I'm on Twitter at pt Sweeney.

989
00:50:06,040 --> 00:50:08,719
Speaker 1: Before the podcast, you can always catch us worldwide at

990
00:50:08,719 --> 00:50:09,479
Speaker 1: Bloomberg Radio