WEBVTT - Moody’s Cuts Bank Ratings 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.520 --> 0:00:22.760 So we just talked with the team, right Tim, about 0:00:23.079 --> 0:00:26.000 KBW Bank Index down almost four percent and it's lows 0:00:26.040 --> 0:00:28.040 today still down about one point three percent, so we've 0:00:28.080 --> 0:00:30.800 definitely bounced off the worst levels of the day. Same 0:00:30.840 --> 0:00:33.640 thing for the SMP Regional Banking ETF. We're talking about 0:00:33.680 --> 0:00:35.840 the KRE, which was down about four and a half 0:00:35.840 --> 0:00:38.199 percent of its lows now down about one and a 0:00:38.280 --> 0:00:39.040 quarter percent. 0:00:39.120 --> 0:00:39.959 And of course this was. 0:00:39.920 --> 0:00:44.199 All following Moody's lowering its ratings for ten small and 0:00:44.240 --> 0:00:47.920 mid sized lenders and talking about downgrading maybe some other firms. 0:00:47.960 --> 0:00:51.240 So a lot going on, reminding us that maybe wait 0:00:51.320 --> 0:00:53.400 out of the woods yet when it comes to banking here. 0:00:53.440 --> 0:00:55.360 Yeah, I think that's certainly fair to say the concerns 0:00:55.360 --> 0:00:59.200 are higher funding costs, potential regulatory capital weaknesses, rising risks 0:00:59.200 --> 0:01:01.960 tied to commercial real estate. Those are among the strains 0:01:01.960 --> 0:01:04.080 that are prompting the review. That's according to what Moody 0:01:04.160 --> 0:01:06.840 said late yesterday with more very pleased to have with us. 0:01:06.880 --> 0:01:10.119 Bloomberg Intelligence senior analyst for US Regional Banks, Herman Chan, 0:01:10.160 --> 0:01:12.199 who joins us in the Bloomberg Interactive broke. 0:01:12.280 --> 0:01:14.119 We actually call him King of Regional Banks. And didn't 0:01:14.280 --> 0:01:18.319 you know that was he anointed March happened? 0:01:18.560 --> 0:01:21.840 Okay, king of regional Banks. I'm sorry, sir, I bowed down. 0:01:22.440 --> 0:01:23.760 You gotta get the title, right. 0:01:24.520 --> 0:01:26.680 Well, it's good to have you. I it was nice 0:01:26.720 --> 0:01:29.360 to uh to get to meet you a little earlier 0:01:29.360 --> 0:01:31.680 too in person finally, because I was gone for the 0:01:31.720 --> 0:01:33.600 regional bank crisis. But I guess I get my own 0:01:33.600 --> 0:01:35.800 little mini crisis here to you. 0:01:35.880 --> 0:01:37.760 That's the question of you're getting the after shocks. 0:01:38.440 --> 0:01:40.480 So to what extent is this tied to what we 0:01:40.520 --> 0:01:41.160 saw in March? 0:01:41.319 --> 0:01:44.840 Yeah, I think it's. It's it's double barreled in terms 0:01:44.920 --> 0:01:49.160 of the failout, the fallout from the banking failures from 0:01:49.640 --> 0:01:54.800 SBB Signature First Republic, and also it's the aftermath of 0:01:55.360 --> 0:01:58.800 the higher rate environment that we're currently operating in the 0:01:58.880 --> 0:02:02.320 Moody's rapport. It's noted in the higher counting funding costs 0:02:02.240 --> 0:02:05.520 as you're articulated so that's really crimping the profitability of 0:02:05.560 --> 0:02:11.360 these banks. And also you're seeing a tougher regulatory environment. 0:02:11.960 --> 0:02:15.000 The FED is already proposing tougher capital rules and tougher 0:02:15.200 --> 0:02:18.680 and expected to offer some tougher liquidity rules for the 0:02:18.720 --> 0:02:22.840 regional banks. So these are all things the banking space 0:02:22.880 --> 0:02:26.160 has to contend with, and the upshot is just weaker 0:02:26.200 --> 0:02:30.320 earnings and weaker first line of defense against the expected 0:02:30.320 --> 0:02:33.760 potential higher charge offs from commercial real estate. 0:02:33.760 --> 0:02:36.760 It's a little puzzling to me because and I mentioned 0:02:36.800 --> 0:02:39.600 this on with our TV colleagues a few minutes ago, 0:02:40.560 --> 0:02:43.280 this shouldn't surprise anyone, right, So it shouldn't. So we've 0:02:43.320 --> 0:02:45.160 been talking about the struggles in the commercial real estate 0:02:45.160 --> 0:02:48.680 market for months, and rates have been high for better 0:02:48.680 --> 0:02:49.239 part of a year. 0:02:49.480 --> 0:02:52.520 Right, it shouldn't surprise folks. We've been writing about all 0:02:52.520 --> 0:02:56.720 these issues ever since April and May, so it's been 0:02:56.840 --> 0:02:59.560 on the radar screen of all the folks that cover 0:03:00.200 --> 0:03:02.880 banks and write about them on a daily basis. I 0:03:02.919 --> 0:03:08.079 guess it's just more of a of a recall that 0:03:07.919 --> 0:03:12.600 the stocks have rallied a bits ever since the May 0:03:12.800 --> 0:03:15.520 time frame, and this is just a call that's saying 0:03:16.080 --> 0:03:19.160 we're not totally out of the woodjet, but in my view, 0:03:19.240 --> 0:03:22.799 it does seem like the issues facing the banks that 0:03:22.919 --> 0:03:25.359 Moody's articulated it should be pretty manageable, all right, So. 0:03:25.440 --> 0:03:29.560 March April, May June like, oh okay, so almost five 0:03:29.600 --> 0:03:32.480 months for five months later. So I don't know, how 0:03:32.520 --> 0:03:34.720 do I I have mixed feelings coming if I go 0:03:34.760 --> 0:03:36.720 back to the Great Financial Crisis and when finally the 0:03:36.800 --> 0:03:40.720 ratings agencies kind of caught up to all that ailed us, right, 0:03:41.480 --> 0:03:44.520 so how are we as investors supposed to kind of 0:03:44.960 --> 0:03:48.360 be like, wait, is most of this still priced in run? 0:03:48.600 --> 0:03:50.520 Or is it just again like you said, hey, we'll 0:03:50.680 --> 0:03:52.920 slow down a little bit, Like how how do you 0:03:53.040 --> 0:03:54.520 read a call like this? 0:03:55.800 --> 0:03:58.600 I just go back to some of the clients that 0:03:58.640 --> 0:04:03.200 we've talked to today and they've mentioned that there isn't 0:04:03.280 --> 0:04:05.440 really anything new in terms of the call, but it's 0:04:05.560 --> 0:04:08.640 just reiterating the fact that there are a number of 0:04:08.640 --> 0:04:11.640 issues in hurdles and headwinds that the banks need to 0:04:11.640 --> 0:04:14.280 contend with going forward for the next six months, a year, 0:04:14.400 --> 0:04:14.920 two years. 0:04:15.080 --> 0:04:17.919 What are the banks that you most specifically keep on 0:04:17.920 --> 0:04:20.279 your radar? I think about and you know, just to 0:04:20.360 --> 0:04:22.040 kind of give you some background, Tim, Like, I feel 0:04:22.040 --> 0:04:25.200 like during we were leaning on Herman constantly during the 0:04:25.240 --> 0:04:27.760 regional bank crisis. And what was interesting is I felt 0:04:27.800 --> 0:04:30.040 like it was a few names that kept popping up. 0:04:30.080 --> 0:04:32.840 Obviously Silicon Valley, Blinton Bank, and you know, kind of 0:04:32.839 --> 0:04:36.160 the ones that really were on everybody's radar, but there 0:04:36.160 --> 0:04:38.159 were others, whether it was pack West, and obviously we 0:04:38.200 --> 0:04:40.040 know what happened there, you know, But right, what are 0:04:40.080 --> 0:04:42.680 the ones you now keep on your radar, either out 0:04:42.720 --> 0:04:45.760 of concern as possible acquisition targets or what. 0:04:46.200 --> 0:04:49.640 Right, So, really, in terms of acquisition targets, the only 0:04:49.960 --> 0:04:53.239 bank that really is a media on the radar screen 0:04:53.240 --> 0:04:56.839 after the Packwest announcement is Home Streets HMST is the 0:04:56.920 --> 0:05:00.920 ticker Bloomberg wrote about them put to atually shopping themselves 0:05:00.960 --> 0:05:03.240 a couple weeks back. So that's the one that's still 0:05:03.279 --> 0:05:06.159 sort of floating out there. But the others that were 0:05:06.360 --> 0:05:10.040 potentially you know, tougher hit a bit harder during that 0:05:10.720 --> 0:05:14.640 banking turmoil earlier in the year, like a Western Alliance. 0:05:14.880 --> 0:05:17.800 They've actually done a really solid job of shoring up 0:05:17.800 --> 0:05:21.240 their balance sheet and improving their capital ratios, improving their 0:05:21.279 --> 0:05:26.239 deposit base, so not expecting anything they're going forward because 0:05:26.440 --> 0:05:29.279 I think they've they've laid out a very credible path 0:05:29.320 --> 0:05:33.000 of regaining that balance sheet strength that they lost a 0:05:33.000 --> 0:05:33.919 bit in March. 0:05:34.200 --> 0:05:37.320 What's a little surprising to me, Hermann, is that in 0:05:37.360 --> 0:05:40.080 the S and P five hundred, regional banks are down 0:05:40.160 --> 0:05:43.400 one point two percent as a whole, but diversified banks, 0:05:44.240 --> 0:05:47.359 the huge ones Jakie Morgan's, the Bank of Americas like 0:05:47.440 --> 0:05:50.960 those are down one point one percent. This is it connected? 0:05:51.000 --> 0:05:52.719 Is it related? Why are they getting hit too? 0:05:53.360 --> 0:05:56.680 I think it just shows the fact that there are 0:05:56.800 --> 0:06:02.680 headwinds across the group going forward. The capital ratios issue 0:06:02.720 --> 0:06:05.919 and the tougher regulatory environment is something that all of 0:06:05.960 --> 0:06:08.839 the banks, the largest banks in the United States and 0:06:08.880 --> 0:06:12.080 the regionals will have to convent tend with with varying degrees, 0:06:12.360 --> 0:06:14.080 And we're actually not sure. 0:06:14.400 --> 0:06:16.040 The city's down one and a half percent. She put 0:06:16.160 --> 0:06:19.640 Morgan down about two thirds. Yeah, and off their lows. 0:06:19.640 --> 0:06:20.960 But nonetheless, right. 0:06:20.839 --> 0:06:23.520 These are the ones we think, okay, we should be okay. 0:06:23.400 --> 0:06:25.960 Yeah, that's right, they should be fine. But we're just 0:06:26.120 --> 0:06:29.719 in sort of some uncertainty and involved in what's going 0:06:29.760 --> 0:06:31.960 to happen. Next in terms of how these capital rules 0:06:32.000 --> 0:06:32.600 really shake out. 0:06:32.800 --> 0:06:34.800 Is the real estate exposure still a big deal? Like, 0:06:34.839 --> 0:06:37.279 what's the top of mind? Is it the interest rate exposure? 0:06:37.440 --> 0:06:40.280 Is it real estate? Commercial real estate, office real estate? 0:06:40.320 --> 0:06:40.680 What is it? 0:06:40.760 --> 0:06:43.280 Over the next couple quarters, it's it will continue to 0:06:43.320 --> 0:06:46.200 be the deposit costs on how fast they arise and 0:06:46.279 --> 0:06:49.800 the mix of deposits are. Will they continue the remix 0:06:49.839 --> 0:06:55.000 into higher cost forms like CDs. So that's the the 0:06:55.000 --> 0:06:58.119 earnings pressure that banks are facing. Over the next couple 0:06:58.080 --> 0:07:01.840 of years. You're going to see the commercial real estate 0:07:01.880 --> 0:07:04.200 become more and more of an issue. Everybody's talking about 0:07:04.240 --> 0:07:08.080 it now, but the actual repercussions of credit losses really 0:07:08.080 --> 0:07:10.920 hasn't shown up yet at all. For the regional the 0:07:11.000 --> 0:07:13.160 loans aren't due yet, because the loans aren't due yet, 0:07:13.600 --> 0:07:16.800 and they can do a little bit of restructuring and 0:07:16.880 --> 0:07:18.600 kick the can down the road, that sort of thing. 0:07:18.720 --> 0:07:22.720 So there's some maneuvering that's happening in some tough conversations 0:07:22.760 --> 0:07:25.680 that are going on today, but the actual losses just 0:07:25.720 --> 0:07:27.680 haven't hit, So that's going to take some time to 0:07:27.720 --> 0:07:29.360 really happen for the industry. 0:07:29.600 --> 0:07:31.920 What do the data tell us and what do you 0:07:31.960 --> 0:07:34.600 have at Bloomberg Intelligence that shows where people are keeping 0:07:34.640 --> 0:07:36.560 their money right now? Because if they're keeping their money 0:07:36.600 --> 0:07:39.080 in their traditional quote unquote checking account, you know it's 0:07:39.080 --> 0:07:41.360 paying nothing, right you can quickly move it to one 0:07:41.360 --> 0:07:43.200 of these neo banks. And this was the problem during 0:07:43.200 --> 0:07:45.400 the March banking crisis. Would was like, wait a second, 0:07:45.440 --> 0:07:47.040 if I can get you know, four and a half 0:07:47.040 --> 0:07:49.680 percent over at you know whatever American Express or Wealth 0:07:49.680 --> 0:07:52.560 Front or whatever name the neo bank here, then I'll 0:07:52.560 --> 0:07:54.800 just you know, take all my money from my checking account. 0:07:54.800 --> 0:07:57.680 There is that still an issue for the banks that's happening. 0:07:57.840 --> 0:08:00.680 So the longer we're in this higher rate environment, the 0:08:00.760 --> 0:08:04.840 tougher it is for the regionals because ineviably your customer 0:08:04.920 --> 0:08:08.280 base will start to erode from the traditional checking accounts, 0:08:08.320 --> 0:08:10.920 and quarter by quarter, month after month, you're going to 0:08:11.000 --> 0:08:15.760 see those zero cost deposits continue to move to a 0:08:15.840 --> 0:08:18.840 higher cost rate like the CD or a high yield savings. 0:08:19.200 --> 0:08:23.280 So that's something that frankly, the regional banks would love 0:08:23.360 --> 0:08:25.760 to see rate cuts, you know, potential later this year 0:08:25.800 --> 0:08:27.320 or next year, just to stem that tide. 0:08:27.440 --> 0:08:29.600 We bout down to the King Herman Ted, thank you 0:08:29.680 --> 0:08:31.600 so much, senior alas for US regional banks. 0:08:31.600 --> 0:08:35.959 At Bloomberg Intelligence, you're listening to the Bloomberg Business Week podcast. 0:08:36.200 --> 0:08:39.400 Catch us live weekday afternoons from three to six Eastern 0:08:39.600 --> 0:08:42.880 Listen on Bloomberg dot com, the iHeartRadio app, and the 0:08:42.880 --> 0:08:46.679 Bloomberg Business App, or watch us live on YouTube. 0:08:47.800 --> 0:08:50.400 In our Bloomberg Sledding segment today, we wanted to get 0:08:50.400 --> 0:08:53.960 into Tesla's new chief financial officer, who's actually kind of 0:08:54.200 --> 0:08:56.000 old when it comes to Tesla. 0:08:56.559 --> 0:08:59.760 Because it's like the chief accounting officer also, so. 0:09:00.040 --> 0:09:01.400 Pretty big jobs now on his plate. 0:09:01.480 --> 0:09:04.120 Huh yeah, yeah, Well, you know, like I said before, 0:09:04.120 --> 0:09:06.120 Elon Musk has more than one job. So it's like 0:09:06.200 --> 0:09:08.400 if he you know, if he's the leader and says, okay, 0:09:08.400 --> 0:09:10.319 well I can be CEO of all these different companies. 0:09:10.400 --> 0:09:12.520 Why can't you do a couple of few doings? 0:09:12.600 --> 0:09:12.760 Right? 0:09:12.760 --> 0:09:14.120 All right, So let's get let's. 0:09:13.920 --> 0:09:16.120 Get too because there was some news yesterday that Tesla 0:09:16.320 --> 0:09:20.840 was replacing its current CFO who was in the job 0:09:20.880 --> 0:09:23.160 for thirteen years. So tracking it all for us, making 0:09:23.200 --> 0:09:25.680 sense of it is our own Bloomberg News senior technology 0:09:25.679 --> 0:09:26.439 reporter downa Hall. 0:09:26.559 --> 0:09:28.160 She is on the phone in San Francisco. 0:09:28.200 --> 0:09:30.679 So, Dana, it does feel like, first of all, backdrop 0:09:30.800 --> 0:09:33.440 a fair amount of movement in the executive suite at Tesla. 0:09:33.640 --> 0:09:35.600 Give us, give us a little bit of background here. 0:09:36.120 --> 0:09:36.320 Yeah. 0:09:36.360 --> 0:09:39.080 So when when you know, we say executive suite, there's 0:09:39.120 --> 0:09:42.840 really only four people, there's only four named executives on 0:09:42.880 --> 0:09:47.560 Tesla's website and in their regulatory filings. And of the four, 0:09:47.640 --> 0:09:50.280 the CFO is one of them. And Zach Kirkhorn had 0:09:50.280 --> 0:09:53.000 been at Tesla for thirteen years. He'd been promoted several 0:09:53.040 --> 0:09:57.000 times internally, and he became CFO four years ago. And 0:09:57.120 --> 0:09:59.400 Zach is really the person who kind of led Tesla 0:09:59.520 --> 0:10:04.040 to profit. He focused a lot on cost, on expanding margins, 0:10:04.240 --> 0:10:07.040 and it was under Zach that the company kind of 0:10:07.080 --> 0:10:10.520 like steered through the pandemic, joined the s and P 0:10:10.640 --> 0:10:14.280 five hundred SADS valuation sore. I mean, he is really 0:10:14.280 --> 0:10:19.520 beloved by investors. So something happened and on Friday he 0:10:19.960 --> 0:10:24.880 basically stepped down as CFO. His replacement is an internal candidate, 0:10:25.160 --> 0:10:31.160 vab Pev viab Pev to today, I'm portraying that NATO policies. 0:10:31.240 --> 0:10:32.920 Okay, we're all trying to figure it out to make sure, 0:10:32.920 --> 0:10:34.439 we get it right, Yeah, fair. 0:10:34.360 --> 0:10:37.760 Enough, But then we didn't learn about this until Monday 0:10:38.000 --> 0:10:42.319 via regulatory filing. So, you know, I think broad strokes, 0:10:42.440 --> 0:10:43.960 a lot of us are still trying to figure out 0:10:44.080 --> 0:10:46.520 what exactly happened with Zach and why he left. But 0:10:47.520 --> 0:10:49.920 we do have a new CFO who's you know, in 0:10:50.000 --> 0:10:52.959 the job now, but he's also still the chief accounting officer. 0:10:53.040 --> 0:10:56.960 So to Tim's point earlier, you know, Musk doesn't really 0:10:56.960 --> 0:10:59.040 think much of having more than one job. He has, 0:10:59.160 --> 0:11:02.280 he's running six companies himself, But it is unusual for 0:11:02.360 --> 0:11:05.360 a company of this size to have the CEO and 0:11:05.400 --> 0:11:07.080 the CFO be the same person. 0:11:07.360 --> 0:11:09.840 Is there any concern about a conflict of interest with 0:11:09.920 --> 0:11:12.400 the person who sort of signs off on the you know, 0:11:12.480 --> 0:11:15.440 accounting docs versus the financial docks. I mean, there is 0:11:15.440 --> 0:11:19.640 a close relationship between accountants and you know, chief financial officers. 0:11:19.760 --> 0:11:21.840 But at the same time, isn't there good to have 0:11:21.880 --> 0:11:24.480 some sort of independence there too, I would think. 0:11:24.600 --> 0:11:28.120 I mean, I haven't heard any like investors making a 0:11:28.200 --> 0:11:31.920 huge cry of this. I mean, that would certainly be 0:11:31.960 --> 0:11:37.719 a concern that I would share, But but I think 0:11:37.760 --> 0:11:40.280 the broader concern is that you know, CFOs typically have 0:11:40.400 --> 0:11:44.680 like pretty broad operational experience in the business. Like Zach 0:11:44.760 --> 0:11:48.240 Kerkorn worked at McKenzie, he studied engineering at Penn. He 0:11:48.360 --> 0:11:51.240 had been you know, always on the finance team at Teessel, 0:11:51.360 --> 0:11:53.480 but was just like very much in the weeds about 0:11:53.520 --> 0:11:58.520 how the company was running. And you know, the new 0:11:58.559 --> 0:12:00.800 guy is more of like an account accounta who came 0:12:00.880 --> 0:12:04.080 up through Price Waterhouse Coopers. And so it'll be interesting 0:12:04.080 --> 0:12:07.480 to me to see how long he stays in the 0:12:07.520 --> 0:12:08.320 CFO role. 0:12:08.720 --> 0:12:11.120 Jana, he just got We just learned about him yesterday. 0:12:11.240 --> 0:12:15.360 I know, this is like flashbacks to twenty seventeen Tesla. 0:12:15.440 --> 0:12:17.160 Remember that when all the it was like every day 0:12:17.200 --> 0:12:18.560 there was an executive turning over. 0:12:18.920 --> 0:12:21.280 Mm hmm, yeah, I do remember, because you were. 0:12:21.160 --> 0:12:22.720 The one breaking that news. That's how I remember. 0:12:23.120 --> 0:12:25.440 Yeah, And this was and this was a surprise to me. 0:12:25.520 --> 0:12:28.120 I mean, you know, it really had had seemed like 0:12:28.240 --> 0:12:32.880 Tesla's bench was pretty stable. Musk was focused on Twitter Slash. 0:12:33.040 --> 0:12:36.080 Now I guess now we call it X. You know, 0:12:36.120 --> 0:12:38.760 the company has just had a quarter after quarter profitability, 0:12:38.840 --> 0:12:41.400 so that the bench at Tesla actually seemed fairly stable. 0:12:41.440 --> 0:12:45.080 I was not expecting a Zech departure this summer at all. 0:12:45.800 --> 0:12:49.319 Is there something about the new CFO and his connection 0:12:49.480 --> 0:12:53.160 to India that maybe makes it make more sense? I 0:12:53.200 --> 0:12:53.560 don't know. 0:12:54.200 --> 0:12:56.760 I mean, so, you know, Tesla obviously has a lot 0:12:56.800 --> 0:13:00.600 of markets to expand into. India has always been top 0:13:00.640 --> 0:13:05.240 of the list all of South America. Another possibility, and 0:13:05.679 --> 0:13:07.800 we've always been trying to figure out, you know, is 0:13:07.920 --> 0:13:11.200 Tesla going to enter the India market. His name is 0:13:11.240 --> 0:13:14.480 on like a filing in India around creating some kind 0:13:14.480 --> 0:13:17.520 of office there, so he probably has been involved. But 0:13:17.679 --> 0:13:18.960 I wouldn't read too much into that. 0:13:19.520 --> 0:13:21.800 Okay, Well, oh sorry, Carol, go ahead. I was gonna 0:13:21.800 --> 0:13:24.120 ask against about the backdrop here if we if we 0:13:24.200 --> 0:13:26.439 zoom out and look at Tesla as a company and 0:13:26.920 --> 0:13:30.960 where it is right now. Obviously it's it's come a 0:13:31.000 --> 0:13:33.480 long way, Dana, in the years that you've been covering it, 0:13:33.600 --> 0:13:36.800 But at the same time, despite all of its successes, 0:13:36.960 --> 0:13:42.000 it's still kind of clying its way to being really sustainable. 0:13:42.040 --> 0:13:44.000 I mean, look at the way that the company has 0:13:44.600 --> 0:13:47.640 still dealt with recalls, production delays, and that old cyber 0:13:47.640 --> 0:13:49.440 truck that still isn't on the streets. 0:13:50.240 --> 0:13:51.720 Yeah, I mean, I think I think it depends on 0:13:51.840 --> 0:13:54.320 what you mean by sustainable. Like they have plenty of 0:13:54.400 --> 0:13:58.240 cash on their balance sheet, and you know, they continue 0:13:58.280 --> 0:14:01.600 to be profitable, but they certainly have like cut prices 0:14:01.600 --> 0:14:05.040 in order to move metal, and they are not in 0:14:05.200 --> 0:14:07.440 They don't have a truck, and I mean Americans really 0:14:07.520 --> 0:14:09.520 like trucks, and so the longer it takes to get 0:14:09.520 --> 0:14:13.120 the cyber truck out, the more competitors like Rivian have 0:14:13.320 --> 0:14:16.840 time to kind of really own that market. And you know, 0:14:17.200 --> 0:14:20.360 I mean Elon is sort of famous for introducing products 0:14:20.400 --> 0:14:23.200 that then take years to bring out. You know, we 0:14:23.240 --> 0:14:26.120 all thought we'd see the cyber truck this year. Now 0:14:26.160 --> 0:14:28.800 we kind of learned during the last earnings round that 0:14:29.200 --> 0:14:31.640 the only ones that they've made or released candidates. So 0:14:31.800 --> 0:14:33.720 I mean, we're still pretty far away from anything like 0:14:33.760 --> 0:14:34.720 high volume production. 0:14:35.320 --> 0:14:37.280 Forgive me if if we already talked, I don't think 0:14:37.280 --> 0:14:39.040 we did talk about this, But I mean, Kirk corn 0:14:39.400 --> 0:14:40.640 I want to go back to him for a second. 0:14:40.640 --> 0:14:42.840 What he walked away with about almost six hundred million 0:14:42.920 --> 0:14:47.800 dollars and so as CFO. 0:14:47.920 --> 0:14:51.080 But did you not get that out of your first job, Carol, No. 0:14:51.280 --> 0:14:55.480 Not even close. But that's okay different different worlds. 0:14:56.200 --> 0:14:59.040 But I mean, could it possibly be Dana that he 0:14:59.120 --> 0:15:02.120 walked away from the Sea job just because I'm set, 0:15:02.160 --> 0:15:03.800 I'm good, like I'm going to do something else, or 0:15:04.040 --> 0:15:06.840 could he be ticked off that Meanwhile, what is Elon worth? 0:15:06.880 --> 0:15:10.680 Because the stock has just taken off in the last decade. 0:15:10.800 --> 0:15:12.720 You know, there's always this, there's this sort of joke 0:15:12.880 --> 0:15:16.720 among Tesla executives and employees that we're working at Tesla's 0:15:16.760 --> 0:15:20.280 like dog lears, right, So like one year at Tesla 0:15:20.440 --> 0:15:25.400 is like seven years in a normal company. So Zach 0:15:25.480 --> 0:15:28.520 put in thirteen years, which is this magnificently long run. 0:15:28.720 --> 0:15:31.200 And you know, I think he's about to turn forty. 0:15:31.240 --> 0:15:33.480 I don't know his exact birth date, but he's like Lea, 0:15:33.760 --> 0:15:35.640 you know, he's like thirty eight or thirty nine. On 0:15:35.720 --> 0:15:38.240 the cusp of being forty, I think that. I mean, 0:15:38.240 --> 0:15:39.880 I don't know how old you guys are, but when 0:15:39.920 --> 0:15:41.640 I turned forty, that was a big moment for me 0:15:41.720 --> 0:15:43.280 to kind of take the stock of my life. And 0:15:43.320 --> 0:15:46.680 to your point, he has done a lot for Tesla. 0:15:46.760 --> 0:15:49.480 The company is in a good place financially. He's still 0:15:49.560 --> 0:15:52.920 very young, and I could see him taking on another 0:15:53.040 --> 0:15:55.400 job at some point as a CEO, I think he's 0:15:55.400 --> 0:15:57.880 got the chops to do it. And so there's a 0:15:57.880 --> 0:16:00.920 lot of theories as to why he left, but you know, 0:16:01.000 --> 0:16:03.000 I don't have anything solid to share at the moment. 0:16:03.680 --> 0:16:06.360 I'm sure those are things you're you're still chasing at 0:16:06.360 --> 0:16:10.200 this point, Dana, so so always chasing, always chasing. And 0:16:10.240 --> 0:16:12.360 you know what, if you know why he left, you 0:16:12.400 --> 0:16:14.400 know how to get in touch with Dana. She's on 0:16:14.560 --> 0:16:17.200 she's on the platform formally known as X as well. 0:16:17.240 --> 0:16:19.600 But I don't know not much Dana anymore. 0:16:20.400 --> 0:16:22.200 I'm not well. One thing I wanted to ask you 0:16:22.240 --> 0:16:23.920 we just got about a minute left here, Dana, is 0:16:23.960 --> 0:16:25.560 I do wonder, like you just said, you know, you 0:16:25.680 --> 0:16:28.400 turn as individuals, we turn a certain age and we 0:16:28.520 --> 0:16:31.000 like do sometimes take stock of our of our lives 0:16:31.040 --> 0:16:34.360 and is there somewhere where Tesla, which is really you know, 0:16:34.440 --> 0:16:36.160 had the field to itself for a long time and 0:16:36.200 --> 0:16:38.800 now there's a lot more competition. We were talking earlier 0:16:38.840 --> 0:16:41.600 with Rivian earnings. You know, I saw two Rivians this 0:16:41.640 --> 0:16:44.360 past weekend. I have not ever, i think, seen them 0:16:44.360 --> 0:16:45.600 on the road. So it's like I feel like, all 0:16:45.600 --> 0:16:48.600 of a sudden, they're out there there's more competition for Tesla. 0:16:48.800 --> 0:16:52.000 Is Tesla kind of maybe taking stock a little bit 0:16:52.040 --> 0:16:54.080 of kind of where its world is now, kind of 0:16:54.120 --> 0:16:56.480 where it needs to go in a very different environment 0:16:56.480 --> 0:17:00.000 from where it's been the last decade or so. Yeah. 0:17:00.120 --> 0:17:02.400 Probably, I mean it's pret you know, I think I 0:17:02.400 --> 0:17:05.920 think for so long Tesla Tesla is all about proving 0:17:05.960 --> 0:17:08.440 to the world that it could make a profitable electric 0:17:08.480 --> 0:17:10.880 car that consumers really wanted. And they have done that. 0:17:10.960 --> 0:17:14.240 They have proven that, and now they're you know, they're expanding, 0:17:14.240 --> 0:17:17.000 They're building a new factory in Mexico, They're going to 0:17:17.000 --> 0:17:19.000 come out with the cyber truck and the next generation 0:17:19.160 --> 0:17:22.960 vehicle platform, and they've kind of like they're they're done 0:17:23.119 --> 0:17:25.520 being this kind of like scrappy startup. They're part of 0:17:25.520 --> 0:17:27.359 the S and P five hundred. Now they need to 0:17:27.400 --> 0:17:30.760 sort of mature as a as an organization. And you know, 0:17:30.800 --> 0:17:33.280 I think Zach has a lot of institutional knowledge that's 0:17:33.359 --> 0:17:36.199 kind of going out the door. But you know, his 0:17:36.280 --> 0:17:39.560 successor also has a lot of inside knowledge. So it's 0:17:39.800 --> 0:17:42.159 it's not a dramatic change, but the CFO is a 0:17:42.160 --> 0:17:44.920 big deal. It's a big deal for a company like Tesla. 0:17:44.800 --> 0:17:48.040 Yeah, and as you said, the executive suite really only 0:17:48.080 --> 0:17:48.600 for people. 0:17:48.640 --> 0:17:51.399 So it's again some perspective. Hey Dana, thank you. 0:17:51.440 --> 0:17:53.679 As always, Bloomberg News Senior Technology put her down a 0:17:53.680 --> 0:17:55.920 hall on the phone in San Francisco. Shere's a Tesla 0:17:55.960 --> 0:17:58.159 by the way, app one hundred and two percent so 0:17:58.280 --> 0:18:00.520 far here in twenty twenty three. 0:18:01.920 --> 0:18:05.479 You're listening to the Bloomberg Business Week podcast. Catch us 0:18:05.520 --> 0:18:09.560 live weekday afternoons from three to six Eastern on Bloomberg Radio, 0:18:09.760 --> 0:18:13.040 the Bloomberg Business App, and YouTube. You can also listen 0:18:13.119 --> 0:18:16.240 live on Amazon Alexa from our flagship New York station, 0:18:16.680 --> 0:18:20.520 Just say Alexa play Bloomberg eleven thirty. 0:18:21.600 --> 0:18:23.880 You guys talked about Zoom yesterday, right, Yeah. 0:18:23.880 --> 0:18:26.399 I mean if you think about perhaps the company that 0:18:26.520 --> 0:18:30.200 most epitomizes working from home, yeah, it's Zoom. I mean 0:18:30.200 --> 0:18:32.600 it was not just a you know, a COVID stock, 0:18:32.760 --> 0:18:34.800 but it was also what we were all learning how 0:18:34.800 --> 0:18:36.800 to use in the early days of the pandemic. 0:18:36.880 --> 0:18:37.040 Right. 0:18:37.320 --> 0:18:39.760 We talked about it yesterday because even they're telling employees 0:18:39.800 --> 0:18:42.320 to get back to the office. Carol, Yeah, I know, Zoom. 0:18:42.320 --> 0:18:44.199 If you live near a of Zoom office, you got 0:18:44.240 --> 0:18:45.760 to come in a couple days a week. So we've 0:18:45.800 --> 0:18:48.960 seen Amazon, Chipotle, black Rock, companies as varied as those 0:18:49.000 --> 0:18:51.040 telling hey, workers, workers, Hey, you got to come back 0:18:51.040 --> 0:18:51.520 to the office. 0:18:51.600 --> 0:18:54.960 Yeah, it's interesting, right, we're seeing that post COVID several 0:18:55.040 --> 0:18:57.040 years out and how that is kind of yep, they're 0:18:57.080 --> 0:18:59.200 coming back to the office. The other thing at play, 0:18:59.280 --> 0:19:01.119 right we see when it comes to how we are 0:19:01.160 --> 0:19:02.680 working going forward. 0:19:02.760 --> 0:19:06.719 Is just the explosion of what the think about AI 0:19:07.200 --> 0:19:11.080 around artificial intelligence generative AI and what does it mean 0:19:11.480 --> 0:19:12.400 eventually for work. 0:19:12.560 --> 0:19:14.800 Well, fortunately McKenzie is out with a new report that 0:19:14.880 --> 0:19:17.080 says twelve million workers are going to move into new 0:19:17.080 --> 0:19:19.080 lines of work by twenty thirty. I guess I'm not 0:19:19.119 --> 0:19:22.359 saying fortunately that's fortunately there's a report. You know, we'll 0:19:22.359 --> 0:19:25.359