WEBVTT - Bloomberg Surveillance TV: March 28, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.240 --> 0:00:37.839 That Miskin joins us now for more mac. 0:00:37.920 --> 0:00:39.560 Good morning to you, Good morning, thanks for having me. 0:00:39.600 --> 0:00:41.639 Great to catch up with you in person as well. 0:00:41.680 --> 0:00:43.920 It's been a while. Let's get into this. Governor Waller, 0:00:44.040 --> 0:00:45.840 is it in ignore and move on? Do you agree 0:00:45.840 --> 0:00:47.160 with Luke kickmore of Aberdeen? 0:00:47.479 --> 0:00:49.120 I actually thought it made a lot of sense. 0:00:49.159 --> 0:00:52.080 I thought Powell in the press conference during the FED 0:00:52.120 --> 0:00:55.440 meeting was you know, he kept saying overtime. It's like 0:00:55.480 --> 0:00:57.720 when I tell my children to clean their room and 0:00:57.760 --> 0:01:00.600 they're like, oh yeah, overtime, all clean the room. You know, 0:01:00.880 --> 0:01:03.960 it just keeps on getting more messy at everything over time, 0:01:04.160 --> 0:01:06.800 you got to be thinking about this more with a priority. 0:01:06.840 --> 0:01:09.280 Inflation is starting to come back, and it just you 0:01:09.319 --> 0:01:10.800 said before data dependent. 0:01:11.080 --> 0:01:12.960 I love that. That's a great way for the Fed 0:01:13.000 --> 0:01:13.640 to think about this. 0:01:13.800 --> 0:01:16.000 But if you're going to revise up your inflation forecast 0:01:16.200 --> 0:01:18.920 and you're going to keep cuts, that's not being data dependent. 0:01:19.400 --> 0:01:21.560 So they have a communication issue right now, and I 0:01:21.560 --> 0:01:23.520 think they're going to have a tough time navigating this 0:01:24.000 --> 0:01:28.880 because the markets are really dependent on them being dubvish, 0:01:29.080 --> 0:01:30.720 and if they push back, I think it's going to 0:01:30.800 --> 0:01:33.839 be tough, but I think they should because they don't 0:01:33.880 --> 0:01:34.520 want to fight. 0:01:34.360 --> 0:01:36.600 This battle all over again later this year. 0:01:36.800 --> 0:01:39.240 Always lovely storytelling, So let's run with it. Let's say 0:01:39.280 --> 0:01:41.400 the claim room is two percent and you're less convince 0:01:41.400 --> 0:01:43.120 they're going to clean it anytime soon. When is the 0:01:43.120 --> 0:01:45.480 bumb market starts to get messia, which essentially is what 0:01:45.560 --> 0:01:46.319 las raz askin. 0:01:46.920 --> 0:01:49.240 So we've seen some that are saying in the position 0:01:49.440 --> 0:01:52.600 with four higher interest rates because of that, the long 0:01:52.720 --> 0:01:54.760 end of the curve would see higher rates if that 0:01:54.800 --> 0:01:58.400 does if they let inflation run like this. But in 0:01:58.440 --> 0:02:01.000 our view, it's just you're seeing a lot of value 0:02:01.000 --> 0:02:04.040 in the bond market yields are already up where in 0:02:04.040 --> 0:02:06.520 an inverted yield curve. This is the longest inversion the 0:02:06.560 --> 0:02:10.120 yield curve ever, So the bond market's a mess in 0:02:10.160 --> 0:02:13.320 a way. Just try and interpret this. In our view 0:02:13.360 --> 0:02:15.840 though we stay inverted. If anything, we see we get 0:02:15.880 --> 0:02:18.160 more inverted. We're actually on the other side. We think 0:02:18.160 --> 0:02:20.119 they're going to take longer to cut, but then they're 0:02:20.120 --> 0:02:23.359 going to cut more than the markets expect because something 0:02:23.400 --> 0:02:25.679 will happen. They've got to push back here. They've got 0:02:25.680 --> 0:02:27.560 to be strong. They've got to be that adult in 0:02:27.600 --> 0:02:30.960 the room and tell the to clean their room. It's hard, 0:02:31.440 --> 0:02:32.880 but right now they're not doing it. 0:02:32.919 --> 0:02:35.280 Well, they're not doing it. They're not being the adults 0:02:35.320 --> 0:02:37.000 in the room. They're basically saying, why don't you throw 0:02:37.080 --> 0:02:38.600 some more things on the floor, because you know what, 0:02:38.600 --> 0:02:39.600 we'll get to it and later. 0:02:39.800 --> 0:02:41.960 And this raises the question, what gives you. 0:02:41.960 --> 0:02:44.480 The conviction that that's the path that they're going to 0:02:44.560 --> 0:02:47.040 take If that's not the signals or the communications that 0:02:47.080 --> 0:02:49.440 they're giving and markets are running with that and they're 0:02:49.440 --> 0:02:50.360 not pushing back. 0:02:50.840 --> 0:02:53.120 Yeah, I just think inflation coming back growth. 0:02:53.240 --> 0:02:56.000 If we are starred, right, the stars of the sky, 0:02:56.200 --> 0:02:58.639 like you remember that analogy. Yeah, yeah, yeah, But if 0:02:58.639 --> 0:03:01.519 this is the utual rate, why isn't the economy slowing, 0:03:01.520 --> 0:03:02.799 Why is an inflation slowing? 0:03:03.080 --> 0:03:04.000 None of that's happening. 0:03:04.120 --> 0:03:06.680 It's hard to say that they're being really restricted with 0:03:06.760 --> 0:03:10.000 high yield spreads at three hundred basis points. They seem 0:03:10.040 --> 0:03:12.280 to be they're trying to turn off the faucet, but 0:03:12.320 --> 0:03:14.840 the shower's still running the water. 0:03:14.880 --> 0:03:16.840 The liquidity is still coming into. 0:03:16.600 --> 0:03:19.440 The market, and you've got to use financial I think 0:03:19.480 --> 0:03:22.400 that the you know, maybe this is a bigger picture conversation, 0:03:22.480 --> 0:03:24.920 but I think the FED needs to be market based 0:03:25.400 --> 0:03:28.000 and not academic based or legal. 0:03:28.160 --> 0:03:31.040 A lawyer gonna jump in, Matt, it doesn't matter. This 0:03:31.120 --> 0:03:31.680 is who they are. 0:03:32.120 --> 0:03:34.480 Doesn't this screen buy stocks by some what you've had 0:03:34.480 --> 0:03:35.200 in the last week. 0:03:35.840 --> 0:03:39.120 So historically speaking, usually this is the time late cycle 0:03:39.160 --> 0:03:41.200 where the FED is at the what they think is 0:03:41.240 --> 0:03:44.320 the neutral rain, and you have to be careful because 0:03:44.320 --> 0:03:46.640 it does look good. Usually, get this late cycle pop 0:03:46.640 --> 0:03:48.680 and risk assets as the FED says, hey, we're gonna 0:03:48.680 --> 0:03:50.720 think about cutting or we're not gonna raise rates anymore, 0:03:50.760 --> 0:03:53.360 and then the tide goes out. Well, Warren Buffin quote 0:03:53.360 --> 0:03:55.840 when the tide goes out, you see you're swimming, but 0:03:55.960 --> 0:03:58.280 you want to make sure that you don't have that risk, 0:03:58.320 --> 0:04:00.840 because if it's commercial real estate and it's other things, 0:04:01.080 --> 0:04:03.040 things can break and then all of a sudden, the 0:04:03.040 --> 0:04:03.720 Fed's got to turn. 0:04:03.760 --> 0:04:06.400 And it almost seems like Powell might have something up. 0:04:06.360 --> 0:04:09.400 His sleeve that's saying there's a risk here that that 0:04:09.600 --> 0:04:12.480 isn't on the surface. That I'm playing this a little 0:04:12.520 --> 0:04:14.960 bit easier, and I wouldn't be surprised if there is 0:04:15.000 --> 0:04:16.080 something underneath the surface. 0:04:16.120 --> 0:04:19.480 How frustrating is it to play psychiatrist to J. Powell 0:04:19.520 --> 0:04:21.360 at a time where you feel like it should happen, 0:04:21.920 --> 0:04:24.880 but you think maybe he's playing games with us, Maybe 0:04:24.920 --> 0:04:26.440 in his head he knows something. I mean, this is 0:04:26.440 --> 0:04:28.360 sort of the level that we're at because people can't 0:04:28.640 --> 0:04:31.840 otherwise understand and draw the dots from what we saw 0:04:32.720 --> 0:04:32.960 in the. 0:04:32.960 --> 0:04:35.200 Nating you know, when they do the summary of economic 0:04:35.200 --> 0:04:37.440 projections and all this forward guidance, and back in the 0:04:37.520 --> 0:04:40.039 day that was supposed to help because it was saying, hey, 0:04:40.040 --> 0:04:42.479 we're not doing much and we're just sitting here. Now 0:04:42.520 --> 0:04:45.480 it's almost hurting the fact that you're saying we're going 0:04:45.520 --> 0:04:47.200 to do rate cuts before it gets price in the 0:04:47.200 --> 0:04:49.960 market immediately, and basically that was a rate cut. 0:04:50.920 --> 0:04:51.800 You know, the way I. 0:04:51.720 --> 0:04:53.839 Think about it, almost like fight Club the movie. You 0:04:53.839 --> 0:04:56.599 don't talk about fight Club. That's the first rule. Don't 0:04:56.600 --> 0:04:59.080 talk about rate cuts until you need to talk about 0:04:59.120 --> 0:05:01.719 rate cuts, because if you're going to talk about in advance, 0:05:01.760 --> 0:05:03.400 the market's going to say, great, I'm going to price 0:05:03.440 --> 0:05:05.800 that in, and then that creates the risk on, that 0:05:05.960 --> 0:05:07.760 creates the inflation impulse. 0:05:07.480 --> 0:05:08.880 And now we're going to have to deal with it 0:05:08.960 --> 0:05:09.719 all over again. 0:05:09.760 --> 0:05:13.560 They also up their own inflation target, so you know, 0:05:13.560 --> 0:05:15.280 we've been having this conversation a lot of people about 0:05:15.520 --> 0:05:20.080 it's two points something that the FED actually basically is targeting, 0:05:20.160 --> 0:05:22.680 not no longer two percent. Maybe they're more acceptable of 0:05:22.680 --> 0:05:25.479 a range. Do you agree with that it's possible. I mean, 0:05:25.520 --> 0:05:27.720 after the last meeting, I thought that, I thought. 0:05:27.520 --> 0:05:28.080 Two to three. 0:05:28.120 --> 0:05:30.400 I mean, in the Summary of Economic projections, it doesn't 0:05:30.400 --> 0:05:32.400 taken till twenty twenty six that you see a two 0:05:32.520 --> 0:05:33.279 point zero. 0:05:33.839 --> 0:05:36.159 That's that overtime. That's hey, we'll clean up the. 0:05:37.040 --> 0:05:39.560 Room two years from now, but for then, you know 0:05:39.560 --> 0:05:42.400 it's gonna be bumpy deal, you know. But Emory, it's 0:05:42.400 --> 0:05:45.280 also about the energy sector recently. You know, oil prices 0:05:45.279 --> 0:05:48.040 are coming up. That's so if you had the stocks 0:05:48.320 --> 0:05:50.880 rallying but you didn't have the inflation impulse, that's a 0:05:51.160 --> 0:05:53.520 that's better. But you know, I almost think about March 0:05:53.560 --> 0:05:55.159 madness bracketology right now. 0:05:55.240 --> 0:05:57.720 So energy stocks were actually. 0:05:57.400 --> 0:06:00.000 One of the best performers in the quarter. Oil prices 0:06:00.040 --> 0:06:03.480 up another one percent today. If that keeps going, they're 0:06:03.480 --> 0:06:06.480 going to be hitting gas prices coming up, inflationary impulse, 0:06:06.600 --> 0:06:09.120 and there's other things disruptions of supply chain still going 0:06:09.160 --> 0:06:11.520 on that I think they're gonna have to change their 0:06:11.560 --> 0:06:12.680 tune as the year goes on. 0:06:12.760 --> 0:06:13.480 So what are you buying? 0:06:14.279 --> 0:06:16.800 So we still have the high quality US doocs were 0:06:16.839 --> 0:06:18.599 overweight US verse International. 0:06:18.720 --> 0:06:21.440 We are up in cap. We're trying to find profitable businesses. 0:06:21.560 --> 0:06:23.920 We do not have some of the AI you know, 0:06:24.240 --> 0:06:27.760 the Fomo AI or the crypto, the mind all that. 0:06:29.160 --> 0:06:33.360 So AI wise, you know, Navidia has done pretty well. 0:06:33.520 --> 0:06:35.880 You know, it has put on another trillion of market 0:06:35.880 --> 0:06:39.680 cap last quarter. So we do have tech. We've been 0:06:39.720 --> 0:06:42.520 overweight tech. We like quality, so that helps, but at 0:06:42.520 --> 0:06:44.880 a reasonable price, on the bond side, we have been 0:06:44.960 --> 0:06:47.120 dragging because we've been higher quality. 0:06:47.600 --> 0:06:48.120 We're willing. 0:06:48.600 --> 0:06:51.400 I look at high yield spreads at two ninety I 0:06:51.440 --> 0:06:52.320 think it was last week. 0:06:52.560 --> 0:06:55.560 It was great tweet by the way, you know, because 0:06:55.560 --> 0:06:56.240 we got to watch this. 0:06:56.560 --> 0:06:59.560 So the upside is fifty bases points lowers, the tightest 0:06:59.560 --> 0:07:02.400 in history, or we could go eight to twenty percent higher. 0:07:02.640 --> 0:07:04.640 And that's just another symptom of this market is just 0:07:04.720 --> 0:07:05.760 how tight the spreads are. 0:07:05.800 --> 0:07:06.760 So we're not going after that. 0:07:06.800 --> 0:07:09.320 We have an underweight to high yield overweight, higher quality 0:07:09.400 --> 0:07:10.000 than the bond market. 0:07:10.320 --> 0:07:12.600 We're getting enough on the ball on that overweight to. 0:07:12.600 --> 0:07:15.200 US equities overweight, US large cap have some of the 0:07:15.240 --> 0:07:19.640 tech quality names, but frankly, we're sitting here waiting and 0:07:19.680 --> 0:07:22.080 nothing's on sale, I mean, other than high quality bonds. 0:07:22.120 --> 0:07:24.680 But it's a hard trade because the momentum factor in 0:07:24.800 --> 0:07:25.800 equities is so powered. 0:07:25.840 --> 0:07:27.760 I love how many people don't have a blimback terminal 0:07:27.800 --> 0:07:31.400 and rely on Bramo to get high yeld spread updates, safe, 0:07:31.520 --> 0:07:33.480 safer tide. But the way you talk about them is 0:07:33.520 --> 0:07:36.400 if they are a reflection of complacency and not a 0:07:36.400 --> 0:07:38.840 reflection of strength. Why do you see it as the 0:07:38.880 --> 0:07:40.120 former and not the latter. 0:07:40.160 --> 0:07:42.080 Of the last two times they were this type was 0:07:42.080 --> 0:07:46.000 two thousand and seven, twenty twenty one, the twelve months 0:07:46.040 --> 0:07:50.080 after those real tight levels, high yield was down three 0:07:50.160 --> 0:07:53.040 percent total return, so you got about seven percent yield. 0:07:53.040 --> 0:07:56.200 Total return was negative in two thousand and seven. And 0:07:56.200 --> 0:07:58.200 this is again going back to that Warren Buffer quote 0:07:58.200 --> 0:08:00.520 of the tide goes out, it off and looks the 0:08:00.560 --> 0:08:04.360 best before it turns. The risk on the centiment has 0:08:04.400 --> 0:08:06.880 to be stretched to really feel the reversion. 0:08:07.320 --> 0:08:08.880 And so I still think, I mean, we always think 0:08:08.880 --> 0:08:10.640 about risk management. It's part of our DNA. 0:08:11.400 --> 0:08:13.600 But right now, as everyone else is going to this 0:08:13.640 --> 0:08:15.920 side of the boat, we're saying, hey, there's some stuff 0:08:15.960 --> 0:08:19.040 that's like higher quality, defensive parts of markets. 0:08:19.520 --> 0:08:20.880 That's actually what you should be looking. 0:08:20.680 --> 0:08:21.600 At it at. That's sensible. 0:08:21.600 --> 0:08:23.200 I think we always just think about you know, when 0:08:23.200 --> 0:08:24.680 I hear stuff like this, I always have to think 0:08:24.720 --> 0:08:27.320 about things from the other side. And I'm thinking, right now, 0:08:27.360 --> 0:08:29.720 I'm listening to you the FED just to borrow a 0:08:29.720 --> 0:08:31.400 little bit from sorrow, So I'll do it the other 0:08:31.400 --> 0:08:33.599 way around. The FED can shake the events to anticipate 0:08:33.640 --> 0:08:35.160 and if you get chairm and Power coming out and 0:08:35.520 --> 0:08:38.319 establishing basically having a bus to respond to weaker economic 0:08:38.400 --> 0:08:41.240 data than they would hire inflation points. It probably makes 0:08:42.080 --> 0:08:45.200 economic data even less likely because financial conditions are so 0:08:45.240 --> 0:08:47.120 loose right now when you see credit spreads as tight 0:08:47.160 --> 0:08:49.120 as they are. The way I think about it is, 0:08:49.160 --> 0:08:51.920 we were really worried about the maturity will in twenty five, 0:08:52.240 --> 0:08:54.520 and we've just taken a massive chunk out of it 0:08:54.679 --> 0:08:57.199 in the first quarter of twenty four. The high rates 0:08:57.360 --> 0:08:59.160 less of a thing to worry about three months into 0:08:59.240 --> 0:09:01.480 twenty four that maybe they were at the start of 0:09:01.480 --> 0:09:01.760 the year. 0:09:02.400 --> 0:09:06.160 Yeah, you still have in all this communication, all this analysis, 0:09:06.240 --> 0:09:08.679 all this you know, analogy, you know, psycho analysis of 0:09:08.679 --> 0:09:09.520 what Powell's thinking. 0:09:09.559 --> 0:09:11.280 But at the end of the day, they haven't done anything. 0:09:11.840 --> 0:09:13.600 So we're still doing QT. 0:09:13.760 --> 0:09:15.600 We still have five and a half, We still have 0:09:15.720 --> 0:09:18.840 this huge maturity wall I mean, Russell twenty and forty 0:09:18.840 --> 0:09:20.240 five percent are not profitable. 0:09:20.280 --> 0:09:21.800 They're gonna there's fifty sixty. 0:09:21.559 --> 0:09:23.480 Percent of those companies that have to refinance in the 0:09:23.520 --> 0:09:26.120 next twelve to eighteen months. Yeah, so if they don't 0:09:26.120 --> 0:09:28.200 do anything, And that's why I actually liked Waller's comments. 0:09:28.200 --> 0:09:29.480 I was like, that's refreshing. 0:09:30.160 --> 0:09:31.079 Just don't do. 0:09:31.080 --> 0:09:34.120 Anything, just let it go, sit on it, be patient. 0:09:35.520 --> 0:09:37.679 But Powell does seem like he wants to cut. I 0:09:37.760 --> 0:09:40.120 think this is going to create more issues than for him. 0:09:40.320 --> 0:09:42.080 And it's you know, it's just a circular feedback. 0:09:42.280 --> 0:09:44.040 It's David shit just romonicus. 0:09:44.120 --> 0:09:45.760 The last couple of weeks to say a chamman that 0:09:45.800 --> 0:09:47.440 wants to count well the tights a co op parade, 0:09:47.440 --> 0:09:49.000 and that's gonna be the outcome that get sets out 0:09:49.400 --> 0:10:01.360 likes it as yet, it's good to see it. Secretary Yellen, 0:10:01.440 --> 0:10:04.480 speaking at an event in Georgia yesterday, saying US manufacturing 0:10:04.520 --> 0:10:07.600 is facing pressure from cheap imports flooding the market. The 0:10:07.600 --> 0:10:11.480 comments ranging from green energy products to electric vehicles. Yellen's 0:10:11.480 --> 0:10:13.600 saying this will be a key isshoe during head next 0:10:13.640 --> 0:10:15.840 trip to China, which is expected in the coming weeks. 0:10:16.040 --> 0:10:20.000 Stave As center At, Executive VP of Care America, joins us. 0:10:20.000 --> 0:10:22.559 Now for more, Steve goomone to you, Moring. Let's talk 0:10:22.559 --> 0:10:24.920 about EV's. It's fantastic to have you with us. You've 0:10:24.920 --> 0:10:27.240 got the EV nine, the EV six over at kir Can. 0:10:27.280 --> 0:10:28.880 We just start with how they're selling because we've heard 0:10:28.880 --> 0:10:31.199 a lot about pushback in this country. 0:10:31.240 --> 0:10:32.080 How are they selling. 0:10:32.480 --> 0:10:35.319 They're selling very well. We'd like to sell more of them, 0:10:35.360 --> 0:10:38.559 but I think there's been a lot of expectation about 0:10:38.559 --> 0:10:44.319 the rate of the transition and that's unknown. And consumers 0:10:44.320 --> 0:10:47.479 are buying the car, they're enjoying the car. The infrastructures 0:10:47.520 --> 0:10:53.080 is a challenge. The whole industry has already received the 0:10:53.160 --> 0:10:56.880 business from the early adopters and now we're getting into 0:10:57.040 --> 0:10:59.320 people that really need the car. This isn't a toy. 0:10:59.360 --> 0:11:01.800 They need to get back and forth. The thing about 0:11:01.880 --> 0:11:06.079 range anxiety is true, but it's more about charging anxiety 0:11:06.120 --> 0:11:09.000 because the cars all go three hundred miles and very 0:11:09.000 --> 0:11:12.000 few people drive three hundred miles at a time. So 0:11:12.880 --> 0:11:16.600 we're very excited. EVE nine's won a lot of awards. 0:11:16.679 --> 0:11:19.640 It's proven what you can do with electric cars at 0:11:19.640 --> 0:11:23.120 three row SUV with that kind of range. 0:11:23.280 --> 0:11:25.240 What are data ship's telling you about what they need 0:11:25.320 --> 0:11:27.480 right now? Where consumer demount is and how can you 0:11:27.520 --> 0:11:28.360 meet that demount. 0:11:28.400 --> 0:11:31.720 Well, when you talk to dealers, their first answer is discounts, 0:11:32.400 --> 0:11:35.480 and that's not selling from strength. I think what we 0:11:35.559 --> 0:11:40.680 need is better infrastructure, and that's where all of This 0:11:40.880 --> 0:11:45.319 is failing in a sense because you can regulate what 0:11:45.360 --> 0:11:49.240 we build, you can't regulate what people buy. And the 0:11:49.240 --> 0:11:52.480 big projects like infrastructure that in the beginning are all 0:11:52.559 --> 0:11:55.800 cash out and then the return is over a long 0:11:55.840 --> 0:11:58.600 period of time. That's kind of like building highways, and 0:11:58.600 --> 0:12:01.080 that's what the government should do, and they've really blown 0:12:01.120 --> 0:12:02.240 it on that. 0:12:03.160 --> 0:12:05.480 From a personal perspective, when I was buying a car, 0:12:05.520 --> 0:12:08.400 it wasn't range anxiety, it wasn't charging anxiety. It was 0:12:08.400 --> 0:12:10.560 resale value anxiety, and the fact that it was probably 0:12:10.559 --> 0:12:12.080 going to plunge off a cliff if I got an 0:12:12.080 --> 0:12:15.520 electric vehicle, because right now it's not clear, especially with 0:12:15.559 --> 0:12:18.839 an eight year battery lifespan, how do you address that 0:12:18.920 --> 0:12:21.360 the fact that these cars are not as valuable when 0:12:21.400 --> 0:12:24.599 you resell them, and potentially there could be new technologies 0:12:24.600 --> 0:12:25.760 that come down the pike in that time. 0:12:25.840 --> 0:12:29.240 Absolutely, and when you're buying electric cars that are probably 0:12:29.320 --> 0:12:33.760 more like tech products than they are normal cars, perhaps 0:12:33.760 --> 0:12:37.680 the ownership method's going to change and you may lease 0:12:37.720 --> 0:12:40.080 the car. You may be the first less see on 0:12:40.120 --> 0:12:41.920 the car. It may come back at the end of 0:12:41.920 --> 0:12:45.360 the lease and get a complete refitting and tech upgrade 0:12:45.400 --> 0:12:47.640 like an aircraft does, and then there'll be a second 0:12:47.760 --> 0:12:51.160 less see and you recondition the battery. So there's a 0:12:51.160 --> 0:12:53.400 lot of change coming in terms of how you do things. 0:12:53.440 --> 0:12:54.680 And it might be that. 0:12:54.559 --> 0:12:56.840 You don't own them. And in a sense, you don't 0:12:56.840 --> 0:12:58.800 own a car when you buy it. You only own 0:12:59.200 --> 0:13:00.000 the life of the car. 0:13:00.559 --> 0:13:00.760 You know. 0:13:00.880 --> 0:13:02.560 Jonesman on this point for a long time, and he's 0:13:02.600 --> 0:13:05.640 absolutely correct. It raises this question if policymakers have gotten 0:13:05.679 --> 0:13:09.720 it wrong, if basically the car makers were pushed into 0:13:10.000 --> 0:13:13.000 manufacturing vehicles where there wasn't the demand yet and it 0:13:13.040 --> 0:13:15.360 wasn't clear that that was the right pathway when there 0:13:15.400 --> 0:13:17.440 could have been better ways to get to a more 0:13:17.480 --> 0:13:18.319 efficient future. 0:13:18.520 --> 0:13:19.160 Is that accurate? 0:13:19.400 --> 0:13:24.600 Absolutely, we're being told what to make specifically, and there's 0:13:24.720 --> 0:13:27.000 many ways to skin that cat, so to speak. And 0:13:27.040 --> 0:13:33.440 if you talk to engine designers and emissions engineers, there 0:13:33.480 --> 0:13:38.160 are many things they can do to clean up the cars. 0:13:38.200 --> 0:13:43.319 And there's different technologies batteries. One, there's fuel cells and hydrogen. 0:13:43.360 --> 0:13:47.880 Fuel cells are really wonderful. Their emission is water and 0:13:48.200 --> 0:13:52.000 they're silent, and the question is where to get the hydrogen. 0:13:52.160 --> 0:13:54.400 And I've worked on hydrogen cars for a long time 0:13:54.800 --> 0:13:58.680 and that infrastructure is even less mature than the battery 0:13:58.760 --> 0:14:03.360 charging infrastructure. So I tell everyone that I can find 0:14:03.360 --> 0:14:07.079 in the government. You need an Oppenheimer moment, and you 0:14:07.720 --> 0:14:10.440 need to one feel the crisis, and you need some 0:14:10.559 --> 0:14:12.760 leadership to manage the change. 0:14:13.040 --> 0:14:15.320 The US government now has subsidies for the evs and 0:14:15.320 --> 0:14:18.000 then the EPA. Many people say, this's basically a mandate. 0:14:18.120 --> 0:14:21.400 These are the strongest pollution standards we've ever seen the 0:14:21.440 --> 0:14:24.280 United States. So what should have they done first? Because 0:14:24.280 --> 0:14:26.400 it seems like what you're saying is they got it backwards. 0:14:26.880 --> 0:14:29.600 Yeah, well, there's a lot wrong with the regulation. And 0:14:29.640 --> 0:14:31.840 if you think about it, you've got three different groups 0:14:31.920 --> 0:14:34.800 regulating the auto industry, at least three at least from 0:14:34.800 --> 0:14:38.120 the emissions. You have a NITSO which is regulating CAFE, 0:14:38.200 --> 0:14:41.560 which is a fuel economy. You have EPA for exhaust gases. 0:14:41.880 --> 0:14:45.440 And then you have California steering from the back and 0:14:45.640 --> 0:14:50.240 they're requiring electric vehicles, and there's other states that jump 0:14:50.280 --> 0:14:53.760 on that rule and they're not doing anything about the infrastructure. 0:14:54.520 --> 0:14:58.480 And the challenge you have is you've got too many 0:14:58.480 --> 0:15:03.000 sets of conflicting rules, and in the case of electric vehicles, 0:15:06.000 --> 0:15:09.880 the point is to reduce the CO two and CO two. 0:15:09.720 --> 0:15:10.800 Is not a local problem. 0:15:10.800 --> 0:15:12.520 When you fly over the country, you don't see the 0:15:12.560 --> 0:15:16.800 lines on the ground. It's a global problem. So California 0:15:16.840 --> 0:15:19.640 is a big EV market, you know what, like the 0:15:19.720 --> 0:15:23.120 number three and five are. It's Texas and Florida. They're 0:15:23.120 --> 0:15:27.840 not ZEV states. And my attitude is, well, let people 0:15:27.840 --> 0:15:29.360 buy them where they want to buy them, right now, 0:15:29.360 --> 0:15:31.640 and let's get the job done. So it's all automakers, 0:15:32.200 --> 0:15:35.320 the percentage of evs. You have to sell it for 0:15:35.400 --> 0:15:39.000 the whole country. Don't create these silos and buckets. That's 0:15:39.160 --> 0:15:42.400 killing the industry and it's impossible to manage that. 0:15:43.320 --> 0:15:45.280 By the administration has been very happy with the Inflation 0:15:45.320 --> 0:15:47.440 Reduction Act, able to get over the finish line. But 0:15:47.480 --> 0:15:49.760 Trump is threatening to ratchet back. How concerned are you 0:15:49.800 --> 0:15:50.200 about that? 0:15:50.320 --> 0:15:53.240 Yeah, So someone asked me last night what's the biggest 0:15:53.320 --> 0:15:57.160 threat that I see in this business? And I said, 0:15:57.160 --> 0:15:59.520 it's an existential threat and they said, oh, it's a 0:15:59.600 --> 0:16:02.720 China something else said, No, that's that's competition, or okay 0:16:02.760 --> 0:16:06.200 with that, it's government policy and this whip sawing. We're 0:16:06.240 --> 0:16:09.400 making decisions that last thirty. 0:16:09.160 --> 0:16:09.760 Or forty years. 0:16:09.760 --> 0:16:13.800 When you build factories and establish supply chains and to 0:16:13.840 --> 0:16:17.520 have the government policy change from on off on off, 0:16:18.000 --> 0:16:18.680 it's nuts. 0:16:19.040 --> 0:16:19.800 It's just nuts. 0:16:19.920 --> 0:16:21.320 I means you need to be riddy in both. So 0:16:21.320 --> 0:16:24.240 can we talk about the EV plump in Georgia. Can 0:16:24.280 --> 0:16:26.080 you tell me whether that's going to be dedicated to 0:16:26.080 --> 0:16:27.520 the Baunttery pat vehicles or not. 0:16:27.640 --> 0:16:29.000 How flexible would that plump be? 0:16:29.240 --> 0:16:33.120 So that's a great question. The original concept is EVS 0:16:33.480 --> 0:16:36.240 and it also includes a battery plant. So because you 0:16:36.280 --> 0:16:38.640 always want to have the big heavy components right near 0:16:38.680 --> 0:16:41.920 the factory, it might be in the future because you 0:16:41.920 --> 0:16:44.640 always want that factory running full speed with everything you 0:16:44.680 --> 0:16:47.440 can do, it might be we also build other cars there. 0:16:47.680 --> 0:16:47.840 Now. 0:16:47.920 --> 0:16:50.600 We have another factory in West Georgia that's been around 0:16:50.600 --> 0:16:52.400 for a long time and we build tell your ide 0:16:52.400 --> 0:16:56.200 in Sorrento and other great cars there. One of the 0:16:56.240 --> 0:16:59.640 things that we've done is we made room and we're 0:16:59.680 --> 0:17:03.960 building EV nine there now. So and most of an 0:17:03.960 --> 0:17:06.639 electric vehicle is the same as internal combustion. At some 0:17:06.720 --> 0:17:09.879 point it goes this way or that way, and we're 0:17:09.960 --> 0:17:13.480 building EV nine. We're going to introduce it later this year. 0:17:13.800 --> 0:17:16.560 So it might be that we're going to balance the 0:17:16.640 --> 0:17:19.360 capacities with other products. 0:17:19.359 --> 0:17:20.560 How easy is it to do that? 0:17:20.720 --> 0:17:23.040 I've tried to get some information some county from GM 0:17:23.040 --> 0:17:24.840 and struggled, So maybe kick and help me out a 0:17:24.880 --> 0:17:28.640 little bit more to talkle between hybrids, evs, and total 0:17:28.680 --> 0:17:31.639 combustion engine vehicles in a single plant. How easy to 0:17:31.640 --> 0:17:33.159 tackle between the three? 0:17:33.600 --> 0:17:36.959 The biggest hybrid vehicle isn't that different. So it has 0:17:37.000 --> 0:17:39.119 an engine, has a fuel tank, it also has a 0:17:39.600 --> 0:17:42.480 electric motor attached to the engine, and a battery pack. 0:17:42.560 --> 0:17:45.119