WEBVTT - Bloomberg Surveillance TV: June 14, 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 0:00:22.400 --> 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 --> 0:00:31.280 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 --> 0:00:36.879 Terminal and the Bloomberg Business app. We begin with our 0:00:36.880 --> 0:00:39.519 top story, stocks on track for a fifth straight day 0:00:39.560 --> 0:00:43.040 of gains following a week of softer than expected inflation data. 0:00:43.200 --> 0:00:46.000 Darrel Cronk of Wells Fargo saying the following, as the 0:00:46.080 --> 0:00:48.800 S and P five hundred makes news highs, it's important 0:00:48.840 --> 0:00:52.920 for investors to rebalance to avoid portfolio equity concentration risk, 0:00:53.240 --> 0:00:56.680 trim tech and communications services to neutral waitings. 0:00:56.760 --> 0:00:58.560 Darrell joined us for more. Darren, good morning to you. 0:00:58.680 --> 0:01:01.960 Good morning, jar What did you can opening exchange with us? 0:01:02.120 --> 0:01:04.320 I'm with you one hundred percent. I mean, so everybody 0:01:04.400 --> 0:01:07.360 knows the concentrated returns. I just ran the numbers yesterday. 0:01:07.400 --> 0:01:09.280 If you look at just the top five names, right, 0:01:09.280 --> 0:01:13.080 not the top ten, top five, they're driving about eighty 0:01:13.120 --> 0:01:16.560 two percent of the index thirteen to fourteen percent year 0:01:16.560 --> 0:01:19.400 to date return. So strip that out, you're you're up 0:01:19.440 --> 0:01:23.399 maybe two three percent you're to date on the broad level. 0:01:24.000 --> 0:01:27.800 But maybe what's more important is when you look at 0:01:27.800 --> 0:01:31.120 those names, the top five ten names, the correlations are 0:01:31.120 --> 0:01:34.640 as high as they've been since August of nineteen ninety seven, right, 0:01:35.080 --> 0:01:37.360 So what's that tell you? It tells you that people 0:01:37.400 --> 0:01:40.160 are chasing, right, they're chasing those winners and continuing to 0:01:40.200 --> 0:01:43.440 feed into it. And to Lisa's very good point, if 0:01:43.440 --> 0:01:45.919 you take the Nasdaq one hundred against the Russell two thousand, 0:01:46.040 --> 0:01:49.880 so tech against small cap five year wides, right, I 0:01:49.920 --> 0:01:52.640 mean we're at the widest level we've been. So you know, 0:01:52.680 --> 0:01:56.280 small cap continues to underperform. Not surprisingly. I keep getting 0:01:56.320 --> 0:01:59.040 asked every conference room I go into every meeting, when's 0:01:59.080 --> 0:02:00.880 the time to buy small wins? It time to buy 0:02:00.920 --> 0:02:02.840 a small cap? And I keep saying, not yet, not yet, 0:02:02.920 --> 0:02:06.680 not yet? Right, when is the sun? I the rustle too, 0:02:06.680 --> 0:02:09.519 probably needs to be somewhere in the eighteen hundreds, maybe 0:02:09.560 --> 0:02:12.200 even seventeen hundreds before. I think you get a compelling 0:02:12.320 --> 0:02:15.680 risk reward to flip there. That makes sense, but nowhere 0:02:15.680 --> 0:02:16.680 here above two thousand. 0:02:16.880 --> 0:02:19.320 So why do you have this argument that you should 0:02:19.320 --> 0:02:22.920 be more concerned about concentration since that's one, and more 0:02:22.960 --> 0:02:25.680 interested in some of the others that keep lagging behind. 0:02:27.480 --> 0:02:30.320 I think because eventually you end up with this kind 0:02:30.360 --> 0:02:32.160 of think of it almost like a you know, it's 0:02:32.200 --> 0:02:34.680 a teflon market, right. Nothing seems to stick to it. 0:02:34.720 --> 0:02:37.280 Every risk that we roll at it, right, whether it's 0:02:37.560 --> 0:02:40.840 you know, the France risks this morning and the tails 0:02:41.240 --> 0:02:44.000 or anything like that, just seems to bounce off of it. 0:02:44.040 --> 0:02:48.040 And the same theme plays through AI wins, tech wins. Right, 0:02:48.760 --> 0:02:51.720 it's seven months into that. You you know, if you 0:02:51.800 --> 0:02:54.360 run a marathon or a race and you sprint for 0:02:54.400 --> 0:02:57.480 seven months, which we have sprinted, Let's be honest about it, 0:02:57.680 --> 0:02:59.639 you're going to be tired. And I think the market 0:02:59.680 --> 0:03:01.600 is tied here. It's you know, when you look at 0:03:01.600 --> 0:03:05.919 those top concentrated names to the point, they're doing extraordinarily well, right, 0:03:06.000 --> 0:03:08.680 And I'll take it, but I get under the surface, right, 0:03:08.720 --> 0:03:11.680 whether your point equal weighted small cap, I look at 0:03:11.680 --> 0:03:13.880 some of the other sectors, they're just not participating at 0:03:13.919 --> 0:03:14.480 the same level. 0:03:14.560 --> 0:03:16.600 So I guess the question is do you sell your 0:03:16.600 --> 0:03:19.960 big tech exposure or do you buy everything else. It's 0:03:20.000 --> 0:03:22.720 a big distinction. Are you bullish on the other sectors 0:03:23.240 --> 0:03:25.640 or are you just simply getting a little bit more 0:03:25.680 --> 0:03:27.600 skeptical of how much further tech can run. 0:03:28.919 --> 0:03:31.639 So yes to the former, right, which is so I 0:03:31.680 --> 0:03:33.440 think when you get underneath. We just released our mid 0:03:33.520 --> 0:03:34.520 year outlook this week. 0:03:34.720 --> 0:03:34.880 Right. 0:03:35.200 --> 0:03:36.720 One of the things we did in the midia outlook 0:03:36.800 --> 0:03:40.200 was took energy to the most favorable we could possibly 0:03:40.240 --> 0:03:42.840 take it too, right in the portfolios. Basically, we ran 0:03:42.880 --> 0:03:46.960 it up to the highest big pullback obviously in oil prices. 0:03:47.040 --> 0:03:49.720 We've taken all the political risk premium out of oil prices, 0:03:49.760 --> 0:03:51.920 which kind of shocks me. Given the global landscape and 0:03:51.960 --> 0:03:54.560 where we are. I'm getting a lot of big whether 0:03:54.600 --> 0:03:56.960 it's you know, the integrated energy names or even some 0:03:57.000 --> 0:04:00.000 of the expiration companies. At twelve thirteen fourteen times pace 0:04:00.120 --> 0:04:02.240 ease with a three and a half percent dividend, I 0:04:02.320 --> 0:04:05.080 will take that all day long. We also like materials. 0:04:05.200 --> 0:04:08.560 We think healthcare is a good value play here, and 0:04:08.960 --> 0:04:12.720 we would fade places like you know, the consumer obviously 0:04:12.800 --> 0:04:15.880 reads and even financials look a little bit over. 0:04:15.760 --> 0:04:18.280 Brought to us here, wait, consumers reads and financials. This 0:04:18.320 --> 0:04:20.599 is very interesting at a time where the fed estensiply 0:04:20.680 --> 0:04:22.920 is going to be cutting rates pretty soon. And at 0:04:22.920 --> 0:04:25.320 one point this was supposed to fuel the next consumer 0:04:25.360 --> 0:04:27.960 spending wave in the sense of consumer strength and ability 0:04:28.000 --> 0:04:30.719 to borrow in a new way. Why is it not 0:04:30.800 --> 0:04:32.400 playing out that way? 0:04:32.560 --> 0:04:34.840 Because I'm not sure the consumer is as strong as 0:04:34.920 --> 0:04:36.920 people want to give it credit for, right, I mean, 0:04:36.960 --> 0:04:40.159 if you everybody does the including us, you know, the 0:04:40.200 --> 0:04:42.839 top five quintiles of income, right, we know that the 0:04:42.880 --> 0:04:45.760 bifurcation of the high end is doing well, the low 0:04:45.839 --> 0:04:48.880 end is not. But what people are missing is kind 0:04:48.880 --> 0:04:52.159 of the creep up into the middle income levels of 0:04:52.160 --> 0:04:54.840 where people are trading down for value. They're not spending 0:04:54.839 --> 0:04:57.520 as robustly as they want to. You see. You know, 0:04:57.560 --> 0:05:00.000 consumer confidence numbers are still on a downtrend. Small bit 0:05:00.000 --> 0:05:03.720 business numbers are still you know, pretty ugly right when 0:05:03.760 --> 0:05:06.120 you get below the surface. So there's just not a 0:05:06.120 --> 0:05:08.800 lot of reason to believe, you know, to us, it 0:05:08.800 --> 0:05:11.440 looks like the consumers kind of running that last mile 0:05:11.560 --> 0:05:15.280 here right, they've they've been able to stay durable and 0:05:15.279 --> 0:05:17.479 spend I'm just not sure how much gas is left 0:05:17.480 --> 0:05:17.960 in the tank. 0:05:18.279 --> 0:05:20.120 So this time last week, when we read out the 0:05:20.120 --> 0:05:22.799 payrolls number two hundred and seventy two thousand, you didn't 0:05:22.800 --> 0:05:24.599 hear two hundred and seventy two thousand. 0:05:24.680 --> 0:05:30.039 You had something else. So I think payrolls and the 0:05:30.120 --> 0:05:33.680 labor market in general are getting skewed heavily by some 0:05:33.760 --> 0:05:37.039 of the lag effects of what's happening with immigration in 0:05:37.040 --> 0:05:39.400 this country and everything else. So we ran the numbers again. 0:05:39.800 --> 0:05:44.520 If you take just immigration from pre COVID levels, we're 0:05:44.520 --> 0:05:47.839 three point three million people higher today in the labor 0:05:47.880 --> 0:05:51.920 force than we were coming into twenty twenty, if you will. 0:05:52.160 --> 0:05:55.080 That's having real impacts on the labor force, right, And 0:05:54.760 --> 0:05:58.120 those numbers, so the labor market is still strong. We'll 0:05:58.120 --> 0:06:00.960 take a four percent unemployment rate all day long, but 0:06:01.040 --> 0:06:03.719 I'm not sure that it's as strong as maybe the 0:06:03.800 --> 0:06:06.520 numbers might be. Sending a little false outquos there to us. 0:06:06.640 --> 0:06:09.120 This is what Chairman Pound basically said in the news conference. 0:06:09.680 --> 0:06:12.560 One of my sort of biggest takeaways from the polls 0:06:12.680 --> 0:06:14.760 over the last year is this poll right here from 0:06:15.040 --> 0:06:17.440 Guardian Harris Pole that came out in the last month 0:06:17.560 --> 0:06:20.080 or so, and Aretus follows. I'll give you some headlines 0:06:20.120 --> 0:06:24.159 a stonic fifty five percent believe the economy shrinking, fifty 0:06:24.200 --> 0:06:27.440 six percent think the US is experiencing a recession. Forty 0:06:27.560 --> 0:06:31.680 nine percent. Forty nine percent believe that unemployment is at 0:06:31.680 --> 0:06:36.200 a fifty year high. Wow, forty nine percent. That's the 0:06:36.200 --> 0:06:38.080 poll that came from Guardian Harris in the last month 0:06:38.160 --> 0:06:38.320 or so. 0:06:38.440 --> 0:06:40.920 It's the reason why consumer sentiment has been so low. 0:06:41.160 --> 0:06:44.360 People don't feel good? Is that wrong? Can you say 0:06:44.360 --> 0:06:46.640 that people's feelings are wrong or are they feeling something? 0:06:46.760 --> 0:06:49.320 The numbers aren't showing in quite the same level and 0:06:49.360 --> 0:06:52.400 people explained by the K shaped recovery. Stay tuned for 0:06:52.400 --> 0:06:55.240 the University of Michigan Sentiments survey. We out in approximately 0:06:55.560 --> 0:06:57.160 one hour and forty nine minutes. 0:06:57.160 --> 0:06:59.320 Well, maybe we're just not measuring things properly. Correct in 0:06:59.360 --> 0:07:02.240 a households versus establishment survey, allows sway was the big 0:07:02.279 --> 0:07:02.920 stand doown down? 0:07:03.480 --> 0:07:05.640 I think that's I think you're spot on right. I mean, 0:07:05.920 --> 0:07:08.360 I think you've got to really you can't just take 0:07:08.400 --> 0:07:10.720 those headline numbers as they stand, right, You've got to 0:07:10.800 --> 0:07:13.240 dig in under the surface and kind of take the 0:07:13.240 --> 0:07:16.080 second derivative, third derivative and understand what those numbers are 0:07:16.080 --> 0:07:20.080 telling you. I am a big firm believer that liquidity 0:07:20.160 --> 0:07:23.720 is masking so many things around the economic element. I mean, 0:07:23.720 --> 0:07:26.240 if we just went back and around the numbers from 0:07:26.480 --> 0:07:28.800 just the twenty twenties, where now twenty twenty four, obviously, 0:07:29.520 --> 0:07:32.880 financial markets are up about forty six trillion dollars in 0:07:33.280 --> 0:07:37.400 am right, government debt is up twelve trillion dollars. Right. 0:07:37.560 --> 0:07:41.360 Think of just the liquidity that that pushes into the engine, right, 0:07:41.520 --> 0:07:45.360 and the ability for consumers to stay longer, right, for 0:07:45.440 --> 0:07:48.600 businesses to feel better. Right. All of that has had 0:07:48.640 --> 0:07:52.120 this kind of long lasting use. It called the marathon effect. 0:07:52.200 --> 0:07:52.280 Right. 0:07:52.320 --> 0:07:55.720 We run hard seven months. But Wall Street isn't Main Street, right, 0:07:55.760 --> 0:07:58.960 and so the S and P isn't what people are feeling. 0:07:59.240 --> 0:08:01.080 If you walk up and down Main Street to the 0:08:01.080 --> 0:08:02.400 point of the survey, right. 0:08:02.680 --> 0:08:04.560 Forty percent belief the S and P is down for 0:08:04.560 --> 0:08:04.880 the year. 0:08:05.640 --> 0:08:07.120 This is quite a pole, isn't it. 0:08:08.080 --> 0:08:09.800 A lot of a lot of the companies are down. 0:08:10.000 --> 0:08:13.080 So it also speaks to the non AI and members. 0:08:13.360 --> 0:08:15.120 Darren, this was great it's going to see us, sir, 0:08:15.280 --> 0:08:17.720 thanks for sharing your thoughts. Darren Pronk there of wel Faco, 0:08:27.640 --> 0:08:30.320 Poosha Shreenramp and the team over at Barclays maintaining their 0:08:30.320 --> 0:08:33.160 call for one cut this year, writing quote, we continue 0:08:33.160 --> 0:08:35.800 to think the cut to take place at the earliest 0:08:35.920 --> 0:08:39.800 in September. Our baseline is predicated on inflation gradually moderating 0:08:39.800 --> 0:08:42.520 in the coming months on a sequential basis and the 0:08:42.520 --> 0:08:46.320 economy gradually slowing. Foosua joins us now for more POSA. 0:08:46.400 --> 0:08:47.720 Great to have you with us on a program. I 0:08:47.760 --> 0:08:49.719 just want to summarize the data we've had so far 0:08:49.800 --> 0:08:54.440 this week. CPI cooler than expected, PPI downside surprise, then 0:08:54.520 --> 0:08:58.199 jobless claims happened wrong kind of upside surprise. What did 0:08:58.200 --> 0:09:00.920 you make of the claims print yesterday? And how concerned 0:09:00.920 --> 0:09:01.520 should we all be? 0:09:03.240 --> 0:09:06.680 So I thank the good morning. I think, you know, 0:09:06.760 --> 0:09:10.920 we really did take too much signal from the claims data, 0:09:11.640 --> 0:09:13.839 you know the fact that it did tick up for 0:09:14.280 --> 0:09:18.640 the week. I think if that trend continues, it would 0:09:18.640 --> 0:09:22.120 be in line with you know, some continued moderation in 0:09:22.520 --> 0:09:26.760 labor market conditions, which you know really is a welcome 0:09:26.840 --> 0:09:29.959 sign I think we should all remember labor market conditions 0:09:29.960 --> 0:09:33.160 are very strong, whether you look at you know, the 0:09:33.200 --> 0:09:36.000 three month moving average of payroll gains or even the 0:09:36.080 --> 0:09:41.320 latest payroll report. I think some moderation is welcomed, particularly 0:09:41.360 --> 0:09:42.679 from an inflation standpoint. 0:09:43.200 --> 0:09:46.240 Jeff You earlier this morning from PNY said the market 0:09:46.320 --> 0:09:48.680 is more dubbish than the Fed. It certainly seems that 0:09:48.679 --> 0:09:50.959 way based on the bond market rally that John was 0:09:51.040 --> 0:09:53.720 just talking about. You could see that into some of 0:09:53.760 --> 0:09:56.480 the implied cuts. Do you think the market is wrong 0:09:56.520 --> 0:09:58.360 to be so or do you see that the Fed 0:09:58.400 --> 0:10:00.800 basically is trying to have a hackish health just so 0:10:00.880 --> 0:10:03.080 they don't get it wrong to reversal of what happened 0:10:03.120 --> 0:10:04.760 at the end of last year when they indicated that 0:10:04.800 --> 0:10:06.160 they would be cutting rates. 0:10:07.200 --> 0:10:11.720 I think, look, I think the markets don't necessarily price 0:10:11.920 --> 0:10:14.360 just the baseline. They've got to price, you know, risks 0:10:14.400 --> 0:10:17.920 around that, so you know the pricing is what it is. 0:10:18.760 --> 0:10:21.120 And as faw it, you know what the Fed signaled 0:10:21.160 --> 0:10:24.599 I think with a very balanced sort of a message. 0:10:25.320 --> 0:10:28.400 You're right, you know they have been burnt once the 0:10:28.480 --> 0:10:30.959 end of last year when there was a dubblesh stilt 0:10:31.240 --> 0:10:33.840 in December after a run of you know, weak inflation 0:10:33.920 --> 0:10:36.199 prints and then look what happened in the first quarter. 0:10:35.960 --> 0:10:36.440 Of this year. 0:10:36.960 --> 0:10:39.439 So I think just you know, they don't want to 0:10:39.480 --> 0:10:42.360 make too much of one data point, and the totality 0:10:42.400 --> 0:10:44.640 of the data that they keep talking about, whether it's 0:10:44.679 --> 0:10:49.000 activity or labor markets, those haven't really shown a material easing. 0:10:49.640 --> 0:10:53.640 And so you know, what they signaled in their SEP 0:10:54.440 --> 0:10:58.480 on Wednesday was very much a tone of patients of caution, 0:10:58.880 --> 0:11:02.360 of course, being cautious, and they want to gain confidence 0:11:02.400 --> 0:11:04.040 that things are moving in the right direction. 0:11:04.440 --> 0:11:05.840 What do you make then, of people who say, well, 0:11:05.840 --> 0:11:08.200 if you put it all together, core PCE, which is 0:11:08.200 --> 0:11:11.160 one of the key inflation metrics to the Federalserve looks at, 0:11:11.520 --> 0:11:13.440 is something that is very predictable. If you have the 0:11:13.440 --> 0:11:16.000 inputs of PPI and CPI and some of the other 0:11:16.080 --> 0:11:19.120 data that's already come out. People are now mapping out 0:11:19.280 --> 0:11:22.000 something akin to a zero point one percent increase in 0:11:22.400 --> 0:11:25.640 core PCE, which would be very much in line with 0:11:25.720 --> 0:11:28.320 the Fed's goals bringing a year over year inflation to 0:11:28.360 --> 0:11:29.800 something like two point six percent. 0:11:30.160 --> 0:11:31.040 How much do. 0:11:31.040 --> 0:11:33.360 You see that as actually giving a green light to 0:11:33.360 --> 0:11:36.080 the FED as early as September, even though that's not 0:11:36.120 --> 0:11:36.839 your base case. 0:11:38.720 --> 0:11:42.880 So look, I think we we agree with that translation. 0:11:43.080 --> 0:11:45.520 Our own forecast for core PC in ME is a 0:11:45.600 --> 0:11:49.200 point one three percent, so to your point, a very benign, 0:11:50.000 --> 0:11:54.600 very soft looking core PC inflation print that said, you know, 0:11:55.040 --> 0:11:57.319 we like to say that the FED is not data 0:11:57.440 --> 0:12:02.320 point dependent, and it came across quite clearly in check 0:12:02.400 --> 0:12:05.000 ours press conference as well, that they didn't want to 0:12:05.040 --> 0:12:08.280 meet too much of one data point. He did say that, 0:12:08.320 --> 0:12:13.120 you know, he welcomed the ME inflation outcome and that's 0:12:13.160 --> 0:12:16.040 the step in the right direction. So, you know, like 0:12:16.640 --> 0:12:21.000 we've written, should inflation outcomes continue to you know, move 0:12:21.040 --> 0:12:23.920 in the right direction, i e. Come and soft. I 0:12:23.920 --> 0:12:27.000 think that will open the door to a rate cut. 0:12:27.040 --> 0:12:30.720 But is the may PCEE alone enough clearly not. 0:12:31.280 --> 0:12:33.079 Pose sure some personal bass here, I have to say, 0:12:33.120 --> 0:12:35.280 I wonder how many people agree with me. I'm far 0:12:35.320 --> 0:12:37.840 more interested in how we end the year on unemployment 0:12:38.160 --> 0:12:41.079 than i am on inflation. I sense from a lot 0:12:41.080 --> 0:12:42.839 of people that come on this program they have far 0:12:42.960 --> 0:12:45.320 less confidence about where this labor market will be by 0:12:45.360 --> 0:12:47.880 year end than they do want how inflation's going to attrack. 0:12:48.480 --> 0:12:50.000 And the reason I asked this question is because the 0:12:50.000 --> 0:12:52.120 federal reservers come out and said, basically, we will end 0:12:52.120 --> 0:12:55.200 the year with unemployment where it is right now, and 0:12:55.280 --> 0:12:57.200 I'm trying to work out how much confidence you have 0:12:57.240 --> 0:13:00.280 the unemployment does actually stabilize at these levels the next 0:13:00.280 --> 0:13:01.439 twelve months plus. 0:13:03.600 --> 0:13:07.280 You know, it's that that's a hard one to forecast. 0:13:07.840 --> 0:13:09.840 You know, we work with the indicators that we have, 0:13:10.080 --> 0:13:13.440 and clearly we haven't seen much by the way of 0:13:13.840 --> 0:13:16.200 move up in the unemployment rate. Of course, you know, 0:13:16.240 --> 0:13:18.920 we were at three four at some point in time. 0:13:19.120 --> 0:13:21.439 You know, we've definitely ticked higher, but a four to 0:13:21.520 --> 0:13:25.480 four point one percent is clearly not something that is 0:13:26.240 --> 0:13:29.360 you know, weak by any standards, and I think this 0:13:29.480 --> 0:13:33.080 is a labor market that is still running strong. You know, 0:13:33.559 --> 0:13:35.800 we we look at the data as SOS we as 0:13:35.840 --> 0:13:38.960 we can. Of course, you know, we're cognizant. A lot 0:13:39.040 --> 0:13:43.240 of the games are concentrated in the private sector, particularly services, 0:13:43.360 --> 0:13:49.400 particularly you know, education and healthcare, some from leision, hospitality. 0:13:49.520 --> 0:13:52.280 So we've we've heard those arguments that the games are 0:13:52.320 --> 0:13:56.360 all pretty narrow, but the fact that they continue, you know, 0:13:56.559 --> 0:14:01.040 month on month is one thing. And second is you know, 0:14:01.120 --> 0:14:04.800 we're looking at the Joel Stata job opening is sure, 0:14:04.920 --> 0:14:07.360 you know, come down a bit, but still quite elevated. 0:14:08.520 --> 0:14:11.440 And you know, if anything, it looks like you know, 0:14:11.480 --> 0:14:14.679 that momentum is still there. So you know, we've we 0:14:14.840 --> 0:14:18.120 we're looking for any signs of cracks. We haven't seen 0:14:18.280 --> 0:14:22.000 so much. So you know, we're we're sort of with 0:14:22.080 --> 0:14:24.800 the ft that we don't see a big spike in 0:14:24.800 --> 0:14:26.560 the unemployment rate by the end of the earl. 0:14:28.080 --> 0:14:37.920 Push you appreciate it. Push your stream ramp of Barclays. 0:14:41.400 --> 0:14:44.760 Tesla shareholder's foken to approval on must fifty six billion 0:14:44.800 --> 0:14:47.800 dollar pip package and green light. The company has moved 0:14:47.800 --> 0:14:50.880 to Texas to stock having a pretty decent twenty four hours, 0:14:50.920 --> 0:14:53.360 Tasha Kni of our constructive on the name right in 0:14:53.400 --> 0:14:57.040 this our confidence in test usibility to launch a robotaxi 0:14:57.120 --> 0:15:01.120 network within the next five years has increased considerably. A 0:15:01.120 --> 0:15:02.680 place to say that we can catch up the Tesla. 0:15:02.680 --> 0:15:04.880 But right now, Tasha, great to catch up with you. 0:15:04.960 --> 0:15:06.800 I just want to start with the shareholder votes of 0:15:06.840 --> 0:15:08.560 the last day or so. Of course they've been going 0:15:08.600 --> 0:15:10.160 on for a number of days. Do you think we 0:15:10.200 --> 0:15:12.400 can leave this issue in the past now and move on. 0:15:14.720 --> 0:15:17.640 Well, you know, I'm not a legal expert, so of course, 0:15:17.680 --> 0:15:19.920 you know, we know what investors want, and now it 0:15:19.960 --> 0:15:22.600 could be up to the courts again. But what I'll 0:15:22.640 --> 0:15:24.680 say is that I think it's positive that you know, 0:15:24.680 --> 0:15:29.000 we saw investors considering the proxy and putting their own 0:15:29.080 --> 0:15:32.120 votes in voting for themselves. You know, when we look 0:15:32.160 --> 0:15:34.520 at Tesla, where we certainly want Elon Musk to be 0:15:34.560 --> 0:15:38.480 at the helm, especially when you can consider the transition 0:15:38.720 --> 0:15:42.080 to fully autonomous driving, which is what we think will 0:15:42.160 --> 0:15:44.920 drive the majority of the value of the company over 0:15:44.960 --> 0:15:45.760 the next five years. 0:15:45.960 --> 0:15:47.920 Can you walk us through why and why you think 0:15:47.920 --> 0:15:50.080 that's the real deal and we'll see it that quickly 0:15:50.360 --> 0:15:51.440 over the next five years. 0:15:53.480 --> 0:15:58.360 Yes. Well, so we already have robotaxis right Waimo, which 0:15:58.400 --> 0:16:02.840 is Alphabet's autonomous driving project, is driving around Phoenix. They're 0:16:03.000 --> 0:16:05.520 you know, starting an effort in La. They're in San Francisco, 0:16:06.520 --> 0:16:09.720 but we don't have them at scale yet. Tesla could 0:16:09.760 --> 0:16:12.360 be one of the first companies to offer a service 0:16:12.440 --> 0:16:15.480 like this at scale, and it's because they have a 0:16:15.520 --> 0:16:19.520 massive data advantage. They're collecting information from customer cars that 0:16:19.600 --> 0:16:22.120 helps them train their models. You know, and they have 0:16:22.160 --> 0:16:25.520 more cars on the road than any other autonomous effort 0:16:25.760 --> 0:16:28.680 that I know of in the US, And you know, 0:16:28.800 --> 0:16:33.000 this is their plan. They're layering on software updates incrementally. 0:16:33.920 --> 0:16:36.840 Right now, it's the full self driving software that's available 0:16:36.880 --> 0:16:39.680 to customers. Eventually customers will be able to take their 0:16:39.680 --> 0:16:42.600 hands off the wheel. And then last night, you know, 0:16:42.640 --> 0:16:46.360 we heard Elon Musk talk about extensively the robotaxi effort, 0:16:46.440 --> 0:16:48.760 where you, as a customer, could sign your car up 0:16:48.800 --> 0:16:50.920 when you're not using it, you know. But more likely, 0:16:50.960 --> 0:16:53.880 I think it'll be a fleet model, so you'll have 0:16:54.240 --> 0:16:57.480 perhaps another company that owns and maintains the fleet. Tesla 0:16:57.560 --> 0:17:02.760 collicks a take rate off of the mile revenue, and 0:17:03.320 --> 0:17:05.879 you know, I think this could have very attractive margins, 0:17:05.960 --> 0:17:09.159 higher margins than the current business model today, which is 0:17:09.200 --> 0:17:13.640 mainly selling vehicles, right, and this will be a recurring revenue. 0:17:14.280 --> 0:17:17.280 So so again we think very attractive from an economic 0:17:17.359 --> 0:17:20.720 perspective to Tesla. But more importantly, it'll change all of 0:17:20.760 --> 0:17:23.000 our lives. You know, I think this is one of 0:17:22.800 --> 0:17:26.959 the greatest AI projects in our time, and we are 0:17:26.960 --> 0:17:28.320 so lucky that we get to witness it. 0:17:28.680 --> 0:17:31.800 Tasha, there are some real questions about Elon Musk's leadership 0:17:32.119 --> 0:17:36.200 and whether he is focused enough on Tesla and diverting 0:17:36.240 --> 0:17:39.240 some of the chips that have honestly reportedly have gone 0:17:39.280 --> 0:17:41.439 to some of his other companies to really get some 0:17:41.520 --> 0:17:45.520 of the ROBOTAXI efforts fully underway. Why do you think 0:17:45.600 --> 0:17:46.640 that's not a concern. 0:17:48.760 --> 0:17:50.560 You know, I actually think it's a positive that Elon 0:17:50.680 --> 0:17:54.080 Musk runs a number of companies. One we've heard and 0:17:54.119 --> 0:17:56.920 we've heard them talk about this. It's great for talent acquisition. 0:17:57.280 --> 0:18:00.399 We've seen employees move in between his companies. You know, 0:18:00.440 --> 0:18:03.560 if you're the top a AI engineer in the world, 0:18:03.760 --> 0:18:06.119 you're not going to get bored working for Elon Musk. 0:18:07.040 --> 0:18:07.280 You know. 0:18:07.359 --> 0:18:08.240 The chip story. 0:18:08.400 --> 0:18:10.760 What I point out is, you know, automakers actually often 0:18:10.760 --> 0:18:13.119 negotiate on behalf of their suppliers, and they do so 0:18:13.680 --> 0:18:17.080 because of economies of scale, they have better negotiating leverage. 0:18:17.600 --> 0:18:19.560 So I think having you know, all of these companies 0:18:19.600 --> 0:18:22.680 that you know, many of which might use in video products, 0:18:22.720 --> 0:18:26.320 is again actually a positive here. And we've also seen 0:18:26.880 --> 0:18:32.320 manufacturing innovations come from SpaceX that bleed into Tesla, So 0:18:32.520 --> 0:18:33.960 you know, and I think you have to look at 0:18:33.960 --> 0:18:36.440 the Tesla results here, right, I mean when you're talking 0:18:36.440 --> 0:18:38.720 about the pay package that the stock has risen over 0:18:38.760 --> 0:18:41.960 one thousand percent over that time period, So he's really 0:18:42.000 --> 0:18:45.320 delivered shareholder value. And I'm again so excited for the 0:18:45.320 --> 0:18:48.959 future because we're really on the cusp of autonomous driving today. 0:18:49.359 --> 0:18:52.320 Tasha, is there absolutely anything that could happen that is 0:18:52.359 --> 0:18:56.560 a potential event in the next year that could shake 0:18:56.600 --> 0:19:00.119 your confidence right now in Tesla? 0:19:00.240 --> 0:19:02.000 Well, you know, really, what I'm looking for is for 0:19:02.040 --> 0:19:06.120 Tesla to cross that threshold into fully autonomous driving. We've 0:19:06.119 --> 0:19:10.040 seen them tease this robotaxi service or a ride hill service, 0:19:10.760 --> 0:19:12.800 both on the past Earning's call and at the event 0:19:12.880 --> 0:19:15.240 last night, so I'm looking for that launch. So we 0:19:15.280 --> 0:19:18.400 have an event coming up in August from Tesla that's 0:19:18.440 --> 0:19:21.880 going to look at the purpose built robotaxi, the next 0:19:21.920 --> 0:19:24.399 generation car. I don't think they need that car to 0:19:24.480 --> 0:19:27.680 necessarily launch the service because the current fleet is capable 0:19:27.720 --> 0:19:30.119 of it. But I am looking for details at that 0:19:30.200 --> 0:19:32.080 event about what this business. 0:19:31.720 --> 0:19:32.479 Model will look like. 0:19:32.640 --> 0:19:34.639 We heard some of that last night, so we know 0:19:34.680 --> 0:19:36.880 that they're thinking through the back end logistics of how 0:19:36.920 --> 0:19:39.199 this will work. So I think that you know, they 0:19:39.240 --> 0:19:42.120 could cross this threshold within the next year or two, 0:19:43.000 --> 0:19:45.120 and that is the catalyst that you know, I'm most 0:19:45.160 --> 0:19:45.800 looking forward to. 0:19:45.840 --> 0:19:48.399 It's Tesla twenty six hundred dollars price target, which is 0:19:48.400 --> 0:19:51.280 pretty punchy, as you know, and certainly gets attention, that's 0:19:51.280 --> 0:19:53.359 for sure. Can you tell me the biggest risk factor 0:19:53.440 --> 0:19:56.280 associated with your cal what would change your mind? 0:19:58.760 --> 0:20:02.840 Well, you know, certainly, I think that solving autonomous driving 0:20:02.920 --> 0:20:06.760 is a very difficult problem and so and you know 0:20:06.800 --> 0:20:09.720 it's hard to time that exactly. But I again, as 0:20:09.760 --> 0:20:12.560 you mentioned, you know in our blog which is on 0:20:12.600 --> 0:20:14.600 the Ark and Best website, we think that this could 0:20:14.640 --> 0:20:17.640