1 00:00:05,080 --> 00:00:09,160 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Lisa Abramoids along 2 00:00:09,200 --> 00:00:12,160 Speaker 1: with Tom Keen and Jonathan Ferrell. Join us each day 3 00:00:12,200 --> 00:00:16,440 Speaker 1: for insight from the best in economics, geopolitics, finance and investment. 4 00:00:16,760 --> 00:00:20,279 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:20,360 --> 00:00:23,840 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:23,840 --> 00:00:26,440 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business. 7 00:00:26,120 --> 00:00:29,480 Speaker 2: Apple's Catshat with List Young, head of investment strategy at 8 00:00:29,560 --> 00:00:32,240 Speaker 2: so Far, Liz, any reason to believe in good morning, 9 00:00:32,280 --> 00:00:33,879 Speaker 2: It's always great to catch up with you, you know that. 10 00:00:34,080 --> 00:00:37,120 Speaker 2: Any reason to believe that this bond market stock market 11 00:00:37,159 --> 00:00:39,640 Speaker 2: correlation continues in the way it has done over the 12 00:00:39,680 --> 00:00:44,040 Speaker 2: previous month over the next three months, Well. 13 00:00:43,880 --> 00:00:45,000 Speaker 3: It's certainly possible. 14 00:00:45,000 --> 00:00:46,800 Speaker 4: I mean, I think twenty twenty three has shown us 15 00:00:46,840 --> 00:00:49,760 Speaker 4: that anything is possible. So it's certainly possible that the 16 00:00:49,800 --> 00:00:53,280 Speaker 4: correlation remains positive in the sense that we continue to 17 00:00:53,280 --> 00:00:57,520 Speaker 4: see yields come down. Stocks are celebrating that, particularly growth 18 00:00:57,560 --> 00:01:00,320 Speaker 4: year stocks, which I think is a rational move, at 19 00:01:00,400 --> 00:01:03,840 Speaker 4: least initially. So I do think that the correlation could 20 00:01:03,840 --> 00:01:07,840 Speaker 4: stay positive for a little while. What we're looking at here, 21 00:01:08,000 --> 00:01:11,480 Speaker 4: especially into twenty twenty four, is that we've been wanting 22 00:01:11,760 --> 00:01:13,680 Speaker 4: cooling in a lot of this data. We've been wanting 23 00:01:13,720 --> 00:01:16,399 Speaker 4: the cooling and inflation. We've been wanting a labor market 24 00:01:16,440 --> 00:01:18,520 Speaker 4: that gets a little bit more imbalance. So we've seen 25 00:01:18,720 --> 00:01:21,679 Speaker 4: some of that data, things like continuing claims on a 26 00:01:21,720 --> 00:01:25,360 Speaker 4: steady move upwards since September. We know that the manufacturing 27 00:01:25,400 --> 00:01:28,440 Speaker 4: economy is still feeling some pain. We're hearing data out 28 00:01:28,440 --> 00:01:30,800 Speaker 4: of the consumer that they're pulling back on spending a 29 00:01:30,800 --> 00:01:31,200 Speaker 4: little bit. 30 00:01:31,480 --> 00:01:32,959 Speaker 3: So we've wanted this cooling. 31 00:01:33,319 --> 00:01:36,000 Speaker 4: The question into twenty twenty four will be can we 32 00:01:36,040 --> 00:01:40,000 Speaker 4: stop the cooling before the economy tips into contraction and 33 00:01:40,080 --> 00:01:43,000 Speaker 4: makes us all nervous If we start to get data 34 00:01:43,040 --> 00:01:46,319 Speaker 4: that gets too cool too quickly, that's when that correlation 35 00:01:46,400 --> 00:01:48,520 Speaker 4: between stocks and bonds breaks down. Where I think you 36 00:01:48,600 --> 00:01:52,120 Speaker 4: see bonds rally, so you see yields continue to fall 37 00:01:52,120 --> 00:01:56,400 Speaker 4: because people got afraid, but stocks also come down in tandem. 38 00:01:56,600 --> 00:01:58,440 Speaker 1: Liz, you work for so far, and you work on 39 00:01:58,480 --> 00:02:01,120 Speaker 1: the investment wing of it as early on the financial 40 00:02:01,200 --> 00:02:05,280 Speaker 1: technology aspect that caters to usually younger individuals who are 41 00:02:05,360 --> 00:02:09,040 Speaker 1: trying to manage their finances in take out credit. I'm wondering, though, 42 00:02:09,080 --> 00:02:12,200 Speaker 1: what you make from an economic and investment perspective of 43 00:02:12,320 --> 00:02:15,280 Speaker 1: people who are doing more buy now, pay later, who 44 00:02:15,320 --> 00:02:18,120 Speaker 1: are increasing their credit card bills, who are increasing on 45 00:02:18,160 --> 00:02:19,959 Speaker 1: their delinquencies and their defaults. 46 00:02:22,240 --> 00:02:25,519 Speaker 4: It's certainly concerning and it's something that I've been watching 47 00:02:26,080 --> 00:02:28,760 Speaker 4: for the last few months. We've seen delinquencies tick up 48 00:02:28,840 --> 00:02:32,080 Speaker 4: so far in just the subprime auto loan sector, but 49 00:02:32,160 --> 00:02:34,760 Speaker 4: you've seen, as we all know, credit card debt get 50 00:02:34,800 --> 00:02:38,240 Speaker 4: to really high levels. Hasn't broken yet, hasn't been an 51 00:02:38,280 --> 00:02:41,040 Speaker 4: issue yet. But the thing about where we are this 52 00:02:41,160 --> 00:02:43,520 Speaker 4: time of year, we talk a lot about this being 53 00:02:43,840 --> 00:02:46,440 Speaker 4: a positive time of year for the market, and as 54 00:02:46,440 --> 00:02:49,240 Speaker 4: we all know, the Santa Claus Rally a possibility later 55 00:02:49,320 --> 00:02:52,040 Speaker 4: this year, and we've got holiday spending going on, and 56 00:02:52,080 --> 00:02:55,040 Speaker 4: so far the data from holiday spending has been maybe 57 00:02:55,080 --> 00:02:59,400 Speaker 4: a little bit higher than expected. However, what happens in 58 00:02:59,520 --> 00:03:02,640 Speaker 4: January in February is that if consumers were doing that 59 00:03:02,760 --> 00:03:06,239 Speaker 4: holiday spending on credit so things that like buy now, 60 00:03:06,240 --> 00:03:09,359 Speaker 4: pay later or on credit cards, the bill comes due 61 00:03:09,600 --> 00:03:12,440 Speaker 4: in January and February. Now, this happens every year, but 62 00:03:12,600 --> 00:03:14,560 Speaker 4: this year could be a time where we're seeing that 63 00:03:14,600 --> 00:03:18,520 Speaker 4: bill come do and delinquencies tick up because consumers have 64 00:03:18,600 --> 00:03:22,120 Speaker 4: been using buy now, pay later in larger quantities than 65 00:03:22,160 --> 00:03:23,120 Speaker 4: they did last year. 66 00:03:23,280 --> 00:03:27,040 Speaker 1: How does that affect your vestment strategy? I mean, basically, 67 00:03:27,040 --> 00:03:29,600 Speaker 1: are you looking to January and February to see those 68 00:03:29,600 --> 00:03:32,240 Speaker 1: increase in defaults in order to get more bearish and 69 00:03:32,280 --> 00:03:34,840 Speaker 1: say that maybe the bond market could rally more. But 70 00:03:34,920 --> 00:03:37,240 Speaker 1: that's going to be a negative when it comes to equities. 71 00:03:39,440 --> 00:03:41,600 Speaker 4: Well, so, the Bowl case and a lot of the 72 00:03:41,600 --> 00:03:43,720 Speaker 4: optimists have been hanging their hat on the strength of 73 00:03:43,720 --> 00:03:46,840 Speaker 4: the consumer, and the consumer has remained strong. There's obviously 74 00:03:46,880 --> 00:03:50,480 Speaker 4: appetite to spend, there's appetite to travel. We're seeing the 75 00:03:50,480 --> 00:03:52,960 Speaker 4: consumers still get out there and spend their money, both 76 00:03:53,000 --> 00:03:57,120 Speaker 4: in stores and online. But over time, if the labor 77 00:03:57,160 --> 00:04:00,360 Speaker 4: market cools, or if consumers really are feeling the pain 78 00:04:00,680 --> 00:04:04,400 Speaker 4: of inflation and recognizing the idea that inflation has stopped 79 00:04:04,480 --> 00:04:07,520 Speaker 4: growing as quickly, but it hasn't come down. So for 80 00:04:07,920 --> 00:04:10,840 Speaker 4: consumers to really get some relief, you would need some 81 00:04:10,880 --> 00:04:14,320 Speaker 4: deflationary prints and we haven't gotten those yet. So if 82 00:04:14,360 --> 00:04:16,680 Speaker 4: the data does start to suggest that the consumer has 83 00:04:16,680 --> 00:04:19,200 Speaker 4: pulled back or the labor market is cooling to a 84 00:04:19,240 --> 00:04:21,480 Speaker 4: point that's going to cause the consumer to pull back, 85 00:04:21,800 --> 00:04:24,640 Speaker 4: then that is going to be negative for equities, particularly 86 00:04:24,680 --> 00:04:29,479 Speaker 4: from these levels. So watching that on a sector basis, 87 00:04:29,520 --> 00:04:32,520 Speaker 4: though it may not be a wide swath of a 88 00:04:32,600 --> 00:04:35,839 Speaker 4: draw down, right So if yields are falling, tech stocks 89 00:04:35,880 --> 00:04:38,560 Speaker 4: probably still can do okay in that environment. But then 90 00:04:38,560 --> 00:04:41,520 Speaker 4: you see the pain on things like consumer discretionary stocks. 91 00:04:41,720 --> 00:04:44,039 Speaker 4: You see the pain on cyclicals because right now I 92 00:04:44,040 --> 00:04:45,760 Speaker 4: think the market is in this place where we're not 93 00:04:45,839 --> 00:04:48,279 Speaker 4: sure if we're going to have a cyclical expansion or not. 94 00:04:48,680 --> 00:04:51,560 Speaker 4: We haven't confirmed in one direction or another, and we're 95 00:04:51,600 --> 00:04:52,520 Speaker 4: sort of waiting. 96 00:04:52,240 --> 00:04:54,640 Speaker 2: To see super difficult to make cause on this market. 97 00:04:54,640 --> 00:04:57,160 Speaker 2: You mentioned sectors list, so let's finish there. What are 98 00:04:57,200 --> 00:04:59,560 Speaker 2: your favorite sectors gone into year enda beyond? 99 00:05:01,400 --> 00:05:04,280 Speaker 4: Well, Look, as yields fall, I think for the near 100 00:05:04,400 --> 00:05:07,160 Speaker 4: term at least tech stocks still can hold up well. 101 00:05:07,360 --> 00:05:10,200 Speaker 4: This is also a period of time after the last 102 00:05:10,320 --> 00:05:13,480 Speaker 4: hike and before the first cut that stocks. 103 00:05:13,120 --> 00:05:14,359 Speaker 3: Tend to do okay. 104 00:05:14,440 --> 00:05:17,400 Speaker 4: So I don't necessarily see a huge draw down unless 105 00:05:17,400 --> 00:05:18,760 Speaker 4: there's some exogynous shock. 106 00:05:19,200 --> 00:05:20,920 Speaker 3: But going into twenty twenty. 107 00:05:20,680 --> 00:05:23,720 Speaker 4: Four, I think that we need if the bowl case 108 00:05:23,760 --> 00:05:27,000 Speaker 4: comes true, we need some broadening out in the equity market. 109 00:05:27,320 --> 00:05:29,720 Speaker 4: I am still nervous about a draw down. I am 110 00:05:29,760 --> 00:05:31,680 Speaker 4: worried that we're going to get data that cools it 111 00:05:31,760 --> 00:05:34,760 Speaker 4: too much, so I would be cautious in cyclicals, so 112 00:05:34,800 --> 00:05:37,320 Speaker 4: I would still be looking at things like consumer staples. 113 00:05:37,480 --> 00:05:40,520 Speaker 4: I think the utilities trade is okay if you're looking 114 00:05:40,560 --> 00:05:43,200 Speaker 4: for growth, but you don't want that rate sensitivity. I 115 00:05:43,200 --> 00:05:45,600 Speaker 4: think healthcare is a good place to be, and I 116 00:05:45,640 --> 00:05:48,320 Speaker 4: do think that we see a resurgence in energy stocks 117 00:05:48,600 --> 00:05:50,560 Speaker 4: because supply will continue to get cut. 118 00:05:50,680 --> 00:05:52,920 Speaker 2: Interesting final point, let's thank you. It's going to catch 119 00:05:52,960 --> 00:05:54,680 Speaker 2: up with you as always this young there of so 120 00:05:54,839 --> 00:05:55,960 Speaker 2: fine the sequity market. 121 00:06:00,120 --> 00:06:03,880 Speaker 1: Lauren Goodwin joining US now economist, director of portfolio Strategy 122 00:06:03,880 --> 00:06:08,040 Speaker 1: at New York Life Investments, Director of disinflationary Nirvana narratives. 123 00:06:08,080 --> 00:06:08,599 Speaker 3: Do you buy it? 124 00:06:09,320 --> 00:06:12,080 Speaker 5: I don't buy it. I think we're sitting there right now, 125 00:06:12,160 --> 00:06:15,040 Speaker 5: but that it's a stop on the train towards recession. 126 00:06:15,120 --> 00:06:17,760 Speaker 5: And the reason for that twofold really one is the 127 00:06:17,800 --> 00:06:20,359 Speaker 5: long and variable lags of monetary policy. We're sort of 128 00:06:20,440 --> 00:06:23,360 Speaker 5: right on time for an average recession timeline from the 129 00:06:23,400 --> 00:06:26,680 Speaker 5: first FED rate hike. But the other is that if 130 00:06:26,680 --> 00:06:30,520 Speaker 5: we did get a cut in March or May, and 131 00:06:30,800 --> 00:06:36,040 Speaker 5: inflation wasn't falling precipitously, we weren't heading towards recession, then 132 00:06:36,080 --> 00:06:41,480 Speaker 5: I think we'd see financial market conditions ease pretty significantly. 133 00:06:41,560 --> 00:06:45,360 Speaker 5: And chairpal and other FED members have been very insistent 134 00:06:45,440 --> 00:06:48,440 Speaker 5: that they don't want to see that. That's a recipe 135 00:06:48,480 --> 00:06:52,720 Speaker 5: for likely a reacceleration of activity and makes the inflationary 136 00:06:52,800 --> 00:06:53,760 Speaker 5: environment more sticky. 137 00:06:54,360 --> 00:06:56,320 Speaker 1: So when we take a look at where you want 138 00:06:56,360 --> 00:06:59,520 Speaker 1: to play the best returns for sixty forty going back 139 00:06:59,520 --> 00:07:01,600 Speaker 1: to nineteen ninety one, do you lean in or do 140 00:07:01,640 --> 00:07:03,440 Speaker 1: you de lean against it and say someone's got to 141 00:07:03,480 --> 00:07:04,039 Speaker 1: be wrong here. 142 00:07:04,120 --> 00:07:06,520 Speaker 6: Whoever it is, I'm going to move against. 143 00:07:06,279 --> 00:07:09,560 Speaker 5: Wells as much as inc that we've spilt, I'm a 144 00:07:09,600 --> 00:07:11,600 Speaker 5: part of it. As much words we put out there 145 00:07:11,600 --> 00:07:15,200 Speaker 5: about the soft versus hard landing debate, neither side has 146 00:07:15,240 --> 00:07:18,120 Speaker 5: been the winner for investors all year, and I expect 147 00:07:18,120 --> 00:07:19,680 Speaker 5: that to be the case for the first part of 148 00:07:19,720 --> 00:07:22,240 Speaker 5: twenty twenty four as well. What I mean by that 149 00:07:22,400 --> 00:07:25,040 Speaker 5: is the only thing we're really certain about is that 150 00:07:25,080 --> 00:07:29,440 Speaker 5: the market is facing uncertainty, and so landing strongly in 151 00:07:29,480 --> 00:07:31,520 Speaker 5: one camp or the other isn't likely to be the answer. 152 00:07:31,600 --> 00:07:34,120 Speaker 5: It's quality, and I think we're seeing that over the 153 00:07:34,160 --> 00:07:39,560 Speaker 5: course of this year, investors leaning into profitability, to dividend yields, 154 00:07:39,960 --> 00:07:42,960 Speaker 5: and to areas of the market where investors expect that 155 00:07:43,000 --> 00:07:45,040 Speaker 5: no matter what happens in the first half of next year, 156 00:07:45,080 --> 00:07:46,240 Speaker 5: they can build some resilience. 157 00:07:46,280 --> 00:07:50,280 Speaker 1: So went in doubt by Microsoft. Is that basically what 158 00:07:50,280 --> 00:07:52,640 Speaker 1: you're saying. I mean, essentially, that's basically been the market 159 00:07:52,680 --> 00:07:54,720 Speaker 1: narrative so far, or then not the market narrative. This 160 00:07:54,760 --> 00:07:56,480 Speaker 1: is what people are saying, we don't know what's going 161 00:07:56,560 --> 00:07:59,360 Speaker 1: to happen, We'll just buy big tech and sit and wait. 162 00:07:59,520 --> 00:08:01,160 Speaker 5: It's a part of the story. One of the things 163 00:08:01,200 --> 00:08:03,360 Speaker 5: I think will shift over the course of twenty twenty 164 00:08:03,400 --> 00:08:06,920 Speaker 5: four specific to the tech narrative is that the excitement 165 00:08:06,960 --> 00:08:11,040 Speaker 5: around productivity and the new technological developments we're getting from 166 00:08:11,040 --> 00:08:14,040 Speaker 5: the artificial intelligence trend have been centered in the foundational 167 00:08:14,120 --> 00:08:16,920 Speaker 5: layer of tech, not least because that's also where consumers 168 00:08:16,920 --> 00:08:21,000 Speaker 5: spend money. As the consumer experiences the sort of dissonance 169 00:08:21,040 --> 00:08:24,040 Speaker 5: of high price levels that you've covered so well, I 170 00:08:24,120 --> 00:08:27,200 Speaker 5: expect that more of the story around tech will actually 171 00:08:27,200 --> 00:08:30,080 Speaker 5: expand into the digital infrastructure and the application layer that 172 00:08:30,120 --> 00:08:32,920 Speaker 5: get built on top of the foundational layer of tech. 173 00:08:32,800 --> 00:08:36,160 Speaker 1: Which really is sort of a part of the difficulty 174 00:08:36,280 --> 00:08:38,400 Speaker 1: understanding what's going on because there are these sort of 175 00:08:38,880 --> 00:08:43,200 Speaker 1: secular overlays like artificial intelligence, like weight loss drugs that 176 00:08:43,240 --> 00:08:45,679 Speaker 1: are put over a lot of uncertainty and frankly a 177 00:08:45,720 --> 00:08:49,160 Speaker 1: lot of underperformance of other rank and file companies. We saw, 178 00:08:49,240 --> 00:08:53,160 Speaker 1: for example, over the past week, pretty big inflows into 179 00:08:53,320 --> 00:08:56,559 Speaker 1: large cap US stocks. We saw outflows yet again from 180 00:08:56,600 --> 00:08:58,640 Speaker 1: the Russell two thousand. What do you make of that 181 00:08:58,640 --> 00:09:01,439 Speaker 1: that basically small caps are going to be left for 182 00:09:01,559 --> 00:09:05,240 Speaker 1: dead in a sense and continue to underperform dramatically even 183 00:09:05,440 --> 00:09:07,160 Speaker 1: with some sort of settling out. 184 00:09:07,200 --> 00:09:11,720 Speaker 5: In this narrative, small caps as the economy slows, tend 185 00:09:11,760 --> 00:09:15,640 Speaker 5: to underperform because they don't have the overhead, the administrative 186 00:09:15,640 --> 00:09:18,520 Speaker 5: overhead that helps them to digest higher rates, higher cost 187 00:09:18,600 --> 00:09:21,200 Speaker 5: the way that large caps do. So it's not necessarily 188 00:09:22,080 --> 00:09:24,920 Speaker 5: a matter of sector, but one of business model, one 189 00:09:24,920 --> 00:09:28,280 Speaker 5: of truly size. I think there are a couple of exceptions. 190 00:09:28,320 --> 00:09:31,640 Speaker 5: The tech sector is one of them, where profitability can 191 00:09:31,880 --> 00:09:35,120 Speaker 5: exist in mid and small caps as well. But as 192 00:09:35,160 --> 00:09:37,840 Speaker 5: we move through into Q one, I expect that the 193 00:09:37,880 --> 00:09:42,480 Speaker 5: preference for frankly defensive allocation plays large caps is one 194 00:09:42,520 --> 00:09:45,240 Speaker 5: of them defensive sectors. I really like infrastructure equity there. 195 00:09:45,280 --> 00:09:48,120 Speaker 5: I think they're going to continue to gain ground because 196 00:09:48,120 --> 00:09:50,760 Speaker 5: we're going to see more evidence that the data is slowing. 197 00:09:50,880 --> 00:09:52,559 Speaker 1: Isn't the best defense just cash? 198 00:09:56,400 --> 00:10:00,240 Speaker 5: There's there are benefits to cash when you're expecting a 199 00:10:00,280 --> 00:10:03,280 Speaker 5: major fallout in the market. But the one of the 200 00:10:03,320 --> 00:10:05,760 Speaker 5: things that I think is so challenging about cash right 201 00:10:05,800 --> 00:10:09,640 Speaker 5: now is that we see such strong opportunity to harvest 202 00:10:09,720 --> 00:10:12,480 Speaker 5: yield in sectors of the economy that even if we 203 00:10:12,520 --> 00:10:16,040 Speaker 5: see recession, which I expect, and even as spreads widen, 204 00:10:16,679 --> 00:10:21,040 Speaker 5: you can still gain meaningful yield uptick in, for example, 205 00:10:21,120 --> 00:10:22,680 Speaker 5: the high yield bond market. 206 00:10:23,160 --> 00:10:25,000 Speaker 1: Funny that you say that high yield bonds had the 207 00:10:25,040 --> 00:10:28,360 Speaker 1: biggest four week inflow going back to June twenty twenty. 208 00:10:28,559 --> 00:10:31,320 Speaker 1: This according to Bank of America Michael's Hartnett. This to 209 00:10:31,360 --> 00:10:33,719 Speaker 1: me highlights exactly what you're talking about. A lot of 210 00:10:33,760 --> 00:10:35,840 Speaker 1: people are saying, we don't have certainty about where things 211 00:10:35,840 --> 00:10:36,600 Speaker 1: are going, We're. 212 00:10:36,440 --> 00:10:37,439 Speaker 6: Going to pile into cash. 213 00:10:37,640 --> 00:10:39,839 Speaker 1: Seventy five billion dollars going in there in the past week, 214 00:10:40,240 --> 00:10:43,160 Speaker 1: But we're also going to pile into income because we 215 00:10:43,200 --> 00:10:45,560 Speaker 1: know we're going to get something. Are you seeing sort 216 00:10:45,559 --> 00:10:49,240 Speaker 1: of the reversal of the bond stock dynamic over the 217 00:10:49,240 --> 00:10:53,320 Speaker 1: past two decades or really, bonds are your equity drivers 218 00:10:53,320 --> 00:10:55,640 Speaker 1: in some ways your income plays and then you can 219 00:10:55,679 --> 00:10:58,160 Speaker 1: sort of shoot for the moon on the peripheries with 220 00:10:58,280 --> 00:10:58,920 Speaker 1: some equities. 221 00:11:00,120 --> 00:11:02,360 Speaker 5: Yes, that is what we're seeing. But I think what's 222 00:11:02,400 --> 00:11:06,679 Speaker 5: specifically interesting about high yield is that we see investors 223 00:11:06,880 --> 00:11:10,240 Speaker 5: and we're doing the same taking equity like risk in 224 00:11:10,320 --> 00:11:15,120 Speaker 5: high yield because you can harvest a meaningful coupon on 225 00:11:15,200 --> 00:11:18,360 Speaker 5: these bonds while acknowledging that FED programs early in the 226 00:11:18,360 --> 00:11:22,400 Speaker 5: pandemic made the credit quality of this sector much more 227 00:11:22,440 --> 00:11:25,360 Speaker 5: interesting relative to past economic cycles. So even if you 228 00:11:25,480 --> 00:11:30,760 Speaker 5: expect spreads to widen prices to fall as the economy stumbles, 229 00:11:31,080 --> 00:11:34,040 Speaker 5: you can still make up for it with the income 230 00:11:34,080 --> 00:11:35,880 Speaker 5: that you're able to capture from that sector. 231 00:11:35,880 --> 00:11:37,959 Speaker 1: So is that your highest conviction heading into next year? 232 00:11:38,000 --> 00:11:39,200 Speaker 1: Can you give us a sense of kind of how 233 00:11:39,200 --> 00:11:41,920 Speaker 1: you're framing at a time where there isn't a lot 234 00:11:41,920 --> 00:11:42,400 Speaker 1: of conviction. 235 00:11:42,760 --> 00:11:44,800 Speaker 5: Yeah, So I want to be clear that even though 236 00:11:45,040 --> 00:11:47,599 Speaker 5: we have a recessionary call in the first half of 237 00:11:47,600 --> 00:11:51,040 Speaker 5: the year, I don't think that's particularly pessimistic. I think 238 00:11:51,040 --> 00:11:54,080 Speaker 5: that's an optimistic scenario for the economy allows a reset. 239 00:11:54,760 --> 00:11:57,240 Speaker 5: I also think that we're going to see risk assets 240 00:11:57,280 --> 00:11:59,280 Speaker 5: continue to do well for the next couple of months. 241 00:11:59,760 --> 00:12:03,320 Speaker 5: We're doing is taking advantage of this sugar rush while 242 00:12:03,320 --> 00:12:05,520 Speaker 5: we have it to rebalance into themes that we think 243 00:12:05,559 --> 00:12:08,360 Speaker 5: will work particularly well. We've talked about a few of them. 244 00:12:08,640 --> 00:12:12,440 Speaker 5: Defensive sectors are really like infrastructure equity. We like high yield, 245 00:12:13,120 --> 00:12:15,600 Speaker 5: and I do think that there's room to run in 246 00:12:15,679 --> 00:12:16,520 Speaker 5: duration as well. 247 00:12:16,720 --> 00:12:19,079 Speaker 1: Do you think that the cyber truck is attractive? 248 00:12:20,000 --> 00:12:22,320 Speaker 5: I will admit that I just saw it for the 249 00:12:22,360 --> 00:12:26,000 Speaker 5: first time after hearing John say this morning it looks 250 00:12:26,040 --> 00:12:29,160 Speaker 5: like a kindergartener drew it, okay, and I could not disagree. 251 00:12:29,280 --> 00:12:30,760 Speaker 3: Okay, Well, it's weird. 252 00:12:30,760 --> 00:12:32,120 Speaker 1: Have you been hiding under a rock? 253 00:12:32,200 --> 00:12:33,199 Speaker 6: I think it's been out there. 254 00:12:33,240 --> 00:12:35,200 Speaker 1: Lauren Goodwin, thank you so much for being with us. 255 00:12:35,240 --> 00:12:38,079 Speaker 1: Wonderful to see you. Lauren Goodwin of New York Life Investments, 256 00:12:38,080 --> 00:12:40,120 Speaker 1: thank you, and she, of course will say, no, Lisa, 257 00:12:40,160 --> 00:12:42,600 Speaker 1: you've been hunded hiding under a rock because I haven't 258 00:12:42,640 --> 00:12:45,360 Speaker 1: seen what movie? Haven't I seen die Hard? Die Hard, 259 00:12:45,600 --> 00:12:48,320 Speaker 1: which I guess is a bad thing, and that it's. 260 00:12:48,160 --> 00:12:50,200 Speaker 5: A Christmas movie. 261 00:12:49,440 --> 00:12:53,800 Speaker 1: Said, why is this debated? He agrees, Okay, so look 262 00:12:53,840 --> 00:12:55,760 Speaker 1: on this on social media and just put in die 263 00:12:55,760 --> 00:12:58,880 Speaker 1: Hard and you'll see this enormous debate goes on every year. 264 00:12:59,360 --> 00:12:59,800 Speaker 6: It's real. 265 00:12:59,840 --> 00:13:02,480 Speaker 1: It's a real debate because check out social media. I 266 00:13:02,480 --> 00:13:04,800 Speaker 1: will check out social media and I will watch the movie. 267 00:13:05,280 --> 00:13:07,840 Speaker 1: Thank you for being with us at Lauren. 268 00:13:18,000 --> 00:13:20,800 Speaker 2: Nadia, Martin wickensjoin just now the director has fell in 269 00:13:20,840 --> 00:13:24,760 Speaker 2: capital Nadia. Let's start there. This word voluntary. How important 270 00:13:24,800 --> 00:13:30,040 Speaker 2: is that word voluntary? At opek plus, I. 271 00:13:30,000 --> 00:13:34,000 Speaker 7: Think the market finds the word voluntary very problematic because 272 00:13:34,040 --> 00:13:37,360 Speaker 7: it means that the group did not manage to together 273 00:13:37,440 --> 00:13:40,440 Speaker 7: agree that this is what we actually have to do, 274 00:13:41,280 --> 00:13:43,480 Speaker 7: and this is why the oil price has not strengthened 275 00:13:43,960 --> 00:13:45,679 Speaker 7: since it was announced. 276 00:13:46,320 --> 00:13:48,760 Speaker 2: What kind of follow through do you expect off the 277 00:13:48,800 --> 00:13:50,720 Speaker 2: back of the announcement? Then we know what the market 278 00:13:50,760 --> 00:13:54,439 Speaker 2: is preoccupied with, a single word. What are you telling clients? 279 00:13:55,760 --> 00:13:58,880 Speaker 7: Well, then on the margin we then see that there's 280 00:13:58,920 --> 00:14:03,199 Speaker 7: around three hundred thousand barrels per day coming less from UAE, 281 00:14:03,720 --> 00:14:06,440 Speaker 7: coming less from Kuwait, and one hundred thousand barrels per 282 00:14:06,480 --> 00:14:09,720 Speaker 7: day coming less from Saudi Arabia. So that makes Q 283 00:14:09,800 --> 00:14:12,719 Speaker 7: one look slightly better and call it a balanced market, right, 284 00:14:12,760 --> 00:14:15,320 Speaker 7: But it's only a Q one cut and it doesn't 285 00:14:15,360 --> 00:14:18,400 Speaker 7: really change the picture. And again, you know what it 286 00:14:18,440 --> 00:14:21,280 Speaker 7: was different about this so pickplus meeting is that it's 287 00:14:21,320 --> 00:14:22,760 Speaker 7: not a long duration cut. 288 00:14:22,920 --> 00:14:23,120 Speaker 4: Right. 289 00:14:23,280 --> 00:14:26,520 Speaker 7: Last year they made it a long duration and now 290 00:14:26,560 --> 00:14:30,880 Speaker 7: they're only looking at three months forward. The expectation for 291 00:14:30,960 --> 00:14:33,640 Speaker 7: them is of course that we will start to see 292 00:14:33,880 --> 00:14:37,080 Speaker 7: demand pick up and then we will see draws, especially 293 00:14:37,120 --> 00:14:39,960 Speaker 7: into the second half next year. But what we saw 294 00:14:40,200 --> 00:14:44,840 Speaker 7: throughout this quarter is a lack of draws does not 295 00:14:44,960 --> 00:14:47,600 Speaker 7: make the oil price rally, right, and we're going to 296 00:14:47,640 --> 00:14:49,040 Speaker 7: see the same in the first quarter. 297 00:14:49,080 --> 00:14:52,080 Speaker 1: We believe there's a story Nadia on the Bloomberg talking 298 00:14:52,120 --> 00:14:54,480 Speaker 1: about how algorithmic traders are confusing all of this so 299 00:14:54,480 --> 00:14:56,240 Speaker 1: that we can't really get the same kind of signal 300 00:14:56,600 --> 00:14:58,840 Speaker 1: from oil prices because of this. Do you buy that 301 00:14:58,960 --> 00:15:01,040 Speaker 1: or do you think that oil prices are sending a 302 00:15:01,160 --> 00:15:06,480 Speaker 1: very strong signal about growth globally? But also particularly in China. 303 00:15:06,960 --> 00:15:09,960 Speaker 7: Well, I think oil prices are okay. You know, it's 304 00:15:10,000 --> 00:15:12,440 Speaker 7: not a low oil price, it's not a high oil price, 305 00:15:12,560 --> 00:15:15,080 Speaker 7: it's a healthy oil price. I think what we have 306 00:15:15,160 --> 00:15:17,120 Speaker 7: to get our heads around is the fact that China 307 00:15:17,160 --> 00:15:20,000 Speaker 7: has changed as an economy, right, and so we're not 308 00:15:20,080 --> 00:15:22,560 Speaker 7: going to see the levels of GDP growth that we. 309 00:15:22,400 --> 00:15:23,000 Speaker 6: Were used to. 310 00:15:23,120 --> 00:15:26,640 Speaker 7: But probably where we are this year, things will continue 311 00:15:26,680 --> 00:15:29,160 Speaker 7: to go on year over year. Of course, this year 312 00:15:29,160 --> 00:15:31,840 Speaker 7: we saw one point five million barrels per day year 313 00:15:31,880 --> 00:15:34,880 Speaker 7: on year growth in oil demand, and our view will 314 00:15:34,880 --> 00:15:37,160 Speaker 7: see six hundred thousand barrels per day next year. It's 315 00:15:37,160 --> 00:15:41,160 Speaker 7: probably slightly higher than consensus. But it's not only China, 316 00:15:41,280 --> 00:15:46,240 Speaker 7: it's also India. It's also non oecd Asia X, China 317 00:15:46,240 --> 00:15:49,480 Speaker 7: and India that are really driving things. In contrast to 318 00:15:49,520 --> 00:15:52,040 Speaker 7: the US that even though the US economy we're firm 319 00:15:52,080 --> 00:15:56,400 Speaker 7: believers in a soft landing, the problem is the rise 320 00:15:56,520 --> 00:15:59,480 Speaker 7: in fuel efficiency every year in the US and this 321 00:15:59,560 --> 00:16:02,080 Speaker 7: is why the driving season disappointed this year and it's 322 00:16:02,080 --> 00:16:04,960 Speaker 7: probably going to disappoint next year. Add into that tesla 323 00:16:05,040 --> 00:16:08,760 Speaker 7: and EV purchases that is also a headwind on that 324 00:16:08,840 --> 00:16:09,560 Speaker 7: demand growth. 325 00:16:09,840 --> 00:16:13,480 Speaker 1: If that's really a big driver of why prices, as 326 00:16:13,480 --> 00:16:15,560 Speaker 1: you call them, healthy but not as elevated as people 327 00:16:15,560 --> 00:16:18,520 Speaker 1: would exploit it would expect. How much can we see 328 00:16:18,560 --> 00:16:21,560 Speaker 1: prices continue to decline as ev adoption and some of 329 00:16:21,600 --> 00:16:26,800 Speaker 1: the other types of non fossil fuel economies build up. 330 00:16:28,240 --> 00:16:30,760 Speaker 7: I think the main difference there. I mean on the 331 00:16:30,800 --> 00:16:33,760 Speaker 7: demand side, yes, we will see slow demand and you know, 332 00:16:34,200 --> 00:16:37,360 Speaker 7: already for next year demand growth and our view is 333 00:16:37,680 --> 00:16:39,840 Speaker 7: one point four million barrels per day year on year 334 00:16:39,960 --> 00:16:42,520 Speaker 7: for the whole world global demand growth, right, but some 335 00:16:42,760 --> 00:16:46,040 Speaker 7: estimates are already calling for less than one million barrels 336 00:16:46,040 --> 00:16:49,120 Speaker 7: per day, right. I think the other aspect, though, is 337 00:16:49,160 --> 00:16:51,720 Speaker 7: the supply side. Right, is that right now we are 338 00:16:51,920 --> 00:16:55,680 Speaker 7: in this still shale boom and that will continue for 339 00:16:55,800 --> 00:17:00,160 Speaker 7: probably another you know, max two million barrels per day, 340 00:17:00,200 --> 00:17:02,760 Speaker 7: and you know, we'll say peak US production will be 341 00:17:02,800 --> 00:17:05,400 Speaker 7: at fifteen point five million barrels per day. So when 342 00:17:05,440 --> 00:17:08,400 Speaker 7: we think about the balance and prices, we will then 343 00:17:08,680 --> 00:17:14,600 Speaker 7: still have strong oil prices because these long cycle investments 344 00:17:14,840 --> 00:17:17,280 Speaker 7: are not happening at the pace that they have in 345 00:17:17,320 --> 00:17:22,560 Speaker 7: the past given this relatively healthy oil price, So I 346 00:17:22,600 --> 00:17:26,680 Speaker 7: don't see a long term negative a price path for 347 00:17:26,880 --> 00:17:29,520 Speaker 7: oil and I expect actually it to strengthen over the 348 00:17:29,520 --> 00:17:32,320 Speaker 7: coming years. We just have to get through this US 349 00:17:32,440 --> 00:17:34,040 Speaker 7: shale being growth period. 350 00:17:34,359 --> 00:17:37,920 Speaker 2: Nadia, appreciate your view. Nadia martin Wigan there as Feland 351 00:17:38,119 --> 00:17:45,919 Speaker 2: Capital computer hardware maker HP Enterprise joining the RUSS to 352 00:17:46,080 --> 00:17:49,639 Speaker 2: artificial intelligence in earnings announced this week HPA, saying it 353 00:17:49,720 --> 00:17:53,080 Speaker 2: expects softer demand for service and storage, but it's hoping 354 00:17:53,400 --> 00:17:56,160 Speaker 2: it's new AI venture will offset the slowdown. The plan 355 00:17:56,240 --> 00:18:00,200 Speaker 2: including a bigger partnership with chip giant Nvidia and Oni 356 00:18:00,240 --> 00:18:03,440 Speaker 2: and Nery, the CEO of HPE, joining us from Barcelona 357 00:18:03,480 --> 00:18:05,560 Speaker 2: where he's been speaking to customers. An tell you great 358 00:18:05,600 --> 00:18:07,439 Speaker 2: to catch up with you, sir. Let's start with that 359 00:18:07,520 --> 00:18:10,760 Speaker 2: relationship with Nvidio for our audience who aren't familiar with it. 360 00:18:10,800 --> 00:18:12,919 Speaker 2: Can you describe it to us and how beneficially it's 361 00:18:12,960 --> 00:18:14,240 Speaker 2: going to be to both of you. 362 00:18:15,480 --> 00:18:18,159 Speaker 8: Yeah, well, good morning, thanks for having me. As you 363 00:18:18,200 --> 00:18:21,080 Speaker 8: see we are in Barcelona. There's still a show going on. 364 00:18:21,480 --> 00:18:25,920 Speaker 8: We hosted HB Discovered here with more than three thousand customers, 365 00:18:26,240 --> 00:18:28,800 Speaker 8: and thanks again for having the opportunity to talk to you. 366 00:18:28,960 --> 00:18:32,840 Speaker 8: So here a discoverer in Barcelona, we announce an expanded 367 00:18:32,920 --> 00:18:37,399 Speaker 8: partnership with Nvidia. Two weeks ago at the Supercomputer event 368 00:18:37,440 --> 00:18:41,000 Speaker 8: in Denver, we announced a deep solution for what we 369 00:18:41,119 --> 00:18:46,000 Speaker 8: call model developers for generative AI, using our supercomputing capabilities, 370 00:18:46,359 --> 00:18:50,320 Speaker 8: plus our intellectual property in the software space, plus Nvidia 371 00:18:50,960 --> 00:18:54,520 Speaker 8: chipsets and other aspects of what they do to provide 372 00:18:54,560 --> 00:18:57,960 Speaker 8: a massive capability for motor developers to speed up the 373 00:18:58,000 --> 00:19:02,360 Speaker 8: training models. And here on Thursday I announced an extension 374 00:19:02,359 --> 00:19:05,880 Speaker 8: of that partnership for enterprise customers to what we call 375 00:19:06,040 --> 00:19:09,000 Speaker 8: fine tune those models. And that's the right time to 376 00:19:09,080 --> 00:19:13,520 Speaker 8: value using our expertise as well as our services capabilities 377 00:19:13,560 --> 00:19:16,439 Speaker 8: and the software to be able to deploy on premises 378 00:19:16,520 --> 00:19:17,200 Speaker 8: and at the edge. 379 00:19:17,680 --> 00:19:19,760 Speaker 9: So this is a complete solution for what we call 380 00:19:19,840 --> 00:19:21,360 Speaker 9: the AI live cycle. 381 00:19:21,080 --> 00:19:24,199 Speaker 8: From tree to tune into infancy, and customer has a 382 00:19:24,240 --> 00:19:28,320 Speaker 8: massive reception because they want to privately fine tune the 383 00:19:28,400 --> 00:19:30,920 Speaker 8: models with their data in a secure and compliant way. 384 00:19:31,359 --> 00:19:34,520 Speaker 2: It's clear your stock is benefiting from the glow of Nvidia. 385 00:19:34,960 --> 00:19:36,720 Speaker 2: We can see that. I think Raymond James writing that 386 00:19:36,760 --> 00:19:39,080 Speaker 2: you're getting a seat at the AI table. Can you 387 00:19:39,119 --> 00:19:42,000 Speaker 2: talk to us about the pace of adoption of this technology. 388 00:19:42,280 --> 00:19:44,159 Speaker 2: I think many of us. Antonio surprised by some of 389 00:19:44,200 --> 00:19:47,000 Speaker 2: the guidance we had repeatedly from Nvidia that this wasn't 390 00:19:47,040 --> 00:19:49,520 Speaker 2: just a hopeful story about the future, it was real 391 00:19:49,880 --> 00:19:51,800 Speaker 2: and present. Can you talk to us about that. 392 00:19:52,000 --> 00:19:55,600 Speaker 8: Yeah, well, I think there's two importants, right, So the 393 00:19:55,640 --> 00:19:58,680 Speaker 8: story is absolutely real. We see it in the quality 394 00:19:58,680 --> 00:20:01,840 Speaker 8: of the dialogs with customers, which are now. 395 00:20:01,640 --> 00:20:05,679 Speaker 9: Accelerating the mobile training. So you think about this. At 396 00:20:05,680 --> 00:20:07,880 Speaker 9: the beginning of twenty twenty three, we. 397 00:20:07,880 --> 00:20:10,120 Speaker 8: Had less than one hundred million dollars what I call 398 00:20:10,320 --> 00:20:15,480 Speaker 8: accelerator processing units in our server business. At the end 399 00:20:15,520 --> 00:20:18,040 Speaker 8: of twenty twenty three, we grew that business to three 400 00:20:18,080 --> 00:20:21,320 Speaker 8: point six billion overs and nobs, and that was literally 401 00:20:21,359 --> 00:20:25,080 Speaker 8: in ten months. And the reason why that's happened is 402 00:20:25,119 --> 00:20:29,000 Speaker 8: because the technology has achieved an inflection point what is 403 00:20:29,080 --> 00:20:30,280 Speaker 8: ready to be deployed. 404 00:20:30,760 --> 00:20:32,760 Speaker 9: However, our story is not just AI. 405 00:20:33,000 --> 00:20:35,399 Speaker 8: Just to be clear, Jonathan Lisia, our story is a 406 00:20:35,440 --> 00:20:38,919 Speaker 8: combination of a hybrid cloud, a cloud native world, in 407 00:20:38,960 --> 00:20:40,280 Speaker 8: an AI native world. 408 00:20:40,400 --> 00:20:43,240 Speaker 9: Think about it this way. Most of our data today 409 00:20:43,359 --> 00:20:45,360 Speaker 9: sits in the cloud native world. 410 00:20:45,160 --> 00:20:48,359 Speaker 8: Whereas in your premise and manufacturing flows and hospitals, and 411 00:20:48,359 --> 00:20:49,560 Speaker 8: obviously in the public. 412 00:20:49,240 --> 00:20:52,280 Speaker 9: Cloud, but AI needs that data. 413 00:20:52,440 --> 00:20:55,600 Speaker 8: Is one hungry for that data and therefore now we 414 00:20:55,640 --> 00:20:59,440 Speaker 8: need an AI native architecture to train and find tune 415 00:20:59,480 --> 00:21:03,040 Speaker 8: this model with that data and then put it in production, 416 00:21:03,200 --> 00:21:04,840 Speaker 8: which ultimately is the value. 417 00:21:04,560 --> 00:21:07,800 Speaker 10: To change your processes and be able to achieve those outcomes. 418 00:21:07,800 --> 00:21:10,880 Speaker 10: And we deliver all of that to our hPG platform 419 00:21:10,920 --> 00:21:13,320 Speaker 10: and that's what we see a tremendous growth in a 420 00:21:13,440 --> 00:21:17,160 Speaker 10: connectivity business, in a hybrid cloud business, and then obviously 421 00:21:17,200 --> 00:21:18,320 Speaker 10: now in AI and we have. 422 00:21:18,359 --> 00:21:21,400 Speaker 8: A unique portfolio to address all aspects of what customers need. 423 00:21:21,720 --> 00:21:23,680 Speaker 1: Antonio. This year, we've been talking to so many people 424 00:21:23,720 --> 00:21:26,719 Speaker 1: who talk about a winner takes all type of trend 425 00:21:26,840 --> 00:21:31,679 Speaker 1: in tech, in particular Amazon's Aws, Microsoft's zore taking an 426 00:21:31,720 --> 00:21:35,200 Speaker 1: increasing part of the market share. How do you compete 427 00:21:35,240 --> 00:21:37,760 Speaker 1: at a time where people seem to be gravitating toward 428 00:21:37,760 --> 00:21:38,920 Speaker 1: the biggest players. 429 00:21:39,960 --> 00:21:44,040 Speaker 8: Well, there is an interesting opportunity here because obviously the 430 00:21:44,119 --> 00:21:47,119 Speaker 8: last decade, think about twenty ten to twenty twenty, it 431 00:21:47,240 --> 00:21:47,639 Speaker 8: was all. 432 00:21:47,480 --> 00:21:51,080 Speaker 9: About the cloud decade. You know, the cloud for us is. 433 00:21:51,080 --> 00:21:56,360 Speaker 8: An experience, is for accelerate speed and agility across the business. 434 00:21:56,960 --> 00:21:58,800 Speaker 8: And now we enter what I call the new age 435 00:21:58,800 --> 00:22:01,680 Speaker 8: of insights and it's all about deriving insights. 436 00:22:01,320 --> 00:22:04,000 Speaker 11: From the data and changing the way you do business. 437 00:22:04,320 --> 00:22:09,520 Speaker 8: But that inflection point actually requires a different architecture, and 438 00:22:09,600 --> 00:22:12,879 Speaker 8: therefore customers are not keen to put the public data, 439 00:22:13,920 --> 00:22:16,720 Speaker 8: you know, the data and the public domain and make 440 00:22:16,760 --> 00:22:19,680 Speaker 8: sure that they control that because that's the intellectual property. 441 00:22:19,720 --> 00:22:22,359 Speaker 8: And that creates a massive opportunity for us, and we 442 00:22:22,480 --> 00:22:25,719 Speaker 8: think of hpgre like us, the fourth cloud is a 443 00:22:25,760 --> 00:22:28,440 Speaker 8: design for hybrid, meaning you can take advantage of the 444 00:22:28,480 --> 00:22:31,880 Speaker 8: public cloud, also take advantage your own premises and more 445 00:22:31,920 --> 00:22:34,000 Speaker 8: and more at the edge and be able to do 446 00:22:34,160 --> 00:22:37,119 Speaker 8: everything you need in a unified experience. 447 00:22:37,560 --> 00:22:39,600 Speaker 9: And that's the value that we bring to the table. 448 00:22:39,960 --> 00:22:42,879 Speaker 8: And ultimately we have every aspect of the solution stack 449 00:22:43,040 --> 00:22:44,679 Speaker 8: and the partnerships. 450 00:22:44,080 --> 00:22:46,120 Speaker 10: Like we did this week with the media to give 451 00:22:46,240 --> 00:22:47,600 Speaker 10: that unified experience. 452 00:22:47,920 --> 00:22:50,959 Speaker 1: We've been hearing all about consolidation in big tech. How 453 00:22:51,040 --> 00:22:54,320 Speaker 1: much are some of the biggest cloud providers kind of 454 00:22:54,320 --> 00:22:57,399 Speaker 1: trying to get into that market where it's basically the 455 00:22:57,520 --> 00:23:03,040 Speaker 1: hybrid trying to have bespoke solutions for companies versus having 456 00:23:03,040 --> 00:23:04,240 Speaker 1: the market to yourself. 457 00:23:05,760 --> 00:23:07,879 Speaker 9: I mean the market is big. I think you know 458 00:23:07,920 --> 00:23:09,160 Speaker 9: we're talking about over. 459 00:23:08,960 --> 00:23:12,399 Speaker 8: A trillion dollar market opportunity from a tea perspective, and 460 00:23:12,440 --> 00:23:15,400 Speaker 8: I believe the eye opens an incremental one point six 461 00:23:15,520 --> 00:23:19,200 Speaker 8: trillion dollar opportunity for everyone. So there's plenty of market 462 00:23:19,240 --> 00:23:21,600 Speaker 8: out there. And you think about us as a company. 463 00:23:21,640 --> 00:23:24,040 Speaker 8: This year, we grew five and a half percentage revenue. 464 00:23:24,040 --> 00:23:26,879 Speaker 8: We expand the gross margin very rapidly. It takes to 465 00:23:26,880 --> 00:23:28,360 Speaker 8: the mix and the value will bring to. 466 00:23:28,320 --> 00:23:30,080 Speaker 11: The table, achieve record. 467 00:23:29,840 --> 00:23:32,119 Speaker 9: Breaker performance in long gap, the. 468 00:23:32,160 --> 00:23:35,240 Speaker 8: Little enity to share and free cash flow, and we 469 00:23:35,320 --> 00:23:37,000 Speaker 8: believe there's a plenty of runway here. 470 00:23:37,119 --> 00:23:39,920 Speaker 9: But ultimately the winner is about all. 471 00:23:39,760 --> 00:23:43,280 Speaker 8: Delivering a simple, simple experience where technology is. 472 00:23:43,359 --> 00:23:45,360 Speaker 11: Easy to deploy and consume. 473 00:23:45,440 --> 00:23:48,200 Speaker 9: And ultimately accelerate business outcomes. 474 00:23:48,280 --> 00:23:51,480 Speaker 8: It's not just about thinking about technology and speeds and feeds. 475 00:23:51,760 --> 00:23:55,439 Speaker 11: It's about delivering that agility to deliver those of business outcomes. 476 00:23:55,520 --> 00:23:58,200 Speaker 11: A thick HP is uniquely positioned with the fold cloud. 477 00:23:58,200 --> 00:24:01,640 Speaker 2: I call it hpgree lake too much tech. Let's finish 478 00:24:01,720 --> 00:24:04,440 Speaker 2: on football. Are you happy that Messi is no longer 479 00:24:04,440 --> 00:24:09,119 Speaker 2: in Barcelona and we have him here in America now? Antonio, Well, I'm. 480 00:24:09,000 --> 00:24:12,199 Speaker 8: Happy that missus Argentina and I was born in Argentina 481 00:24:12,280 --> 00:24:14,280 Speaker 8: and I had the honor and pleasure to. 482 00:24:15,800 --> 00:24:18,720 Speaker 11: Meet both of them. In fact, I was able. 483 00:24:18,480 --> 00:24:21,160 Speaker 8: To play one time again with you with Maradona, and I. 484 00:24:21,040 --> 00:24:23,480 Speaker 9: Have to say, for us is an incredible pride. 485 00:24:23,480 --> 00:24:26,199 Speaker 8: But obviously having him in the United States gives me 486 00:24:26,240 --> 00:24:28,399 Speaker 8: the opportunity to go watching more often. 487 00:24:28,640 --> 00:24:31,240 Speaker 2: Amazing. I want to hear that Maradonna story one day, Antonio, 488 00:24:31,320 --> 00:24:34,040 Speaker 2: Thank you, Antonio near again if you look back at 489 00:24:34,080 --> 00:24:46,880 Speaker 2: thank you sir on the latest, because four years ago, 490 00:24:47,040 --> 00:24:49,560 Speaker 2: when I first saw the design for this vehicle, then 491 00:24:49,600 --> 00:24:51,560 Speaker 2: I might remember this. I described it as an eight 492 00:24:51,600 --> 00:24:53,520 Speaker 2: year old during the Car of the Future, just these 493 00:24:53,600 --> 00:24:56,400 Speaker 2: jacket lines and it looked ridiculous. And here we are. 494 00:24:56,760 --> 00:24:59,040 Speaker 2: The thing looks phenomenal and everyone wants to buy one, 495 00:24:59,040 --> 00:25:00,840 Speaker 2: at least the people I speak you still. 496 00:25:00,640 --> 00:25:02,959 Speaker 1: Think it looks like your whole Druids, So it'scite to you. 497 00:25:02,960 --> 00:25:05,480 Speaker 2: But what do I know about car design, because apparently 498 00:25:05,520 --> 00:25:07,159 Speaker 2: everyone thinks this is the car of the future and 499 00:25:07,160 --> 00:25:07,800 Speaker 2: they want to buy it. 500 00:25:07,840 --> 00:25:10,040 Speaker 1: Well, apparently Danives thinks that you're a great candidate to 501 00:25:10,040 --> 00:25:11,320 Speaker 1: get in one of those and drive. 502 00:25:11,200 --> 00:25:14,760 Speaker 2: Off the while we'll have that conversation right now, just 503 00:25:15,080 --> 00:25:18,480 Speaker 2: pitching the cyber truck to me and a commercial Breakdan, 504 00:25:18,560 --> 00:25:19,200 Speaker 2: It's good to see you. 505 00:25:19,320 --> 00:25:19,960 Speaker 6: Great to be here. 506 00:25:20,080 --> 00:25:24,080 Speaker 2: It's fantastic to catch up this Beast deliveries. Talk to 507 00:25:24,080 --> 00:25:26,359 Speaker 2: me about how transformational this might be for the company. 508 00:25:26,520 --> 00:25:29,000 Speaker 6: It's a historic moment. I mean, it's four years in 509 00:25:29,040 --> 00:25:31,600 Speaker 6: the making, and I think the reason it's important in 510 00:25:31,680 --> 00:25:34,399 Speaker 6: terms of this could be another growth vehicle for a 511 00:25:34,560 --> 00:25:37,399 Speaker 6: musk and Tasla. And it also just shows what's happened 512 00:25:37,440 --> 00:25:40,639 Speaker 6: three one three area code GM Ford peeling back a 513 00:25:40,680 --> 00:25:44,040 Speaker 6: little on EVS, Tesla is doubling down, and I think 514 00:25:44,080 --> 00:25:48,400 Speaker 6: this is an important moment. And you go back over 515 00:25:48,440 --> 00:25:51,760 Speaker 6: the years, many times been count out, but yet they've 516 00:25:51,840 --> 00:25:54,040 Speaker 6: come out and reflex the muscles moments. 517 00:25:54,080 --> 00:25:55,919 Speaker 2: I want to talk Margins a little bit more with you, 518 00:25:56,000 --> 00:25:57,680 Speaker 2: but just on the point you made bringing up GM 519 00:25:57,760 --> 00:26:00,720 Speaker 2: and Ford. Are we finding out that people just want 520 00:26:00,720 --> 00:26:02,679 Speaker 2: Teslas they don't want EVAs. 521 00:26:03,200 --> 00:26:07,080 Speaker 6: Look, I think that's a serious question here, because you know, 522 00:26:08,359 --> 00:26:12,080 Speaker 6: wanting an EV versus do you actually just want a Tesla? 523 00:26:12,480 --> 00:26:15,920 Speaker 6: And I think you're starting to see now a moderation 524 00:26:16,160 --> 00:26:19,679 Speaker 6: in terms of ev demand. Now clearly Tesla has had 525 00:26:19,720 --> 00:26:23,439 Speaker 6: the price war that we've talked about in China. That's definitely, 526 00:26:23,520 --> 00:26:25,800 Speaker 6: you know, left a bit of a stand. But I 527 00:26:25,840 --> 00:26:28,680 Speaker 6: do think from a scale and scope perspective, you look 528 00:26:28,680 --> 00:26:32,919 Speaker 6: at Fisker reducing guidance again today, no one could match 529 00:26:33,119 --> 00:26:35,840 Speaker 6: the scalon scope of Musk and Tesla, and I think 530 00:26:35,880 --> 00:26:39,239 Speaker 6: that lead continues to further be there. And I think 531 00:26:39,320 --> 00:26:43,320 Speaker 6: that's what's happened a little humble pie maybe with traditional automakers. 532 00:26:43,520 --> 00:26:46,560 Speaker 1: Well, John Lawler was on yesterday a CFO Ford and 533 00:26:46,560 --> 00:26:48,720 Speaker 1: he was talking about how there was a different audience 534 00:26:48,840 --> 00:26:51,400 Speaker 1: for the initial Tesla's because it was the first adopters 535 00:26:51,680 --> 00:26:53,440 Speaker 1: and they were willing to pray a price premium and 536 00:26:53,480 --> 00:26:55,879 Speaker 1: they were willing to come in and they were Tesla adopters. 537 00:26:56,119 --> 00:26:58,119 Speaker 1: The ones who are coming in now are looking for 538 00:26:58,320 --> 00:27:02,399 Speaker 1: price value, quality, et cetera. It is a different pool 539 00:27:02,640 --> 00:27:05,560 Speaker 1: or that can be pulled away more aggressively in that 540 00:27:05,680 --> 00:27:09,520 Speaker 1: kind of environment. Does Tesla's margin story start to get eroded? 541 00:27:09,800 --> 00:27:12,400 Speaker 6: I think, and John talked about it. I think that's 542 00:27:12,680 --> 00:27:15,200 Speaker 6: right now, that's the balancing act because if you look 543 00:27:15,240 --> 00:27:19,360 Speaker 6: from a margin perspective, it's really been volume over margins 544 00:27:19,400 --> 00:27:21,639 Speaker 6: in the street you know, so far that's been the 545 00:27:21,720 --> 00:27:24,439 Speaker 6: right strategy. Next two to three quarters you need to 546 00:27:24,440 --> 00:27:27,880 Speaker 6: see margins trough out level out here. But when you'll 547 00:27:27,880 --> 00:27:32,080 Speaker 6: get cybertruck look, essentially they'll be losing let's say, thirty thousand, 548 00:27:32,200 --> 00:27:35,640 Speaker 6: forty thousand per vehicle for the next year and a half. 549 00:27:35,760 --> 00:27:38,879 Speaker 6: Then it starts to become profitable. But that is the 550 00:27:38,960 --> 00:27:41,240 Speaker 6: near term pain for long term gain that they need 551 00:27:41,280 --> 00:27:44,280 Speaker 6: to do in what continues to be this green tidal wave. 552 00:27:44,440 --> 00:27:46,439 Speaker 1: You know, to John's point, when you're saying people just 553 00:27:46,480 --> 00:27:49,200 Speaker 1: want to Tesla, I wonder how much that's people wanting 554 00:27:49,240 --> 00:27:52,439 Speaker 1: to ride Elon Musk's wave and how much that was 555 00:27:52,520 --> 00:27:55,240 Speaker 1: really the feeling a number of years ago. How much 556 00:27:55,480 --> 00:27:59,560 Speaker 1: some of the recent high profile discussion around Elon Musk, 557 00:27:59,640 --> 00:28:04,680 Speaker 1: with with his colorful interview and commentary toward advertisers, does 558 00:28:04,720 --> 00:28:07,639 Speaker 1: that draw people in or push them away? 559 00:28:08,119 --> 00:28:10,879 Speaker 6: I think there's still a question there because to some 560 00:28:11,119 --> 00:28:15,160 Speaker 6: and emboldens them. In terms of Musk what he represents, 561 00:28:15,359 --> 00:28:18,919 Speaker 6: he's the anti that that's you know, I affiliate, you know, 562 00:28:19,240 --> 00:28:21,040 Speaker 6: with the Tesla, but then on the other hand, you 563 00:28:21,119 --> 00:28:25,160 Speaker 6: alienate and the problem for I think Tesla investors when 564 00:28:25,160 --> 00:28:29,440 Speaker 6: you sell consumer products to the masses. You don't want controversy. 565 00:28:29,480 --> 00:28:32,200 Speaker 6: But again, Musk is Musk, goes to be of a 566 00:28:32,240 --> 00:28:35,480 Speaker 6: different drum, and you see and that's you know, we 567 00:28:35,600 --> 00:28:38,320 Speaker 6: saw that maybe overshadow a bit in terms of what 568 00:28:38,440 --> 00:28:43,320 Speaker 6: happened at the New York Times event, the cyber truck unveiling, 569 00:28:43,360 --> 00:28:45,120 Speaker 6: that's four years in the making. But at the end 570 00:28:45,160 --> 00:28:48,480 Speaker 6: of the day, Musk will continue to I think, innovate 571 00:28:48,880 --> 00:28:50,600 Speaker 6: and especially when it comes cyber truck. 572 00:28:50,600 --> 00:28:52,960 Speaker 2: At historical moment, what did you think about what happened 573 00:28:52,960 --> 00:28:53,400 Speaker 2: this week? 574 00:28:54,480 --> 00:28:57,560 Speaker 6: I think it's one where the last thing you want 575 00:28:57,600 --> 00:29:02,000 Speaker 6: to see as a Tesla bull to see something like 576 00:29:02,040 --> 00:29:05,520 Speaker 6: that come and ultimately overshadow what was going to be cybertruck. 577 00:29:05,560 --> 00:29:08,320 Speaker 6: But as we all know, Musk is Musk, and it 578 00:29:08,400 --> 00:29:09,960 Speaker 6: goes back to what we've talked about a lot in 579 00:29:10,000 --> 00:29:13,760 Speaker 6: the show when he bought Twitter, the forty four billion 580 00:29:13,800 --> 00:29:16,960 Speaker 6: dollar mistake in my opinion, which now let's say x 581 00:29:17,120 --> 00:29:20,960 Speaker 6: is worth five to eight billion. This is always the worry. 582 00:29:21,120 --> 00:29:24,800 Speaker 6: It just adds that tornado factor because with Musk, if 583 00:29:24,840 --> 00:29:26,840 Speaker 6: you give him a mic, you never know what's going 584 00:29:26,920 --> 00:29:29,400 Speaker 6: to happen. And that's part of the problem here and 585 00:29:29,440 --> 00:29:33,360 Speaker 6: even though many could say, oh it's great, go get them, okay, 586 00:29:33,360 --> 00:29:36,560 Speaker 6: but there's a business there. It's it's been essentially taken 587 00:29:36,600 --> 00:29:39,240 Speaker 6: out with debt, so eventually that you're gonna have to 588 00:29:39,760 --> 00:29:42,000 Speaker 6: you know, have to pay someone. In terms of what's 589 00:29:42,000 --> 00:29:42,760 Speaker 6: happened with X. 590 00:29:42,760 --> 00:29:45,000 Speaker 2: I think you just put a dentive's multiple on X 591 00:29:45,040 --> 00:29:46,920 Speaker 2: there with that valuation. But we'll come back to that 592 00:29:46,920 --> 00:29:49,200 Speaker 2: another time. I want to talk about margins just a 593 00:29:49,200 --> 00:29:52,200 Speaker 2: little bit more. There's a massive opportunity if you didn't 594 00:29:52,240 --> 00:29:54,920 Speaker 2: have this truck to keep on pushing and squeezing four 595 00:29:54,960 --> 00:29:57,680 Speaker 2: and GM. GM have come out with numbers this week 596 00:29:58,120 --> 00:30:01,840 Speaker 2: basically telling us that the papermarket contract, the labor contract 597 00:30:01,840 --> 00:30:04,400 Speaker 2: would add an additional five to seven five per vehicle 598 00:30:05,160 --> 00:30:09,240 Speaker 2: at Ford it's upwards of nine hundred. Does this truck 599 00:30:09,440 --> 00:30:12,720 Speaker 2: complicate their effort to really put the squeeze on FOD 600 00:30:12,720 --> 00:30:14,920 Speaker 2: and GM and the way they have done last year. 601 00:30:15,360 --> 00:30:18,240 Speaker 6: I think it does a little, because ultimately, when you 602 00:30:18,280 --> 00:30:21,000 Speaker 6: look at the UAW debacle and the three and three 603 00:30:21,040 --> 00:30:24,920 Speaker 6: era good, it's put Farley bar, it's put back against 604 00:30:24,960 --> 00:30:27,840 Speaker 6: the wall, and and that add to the cost I 605 00:30:27,840 --> 00:30:30,920 Speaker 6: think where they're going to squeeze them continues to really 606 00:30:30,960 --> 00:30:33,640 Speaker 6: be on that forty to fifty k price points in 607 00:30:33,720 --> 00:30:36,480 Speaker 6: terms of sedans. That's what they're going after. But that's 608 00:30:36,520 --> 00:30:39,320 Speaker 6: also why Mary and you've seen them from Farley as well. 609 00:30:39,720 --> 00:30:41,880 Speaker 6: They're kind of come back all from the edge, not 610 00:30:42,000 --> 00:30:46,000 Speaker 6: maybe going full ev where Tesla's actually going the opposite. 611 00:30:46,000 --> 00:30:48,440 Speaker 6: And that's essentially what's happened right now. This is this 612 00:30:48,520 --> 00:30:51,760 Speaker 6: is all Gama high steaks poker, and I think everyone's 613 00:30:51,760 --> 00:30:54,000 Speaker 6: trying to figure out what must next move is in 614 00:30:54,040 --> 00:30:55,280 Speaker 6: twenty twenty four. 615 00:30:55,240 --> 00:30:56,200 Speaker 2: And who it's catered to. 616 00:30:56,360 --> 00:30:59,320 Speaker 1: I mean that's another question too, because the audiences a 617 00:30:59,440 --> 00:31:03,320 Speaker 1: Ford and g much more focused domestically, or as Elon 618 00:31:03,440 --> 00:31:06,120 Speaker 1: Musk has a big audience in China as well. How 619 00:31:06,200 --> 00:31:09,680 Speaker 1: much is the cyber truck geared toward American buyers and 620 00:31:09,720 --> 00:31:12,040 Speaker 1: how much is it geared toward international buyers and. 621 00:31:12,040 --> 00:31:14,640 Speaker 6: LEAs That's a great point because look China the hearts 622 00:31:14,680 --> 00:31:17,120 Speaker 6: and lungs of the Tesla growth story. It is in 623 00:31:17,280 --> 00:31:20,200 Speaker 6: China forty five percent of demand. And I think what 624 00:31:20,400 --> 00:31:24,040 Speaker 6: really he's focused on here with cybertruck. It's, first of all, 625 00:31:24,040 --> 00:31:27,120 Speaker 6: it's showing from an innovation technology perspective, just how far 626 00:31:27,160 --> 00:31:30,000 Speaker 6: they are, But the opportunity, even though it's starting in 627 00:31:30,040 --> 00:31:33,479 Speaker 6: the US, it is international, it's Europe, it's China, and 628 00:31:33,520 --> 00:31:36,880 Speaker 6: I think that's really the global focus of Tesla. You 629 00:31:36,920 --> 00:31:40,320 Speaker 6: look at forward, there's many that have kind of customers 630 00:31:40,480 --> 00:31:44,160 Speaker 6: fought against going toward ev I'm a traditional f one fifty. 631 00:31:44,160 --> 00:31:46,280 Speaker 6: I'm not going to go there. Dealers have fought against it, 632 00:31:46,600 --> 00:31:50,000 Speaker 6: and they've heard it loud and clear in Detroit. Do 633 00:31:50,040 --> 00:31:53,520 Speaker 6: you think it's attractive? Look the mad Max vehicle. And 634 00:31:53,560 --> 00:31:55,920 Speaker 6: I remember when I remember when you talked about that 635 00:31:55,960 --> 00:31:58,240 Speaker 6: in twenty nineteen. I think we talked about that together. 636 00:31:59,000 --> 00:32:02,120 Speaker 6: I believe I get it. It's on the edge, but 637 00:32:02,240 --> 00:32:05,840 Speaker 6: I think it's innovative, it's new, and it's something where 638 00:32:05,880 --> 00:32:09,320 Speaker 6: Tesla is not gonna go down the typical path of 639 00:32:09,400 --> 00:32:11,840 Speaker 6: our other autumn makers. And that's why, you know, Look 640 00:32:11,880 --> 00:32:14,480 Speaker 6: when I see you driving this in New York about 641 00:32:14,680 --> 00:32:16,120 Speaker 6: you know, six nine months now. 642 00:32:16,320 --> 00:32:18,720 Speaker 2: And a passenger say, t K in the passenger seat. 643 00:32:18,880 --> 00:32:22,600 Speaker 6: It's with cyber truck. It's gonna be the roof come off, 644 00:32:22,720 --> 00:32:24,760 Speaker 6: but you could be in the back as well, So 645 00:32:25,080 --> 00:32:26,440 Speaker 6: it's gonna be super interesting. 646 00:32:26,480 --> 00:32:28,520 Speaker 1: Am I the only one who drives. 647 00:32:28,440 --> 00:32:30,680 Speaker 2: You are, Yeah, Brando's got to drive. T can I 648 00:32:30,760 --> 00:32:31,200 Speaker 2: don't drive. 649 00:32:32,040 --> 00:32:36,320 Speaker 6: I'll get in the back and again, but Belisa could 650 00:32:36,360 --> 00:32:40,200 Speaker 6: be driving. You got t K shotgun barrows in the 651 00:32:40,280 --> 00:32:40,640 Speaker 6: back end. 652 00:32:40,800 --> 00:32:43,800 Speaker 2: Sleep that could happen. All right, let's get sleep. Thank 653 00:32:43,880 --> 00:32:51,320 Speaker 2: you version. Because four years ago, when I first saw 654 00:32:51,360 --> 00:32:53,920 Speaker 2: the design for this vehicle, then I might remember this. 655 00:32:54,160 --> 00:32:55,760 Speaker 2: I described it as an eight year old drawing the 656 00:32:55,800 --> 00:32:57,960 Speaker 2: car of the future, just these jacket lines, and it 657 00:32:58,040 --> 00:33:01,400 Speaker 2: looked ridiculous. And here we are. The thing looks phenomenal 658 00:33:01,480 --> 00:33:03,240 Speaker 2: and everyone wants to buy one. At least the people 659 00:33:03,280 --> 00:33:03,840 Speaker 2: I speak to you. 660 00:33:03,960 --> 00:33:06,160 Speaker 1: Still think it looks like your old Druids, so insciting 661 00:33:06,240 --> 00:33:06,400 Speaker 1: to you. 662 00:33:06,520 --> 00:33:09,000 Speaker 2: But what do I know about car design? Because apparently 663 00:33:09,040 --> 00:33:10,680 Speaker 2: everyone thinks this is the card of the future and 664 00:33:10,720 --> 00:33:11,320 Speaker 2: they want to buy it. 665 00:33:11,400 --> 00:33:13,120 Speaker 1: Well, apparently, Dan, I have thinks that you're a great 666 00:33:13,160 --> 00:33:14,880 Speaker 1: candidate to get in one of those and drive off 667 00:33:15,320 --> 00:33:15,640 Speaker 1: the lot. 668 00:33:15,680 --> 00:33:19,080 Speaker 2: Here we'll have that conversation right now, just pitching the 669 00:33:19,160 --> 00:33:22,280 Speaker 2: cyber truck to me and a commercial break. Dan, it's 670 00:33:22,280 --> 00:33:22,720 Speaker 2: going to see you. 671 00:33:22,880 --> 00:33:23,480 Speaker 6: Great to be here. 672 00:33:23,640 --> 00:33:27,560 Speaker 2: It's fantastic to catch up this beast deliveries. Talk to 673 00:33:27,640 --> 00:33:29,880 Speaker 2: me about how transformational this might be for the company. 674 00:33:30,080 --> 00:33:32,520 Speaker 6: It's a historic moment. I mean, it's four years in 675 00:33:32,600 --> 00:33:35,080 Speaker 6: the making, and I think the reason it's important in 676 00:33:35,240 --> 00:33:38,360 Speaker 6: terms of this could be another growth vehicle for Musk 677 00:33:38,480 --> 00:33:41,120 Speaker 6: and Tesla. And it also just shows what's happened three 678 00:33:41,160 --> 00:33:44,480 Speaker 6: one three area code, GM Ford peeling back a little 679 00:33:44,480 --> 00:33:47,640 Speaker 6: on EVS, Tesla is doubling down, and I think this 680 00:33:47,840 --> 00:33:51,680 Speaker 6: is an important moment. And I know you go back 681 00:33:51,760 --> 00:33:55,000 Speaker 6: over the years many times been count out, but yet 682 00:33:55,040 --> 00:33:57,600 Speaker 6: they've come out and reflex the muscles moments. 683 00:33:57,640 --> 00:33:59,440 Speaker 2: I want to talk Margins a little bit more with you, 684 00:33:59,520 --> 00:34:01,200 Speaker 2: but just on the point you might bringing up GM 685 00:34:01,320 --> 00:34:04,200 Speaker 2: and Ford. Are we finding out that people just want 686 00:34:04,280 --> 00:34:06,080 Speaker 2: Tesla's they don't want evs. 687 00:34:06,760 --> 00:34:10,560 Speaker 6: Look, I think that's a serious question here because you know, 688 00:34:11,920 --> 00:34:15,600 Speaker 6: wanting an EV versus do you actually just want a Tesla? 689 00:34:16,040 --> 00:34:19,400 Speaker 6: And I think you're starting to see now a moderation 690 00:34:19,719 --> 00:34:23,239 Speaker 6: in terms of EV demand. Now, clearly Tesla has had 691 00:34:23,280 --> 00:34:26,920 Speaker 6: the price war that we've talked about in China. That's definitely, 692 00:34:27,080 --> 00:34:29,279 Speaker 6: you know, left a bit of a stand. But I 693 00:34:29,400 --> 00:34:32,200 Speaker 6: do think from a scale and scope perspective, you look 694 00:34:32,200 --> 00:34:36,440 Speaker 6: at Fisker reducing guidance again today, no one could match 695 00:34:36,680 --> 00:34:39,359 Speaker 6: the scaling scope of Musk and Tesla, and I think 696 00:34:39,440 --> 00:34:42,799 Speaker 6: that lead continues to further be there. And I think 697 00:34:42,880 --> 00:34:46,879 Speaker 6: that's what's happened a little humble pie maybe with traditional automakers. 698 00:34:47,080 --> 00:34:50,080 Speaker 1: Well, John Lawler was on yesterday a CFO Ford and 699 00:34:50,120 --> 00:34:52,240 Speaker 1: he was talking about how there was a different audience 700 00:34:52,360 --> 00:34:54,960 Speaker 1: for the initial Tesla's because it was the first adopters 701 00:34:55,239 --> 00:34:57,000 Speaker 1: and they were willing to pray a price premium and 702 00:34:57,040 --> 00:34:59,400 Speaker 1: they were willing to come in and they were Tesla adopters. 703 00:34:59,640 --> 00:35:04,160 Speaker 1: The who are coming in now are looking for price, value, quality, 704 00:35:04,280 --> 00:35:06,600 Speaker 1: et cetera. It is a different pool or that can 705 00:35:06,680 --> 00:35:10,040 Speaker 1: be pulled away more aggressively in that kind of environment. 706 00:35:10,360 --> 00:35:13,040 Speaker 1: Does Tesla's margin story start to get eroded? 707 00:35:13,320 --> 00:35:15,719 Speaker 6: I think, and John talked about it. I think that's 708 00:35:16,239 --> 00:35:18,719 Speaker 6: right now. That's the balancing act because if you look 709 00:35:18,800 --> 00:35:22,880 Speaker 6: from a margin perspective, it's really been volume over margins 710 00:35:22,960 --> 00:35:25,160 Speaker 6: in the street. You know, so far that's been the 711 00:35:25,280 --> 00:35:27,960 Speaker 6: right strategy. Next two to three quarters you need to 712 00:35:28,000 --> 00:35:31,439 Speaker 6: see margins trof out level out here. But when you'll 713 00:35:31,440 --> 00:35:35,160 Speaker 6: get cybertruck, look, essentially they'll be losing let's say thirty 714 00:35:35,280 --> 00:35:38,680 Speaker 6: thousand forty thousand per vehicle for the next year and 715 00:35:38,719 --> 00:35:41,920 Speaker 6: a half. Then it starts to become profitable. But that 716 00:35:42,239 --> 00:35:44,239 Speaker 6: is the near term pain for long term gain that 717 00:35:44,360 --> 00:35:46,880 Speaker 6: they need to do in what continues to be this 718 00:35:47,000 --> 00:35:47,799 Speaker 6: green tidal wave. 719 00:35:48,000 --> 00:35:49,960 Speaker 1: You know, to John's point when he's saying people just 720 00:35:50,040 --> 00:35:52,720 Speaker 1: want to Tesla, I wonder how much that's people wanting 721 00:35:52,800 --> 00:35:55,960 Speaker 1: to ride Elon Musk's wave and how much that was 722 00:35:56,080 --> 00:35:58,719 Speaker 1: really the feeling a number of years ago. How much 723 00:35:59,040 --> 00:36:03,120 Speaker 1: some of the recent high profile discussion around Elon Musk 724 00:36:03,239 --> 00:36:07,600 Speaker 1: with X, with his colorful interview and commentary toward advertisers, 725 00:36:08,040 --> 00:36:11,080 Speaker 1: does that draw people in or push them away? 726 00:36:11,640 --> 00:36:14,400 Speaker 6: I think there's still a question there because to some 727 00:36:14,680 --> 00:36:18,680 Speaker 6: and emboldens them. In terms of Musk what he represents, 728 00:36:18,880 --> 00:36:22,400 Speaker 6: he's the anti that that's you know, I affiliate, you know, 729 00:36:22,800 --> 00:36:25,160 Speaker 6: with the Tesla, but then on the other hand, you alienate. 730 00:36:25,360 --> 00:36:28,759 Speaker 6: And the problem for I think Tesla investors, when you 731 00:36:29,000 --> 00:36:32,919 Speaker 6: sell consumer products to the masses, you don't want controversy. 732 00:36:33,040 --> 00:36:35,719 Speaker 6: But again Musk is Musk goes to be of a 733 00:36:35,800 --> 00:36:38,920 Speaker 6: different drum, and you see and that's you know, we 734 00:36:39,120 --> 00:36:41,840 Speaker 6: saw that maybe overshadow a bit in terms of what 735 00:36:42,000 --> 00:36:46,840 Speaker 6: happened at the New York Times event, the cyber Truck unveiling. 736 00:36:46,920 --> 00:36:48,680 Speaker 6: That's four years in the making. But at the end 737 00:36:48,719 --> 00:36:52,000 Speaker 6: of the day, Musk will continue to I think, innovate 738 00:36:52,440 --> 00:36:55,319 Speaker 6: and especially when it comes cyber Truck. At historical moment, what. 739 00:36:55,400 --> 00:36:56,839 Speaker 2: Did you think about what happened this week? 740 00:36:58,040 --> 00:37:01,080 Speaker 6: I think it's one where still last thing you want 741 00:37:01,120 --> 00:37:05,480 Speaker 6: to see as a Tesla bull to see something like 742 00:37:05,600 --> 00:37:09,040 Speaker 6: that come and ultimately overshadow what was gonna be Cybertruck. 743 00:37:09,120 --> 00:37:11,840 Speaker 6: But as we all know, Musk is Musk, and it 744 00:37:11,960 --> 00:37:13,480 Speaker 6: goes back to what we've talked about a lot in 745 00:37:13,560 --> 00:37:17,280 Speaker 6: the show when he bought Twitter, the forty four billion 746 00:37:17,320 --> 00:37:20,480 Speaker 6: dollar mistake in my opinion, which now let's say x 747 00:37:20,680 --> 00:37:24,360 Speaker 6: is worth five to eight billion. This is always the worry. 748 00:37:24,680 --> 00:37:28,319 Speaker 6: It just adds that tornado factor because with Musk, if 749 00:37:28,360 --> 00:37:30,799 Speaker 6: you give him a mic, you never know what's gonna happen. 750 00:37:31,320 --> 00:37:33,359 Speaker 6: And that's part of the problem here. And even though 751 00:37:33,719 --> 00:37:36,840 Speaker 6: many could say, oh, it's great, go get them, okay, 752 00:37:36,920 --> 00:37:40,080 Speaker 6: but there's a business there. It's it's been essentially taken 753 00:37:40,120 --> 00:37:42,759 Speaker 6: out with debt, so eventually that you're gonna have to 754 00:37:43,280 --> 00:37:45,520 Speaker 6: you know, have to pay someone in terms of what's 755 00:37:45,560 --> 00:37:46,200 Speaker 6: happened with X. 756 00:37:46,280 --> 00:37:48,480 Speaker 2: I think you just put a dentives multiple on X 757 00:37:48,560 --> 00:37:50,440 Speaker 2: there with that valuation. But we'll come back to that 758 00:37:50,480 --> 00:37:52,680 Speaker 2: another time. I want to talk about margins just a 759 00:37:52,719 --> 00:37:55,719 Speaker 2: little bit more. There's a massive opportunity if you didn't 760 00:37:55,760 --> 00:37:58,439 Speaker 2: have this truck to keep on pushing and squeezing four 761 00:37:58,480 --> 00:38:02,680 Speaker 2: and GM mat with numbers this week basically telling us 762 00:38:02,719 --> 00:38:05,799 Speaker 2: that the labor market contract, the labor contract would add 763 00:38:05,800 --> 00:38:09,160 Speaker 2: an additional five to seven five per vehicle at Ford 764 00:38:09,200 --> 00:38:13,759 Speaker 2: it's upwards of nine hundred. Does this truck complicate their 765 00:38:13,800 --> 00:38:16,600 Speaker 2: effort to really put the squeeze on four and GM 766 00:38:16,640 --> 00:38:18,440 Speaker 2: and the way they have done last year? 767 00:38:18,880 --> 00:38:21,759 Speaker 6: I think it does a little because ultimately, when you 768 00:38:21,840 --> 00:38:24,520 Speaker 6: look at the UAW debacle and the three and three 769 00:38:24,600 --> 00:38:28,480 Speaker 6: era could it's put Farley bar, it's put back against 770 00:38:28,480 --> 00:38:31,360 Speaker 6: the wall, and in that add to the cost, I 771 00:38:31,400 --> 00:38:34,439 Speaker 6: think where they're going to squeeze them continues to really 772 00:38:34,520 --> 00:38:37,160 Speaker 6: be on that forty to fifty k price points in 773 00:38:37,280 --> 00:38:40,040 Speaker 6: terms of sedans. That's what they're going after. But that's 774 00:38:40,080 --> 00:38:42,759 Speaker 6: also why Mary and you've seen them from Farley as well. 775 00:38:43,280 --> 00:38:45,400 Speaker 6: They're kind of come back all from the edge, not 776 00:38:45,560 --> 00:38:49,520 Speaker 6: maybe going full ev where Tesla's actually going the opposite. 777 00:38:49,520 --> 00:38:51,880 Speaker 6: And that's essentially what's happened right now. This is this 778 00:38:52,080 --> 00:38:55,320 Speaker 6: is all Gamma high steaks poker, and I think everyone's 779 00:38:55,320 --> 00:38:57,520 Speaker 6: trying to figure out what must next move is in 780 00:38:57,560 --> 00:38:59,680 Speaker 6: twenty twenty four and who it's catered to. 781 00:39:00,000 --> 00:39:02,640 Speaker 1: I mean that's another question too, because the audience is 782 00:39:02,840 --> 00:39:06,440 Speaker 1: a Ford and GM much more focused domestically, or as 783 00:39:06,600 --> 00:39:09,319 Speaker 1: Elon Musk has a big audience in China as well. 784 00:39:09,520 --> 00:39:13,000 Speaker 1: How much is the cyber truck geared toward American buyers 785 00:39:13,120 --> 00:39:15,440 Speaker 1: and how much is it geared toward international. 786 00:39:15,040 --> 00:39:17,400 Speaker 6: Buyers and LEAs. That's a great point because look China 787 00:39:17,719 --> 00:39:20,360 Speaker 6: the hearts and lungs of the Tesla growth story. It 788 00:39:20,520 --> 00:39:23,360 Speaker 6: is in China forty five percent of demand. And I 789 00:39:23,440 --> 00:39:26,960 Speaker 6: think what really he's focused on here with cybertruck. It's, 790 00:39:27,200 --> 00:39:30,080 Speaker 6: first of all, it's showing from an innovation technology perspective 791 00:39:30,200 --> 00:39:33,000 Speaker 6: just how far they are. But the opportunity, even though 792 00:39:33,000 --> 00:39:35,880 Speaker 6: it's starting in the US, it is international, it's Europe, 793 00:39:35,960 --> 00:39:39,240 Speaker 6: it's China, and I think that's really the global focus 794 00:39:39,520 --> 00:39:42,320 Speaker 6: of Tesla. You look at forward, there's many that have 795 00:39:42,480 --> 00:39:46,440 Speaker 6: kind of customers fought against going toward EV. I'm a 796 00:39:46,520 --> 00:39:48,480 Speaker 6: traditional f one fifty. I'm not going to go there. 797 00:39:48,560 --> 00:39:51,200 Speaker 6: Dealers have fought against it, and they've heard it loud 798 00:39:51,280 --> 00:39:55,640 Speaker 6: and clear in Detroit. Do you think it's attractive? Look 799 00:39:55,920 --> 00:39:58,360 Speaker 6: the mad Max vehicle, and I remember when I remember 800 00:39:58,440 --> 00:40:01,040 Speaker 6: when you talked about that nineteen. I think we talked 801 00:40:01,040 --> 00:40:04,719 Speaker 6: about that together. I believe I get it. It's on 802 00:40:04,840 --> 00:40:08,600 Speaker 6: the edge, but I think it's innovative, it's new, and 803 00:40:08,719 --> 00:40:11,360 Speaker 6: it's something where Tesla is not gonna go down the 804 00:40:11,440 --> 00:40:15,000 Speaker 6: typical path of our other automakers. And that's why. You know, 805 00:40:15,200 --> 00:40:17,680 Speaker 6: Look when I see you driving this in New York 806 00:40:17,760 --> 00:40:19,680 Speaker 6: about you know six nine months now. 807 00:40:19,600 --> 00:40:22,280 Speaker 2: You can a passenger, say TK in the passenger seat. 808 00:40:22,400 --> 00:40:23,680 Speaker 6: It's with cyber truck. 809 00:40:23,760 --> 00:40:26,080 Speaker 2: It's gonna be the roof come off. 810 00:40:26,280 --> 00:40:28,239 Speaker 6: But you could be in the back as well. So 811 00:40:28,360 --> 00:40:29,920 Speaker 6: it's gonna be super interesting. 812 00:40:30,040 --> 00:40:31,640 Speaker 1: Am I the only one who drives? 813 00:40:32,000 --> 00:40:35,960 Speaker 2: You are? Yeah, Brando's gotta drive, cannot don't drive, I'll drive. 814 00:40:36,000 --> 00:40:39,640 Speaker 6: They get in the back and again, believe belie, it 815 00:40:39,680 --> 00:40:43,759 Speaker 6: could be driving. You got TK shotgun barrows in the 816 00:40:43,800 --> 00:40:44,200 Speaker 6: back end. 817 00:40:44,360 --> 00:40:46,800 Speaker 2: Sleep that could happen, all right, let's sleep. 818 00:40:48,960 --> 00:40:52,360 Speaker 1: Subscribe to The Bloomberg Surveillance Podcast on Apple, Spotify, and 819 00:40:52,440 --> 00:40:55,840 Speaker 1: anywhere else you get your podcasts. Listen live every weekday, 820 00:40:55,880 --> 00:40:58,440 Speaker 1: starting at seven am Eastern on Blueberok dot com, the 821 00:40:58,520 --> 00:41:02,239 Speaker 1: iHeartRadio app, to In, and the Bloomberg Business app. You 822 00:41:02,320 --> 00:41:05,640 Speaker 1: can watch us live on Bloomberg Television and always on 823 00:41:05,680 --> 00:41:09,080 Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and 824 00:41:09,239 --> 00:41:10,080 Speaker 1: this is Bloomberg