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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: This is Bloomberg business Week Daily reporting from the magazine

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Speaker 2: that helps global leaders stay ahead with insight on the people, companies,

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Speaker 2: and trends shaping today's complex economy. Plus global business finance

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Speaker 2: and tech news as it happens. The Bloomberg Business Weekdaily

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Speaker 2: Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.

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Speaker 3: I want to go to Nvidio though, because we are

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Speaker 3: going to see their numbers drop probably any moment now,

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Speaker 3: and we are seeing the stock up about eight tenths

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Speaker 3: of a percent here in the after market. Obviously a

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Speaker 3: big deal, biggest semiconductor company. What they have to say

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Speaker 3: about the AI trade, and it's not just the hyperscalers

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Speaker 3: but beyond as we heard from Kunjohn Sabania Bloomberg Intelligence,

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Speaker 3: So second tier companies are they also biding buying into

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Speaker 3: and video chips. So we'll have to see what they

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Speaker 3: have to say say. And Vidia is app folks, let's

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Speaker 3: get to it. First quarter just to DPS eighty one

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Speaker 3: cents a share.

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Speaker 4: That's a miss. Street was looking.

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Speaker 3: For ninety three cents, so twelve cents shy what the

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Speaker 3: street was expected expecting revenue is expected to be forty

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Speaker 3: five billion plus or minus two percent. First quarter revenue

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Speaker 3: forty four point one billion, that was a beat the

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Speaker 3: street expectations was forty three point twenty nine billion. First

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Speaker 3: quarter adjusted gross margin that was a miss sixty one

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Speaker 3: percent versus an estimate of seventy one percent. Company, though

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Speaker 3: saying that the second.

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Speaker 4: Quarter outlook reflects a loss in H twenty revenue of

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Speaker 4: about eight billion.

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Speaker 3: Keep in mind that when that ban came from the

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Speaker 3: administration and vide did do a write down of about

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Speaker 3: five and a half billion dollars, and Kunjan said it

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Speaker 3: was a little noisy because not all of the estimates

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Speaker 3: on the street had incorporated that full H twenty ban.

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Speaker 5: Yeah, shares bouncing around right now of about eight tenths

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Speaker 5: of one percent in the after hours. They were down earlier.

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Speaker 5: The company said that global demand for AI infrastructure is

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Speaker 5: quote incredibly strong, also saying that Blackwell's NVL seventy two

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Speaker 5: AI supercomputer is in full scale production. The company also

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Speaker 5: said the second quarter outlook reflects a loss in H

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Speaker 5: twenty revenue of about eight billion dollars. So I wonder

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Speaker 5: if that charge, Carol that they took was relatively conservative,

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Speaker 5: The company also saying it was unable to ship and

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Speaker 5: add a two point five billion dollars of H twenty

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Speaker 5: revenue in the first quarter. The company also saying it

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Speaker 5: will pay a quarterly dividend of one cent per share

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Speaker 5: that will happen on July third. Shares right now in

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Speaker 5: the after hours are moving higher, up about two point

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Speaker 5: five percent.

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Speaker 4: Yeah, up about two yeah, exactly.

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Speaker 3: The CEO, Jensen Wong, who we're going to hear from

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Speaker 3: our Ed Ludlow's going to talk with him at six

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Speaker 3: thirty pm Wall Street time on Bloomberg TV and radio.

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Speaker 3: The CEO saying the company stands at the center of transformation.

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Speaker 3: Go back to what he said about global demand for

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Speaker 3: AI infrastructure, incredibly strong adjectives, and so we're going to

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Speaker 3: want some more numbers around that. We're getting more on

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Speaker 3: the first quarter at comput revenue thirty four point sixteen billion,

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Speaker 3: a little light. Street was looking for thirty five point

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Speaker 3: forty seven billion. First quarter networking revenue four point ninety

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Speaker 3: six billion. Street estimate was three point forty five billion,

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Speaker 3: So that's a bit of a big beat. But again,

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Speaker 3: the key headlines seem to be what it says about

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Speaker 3: second quarter revenue forty five billion plus or minus two percent.

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Speaker 3: The estimate on the street is forty five point five billion,

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Speaker 3: So we could have some upside.

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Speaker 4: Tim from it, or we could see some downside from it.

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Speaker 5: We're seeing shares right now hire about about three point

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Speaker 5: two percent in the after hours. Want to bring in

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Speaker 5: Jay Goldberg, senior analyst Semiconductors and Electronics at Seaport Research Partners.

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Speaker 5: Jay joins us from San Francisco. Jay, I want to

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Speaker 5: get your reaction to earnings in just a minute. I

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Speaker 5: should note that you are the only analyst listed on

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Speaker 5: the Bloomberg terminal with a cell rating for Nvidia. Does

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Speaker 5: today's result keep you at a cell rating?

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Speaker 6: So I have to go through numbers first, but I

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Speaker 6: would say yes.

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Speaker 7: I mean, my take is that in video, the most

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Speaker 7: scrutinized company in the planet, we all have a pretty

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Speaker 7: good sense of what their numbers should look like this year,

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Speaker 7: what their capacity is working backwards from that, there's not

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Speaker 7: a lot of room.

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Speaker 6: Left for upside. Right.

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Speaker 7: There's a few things here and there, but there's not

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Speaker 7: much upside possible. But on the downside, there's still a

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Speaker 7: lot of risks. There are a lot of things that

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Speaker 7: could go wrong. There's lots of problems with the supply chain,

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Speaker 7: the fact that they keeper mentioning that Blackwell is ramping.

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Speaker 7: That was in doubt for a while. There's just a

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Speaker 7: lot of questions the companies. It's a good company, it's

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Speaker 7: well run, it's just gotten so big so quickly.

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Speaker 6: I don't think they can keep this.

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Speaker 7: The level of expectations beating that they've had for the

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Speaker 7: last three years, that just can't keep going.

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Speaker 6: And I think the headwinds are continuing to mount.

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Speaker 3: In the earning statement, in video, CEO Jensen Wong saying

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Speaker 3: global demand for Nvidia's AI infrastructure is incredibly strong. AI

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Speaker 3: inferenced token generation has surged tenfold in just one year,

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Speaker 3: and as AI agents become mainstream demand for AI computing,

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Speaker 3: we'll accelerate. Jay obviously sounds upbeat, but again, you know,

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Speaker 3: this is where we want to have some numbers around things.

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Speaker 3: The CFO saying sales of their H twenty products four

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Speaker 3: point six billion for the first quarter of twenty twenty six.

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Speaker 4: It continues to cross.

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Speaker 3: You know, is there anything that could kind of make

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Speaker 3: you say, well, wait a minute, maybe I need to

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Speaker 3: say it's not a sell maybe there is something interesting here.

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Speaker 7: So I think the underlying question is what are we

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Speaker 7: going to do with AI? Like there's a lot of

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Speaker 7: excitement around AI, but it's still in very early stages,

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Speaker 7: you know. I like to think of this as the

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Speaker 7: Internet in the nineteen seventies. We knew it was something,

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Speaker 7: but we didn't know what it would become. I think

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Speaker 7: that's where we are with AI now, and I think

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Speaker 7: it's going to take a few years for us to

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Speaker 7: really as an industry figure out what the actual consumer

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Speaker 7: use cases and applications are. And in that process there's

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Speaker 7: going to be some fits and starts, and don't I

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Speaker 7: just don't think we can keep this momentum going forever.

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Speaker 7: I know demand is good now, but we start to

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Speaker 7: look in the next year. I think people are starting

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Speaker 7: to ask good questions about what is the ROI and

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Speaker 7: these massive GPU investments all the hyperscalers and the enterprises

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Speaker 7: have made, and I don't think we've seen those yet.

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Speaker 7: I think what would sort of alter my belief is

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Speaker 7: if somebody invents some incredible consumer application for AI that

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Speaker 7: would radically accelerate things.

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Speaker 3: Hey, I just want to point out first quarter adjusted

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Speaker 3: EPs ninety six cents a share. That was three pennies

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Speaker 3: better than what the street was expecting. I think we

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Speaker 3: had a number that crossed earlier that was not accurate,

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Speaker 3: So again they did be in terms of first quarter

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Speaker 3: adjusted EPs. The second quarter forecast, just to rehash, second

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Speaker 3: quarter revenue forty five billion plus or minus two percent.

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Speaker 3: The estimate on the street is forty five point five billion.

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Speaker 3: Second quarter forecast also reflects eight billion dollars in loss

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Speaker 3: sales to China, and we know that that ban that

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Speaker 3: went into effect in April, and just continuing to check

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Speaker 3: and Video shares right now up about two point nine

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Speaker 3: percent in the aftermarket.

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Speaker 5: There's also another correction crossing right now in video. First

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Speaker 5: quarter adjusted gross margin coming in at seventy one point

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Speaker 5: three percent versus estimates of seventy one percent, so I

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Speaker 5: want to make sure that gets there. In Vidia says

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Speaker 5: the charge relates to H twenty excess inventory and by

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Speaker 5: obligations in first quarter auto revenues driven by self driving

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Speaker 5: platform sales. I want to get back to Jay Goldberg. Jay,

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Speaker 5: you made an interesting comment that this is like you know,

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Speaker 5: AI is like the Internet in the nineteen seventies. I

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Speaker 5: got to tell you playing around with chat GPT and

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Speaker 5: anthropics Claude, it blows my mind every single day getting

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Speaker 5: in a way MO blows my mind. I mean, I

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Speaker 5: mean to me, this feels like, certainly the new frontier.

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Speaker 5: What's the vision that you have if we're in the

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Speaker 5: early stages, if we're in the early innings of this game,

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Speaker 5: like what is the impact going to be? And where

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Speaker 5: will Nvidia be in that?

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Speaker 6: I think those are two separate questions, right.

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Speaker 7: I think in terms of where in Vidio is going

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Speaker 7: to be ultimately will depend on what we end up

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Speaker 7: using AI for right, And I, like I said, chat

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Speaker 7: GPT is incredible technological achievement, but in terms of like

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Speaker 7: changing everybody's day to day life, it's it's not quite

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Speaker 7: there yet. It's very useful for some people. It's it's

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Speaker 7: very useful if you're if you're writing web content or

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Speaker 7: if you're coding, but for sort of average day to

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Speaker 7: day use. I think of my my my nine year

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Speaker 7: old father or my twenty five year old niece, they

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Speaker 7: don't they don't use chat GIPT.

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Speaker 5: It's just not that useful for what Really the twenty

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Speaker 5: five year old is not using chat GPT. No, that's shocking.

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Speaker 6: No, I'm basic. I'm using it.

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Speaker 5: I'm using it more than I not more than I

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Speaker 5: use Google. But like I'll go there first.

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Speaker 3: I got to say my house, I think all of

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Speaker 3: a sudden has kind of amped up and you've got

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Speaker 3: a range of ages and using it for different things

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Speaker 3: and things like even grock and you know, yeah, it's happening.

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Speaker 6: It's I think it is happening. I think we have

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Speaker 6: a long way to go though. Forward.

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Speaker 7: The utility is really really clear, Like if you look

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Speaker 7: at if you look at search even it's not clear

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Speaker 7: how that's going to anetize.

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Speaker 6: Are we going to start adds there? What impact will

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Speaker 6: that have when we start seeing ads and jat GPT search.

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Speaker 6: I'm just making of that example.

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Speaker 7: I have no idea they're actually going to do that,

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Speaker 7: but that's going to I think that will have an impact.

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Speaker 7: I actually think I'm a big optimist about it. I

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Speaker 7: think it can be much much more than what it

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Speaker 7: is today. And I don't think it's really exciting until

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Speaker 7: we get something along those lines.

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Speaker 3: All right, We are talking with Jay Goldberg, Senior analyst

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Speaker 3: of Semiconductors and Electronics Effort Support Research Partners from San

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Speaker 3: Francisco and Video earnings. They have crossed, folks, and we

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Speaker 3: continue to see the stock up about two point nine

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Speaker 3: percent in the aftermarket. Ian King, with a write through

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Speaker 3: on the Bloomberg terminal, and Video forecast revenue of about

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Speaker 3: forty five billion in the fiscal second quarter, despite losing

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Speaker 3: eight billion in revenue from China due to export controls

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Speaker 3: imposed by the Trump administration. The company is ramping up

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Speaker 3: production of its latest semiconductor design, Blackwell, and expect strong

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Speaker 3: demand for its AI infrastructure, which the company believes will

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Speaker 3: tran form the economy.

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Speaker 4: And Video's growth is driven by its.

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Speaker 3: Dominance as you know, in the AI market or in

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Speaker 3: the market for AI accelerator chips. Companies increasingly offering its

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Speaker 3: chips as part of whole computer systems to speed up

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Speaker 3: the deployment of complex technology.

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Speaker 5: So Jay got a little bit of an update there

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Speaker 5: from Carol and from our OWNI and King about the

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Speaker 5: write through when it comes to Invidia results. Going back

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Speaker 5: to remind everybody, you're the only analyst listed on the

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Speaker 5: Bloomberg terminal with accelerating on in Video. What would you

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Speaker 5: need to see from the company today to have you

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Speaker 5: reverse course with that decision?

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Speaker 7: So I think one of the things sort of stands

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Speaker 7: out for me is a year ago there was a

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Speaker 7: line out the door for in video products. Everybody was

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Speaker 7: buying everything they could, right and if one company couldn't

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Speaker 7: take its allocation, there was somebody else who was more

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Speaker 7: than willing to step in. I think the same is

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Speaker 7: true of this eight twenty product. The company wrote it

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Speaker 7: down a couple months ago. I kind of wonder why

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Speaker 7: no one else bought that product. It's different, you know,

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Speaker 7: there's all kinds of technical things there, but still it's

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Speaker 7: compute at the right price, it would have been attractive

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Speaker 7: to somebody.

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Speaker 4: Hey what and so yeah, Oh I'm sorry, please continue.

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Speaker 6: Yeah.

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Speaker 7: So I'm just wondering how much more demand there is

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Speaker 7: right now. Again, I think AI long term is important.

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Speaker 7: In the near term, though, I think we're sort of

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Speaker 7: running out of steam as people are taking a pause

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Speaker 7: to assess what they want to do with it.

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Speaker 3: One thing I want to ask you, is it tough

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Speaker 3: to have a cell rating Considering the stock Nvidia has

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Speaker 3: rallied about twenty four percent since you initiated coverage on

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Speaker 3: April thirtieth.

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Speaker 7: Oh, it's fantastic having being the only celerated analyst on

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Speaker 7: a stock I like being the sober contrarian.

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Speaker 3: But even with the stock, you know, rallying as much

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Speaker 3: as it did, I understand it's a bounce from being

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Speaker 3: perhaps you know, taking quite a beating like many names did,

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Speaker 3: courtesy of some of the news coming out of the administration.

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Speaker 3: But I mean you still kind of conviction you're going

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Speaker 3: to hold to it.

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Speaker 6: Oh, absolutely absolutely.

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Speaker 7: I mean I have a good sense of you know,

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Speaker 7: Jensen is going to get on the call and it

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Speaker 7: can drive the stock price higher because he's a fabulous,

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Speaker 7: fabulous marketer. He really knows how to sell this company,

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Speaker 7: does a great job of that. But I think the

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Speaker 7: substance there is still I have lots of questions about it,

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Speaker 7: and I'll I'll say in you know, in the two

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Speaker 7: three months i've had this celerating out there, I haven't

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Speaker 7: got a lot push back from the street.

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Speaker 6: I haven't had investors and clients telling me that I'm crazy.

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Speaker 6: I've had a few people say I'm too too soon.

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Speaker 7: I've had a few people say I'm too late, but

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Speaker 7: nobody is sort of questioning my thesis.

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Speaker 5: We're getting some additional details about challenges in China and

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Speaker 5: China restrictions are any in King writing on the live

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Speaker 5: blog that Nvidia missed out on two and a half

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Speaker 5: billion dollars of sales in the fiscal first quarter and

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Speaker 5: will not getting projected eight billion dollars in the fiscal

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Speaker 5: second quarter. It's an amount per quarter roughly equal to

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Speaker 5: its nearest rival, AMD's total sales. You mentioned demand of

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Speaker 5: the H twenty specifically. Is that what you see as

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Speaker 5: the biggest risk? China and a lack of demand from China, Jay.

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Speaker 7: I think China is a big X factor, just because

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Speaker 7: the US government's China policy is, let's call it dynamic

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Speaker 7: and rapidly changing day to day.

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Speaker 6: I don't think that's the biggest risk. I think the

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Speaker 6: biggest question.

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Speaker 7: I have about in Nvidia is long term demand for AI,

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Speaker 7: where it's going, what it's going to be like in

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Speaker 7: the near term. I think when I speak to corporate CIOs,

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Speaker 7: they've all tested AI pilots, they've all demoed it, and

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Speaker 7: what they're finding is that they get sort of ten

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Speaker 7: twenty percent cost reductions around their AI deployments. It helps

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Speaker 7: them reduce call center costs, things like that, which is good,

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Speaker 7: but it's not necessarily enough to justify the massive investments

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Speaker 7: needed to keep in video growing the way it has

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Speaker 7: been growing.

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Speaker 5: Okay, Jay, I want to go to a story I'm

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Speaker 5: just going through. I was exchanging some texts with some

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Speaker 5: friends earlier because it doesn't sound like I have a

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Speaker 5: group of friends and like some of them are very

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Speaker 5: concerned about AI and about impacts on jobs, and we're

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Speaker 5: watching this really closely. Dario Amidae, the CEO of Anthropic,

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Speaker 5: I've interviewed him before. Axios out this morning with a

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Speaker 5: story that he basically said that AI could wipe out

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Speaker 5: about half about all entry level white collar jobs I'm

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Speaker 5: reading from Axios right now, and spike unemployment to ten

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Speaker 5: to twenty percent in the next one to five years.

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Speaker 5: He said this in an interview to Axio in San Francisco.

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Speaker 5: Axios in San Francisco, do you disagree with that? It

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Speaker 5: sounds like you're not as bullish when it comes to

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Speaker 5: the actual effect of AI on the workforce.

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Speaker 7: I think that again, I'm a techno optimist, if anything,

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Speaker 7: I think there will be absolutely there will be disruptions

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Speaker 7: to the labor force, but there will also be new

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Speaker 7: opportunities over the long term. So you know, I think

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Speaker 7: certain low level coding jobs, certain low level copy eating jobs,

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Speaker 7: Those will start to get pretty tough. Anyone who does

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Speaker 7: image creation, they're going to be challenged for a while

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Speaker 7: until we find new ways to make use of these tools.

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Speaker 7: So absolutely, you know, in the nineteen hundreds, all the

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Speaker 7: buggy whip and you know carriage, you know, carriage makers

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Speaker 7: and horse trainers, they were very disrupted, and we're going

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Speaker 7: to see something similar. But the economy will still continue

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Speaker 7: to grow and hopefully we'll find ways to use those

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Speaker 7: people to do new things with the tools we get.

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Speaker 5: I mean hopefully, or else we're in for a real

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Speaker 5: reckoning when it comes to the labor force.

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Speaker 7: Yeah, and again I think it's I think it's very

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Speaker 7: premature to talk about these sort of massive, big term

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Speaker 7: impacts of AI because the things.

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Speaker 6: We actually use day to day aren't aren't quite there yet.

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Speaker 7: You know, again, a few small categories where there is disruption,

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Speaker 7: but in a broader sense, we haven't really grasped the

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Speaker 7: full potential for AI and what it's going to do.

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Speaker 6: So then it's ways to.

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Speaker 5: Go if okay, So then it raises the question about

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Speaker 5: other companies than your view that could be beneficiaries of

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Speaker 5: the way that technology is moving. If in video in

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Speaker 5: your view has limited upside. Right now, where in your

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Speaker 5: view should investors be putting their money Broadcom?

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Speaker 6: Right?

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Speaker 7: I think today, anytime in video loses share, it's to

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Speaker 7: one of its big customers, the hyperscalers, Intel, micros off Google,

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Speaker 7: not Intel, So our Google, Microsoft, Amazon, those companies are

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Speaker 7: all in various stages of designing their own GPU alternatives,

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Speaker 7: and Broadcom is going to make a lot of money

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Speaker 7: helping those those chips come to market.

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Speaker 5: When do you think those chips will be able to

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Speaker 5: hold a candle to what Nvidia has developed.

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Speaker 6: I think we're already there today.

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Speaker 7: I think Google Google has the TPU, their tensor processing unit.

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Speaker 7: They're on their fifth or sixth generation of those. Those

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Speaker 7: are incredibly performative. They work very well for Google and

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Speaker 7: what Google needs to do, and I think other Google's

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Speaker 7: peers are going to start to see the benefits of

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Speaker 7: that and move down that path as well.

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Speaker 3: All Right, you are listening and watching Bloomberg Business Week

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Speaker 3: Daily Carol Master along with Tim Stanevik live in our

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Speaker 3: Bloomberg Interactive Broker Studio. We're talking to Jay Goldberg, Senior

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Speaker 3: analyst of Sevenconductors and Electronics over at Seaport Research Partners.

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Speaker 3: As we said, he's the only analyst listed on the

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Speaker 3: Bloomberg with a cell rating on Nvidia, and yet here

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Speaker 3: in the after market, we are definitely not seeing investors

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Speaker 3: sell shares of Nvidia stock is up about three point

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Speaker 3: three percent.

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Speaker 4: This as the company did come out and post.

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Speaker 3: Its latest quarterly update as well as outlook, and as

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Speaker 3: our ian King rights, the company it's the world's largest

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Speaker 3: semiconductor company, giving an upbeat forecast even as China slowed

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Speaker 3: down Mars some of the growth slow down in China

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Speaker 3: weight on results, but sales will be about forty five

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Speaker 3: billion dollars in the fiscal second quarter that runs through July.

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Speaker 4: That included the loss of roughly.

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Speaker 3: Eight billion dollars in revenue from China because of export

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Speaker 3: controls from the United States.

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Speaker 4: The forecast was in line with the analyst estimates according

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Speaker 4: to our data.

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Speaker 3: So what's interesting is that even with that loss we're

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Speaker 3: talking about, sales will be about forty five billion dollars.

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Speaker 3: And as our ian King rights on our live blog,

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Speaker 3: how many companies could frontload their earnings release with details

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Speaker 3: of what they're missing out on and still get a

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Speaker 3: positive reaction from investors.

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Speaker 4: So the stock as we said, still.

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Speaker 3: Holding on to about a three and a half percent

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Speaker 3: gain here in the aftermarket.

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Speaker 5: Our colleague Carmen Ryanikey writing on our live blog that

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Speaker 5: it seems traders are acting to the company's revenue forecast,

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Speaker 5: which is still basically in line even with an expected

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Speaker 5: eight billion dollar loss. When it comes to H twenty revenue,

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Speaker 5: that signals in Vidia is making up for the loss elsewhere. Jay,

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Speaker 5: I want to bring you back in with the caveat

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Speaker 5: that you haven't necessarily had the time to comb through

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Speaker 5: these results. But in your view, where do you think

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Speaker 5: in Nvidia could be making up for the loss in

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Speaker 5: H twenty revenue.

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Speaker 7: I think there's still a lot of demand from the hyperscalers.

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Speaker 7: We have a bunch of massive data center buildouts taking place.

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Speaker 7: We had, you know, big announcements in Salary, Rabia last week,

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Speaker 7: Stargate earlier this year, UAE, ku Wait, lots of big

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Speaker 7: Gulf nations are building out data center capacity.

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Speaker 6: The hyperscalers.

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Speaker 7: You know have you know, building these plans these data

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Speaker 7: centers takes multiple years and so they've had commitments and

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Speaker 7: plans in place for a long time now. So those

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Speaker 7: are going to continue, right I think the question is

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Speaker 7: next year, can the capex continue to be at these levels?

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Speaker 6: What happens there?

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Speaker 7: But a lot of what we're seeing today is stuff

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Speaker 7: that was planned on and committed to months ago.

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Speaker 5: So I guess it also raises the question about demand

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Speaker 5: from these hyperscalers, which you said continues to remain strong.

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Speaker 5: You also said that it does seem like, especially when

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Speaker 5: it comes to Google, that they could have some products that,

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Speaker 5: in your view at this point, hold a candle to

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Speaker 5: in video in terms of where in Nvidia needs to

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Speaker 5: go next. Over the last few months, we've talked a

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Speaker 5: little bit about the way, and we're going to hear

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Speaker 5: from Jensen Wong six thirty Wall Street Time just in

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Speaker 5: a little under two hours. Ed Ludlow is going to

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Speaker 5: have an Nvidia Earning special six thirty pm Wall Street

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Speaker 5: Time on Bloomberg TV and Radio. But Jay, I'm wondering

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Speaker 5: about where you think the area of growth is for

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Speaker 5: in Nvidia right now in terms of products. We've seen

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Speaker 5: Jensen Wong talk in recent months about humanoid robots, about

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Speaker 5: self driving cars as areas of potential growth. Where do

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Speaker 5: you see that the company needs to go.

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Speaker 7: I think the two critical areas for them are in inference,

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Speaker 7: compute and robots. Inference is the stage of AI computing

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Speaker 7: where it sort of goes into wide adoption when we

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Speaker 7: built the model and then we.

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Speaker 6: Need to use it.

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Speaker 7: How that actually gets deployed I mentioned earlier, It depends

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Speaker 7: a lot on what we're actually doing with it. Inference

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Speaker 7: is going to be the big battleground. I think in

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Speaker 7: Vidia has a lock on the training side of the

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Speaker 7: model building, but the inference question is is looming large.

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Speaker 7: How we're actually going to deploy this. We as consumers

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Speaker 7: when we interact with with AI, where are those chips?

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Speaker 7: Are they in our phones? Is that where the AI

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Speaker 7: is being done or is it in the data center?

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Speaker 7: And I think that that's a big open question. Nobody

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Speaker 7: has a clear answer to that yet, and it's going

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Speaker 7: to matter a lot too, you know, I guarantee they're

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Speaker 7: going to talk about on the call. And the other

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Speaker 7: one is, like you mentioned, is robots. Jensen has talked

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Speaker 7: a lot about robots. It's a big theme of his

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Speaker 7: I think I think it's an area where there's there's

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Speaker 7: you know, dozens of companies building humanoid robots that can

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Speaker 7: do all kinds of interesting things. And I'm just waiting

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Speaker 7: for a robot that can help me fold laundry.

441
00:20:54,280 --> 00:20:57,320
Speaker 5: Yeah, and you and me both. Jay, Hey, Jay, appreciate

442
00:20:57,359 --> 00:20:59,159
Speaker 5: you joining us. Got to come back soon. Jake Goldberg,

443
00:20:59,200 --> 00:21:02,640
Speaker 5: Senior Analyst, semi Conductors and Electronics and Seaport Research Partners,

444
00:21:02,720 --> 00:21:04,199
Speaker 5: joining us from San Francisco.

445
00:21:04,600 --> 00:21:08,600
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us

446
00:21:08,640 --> 00:21:12,119
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen

447
00:21:12,119 --> 00:21:15,719
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,

448
00:21:15,840 --> 00:21:17,800
Speaker 2: or watch us live on YouTube.

449
00:21:18,200 --> 00:21:20,399
Speaker 5: A lot's happening in the universe of Elon must on

450
00:21:20,440 --> 00:21:23,120
Speaker 5: the ground and up in the sky, Up in the sky.

451
00:21:23,280 --> 00:21:27,400
Speaker 5: Space Ex's starship suffering a midflight loss, its third consecutive setback,

452
00:21:27,400 --> 00:21:30,040
Speaker 5: and it raises questions about the company's progress on the

453
00:21:30,080 --> 00:21:31,880
Speaker 5: project Close to Earth.

454
00:21:31,920 --> 00:21:32,200
Speaker 6: Though.

455
00:21:32,400 --> 00:21:36,439
Speaker 5: In an interview to CBS News, Elon Musk expressed dissatisfaction

456
00:21:36,880 --> 00:21:40,080
Speaker 5: with President Trump's giant tax bill, saying it undercut his

457
00:21:40,160 --> 00:21:42,120
Speaker 5: effort to slash government spending.

458
00:21:43,119 --> 00:21:48,040
Speaker 8: I was like disappointed to see the massive spending bill, frankly,

459
00:21:49,760 --> 00:21:53,359
Speaker 8: which increases the budge deps that does decrease it, and

460
00:21:53,400 --> 00:21:55,280
Speaker 8: that reminds the work that Podoche team is doing.

461
00:21:55,800 --> 00:21:58,280
Speaker 6: I actually thought that when this big beautiful bill came along.

462
00:21:58,320 --> 00:22:01,399
Speaker 9: I mean, like everything he don On does gets wiped

463
00:22:01,440 --> 00:22:02,359
Speaker 9: out in the first year.

464
00:22:03,960 --> 00:22:07,080
Speaker 8: I think it both can be big, board can be beautiful.

465
00:22:08,480 --> 00:22:10,560
Speaker 5: So that's a portion of the CBS interview with Elon

466
00:22:10,640 --> 00:22:13,240
Speaker 5: Musk gets set to air fully on CBS Sunday morning

467
00:22:13,359 --> 00:22:15,800
Speaker 5: this weekend. We should note that just the last couple

468
00:22:15,840 --> 00:22:19,359
Speaker 5: of hours, President Trump did dismiss criticism from Elon Musk

469
00:22:19,880 --> 00:22:21,679
Speaker 5: over the cost of his signature to AX bill. He

470
00:22:21,680 --> 00:22:25,240
Speaker 5: told reporters on Wednesday that compromises were made to secure

471
00:22:25,440 --> 00:22:28,479
Speaker 5: the necessary votes. We got Max Chafkin with us, the

472
00:22:28,480 --> 00:22:31,080
Speaker 5: co host of the podcast Everybody's Business and Elon Ink.

473
00:22:31,080 --> 00:22:33,600
Speaker 5: He's also senior reporter for Business Week. He joins us

474
00:22:33,600 --> 00:22:36,439
Speaker 5: here in the Bloomberg Interactive Brokers studio, You've got a

475
00:22:36,440 --> 00:22:39,680
Speaker 5: new story out about Elon and whether or not he

476
00:22:39,760 --> 00:22:41,240
Speaker 5: actually is leaving politics.

477
00:22:41,359 --> 00:22:42,000
Speaker 4: I feel like.

478
00:22:42,080 --> 00:22:44,560
Speaker 9: Every time we start to say he looks like he's

479
00:22:44,640 --> 00:22:49,800
Speaker 9: leaving politics, there is again making news in politics, and

480
00:22:49,840 --> 00:22:51,520
Speaker 9: you know, kind of here we go again, right. We

481
00:22:51,560 --> 00:22:54,760
Speaker 9: saw this at the end of last year when there.

482
00:22:54,640 --> 00:22:55,720
Speaker 6: Was talking the budget bill.

483
00:22:55,800 --> 00:22:59,960
Speaker 9: A Republican Congressional Republicans reaching compromise to fund the government

484
00:23:00,359 --> 00:23:03,560
Speaker 9: must kind of came out unexpectedly against that. I think

485
00:23:03,560 --> 00:23:07,280
Speaker 9: we're seeing something similar, right. He's attempting, I think, to

486
00:23:07,520 --> 00:23:12,240
Speaker 9: influence Congress here to at least shape this bill, if

487
00:23:12,320 --> 00:23:15,200
Speaker 9: not a torpedo at all together, which of course puts

488
00:23:15,280 --> 00:23:19,680
Speaker 9: him at odds in some sense with President Trump. Although,

489
00:23:19,680 --> 00:23:22,840
Speaker 9: as you heard from Trump right, Trump is also negotiating

490
00:23:23,359 --> 00:23:26,160
Speaker 9: with Congress right now over the exact contents of the bill.

491
00:23:26,359 --> 00:23:28,480
Speaker 5: So you think he actually has a goal with comments

492
00:23:28,480 --> 00:23:30,680
Speaker 5: like this, He actually has a goal of shaping policy.

493
00:23:31,000 --> 00:23:32,160
Speaker 6: And look clearly.

494
00:23:32,119 --> 00:23:35,600
Speaker 9: Yeah, I mean, like I don't know why else he

495
00:23:35,640 --> 00:23:38,639
Speaker 9: would be saying this. I mean, he seems to be

496
00:23:38,800 --> 00:23:44,720
Speaker 9: saying that this bill is insufficiently hawkish on the deficit.

497
00:23:45,080 --> 00:23:47,520
Speaker 9: That's a point of view, you know, that's pretty consistent

498
00:23:47,560 --> 00:23:51,480
Speaker 9: with Elon Musk. Also, there's a pretty substantial contingent in

499
00:23:51,520 --> 00:23:55,080
Speaker 9: the Republican Party that agrees with him. I also think

500
00:23:55,119 --> 00:23:57,600
Speaker 9: it might be worth looking at some of the specific

501
00:23:58,080 --> 00:24:00,119
Speaker 9: aspects of this bill. You know, this bill has his

502
00:24:00,800 --> 00:24:04,960
Speaker 9: implications for the electric vehicle industry. It gets rid of

503
00:24:05,000 --> 00:24:08,160
Speaker 9: these tax credits that have been very important to Elon Musk.

504
00:24:08,280 --> 00:24:11,960
Speaker 9: And other electric car companies. I don't know to what

505
00:24:12,080 --> 00:24:15,359
Speaker 9: extent those are still in play, but we don't know

506
00:24:15,400 --> 00:24:17,200
Speaker 9: what the final bill is going to look like. And

507
00:24:17,640 --> 00:24:22,200
Speaker 9: you could imagine getting Musk on side would be worth

508
00:24:22,240 --> 00:24:24,600
Speaker 9: something to support us this bill. So I suppose we'll see.

509
00:24:25,040 --> 00:24:29,640
Speaker 3: As long as Elon Musk Max is a financial supporter

510
00:24:30,000 --> 00:24:33,800
Speaker 3: of Donald Trump and Republicans, he's going to have a

511
00:24:33,840 --> 00:24:34,919
Speaker 3: direct line to the president.

512
00:24:35,000 --> 00:24:36,200
Speaker 4: Is that fair to make that assumption?

513
00:24:36,800 --> 00:24:39,640
Speaker 9: Yeah, I think it is fair, And I think even

514
00:24:39,480 --> 00:24:43,439
Speaker 9: in Trump's reaction here, you know, people, it's unclear to

515
00:24:43,480 --> 00:24:45,879
Speaker 9: me from that clip whether Elon Musk is intending to

516
00:24:45,880 --> 00:24:49,720
Speaker 9: criticize congressional Republicans or Donald Trump, although he did sort

517
00:24:49,760 --> 00:24:53,399
Speaker 9: of mock the name, you know, Trump's big beautiful bill formulation,

518
00:24:53,800 --> 00:24:57,479
Speaker 9: Trump responding to it in a pretty accommodating way, like

519
00:24:57,480 --> 00:25:01,520
Speaker 9: he's he's not punching backs, He's taking it like a

520
00:25:01,640 --> 00:25:06,080
Speaker 9: criticism from a friend or something like that. Elon Musk

521
00:25:06,240 --> 00:25:09,159
Speaker 9: is going to be very is still very important to

522
00:25:09,240 --> 00:25:12,520
Speaker 9: Donald Trump and to Republicans as a potential funder in

523
00:25:12,560 --> 00:25:17,800
Speaker 9: the midterm elections and as also a very very visible supporter,

524
00:25:18,000 --> 00:25:21,000
Speaker 9: right he you know, he's very polarizing now, but he's

525
00:25:21,040 --> 00:25:25,520
Speaker 9: still a successful business person, you know, an American industrialist.

526
00:25:26,160 --> 00:25:28,560
Speaker 9: You know, his support matters beyond money.

527
00:25:28,840 --> 00:25:30,720
Speaker 5: Carol made an interesting comment, I can't remember if it

528
00:25:30,720 --> 00:25:32,119
Speaker 5: was this week or last week, during one of our

529
00:25:32,200 --> 00:25:35,280
Speaker 5: editorial calls about the press that Elon Musk has been

530
00:25:35,280 --> 00:25:35,879
Speaker 5: doing lately.

531
00:25:36,119 --> 00:25:37,879
Speaker 4: Yeah, it's like the Eras tour.

532
00:25:39,440 --> 00:25:41,439
Speaker 5: I think it's notable for a couple of reasons. One,

533
00:25:41,560 --> 00:25:45,359
Speaker 5: when he bought X, it seemed like he was doing

534
00:25:45,359 --> 00:25:49,359
Speaker 5: everything directly to his followers and directly to the world

535
00:25:49,400 --> 00:25:52,119
Speaker 5: through X. He put his head down and worked a

536
00:25:52,119 --> 00:25:54,480
Speaker 5: lot with Doge. There were some Fox interviews over that

537
00:25:54,480 --> 00:25:56,480
Speaker 5: period of time. But as he's moved away from the

538
00:25:56,520 --> 00:25:58,200
Speaker 5: White House and over the last few weeks, we've we've

539
00:25:58,240 --> 00:26:01,439
Speaker 5: heard more and more from him, and especially through like

540
00:26:01,640 --> 00:26:03,960
Speaker 5: quote unquote traditional like legacy media.

541
00:26:04,160 --> 00:26:05,919
Speaker 3: That's what kills me because you guys make fun of me,

542
00:26:06,119 --> 00:26:07,840
Speaker 3: like my little Sunday morning shows that I watch.

543
00:26:07,880 --> 00:26:12,040
Speaker 4: But it's Sunday morning. It's a very mass wide audience.

544
00:26:12,280 --> 00:26:16,160
Speaker 9: So I think what's going on is Musk is suffering

545
00:26:16,200 --> 00:26:18,800
Speaker 9: a lot of blowback from customers.

546
00:26:18,880 --> 00:26:19,000
Speaker 10: Right.

547
00:26:19,040 --> 00:26:21,600
Speaker 9: He talks all the time about you know, the legacy

548
00:26:21,640 --> 00:26:24,280
Speaker 9: media and the Democrats and the and his various sort

549
00:26:24,280 --> 00:26:27,639
Speaker 9: of political adversaries. But what's happened when you look at

550
00:26:27,640 --> 00:26:32,280
Speaker 9: opinion polling is regular people, the people who buy musk stuff,

551
00:26:32,480 --> 00:26:35,000
Speaker 9: have turned on him. There was a really interesting poll

552
00:26:35,359 --> 00:26:38,360
Speaker 9: published the other day by Harris and Axios. They ask

553
00:26:38,440 --> 00:26:42,320
Speaker 9: people to rate how they basically how much they trust

554
00:26:42,359 --> 00:26:45,080
Speaker 9: well known companies. And you look at Tesla and SpaceX

555
00:26:45,480 --> 00:26:48,520
Speaker 9: over the last five years, and it is stunning. They

556
00:26:48,520 --> 00:26:51,520
Speaker 9: went from being some of the companies with the best

557
00:26:51,560 --> 00:26:54,440
Speaker 9: reputation to some of the companies in this universe of

558
00:26:54,440 --> 00:26:57,560
Speaker 9: one hundred companies with the worst reputation. And I think

559
00:26:57,600 --> 00:27:01,160
Speaker 9: what he's trying to do is get both investors and

560
00:27:01,320 --> 00:27:04,879
Speaker 9: consumers to focus on the other stuff, the non political stuff.

561
00:27:04,880 --> 00:27:07,440
Speaker 9: So we had this rocket launch yesterday, which, as he said,

562
00:27:07,480 --> 00:27:10,600
Speaker 9: Tim did not go very well for SpaceX, but there

563
00:27:10,640 --> 00:27:12,240
Speaker 9: was a big media role out. He did a bunch

564
00:27:12,280 --> 00:27:16,119
Speaker 9: of interviews with various outlets. I assume, although don't know

565
00:27:16,200 --> 00:27:19,840
Speaker 9: for sure, that this CBS interview was part of that,

566
00:27:21,000 --> 00:27:24,159
Speaker 9: essentially saying like, look at the space stuff, look at

567
00:27:24,200 --> 00:27:28,080
Speaker 9: the technology, which I think is smart from a messaging perspective,

568
00:27:28,119 --> 00:27:32,240
Speaker 9: because SpaceX is just inherently going to be less political

569
00:27:32,680 --> 00:27:35,560
Speaker 9: than you know, attacking various parts of the federal government.

570
00:27:35,880 --> 00:27:39,199
Speaker 9: On the other hand, Musk still needs this relationship with

571
00:27:39,240 --> 00:27:42,280
Speaker 9: Donald Trump, and SpaceX still needs this relationship with Donald Trump.

572
00:27:42,359 --> 00:27:44,240
Speaker 9: So it's going to be a difficult dance. I think

573
00:27:44,240 --> 00:27:46,719
Speaker 9: it's going to be very hard for him to undo

574
00:27:46,920 --> 00:27:49,880
Speaker 9: some of the damage that was caused with certain consumers,

575
00:27:49,920 --> 00:27:51,480
Speaker 9: especially you know, left leaning consumers.

576
00:27:51,640 --> 00:27:54,320
Speaker 3: You know, I always think about money with everything we do,

577
00:27:54,640 --> 00:27:57,080
Speaker 3: rightfully so, but there's a story on the Bloomberg about

578
00:27:57,080 --> 00:28:00,880
Speaker 3: Elon Musk's Neuralink raising six center million in a deal

579
00:28:00,920 --> 00:28:03,840
Speaker 3: that values that company at nine billion. This is coming

580
00:28:03,840 --> 00:28:07,840
Speaker 3: from Semaphore siding unidentified people. So people, it sounds like

581
00:28:07,880 --> 00:28:11,440
Speaker 3: if this is true, like still committing money to his ventures.

582
00:28:11,480 --> 00:28:14,840
Speaker 3: I mean, I wonder, Max, we live in a funny world.

583
00:28:14,960 --> 00:28:17,480
Speaker 3: Could it be six months, twelve months, eighteen months where

584
00:28:17,480 --> 00:28:19,720
Speaker 3: all of a sudden, like everybody's kind.

585
00:28:19,520 --> 00:28:21,480
Speaker 5: Of back in on Eli because we have brain chips.

586
00:28:21,560 --> 00:28:22,520
Speaker 4: Because we have brainchips.

587
00:28:22,640 --> 00:28:22,879
Speaker 8: Is that what?

588
00:28:23,359 --> 00:28:24,360
Speaker 4: Maybe there is brain chips?

589
00:28:24,400 --> 00:28:26,520
Speaker 3: But you know what I mean, Like, I don't know,

590
00:28:26,600 --> 00:28:28,800
Speaker 3: does he do something I don't know.

591
00:28:29,000 --> 00:28:32,679
Speaker 9: I think he's in a very difficult political position. I

592
00:28:32,720 --> 00:28:35,000
Speaker 9: think certainly that is what investors are hoping, you know, right.

593
00:28:35,280 --> 00:28:37,560
Speaker 9: He made some comments on the earnings call about a

594
00:28:37,600 --> 00:28:40,120
Speaker 9: month ago, essentially saying, you know, maybe I'll spend one

595
00:28:40,200 --> 00:28:43,000
Speaker 9: to two days a week advising President Trump rather than

596
00:28:43,040 --> 00:28:43,920
Speaker 9: you know, full time.

597
00:28:44,960 --> 00:28:46,560
Speaker 5: And I was saying twenty four to seven, he's going

598
00:28:46,600 --> 00:28:50,280
Speaker 5: to be on company.

599
00:28:50,200 --> 00:28:51,800
Speaker 4: Sleeping somewhere on the floors.

600
00:28:51,880 --> 00:28:52,479
Speaker 8: Who knows.

601
00:28:53,280 --> 00:28:56,440
Speaker 9: I mean, you know, investors like this. The issue is

602
00:28:57,440 --> 00:28:59,760
Speaker 9: he is now closely tied to Donald Trump, and I

603
00:28:59,800 --> 00:29:03,360
Speaker 9: don't I don't think short of really like turning critic

604
00:29:03,880 --> 00:29:06,479
Speaker 9: and saying, okay, now I support a different political party,

605
00:29:06,600 --> 00:29:09,280
Speaker 9: which could happen. I think it's going to be very

606
00:29:09,320 --> 00:29:12,400
Speaker 9: hard for him to walk that line because all you know,

607
00:29:12,520 --> 00:29:15,840
Speaker 9: politics is very polarized in this country, and it's going

608
00:29:15,880 --> 00:29:19,040
Speaker 9: to be hard to avoid, you know, winning back these

609
00:29:19,080 --> 00:29:22,920
Speaker 9: people he's alienated without in turn alienating you know, this

610
00:29:23,040 --> 00:29:25,760
Speaker 9: kind of new cohort or conservatives who still very much

611
00:29:25,800 --> 00:29:26,800
Speaker 9: support Donald Trump.

612
00:29:27,360 --> 00:29:30,000
Speaker 5: Just twenty seconds left on the SpaceX launch that didn't

613
00:29:30,000 --> 00:29:33,080
Speaker 5: go exactly as planned? Can can they still spin it

614
00:29:33,160 --> 00:29:34,640
Speaker 5: as a win. That's what they're doing.

615
00:29:34,920 --> 00:29:37,360
Speaker 9: You know, all these launches are experiments. That's they're going

616
00:29:37,440 --> 00:29:40,000
Speaker 9: to say so, so you shouldn't really focus on the result.

617
00:29:40,200 --> 00:29:43,280
Speaker 9: That said, a lot has to go right between now

618
00:29:43,320 --> 00:29:45,560
Speaker 9: and next year for them to hit the timeline. And

619
00:29:45,640 --> 00:29:48,080
Speaker 9: each time one of these launches does not go right,

620
00:29:48,360 --> 00:29:49,080
Speaker 9: it gets harder.

621
00:29:49,480 --> 00:29:52,560
Speaker 5: Max Chafkin, the co host of the podcast Everybody's Business

622
00:29:52,600 --> 00:29:56,320
Speaker 5: and Elon Ink, also senior reporter for Bloomberg BusinessWeek. He's

623
00:29:56,360 --> 00:29:59,120
Speaker 5: joining us here in the Bloomberg Interactive at Brokers Studio.

624
00:30:00,880 --> 00:30:04,760
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live

625
00:30:04,840 --> 00:30:07,719
Speaker 2: each weekday starting at two pm Eastern on Apple car

626
00:30:07,840 --> 00:30:10,640
Speaker 2: Play and the Android Auto with the Bloomberg Business App.

627
00:30:10,720 --> 00:30:13,520
Speaker 2: You can also listen live on Amazon Alexa from our

628
00:30:13,520 --> 00:30:17,680
Speaker 2: flagship New York station, Just Say Alexa played Bloomberg eleven thirty.

629
00:30:19,280 --> 00:30:21,400
Speaker 5: It is one of the most read stories on the

630
00:30:21,440 --> 00:30:24,320
Speaker 5: Bloomberg terminal right now. ETFs have a mass trillions of

631
00:30:24,360 --> 00:30:28,600
Speaker 5: dollars by offering investors greater tax efficiency, liquidity, and lower

632
00:30:28,600 --> 00:30:32,400
Speaker 5: costs than mutual funds. It's why we've seen inflows that

633
00:30:32,440 --> 00:30:37,520
Speaker 5: are so huge into ETFs and not into mutual funds. Now,

634
00:30:37,800 --> 00:30:40,400
Speaker 5: a regulatory shift is poised to bring ETFs and mutual

635
00:30:40,400 --> 00:30:43,640
Speaker 5: funds closer together, but it also threatens to complicate the

636
00:30:43,760 --> 00:30:47,640
Speaker 5: very features that fueled the ETF boom. Done Emi Grafeo

637
00:30:47,720 --> 00:30:50,560
Speaker 5: and Wildona Hire right about the dual share class structures

638
00:30:50,600 --> 00:30:52,680
Speaker 5: that could be approved as soon as the summer, and

639
00:30:52,720 --> 00:30:56,600
Speaker 5: the warnings about what could transpire if the market becomes stressed.

640
00:30:56,600 --> 00:30:58,920
Speaker 5: They're both Bloomberg News Crossouts reporters and they join us

641
00:30:58,920 --> 00:31:02,440
Speaker 5: here in the Bloomberg Interactive Brokers Studio. Emily, I want

642
00:31:02,440 --> 00:31:06,400
Speaker 5: to start with what this looming shift is, this regulatory shift.

643
00:31:06,440 --> 00:31:09,640
Speaker 5: Explain what exactly it is and why it's happening.

644
00:31:10,440 --> 00:31:13,160
Speaker 10: Okay, so right now, when you're an investor and you

645
00:31:13,200 --> 00:31:17,239
Speaker 10: buy a fund, you buy a mutual fund, or you

646
00:31:17,280 --> 00:31:20,840
Speaker 10: buy an ETF, and ETFs have one share class. It's

647
00:31:20,920 --> 00:31:23,000
Speaker 10: just an ETF, you get the ticker you buy. If

648
00:31:23,040 --> 00:31:26,600
Speaker 10: you buy a mutual fund, depending on what avenue you're

649
00:31:26,600 --> 00:31:29,200
Speaker 10: buying it through, you'll be in a different share class.

650
00:31:29,200 --> 00:31:32,200
Speaker 10: You could be in the institutional one, the retail one,

651
00:31:32,400 --> 00:31:34,000
Speaker 10: the advisor friendly one.

652
00:31:34,120 --> 00:31:35,400
Speaker 1: Sometimes their price differently.

653
00:31:35,480 --> 00:31:37,160
Speaker 5: Yeah, I was going to say, sometimes the share class

654
00:31:37,160 --> 00:31:40,840
Speaker 5: has a different expense ratio or I don't know, like

655
00:31:41,160 --> 00:31:44,640
Speaker 5: that's the difference, right, Yeah, yetifically exclusively through your private wealth.

656
00:31:44,400 --> 00:31:45,440
Speaker 1: Matter or something exactly.

657
00:31:45,520 --> 00:31:47,400
Speaker 10: So maybe you get like a discount because you're using

658
00:31:47,440 --> 00:31:50,280
Speaker 10: it through like your employer or something, but ETFs don't

659
00:31:50,480 --> 00:31:54,800
Speaker 10: have that. Twenty over twenty years ago, actually Vanguard made

660
00:31:54,840 --> 00:31:58,400
Speaker 10: this patent where they could create a dual share class

661
00:31:58,400 --> 00:32:01,320
Speaker 10: fund where they have a mutual fund and an ETF

662
00:32:01,520 --> 00:32:04,120
Speaker 10: all in one, so you have multiple mutual fund share

663
00:32:04,120 --> 00:32:07,600
Speaker 10: classes and then one share class of that is exchange traded.

664
00:32:08,040 --> 00:32:10,600
Speaker 10: The reason why they did this and they patented it

665
00:32:10,640 --> 00:32:14,800
Speaker 10: is because it makes the fund in total more tax efficient.

666
00:32:14,920 --> 00:32:18,400
Speaker 10: Basically takes all the tax efficiency of the ETF and

667
00:32:18,480 --> 00:32:21,040
Speaker 10: puts it onto the mutual fund. So they figured this out.

668
00:32:21,080 --> 00:32:23,920
Speaker 10: They were like, great idea, let's patent it, make sure

669
00:32:24,000 --> 00:32:27,080
Speaker 10: no one else does it, and they save their clients

670
00:32:27,160 --> 00:32:29,640
Speaker 10: billions on taxes over the years.

671
00:32:30,000 --> 00:32:31,720
Speaker 1: The patent expired two years.

672
00:32:31,520 --> 00:32:34,960
Speaker 10: Ago, so now everyone else on Wall Street is trying

673
00:32:35,040 --> 00:32:36,360
Speaker 10: to get in on it.

674
00:32:36,680 --> 00:32:39,240
Speaker 4: Can anybody and everybody do it? Goes on it? Well

675
00:32:39,280 --> 00:32:39,680
Speaker 4: not yet.

676
00:32:39,760 --> 00:32:42,680
Speaker 11: So we have more than fifty firms that have applied

677
00:32:42,880 --> 00:32:45,520
Speaker 11: for the dual share class, but we are still waiting

678
00:32:45,920 --> 00:32:50,280
Speaker 11: from regulators to hear from regulators. We are expecting, you know,

679
00:32:50,320 --> 00:32:54,040
Speaker 11: the industries, expecting the SEC to greenlight this and to

680
00:32:54,120 --> 00:32:57,440
Speaker 11: actually allow it, maybe possibly as soon as this summer.

681
00:32:57,720 --> 00:33:00,600
Speaker 11: But you know, right now we're just in in wait

682
00:33:00,640 --> 00:33:03,040
Speaker 11: and see mode to see if we can actually get

683
00:33:03,040 --> 00:33:03,640
Speaker 11: approval on this.

684
00:33:03,840 --> 00:33:06,400
Speaker 5: Build on what's the concern here? If there is stress

685
00:33:06,480 --> 00:33:08,760
Speaker 5: to the market, if there are liquidity issues, like what

686
00:33:08,800 --> 00:33:10,920
Speaker 5: are the risks that some of your sources are sharing

687
00:33:10,960 --> 00:33:11,160
Speaker 5: with you.

688
00:33:11,520 --> 00:33:13,480
Speaker 11: Well, there's a couple of different concerns, but one of

689
00:33:13,520 --> 00:33:16,920
Speaker 11: the main ones is, you know, issues related to what

690
00:33:17,000 --> 00:33:21,240
Speaker 11: Emily was just talking about in terms of the tax efficiency.

691
00:33:21,480 --> 00:33:26,720
Speaker 11: So if you have a mutual fund and ETF together

692
00:33:27,680 --> 00:33:30,760
Speaker 11: and you and the mutual fund has to pay out

693
00:33:30,880 --> 00:33:36,160
Speaker 11: capital gains distributions, then in that new structure, the ETF

694
00:33:36,320 --> 00:33:39,400
Speaker 11: investors could potentially also be hit. And there is some

695
00:33:39,600 --> 00:33:43,080
Speaker 11: historical precedent. There actually is a fund of anguart fund

696
00:33:43,280 --> 00:33:46,920
Speaker 11: that back in two thousand and nine had huge outflows

697
00:33:46,960 --> 00:33:49,480
Speaker 11: and so the ETF share class investor, you know, the

698
00:33:49,520 --> 00:33:52,680
Speaker 11: ETF investors were also hit with a fourteen percent distribution.

699
00:33:52,920 --> 00:33:54,200
Speaker 4: So there is some.

700
00:33:54,320 --> 00:33:57,240
Speaker 11: Precedent and so a lot of market watchers or you know,

701
00:33:57,280 --> 00:33:59,040
Speaker 11: people who are maybe looking at this from a critical

702
00:33:59,080 --> 00:34:03,040
Speaker 11: angle or thinking ahead and saying that potentially this is

703
00:34:03,560 --> 00:34:04,719
Speaker 11: an issue that could come up.

704
00:34:04,760 --> 00:34:06,080
Speaker 4: All right, I'm going to age myself.

705
00:34:06,120 --> 00:34:09,320
Speaker 3: But when I started this career about three decades in accounting,

706
00:34:10,520 --> 00:34:11,680
Speaker 3: one of my first things I did was like a

707
00:34:11,760 --> 00:34:14,400
Speaker 3: mutual fund show and it was just like it was

708
00:34:14,440 --> 00:34:16,279
Speaker 3: kind of everybody was all of a sudden, you know,

709
00:34:16,360 --> 00:34:18,880
Speaker 3: getting investment plans at their companies, and it was the

710
00:34:18,880 --> 00:34:21,040
Speaker 3: big thing. And I guess and then now we've kind

711
00:34:21,080 --> 00:34:23,800
Speaker 3: of seen the ETF rush over what the last decade

712
00:34:23,880 --> 00:34:24,560
Speaker 3: or so in counting?

713
00:34:25,480 --> 00:34:26,360
Speaker 4: Do we need both?

714
00:34:27,840 --> 00:34:27,920
Speaker 9: Like?

715
00:34:28,080 --> 00:34:28,919
Speaker 4: Is it just a case?

716
00:34:28,960 --> 00:34:30,680
Speaker 3: Like as I saw this story, I'm like, Okay, here

717
00:34:30,719 --> 00:34:34,000
Speaker 3: it goes the mergeover to ETFs. Is this a first

718
00:34:34,040 --> 00:34:37,000
Speaker 3: step of eventually everything being converted? Or are there are

719
00:34:37,000 --> 00:34:41,880
Speaker 3: advantages to having one pure bread ETF versus one pure.

720
00:34:41,719 --> 00:34:42,919
Speaker 4: Bread mutual fund?

721
00:34:42,960 --> 00:34:45,400
Speaker 10: Yeah? I think when we started out writing this story,

722
00:34:45,520 --> 00:34:48,080
Speaker 10: we wanted to understand. There was this report from Seruly

723
00:34:48,160 --> 00:34:51,600
Speaker 10: and they posed this question of like, why would you

724
00:34:51,719 --> 00:34:54,560
Speaker 10: buy if you're an investor in an ETF, why would

725
00:34:54,560 --> 00:34:56,239
Speaker 10: you buy an ETF attached to.

726
00:34:56,239 --> 00:34:58,440
Speaker 1: A mutual fund if you could just buy a standalone one?

727
00:34:58,560 --> 00:34:58,680
Speaker 9: Right?

728
00:34:58,719 --> 00:35:00,600
Speaker 1: Because the sec one of their.

729
00:35:00,680 --> 00:35:03,600
Speaker 10: Concerns that they flagged, and issuers will say that they've

730
00:35:03,640 --> 00:35:06,080
Speaker 10: answered them. One of the concerns is is there going

731
00:35:06,120 --> 00:35:09,560
Speaker 10: to be this issue of like cross subsidization, one class

732
00:35:09,600 --> 00:35:12,719
Speaker 10: subsidized in the other. To answer your question, though, there

733
00:35:12,760 --> 00:35:16,760
Speaker 10: are some advantages to mutual funds. A lot of mutual

734
00:35:16,760 --> 00:35:21,000
Speaker 10: funds are already in tax exempt accounts, So a lot

735
00:35:21,040 --> 00:35:25,040
Speaker 10: of mutual funds in people's four to one k's. That's

736
00:35:25,080 --> 00:35:28,439
Speaker 10: probably the four to one k technology. It's not really

737
00:35:28,480 --> 00:35:32,400
Speaker 10: suited to hold ETFs. So most of our sources expect

738
00:35:32,400 --> 00:35:34,400
Speaker 10: that that that's a pretty big part of the market

739
00:35:34,400 --> 00:35:34,880
Speaker 10: that will.

740
00:35:34,760 --> 00:35:36,960
Speaker 1: Stay in mutual funds.

741
00:35:37,360 --> 00:35:40,680
Speaker 10: This structure is more for maybe if you're an investor

742
00:35:40,719 --> 00:35:42,239
Speaker 10: that you've been sitting in a mutual.

743
00:35:42,000 --> 00:35:45,080
Speaker 1: Fund in like your brokerage account for years and years,

744
00:35:45,120 --> 00:35:46,280
Speaker 1: and you have all.

745
00:35:46,120 --> 00:35:48,640
Speaker 10: Of these embedded capital gains that if you were to

746
00:35:48,680 --> 00:35:50,600
Speaker 10: sell you would pay a huge.

747
00:35:51,600 --> 00:35:52,680
Speaker 1: Capital gains tax on.

748
00:35:52,880 --> 00:35:55,359
Speaker 10: You could tax free convert into the ETF with this

749
00:35:55,520 --> 00:35:58,400
Speaker 10: and maybe wash out at least some of the taxes.

750
00:35:58,400 --> 00:35:59,239
Speaker 1: That's the idea here.

751
00:36:00,239 --> 00:36:03,719
Speaker 5: Build on our people or firms still launching mutual funds,

752
00:36:03,760 --> 00:36:06,280
Speaker 5: are they going all in on atfs?

753
00:36:06,760 --> 00:36:09,399
Speaker 11: I mean, we're atf reporters, so I'm gonna say they're

754
00:36:09,440 --> 00:36:10,520
Speaker 11: all going all in on the.

755
00:36:12,560 --> 00:36:13,359
Speaker 10: Coperation vice.

756
00:36:13,800 --> 00:36:16,800
Speaker 5: But it has seemed like even some of the huge

757
00:36:17,719 --> 00:36:21,720
Speaker 5: traditional mutual fund companies, like a Capitol Group for example,

758
00:36:21,719 --> 00:36:24,120
Speaker 5: I think you spoke to them at Milken Carol.

759
00:36:25,719 --> 00:36:28,680
Speaker 11: MFS is one hundred and one years old and they

760
00:36:28,760 --> 00:36:30,120
Speaker 11: launched five ETFs.

761
00:36:29,800 --> 00:36:31,919
Speaker 5: Lash like that's that's a big deal.

762
00:36:32,320 --> 00:36:34,440
Speaker 11: I think all of them are watching where the money

763
00:36:34,480 --> 00:36:39,240
Speaker 11: is flowing, and mutual funds as a category are seeing outflows,

764
00:36:39,239 --> 00:36:42,719
Speaker 11: and ETFs are seeing record inflows every single year. And

765
00:36:42,800 --> 00:36:48,160
Speaker 11: obviously we're seeing like hundreds of new ETFs every single year,

766
00:36:48,280 --> 00:36:52,360
Speaker 11: and not all of them are you know, home runs,

767
00:36:52,800 --> 00:36:57,360
Speaker 11: but you just need one. If you're a small etf

768
00:36:57,400 --> 00:37:00,799
Speaker 11: issuer and you have one hit, that's it.

769
00:37:00,920 --> 00:37:02,720
Speaker 1: Like that, you're you're set.

770
00:37:02,840 --> 00:37:05,520
Speaker 11: Like you know, if you have one strategy that that

771
00:37:05,719 --> 00:37:08,120
Speaker 11: you know, maybe a ton of retail investors are attracted to,

772
00:37:08,480 --> 00:37:12,800
Speaker 11: or something new, something that truly is innovative, it can.

773
00:37:12,680 --> 00:37:13,960
Speaker 1: Work out really well for you.

774
00:37:14,040 --> 00:37:16,000
Speaker 11: So a lot of people are looking at that and

775
00:37:16,040 --> 00:37:17,080
Speaker 11: thinking about.

776
00:37:16,920 --> 00:37:17,440
Speaker 4: Well why not.

777
00:37:17,560 --> 00:37:20,640
Speaker 11: It's pretty cheap actually to file and a lot of

778
00:37:20,640 --> 00:37:23,839
Speaker 11: times to launch ETFs. It's a bit obviously, it's very

779
00:37:23,880 --> 00:37:27,640
Speaker 11: difficult to attract assets and attention and eyeballs, et cetera.

780
00:37:28,000 --> 00:37:30,560
Speaker 11: But if you can do it, you know, you can

781
00:37:30,600 --> 00:37:31,799
Speaker 11: get you can get a home run.

782
00:37:31,840 --> 00:37:33,680
Speaker 3: I mean, is there something to learn by what Vanguard

783
00:37:33,680 --> 00:37:36,560
Speaker 3: did and kind of where this then maybe ultimately goes Yeah.

784
00:37:36,600 --> 00:37:39,440
Speaker 10: I mean, well, one, using the structure, they were able

785
00:37:39,480 --> 00:37:45,640
Speaker 10: to save clients in mutual funds a lot on taxes.

786
00:37:45,760 --> 00:37:50,200
Speaker 10: Vanguard gets consistent inflows. So then this this concern about

787
00:37:50,600 --> 00:37:55,080
Speaker 10: the capital gains distributions like bleeding into the ETF, it's

788
00:37:55,120 --> 00:37:57,920
Speaker 10: really only concern concerning if the mutual fund gets a

789
00:37:57,960 --> 00:38:00,640
Speaker 10: ton of outflows and has to like sell shares to

790
00:38:01,280 --> 00:38:05,720
Speaker 10: meet a redemption. They've been really successful. But I mean, Carol,

791
00:38:05,760 --> 00:38:08,840
Speaker 10: they are Vanguard. That's why get huge flows. They have

792
00:38:08,880 --> 00:38:12,920
Speaker 10: a huge audience. I think everyone saw Vanguard's success. I

793
00:38:12,960 --> 00:38:16,239
Speaker 10: think most fund managers are realistic and that like, they

794
00:38:16,239 --> 00:38:19,680
Speaker 10: don't have the scale the Vanguard has. Fair but if

795
00:38:19,680 --> 00:38:21,719
Speaker 10: this is a way to maybe squeeze a little bit

796
00:38:21,719 --> 00:38:24,120
Speaker 10: out and get a couple more assets through now having

797
00:38:24,160 --> 00:38:27,640
Speaker 10: an ETF, might as well try.

798
00:38:26,960 --> 00:38:30,120
Speaker 11: But if I can add, yeah, you know, market watchers

799
00:38:30,160 --> 00:38:34,000
Speaker 11: critics people We've talked to analysts who are anticipating any

800
00:38:34,000 --> 00:38:36,040
Speaker 11: of the potential conflicts with this. They say it's not

801
00:38:36,080 --> 00:38:40,160
Speaker 11: a panacea for mutual fund managers to stench outflows like

802
00:38:40,920 --> 00:38:43,600
Speaker 11: mutual funds still are expected to.

803
00:38:43,600 --> 00:38:45,239
Speaker 4: Keep seeing outflows.

804
00:38:45,239 --> 00:38:49,200
Speaker 11: So even if you get this dual share class structure approved,

805
00:38:49,400 --> 00:38:52,160
Speaker 11: it doesn't mean that your outflows are going to You

806
00:38:52,160 --> 00:38:54,600
Speaker 11: know that you'll be all set terms of performance is

807
00:38:54,680 --> 00:38:56,480
Speaker 11: bad saying exactly, Bill.

808
00:38:56,320 --> 00:38:59,160
Speaker 5: Donnie, you mentioned that if you have a successful ETF,

809
00:38:59,560 --> 00:39:03,040
Speaker 5: it can be game changing for a smaller term. What

810
00:39:03,160 --> 00:39:06,920
Speaker 5: about if it's Trump Media and Technology, for example, you

811
00:39:06,960 --> 00:39:10,520
Speaker 5: wrote about this company recently. It's majority owned by the

812
00:39:10,560 --> 00:39:13,120
Speaker 5: President of the United States, and you wrote that they're

813
00:39:13,160 --> 00:39:15,440
Speaker 5: laying the groundwork to come out with some ETFs.

814
00:39:15,640 --> 00:39:16,040
Speaker 1: They are.

815
00:39:16,320 --> 00:39:19,200
Speaker 11: It's actually an unusual move to pre announce that you

816
00:39:19,280 --> 00:39:23,520
Speaker 11: are planning to launch ETFs. Usually, issuers keep their ideas

817
00:39:23,560 --> 00:39:27,040
Speaker 11: close to their what's the saying, to their vest, to

818
00:39:27,080 --> 00:39:30,399
Speaker 11: their heart, and close to the vest, and so it's

819
00:39:30,480 --> 00:39:32,440
Speaker 11: very unusual to pre announce that you're going to be

820
00:39:32,480 --> 00:39:36,000
Speaker 11: doing something. But Trump Media did say that they are

821
00:39:36,239 --> 00:39:41,160
Speaker 11: planning on soon filing and launching ETFs, and separately Managed

822
00:39:41,160 --> 00:39:44,919
Speaker 11: accounts SMAs with three different themes, oil and gas, made

823
00:39:44,960 --> 00:39:47,000
Speaker 11: in America, and cryptocurrencies.

824
00:39:47,400 --> 00:39:48,399
Speaker 4: The catch here is.

825
00:39:48,360 --> 00:39:53,719
Speaker 11: Obviously all of that is tied to the president's various policies,

826
00:39:53,760 --> 00:39:58,400
Speaker 11: whether they're terrifilated or cryptocurrency related. Obviously, oil and gas

827
00:39:58,600 --> 00:40:01,200
Speaker 11: was a big theme when he was running for re election, right,

828
00:40:01,680 --> 00:40:05,800
Speaker 11: But more than sixty oil and gas ETFs already exist,

829
00:40:06,000 --> 00:40:12,000
Speaker 11: more than sixty focus. There's even a handful of made

830
00:40:12,000 --> 00:40:14,799
Speaker 11: in America ETFs already, and so what a lot of

831
00:40:15,000 --> 00:40:18,040
Speaker 11: ETF you know, analysts ETF.

832
00:40:18,120 --> 00:40:19,680
Speaker 1: The industry is looking.

833
00:40:19,440 --> 00:40:23,040
Speaker 11: At this and thinking it's you know, you're adding to

834
00:40:23,080 --> 00:40:27,279
Speaker 11: the mix of an already saturated, oversaturated market. But it

835
00:40:27,320 --> 00:40:30,880
Speaker 11: does come with potentially the president being able to, you know,

836
00:40:30,920 --> 00:40:32,680
Speaker 11: maybe go out and say you can buy my phones

837
00:40:32,760 --> 00:40:36,319
Speaker 11: or something along those lines, and that that might you know,

838
00:40:36,440 --> 00:40:40,319
Speaker 11: hinder or hurt his competitors, the people who already have

839
00:40:40,360 --> 00:40:41,080
Speaker 11: these et al.

840
00:40:41,040 --> 00:40:42,840
Speaker 3: Right, that's a great story that you have on the terminal.

841
00:40:42,880 --> 00:40:44,600
Speaker 3: We're gonna give you guys equal love because you guys

842
00:40:44,600 --> 00:40:46,680
Speaker 3: did a story together, that was your story, and well

843
00:40:46,719 --> 00:40:49,160
Speaker 3: you've got another ETF story. We've just got about forty

844
00:40:49,160 --> 00:40:52,600
Speaker 3: seconds left here about State Street looking to kind of

845
00:40:52,600 --> 00:40:55,120
Speaker 3: double down on it's a bit to bring private assets

846
00:40:55,160 --> 00:40:59,319
Speaker 3: to a broader spectrum of investors. So this is an ETF.

847
00:40:59,320 --> 00:41:01,680
Speaker 3: This is an ets the private market world.

848
00:41:01,880 --> 00:41:04,520
Speaker 10: Yeah, this is a private credit ETF. They have one

849
00:41:04,560 --> 00:41:08,480
Speaker 10: already and launched in February. The flows have been very lackluster,

850
00:41:09,120 --> 00:41:11,520
Speaker 10: especially for Stage Street. They're a big issuer. They've only

851
00:41:11,560 --> 00:41:14,480
Speaker 10: seen like five million inflows over a couple of months.

852
00:41:14,480 --> 00:41:16,400
Speaker 10: But they are doubling down. This one's going to be

853
00:41:16,400 --> 00:41:20,200
Speaker 10: a short duration private acid ETF. The one they have

854
00:41:20,280 --> 00:41:21,840
Speaker 10: now it's a little bit longer duration.

855
00:41:22,600 --> 00:41:23,960
Speaker 4: Markets are longer duration.

856
00:41:24,920 --> 00:41:26,960
Speaker 10: Well they said, yeah, they said this one's one to

857
00:41:27,040 --> 00:41:29,719
Speaker 10: three years. It's still in the early stages.

858
00:41:30,200 --> 00:41:31,920
Speaker 1: Yeah, I don't know.

859
00:41:32,200 --> 00:41:35,319
Speaker 3: Maybe you guys might you should do.

860
00:41:35,320 --> 00:41:37,239
Speaker 4: I know we have an ATF podcast, but you guys

861
00:41:37,239 --> 00:41:38,719
Speaker 4: should do an ETFO.

862
00:41:40,960 --> 00:41:41,200
Speaker 8: Show.

863
00:41:42,440 --> 00:41:46,680
Speaker 3: And La Grafe the Donna Hirich so appreciated both Bloomberg

864
00:41:46,719 --> 00:41:47,760
Speaker 3: News crocessset reporters.

865
00:41:47,800 --> 00:41:50,080
Speaker 4: Check them out on the Bloomberg and a Bloomberg dot com.

866
00:41:50,440 --> 00:41:55,080
Speaker 2: This is the Bloomberg Business Week Daily podcast, available on Apple,

867
00:41:55,239 --> 00:41:59,160
Speaker 2: Spotify and anywhere else you get your podcasts. Listen live

868
00:41:59,200 --> 00:42:02,960
Speaker 2: weekday afternoonunes from two to five pm Eastern, on Bloomberg

869
00:42:03,000 --> 00:42:06,800
Speaker 2: dot com, the iHeartRadio app tune In, and the Bloomberg

870
00:42:06,880 --> 00:42:09,960
Speaker 2: Business app. You can also watch us live every weekday

871
00:42:10,000 --> 00:42:13,000
Speaker 2: on YouTube and always on the Bloomberg terminal