Latest / Bloomberg Intelligence / Investors Should Short Tesla At This Price: Mainstay's Kudla

Transcript

Investors Should Short Tesla At This Price: Mainstay's Kudla · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. If
• 0:32
  Speaker 1: you are like me and all of my friends, we
• 0:35
  Speaker 1: have so much money we don't know what to do
• 0:36
  Speaker 1: with it. To help us out, We've brought in David Kudla.
• 0:39
  Speaker 1: He's the CEO and chief investment strategist at Mainstay Capital Management,
• 0:44
  Speaker 1: which manages more than two billion dollars in Michigan. Just
• 0:47
  Speaker 1: above the thumb of the MIT. Dave, Welcome to Bloomberg Radio.
• 0:53
  Speaker 1: I hear you have some interesting thoughts on large cap
• 0:56
  Speaker 1: versus small cap. I do uh good to speak with you. Kim. Yeah.
• 1:01
  Speaker 1: We we have seen a transition in the markets this year.
• 1:06
  Speaker 1: In we have um seen a increase in the interest
• 1:13
  Speaker 1: in small cap stocks for several reasons. UM One is
• 1:18
  Speaker 1: primarily we started out the year with low valuations of
• 1:21
  Speaker 1: small cap relative to large cap. We have the tax
• 1:25
  Speaker 1: reform that small caps benefit more versus large caps, and
• 1:31
  Speaker 1: what has been in the news a lot lately are
• 1:33
  Speaker 1: the tariffs that multinational conglomerates will be impaired by, both
• 1:39
  Speaker 1: in sales and their supply chain. Small caps tend to
• 1:43
  Speaker 1: be more domestically oriented and therefore stand to do better.
• 1:46
  Speaker 1: And we've seen that in the UH improvement the Russell
• 1:50
  Speaker 1: two thousand here over the past few months, and how
• 1:53
  Speaker 1: all small caps have done David uh pim fox here. Um,
• 1:57
  Speaker 1: you were speaking with Bob every my co host and
• 2:00
  Speaker 1: colleague during the broadcast, and I want to continue on
• 2:04
  Speaker 1: his theme of small caps, but ask you are they
• 2:08
  Speaker 1: already too expensive and what area of the small cap
• 2:11
  Speaker 1: space is worth looking at. We don't think they're too expensive.
• 2:16
  Speaker 1: We know that small caps typically trade to a premium
• 2:18
  Speaker 1: to large cap stocks, and there are just so many
• 2:21
  Speaker 1: fundamental factors that are UH supporting that underlying story for
• 2:27
  Speaker 1: small caps going forward. Uh. We like technology, technology sector,
• 2:32
  Speaker 1: and actually like technology sector both in large cap and
• 2:36
  Speaker 1: small cap and in consumer discretionary. You talked to the
• 2:40
  Speaker 1: consumer discretionary is that because you think people are going
• 2:43
  Speaker 1: to have more money left over after they pay for
• 2:45
  Speaker 1: higher gasoline prices. Good question. Yeah, we've got higher gasoline
• 2:51
  Speaker 1: prices and maybe some more price higher prices coming on, uh,
• 2:55
  Speaker 1: certain goods as tariffs impact the cost of the end product.
• 3:00
  Speaker 1: But the when we look at at the areas in
• 3:03
  Speaker 1: consumer discretionary, say retailing, and you know what we look
• 3:08
  Speaker 1: for going forward, uh, in this market environment, as this
• 3:12
  Speaker 1: bull market is aging becoming very long in the tooth
• 3:16
  Speaker 1: now entering its tenth here we look for opportunities where
• 3:22
  Speaker 1: we can find returns or find alpha that is not
• 3:27
  Speaker 1: dependent on the markets just simply going higher or index
• 3:30
  Speaker 1: funds simply going higher. So in retailing, one of the
• 3:34
  Speaker 1: areas is an E t F clicks c l I X,
• 3:38
  Speaker 1: which essentially is long e commerce in short brick and
• 3:43
  Speaker 1: mortar stores, a trend that we all see happening with
• 3:47
  Speaker 1: what Amazon is doing versus the local shopping mall or
• 3:51
  Speaker 1: big box retailer. It's no longer there when that's that
• 3:56
  Speaker 1: e t F, that is a long short e t F.
• 3:59
  Speaker 1: When E comm orse wins, it wins. When the big
• 4:02
  Speaker 1: the U, the big store, big box stores and shopping
• 4:07
  Speaker 1: mall's loose brick and mortar, it wins. That fund is
• 4:10
  Speaker 1: up about yere today, Dave, I think this moll market
• 4:15
  Speaker 1: is defying all actuarial tables. Um. The UH interest rates
• 4:21
  Speaker 1: are also a you know, front front burner right now.
• 4:24
  Speaker 1: Are there any funds out there that you would recommend
• 4:26
  Speaker 1: that would be advantageous in this in this environment. Well, yeah,
• 4:32
  Speaker 1: we actually have been short bond so UH and this
• 4:38
  Speaker 1: is this is an aggressive play, but d LBS, which
• 4:43
  Speaker 1: is an iPath US treasury long bond bear treasury exchange
• 4:47
  Speaker 1: traded notes. Basically we are betting on not to be unpatriotic,
• 4:54
  Speaker 1: but betting on a rise in interest rates. That funds
• 4:57
  Speaker 1: doing pretty well this year up about seventeen or ut.
• 5:00
  Speaker 1: It is a very volatile fund. There are ways you
• 5:02
  Speaker 1: can play. This is a more conservative manner. But essentially
• 5:05
  Speaker 1: our theme has been avoid interest rate sensitivity. Avoid is
• 5:09
  Speaker 1: strate sensitivity in your income investments and in other securities. UM.
• 5:14
  Speaker 1: So that takes us to UH mortgage backed securities which
• 5:18
  Speaker 1: do wellness environment, and floating rate funds which adjusts their
• 5:22
  Speaker 1: yields every thirty to ninety days, floating rate dead instruments
• 5:26
  Speaker 1: which do well in in a in a more conservative way,
• 5:29
  Speaker 1: but key to that is avoiding interest rate sensitive bonds
• 5:33
  Speaker 1: interest rate sensitive securities because we know what cycle the
• 5:37
  Speaker 1: FED is on. We know where they're headed, and we
• 5:40
  Speaker 1: want to avoid rising even though rates there will be volatility.
• 5:44
  Speaker 1: Rates are a little bit lower now than where they
• 5:46
  Speaker 1: were a couple of months ago, but the trend from
• 5:50
  Speaker 1: a ten year yield of one point three about two
• 5:54
  Speaker 1: years ago, we're more than double that now. I gotta
• 5:58
  Speaker 1: ask you about Tesla on a week where we learned
• 6:01
  Speaker 1: that they did produce that five thousand and thirty one
• 6:05
  Speaker 1: Model three sedans. What's your view on Tesla and how
• 6:09
  Speaker 1: are you implementing your strategy? You know, the interesting thing
• 6:14
  Speaker 1: about what just happened with Tesla makes you think about
• 6:17
  Speaker 1: a runner. I look at the traditional automakers is running
• 6:20
  Speaker 1: a marathon. They have a good plan, they have a
• 6:23
  Speaker 1: steady pace to win a long term race. And I
• 6:26
  Speaker 1: look at Tesla as a sprinter trying to run a marathon.
• 6:31
  Speaker 1: So at the end of each quarter they get into
• 6:34
  Speaker 1: this sprint mode to meet some arbitrary self imposed target
• 6:39
  Speaker 1: this last quarter of five thousand vehicles in a week,
• 6:42
  Speaker 1: they stage everything, get ready to go build five thousand
• 6:46
  Speaker 1: thirty one cars. Everybody claps their hands. Now they've got
• 6:50
  Speaker 1: to take a three day rest. That's no way to
• 6:52
  Speaker 1: win a marathon. And when we look at Tesla and
• 6:56
  Speaker 1: when we see the numbers in a month, we're going
• 6:59
  Speaker 1: to re lies how much uh they compromised quality, how
• 7:04
  Speaker 1: much they increased cost to build to make that build rate?
• 7:07
  Speaker 1: They made five thousand, They made five thousand vehicles one week,
• 7:11
  Speaker 1: So what what are the quality of those cars? What
• 7:14
  Speaker 1: has cost of making those cars? And when they get
• 7:17
  Speaker 1: to a sustainable rate, what is the competition coming in?
• 7:20
  Speaker 1: So I think for investors at this price, short it
• 7:24
  Speaker 1: and is that what you're doing? Absolutely is it expensive?
• 7:30
  Speaker 1: Is the is it expensive to short? It depends on
• 7:34
  Speaker 1: what your time horizon is. You know, if you look
• 7:37
  Speaker 1: at people want to look at it at Tesla as
• 7:39
  Speaker 1: a technology company, it is not. It is an automaker. Now, yeah,
• 7:44
  Speaker 1: they have some other technologies that don't really add much
• 7:46
  Speaker 1: to the bottom line, and and their solar business unit
• 7:50
  Speaker 1: has its own issues right now with the service center
• 7:55
  Speaker 1: or the centers have been closing around the country. But
• 7:57
  Speaker 1: if we look at their auto making business, they are
• 8:01
  Speaker 1: terrible at it. They are absolutely terrible at manufacturing automobiles.
• 8:06
  Speaker 1: And what we're going to see in a month is
• 8:09
  Speaker 1: how that's affect the financials. What the warranty costs are
• 8:12
  Speaker 1: that they're occurring. Ellen must talked about production. Hell, we
• 8:16
  Speaker 1: know now he's gonna David, We've got to leave it there.
• 8:19
  Speaker 1: David could La, Chief Executive in chief investment strategist Mainstake Capital,
• 8:24
  Speaker 1: David Understore Couldla at Twitter, China trade wars, the Chinese currency.
• 8:43
  Speaker 1: Here to tell us more, Bob Sinch, Global strategist, Amirs
• 8:47
  Speaker 1: Pierre Pont Securities, and of course joining me here in studios,
• 8:50
  Speaker 1: my co host and colleague Bob every all right, Bob,
• 8:53
  Speaker 1: since show. At least they give us some background on
• 8:56
  Speaker 1: what has been going on with the Chinese yuan versus
• 8:58
  Speaker 1: the US dollar and role in these trade negotiations. Well,
• 9:04
  Speaker 1: good morning, guys. It's a dollar. China is up about
• 9:06
  Speaker 1: four in the last three weeks, which you know doesn't
• 9:10
  Speaker 1: sound like a huge amount, but um it is one
• 9:14
  Speaker 1: of the worst performing UM currencies over that timeframe, UM,
• 9:18
  Speaker 1: at least amongst the uh you know, the thirty major
• 9:21
  Speaker 1: currencies in the world track by Bloomberg. And I think
• 9:25
  Speaker 1: most importantly for US is if you look at movements
• 9:28
  Speaker 1: in the dollar versus the Chinese currency and you line
• 9:33
  Speaker 1: that up with the movement of the dollar versus major currencies,
• 9:36
  Speaker 1: and there's actually been a pretty good correlation going back
• 9:39
  Speaker 1: to at least the beginning of two thousand sixteen. Now
• 9:44
  Speaker 1: why does this happen, Because the Chinese have been saying
• 9:46
  Speaker 1: they're targeting a basket of currencies. So when the dollar
• 9:50
  Speaker 1: goes up against the euro and the pound, in the
• 9:53
  Speaker 1: yen and the like, if if it if it doesn't
• 9:55
  Speaker 1: go up against the Chinese currency, that's actually an appreciation
• 10:00
  Speaker 1: of the Chinese currency, which is not what they want
• 10:03
  Speaker 1: to do. They want to stabilize it. So we've seen
• 10:06
  Speaker 1: this correlation, and interestingly, in the run up to the
• 10:12
  Speaker 1: summit with North Korea and discussions about tariffs, the movement
• 10:17
  Speaker 1: in in dollar versus the yuan was only about half
• 10:22
  Speaker 1: of what we might have expected a movement up given
• 10:26
  Speaker 1: the overall strength of the dollar. So in the early
• 10:29
  Speaker 1: part of this process, in the last couple of months,
• 10:32
  Speaker 1: it actually looked like the Chinese were exhibiting some restraint
• 10:35
  Speaker 1: on the amount of movement up in the dollar versus
• 10:38
  Speaker 1: the yu want um. Starting June eleven, right after the
• 10:42
  Speaker 1: President talked about finding another two billion of Chinese products um,
• 10:48
  Speaker 1: that's the three week period into which the dollar has
• 10:52
  Speaker 1: now moved up four percent against the Chinese currency. And
• 10:56
  Speaker 1: you know, I was born at night, but not last night. Um,
• 10:59
  Speaker 1: I find that a little coincidental and a little suspicious,
• 11:04
  Speaker 1: Bob staying on the on the uh yuan, I am
• 11:09
  Speaker 1: been reading about how they're they're seeking to stabilize it,
• 11:12
  Speaker 1: as you said, But if we are in a trade
• 11:14
  Speaker 1: war and they run out of American products to to
• 11:19
  Speaker 1: impose tariffs on, why wouldn't the Chinese want to continue
• 11:23
  Speaker 1: the devaluation of their currency? Well, well, I think they would.
• 11:27
  Speaker 1: I mean clearly they said that. You know, they have
• 11:30
  Speaker 1: many levers that they can they can pull, and I
• 11:33
  Speaker 1: think the two that went unmentioned were the currency um
• 11:39
  Speaker 1: and ownership of treasuries at a time when the treasury
• 11:42
  Speaker 1: is going to be issuing increasing amounts of debt. You know,
• 11:46
  Speaker 1: I would consider that an extreme option because it hurts
• 11:49
  Speaker 1: them as well. The reason I think they went the
• 11:52
  Speaker 1: currency route is because the impact of the tariffs is
• 11:58
  Speaker 1: going to impact you know, the act of the terroffs
• 12:00
  Speaker 1: falls on the corporate sector in China, where is there
• 12:04
  Speaker 1: a lot of debt, where is they're kind of achilles heel.
• 12:07
  Speaker 1: People believe it's a corporate bond market. So profits have
• 12:10
  Speaker 1: been pretty good. Obviously, they get squeezed in certain sectors
• 12:13
  Speaker 1: as a result of the tariffs. So I think from
• 12:17
  Speaker 1: a from a policy perspective, moving the currency lower actually
• 12:22
  Speaker 1: made sense domestically, inflation pressures aren't horrible, um and um
• 12:29
  Speaker 1: And as a result, I think that that you know,
• 12:33
  Speaker 1: it's a it's it's a sensible policy move in the
• 12:36
  Speaker 1: sense that it will help the corporate sector widened profit
• 12:39
  Speaker 1: margins at a time when that's an important thing for
• 12:41
  Speaker 1: them to be trying to accomplish. Bob Sinch the Chinese currency,
• 12:48
  Speaker 1: if it continues to demonstrate weakness, would that be a
• 12:51
  Speaker 1: trigger for equity sell off? And I mean you see
• 12:55
  Speaker 1: also stock selling off in China. Yeah, it has in
• 12:59
  Speaker 1: the past, um and And certainly you know the spasms
• 13:04
  Speaker 1: a few years ago associated with fears of a quote
• 13:06
  Speaker 1: unquote China devaluation. We're pretty severe um at this juncture.
• 13:13
  Speaker 1: You know, you know what what matters anymore? You know,
• 13:17
  Speaker 1: we've had we've had so many threats of tariffs and
• 13:19
  Speaker 1: counter tariffs and trade barriers and restrictions and you know,
• 13:23
  Speaker 1: tearing up treaties that I think the markets have become
• 13:26
  Speaker 1: a little bit more immune um to these announcements, in
• 13:30
  Speaker 1: these developments, and certainly, if you know, I would have
• 13:34
  Speaker 1: thought so. But given the movement we've had in the
• 13:36
  Speaker 1: last three weeks and a lack of response, I'm not
• 13:39
  Speaker 1: sure um that this alone will trigger much of a
• 13:44
  Speaker 1: risk aversion move um in markets. And you know, again,
• 13:48
  Speaker 1: I think part of this maybe to help Chinese companies
• 13:52
  Speaker 1: and and potentially help their um, you know, their their
• 13:56
  Speaker 1: equity market. I mean, this is a form of monetary
• 13:59
  Speaker 1: easing along with the recent cuts in the reserve requirement
• 14:02
  Speaker 1: ratios in China. Thank you very much for being with us.
• 14:06
  Speaker 1: Bob Sinch, Global Strategist amerst pure Pont Securities, best wishes
• 14:10
  Speaker 1: for a wonderful July four holiday. We appreciated your appearance
• 14:15
  Speaker 1: here on Bloomberg. Hey everybody, I am not Lisa a Brahma.
• 14:32
  Speaker 1: It's I'm Bobby every and I'm sitting in for Lisa
• 14:34
  Speaker 1: with Pim Fox. You're listening to Bloomberg Radio. It's really
• 14:39
  Speaker 1: really hot at Bloomberg World headquarters today. It's over a
• 14:42
  Speaker 1: gazillion degrees and Alexa turn on the air conditioner. Brian
• 14:47
  Speaker 1: Manning is here to talk about the smart home he's
• 14:49
  Speaker 1: president and co founder of Centric Digital, And Brian, what
• 14:53
  Speaker 1: are some of that you were just saying offline here
• 14:57
  Speaker 1: that companies are doing better? Who that that a stake
• 15:00
  Speaker 1: in the in the online world? What are what are
• 15:03
  Speaker 1: some of the companies that are the leaders in this? Sure?
• 15:05
  Speaker 1: And and the way we get to that is, you know,
• 15:08
  Speaker 1: our company, Centric Digital measures digital intelligence companies. So we
• 15:12
  Speaker 1: look at both the companies that started only as digital
• 15:14
  Speaker 1: as well as the ones that are entering the space.
• 15:17
  Speaker 1: And you know, we have a comprehensive practice that looks
• 15:22
  Speaker 1: at all the best practices within digital and assess switch
• 15:25
  Speaker 1: companies are doing it well and not so. Smart homes
• 15:27
  Speaker 1: certainly a major theme, but there are many others going
• 15:30
  Speaker 1: on right now as well throughout technology, AI, cloud computing, robotics.
• 15:35
  Speaker 1: These are all new technologies that are going to just
• 15:38
  Speaker 1: change the face of a lot of traditional industries. Tell
• 15:41
  Speaker 1: us about the connected home and the Internet of things
• 15:44
  Speaker 1: and how you believe that is going to play out? Sure, Um,
• 15:47
  Speaker 1: you know already, Uh, there's a lot of companies that
• 15:50
  Speaker 1: have automated you know, controlling your lights, controlling your climate
• 15:54
  Speaker 1: in your home. Uh, your kitchen impliances are now starting
• 15:57
  Speaker 1: to automate some of the tasks that you would otherwise
• 16:00
  Speaker 1: is do manually. There's nothing worse than leaving your home
• 16:02
  Speaker 1: and uh wondering if you left your lights on, or
• 16:05
  Speaker 1: wondering if the air conditioners on or on a hot
• 16:08
  Speaker 1: daylight today, not getting not having it on by the
• 16:10
  Speaker 1: time you get home. So those types of features, traditional
• 16:16
  Speaker 1: appliances and and things that are in your home are
• 16:18
  Speaker 1: now starting to connect to the internet even connect to
• 16:21
  Speaker 1: each other and talk to each other and control control
• 16:24
  Speaker 1: different Just a question that are those kinds of connections
• 16:28
  Speaker 1: Are they going to cost more money? Uh? So far. No,
• 16:31
  Speaker 1: that the the appliances and and so on themselves, they
• 16:34
  Speaker 1: may be priced a little bit differently with those capabilities.
• 16:37
  Speaker 1: Usually it's higher end appliances that will have WiFi or
• 16:41
  Speaker 1: Internet of Things connection UM. And there are lots of
• 16:44
  Speaker 1: free services like UH I, F T, T T out
• 16:48
  Speaker 1: there that you can connect these devices to actually interoperate
• 16:51
  Speaker 1: with each other. You were saying that the uh, there's
• 16:55
  Speaker 1: nothing worse than not having the air conditioning on when
• 16:57
  Speaker 1: you come home, But there to me, there is You know,
• 17:00
  Speaker 1: regular listeners of Bloomberg Radio know what a pessimist I am.
• 17:04
  Speaker 1: What are some of the security issues and how is
• 17:07
  Speaker 1: the industry addressing them. Sure, with any new technologies, there's
• 17:11
  Speaker 1: always going to be security concerns and things that maybe
• 17:14
  Speaker 1: the technology builders haven't thought of and and ultimately they
• 17:18
  Speaker 1: get to these. I mean, we just saw recently issues
• 17:20
  Speaker 1: with Facebook with its data situation in Cambridge Analytica. Um.
• 17:25
  Speaker 1: You know, I think as things come up, the companies
• 17:29
  Speaker 1: figure out the blocks. It's the same thing that happened
• 17:31
  Speaker 1: with email where people were getting spoofed and spam and
• 17:34
  Speaker 1: you know, companies that provide those services have built more
• 17:37
  Speaker 1: infrastructure in there to help protect consumers, but some of
• 17:40
  Speaker 1: it also is on the consumer themselves to learn how
• 17:43
  Speaker 1: to protect themselves. But maybe you can reassure me about
• 17:45
  Speaker 1: you know, my worst case scenario is the grid, is
• 17:48
  Speaker 1: the electrical electricity grid is hacked. What kinds of safeguards
• 17:53
  Speaker 1: are out there, and that's bigger than just the devices
• 17:56
  Speaker 1: in your home that that's a challenge with our infrastructure
• 17:59
  Speaker 1: and the entry in general. Um. You know, there are
• 18:02
  Speaker 1: a lot of people in different parts of the country
• 18:03
  Speaker 1: moving off the grid to solar powered and and you know,
• 18:07
  Speaker 1: their own power source. So that's one way that they
• 18:09
  Speaker 1: can protect themselves. Uh, certainly those technologies have the ability
• 18:13
  Speaker 1: to turn themselves off of the Internet if they're self contained.
• 18:17
  Speaker 1: But over time, Um, you know, there's a huge business
• 18:19
  Speaker 1: out there around cybersecurity and all of that. For all
• 18:22
  Speaker 1: of these types of companies, Who do you believe is
• 18:25
  Speaker 1: doing the best job right now of integrating all of
• 18:28
  Speaker 1: these technologies and making them available to consumers. Am I
• 18:31
  Speaker 1: going to say Amazon again? Well, Amazon was certainly first
• 18:34
  Speaker 1: to the market, as as they are in a lot
• 18:36
  Speaker 1: of markets. But I have to say, um, you know,
• 18:38
  Speaker 1: we see Google as being a fierce, you know, up
• 18:42
  Speaker 1: and coming competitor there Google Home Mini product um as
• 18:45
  Speaker 1: well as the other offshoots of that product. It's very strong.
• 18:49
  Speaker 1: The way it converses with you is much more sophisticated
• 18:52
  Speaker 1: than I think alexas. Apple is also getting into the
• 18:55
  Speaker 1: space again, always very late, but trying to get into
• 18:58
  Speaker 1: it in a very high end, slick way. So the
• 19:00
  Speaker 1: home Pod is a very sophisticated speaker which also has
• 19:03
  Speaker 1: voice activation and so on, and those are usually the
• 19:07
  Speaker 1: main controlling devices. Um. But lots of companies are in
• 19:11
  Speaker 1: the space. Lutron is certainly a leader in the lighting
• 19:14
  Speaker 1: uh nest, which is now bought by Google, uh as
• 19:18
  Speaker 1: a leader. It's started out just in the CEO two
• 19:21
  Speaker 1: and and smoke alarm, but it's gotten into thermostats. It's
• 19:25
  Speaker 1: got uh, you know, I would say, a very high
• 19:28
  Speaker 1: end competing product with the home security devices that are
• 19:31
  Speaker 1: out there, everything from locks, window protectors. You know it
• 19:35
  Speaker 1: was your door opened, alarms and so on. Well, you
• 19:39
  Speaker 1: already know that Ciri can tell me what the World
• 19:42
  Speaker 1: Cup match score is, and we already know that Alexa
• 19:45
  Speaker 1: can play cool jazz. What are some of the other
• 19:48
  Speaker 1: quirky things that are that are new to this market
• 19:50
  Speaker 1: that you could that you could use, uh that maybe
• 19:54
  Speaker 1: you have been is publicized as much, you know, I
• 19:57
  Speaker 1: mean voice control of your home appliance. This is one
• 20:00
  Speaker 1: of the main ways that I use it. I mean
• 20:02
  Speaker 1: I rarely ever touch a switch. I'm always talking to
• 20:06
  Speaker 1: Google and telling it to turn off the lights, turn
• 20:08
  Speaker 1: on the lights, and so on. Um. You know, so,
• 20:11
  Speaker 1: so any of those appliances that we talked about, an
• 20:14
  Speaker 1: effect can be connected to Google. It's great for reminders,
• 20:18
  Speaker 1: It's great for hearing what your calendar is. It's great
• 20:20
  Speaker 1: for calling up the day's events or or the weather
• 20:24
  Speaker 1: or whatever else. I never set an alarm anymore. I
• 20:26
  Speaker 1: just tell Google what time I need to wake up.
• 20:29
  Speaker 1: And and some of these devices are getting very intelligent
• 20:32
  Speaker 1: to monitor the way you behave in act and I
• 20:35
  Speaker 1: could see that AI UM artificial intelligence will start to
• 20:39
  Speaker 1: become more and more part of this, where you won't
• 20:42
  Speaker 1: have to tell it what to do. It will now
• 20:44
  Speaker 1: it'll start to trace your patterns, what happens when your
• 20:47
  Speaker 1: WiFi goes down. That that's definitely a challenge. Some devices,
• 20:52
  Speaker 1: including like the door locks, are building in a cellular
• 20:55
  Speaker 1: component as well as a backup. You have to pay
• 20:58
  Speaker 1: a subscription for that you you generally would and so
• 21:01
  Speaker 1: I think people that more and more depend on this
• 21:03
  Speaker 1: are going to likely have a redundant source a WiFi,
• 21:06
  Speaker 1: just like any other company would have multiple lines for Internet.
• 21:11
  Speaker 1: Means you're gonna have to have a redundant source of
• 21:13
  Speaker 1: money too, it seems potentially. But this cost savings is
• 21:17
  Speaker 1: there as well. You're saving electricity, um, you know, you're
• 21:20
  Speaker 1: you're giving yourself back time from lots of little tasks
• 21:23
  Speaker 1: that you may provide. So hopefully there's an offset and
• 21:26
  Speaker 1: the benefits that you got from this. What do you think, Bob,
• 21:29
  Speaker 1: is this is this going to save you time? Because
• 21:31
  Speaker 1: I have a feeling you know you're gonna look and
• 21:33
  Speaker 1: spend all that time trying to figure out how do
• 21:36
  Speaker 1: I how do I get the WiFi back? I just
• 21:38
  Speaker 1: think one for I, I just think this is the
• 21:41
  Speaker 1: first step towards the robots taking over PIM. I mean
• 21:44
  Speaker 1: I might already dreamist. Yeah, but you know I still
• 21:47
  Speaker 1: have to unlock my door and put my toast in
• 21:49
  Speaker 1: the toaster so I have some function in life, you know,
• 21:53
  Speaker 1: I have something to live. Yeah, we like that. Thanks
• 21:57
  Speaker 1: very much. Thanks Brian mckenning, President, co founder Centric Digital,
• 22:03
  Speaker 1: and our toastmaster. Here, Bob Every, you're listening to Bloomberg.
• 22:21
  Speaker 1: I'm PIM Fox with Bob Every. He is my colleague
• 22:25
  Speaker 1: and co host for the program of filling in for
• 22:28
  Speaker 1: Lisa Bramwitz, who is on a well deserved holiday vacation, well,
• 22:32
  Speaker 1: no vacation perhaps for those executives a Comcast looking to
• 22:37
  Speaker 1: better a bid by Disney for Cury Fox Entertainment assets.
• 22:42
  Speaker 1: Disney has a more than seventy one billion dollar offer
• 22:45
  Speaker 1: on the table. Here to tell us more about these
• 22:49
  Speaker 1: negotiations and the battle for the assets, is Guita Ranganathan,
• 22:53
  Speaker 1: our technology and media analyst for Bloomberg Intelligence, and you
• 22:57
  Speaker 1: can follow Geta on Twitter at Guita rankan number one.
• 23:04
  Speaker 1: Guita tell us about the latest in this battle for
• 23:07
  Speaker 1: the assets. What is Comcast facing? Yes? Umm, thank you.
• 23:12
  Speaker 1: So this is really turning into a do or die
• 23:15
  Speaker 1: battle for both Comcast and Disney as it stands right now,
• 23:19
  Speaker 1: Disney has a thirty eight dollar per share offer on
• 23:23
  Speaker 1: the table that bested Comcast thirty five dollar offer, and
• 23:29
  Speaker 1: it's actually thirty yes, it's it's also thirty five percent
• 23:32
  Speaker 1: higher than Disney's own offer, which was about which came
• 23:35
  Speaker 1: in at about twenty eight dollars six months ago. UM.
• 23:38
  Speaker 1: So they kind of tried to really preempt the Comcast bid.
• 23:43
  Speaker 1: But I don't think it's a done deal just yet. UM.
• 23:46
  Speaker 1: We are going to see a lot more action here.
• 23:50
  Speaker 1: The market believes that Comcast is going to come in
• 23:52
  Speaker 1: with a significantly higher bid, possibly anywhere from about forty
• 23:56
  Speaker 1: five to fifty dollars per share. UM So that's kind
• 24:00
  Speaker 1: of where it stands right now. UM. There is a
• 24:02
  Speaker 1: deadline though, because um Fox stockholders are supposed to vote
• 24:07
  Speaker 1: on this deal on July. So we're expecting some action
• 24:13
  Speaker 1: from Comcast before that date. I think it, Um, it's
• 24:19
  Speaker 1: good to to just note that it's not all of Fox.
• 24:21
  Speaker 1: It's Fox assets, the film and TV studios, the cable networks,
• 24:25
  Speaker 1: pay TV operations, Sky and Star India. Yes, Gita, is
• 24:30
  Speaker 1: there any possible future here where they end up carving
• 24:35
  Speaker 1: up the assets and maybe splitting the the splitting the baby. Yeah,
• 24:39
  Speaker 1: so that's actually a really interesting question. So Bob iger
• 24:42
  Speaker 1: on Um on the most recent MM and A call
• 24:45
  Speaker 1: was asked that very same question, UM, and what he said,
• 24:49
  Speaker 1: from Disney's perspective is no, we are not interested in
• 24:52
  Speaker 1: any kind of a split, but just kind of looking
• 24:55
  Speaker 1: at the massive price UM that that these assets are
• 25:00
  Speaker 1: going to be commanding. I mean, it certainly makes sense
• 25:03
  Speaker 1: for Comcast, I think UM to examine kind of a
• 25:07
  Speaker 1: carve out of the assets. Um. They really are more
• 25:10
  Speaker 1: focused if you just look at it from Comcast perspective,
• 25:13
  Speaker 1: they really are more focused on the international portion of
• 25:15
  Speaker 1: Foxes operations. So really what Comcast is going after is Sky, um,
• 25:20
  Speaker 1: the satellite operations in the UK and some parts of Europe,
• 25:25
  Speaker 1: and also the Star network in India which has you know,
• 25:27
  Speaker 1: millions of subscribers. It's a very very popular UM TV
• 25:31
  Speaker 1: service there. UM, so that's kind of really what Comcast
• 25:35
  Speaker 1: is going after, not so much the studio, not so
• 25:38
  Speaker 1: much the TV networks. Disney, on the other hand, is
• 25:41
  Speaker 1: really focused on getting content for UM, its streaming service,
• 25:45
  Speaker 1: which it hopes to launch next year, and so the
• 25:47
  Speaker 1: studio is extremely important for Disney, and so it kind
• 25:50
  Speaker 1: of makes sense in a way if you know, both
• 25:53
  Speaker 1: of them split assets. What about the possibility that Comcast
• 25:56
  Speaker 1: finds a partner, So there were some words about this
• 26:01
  Speaker 1: UM A few days ago there was a there was
• 26:04
  Speaker 1: a report in the Journal suggesting that UM Comcast is
• 26:07
  Speaker 1: actually exploring tie ups with private equity firms, with other
• 26:11
  Speaker 1: strategic partners so that they can come in submit UM
• 26:15
  Speaker 1: a knockout bit of possibly a fifty dollars or slightly
• 26:18
  Speaker 1: lower UM you know, something that Disney would find very
• 26:22
  Speaker 1: very hard to respond to. And in that case too,
• 26:25
  Speaker 1: UM Comcast might very well be looking to kind of
• 26:28
  Speaker 1: split spin out a few of the assets, maybe UM
• 26:31
  Speaker 1: spin out some of the domestic operations, hand that over
• 26:33
  Speaker 1: to the strategic partner, and then go after possibly Sky
• 26:37
  Speaker 1: and star Key too quickly. My impression is that Murdoch.
• 26:42
  Speaker 1: Rupert Murdoch just likes Disney more. Could he just convince
• 26:46
  Speaker 1: the other investors of that? So, yes, you're absolutely right. UM.
• 26:51
  Speaker 1: So all along, UM, and this saga has now been
• 26:54
  Speaker 1: going on for about six seven months. All along the
• 26:57
  Speaker 1: Murdochs have really preferred to do a deal with Disney
• 27:01
  Speaker 1: with Bob Eiger. Um. They you know, their ultimate goal
• 27:04
  Speaker 1: is to become a long term shareholder in Disney. UM.
• 27:09
  Speaker 1: And also there's there's the other question of, you know,
• 27:11
  Speaker 1: the efficiency from a tax perspective, just because of a
• 27:14
  Speaker 1: stock deal with Disney with Comcasts an all cash deal,
• 27:17
  Speaker 1: and you know there's going to be a significant tax burden. UM.
• 27:21
  Speaker 1: Fox just a few days ago also highlighted, you know,
• 27:24
  Speaker 1: some regulatory difficulties which they think will be much more
• 27:27
  Speaker 1: pronounced UM with Comcasts. They actually already have regulatory approval
• 27:31
  Speaker 1: for the Disney Disney deal. UM. So it's going to
• 27:34
  Speaker 1: be I mean, UM, the MURDOCKX of course preferred Disney. UM.
• 27:39
  Speaker 1: There's no question of doubt about that. But if you
• 27:42
  Speaker 1: are just following other news reports, we've seen multiple Fox
• 27:45
  Speaker 1: investors kind of come in and say, um that they
• 27:48
  Speaker 1: really want UM Fox to kind of listen to what
• 27:51
  Speaker 1: Comcast is going to submit. Um, they obviously want the
• 27:54
  Speaker 1: best deal possible, so the highest price possible. Thank you
• 27:58
  Speaker 1: very much for being with us. Guitar Ranganathan, our technology
• 28:01
  Speaker 1: and media analysts for Bloomberg Intelligence. Thanks for listening to
• 28:09
  Speaker 1: the Bloomberg P and L podcast. You can subscribe and
• 28:12
  Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast
• 28:16
  Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at
• 28:19
  Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo wits one.
• 28:23
  Speaker 1: Before the podcast, you can always catch us worldwide on
• 28:26
  Speaker 1: Bloomberg Radio