1 00:00:02,960 --> 00:00:07,280 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,960 --> 00:00:13,840 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 3 00:00:13,920 --> 00:00:17,000 Speaker 2: weekdays at ten am Eastern on Apple, Cardplay and Android 4 00:00:17,040 --> 00:00:20,120 Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,200 --> 00:00:25,040 Speaker 2: you get your podcasts, or watch us live on YouTube. 6 00:00:25,120 --> 00:00:28,320 Speaker 3: I'm Alex Steel alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 7 00:00:28,520 --> 00:00:30,280 Speaker 3: We bring you all the top news in business and 8 00:00:30,320 --> 00:00:33,960 Speaker 3: economics and finance with our lends through a Bloomberg Intelligence Analysts. 9 00:00:33,960 --> 00:00:36,240 Speaker 3: They cover two thousand companies in about one hundred and 10 00:00:36,240 --> 00:00:39,199 Speaker 3: thirty industries a worldwide. We also take a look at 11 00:00:39,200 --> 00:00:41,320 Speaker 3: all the stock market action. Take a look at Nvidia, 12 00:00:41,560 --> 00:00:46,200 Speaker 3: that's stock up by still over nine percent that company, Paul, 13 00:00:46,520 --> 00:00:49,600 Speaker 3: that's some serious cash. I mean that just like mints. 14 00:00:49,320 --> 00:00:51,720 Speaker 4: The money it does, and you know, it's just extraordinary. 15 00:00:51,760 --> 00:00:54,240 Speaker 4: You think about kind of how they've. 16 00:00:54,080 --> 00:00:59,160 Speaker 5: Become really the play on all things AI. I mean 17 00:00:59,200 --> 00:01:01,240 Speaker 5: they it was a year ago, maybe five quarters ago 18 00:01:01,240 --> 00:01:05,360 Speaker 5: that they issued that revenue guide increase that just shocked 19 00:01:05,640 --> 00:01:08,720 Speaker 5: the tech space and talk shocked Wall Street in terms 20 00:01:08,720 --> 00:01:12,520 Speaker 5: of Wow, this AI spending thing, it is real because 21 00:01:12,560 --> 00:01:14,800 Speaker 5: we are seeing in videos, seeing it in its order book, 22 00:01:15,080 --> 00:01:19,000 Speaker 5: and it's just been extraordinary and it's hasn't let up. 23 00:01:19,000 --> 00:01:21,440 Speaker 5: And you know, I talked to Tim Steneviek every time 24 00:01:21,480 --> 00:01:23,280 Speaker 5: these company reports earnings, and he asked me, Paul, do 25 00:01:23,280 --> 00:01:24,600 Speaker 5: you think these guys are gonna. 26 00:01:24,440 --> 00:01:25,039 Speaker 4: Beat and raise? 27 00:01:25,080 --> 00:01:27,920 Speaker 5: And I said, I think so until they don't, because 28 00:01:27,959 --> 00:01:29,920 Speaker 5: I just don't see any end there at least what 29 00:01:30,360 --> 00:01:33,800 Speaker 5: you hear from the the companies that are making these 30 00:01:34,000 --> 00:01:38,080 Speaker 5: these orders, like Microsoft, like Amazon. All they talk about 31 00:01:38,120 --> 00:01:40,480 Speaker 5: is AI AI AI exactly, and they get the chips 32 00:01:40,480 --> 00:01:41,760 Speaker 5: from in video, So there you go. 33 00:01:41,920 --> 00:01:45,040 Speaker 3: I mean, so, yes, more than forty percent of Video's 34 00:01:45,040 --> 00:01:49,639 Speaker 3: revenue comes from just those guys, right, Microsoft, Meta, Amazon, Alphabet. Okay, 35 00:01:49,720 --> 00:01:52,120 Speaker 3: so there's some so maybe risk in that you have 36 00:01:52,200 --> 00:01:55,200 Speaker 3: competitors that are still trying to ramp up their own 37 00:01:55,240 --> 00:01:58,800 Speaker 3: ability for that. So I guess you're looking at again 38 00:01:58,880 --> 00:02:00,400 Speaker 3: what we what I like to talk about is a 39 00:02:00,440 --> 00:02:03,040 Speaker 3: structural versus cyclical trend. The AI is here to stay 40 00:02:03,200 --> 00:02:06,280 Speaker 3: is a structural change, a structural trend? Right? Does it 41 00:02:06,440 --> 00:02:09,200 Speaker 3: mean that eventually this also won't be some kind of 42 00:02:09,240 --> 00:02:13,119 Speaker 3: cyclical story but we're clearly not there yet. 43 00:02:13,360 --> 00:02:15,760 Speaker 5: No, And so when we get the smart people on 44 00:02:16,480 --> 00:02:18,400 Speaker 5: and we're going to get a smart person on sooners 45 00:02:18,400 --> 00:02:20,760 Speaker 5: soon as he figures out how to get his microphonnel. 46 00:02:20,720 --> 00:02:21,240 Speaker 3: In other ways. 47 00:02:21,360 --> 00:02:25,519 Speaker 5: Yeah, yeah, is a competition. I mean you're supposed to 48 00:02:25,520 --> 00:02:27,440 Speaker 5: be on there a certain time with the Yeah, how 49 00:02:27,440 --> 00:02:27,959 Speaker 5: hard is that? 50 00:02:29,440 --> 00:02:33,120 Speaker 4: You know? So the question is competition. Where's competition? 51 00:02:33,639 --> 00:02:36,320 Speaker 3: Yeah, well it's hard. It's expensive to get this stuff out. 52 00:02:36,360 --> 00:02:37,200 Speaker 3: I think that's the problem. 53 00:02:37,280 --> 00:02:38,720 Speaker 6: And also if you don't want to pay over one 54 00:02:38,720 --> 00:02:41,720 Speaker 6: thousand dollars this year for Nvidio, even though you're optimistic 55 00:02:41,760 --> 00:02:44,880 Speaker 6: about the future there, what are the derivative plays? There 56 00:02:45,320 --> 00:02:45,880 Speaker 6: was so. 57 00:02:45,840 --> 00:02:51,280 Speaker 7: Many today looking at a company it's not publicly traded 58 00:02:51,600 --> 00:02:56,639 Speaker 7: and charge the brainschild of a Princeton professor to make 59 00:02:56,680 --> 00:02:58,600 Speaker 7: it more energy efficient these chips. 60 00:02:58,720 --> 00:03:01,560 Speaker 3: Oh sure, but there are a ton of those startups. 61 00:03:01,560 --> 00:03:03,960 Speaker 3: But it's just a question of actually making the money, 62 00:03:04,040 --> 00:03:06,840 Speaker 3: that is the question. All right, thanks so much for 63 00:03:07,040 --> 00:03:08,720 Speaker 3: I don't know. I don't know why I'm thanking John Tucker. 64 00:03:08,880 --> 00:03:11,920 Speaker 3: Now we do, but I'm gonna go to about those. 65 00:03:11,960 --> 00:03:16,040 Speaker 3: You're welcome. Su Johan Shabani is Boomberg Intelligence senior semi analysts. 66 00:03:16,080 --> 00:03:17,320 Speaker 3: I hope he knows more than we do about this? 67 00:03:17,680 --> 00:03:18,480 Speaker 8: Does all right? 68 00:03:18,480 --> 00:03:21,040 Speaker 3: The stock up ten percent? Can they continue at this 69 00:03:21,200 --> 00:03:23,120 Speaker 3: point to just continue to beat and raise. 70 00:03:24,400 --> 00:03:27,120 Speaker 9: I think in the near term they can definitely demand 71 00:03:27,200 --> 00:03:30,200 Speaker 9: on most of their products keep running ahead of supply. 72 00:03:31,040 --> 00:03:35,520 Speaker 9: We don't see any slowing down in terms of purchasing 73 00:03:35,520 --> 00:03:39,160 Speaker 9: from their customers. In fact, beyond their largest cloud customer, 74 00:03:39,360 --> 00:03:42,600 Speaker 9: enterprise and consumer intern companies are coming in strong. So 75 00:03:42,800 --> 00:03:45,200 Speaker 9: we don't see any sort of big risk that says 76 00:03:45,240 --> 00:03:46,400 Speaker 9: they cannot continue. 77 00:03:46,760 --> 00:03:49,080 Speaker 5: So Kunjohn, I was selling Alex and John. When we 78 00:03:49,080 --> 00:03:51,400 Speaker 5: get smart people on like you yourself, I like to 79 00:03:51,400 --> 00:03:52,920 Speaker 5: ask the question about competition. 80 00:03:53,520 --> 00:03:55,960 Speaker 4: I'm kind of surprised that, you know, in. 81 00:03:56,000 --> 00:04:00,440 Speaker 5: Nvidia has this competitive leadership position relative to everybody else. 82 00:04:00,640 --> 00:04:04,400 Speaker 5: How proprietary is their chip design versus I don't know 83 00:04:04,480 --> 00:04:07,800 Speaker 5: the AMD's of the world, even in Cisco's. What is 84 00:04:07,800 --> 00:04:09,120 Speaker 5: the competitive landscape? 85 00:04:10,280 --> 00:04:12,880 Speaker 9: Yeah, I mean, look, they were I would say almost 86 00:04:12,960 --> 00:04:16,400 Speaker 9: two to even arguably three years ahead of everyone, and 87 00:04:16,440 --> 00:04:19,200 Speaker 9: it's not easy in the chip landscape to catch up. 88 00:04:19,279 --> 00:04:22,279 Speaker 9: When someone has that kind of a lead, they have 89 00:04:22,480 --> 00:04:27,440 Speaker 9: actually aggressively gone out and out in it their peers 90 00:04:27,480 --> 00:04:30,200 Speaker 9: before they were on an eighteen to twenty four month 91 00:04:30,400 --> 00:04:32,800 Speaker 9: product cycle. Now they are on a twelve month product cycle, 92 00:04:33,080 --> 00:04:35,400 Speaker 9: so they just keep staying ahead of their combetition. Their 93 00:04:35,400 --> 00:04:38,800 Speaker 9: combination is trying to catch up. AMD has made significant 94 00:04:38,800 --> 00:04:43,279 Speaker 9: progress and now is another second viral alternative in the market. 95 00:04:43,360 --> 00:04:46,000 Speaker 9: Hence you see that in their significant growth as well. 96 00:04:46,240 --> 00:04:48,920 Speaker 9: But we don't think at this point there is anyone 97 00:04:49,000 --> 00:04:52,600 Speaker 9: else who can rival the total system TCO and performance 98 00:04:52,600 --> 00:04:53,000 Speaker 9: that they have. 99 00:04:53,440 --> 00:04:55,720 Speaker 3: I was mentioning earlier that Nvidia gets about forty percent 100 00:04:55,720 --> 00:04:58,520 Speaker 3: it's revenue from the big four players, Microsoft, Meta Alphabet 101 00:04:58,560 --> 00:05:01,400 Speaker 3: and Amazon. What kind risk is that, if any? 102 00:05:02,800 --> 00:05:04,880 Speaker 9: I mean there have been concerns around it. So there's 103 00:05:04,920 --> 00:05:07,080 Speaker 9: two good data points that came out of this print. 104 00:05:07,160 --> 00:05:10,479 Speaker 9: One that concentration did reduce for the very first time, 105 00:05:11,040 --> 00:05:13,919 Speaker 9: and what we liked it It was not reduced because 106 00:05:13,920 --> 00:05:16,800 Speaker 9: the cloud guys slowed their purchasing. In fact, those top 107 00:05:16,880 --> 00:05:19,680 Speaker 9: four guys that are expected to increase their capec spent 108 00:05:19,800 --> 00:05:22,000 Speaker 9: by forty five percent this year and they are all 109 00:05:22,000 --> 00:05:24,880 Speaker 9: lined up to purchase its newest Blackwell products. But what 110 00:05:24,880 --> 00:05:27,960 Speaker 9: it was good was that the share was taken by 111 00:05:28,040 --> 00:05:30,880 Speaker 9: strong enterprise demand, which we really like because that is 112 00:05:30,960 --> 00:05:33,640 Speaker 9: much more diversified and sticky Kunjan. 113 00:05:33,720 --> 00:05:35,720 Speaker 5: Let's say I'm at Amazon and I buy one of 114 00:05:35,800 --> 00:05:36,760 Speaker 5: nvidious chips. 115 00:05:37,120 --> 00:05:39,280 Speaker 4: When do I have to replace it? Question? 116 00:05:41,640 --> 00:05:43,479 Speaker 9: There's two answers to it. If we were in a 117 00:05:43,600 --> 00:05:48,560 Speaker 9: normal sector semicharactor cycle like you are in smartphones or PCs, 118 00:05:48,800 --> 00:05:51,919 Speaker 9: the refreshed time would be longer, so I would say 119 00:05:52,839 --> 00:05:55,640 Speaker 9: on ideally three to five years. But what's going on 120 00:05:55,720 --> 00:05:57,960 Speaker 9: right now is all of these customers are just racing 121 00:05:57,960 --> 00:06:01,200 Speaker 9: against each other, so they cannot afford to stop. So 122 00:06:01,240 --> 00:06:03,920 Speaker 9: as soon as a newer, better chip is available that 123 00:06:03,960 --> 00:06:06,840 Speaker 9: they can change, they are going to change. 124 00:06:07,800 --> 00:06:11,039 Speaker 3: What would stop all this? Like, we know that AI 125 00:06:11,120 --> 00:06:12,360 Speaker 3: is going to grow, we know that there will be 126 00:06:12,400 --> 00:06:14,599 Speaker 3: demand for chips. We know all that. That's a structural 127 00:06:14,640 --> 00:06:18,719 Speaker 3: shift within the economy. But what makes it cyclical? 128 00:06:20,480 --> 00:06:24,120 Speaker 9: I think the first point of cyclicality would be when 129 00:06:24,279 --> 00:06:27,960 Speaker 9: the demand momentum stops, which we haven't seen no signs of. Look, 130 00:06:28,000 --> 00:06:30,760 Speaker 9: the supply keeps on coming up, so at some point 131 00:06:31,120 --> 00:06:34,960 Speaker 9: demand is going to be meeting supply. And after that, 132 00:06:35,040 --> 00:06:37,200 Speaker 9: if we see any kind of weakness in demand, look, 133 00:06:37,200 --> 00:06:40,279 Speaker 9: look if the largest cloud providers don't see return on 134 00:06:40,320 --> 00:06:44,120 Speaker 9: that investment, don't see monetization benefit, don't see their earnings 135 00:06:44,120 --> 00:06:47,000 Speaker 9: and revenue grow from these investments. That's when we can 136 00:06:47,040 --> 00:06:49,200 Speaker 9: start worrying about sort of a cyclical downtown. 137 00:06:49,640 --> 00:06:54,120 Speaker 5: All right, So, how else in your universe of semiconductors, 138 00:06:55,400 --> 00:06:56,799 Speaker 5: how else do you if you play this trend? 139 00:06:59,400 --> 00:07:03,000 Speaker 9: Look, it's Nvidia still remains sort of the best pure 140 00:07:03,040 --> 00:07:05,920 Speaker 9: play AI play in semiconductors. So I don't know why 141 00:07:05,960 --> 00:07:07,920 Speaker 9: you would want to look elsewhere, but if you were 142 00:07:07,960 --> 00:07:12,720 Speaker 9: forced to, we also like you know, players like Broadcommon, 143 00:07:12,800 --> 00:07:15,840 Speaker 9: Marvel when it comes to AI networking, when it comes 144 00:07:15,840 --> 00:07:21,960 Speaker 9: to the ask chips, which Nvidia's largest customers are designing themselves. 145 00:07:22,040 --> 00:07:25,320 Speaker 9: So these are the two areas where we see significant 146 00:07:25,320 --> 00:07:27,640 Speaker 9: growth coming in over the next two years. 147 00:07:28,240 --> 00:07:30,720 Speaker 4: All right, Yeah, good, John Sabanni, thanks so much for 148 00:07:30,800 --> 00:07:31,200 Speaker 4: joining us. 149 00:07:31,200 --> 00:07:31,280 Speaker 3: There. 150 00:07:31,760 --> 00:07:35,440 Speaker 5: Sabani, senior analyst covering to sevent conductor space for Bloomberg Intelligence. 151 00:07:36,000 --> 00:07:38,600 Speaker 5: Joining us from San Francisco is right there in Silicon Valley. 152 00:07:40,160 --> 00:07:44,040 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 153 00:07:44,120 --> 00:07:47,640 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 154 00:07:47,680 --> 00:07:50,440 Speaker 2: Otto with the Bloomberg Business app. You can also listen 155 00:07:50,560 --> 00:07:53,640 Speaker 2: live on Amazon Alexa from our flagship New York station. 156 00:07:54,040 --> 00:07:57,520 Speaker 2: Just say Alexa play Bloomberg eleven thirty. 157 00:07:58,560 --> 00:08:00,360 Speaker 4: Let's switch gear. Let's get right to our next guys. 158 00:08:00,480 --> 00:08:06,120 Speaker 5: Shanna Sissel, president and CEO of ben bond On Capital Management, 159 00:08:06,520 --> 00:08:09,400 Speaker 5: joining us from Chicago via this zoom thing. Shana, think 160 00:08:09,400 --> 00:08:11,080 Speaker 5: so much for joining us here. I mean, I guess 161 00:08:11,080 --> 00:08:14,080 Speaker 5: the story of the day this morning is in Nvidia, 162 00:08:14,560 --> 00:08:16,240 Speaker 5: another beat and raise. 163 00:08:16,480 --> 00:08:19,000 Speaker 4: As the kids say, what did you take away from 164 00:08:19,080 --> 00:08:19,960 Speaker 4: the earnings last night? 165 00:08:21,880 --> 00:08:25,040 Speaker 10: It wasn't the earnings that I was most surprised by. 166 00:08:26,160 --> 00:08:27,920 Speaker 10: I think we all expected them to be. It was 167 00:08:27,960 --> 00:08:31,600 Speaker 10: somewhat built into the stock price aftermarket. It didn't move 168 00:08:31,640 --> 00:08:35,120 Speaker 10: that much. Obviously now it is. But I think that 169 00:08:35,360 --> 00:08:37,720 Speaker 10: the thing that shoped me most was the ten for 170 00:08:37,800 --> 00:08:40,839 Speaker 10: one stock split announcement. That surprised me. 171 00:08:42,280 --> 00:08:43,480 Speaker 3: Not because. 172 00:08:44,559 --> 00:08:46,760 Speaker 10: It's not unusual for a company to want to split 173 00:08:46,760 --> 00:08:48,439 Speaker 10: in a way that would make their stock price under 174 00:08:48,440 --> 00:08:50,520 Speaker 10: one hundred dollars again and make them more attractive to 175 00:08:50,679 --> 00:08:54,160 Speaker 10: retail investors, make it easier for their employees to take 176 00:08:54,160 --> 00:08:57,560 Speaker 10: advantage of their stock compensation, and a variety of other reasons. 177 00:08:57,600 --> 00:09:00,360 Speaker 10: But in the world of fractional shares, it's not as necessary, 178 00:09:00,400 --> 00:09:03,240 Speaker 10: which is why we see so many stocks trading at 179 00:09:03,320 --> 00:09:05,880 Speaker 10: you know, five six, seven hundred and eight thousand dollars. 180 00:09:05,920 --> 00:09:08,839 Speaker 10: I mean Chipolti is like over three thousand dollars. So 181 00:09:09,080 --> 00:09:13,439 Speaker 10: that actually surprised me the most. But the earnings weren't 182 00:09:13,480 --> 00:09:17,880 Speaker 10: particularly surprising. Obviously, it was above consensus estimates, but there 183 00:09:17,920 --> 00:09:21,160 Speaker 10: was a whisper number, and the numbers that they reported 184 00:09:21,160 --> 00:09:24,480 Speaker 10: were close to that whisper number, And so, you know, 185 00:09:25,000 --> 00:09:29,280 Speaker 10: I think the probably the real problem here is how 186 00:09:29,320 --> 00:09:31,079 Speaker 10: long they can they keep doing this. This is the 187 00:09:31,160 --> 00:09:34,679 Speaker 10: third straight quorder that they reported greater than two hundred 188 00:09:34,679 --> 00:09:36,240 Speaker 10: percent year or year revenue growth. 189 00:09:36,360 --> 00:09:38,360 Speaker 3: Yeah, and I feel like we've been asking that question 190 00:09:38,400 --> 00:09:41,520 Speaker 3: for the third straight quarterer too, so you're not alone. 191 00:09:41,720 --> 00:09:45,080 Speaker 3: I was really struck by a note that came out today. Man, 192 00:09:45,120 --> 00:09:47,400 Speaker 3: it's time for spring break in video is done. We 193 00:09:47,480 --> 00:09:50,640 Speaker 3: got nothing going on until June seventh, which is jobs day. 194 00:09:50,880 --> 00:09:52,960 Speaker 3: It is time for spring break. Do you subscribe to 195 00:09:53,000 --> 00:09:53,440 Speaker 3: that view? 196 00:09:54,360 --> 00:09:57,520 Speaker 10: But I don't. I'm always following the markets. There's always 197 00:09:57,559 --> 00:10:02,400 Speaker 10: interesting things going on. You know. Obviously, as you said, 198 00:10:02,400 --> 00:10:05,960 Speaker 10: the next big report is in June, but there's opportunities 199 00:10:06,000 --> 00:10:07,720 Speaker 10: for here to take a breather. But I think this 200 00:10:07,800 --> 00:10:10,479 Speaker 10: is a great opportunity to start looking for new opportunities 201 00:10:10,520 --> 00:10:13,600 Speaker 10: to get into stocks as people are taking a breather, 202 00:10:13,880 --> 00:10:16,200 Speaker 10: and so I use this time to kind of do 203 00:10:16,360 --> 00:10:18,520 Speaker 10: my work and figure out what my best ideas are 204 00:10:18,520 --> 00:10:18,920 Speaker 10: going to be. 205 00:10:18,840 --> 00:10:22,760 Speaker 5: Going forward, Shenna, do your best ideas include small cap stocks? 206 00:10:23,640 --> 00:10:27,880 Speaker 10: So right now, small caps have some technical issues they 207 00:10:27,920 --> 00:10:31,280 Speaker 10: have I think they're in the third longest streak of 208 00:10:32,360 --> 00:10:35,760 Speaker 10: negative of not reaching a new high, and they have 209 00:10:36,480 --> 00:10:40,040 Speaker 10: really struggled to get out of the funk that they're in, 210 00:10:40,080 --> 00:10:43,280 Speaker 10: which is unusual in many ways, and it might be 211 00:10:43,720 --> 00:10:47,040 Speaker 10: a reflection of some change in market dynamics, especially the 212 00:10:47,120 --> 00:10:49,960 Speaker 10: concentration and the large caps that MAGS seven kind of 213 00:10:50,320 --> 00:10:53,840 Speaker 10: feel and what's driving it. But small caps are interesting 214 00:10:53,920 --> 00:10:57,640 Speaker 10: because if you look at the data, it's the actively 215 00:10:57,720 --> 00:11:01,679 Speaker 10: managed and the factor based small cap types of ETFs 216 00:11:01,679 --> 00:11:05,360 Speaker 10: and mutual funds that are outperforming and substantially so. So 217 00:11:05,679 --> 00:11:08,080 Speaker 10: this whole idea that active management is dead and that 218 00:11:08,160 --> 00:11:10,840 Speaker 10: you don't need active management in your portfolio in order 219 00:11:10,880 --> 00:11:13,720 Speaker 10: to do well, I think needs to be reconsidered because 220 00:11:13,760 --> 00:11:15,560 Speaker 10: in a place like small caps, where there's a lot 221 00:11:15,559 --> 00:11:20,400 Speaker 10: of inefficiencies and opportunities for smart money and those who 222 00:11:20,440 --> 00:11:24,120 Speaker 10: are actually doing work on individual names to outperform. I 223 00:11:24,160 --> 00:11:26,920 Speaker 10: think that, you know, we should reconsider ways that we 224 00:11:27,000 --> 00:11:30,400 Speaker 10: build portfolios and active management right now is really working 225 00:11:30,400 --> 00:11:31,400 Speaker 10: in the small cap space. 226 00:11:31,840 --> 00:11:33,800 Speaker 3: So where in the small cap space, whether is it 227 00:11:33,840 --> 00:11:37,200 Speaker 3: sector specific, is it balance sheet specific? Is it a 228 00:11:37,240 --> 00:11:38,640 Speaker 3: growth value kind of thing? 229 00:11:39,640 --> 00:11:43,920 Speaker 10: It's more factor based, so like quality, but even it 230 00:11:43,960 --> 00:11:46,360 Speaker 10: has to be even higher quality because the active managers 231 00:11:46,360 --> 00:11:48,400 Speaker 10: are beating the S and P six hundred, which tends 232 00:11:48,400 --> 00:11:50,960 Speaker 10: to be higher in quality than the Russell two thousand, 233 00:11:51,000 --> 00:11:53,000 Speaker 10: which tends to be full of a lot of like 234 00:11:53,120 --> 00:11:56,920 Speaker 10: junk and penny stocks and things of that nature. So 235 00:11:56,960 --> 00:12:00,360 Speaker 10: we're seeing that in active management. We're seeing it and 236 00:12:00,800 --> 00:12:04,120 Speaker 10: the quality factor. You're seeing it in the momentum factor, 237 00:12:04,800 --> 00:12:06,960 Speaker 10: but you're seeing it more in the factors than in 238 00:12:07,240 --> 00:12:09,680 Speaker 10: like growth value, in more than. 239 00:12:10,040 --> 00:12:11,120 Speaker 3: Style per se. 240 00:12:11,880 --> 00:12:14,240 Speaker 5: Hey Shanna, what are you guys doing in fixed income? 241 00:12:14,320 --> 00:12:16,520 Speaker 5: I mean I can sit in to your treasury and 242 00:12:16,520 --> 00:12:19,080 Speaker 5: get close to five percent here with no risk? 243 00:12:20,040 --> 00:12:21,240 Speaker 4: Do I sit there? Do I go out on the 244 00:12:21,240 --> 00:12:22,120 Speaker 4: credit curve a little bit? 245 00:12:23,120 --> 00:12:27,760 Speaker 10: So we are being focused on alternatives. We're looking more 246 00:12:27,760 --> 00:12:31,680 Speaker 10: at the private credit and private debt markets. Some interesting 247 00:12:31,679 --> 00:12:35,240 Speaker 10: opportunities in real estate income and with the advent of 248 00:12:35,360 --> 00:12:39,640 Speaker 10: interval funds, it allows us the opportunity to gain exposure 249 00:12:39,679 --> 00:12:44,080 Speaker 10: to those types of credits even for clients that aren't 250 00:12:44,160 --> 00:12:47,880 Speaker 10: qualified or credited. So you know, there's a there's a 251 00:12:48,240 --> 00:12:51,480 Speaker 10: Pender Capital has a real estate debt fund that is 252 00:12:51,520 --> 00:12:54,520 Speaker 10: an interval fund that allows for you know, the average 253 00:12:54,520 --> 00:12:57,400 Speaker 10: investor to gain exposure to an area in private credit 254 00:12:57,440 --> 00:13:00,959 Speaker 10: that was not traditionally available to that space. There's others 255 00:13:01,120 --> 00:13:04,440 Speaker 10: like that, So for us, that's kind of where we're 256 00:13:04,480 --> 00:13:07,760 Speaker 10: playing because that's where the real opportunity lies. You know, 257 00:13:07,960 --> 00:13:12,920 Speaker 10: rates are kind of volatile right now, and as you said, 258 00:13:12,960 --> 00:13:16,880 Speaker 10: you can get really good yield and treasuries, but we're 259 00:13:16,880 --> 00:13:19,839 Speaker 10: seeing a lot of demand in the non traditional credit 260 00:13:19,880 --> 00:13:24,199 Speaker 10: markets and the non bank lenders because the credit markets 261 00:13:24,360 --> 00:13:27,600 Speaker 10: after the financial crisis kind of seized up for a 262 00:13:27,720 --> 00:13:33,040 Speaker 10: lot of potential potential businesses, small business and such. So 263 00:13:33,080 --> 00:13:36,160 Speaker 10: the private debt markets have real opportunity to get above 264 00:13:36,160 --> 00:13:40,960 Speaker 10: average yield with relatively good credit quickly before we. 265 00:13:41,000 --> 00:13:44,720 Speaker 3: Let you go, before we let you go. When you 266 00:13:44,760 --> 00:13:48,680 Speaker 3: look at alternatives like that, that also include like gold, 267 00:13:48,760 --> 00:13:50,480 Speaker 3: and I say that because man gold has been on 268 00:13:50,520 --> 00:13:52,479 Speaker 3: a tear like is that part of the portfolio. 269 00:13:53,160 --> 00:13:56,079 Speaker 10: Oh, absolutely, Commodity is a part of the portfolio. Gold 270 00:13:56,120 --> 00:13:59,520 Speaker 10: and copper are really interesting right now. Gold hit all 271 00:13:59,600 --> 00:14:03,680 Speaker 10: time his yesterday. I would also put crypto in that space, 272 00:14:04,120 --> 00:14:06,120 Speaker 10: so big point. And you know there's a lot of 273 00:14:06,480 --> 00:14:11,559 Speaker 10: chatter right now about the probabilities of the spot E 274 00:14:11,559 --> 00:14:15,600 Speaker 10: ETF being approved this week or next week. I know 275 00:14:15,840 --> 00:14:18,480 Speaker 10: your colleague Eric Belcunus has been writing a lot about it. 276 00:14:19,280 --> 00:14:22,120 Speaker 10: So it's one of those things where crypto is also 277 00:14:22,200 --> 00:14:25,400 Speaker 10: quite interesting right here. But yeah, those are all alternatives, 278 00:14:25,400 --> 00:14:27,440 Speaker 10: and those are all things we consider for portfolios. 279 00:14:27,560 --> 00:14:29,720 Speaker 3: All right, Thanks Lott, really appreciated. Thank you for jumping 280 00:14:29,760 --> 00:14:32,960 Speaker 3: on with us. Shana Sissel joining US, President and CEO 281 00:14:33,400 --> 00:14:37,560 Speaker 3: of a bandy Own Capital Management joining us from Chicago, Illinois. 282 00:14:39,520 --> 00:14:43,400 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 283 00:14:43,480 --> 00:14:46,120 Speaker 2: weekdays at ten am Eastern on Apple card Play and 284 00:14:46,120 --> 00:14:48,760 Speaker 2: then Broyd Auto with the Bloomberg Business app. Listen on 285 00:14:48,840 --> 00:14:52,120 Speaker 2: demand wherever you get your podcasts, or watch us live 286 00:14:52,200 --> 00:14:53,560 Speaker 2: on YouTube. 287 00:14:54,480 --> 00:14:57,320 Speaker 3: We're also keeping our eye on the broader market as well. 288 00:14:57,800 --> 00:14:59,960 Speaker 3: You're looking at the s and key is barely high 289 00:15:00,200 --> 00:15:02,920 Speaker 3: up one tenth of one percent. The Nasdaq Shocker is 290 00:15:02,920 --> 00:15:06,040 Speaker 3: at performing up by six tenths of one percent, really 291 00:15:06,040 --> 00:15:09,120 Speaker 3: helped by Nvidia at a record high fifty two week 292 00:15:09,200 --> 00:15:12,400 Speaker 3: high below and past one thousand. So let's get what 293 00:15:12,440 --> 00:15:14,760 Speaker 3: I'm interested in now is now what? It's not only 294 00:15:14,760 --> 00:15:17,960 Speaker 3: what's now what for Nvidia, but now what for the 295 00:15:18,000 --> 00:15:21,400 Speaker 3: broader market? Is tech still going to be responsible for 296 00:15:21,520 --> 00:15:24,600 Speaker 3: pushing it higher? Gina Martin Adam's chief equity strategist at 297 00:15:24,600 --> 00:15:26,960 Speaker 3: Bloomberg Intelligence, joins us now. And you know this comes 298 00:15:26,960 --> 00:15:29,360 Speaker 3: directly from your guys's note this morning that came out 299 00:15:29,360 --> 00:15:31,280 Speaker 3: that talked about the importance of tech when it comes 300 00:15:31,320 --> 00:15:34,440 Speaker 3: to earnings, but how much that importance will still be 301 00:15:34,560 --> 00:15:35,840 Speaker 3: there in the coming quarters. 302 00:15:37,600 --> 00:15:39,960 Speaker 1: Yeah. I think it's a critical issue for the market 303 00:15:40,000 --> 00:15:43,000 Speaker 1: at large because we've been in this really intriguing sort 304 00:15:43,000 --> 00:15:45,240 Speaker 1: of environment over the course of the last year where 305 00:15:45,320 --> 00:15:49,120 Speaker 1: tech has sort of almost single handedly held up S 306 00:15:49,160 --> 00:15:52,760 Speaker 1: and P five hundred earnings. Tech and communications together as sectors, 307 00:15:53,280 --> 00:15:55,760 Speaker 1: have been the earning stalwarts and the index, while the 308 00:15:55,760 --> 00:15:58,120 Speaker 1: rest of the index has suffered through some kind of 309 00:15:58,120 --> 00:16:02,760 Speaker 1: earnings recession. Intulular, the commodity centric sectors really posting very 310 00:16:02,760 --> 00:16:05,640 Speaker 1: strong declines, but also healthcare posting double digit clines and 311 00:16:05,680 --> 00:16:08,040 Speaker 1: earnings over the course of the last year. As we 312 00:16:08,120 --> 00:16:12,560 Speaker 1: move forward, this sort of onus on technology should lighten 313 00:16:12,680 --> 00:16:15,720 Speaker 1: up at the very least, and that may get reflected 314 00:16:15,720 --> 00:16:17,760 Speaker 1: in the stocks as well. Naturally, when these were the 315 00:16:17,800 --> 00:16:22,040 Speaker 1: only earners on the index, capital concentrated in those names, 316 00:16:22,080 --> 00:16:25,720 Speaker 1: concentrated in those themes, and we're already starting to see 317 00:16:25,760 --> 00:16:29,280 Speaker 1: some evidence that that thematic trade, that tech centric trade, 318 00:16:29,320 --> 00:16:32,240 Speaker 1: is breaking up. Some of the evidence that we presented 319 00:16:32,240 --> 00:16:35,760 Speaker 1: in the note this morning. For example, first is Navidia 320 00:16:35,840 --> 00:16:38,480 Speaker 1: isn't even the top theme stock that we follow right now. 321 00:16:38,600 --> 00:16:40,480 Speaker 1: And when we look at all the stocks that are 322 00:16:40,520 --> 00:16:44,040 Speaker 1: most levered two themes, the stock that has actually performed 323 00:16:44,120 --> 00:16:47,840 Speaker 1: the best is Seman's Energy. We're seeing physical environment themes 324 00:16:47,880 --> 00:16:51,720 Speaker 1: generally outperform AI centric themes. Already in twenty twenty four, 325 00:16:52,440 --> 00:16:55,840 Speaker 1: earnings trends are shifting, and correlations with the market between 326 00:16:55,840 --> 00:16:58,280 Speaker 1: tech and the rest of the market are also shifting somewhat. 327 00:16:58,320 --> 00:16:59,840 Speaker 1: So there's a lot of evidence that this is already 328 00:17:00,000 --> 00:17:04,320 Speaker 1: ocurring in anticipation of that earnings trend shift later this year. 329 00:17:05,200 --> 00:17:08,919 Speaker 5: How about valuation, Gina, where are we here kind of 330 00:17:08,920 --> 00:17:11,240 Speaker 5: post earnings and we've seen the shakeout in kind of 331 00:17:11,280 --> 00:17:13,280 Speaker 5: earnings estimates and guidance and so on and so forth. 332 00:17:13,320 --> 00:17:16,200 Speaker 5: What does that mean for you in terms of valuation. 333 00:17:15,800 --> 00:17:16,440 Speaker 4: Of this market? 334 00:17:17,680 --> 00:17:20,359 Speaker 1: Yeah, I think you have to look at valuations on 335 00:17:20,400 --> 00:17:23,400 Speaker 1: a sector by sector, stock by stock, industry by industry basis. 336 00:17:23,400 --> 00:17:25,520 Speaker 1: If you're looking at valuations in the market at large 337 00:17:25,560 --> 00:17:29,480 Speaker 1: right now, you're also looking at valuations that reflect in 338 00:17:29,640 --> 00:17:34,359 Speaker 1: earnings recession outside of tech and an expected slow recovery 339 00:17:34,400 --> 00:17:38,119 Speaker 1: from that recession. You're also looking at valuations that are 340 00:17:38,119 --> 00:17:42,399 Speaker 1: abnormally skewed toward tech, and tech is the one sector 341 00:17:42,400 --> 00:17:45,600 Speaker 1: in the index where we can prove that using valuations 342 00:17:45,640 --> 00:17:48,800 Speaker 1: as a tactical timing measure is a faulty strategy. So 343 00:17:49,480 --> 00:17:51,960 Speaker 1: I do think that if you're looking at broad market valuations, 344 00:17:52,000 --> 00:17:55,640 Speaker 1: you're kind of missing the bigger picture in really unique circumstances. 345 00:17:56,600 --> 00:17:59,560 Speaker 1: So we do look at sector level valuations, and what 346 00:17:59,640 --> 00:18:03,240 Speaker 1: you find is there are still quite a few very 347 00:18:03,320 --> 00:18:07,120 Speaker 1: discounted segments of the US equity market outside of tech 348 00:18:07,119 --> 00:18:11,720 Speaker 1: and communications, where again capital has concentrated because those were 349 00:18:11,720 --> 00:18:14,680 Speaker 1: the only earnings grows stories largely in the market over 350 00:18:14,720 --> 00:18:16,880 Speaker 1: the course of the last year. So when we look 351 00:18:16,880 --> 00:18:19,439 Speaker 1: across the landscape of the S and P five hundred, 352 00:18:19,760 --> 00:18:21,840 Speaker 1: we actually see nearly half of the stacks in the 353 00:18:21,840 --> 00:18:25,400 Speaker 1: index are training at levels below their media and valuation 354 00:18:25,560 --> 00:18:29,280 Speaker 1: multiples of the last cycle, the pre pandemic cycle. So 355 00:18:29,359 --> 00:18:32,760 Speaker 1: that's just one small stat on what's really happening beneath 356 00:18:32,800 --> 00:18:36,040 Speaker 1: the headline of multiples. Sure everyone will tell you the 357 00:18:36,160 --> 00:18:39,600 Speaker 1: S and P five hundred looks expensive. It looks expensive 358 00:18:39,720 --> 00:18:43,439 Speaker 1: relative to recent pass because of these unique earning circumstances 359 00:18:43,480 --> 00:18:47,320 Speaker 1: as well as the unique concentration of earnings inside tech 360 00:18:47,359 --> 00:18:48,280 Speaker 1: and tech specifically. 361 00:18:48,400 --> 00:18:50,679 Speaker 3: And that's what happens when we say things like maybe 362 00:18:50,680 --> 00:18:53,199 Speaker 3: this time is different, like maybe the economy is different 363 00:18:53,480 --> 00:18:56,720 Speaker 3: this time than it was, say, twenty years ago. Gina. 364 00:18:56,800 --> 00:18:59,000 Speaker 3: One of my favorite stories of this year has been 365 00:18:59,000 --> 00:19:02,960 Speaker 3: the outperformance of utilities, And typically if that happens, you're like, ooh, well, 366 00:19:03,000 --> 00:19:05,320 Speaker 3: investors are going to be really scared because that's where 367 00:19:05,320 --> 00:19:08,359 Speaker 3: you go, and you're scared and you want higher yield 368 00:19:08,400 --> 00:19:10,320 Speaker 3: and you don't want to have any growth, et cetera. 369 00:19:11,520 --> 00:19:14,880 Speaker 3: Is there possibility for utilities to become a growth sector? 370 00:19:15,040 --> 00:19:20,840 Speaker 3: As we tie that into the data center AI story. 371 00:19:19,520 --> 00:19:23,199 Speaker 11: I think no, no, But is there anything to that 372 00:19:23,240 --> 00:19:26,560 Speaker 11: at all? I think the reason utilities have outperformed is 373 00:19:26,560 --> 00:19:30,119 Speaker 11: actually several fold. Yes, there is some optimism with respect 374 00:19:30,160 --> 00:19:33,000 Speaker 11: to AI, but we're in the process actually of working 375 00:19:33,000 --> 00:19:37,760 Speaker 11: through our earning sentiment analysis right now, and no utilities 376 00:19:37,800 --> 00:19:41,840 Speaker 11: companies are mentioning AI as a growth opportunity for them. 377 00:19:42,440 --> 00:19:46,040 Speaker 1: So as much as the market has maybe tried to 378 00:19:46,240 --> 00:19:51,200 Speaker 1: push this narrative, that's really only part of what's impacted 379 00:19:51,240 --> 00:19:53,240 Speaker 1: the utility stocks. It's important to keep in mind that 380 00:19:53,359 --> 00:19:56,520 Speaker 1: utilities are very low beta stacks. We did go through 381 00:19:56,560 --> 00:20:00,359 Speaker 1: a pretty significant corrective process in the month of apriltilblities 382 00:20:00,480 --> 00:20:05,040 Speaker 1: naturally outperformed that process, so their base was higher coming 383 00:20:05,080 --> 00:20:08,280 Speaker 1: into May. And then we've had a bond market rally 384 00:20:09,160 --> 00:20:12,800 Speaker 1: to boot. Utilities are a high rate sensitivity sort of 385 00:20:12,880 --> 00:20:16,679 Speaker 1: segment of the market. When bond yields rally, then of 386 00:20:16,680 --> 00:20:20,280 Speaker 1: course utilities tend to outperform. So there's three reasons why 387 00:20:20,400 --> 00:20:23,240 Speaker 1: utilities have done well over the last three months. I 388 00:20:23,400 --> 00:20:26,800 Speaker 1: do think that there's a possibility, certainly that you have 389 00:20:27,680 --> 00:20:33,440 Speaker 1: some exposure to AI propelling demand for utilities The question then, 390 00:20:33,600 --> 00:20:36,600 Speaker 1: is how much of that demand ultimately results in pricing 391 00:20:36,680 --> 00:20:39,399 Speaker 1: power for utilities. And this is a really critical question 392 00:20:39,440 --> 00:20:42,520 Speaker 1: for this segment. This is a hyper regulated sector, especially 393 00:20:42,600 --> 00:20:45,960 Speaker 1: here in the United States. Will they ultimately just get 394 00:20:46,040 --> 00:20:49,320 Speaker 1: price passed through on a regulated basis or will we 395 00:20:49,480 --> 00:20:52,639 Speaker 1: actually see real shift in growth in the business model. 396 00:20:52,720 --> 00:20:55,560 Speaker 1: I don't know, but it seems like the short term 397 00:20:55,600 --> 00:20:57,080 Speaker 1: answer is not anytime soon. 398 00:20:57,280 --> 00:20:58,879 Speaker 4: Hi, Gina, thank you so much for joining us. 399 00:20:58,920 --> 00:21:02,480 Speaker 5: As always, Gina Martin Adams us strategist for all the 400 00:21:02,480 --> 00:21:04,040 Speaker 5: equity stuff for Bloomberg Intelligence. 401 00:21:04,040 --> 00:21:06,159 Speaker 4: She does, she does it all. We appreciate getting some 402 00:21:06,240 --> 00:21:06,720 Speaker 4: of her time. 403 00:21:08,280 --> 00:21:12,160 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 404 00:21:12,240 --> 00:21:15,760 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 405 00:21:15,800 --> 00:21:18,560 Speaker 2: Auto with the Bloomberg Business app. You can also listen 406 00:21:18,680 --> 00:21:21,760 Speaker 2: live on Amazon Alexa from our flagship New York station, 407 00:21:22,119 --> 00:21:25,840 Speaker 2: Just Say Alexa playing Bloomberg eleven thirty. 408 00:21:26,760 --> 00:21:29,040 Speaker 4: Staying on the auto kind of theme here. 409 00:21:29,480 --> 00:21:31,879 Speaker 5: Joel Lavington joins us here he covers He's the director 410 00:21:31,920 --> 00:21:34,080 Speaker 5: of credit research for Bloomberg Intelligence. 411 00:21:34,080 --> 00:21:36,240 Speaker 4: He does it all. One of the research areas he 412 00:21:36,280 --> 00:21:39,439 Speaker 4: covers is the automobile industry. And Joel, thanks so much 413 00:21:39,480 --> 00:21:40,439 Speaker 4: for joining us here in studio. 414 00:21:40,480 --> 00:21:42,960 Speaker 5: You guys are gonna have a concert a conference next 415 00:21:43,040 --> 00:21:46,879 Speaker 5: week in New York City focusing on the auto business. 416 00:21:46,920 --> 00:21:48,080 Speaker 4: Tell us about that. What are you guys doing? 417 00:21:48,160 --> 00:21:50,160 Speaker 12: It's sure, Paul, thank you so much for having us. 418 00:21:50,600 --> 00:21:53,960 Speaker 12: It's gonna be a great conference next Thursday. Everybody please 419 00:21:53,960 --> 00:21:55,119 Speaker 12: come out to one twenty. 420 00:21:54,880 --> 00:21:56,480 Speaker 13: Park for the show. 421 00:21:57,119 --> 00:22:00,280 Speaker 12: We're gonna be talking about things like auto loans and 422 00:22:00,440 --> 00:22:03,359 Speaker 12: have delinquencies which are as high as they were in 423 00:22:03,359 --> 00:22:04,240 Speaker 12: the Great Depression. 424 00:22:04,640 --> 00:22:07,080 Speaker 13: Gregscuse me? The Great Recession? Where are they headed? 425 00:22:07,200 --> 00:22:09,920 Speaker 12: And what does it mean that when Tesla cuts its 426 00:22:09,920 --> 00:22:12,320 Speaker 12: prices by thirty five percent? What does it mean for 427 00:22:12,359 --> 00:22:14,840 Speaker 12: your residual values and your ability to buy a new 428 00:22:14,880 --> 00:22:17,240 Speaker 12: car with the average price of forty eight thousand dollars. 429 00:22:17,520 --> 00:22:19,800 Speaker 13: And of course we'll have the rating agencies there. 430 00:22:19,880 --> 00:22:24,440 Speaker 12: We'll have valuation views from JP Morgan, from Merrill Lynch 431 00:22:24,520 --> 00:22:25,480 Speaker 12: and from credit site. 432 00:22:25,480 --> 00:22:27,840 Speaker 13: So it should be a great, great afternoon for everybody. 433 00:22:27,920 --> 00:22:29,879 Speaker 3: First of all, I want to point out he brought 434 00:22:29,880 --> 00:22:32,600 Speaker 3: me swag. Oh let's see in the radio studio. It 435 00:22:32,640 --> 00:22:36,359 Speaker 3: is a hat. Autopalooza twenty twenty four, Bloomberg intelligence on 436 00:22:36,400 --> 00:22:38,679 Speaker 3: the back, I love me swag. For those of you 437 00:22:38,760 --> 00:22:41,639 Speaker 3: on radio, sorry, but for those of you on YouTube 438 00:22:41,640 --> 00:22:43,600 Speaker 3: you can check out my goods back. The problem is 439 00:22:43,600 --> 00:22:45,600 Speaker 3: is that I like terrible in hats. 440 00:22:45,840 --> 00:22:46,480 Speaker 4: Oh you look right? 441 00:22:46,520 --> 00:22:49,399 Speaker 3: No, yeah, no, trust me. This is this is a 442 00:22:49,520 --> 00:22:52,040 Speaker 3: joke in my family that I ever, but my husband 443 00:22:52,040 --> 00:22:56,280 Speaker 3: looks great in hats. Why are delinquencies so bad right now? 444 00:22:56,520 --> 00:22:56,760 Speaker 1: Sure? 445 00:22:56,840 --> 00:22:59,160 Speaker 12: Well, you know, twenty five percent of loans right now 446 00:22:59,280 --> 00:23:02,480 Speaker 12: alex cost one thousand dollars or more a month. And 447 00:23:02,560 --> 00:23:05,400 Speaker 12: so if you're thinking about your average consumer that makes 448 00:23:05,400 --> 00:23:08,199 Speaker 12: about sixty five thousand dollars, that's your average household a 449 00:23:08,240 --> 00:23:11,680 Speaker 12: forty eight thousand dollars car with one thousand dollars plus loan. 450 00:23:12,200 --> 00:23:14,359 Speaker 12: And then you know, like eighteen percent of the loans 451 00:23:14,359 --> 00:23:17,879 Speaker 12: that are outstanding, Paul have a negative sixty two hundred 452 00:23:17,880 --> 00:23:20,800 Speaker 12: dollars equity value. Because prices, particularly for EV's have been 453 00:23:20,840 --> 00:23:23,480 Speaker 12: coming down so much, so it really puts you in 454 00:23:23,480 --> 00:23:27,160 Speaker 12: a spot where you're paying for something that is already underwater. 455 00:23:27,320 --> 00:23:30,000 Speaker 12: So why continue tends to be the question, and I 456 00:23:30,000 --> 00:23:32,040 Speaker 12: think that's the key reason why you're starting to see 457 00:23:33,440 --> 00:23:37,160 Speaker 12: seeing these numbers rise despite unemployment levels that are quite low. 458 00:23:37,560 --> 00:23:40,960 Speaker 5: So what's the feeling in the auto industry, jol about 459 00:23:41,240 --> 00:23:43,680 Speaker 5: kind of where we are on this transition to evs. 460 00:23:43,840 --> 00:23:45,520 Speaker 4: We seem to have hit a little bit. 461 00:23:45,400 --> 00:23:46,960 Speaker 5: Of a bump in the road here, and I'm not 462 00:23:47,000 --> 00:23:49,359 Speaker 5: sure if it's just a little pothole or if it's 463 00:23:49,400 --> 00:23:52,239 Speaker 5: something much bigger. What are the companies saying, What are 464 00:23:52,240 --> 00:23:54,000 Speaker 5: the investors that you talk to, what are they. 465 00:23:53,840 --> 00:23:55,000 Speaker 13: Saying to me? 466 00:23:55,119 --> 00:23:58,240 Speaker 12: I think it's actually much bigger than what people think. 467 00:23:58,520 --> 00:24:00,399 Speaker 12: I think you're going to see more R and D 468 00:24:00,520 --> 00:24:03,000 Speaker 12: and CAPEX being cut and reduced. And I think you're 469 00:24:03,040 --> 00:24:08,000 Speaker 12: really seeing a recycling of capital usage where you're investing 470 00:24:08,200 --> 00:24:13,360 Speaker 12: in evs into an unknown project with unknown returns, whereas 471 00:24:13,800 --> 00:24:16,560 Speaker 12: when you're socks traded three or four times PE, why 472 00:24:16,640 --> 00:24:18,840 Speaker 12: not go buy the shares or give more dividends. And 473 00:24:18,880 --> 00:24:21,720 Speaker 12: I think you're seeing the shift in capital allocation from 474 00:24:21,880 --> 00:24:26,120 Speaker 12: capex and growth from evs because most consumers don't want them, 475 00:24:26,320 --> 00:24:29,240 Speaker 12: right BI Survey after survey tells you around the globe 476 00:24:29,280 --> 00:24:31,639 Speaker 12: that people are not that interested in owning EU. 477 00:24:31,520 --> 00:24:34,120 Speaker 5: Are they not interested owning evs because of the costs 478 00:24:34,359 --> 00:24:37,320 Speaker 5: they politically they don't link this whole green energy thing. 479 00:24:38,240 --> 00:24:40,720 Speaker 4: They're just not good vehicles. Why don't they want them? 480 00:24:40,880 --> 00:24:44,199 Speaker 12: Cost is a huge factor, you know at the beginning, 481 00:24:44,200 --> 00:24:47,520 Speaker 12: when you have people that will buy whatever the latest 482 00:24:47,520 --> 00:24:48,600 Speaker 12: and greatest technology is. 483 00:24:48,640 --> 00:24:50,959 Speaker 13: That's great and they can afford that. 484 00:24:51,080 --> 00:24:53,960 Speaker 12: But a one hundred and twenty thousand dollars Mercedes is 485 00:24:53,960 --> 00:24:56,080 Speaker 12: not going to work for the average person like myself, 486 00:24:57,640 --> 00:25:00,280 Speaker 12: And so you have issues there with price, which is 487 00:25:00,280 --> 00:25:02,520 Speaker 12: what Tesla has been trying to do to solve that, right, 488 00:25:02,560 --> 00:25:04,679 Speaker 12: and that creates different sorts of issues. 489 00:25:04,720 --> 00:25:07,600 Speaker 13: I think the other thing is infrastructure. There's just not enough. 490 00:25:07,640 --> 00:25:10,000 Speaker 12: And if you think about your typical consumer, perhaps in 491 00:25:10,040 --> 00:25:13,200 Speaker 12: the Midwest, they go on long trips and they want 492 00:25:13,280 --> 00:25:17,320 Speaker 12: three four or five hundred miles of guaranteed road and 493 00:25:17,400 --> 00:25:19,639 Speaker 12: you just can't get that with the infrastructure that you 494 00:25:19,680 --> 00:25:20,199 Speaker 12: have today. 495 00:25:20,440 --> 00:25:22,800 Speaker 3: And this is just also sort of the wrong time, Like 496 00:25:22,840 --> 00:25:26,680 Speaker 3: if we just pair that with auto delinquencies, we haven't 497 00:25:26,720 --> 00:25:29,359 Speaker 3: seen this since the Great Recession, Like that's not the 498 00:25:29,480 --> 00:25:32,120 Speaker 3: right time to then try and convince people to buy 499 00:25:32,200 --> 00:25:34,400 Speaker 3: a car whose base price is sixty. 500 00:25:34,119 --> 00:25:36,840 Speaker 12: Grand, especially because you can get into something better like 501 00:25:36,920 --> 00:25:40,640 Speaker 12: a hybrid or better venege than a pure better value. 502 00:25:40,400 --> 00:25:42,760 Speaker 3: Or like cheaper and sold as the same. 503 00:25:42,600 --> 00:25:44,760 Speaker 12: Thing relative from a green standpoint, certainly better than a 504 00:25:44,760 --> 00:25:47,240 Speaker 12: pure ice engine, where you could probably double your mileage, 505 00:25:47,840 --> 00:25:49,880 Speaker 12: pay a lower dollar amount and feel like you're doing 506 00:25:49,920 --> 00:25:52,560 Speaker 12: something for the you know, for the Earth. And so 507 00:25:52,640 --> 00:25:54,720 Speaker 12: I think that's really why you're starting to see a 508 00:25:54,800 --> 00:25:58,560 Speaker 12: huge ramp up in hybrid sales across the platforms. 509 00:25:58,640 --> 00:26:00,919 Speaker 3: Cask a really dumb question about Tesla. So I've been 510 00:26:01,000 --> 00:26:02,760 Speaker 3: using a lot of Tesla's to get into the office. 511 00:26:02,840 --> 00:26:05,600 Speaker 3: Like Uber has a green car thing, what I've noticed 512 00:26:05,640 --> 00:26:08,880 Speaker 3: is like the size looks exactly the same, but inside 513 00:26:08,960 --> 00:26:11,359 Speaker 3: I feel like I'm in a hotel room. It's like huge. 514 00:26:11,520 --> 00:26:14,520 Speaker 3: Is that because Elon Musk takes out all the stuff 515 00:26:14,520 --> 00:26:17,000 Speaker 3: that's in a regular internal combustion engine car. 516 00:26:17,320 --> 00:26:20,080 Speaker 12: The design and the compactness of their battery has done 517 00:26:20,119 --> 00:26:22,919 Speaker 12: a tremendous job, and much like Lucid has. Lucid of 518 00:26:22,960 --> 00:26:26,879 Speaker 12: course was founded by the former designer for Teslas, so 519 00:26:26,920 --> 00:26:29,880 Speaker 12: they've done a great job of like re designing the 520 00:26:29,920 --> 00:26:32,760 Speaker 12: insides of a vehicle. And that's why it feels so 521 00:26:32,840 --> 00:26:35,840 Speaker 12: much more roomier than you get because the battery essentially 522 00:26:35,880 --> 00:26:39,359 Speaker 12: is pushed lower and the truck or the front is 523 00:26:39,400 --> 00:26:41,720 Speaker 12: pushed forward so you get more space, and they also 524 00:26:41,760 --> 00:26:44,760 Speaker 12: have more of a curved dome on the on the roof. 525 00:26:45,119 --> 00:26:47,600 Speaker 3: Have you been in one? Like, yes, have you noticed it? 526 00:26:47,640 --> 00:26:48,720 Speaker 3: I feel like so much favor. 527 00:26:48,840 --> 00:26:49,800 Speaker 4: Yeah, now do you think about it? 528 00:26:49,880 --> 00:26:50,680 Speaker 8: Yeah? 529 00:26:50,720 --> 00:26:52,879 Speaker 5: But I mean I drove the thanks to Matt Miller, 530 00:26:53,440 --> 00:26:56,280 Speaker 5: the four f one fifty lightning the electric version. That 531 00:26:56,359 --> 00:26:59,480 Speaker 5: now is you like, Yeah, I'm not a pickup truck 532 00:26:59,560 --> 00:27:02,080 Speaker 5: driver because I'm an investment banker. I don't do that 533 00:27:02,320 --> 00:27:04,399 Speaker 5: and I don't do electric, but boy, it was an 534 00:27:04,440 --> 00:27:06,080 Speaker 5: awesome car, awesome vehicle. 535 00:27:06,640 --> 00:27:09,560 Speaker 4: So what's the feeling, Joel. Is hybrid's going to be 536 00:27:09,720 --> 00:27:11,520 Speaker 4: kind of where we settle out? Do you think or? 537 00:27:12,560 --> 00:27:13,080 Speaker 8: Like? 538 00:27:13,080 --> 00:27:15,720 Speaker 5: Like I asked the BCG guys right, and the auto 539 00:27:15,800 --> 00:27:18,240 Speaker 5: guy there says he thinks in ten years forty percent 540 00:27:18,280 --> 00:27:19,360 Speaker 5: of sales will be evs. 541 00:27:19,440 --> 00:27:20,480 Speaker 4: Does that sound reasonable? 542 00:27:20,640 --> 00:27:21,840 Speaker 13: I would take the under on that. 543 00:27:21,960 --> 00:27:24,560 Speaker 12: Take the under on that, yeah, And I you know, 544 00:27:24,600 --> 00:27:28,280 Speaker 12: I think it doesn't really help. It really doesn't help 545 00:27:28,320 --> 00:27:31,119 Speaker 12: anybody until the technology is stronger and the cost is 546 00:27:31,119 --> 00:27:34,000 Speaker 12: lower on the battery side to really make an effective 547 00:27:34,040 --> 00:27:36,600 Speaker 12: car and an effective price. And I think you'll be 548 00:27:36,600 --> 00:27:39,400 Speaker 12: seeing that ramp up in part because the Chinese are coming, 549 00:27:39,440 --> 00:27:40,560 Speaker 12: and the Chinese can make a. 550 00:27:40,480 --> 00:27:41,720 Speaker 13: Profit at ten thousand dollars. 551 00:27:42,200 --> 00:27:44,040 Speaker 5: They're not coming now because we have the don't we 552 00:27:44,080 --> 00:27:45,760 Speaker 5: have like tariffs on them on something like that. 553 00:27:45,800 --> 00:27:48,480 Speaker 12: We do, and that is a huge concern, really more 554 00:27:48,480 --> 00:27:51,200 Speaker 12: for the Europeans than for the US. Four and GM 555 00:27:51,240 --> 00:27:54,400 Speaker 12: don't make a lot of money in China, but when 556 00:27:54,400 --> 00:27:59,280 Speaker 12: you think about Volkswagen, or you think about Mercedes or BMW, 557 00:27:59,400 --> 00:28:02,040 Speaker 12: that's about a thirty five percent of their business is 558 00:28:02,080 --> 00:28:05,359 Speaker 12: based in China. So it's really the tariffs that are 559 00:28:05,359 --> 00:28:08,439 Speaker 12: going back and forth or being discussed with between China 560 00:28:08,480 --> 00:28:11,560 Speaker 12: and Europe and Europe and China. That's really where the 561 00:28:11,560 --> 00:28:13,120 Speaker 12: sticking point is going to be in the near term 562 00:28:13,160 --> 00:28:13,840 Speaker 12: for these autos. 563 00:28:14,119 --> 00:28:16,240 Speaker 3: So going back to the autopalooza that you're going to 564 00:28:16,320 --> 00:28:18,360 Speaker 3: have and you have rating agencies there, it sounds very 565 00:28:18,359 --> 00:28:22,560 Speaker 3: cool rating agencies and cool maybe not usually what you say, 566 00:28:22,560 --> 00:28:25,879 Speaker 3: but you nevertheless, what is going to be your forecast, 567 00:28:25,920 --> 00:28:27,639 Speaker 3: Like what kind of forecasts are you looking at for 568 00:28:27,720 --> 00:28:30,960 Speaker 3: the charge offs for the delinquencies? How are you thinking 569 00:28:30,960 --> 00:28:32,440 Speaker 3: about that for the medium term? 570 00:28:32,600 --> 00:28:34,280 Speaker 12: Yeah, well, I think what's really going to be great 571 00:28:34,320 --> 00:28:37,280 Speaker 12: there is Cox Automotive that experience are going to be 572 00:28:37,280 --> 00:28:42,560 Speaker 12: coming in and talking about what electrification means for finance companies. 573 00:28:42,720 --> 00:28:44,320 Speaker 13: I know that doesn't particularly sound. 574 00:28:44,120 --> 00:28:48,040 Speaker 12: Cool, but really you have seen a perfect performance or 575 00:28:48,120 --> 00:28:51,720 Speaker 12: near perfect performance out of electric cars, and at least 576 00:28:51,720 --> 00:28:53,360 Speaker 12: the slides that they've shown me tell me that that 577 00:28:53,520 --> 00:28:55,360 Speaker 12: is not the case any longer. And in fact, it's 578 00:28:55,360 --> 00:28:57,600 Speaker 12: going to be a lot worse than ice engines. And 579 00:28:57,640 --> 00:29:00,960 Speaker 12: so people that we're betting on evs holding their residual 580 00:29:01,040 --> 00:29:02,720 Speaker 12: values I think are going to be in for a 581 00:29:02,760 --> 00:29:05,520 Speaker 12: bad surprise, whether it's the finance companies or people that 582 00:29:05,600 --> 00:29:08,960 Speaker 12: own abs securities that have a lot of EVS in them. 583 00:29:09,040 --> 00:29:10,600 Speaker 12: So I think they'll be able to provide a lot 584 00:29:10,640 --> 00:29:12,360 Speaker 12: of detail next Thursday. 585 00:29:12,880 --> 00:29:14,520 Speaker 4: All right, Joel, thank you so much for joining us. 586 00:29:14,560 --> 00:29:18,080 Speaker 5: Joe Levington, he runs all the credit research for Bloomberg Intelligence, 587 00:29:18,120 --> 00:29:21,760 Speaker 5: also covers the audio industry in his spare time. 588 00:29:22,040 --> 00:29:22,840 Speaker 8: Autopoalooser. 589 00:29:22,960 --> 00:29:25,640 Speaker 5: Get the Auto industry together in New York City for 590 00:29:25,800 --> 00:29:32,880 Speaker 5: Bloomberg Intelligence Investor Conference Thursday one twenty, Park Avenue Next Thursday. 591 00:29:33,440 --> 00:29:37,320 Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live 592 00:29:37,400 --> 00:29:40,920 Speaker 2: weekdays at ten am Eastern on applecard Play and Android 593 00:29:40,960 --> 00:29:43,720 Speaker 2: Auto with the Bloomberg Business app. You can also listen 594 00:29:43,840 --> 00:29:46,920 Speaker 2: live on Amazon Alexa from our flagship New York station. 595 00:29:47,280 --> 00:29:51,240 Speaker 2: Just say Alexa play Bloomberg eleven thirty. 596 00:29:51,640 --> 00:29:53,920 Speaker 5: This is the perfect time to check in with Matt Miller, 597 00:29:54,280 --> 00:29:57,560 Speaker 5: the exceedingly overworked Matt Miller, who joins his here in 598 00:29:57,600 --> 00:30:00,120 Speaker 5: our Bloomberg studio here at some shade. 599 00:30:00,240 --> 00:30:02,120 Speaker 8: Sarcasm is the lowest form of wit. 600 00:30:02,320 --> 00:30:04,520 Speaker 4: Paulley, all Right, what do you guys? I mean, you've 601 00:30:04,560 --> 00:30:06,760 Speaker 4: got your You are so into this auto gig. 602 00:30:06,800 --> 00:30:09,640 Speaker 5: You've got a podcast with our good friend Hannah Elliott 603 00:30:09,760 --> 00:30:10,400 Speaker 5: tell us about it. 604 00:30:10,480 --> 00:30:14,000 Speaker 14: Yeah, and we have some amazing guests. So you're just 605 00:30:14,040 --> 00:30:16,040 Speaker 14: talking to Michael Barr. He has a podcast, The Business 606 00:30:16,080 --> 00:30:18,880 Speaker 14: of Sports, and this weekend is one of the most 607 00:30:19,160 --> 00:30:24,160 Speaker 14: iconic races in motorsports, his Charlot Speedway, the Indy five. 608 00:30:24,160 --> 00:30:25,600 Speaker 8: Hundred, The Indy five hundred. 609 00:30:25,800 --> 00:30:27,240 Speaker 3: I even kind of knew that. 610 00:30:27,560 --> 00:30:30,120 Speaker 14: This weekend, so a lot of people are getting their 611 00:30:30,200 --> 00:30:34,640 Speaker 14: RVs driving out to Indianapolis and Hannah and I spoke 612 00:30:34,680 --> 00:30:35,600 Speaker 14: with Catherine. 613 00:30:35,240 --> 00:30:37,640 Speaker 8: Legg, who is gonna be one of the drivers. 614 00:30:38,000 --> 00:30:41,920 Speaker 14: She had an amazing qualifying session a couple of days ago. 615 00:30:42,000 --> 00:30:43,840 Speaker 14: She was doing an average speed of two hundred and 616 00:30:43,840 --> 00:30:46,280 Speaker 14: thirty miles per hour and she hit the wall, but 617 00:30:46,880 --> 00:30:49,240 Speaker 14: she did not take her foot off the gas pedal. 618 00:30:50,240 --> 00:30:51,480 Speaker 8: Never lift. 619 00:30:52,680 --> 00:30:55,600 Speaker 14: One of my favorite automotive phrases. So she's she's on 620 00:30:55,640 --> 00:30:58,040 Speaker 14: the podcast this week and it's really interesting. But we 621 00:30:58,160 --> 00:31:01,600 Speaker 14: have an amazing line of guests coming up. Next week. 622 00:31:01,640 --> 00:31:03,960 Speaker 14: We're going to talk with Zach Brown, who's the team 623 00:31:04,000 --> 00:31:07,120 Speaker 14: principal for McLaren in Formula one. 624 00:31:08,360 --> 00:31:11,200 Speaker 8: One of the most watched sporting leagues in the world. 625 00:31:11,480 --> 00:31:13,920 Speaker 14: Then tell me and then the week after that, I 626 00:31:14,120 --> 00:31:16,040 Speaker 14: just snagged Tom Wagner. 627 00:31:16,600 --> 00:31:18,120 Speaker 8: He runs Nighthead Capital. 628 00:31:18,240 --> 00:31:21,080 Speaker 14: So everyone knows they own Hertz and they had the 629 00:31:21,080 --> 00:31:25,440 Speaker 14: whole Tesla thing, but they also own Singer, which is 630 00:31:25,480 --> 00:31:29,080 Speaker 14: a Porsche customizer. I guess you could say a Porsche 631 00:31:29,120 --> 00:31:31,680 Speaker 14: restomat outfit in La that's very famous. You can pick 632 00:31:31,680 --> 00:31:34,000 Speaker 14: one of those up for about a million bucks if 633 00:31:34,040 --> 00:31:39,240 Speaker 14: you wait long enough. And they also own Revology, which 634 00:31:39,280 --> 00:31:44,400 Speaker 14: does replicas or reproductions. They prefer of the nineteen sixty 635 00:31:44,400 --> 00:31:47,880 Speaker 14: eight Mustang down in Florida. They have licensing deal with 636 00:31:47,960 --> 00:31:51,720 Speaker 14: Ford and they do an entirely new vehicle from the 637 00:31:51,800 --> 00:31:55,160 Speaker 14: frame up, but it looks exactly like a nineteen sixty 638 00:31:55,200 --> 00:31:57,360 Speaker 14: eight Mustang with modern day performance. 639 00:31:57,440 --> 00:31:59,520 Speaker 8: Yeah so an amazing business. 640 00:31:59,520 --> 00:32:01,400 Speaker 14: He also owned is a soccer team, So I guess 641 00:32:01,480 --> 00:32:05,040 Speaker 14: Tom Kean would care Birmingham I think yeah, no, uh 642 00:32:05,200 --> 00:32:06,280 Speaker 14: and a couple of. 643 00:32:06,240 --> 00:32:07,920 Speaker 8: Worlds a player racing teams. 644 00:32:07,960 --> 00:32:08,120 Speaker 4: Yeah. 645 00:32:08,160 --> 00:32:10,360 Speaker 8: So I'm pretty excited about Hot Pursuit right now. We 646 00:32:10,400 --> 00:32:11,280 Speaker 8: have a pretty good lineup. 647 00:32:11,400 --> 00:32:12,520 Speaker 3: Good that sounds really fun. 648 00:32:12,600 --> 00:32:13,360 Speaker 8: Do you ever listen? 649 00:32:14,200 --> 00:32:14,720 Speaker 3: Yeah? 650 00:32:15,960 --> 00:32:17,280 Speaker 6: Okay, what was the last topic? 651 00:32:18,400 --> 00:32:22,520 Speaker 3: It were cars? I follow her, come. 652 00:32:22,400 --> 00:32:25,720 Speaker 4: On Elliott on social and what a life she leads. 653 00:32:25,720 --> 00:32:27,640 Speaker 4: She's all over the globe. 654 00:32:27,120 --> 00:32:30,200 Speaker 8: Literally today she's at Lake Como perfect. 655 00:32:30,200 --> 00:32:33,560 Speaker 14: Why wouldn't you be in Italy right for the Villadesta 656 00:32:34,000 --> 00:32:36,040 Speaker 14: some kind of concourse delgo. 657 00:32:35,840 --> 00:32:36,680 Speaker 3: And you get that gig. 658 00:32:37,320 --> 00:32:37,440 Speaker 9: Uh. 659 00:32:37,680 --> 00:32:39,160 Speaker 8: Well, Hannah's much better at it, you know. 660 00:32:39,200 --> 00:32:43,200 Speaker 14: She she prefers like the high end luxury market, the 661 00:32:43,280 --> 00:32:46,560 Speaker 14: supercars and hyper cars. She knows all the millionaires and 662 00:32:46,600 --> 00:32:50,160 Speaker 14: billionaires that do the collections. I like, like a Dodge 663 00:32:50,200 --> 00:32:53,520 Speaker 14: muscle car or a Chevy truck. You know, I'm more 664 00:32:53,760 --> 00:32:54,840 Speaker 14: salt of the earth when it. 665 00:32:54,800 --> 00:32:57,400 Speaker 3: Comes to seems like a perfect combination exactly. 666 00:32:57,480 --> 00:33:01,560 Speaker 14: Well, we span the whole gamut and we often disagree, 667 00:33:01,600 --> 00:33:03,520 Speaker 14: but we have a lot of respect for each other. 668 00:33:03,640 --> 00:33:05,640 Speaker 8: So it's podcast. 669 00:33:05,760 --> 00:33:08,680 Speaker 3: Yeah, sure, okay, all listen. So what what are you 670 00:33:08,760 --> 00:33:09,560 Speaker 3: driving right now? 671 00:33:10,440 --> 00:33:14,560 Speaker 14: I actually last week I was in the Fiat five hundred, 672 00:33:14,680 --> 00:33:18,920 Speaker 14: the tiny little compact car, the electric electric version of that. 673 00:33:19,000 --> 00:33:20,120 Speaker 8: It's actually pretty. 674 00:33:19,920 --> 00:33:23,080 Speaker 14: Roomy on the interior, and I enjoyed driving it. I mean, 675 00:33:23,120 --> 00:33:26,440 Speaker 14: it's not the right vehicle unless you're only gonna go 676 00:33:26,600 --> 00:33:29,920 Speaker 14: like maximum five or ten miles, right because it's a tiny, 677 00:33:29,960 --> 00:33:33,080 Speaker 14: little sort of city car, but it really really cool 678 00:33:33,440 --> 00:33:38,040 Speaker 14: and all the ladies in my hometown loved it and 679 00:33:37,840 --> 00:33:40,520 Speaker 14: h And this week I'm I'm gonna test drive the 680 00:33:40,520 --> 00:33:43,360 Speaker 14: new Mercedes E class, the four fifties, so it's got 681 00:33:43,360 --> 00:33:46,080 Speaker 14: the inline six. I'm pretty excited about that. But I'm 682 00:33:46,120 --> 00:33:49,040 Speaker 14: most excited about the Mustangs that are coming up. I've 683 00:33:49,040 --> 00:33:51,080 Speaker 14: been promised by four that I'm gonna get to drive 684 00:33:51,080 --> 00:33:55,520 Speaker 14: the new Mustang dark Horse, and I'm so pumped to. 685 00:33:55,520 --> 00:33:59,240 Speaker 8: Try that out. Are you talking about I see John? 686 00:33:59,400 --> 00:33:59,880 Speaker 4: I see John. 687 00:34:00,480 --> 00:34:01,200 Speaker 3: No, he's not talking. 688 00:34:03,000 --> 00:34:05,360 Speaker 14: So the Mustang, Uh, you know, they came out the 689 00:34:05,360 --> 00:34:08,960 Speaker 14: new Mustang last year. It's kind of a beefier, brawnier, 690 00:34:09,400 --> 00:34:10,760 Speaker 14: more muscular shape. 691 00:34:11,000 --> 00:34:14,000 Speaker 8: And it's the last of the big muscle cars. 692 00:34:14,040 --> 00:34:17,200 Speaker 14: They They finished making the Dodge Challenger last year. They 693 00:34:17,239 --> 00:34:18,120 Speaker 14: don't make that anymore. 694 00:34:18,120 --> 00:34:19,839 Speaker 4: Would you own? I bought one. 695 00:34:19,920 --> 00:34:22,000 Speaker 14: I bought one of the last call versions. Yeah, the 696 00:34:22,120 --> 00:34:24,240 Speaker 14: RT scatpack wide body. 697 00:34:24,320 --> 00:34:24,680 Speaker 4: I knew that. 698 00:34:24,880 --> 00:34:29,520 Speaker 14: And and they finished making the Camaro, so GM and Chrysler, 699 00:34:29,800 --> 00:34:31,680 Speaker 14: Dodge or whatever you want to call it. 700 00:34:31,719 --> 00:34:33,600 Speaker 8: They're out of the muscle car business. 701 00:34:33,760 --> 00:34:37,759 Speaker 14: Mustang is the only American sort of muscle car you 702 00:34:37,760 --> 00:34:38,640 Speaker 14: can see anymore. 703 00:34:38,840 --> 00:34:41,560 Speaker 5: Like, uh, this seems like they made a mistake because 704 00:34:41,640 --> 00:34:43,160 Speaker 5: I don't think those muscle cars are going away. 705 00:34:43,160 --> 00:34:45,040 Speaker 4: I don't think evs are going to take over the 706 00:34:45,040 --> 00:34:46,960 Speaker 4: world like we thought as recently as a year ago. 707 00:34:47,120 --> 00:34:49,040 Speaker 8: Yeah, I think they did it a little bit too early. 708 00:34:49,080 --> 00:34:50,600 Speaker 8: They closed down production a little too early. 709 00:34:50,640 --> 00:34:53,400 Speaker 3: But you still have can you have like hybrid muscle cars? 710 00:34:55,760 --> 00:34:57,719 Speaker 14: That's not really like the point The point of a 711 00:34:57,800 --> 00:35:01,560 Speaker 14: muscle car is kind of a small vehicle, rear wheel drive, 712 00:35:01,680 --> 00:35:04,640 Speaker 14: big motor and like dumb analog is the point of 713 00:35:04,640 --> 00:35:05,400 Speaker 14: a muscle car. 714 00:35:05,480 --> 00:35:08,160 Speaker 3: But if we're gonna keep the muscle car like over 715 00:35:08,200 --> 00:35:09,560 Speaker 3: the next sixty eighty years. 716 00:35:09,840 --> 00:35:12,200 Speaker 8: Yes, so that is what that is what Dodge is 717 00:35:12,239 --> 00:35:12,799 Speaker 8: trying to do. 718 00:35:12,880 --> 00:35:16,680 Speaker 14: They're trying to make electric or hybrid versions of they 719 00:35:16,680 --> 00:35:19,359 Speaker 14: haven't come out with it yet, but the Challenger and 720 00:35:19,480 --> 00:35:21,080 Speaker 14: the charger, so they. 721 00:35:20,960 --> 00:35:25,279 Speaker 8: Do want that. But the muscle car fans might want that. 722 00:35:25,400 --> 00:35:31,000 Speaker 14: The buyers of these products are very averse to electric 723 00:35:31,160 --> 00:35:32,879 Speaker 14: like anything ev if you. 724 00:35:32,840 --> 00:35:34,279 Speaker 8: Go on the forums, they don't like. 725 00:35:34,880 --> 00:35:37,560 Speaker 14: On the other hand, Ferrari is just about to open 726 00:35:37,640 --> 00:35:41,120 Speaker 14: up its first all electric factory, so okay, they're not 727 00:35:41,239 --> 00:35:42,600 Speaker 14: muscle car makers, but you know. 728 00:35:42,680 --> 00:35:45,160 Speaker 4: Again, typically it's not gonna sell. I just don't see it. 729 00:35:46,840 --> 00:35:49,200 Speaker 6: That's the sound that you'll okay. 730 00:35:48,920 --> 00:35:51,680 Speaker 8: I'm with you, I'm with you, I Alex I think 731 00:35:51,760 --> 00:35:53,160 Speaker 8: is on the right track. That's what. 732 00:35:53,200 --> 00:35:55,960 Speaker 14: They don't have any other choice, right because because of 733 00:35:56,040 --> 00:36:00,400 Speaker 14: the cafe regulations, they can't make a six point four 734 00:36:00,520 --> 00:36:04,640 Speaker 14: leader naturally aspirated V eight anymore. It's just too polluting. 735 00:36:05,080 --> 00:36:07,520 Speaker 14: So they're trying to do anything else they can. The 736 00:36:07,560 --> 00:36:10,600 Speaker 14: problem is that the market just isn't there yet. 737 00:36:10,719 --> 00:36:13,600 Speaker 6: And I ask a quick Tesla question, is Elon must 738 00:36:13,640 --> 00:36:18,880 Speaker 6: focus on selling cars or selling or doing the autonomous driving. 739 00:36:19,280 --> 00:36:22,040 Speaker 8: I mean you'd have to ask elon Musk. 740 00:36:21,880 --> 00:36:24,520 Speaker 3: ANSWER's yes, and space and battery stores. 741 00:36:24,560 --> 00:36:25,320 Speaker 8: Yeah, well exactly. 742 00:36:25,440 --> 00:36:28,040 Speaker 6: Well, they're not focusing on the number of cars that 743 00:36:28,040 --> 00:36:30,560 Speaker 6: they're selling now. He seems to be really committed to 744 00:36:30,719 --> 00:36:33,080 Speaker 6: autonomous driving from point. 745 00:36:33,160 --> 00:36:36,640 Speaker 14: I mean, yeah, he's focused on so many different things, right, 746 00:36:36,680 --> 00:36:39,480 Speaker 14: and a lot of investors are concerned that he's not 747 00:36:39,640 --> 00:36:42,239 Speaker 14: as focused as he should be on their specific thing. 748 00:36:42,440 --> 00:36:46,480 Speaker 5: So like like Folkswagen Ford, as you know, unless three 749 00:36:46,520 --> 00:36:49,520 Speaker 5: years they've made big announcements, big investments in EV and 750 00:36:49,640 --> 00:36:53,879 Speaker 5: billions of dollars of loss dollars of losses where we've 751 00:36:54,600 --> 00:36:55,680 Speaker 5: we've seen Ford pull back. 752 00:36:55,719 --> 00:36:57,520 Speaker 4: I mean, we've seen a lot of the companies pull 753 00:36:57,600 --> 00:36:59,040 Speaker 4: back right and say we're gonna go this. 754 00:36:59,239 --> 00:37:01,279 Speaker 8: Yeah, I think they just lost too much money. 755 00:37:01,320 --> 00:37:06,720 Speaker 14: They've obviously been regulated into and you know, socially cajoled 756 00:37:06,960 --> 00:37:09,919 Speaker 14: towards this EV thing, and they've all made the big 757 00:37:10,000 --> 00:37:12,160 Speaker 14: bet that can't be unmade. 758 00:37:12,520 --> 00:37:14,320 Speaker 8: Like it's too late to turn around. 759 00:37:14,680 --> 00:37:17,400 Speaker 14: They're all headed towards evs, but they do have the 760 00:37:17,440 --> 00:37:20,000 Speaker 14: ability to take their foot off the accelerator in terms 761 00:37:20,040 --> 00:37:24,319 Speaker 14: of how many straight evs they make and head more 762 00:37:24,360 --> 00:37:28,560 Speaker 14: towards hybrids because that's what the consumer wants. The consumer 763 00:37:28,600 --> 00:37:31,760 Speaker 14: wants the hybrid. You can drive around town electric power 764 00:37:31,880 --> 00:37:35,680 Speaker 14: only emitting zero CO two from your tailpipe, but when 765 00:37:35,719 --> 00:37:37,880 Speaker 14: you need to go on a longer trip, the range 766 00:37:37,880 --> 00:37:41,239 Speaker 14: extending internal combustion engine kicks in and you don't have 767 00:37:41,320 --> 00:37:46,040 Speaker 14: to like wait at broken chargers to get more power. 768 00:37:46,160 --> 00:37:51,839 Speaker 14: So I think they're all pivoting back towards hybrids. But yeah, 769 00:37:51,840 --> 00:37:56,480 Speaker 14: they've already sunk so much into the battery power, the electrification, 770 00:37:57,480 --> 00:38:00,560 Speaker 14: you know, the software, they can't turn back around. 771 00:38:00,960 --> 00:38:03,040 Speaker 3: And so here's also my question talking about like the 772 00:38:03,120 --> 00:38:04,520 Speaker 3: nuts and the bolts of the stuff. And this is 773 00:38:04,520 --> 00:38:06,920 Speaker 3: where it gets to my world. So when you have 774 00:38:07,080 --> 00:38:10,200 Speaker 3: these tariffs on like things that you need to build 775 00:38:10,280 --> 00:38:14,960 Speaker 3: those cars on China, but the price to buy them 776 00:38:14,960 --> 00:38:17,719 Speaker 3: in North America is so much higher, what are these 777 00:38:17,719 --> 00:38:19,759 Speaker 3: guys gonna do? Are they gonna pay thirty percent more 778 00:38:19,800 --> 00:38:22,000 Speaker 3: to get graph fyighte from Canada or are they just 779 00:38:22,040 --> 00:38:24,640 Speaker 3: gonna wait for China to import that graph Bite to 780 00:38:24,719 --> 00:38:27,080 Speaker 3: Mexico and then they're gonna get it for a lot cheaper. 781 00:38:27,480 --> 00:38:29,720 Speaker 14: You know, first of all, I don't know the answer, 782 00:38:29,920 --> 00:38:33,400 Speaker 14: but I would guess that at some point the government 783 00:38:33,440 --> 00:38:35,120 Speaker 14: is going to have to step in and help because 784 00:38:35,680 --> 00:38:38,960 Speaker 14: I agree with you, the administration has regulated them into 785 00:38:39,000 --> 00:38:39,480 Speaker 14: this path. 786 00:38:39,600 --> 00:38:41,120 Speaker 8: They have no other choice. 787 00:38:41,239 --> 00:38:44,480 Speaker 14: On the other hand, consumers can't afford to pay, you know, 788 00:38:44,719 --> 00:38:47,560 Speaker 14: forty five thousand dollars for an electric car when the 789 00:38:47,840 --> 00:38:52,279 Speaker 14: IC equivalent is twenty five thousand dollars. You know, they've 790 00:38:52,280 --> 00:38:54,560 Speaker 14: got the seventy five hundred dollars credit, But you're gonna 791 00:38:54,560 --> 00:38:57,440 Speaker 14: have to either give more. I mean, especially if you've 792 00:38:57,480 --> 00:39:01,320 Speaker 14: got these protectionist tariffs that are gonna drive prices even higher. 793 00:39:01,440 --> 00:39:05,319 Speaker 14: They've already cost so much inflation, and they're gonna continue 794 00:39:05,480 --> 00:39:09,440 Speaker 14: to inflate prices at the government level. So the consumer, 795 00:39:09,520 --> 00:39:11,480 Speaker 14: if it's gonna be able to keep up, is gonna 796 00:39:11,480 --> 00:39:13,880 Speaker 14: have to get a little bit more help from Uncle Sam. 797 00:39:14,040 --> 00:39:15,759 Speaker 14: That means all of us are gonna have to pay 798 00:39:16,040 --> 00:39:18,359 Speaker 14: even more taxes than we already do. 799 00:39:18,880 --> 00:39:21,680 Speaker 5: And plus John Tucker has to play the congestion pricing 800 00:39:21,719 --> 00:39:23,600 Speaker 5: to come into Mintown, Manhattan. 801 00:39:23,200 --> 00:39:24,279 Speaker 8: Which is a no. 802 00:39:24,440 --> 00:39:27,040 Speaker 14: If I were Tucker, I would definitely charge that to work. 803 00:39:27,080 --> 00:39:29,320 Speaker 14: Like he comes in here at midnight. At two o'clock 804 00:39:29,360 --> 00:39:31,400 Speaker 14: in the morning, we keep telling his commute has to 805 00:39:31,440 --> 00:39:32,080 Speaker 14: be subsidiential. 806 00:39:32,160 --> 00:39:34,320 Speaker 3: We keep telling him that, yes, you're not allowed. 807 00:39:34,440 --> 00:39:37,160 Speaker 14: I don't know why you murder yourself, you know, I mean, 808 00:39:37,320 --> 00:39:39,279 Speaker 14: we all love our bosses, But. 809 00:39:39,320 --> 00:39:41,960 Speaker 5: All right, all right, Matt Miller, thanks so much. He's 810 00:39:41,960 --> 00:39:44,799 Speaker 5: got the podcast. He does everything for Bloomberg Radio and TV. 811 00:39:45,239 --> 00:39:49,759 Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 812 00:39:49,960 --> 00:39:52,880 Speaker 2: and anywhere else you will get your podcasts. Listen live 813 00:39:52,960 --> 00:39:56,560 Speaker 2: each weekday, ten am to noon Eastern on Bloomberg dot com, 814 00:39:56,640 --> 00:40:00,000 Speaker 2: the iHeart Radio app, tune In, and the Bloomberg Business app. 815 00:40:00,200 --> 00:40:03,200 Speaker 2: You can also watch us live every weekday on YouTube 816 00:40:03,400 --> 00:40:05,280 Speaker 2: and always on the Bloomberg terminal 817 00:40:08,360 --> 00:40:08,400 Speaker 1: M