WEBVTT - Weak US Services Activity, ADP Hiring Signal Some Tariff Strain 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.600 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:18.560 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.640 --> 0:00:21.920 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.120 us live on YouTube. 0:00:23.680 --> 0:00:25.520 We have some economic data coming out right now. I 0:00:25.520 --> 0:00:28.360 have some services data coming out forty nine point nine. 0:00:28.400 --> 0:00:30.960 That headline consensus on US was fifty two, so not 0:00:31.080 --> 0:00:33.200 kind of flirting with a little bit of a contraction 0:00:33.280 --> 0:00:35.080 there in the services part of the economy, which again 0:00:35.120 --> 0:00:36.800 is about seventy percent of the US economy. 0:00:37.159 --> 0:00:37.839 Let's get right to it. 0:00:37.920 --> 0:00:40.120 Steve Miller, a chair of the is some services PMI 0:00:40.320 --> 0:00:43.480 on that data. Steve, I'm looking at that headline data 0:00:43.560 --> 0:00:44.760 forty nine point nine. 0:00:44.880 --> 0:00:46.599 That's below fifty. Talk to us about that. 0:00:47.800 --> 0:00:51.519 Good morning, Thanks for having me back. You know, zo 0:00:51.520 --> 0:00:55.800 point one percent below the flat in services industries. 0:00:56.440 --> 0:00:57.200 Flat is bad. 0:00:57.360 --> 0:01:00.200 You know, we've seen we see long term growth when 0:01:00.200 --> 0:01:04.240 we get to flat or just below flat, certainly negative indicators. 0:01:04.640 --> 0:01:08.679 On the positive side, we track the numbers by industry 0:01:08.840 --> 0:01:12.039 and how they contribute to overall GDP. What we're seeing 0:01:12.120 --> 0:01:15.240 is a slight increase in the percent of GDP that's 0:01:15.280 --> 0:01:19.160 representing growth, and a slight decrease in those that are 0:01:19.200 --> 0:01:23.040 saying that they're in contraction territory. What we saw bringing 0:01:23.040 --> 0:01:28.520 the number overall down was for accommodations and food services 0:01:29.240 --> 0:01:32.720 and the real estate rental and leasing. Although both still 0:01:32.720 --> 0:01:36.080 an expansion territory, they're not as high or as fast 0:01:36.200 --> 0:01:38.080 level of expansion as they were last month. 0:01:40.440 --> 0:01:43.360 So I was confused as to how im services employment 0:01:43.440 --> 0:01:46.920 actually ticked above that fifty level, whereas a new order 0:01:47.000 --> 0:01:49.760 is just tanked to forty six and the overall index 0:01:49.920 --> 0:01:51.720 is below fifty, what does that. 0:01:51.680 --> 0:01:57.320 Mean well on the employment side, my interpretation of those 0:01:57.440 --> 0:02:01.280 numbers is that we're still seeing confidence that the terror 0:02:01.320 --> 0:02:03.840 situation is going to get worked out and we're going 0:02:03.880 --> 0:02:06.400 to be able to return to growth. But the new 0:02:06.520 --> 0:02:11.239 orders and actually seeing backlog as well backlocker orders, we're 0:02:11.240 --> 0:02:15.520 seeing those very low. And another data point is when 0:02:15.520 --> 0:02:18.760 I look at the average of new orders and backlog, 0:02:19.320 --> 0:02:22.600 this is the lowest that it's been since two other 0:02:22.639 --> 0:02:25.840 points in the last twenty years. One was the beginning 0:02:26.000 --> 0:02:29.320 of the pandemic in March and April, and the other 0:02:29.600 --> 0:02:31.359 was in the two thousand and eight two thousand and 0:02:31.400 --> 0:02:35.000 nine time frame in the Great Recession. So for me, 0:02:35.160 --> 0:02:37.519 that's the biggest red flag is the drop in new 0:02:37.639 --> 0:02:41.440 orders as well as both the average level between the 0:02:41.480 --> 0:02:44.400 new orders and the backlog of orders. 0:02:46.520 --> 0:02:48.720 So we've got new orders lower that's concerned about just 0:02:48.760 --> 0:02:51.720 the economy slowing down, and we've got services prices paid 0:02:52.160 --> 0:02:55.079 coming in much higher than expected. 0:02:55.120 --> 0:02:55.840 Is that inflation? 0:02:58.000 --> 0:03:01.880 So I can't say yet whether it's inflationary, but I 0:03:01.880 --> 0:03:05.600 would tell you that the two month growth rate is 0:03:05.680 --> 0:03:10.720 what we saw just at the start of the acceleration 0:03:10.800 --> 0:03:12.600 and inflation back during the pandemic. 0:03:14.080 --> 0:03:15.520 So definitely that's right. 0:03:15.639 --> 0:03:16.480 See, we appreciate it. 0:03:16.520 --> 0:03:16.840 Thank you. 0:03:18.480 --> 0:03:20.080 Yeah, we know you've got to run, so we'll let 0:03:20.080 --> 0:03:23.520 you go. Steve Miller, Chair of the Ism Services, joining us. 0:03:23.520 --> 0:03:26.720 They're really rough new order, so we will keep track 0:03:27.080 --> 0:03:28.280 of all of that as it goes. 0:03:29.960 --> 0:03:33.680 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:03:33.760 --> 0:03:36.840 weekdays at ten am Eastern on Apple, Cocklay and Android 0:03:36.840 --> 0:03:40.160 Auto with the Bloomberg Business App. Listen on demand wherever 0:03:40.200 --> 0:03:43.360 you get your podcasts, or watch us live on YouTube. 0:03:43.840 --> 0:03:46.520 So the economic data we keep hearing is going to 0:03:46.520 --> 0:03:48.760 be a few months off till we see any negativity 0:03:48.800 --> 0:03:50.680 hit the hard data. But let's just go over some 0:03:50.760 --> 0:03:52.440 of the data we got today. We got the ADP 0:03:52.600 --> 0:03:56.440 employment number, disappointing, coming in at just thirty seven thousand jobs. 0:03:56.480 --> 0:03:58.320 Then you had the ISM services number and it was 0:03:58.360 --> 0:04:00.880 pretty rough. You had the overall index below fifty. That's 0:04:00.920 --> 0:04:04.680 contraction territory. But the big thing was new orders coming 0:04:04.680 --> 0:04:06.680 in at the lowest level. Like we saw bask in 0:04:06.680 --> 0:04:09.520 April twenty twenty. No one likes April of twenty twenty. 0:04:09.920 --> 0:04:12.080 Also back in two thousand and eight, two thousand and nine, 0:04:12.080 --> 0:04:13.680 no one liked two thousand and eight and two thousand 0:04:13.680 --> 0:04:15.520 and nine joining us now for more. Michael mckeib when 0:04:15.560 --> 0:04:18.839 we're going to National Economics and Policy correspondent, I'm like, 0:04:19.080 --> 0:04:20.680 is this the stagflation kind of thing? 0:04:22.160 --> 0:04:24.160 Well, if you took it at face value, it is 0:04:24.360 --> 0:04:27.880 in the sense that we're looking at prices going up 0:04:27.960 --> 0:04:29.920 and activity going down. 0:04:30.520 --> 0:04:32.080 What we haven't seen. 0:04:32.000 --> 0:04:35.640 Is, as you note, the hard data completely reflecting this, 0:04:35.760 --> 0:04:39.520 we're starting to get numbers that do. Remember we saw 0:04:39.640 --> 0:04:44.000 a big drop in imports during the last month, and 0:04:44.080 --> 0:04:48.080 that was largely because so much was pulled forward because 0:04:48.080 --> 0:04:51.120 of the impending tariffs, and so that will have an 0:04:51.120 --> 0:04:55.520 impact on second quarter growth, but we're not at this 0:04:55.600 --> 0:04:58.440 point able to say exactly where we go from there. 0:04:58.760 --> 0:05:01.120 It looks like service are bad, and I know you 0:05:01.279 --> 0:05:06.240 had the director of the Ism services on earlier and 0:05:06.279 --> 0:05:11.279 he said that the new orders really are looking bad 0:05:11.480 --> 0:05:14.640 right now. And that's just kind of a scary thought. 0:05:17.200 --> 0:05:20.200 Hey, Mike in our group chat here, I dropped in 0:05:20.200 --> 0:05:22.080 a note earlier that I said, you know, maybe a 0:05:22.120 --> 0:05:24.160 few months time, we're going to look back on today 0:05:24.960 --> 0:05:28.880 as the beginning of something, you know, whether it's tagflation, 0:05:29.080 --> 0:05:32.880 whether it's recession, whether it's inflation really warring its head. 0:05:32.920 --> 0:05:34.240 Am I being over dramatic there? 0:05:35.960 --> 0:05:38.039 I don't know if I would say today, but it 0:05:38.080 --> 0:05:40.880 could be this week in let's see what happens on 0:05:40.920 --> 0:05:42.080 Friday with the jobs report. 0:05:42.720 --> 0:05:44.440 This may be sort of the last. 0:05:44.240 --> 0:05:49.200 Hurrah week where we see numbers that are okay in 0:05:49.320 --> 0:05:51.719 terms of those things. The big question is going to 0:05:51.720 --> 0:05:56.360 be whether ADP reflects reality or not, because any number 0:05:56.480 --> 0:06:00.560 like that for Friday's payrolls figures would really scare the 0:06:00.600 --> 0:06:03.960 pants off Wall Street and get everybody excited about FED 0:06:04.040 --> 0:06:06.200 rate cuts, even if they're not going to happen right away, 0:06:06.680 --> 0:06:10.400 So yes, this could be not mincing those time to remember, 0:06:13.480 --> 0:06:14.480 Oh nice new us. 0:06:14.520 --> 0:06:16.599 Then how do you square how do we think about 0:06:17.000 --> 0:06:20.960 ADP versus the jolts that we got yesterday. I was thinking, like, 0:06:21.080 --> 0:06:23.360 is it the companies just aren't hiring, but they're not 0:06:23.400 --> 0:06:26.240 necessarily laying off either, Like how do we square those 0:06:26.240 --> 0:06:28.520 two together in the broader economic jobs picture. 0:06:28.960 --> 0:06:31.000 Well, it's not easy to square the two, except that 0:06:31.040 --> 0:06:34.240 you note that ADP that the jolts rather is two 0:06:34.240 --> 0:06:38.960 months old, so it is past data and things could 0:06:39.040 --> 0:06:42.279 certainly have changed, which ADP suggests might be the case. 0:06:42.600 --> 0:06:45.880 Now with ADP, what we're not seeing is whether companies 0:06:45.920 --> 0:06:49.800 were letting anybody go and whether they have openings that 0:06:49.839 --> 0:06:52.760 they want to fill. It just tells you they didn't 0:06:52.839 --> 0:06:56.560 hire very many people or add to payrolls. Now, it 0:06:56.640 --> 0:06:59.839 has historically been that ADP is usually way off from 0:07:00.160 --> 0:07:03.440 the private sector hiring is in the non farm payrolls figure, 0:07:03.520 --> 0:07:06.520 so we'll have to see how that proves out. On 0:07:06.600 --> 0:07:09.960 Friday last month, ADP said there were only sixty thousand 0:07:10.280 --> 0:07:13.320 private sector jobs created and the government found one hundred 0:07:13.320 --> 0:07:17.440 and sixty seven thousand, So I don't know whether ADP 0:07:17.720 --> 0:07:19.920 or Jolts gives us a better idea of what's going on, 0:07:19.960 --> 0:07:21.880 But I don't think people are going to pay a 0:07:21.880 --> 0:07:24.560 whole lot of attention to either one once we get 0:07:24.560 --> 0:07:25.440 the Friday figures. 0:07:28.200 --> 0:07:31.720 Tariffs, Mike, we have so many tariffs are very hard 0:07:31.760 --> 0:07:35.360 to kind of keep them, keep them in focus here. 0:07:35.400 --> 0:07:36.240 There's so many out there. 0:07:36.280 --> 0:07:39.200 Do we have any idea kind of what percentage of 0:07:39.240 --> 0:07:41.640 the tariffs have found their way into the economy at 0:07:41.640 --> 0:07:44.040 this stage or is it just too early to tell here? 0:07:44.640 --> 0:07:46.680 Well, there have been some rough back of the envelope 0:07:46.720 --> 0:07:50.960 calculations that about what Bloomberg Economics has done one about 0:07:51.000 --> 0:07:54.280 six percent of US imports have been affected by tariffs, 0:07:54.320 --> 0:07:57.760 because we're looking at autos and we're looking at steel 0:07:57.800 --> 0:08:03.720 and aluminum. Basically, tariff's likely coming. The Congressional Budget Office 0:08:03.760 --> 0:08:06.680 just a short time ago put out a couple of 0:08:06.680 --> 0:08:09.920 new reports, one suggesting that the Big Beautiful Bill is 0:08:09.960 --> 0:08:14.720 going to add something like ten trillion dollars on to 0:08:15.000 --> 0:08:19.080 the overall deficits over a period of years, and then 0:08:19.600 --> 0:08:24.239 that the tariffs would reduce that by about three trillion. 0:08:25.120 --> 0:08:28.960 So if all the tariffs were carried through and that's 0:08:29.000 --> 0:08:31.840 the caveat that the CBO puts on their numbers today 0:08:32.160 --> 0:08:35.400 that they don't know what tariffs are actually going to 0:08:35.400 --> 0:08:37.880 be imposed. So that's the hard part for everybody at 0:08:37.920 --> 0:08:40.480 the moment is how much are we going to tariff people? 0:08:40.520 --> 0:08:42.160 And who are we going to tariff? 0:08:44.559 --> 0:08:46.680 Mike, what's what's that nerdy chart that you have on 0:08:46.720 --> 0:08:48.080 your desktop right now? 0:08:49.440 --> 0:08:49.760 Actually? 0:08:49.840 --> 0:08:54.720 I was looking at steel today and because of you, 0:08:54.800 --> 0:08:59.839 of course, Alex Steele, the fact that when Trump put 0:08:59.880 --> 0:09:03.920 on tariffs in twenty seventeen, we saw a short term 0:09:04.040 --> 0:09:08.040 rise in employment at steel mills, but then that rolled 0:09:08.040 --> 0:09:13.960 over and the number of jobs in the downstream people 0:09:13.960 --> 0:09:20.280 who use steel in their industries fabricated medical metal producers 0:09:20.320 --> 0:09:25.160 really fell significantly, lost about seventy five thousand jobs there. 0:09:25.559 --> 0:09:30.680 So it'll be something we're gonna have to watch those 0:09:30.760 --> 0:09:34.959 two numbers in Friday and the following month's reports on 0:09:35.600 --> 0:09:38.320 how the steel tariffs are affecting the economy. 0:09:40.559 --> 0:09:42.440 Yeah. I love that. I think I better come in 0:09:42.559 --> 0:09:45.319 on Friday, Big Day. Are you going to be off Friday? No, 0:09:45.480 --> 0:09:47.319 I think I'll be d I mean the thing is 0:09:47.720 --> 0:09:48.319 from what we've been. 0:09:48.320 --> 0:09:50.360 Learning, like maybe we'll get little cracks, but it's stillly 0:09:50.400 --> 0:09:51.920 going to be in the next two months, maybe that 0:09:51.960 --> 0:09:53.760 we'll get hard data. So I feel like you can 0:09:53.800 --> 0:09:56.000 still get that on the Jersey Shore, but it's gonna 0:09:56.000 --> 0:09:58.080 be rainy tvd oh well, then definitely come in from that. 0:09:58.160 --> 0:10:01.200 All right, thanks, Mike, really appreciate it. Michael mckei, Bloomberger 0:10:01.280 --> 0:10:03.040 National Economics and Policy Correspondent. 0:10:04.679 --> 0:10:08.360 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:08.440 --> 0:10:11.520 weekdays at ten am Eastern on Apple, Cocklay and Android 0:10:11.559 --> 0:10:14.840 Auto with the Bloomberg Business App. Listen on demand wherever 0:10:14.920 --> 0:10:18.000 you get your podcasts, or watch us live on YouTube. 0:10:18.320 --> 0:10:19.760 All right, let's pick up with one of the stocks 0:10:19.760 --> 0:10:22.439 that Norm was just talking about, and that is Wells 0:10:22.520 --> 0:10:25.240 Fargo taking a look at that asset cat finally being 0:10:25.360 --> 0:10:28.080 removed and what does it then mean after the seven 0:10:28.160 --> 0:10:30.960 year old cap is removed for CEO Charlie Sharp, joining 0:10:31.000 --> 0:10:34.800 us now is Hannah Levett, senior finance reporter from Bloomberg News. Now, Hannah, 0:10:34.920 --> 0:10:37.000 Wells Fargo's been working at this for a very very 0:10:37.000 --> 0:10:39.840 long time. How are they then positioned for this next 0:10:39.840 --> 0:10:40.640 stage of growth? 0:10:41.000 --> 0:10:43.920 Yeah, so this has truly been such a long saga 0:10:44.000 --> 0:10:47.440 for them. Like I started covering Wells Fargo more than 0:10:47.480 --> 0:10:51.600 seven years ago, they had just gotten put under this cap. 0:10:51.640 --> 0:10:54.000 At the time, I was still enjoying my mid twenties, 0:10:55.120 --> 0:10:59.120 and you know, now we are no longer there. For 0:10:59.240 --> 0:11:02.320 Charlie Sharp, this means that he can finally play offense. 0:11:02.400 --> 0:11:05.040 He can you know, they're not capped in size to 0:11:05.080 --> 0:11:07.839 their level at the end of twenty seventeen anymore. And 0:11:07.920 --> 0:11:10.920 remember that's been a huge deal for them along the way. 0:11:11.000 --> 0:11:13.520 I mean some of the businesses that he's marked for growth, 0:11:13.640 --> 0:11:18.640 like the trading business most notably, that's been constrained because 0:11:18.640 --> 0:11:20.600 it's more balance sheet heavy and they haven't been able 0:11:20.640 --> 0:11:23.760 to allocate that balance sheet because they're restricted. And like 0:11:23.960 --> 0:11:26.760 just for context, JP Morgan, the biggest US bank, has 0:11:27.160 --> 0:11:30.559 grown almost an entire Wells Fargo in terms of assets 0:11:30.559 --> 0:11:31.880 in the time that Wells has been capped. 0:11:32.040 --> 0:11:35.960 Wow, all right, hann I you know full discorder. I 0:11:35.960 --> 0:11:39.000 have my checking account with Wells Fargo, but I'm guessing 0:11:39.000 --> 0:11:40.800 the CEO and the management team there they want to 0:11:40.840 --> 0:11:42.560 do something more than that. They think they can do 0:11:42.559 --> 0:11:44.480 a little bit bigger and better than Paul's. And he's 0:11:44.520 --> 0:11:47.320 checking account. So what are some of the businesses you 0:11:47.360 --> 0:11:51.120 mentioned trading? Are there other eritors where they think they 0:11:51.160 --> 0:11:53.600 can really grow by allocating more capital there? 0:11:54.160 --> 0:11:59.160 Yeah, absolutely, so the businesses that Charlie Sharff marked for growth, 0:11:59.520 --> 0:12:01.320 you know in time while he was running the firm, 0:12:01.360 --> 0:12:05.000 but it was still under the cap where investment, banking 0:12:05.080 --> 0:12:09.640 and trading and wealth management and credit card. But he 0:12:09.720 --> 0:12:12.760 was saying on CNBC today that virtually every business aside 0:12:12.760 --> 0:12:15.360 from mortgage, which they've said they're shrinking, and remember wells 0:12:15.360 --> 0:12:17.040 Farga used to be huge, and mortgage at one point 0:12:17.240 --> 0:12:19.280 they were churning out one in every three home loans 0:12:19.320 --> 0:12:22.800 in the country. Every business other than that should grow 0:12:22.880 --> 0:12:24.760 now and they have room to do that. But I 0:12:24.800 --> 0:12:29.760 think those businesses where they've already said that they're targeting growth, 0:12:29.760 --> 0:12:33.600 that may be where the earliest moves are. You know, 0:12:33.640 --> 0:12:37.120 we've reported that they're working on a high end credit card, 0:12:37.240 --> 0:12:42.160 so that could be something that people see. But yeah, 0:12:42.160 --> 0:12:43.840 so it really just it goes across all of those 0:12:43.880 --> 0:12:48.920 and beyond now because they don't have this constraint anymore, so. 0:12:49.040 --> 0:12:51.440 How quickly can they scale in the other parts of 0:12:51.440 --> 0:12:52.280 their business. 0:12:52.880 --> 0:12:55.600 Yeah, Well, it's an interesting question, right because we've seen, 0:12:56.200 --> 0:12:58.520 you know, the tales of banks trying to grow too 0:12:58.559 --> 0:13:02.560 fast and then having you know, a calamitous blow up, 0:13:02.559 --> 0:13:05.400 and so that's something that they definitely want to avoid. 0:13:05.400 --> 0:13:07.320 And Charlie Sharff has talked about that that it's not 0:13:08.320 --> 0:13:11.760 like an on switch day one, but it does give 0:13:11.800 --> 0:13:15.000 them more flexibility so they can you know, the most 0:13:15.000 --> 0:13:17.559 immediate thing is the trading business, where they just have 0:13:17.679 --> 0:13:22.080 capacity today that they didn't have yesterday. But besides that, 0:13:22.120 --> 0:13:28.000 it's more being able to lean into more enthusiastically those 0:13:28.040 --> 0:13:31.760 growth initiatives that they've already kind of outlined. 0:13:33.040 --> 0:13:37.120 Right, So, Hannah, they now have the regulatory capability to 0:13:37.160 --> 0:13:40.760 maybe do more, to maybe grow a little bit more quickly. 0:13:41.080 --> 0:13:42.760 Did they have the balance sheet to do that? Did 0:13:42.760 --> 0:13:43.960 they have the capital to do that? 0:13:44.400 --> 0:13:46.319 Yeah, they have a ton of excess capital. And that's 0:13:46.360 --> 0:13:49.520 been a theme throughout. I mean even in the earliest 0:13:49.600 --> 0:13:53.200 days of the asset cap like they couldn't deploy that capital, 0:13:53.280 --> 0:13:57.559 so they gave investors a bigger dividend and more buybacks 0:13:57.640 --> 0:13:59.680 than they were expecting. It was sort of like a 0:14:01.000 --> 0:14:02.920 you wouldn't think that would be the outcome, but it 0:14:03.080 --> 0:14:07.599 was at the time so they've had excess capital, and 0:14:07.920 --> 0:14:10.520 also because the banks in general were preparing for the 0:14:10.559 --> 0:14:15.200 possibility of tougher capital rules that have not panned out, 0:14:15.240 --> 0:14:16.720 so they were a lot of them have been hoarding 0:14:16.760 --> 0:14:18.559 capital anyway, sitting on a bunch of extra. 0:14:20.640 --> 0:14:22.640 Well, we're seeing in Wall Street it's definitely a competition 0:14:22.720 --> 0:14:25.040 for talent, particularly if you wrap in hedge funds as 0:14:25.040 --> 0:14:27.160 well as huge ass at managers. 0:14:26.760 --> 0:14:27.600 Are private equity. 0:14:27.920 --> 0:14:29.360 Can weils Haargo play in that game? 0:14:30.360 --> 0:14:34.080 Yeah, they already have been. I mean they hired Fernando 0:14:34.200 --> 0:14:37.360 Rivas who is the head of the corporate investment bank there. 0:14:38.120 --> 0:14:41.880 He was a major hire from JP Morgan, so that 0:14:41.880 --> 0:14:44.160 that was huge for them. And you know they've made 0:14:44.240 --> 0:14:48.120 other hires over the years. Doug Bronstein is there, another 0:14:48.160 --> 0:14:53.960 former JPM executive and he's vice chair. They have Vary 0:14:54.000 --> 0:14:56.320 Summers running wealth, so they have you know, they've been 0:14:56.360 --> 0:14:58.560 able to get talent at the highest level and then 0:14:58.680 --> 0:15:01.920 you know even further down as well. 0:15:02.000 --> 0:15:03.560 All Right, I think the street kind of like this. 0:15:03.600 --> 0:15:05.760 Stocks up about seven tens to one percent today, It's 0:15:05.840 --> 0:15:08.120 up eight and a half percent year to date, up 0:15:08.160 --> 0:15:10.160 thirty percent over the trailing twelve months, so it looks 0:15:10.200 --> 0:15:11.800 like this street is kind of warming up to a 0:15:11.840 --> 0:15:13.440 story which has been going to middle of the road. 0:15:13.640 --> 0:15:15.680 Given some of the regulatory constraints, will stay on top 0:15:15.720 --> 0:15:15.880 of that. 0:15:16.240 --> 0:15:16.680 He a lovit. 0:15:16.720 --> 0:15:18.840 Thanks so much for joining us at Bloomberg Senior financi 0:15:18.840 --> 0:15:20.800 reporter on Wells Fargo. 0:15:22.120 --> 0:15:25.800 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:15:25.880 --> 0:15:29.000 weekdays at ten am Eastern on Apple Cocklay and Android 0:15:29.000 --> 0:15:32.280 Auto with the Bloomberg Business App. Listen on demand wherever 0:15:32.360 --> 0:15:36.040 you get your podcasts, or watch us live on YouTube during. 0:15:35.960 --> 0:15:38.840 Alex Seal alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 0:15:38.920 --> 0:15:41.680 We are broadcasting to live from the Galor National Convention 0:15:41.840 --> 0:15:45.400 Center right here in Maryland. We're overlooking the Potomac. We 0:15:45.440 --> 0:15:48.480 are at BNY Insight twenty twenty five as we talk 0:15:48.480 --> 0:15:51.480 about wealth management and all the tools and tricks that 0:15:51.880 --> 0:15:55.640 can be used to help navigate these markets. We're also 0:15:55.960 --> 0:15:58.480 continuing to take a check in here on what's happening 0:15:58.520 --> 0:16:01.400 in the overall market. We turned out to today's a 0:16:01.440 --> 0:16:05.800 Big Take story. It talks about Tesla and what autonomous 0:16:05.880 --> 0:16:09.680 driving and robotaxis say in Austin as Elon Musks keeps 0:16:09.680 --> 0:16:13.400 talking about them, are talking about investigating whether the system 0:16:14.040 --> 0:16:16.560 is actually too dangerous even if you have a human 0:16:16.680 --> 0:16:20.240 behind the wheel. Joining us now is Global Autos editor 0:16:20.360 --> 0:16:23.320 Craig Trudell. Craig, So, here's the title of the big take, 0:16:23.360 --> 0:16:26.480 A fatal Tesla crash shows the limits of full self 0:16:26.560 --> 0:16:30.040 driving walk us through the details of what the issues 0:16:30.080 --> 0:16:33.000 are surrounding completely autonomous vehicles. 0:16:34.400 --> 0:16:36.840 Yeah, so, I guess maybe the thing to start with 0:16:36.960 --> 0:16:39.200 is the Teslas that you can buy today that are 0:16:39.240 --> 0:16:42.040 on the road now are not that right, They are 0:16:42.040 --> 0:16:46.840 not autonomous. You can pay extra for a system called 0:16:46.880 --> 0:16:50.920 full self driving, and yet it's a miss snowmer. It's 0:16:51.080 --> 0:16:53.080 a system that you have to pay attention to at 0:16:53.080 --> 0:16:57.240 all times. You know, if you get into a crash, 0:16:57.400 --> 0:17:01.000 it is on you. And we've seen that, you know, 0:17:01.080 --> 0:17:04.399 play out. When Tesla customers have you know, tried to 0:17:04.400 --> 0:17:07.159 come after the company, the company says, look, you know, 0:17:07.240 --> 0:17:10.440 we we warned you. We told you that you know 0:17:10.680 --> 0:17:14.639 you're you're responsible for driving while using this system. The 0:17:14.680 --> 0:17:17.200 company is trying to make this leap that's been trying 0:17:17.200 --> 0:17:19.840 to make the sleep for years to eventually get to 0:17:19.880 --> 0:17:22.119 a point where you do not have to to supervise 0:17:22.240 --> 0:17:25.680 and you know, even to take it further than that, 0:17:25.920 --> 0:17:28.440 you know, take the human out from behind the wheel altogether. 0:17:29.080 --> 0:17:32.240 And we hear Musk, you know, talk about that quite 0:17:32.240 --> 0:17:34.760 a bit lately because it's something that they're actually trying 0:17:34.800 --> 0:17:37.960 to commercialize, even just in the next matter of you know, 0:17:38.119 --> 0:17:42.000 next week or so. There's a lot of questions about 0:17:42.040 --> 0:17:45.080 how exactly they intend to do that, whether they can 0:17:45.119 --> 0:17:48.680 do it, especially after he's predicted, you know, year after 0:17:48.760 --> 0:17:51.000 year that they're on the cusp of doing it. And 0:17:51.200 --> 0:17:53.840 part of the reason there are doubts is is because 0:17:53.920 --> 0:17:56.760 of the hardware. And I think that's kind of an 0:17:56.800 --> 0:18:01.359 important aspect of today's story is is this particular crash involves, 0:18:01.800 --> 0:18:04.680 you know, an incident where a driver was using full 0:18:04.720 --> 0:18:09.200 self driving driving into the sun, and that appeared to 0:18:09.520 --> 0:18:14.280 play a part in the crash, which resulted in a fatality, 0:18:14.320 --> 0:18:17.960 and it led to a federal investigation that is ongoing. 0:18:20.640 --> 0:18:23.800 I mean, this is all very much feels as part 0:18:23.800 --> 0:18:25.879 of the growing pains as we kind of understand this 0:18:25.960 --> 0:18:29.600 technology and how it works itself out. So what are 0:18:29.600 --> 0:18:32.160 the steps that Tesla's taking and that the regulators are 0:18:32.160 --> 0:18:32.920 taking at this time? 0:18:34.560 --> 0:18:37.480 Yeah, so you know, we should acknowledge that this incident 0:18:37.560 --> 0:18:41.520 happened in November twenty twenty three. You know, Tesla has 0:18:41.560 --> 0:18:46.240 has changed. They've they've made upgrades both to hardware and software. 0:18:46.880 --> 0:18:50.479 You know, hardware for certain customers, they should say, but 0:18:50.640 --> 0:18:55.639 you know, in terms of their approach to the sensor 0:18:55.640 --> 0:18:59.320 system for their vehicles, Elon Musk has been you know, 0:18:59.400 --> 0:19:02.480 really sort of down a limb and having this view 0:19:02.520 --> 0:19:06.439 that all you need is cameras and company companies that 0:19:06.920 --> 0:19:09.159 are also in this space. I think the one people 0:19:09.400 --> 0:19:13.600 recognize the most is Weymo, the Google company, and they 0:19:13.720 --> 0:19:16.680 use a mix of camera, radar and wide R and 0:19:17.040 --> 0:19:20.280 their sensor set is much more expensive. It's more extensive. 0:19:20.480 --> 0:19:22.479 You know, these sensors are placed all over the vehicle. 0:19:23.920 --> 0:19:27.159 But you know, the sort of bet here on the 0:19:27.160 --> 0:19:29.520 part of Weimo is that is worth it. It will 0:19:29.560 --> 0:19:32.439 mean this system is safer. What Musk has tried to 0:19:32.480 --> 0:19:35.879 do is go with the cheaper route, go with the 0:19:36.880 --> 0:19:38.879 you know system that he can afford to put in 0:19:38.920 --> 0:19:41.840 every Tesla, and make this bet that you know, he 0:19:41.920 --> 0:19:46.240 can develop his way to autonomy faster by sort of 0:19:46.320 --> 0:19:49.959 leveraging the broader Tesla fleet. Even if it means putting 0:19:50.080 --> 0:19:52.840 you know, cars on the road that you know, draw 0:19:52.880 --> 0:19:55.879 scrutiny from federal regulators as to whether or not that 0:19:56.040 --> 0:20:00.520 this is you know, unreasonably unsafe. 0:20:01.720 --> 0:20:05.879 So, Craig, I think Elon Musk is back at the company. 0:20:06.880 --> 0:20:07.560 What does that mean? 0:20:07.680 --> 0:20:10.359 I mean, are you hearing anything like, Okay, now we 0:20:10.359 --> 0:20:13.399 can get back on track, Now we can really move forward, 0:20:13.400 --> 0:20:15.280 maybe at you know, a higher velocity. 0:20:15.320 --> 0:20:15.880 What's that mean? 0:20:17.560 --> 0:20:19.800 Yeah, I'm you know, I think it's difficult to tell 0:20:19.840 --> 0:20:23.119 at this point because he's kind of coming back to 0:20:23.240 --> 0:20:27.199 business means coming back to so many businesses, right, and 0:20:27.280 --> 0:20:30.439 so on a day to day Yeah, we're you know, 0:20:30.640 --> 0:20:34.439 we're seeing him travel to to his various companies, you know, 0:20:34.640 --> 0:20:38.040 devoting some time and attention to to them. But it's 0:20:38.080 --> 0:20:40.800 not as though he's sort of one hundred percent, uh, 0:20:41.119 --> 0:20:44.719 you know, focusing in on Tesla and neglecting all of 0:20:44.720 --> 0:20:48.320 his other businesses. We see him you know, regularly engaging 0:20:48.400 --> 0:20:52.480 with you know, users on x about you know, troubleshooting 0:20:52.800 --> 0:20:55.800 problems that they have with that service. You know, I 0:20:55.840 --> 0:21:00.480 would say he is you know more actively engaging there 0:21:00.560 --> 0:21:05.159 on Tesla matters and definitely is trying to sort of 0:21:05.160 --> 0:21:07.840 send this signal that you know, okay, it's it's time 0:21:07.880 --> 0:21:10.679 to get back to business here. But whether or not 0:21:10.760 --> 0:21:13.320 that's you know, resulting in sort of tangible changes at 0:21:13.320 --> 0:21:14.880 the company, I think remains to be seen. 0:21:17.359 --> 0:21:21.119 I guess, I mean quickly twenty seconds. What's the rush 0:21:21.160 --> 0:21:22.280 for autonomous driving? 0:21:24.359 --> 0:21:28.359 You know, I think forty thousand people die on US 0:21:28.440 --> 0:21:30.880 roads every year, right, and so the rush, of course 0:21:30.960 --> 0:21:33.919 is to bend that, you know, to change that. And 0:21:34.440 --> 0:21:36.679