Latest / Bloomberg Intelligence / Israel Conflict, Jay Powell on Polixy, AmEx Earnings, and Indian Motorcycles

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Israel Conflict, Jay Powell on Polixy, AmEx Earnings, and Indian Motorcycles · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller.
0:05
Speaker 2: Every business day, we bring you interviews from CEOs, market pros,
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Speaker 2: and Bloomberg experts, along with essential market moving news.
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Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash
0:20
Speaker 1: podcast at Miller Paul Sweeney live here in a Bloomberg
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Speaker 1: Interactive Brokers studio. John is just reporting on American Express
0:25
Speaker 1: AXP blockbuster numbers beat estimates, looks like a record quarter.
0:30
Speaker 1: Stocks down to four percent, So I'm sure the market
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Speaker 1: Maybe I guess didn't link the guidance here. Let's check
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Speaker 1: with somebody who actually knows this stuff, Ben Elliott. He's
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Speaker 1: an analyst for Bloomberg Intelligence covering in the consumer financials
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Speaker 1: and that includes American Express. Ben, thanks so much for
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Speaker 1: joining us here. What's the takeaway from our good friends
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Speaker 1: at American Express?
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Speaker 3: Look, Paul, Amex is still the best card company to
0:52
Speaker 3: own if you're gonna be interested in this space. But
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Speaker 3: you know, the macro fears are winning on the entire industry.
1:00
Speaker 3: You know they're they're essentially plays on GDP, and with
1:04
Speaker 3: people afraid of a recession to come, you know, MX
1:07
Speaker 3: can't kind of escape what's weighing down the entire sector,
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Speaker 3: even though they're probably twice as good as their nearest peer.
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Speaker 2: In what sense are they twice as good? You mean
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Speaker 2: in terms of profit margins, in terms of returning money
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Speaker 2: to investors, in terms of you know what, growing the
1:25
Speaker 2: top line?
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Speaker 4: How are they so much better?
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Speaker 3: Yeah, I mean basically everything you mentioned.
1:29
Speaker 5: They're running.
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Speaker 3: Loan growth runs well above peers, charge offs run less
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Speaker 3: than half the rate of their peers. You know, ROE
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Speaker 3: in the in the mid to high thirties, which is
1:39
Speaker 3: really the envy of everyone in the card industry. So
1:45
Speaker 3: if you have to kind of bet on one, and
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Speaker 3: really the core of MX is the super premium consumer base.
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Speaker 3: You know, these are people paying seven hundred dollars a
1:53
Speaker 3: year to swipe their Platinum card. So if you have
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Speaker 3: to bet on one group of consumers doing well in
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Speaker 3: a recession, it would be MS cardholders.
2:00
Speaker 1: See, I'm I stick with the classic green card. Not many, dude, No,
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Speaker 1: I mean I'm classic old school green AMEX.
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Speaker 4: That still has cachet for me.
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Speaker 2: I got the Platinum card with little flowers painted on it.
2:13
Speaker 2: They may be painted. And I felt so special until
2:17
Speaker 2: I read this story that they've got. They've attracted new
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Speaker 2: cardholders at like a record pace in the top tier,
2:26
Speaker 2: And actually I already felt this. I already feel this
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Speaker 2: when I go to the America Express Platinum Lounge at
2:32
Speaker 2: the airport and there are more people trying to get
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Speaker 2: in the Platinum lounge than like going to McDonald's. You know,
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Speaker 2: it's it's like, I don't feel at all special anymore.
2:45
Speaker 2: Is that a problem?
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Speaker 5: You think, Well, here's the other side of that. That's for.
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Speaker 3: The other side of that equation, Matt, is that they
2:53
Speaker 3: spend a massive amount of money on marketing five and
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Speaker 3: a half billion this year, targeting the same next year,
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Speaker 3: and you know, they have to provide benefits to their
3:02
Speaker 3: customers to keep signing up new cards at the rate
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Speaker 3: they've been doing. So their their card fees, which are
3:08
Speaker 3: really a key part of key a key earnings lever.
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Speaker 3: Over the last year, growth there slowing. So I think
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Speaker 3: some of some of what you're seeing in the market
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Speaker 3: today is probably seeing some of these key growth areas
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Speaker 3: coming starting to slow.
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Speaker 1: What's a difference, if any bend between a you know,
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Speaker 1: an Amex card holder and a VISA cardholder, is there
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Speaker 1: different spending? I guess levels trends.
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Speaker 4: How do you think about that?
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Speaker 3: Yeah, so Amex is very focused on travel and entertainment.
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Speaker 3: Both of those things have lagged in the post pandemic recovery.
3:40
Speaker 3: So that's kind of given MS these sort of long
3:43
Speaker 3: legs to do better over the last couple of quarters.
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Speaker 3: And some of their peers who are more focused on
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Speaker 3: you know, every day spend good and services gas stations
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Speaker 3: for instance. So you know you saw a Discover report
3:55
Speaker 3: a couple of days ago. Their provisions almost doubled, and
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Speaker 3: that's kind of reflecting their middle market consumer who's really
4:02
Speaker 3: being hit by UH inflation at the gas pump. UH
4:05
Speaker 3: And and for the most part, MS customers are not
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Speaker 3: hit by that. You know, they're out there buying Taylor
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Speaker 3: Swift concert tickets, you know, traveling to Europe, those kinds
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Speaker 3: of things, all right, To.
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Speaker 1: Be honest, the only time I use my MX card
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Speaker 1: really just want to use my corporate MX for business travel.
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Speaker 4: What's Amex.
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Speaker 2: That's because Paul walks around in the world with a
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Speaker 2: giant roll of cash. I'm not joking, right, So he
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Speaker 2: always has like a ton of Benjamins in his pocket. Still, okay,
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Speaker 2: you just set him up to be most when walking.
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Speaker 2: It's unusual, is my point. Not everybody.
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Speaker 5: Why don't you describe them?
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Speaker 6: Look at people exactly.
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Speaker 1: I'll be walking out of the office at one o
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Speaker 1: five today, So Ben, what are they saying about business, travel,
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Speaker 1: business spend?
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Speaker 5: UH?
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Speaker 3: So business is people think of it as sort of
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Speaker 3: a core part of MX's UH customer base, but it's,
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Speaker 3: you know, an increasingly less relevant part nowadays. The biggest
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Speaker 3: growth engine is the US card business, and a third
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Speaker 3: of that is millennials and gen Z's really so, you know,
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Speaker 3: MX is forward thinking. You know, they're still serving their
5:12
Speaker 3: corporate customers, but it's not sort of a key part
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Speaker 3: of the value proposition anymore on the growth side as
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Speaker 3: they look forward.
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Speaker 2: I mean, it's not the so in the past when
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Speaker 2: you wanted the ultimate credit card, You've got the American
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Speaker 2: Expressed Platinum card. Right now they are these there's this
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Speaker 2: whole line of Sapphire cards which are I think visas
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Speaker 2: are MasterCard. But you know other banks have offered competing products.
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Speaker 2: Do you see competition hotting up against MS?
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Speaker 3: Yeah, competition is is huge. It's always been huge in
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Speaker 3: the space, especially a sort of top wallet share. You know,
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Speaker 3: every every card company is opening an airline lounge, so
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Speaker 3: you know, it's been the case for the last twenty years.
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Speaker 3: Everyone's always calling out MS saying they're catching up.
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Speaker 5: They're catching up.
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Speaker 3: But you know, the they do the necessary investment every year.
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Speaker 3: They're going to spend five and a half billion again
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Speaker 3: next year, and their card is on about a three
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Speaker 3: year refresh cycle, so you know, in the next year
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Speaker 3: or two we're coming up probably on another refresh we'll
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Speaker 3: see them, if anything, add to the value proposition and
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Speaker 3: probably raise the fee.
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Speaker 2: The shares are at a three year refresh cycle. I mean,
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Speaker 2: we're right where we were at the beginning of twenty one.
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Speaker 2: Are they going to move higher?
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Speaker 5: Yeah?
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Speaker 3: So amex is still quite fully valued relative to their peers.
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Speaker 3: They're trading about four x book, which is way out
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Speaker 3: of line with the one and a half x of
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Speaker 3: the peer group and their thirteen fourteen x price to earnings.
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Speaker 3: So I think some of the pressure you're seeing there is. Yeah,
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Speaker 3: they've set ambitious growth targets and they've met them over
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Speaker 3: the last couple of years, but you can only grow
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Speaker 3: so fast off of big base. So I think the
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Speaker 3: market is getting a little bit skeptical of the ten
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Speaker 3: percent revenue growth target in the forward years, and so
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Speaker 3: I think that's what you're seeing reflected in the stock today.
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Speaker 1: All right, Ben, thanks so much for joining us. Ben Elliott,
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Speaker 1: he covers all the consumer financial companies for Bloomberg Intelligence's
7:04
Speaker 1: based down in Washington, DC. Amex put up some big,
7:07
Speaker 1: big numbers. Stocks off about three or four percent. Though
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Speaker 1: you know, maybe John Tucker suggestive, you know, by the rumor,
7:13
Speaker 1: sell the news, or maybe the guidance here probably.
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Speaker 4: Was a little bit less than stellar.
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7:22
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7:24
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7:33
Speaker 1: All right, listening to FED Chairman j Pal yesterday at
7:35
Speaker 1: the Economic Club of New York in his speech and
7:38
Speaker 1: then in his fireside chat with Bloomberg's David Weston, I
7:41
Speaker 1: came away and I think the market came away with
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Speaker 1: all Right, the FED is going to stay on hold here,
7:46
Speaker 1: but they're also keeping future hikes on the table. That
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Speaker 1: seemed to be the message, and that seemed to be
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Speaker 1: the consistent message. Let's see if it's if it's the
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Speaker 1: same message that the good folks at City are talking about.
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Speaker 1: Steven Whiting, he's a chief investment strategists at City Global.
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Speaker 1: Well so Steve, And again it appears that this federal
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Speaker 1: reserve is comfortable worth where we are on rates here,
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Speaker 1: maybe even another rate hike on the table. Is that
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Speaker 1: how you guys are thinking about it over there at Citygroup.
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Speaker 7: I think that was the message of Chairman Powell. He
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Speaker 7: acknowledged that we're making progress. Of course, he pointed to
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Speaker 7: backward looking inflation is still too high. It's always kind
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Speaker 7: of difficult to have core inflation at two percent when
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Speaker 7: shelter price inflation is still about seven and a half percent.
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Speaker 7: That's forty five percent of the core. So the you know,
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Speaker 7: the issue is he's acknowledging the progress, and he's especially
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Speaker 7: acknowledging that some of these softer measures of the tightness
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Speaker 7: of the labor market have come off, that the forward
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Speaker 7: looking signs are weaker, and that the Fed is already
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Speaker 7: at a restrictive policy stance, and it gets more restrictive
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Speaker 7: every month with quantitative tightening. So I think that again
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Speaker 7: there he's really trying to say that, yes, we've achieved
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Speaker 7: a lot, but we're not going to take it for
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Speaker 7: granted that we are absolutely done. So he's not taking
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Speaker 7: that notion out that the Fed still has the option
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Speaker 7: of tightening further.
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Speaker 2: I mean, if they're restrictive now, I would hate to
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Speaker 2: see what it really what it really looks like when
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Speaker 2: they get tight I mean, five point four percent growth
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Speaker 2: is what we're seeing in the Atlanta now GDP forecast.
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Speaker 7: Well, that's that's you know, indicative of the year. No,
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Speaker 7: it's no, it's it's it's really indicative quarter to quarter
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Speaker 7: volatility of the economy. And you know, no, we're not
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Speaker 7: in the environment where we were in twenty twenty, where
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Speaker 7: we had plus or minus thirty percent quarter to quarter GDP.
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Speaker 7: But you know, I think a lot of things have
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Speaker 7: surprised to be upside. We've raised our economic forecast as
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Speaker 7: of August by a full one and a half percent
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Speaker 7: for the year. What's the striking part of all of this?
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Speaker 2: What are you what are your forecasts for the year, Stephen,
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Speaker 2: I mean.
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Speaker 7: For full year yeah, two three for full year GDP
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Speaker 7: slowing about a half percentage point at about one to
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Speaker 7: eight in the coming year, and if anything, it could
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Speaker 7: be a little bit more attenuated, the sort of the
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Speaker 7: strength and the slowdown a little bit. The really striking
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Speaker 7: thing about the economy is that in the year past
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Speaker 7: the growth rate of employment exceeded the growth rate of
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Speaker 7: GDP by the most since nineteen seventy four.
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Speaker 5: Not a good year.
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Speaker 7: Wow, right, So profits have fallen, We've gone through what
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Speaker 7: I would say is in the manufacturing and trade sectors
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Speaker 7: and components of the housing sector. We've already gone through
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Speaker 7: a recessionary adjustment at least a mild wine, and yet
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Speaker 7: employment growth has been this strong. I think that changes
10:43
Speaker 7: in the coming year, and that we're likely to get
10:46
Speaker 7: some rebound in profits while headcount is going to be
10:49
Speaker 7: a lot more stable. So I think that's the optimistic
10:52
Speaker 7: call for rates. If we just continue to see regardless
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Speaker 7: of what how the economy does, regardless of tightening monetary policy,
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Speaker 7: employment still rages on, well, then you still have the
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Speaker 7: existing problems that markets have now in market and not
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Speaker 7: knowing where the top is on rates.
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Speaker 2: But do you think that turns around, Steven? I mean,
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Speaker 2: if employment growth was stronger than economic growth in the
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Speaker 2: past year. In the next year, as economic growth slows down,
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Speaker 2: does employment growth take a leg even lower than that?
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Speaker 2: I mean, do we start I.
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Speaker 7: Think we're headed to a jobs recovery.
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Speaker 5: Yeah.
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Speaker 7: I think we're headed to a period in which, you know,
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Speaker 7: there's no v in the economy, there's no collapse in
11:30
Speaker 7: everything everywhere, all at once that everybody's waiting for, like
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Speaker 7: twenty twenty, where it's as clear as day it can
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Speaker 7: only get better. It's not that, but employment growth, just
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Speaker 7: the industry composition of employment growth, the recovery and services
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Speaker 7: which took a depression, strange imposed depression in industries that
11:49
Speaker 7: normally don't even fire people. That rebound in services really
11:55
Speaker 7: drove that outperformance of the labor market. And I think
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Speaker 7: it's going to slow. And at the same time, you know,
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Speaker 7: there are areas that are just long cycle multi family
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Speaker 7: construction for example. Now, construction is an industry that normally
12:08
Speaker 7: has you know, double digit gains and losses around recessions.
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Speaker 7: It's only slow, and that's despite a twenty one percent
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Speaker 7: drop in residential investment. But what's happened here is the
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Speaker 7: longer cycle components of construction, multifamily housing, which takes three
12:25
Speaker 7: years of construction time, four years of planning. Well, activity
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Speaker 7: right now is still demanding a lot of labor, and
12:33
Speaker 7: it's at a record high share of total construction activity,
12:37
Speaker 7: So that is going to come off. And I think
12:38
Speaker 7: everyone assumes that there's been this really short policy leg Hey,
12:41
Speaker 7: everybody can get used to the FED quickly. That might
12:44
Speaker 7: be the true in financial markets, but it's not true
12:45
Speaker 7: in the economy. So I think we're headed for a
12:48
Speaker 7: slower labor market in the coming year, you know, despite
12:52
Speaker 7: the fact that profits down in the last year will
12:54
Speaker 7: probably recover a little less than consensus, but they're on
12:57
Speaker 7: their way up, all.
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Speaker 1: Right, Steven, Given that economic backdrop, what's the investment call
13:03
Speaker 1: coming out of city these days? What are you telling
13:04
Speaker 1: clients to do?
13:06
Speaker 5: Well?
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Speaker 7: You know, look, I think this current period of greater
13:11
Speaker 7: concern about security is something we can't dispute everyone. We
13:16
Speaker 7: can't tell everyone. Are we certain that there's no widespread conflict.
13:21
Speaker 7: History shows that in more than ninety percent of cases
13:24
Speaker 7: that is true. We're not going to change and create
13:27
Speaker 7: a turning point for the world over regional security issues.
13:31
Speaker 7: I think for the equities markets, everyone has said, well,
13:34
Speaker 7: you know, if we don't know where the top is
13:36
Speaker 7: in rates and oil, then we have issues, but broadly speaking,
13:41
Speaker 7: we've restored value in both stocks and bonds. We've restored
13:45
Speaker 7: again near record high real interest rates. If you look
13:47
Speaker 7: at tips markets again, two and a half percent government
13:51
Speaker 7: guaranteed bond yields plus inflation compensation. Think about that six
13:56
Speaker 7: percent corporate bonds. Now here's another one. Small and MidCap
13:59
Speaker 7: growth companies, those with good balance sheets and profits, not
14:02
Speaker 7: the ones that have levered up for treating about thirty
14:05
Speaker 7: percent below their long term valuation average, down by a
14:09
Speaker 7: fifteen PE multiple. So we started to add there, not
14:12
Speaker 7: taking a whole lot of aggregate risk, but it's time
14:15
Speaker 7: to recognize those growth opportunities.
14:17
Speaker 2: We don't see a lot of bargains. Dewey steven because
14:20
Speaker 2: I hear torson Slock. I think a couple of days
14:22
Speaker 2: ago sent out a PE for the Magnificent seven Yes,
14:27
Speaker 2: which was like forty five, and for the S and
14:30
Speaker 2: P four hundred and ninety three, which was still nineteen.
14:34
Speaker 2: Now I've heard others say it's more like sixteen, but
14:38
Speaker 2: it's it's not below terribly below the historical average. And
14:42
Speaker 2: then in terms of credit, you don't see spreads wide
14:47
Speaker 2: you know, they're still pretty tight.
14:50
Speaker 7: Well, this is again the reason why we're not investing
14:54
Speaker 7: along the lines of just adding S and P five hundred.
14:57
Speaker 7: You know, for large cap exposure, we're doing equal late
15:00
Speaker 7: SMP and we're overweighting again within a neutral global allocation.
15:05
Speaker 7: For small MidCap companies, you know, we found true bargains
15:09
Speaker 7: and small and mid cap growth companies fifteen times. The
15:13
Speaker 7: long term average PE for the sector is twenty one times.
15:16
Speaker 7: That's not Russell two thousand. Again, that's again companies that
15:19
Speaker 7: have grown their earnings about twelve percent per year for
15:21
Speaker 7: the last ten years, and largely exclude things like banks
15:25
Speaker 7: that have levered up in the small cap area. So
15:27
Speaker 7: it's being more specific than I think just saying the
15:31
Speaker 7: market our return OLOOP is moderate. I think at this point,
15:35
Speaker 7: if we're right about inflation coming down, rates peaking, and
15:40
Speaker 7: profits starting to bottom again, it's not going to be
15:43
Speaker 7: twelve percent EPs growth like the consensus. Thanks we're at four.
15:47
Speaker 7: We still think again the broader markets will have a
15:49
Speaker 7: positive return. But some of these valuation opportunities are pretty good,
15:54
Speaker 7: and I would say especially the US bond market stands
15:57
Speaker 7: out with some of the highest yields in the world
15:59
Speaker 7: for high quality investment great companies. So it's not a
16:01
Speaker 7: matter again of chasing low quality spreads. It's earning a
16:06
Speaker 7: prospective real yield and that could be as much as
16:09
Speaker 7: four percent for investment great corporates.
16:12
Speaker 1: Steven, thanks so much for joining us. Really appreciate getting
16:15
Speaker 1: your thoughts and insights there. Stephen Whiting, He's a chief
16:18
Speaker 1: investment strategist at City Global Wealth.
16:22
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16:25
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16:30
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16:41
Speaker 1: Let's get that back to the leading geopolitical issue out there,
16:44
Speaker 1: and that is, of course, what's happening in Israel.
16:47
Speaker 4: Micheline ishe joins us.
16:48
Speaker 1: She is a professor at the Joseph Corbell School of
16:51
Speaker 1: International Studies at the University of Denver. She joins us
16:56
Speaker 1: here and Micheline thanks.
16:57
Speaker 4: So much for joining us here.
16:59
Speaker 1: What do you believe Israel should do? In response to
17:04
Speaker 1: what was almost two weeks ago, the terror attack. What
17:07
Speaker 1: do you think they should do here?
17:10
Speaker 8: Well, as any country that has been attacked in a
17:15
Speaker 8: non lawful manner, with an intensity and a scope that
17:20
Speaker 8: was unprecedented, it's clear that it has to defend itself.
17:25
Speaker 8: It will defend itself, as we heard in the media,
17:28
Speaker 8: by just sending ground troop. Now, it took some time
17:32
Speaker 8: to do that because it wanted to sort of somehow
17:35
Speaker 8: sheltered infrastructures of the northern No Gaza in order to
17:39
Speaker 8: send its troop. Now you ask about what it should do.
17:43
Speaker 8: It has the right to self defense under international law.
17:47
Speaker 8: It has of course to be consistent with not creating
17:52
Speaker 8: excessive death that surpassed the mitullary advantage, which will be
17:58
Speaker 8: a difficult call. It should do and will do. Will
18:01
Speaker 8: probably be defending itself, and here we all hope that
18:05
Speaker 8: it would be done with international oin mind.
18:10
Speaker 2: So do you have problems with the blockade that now
18:15
Speaker 2: has kept humanitarian aid out of Gaza. I mean you
18:19
Speaker 2: could understand the anger right obviously initially, but then there
18:26
Speaker 2: are over a million people in Gaza under the age
18:30
Speaker 2: of fifteen, so you know they weren't even born when
18:34
Speaker 2: the Palestinians elected Hamas in two thousand and six. Is
18:39
Speaker 2: that is that something that the Israelis need to be
18:42
Speaker 2: better at doing, letting food and medicine and water, maybe
18:46
Speaker 2: even fuel through or you know, do you see that
18:50
Speaker 2: Hamas just takes what they want right away and doesn't
18:53
Speaker 2: care about the rest of the people, and so it's
18:55
Speaker 2: kind of fruitless.
18:57
Speaker 8: Well, it's probably one of the consumers, really, is that
19:01
Speaker 8: Hamas might be taking some part of the humanitarian aid
19:05
Speaker 8: that will be delivered.
19:06
Speaker 2: Or not just might be I mean definitely right, they
19:09
Speaker 2: stole they stole already a lot of fuel that went
19:12
Speaker 2: in last week.
19:13
Speaker 8: Yeah, so there will be an important need of an
19:15
Speaker 8: important triarch. The question who is going to be doing it.
19:18
Speaker 8: At the same time, you have, as you said, a
19:20
Speaker 8: humanitarian crisis with a close to a million of people
19:23
Speaker 8: now trying to evacuate to the south of Gaza, very
19:27
Speaker 8: small strip of area with a highly densit densely populated people.
19:34
Speaker 8: So there will be opening as a result of the
19:37
Speaker 8: bidened visit to is world. There will be an opening
19:40
Speaker 8: of truck delivering food and water. It's very unclear as
19:46
Speaker 8: to what extents there will be electricity, because the electricity
19:50
Speaker 8: can be used also for warfare purposes. But there will
19:54
Speaker 8: be certainly a situations in where we will see in
19:57
Speaker 8: the coming days opening in the rough crossing, at least
20:00
Speaker 8: from what we hear from the Americans and the Israeli
20:03
Speaker 8: as well.
20:05
Speaker 1: Micheline, how concerned are you about this conflict which is
20:08
Speaker 1: currently between Israel and Hamas broadening out to something that
20:12
Speaker 1: includes more of the Arab players in the region. How
20:16
Speaker 1: much of a risk do you think that is?
20:19
Speaker 8: It is always a risk. We know that Iran as
20:25
Speaker 8: Iran as sponsored Risbola and also Hamas, and we also
20:30
Speaker 8: know that there was just yesterday today's ago, just missiles
20:33
Speaker 8: that were intercepted by American boats launched toward Tel Aviv.
20:40
Speaker 8: So there is a possibility always of a war to
20:42
Speaker 8: be to spiral in the wrong direction. At the same time,
20:46
Speaker 8: it's worth suggesting that the fact that Iran has been
20:51
Speaker 8: very much weakend years of protest also in its own country,
20:55
Speaker 8: Frisbola has become also a very weak party in Lebanon,
21:01
Speaker 8: and Lebanon has been becoming a failed state. So those
21:04
Speaker 8: two country though, they might want to unify and they
21:07
Speaker 8: might want to show their supporter to the Palestinians also
21:10
Speaker 8: are hesitant in full fledged involvement, so they are waiting.
21:15
Speaker 8: I think that if they see that there is in
21:17
Speaker 8: the north of Israel more in fights, so missile rockets
21:21
Speaker 8: going in the directions from Israel to Risbola, they probably
21:25
Speaker 8: will be further involved. What is reassuring in a way
21:29
Speaker 8: is that the United States has send these two aircrafters
21:32
Speaker 8: on to the East Mediterranean Sea, and in that sense
21:35
Speaker 8: it provides a form of deterrents to the potential escalation
21:41
Speaker 8: of countries in the region.
21:43
Speaker 1: And Professor, I guess, can you help us just understand
21:47
Speaker 1: kind of the support that Hamas enjoys in Gaza among
21:53
Speaker 1: the Palestinian people. I guess I'm just wondering to what extends.
21:56
Speaker 2: So hard spend a question that's really hard to get
21:59
Speaker 2: an answer.
22:00
Speaker 1: Did the Palestinians support Hamas? And if so, to what
22:02
Speaker 1: extent do you think?
22:04
Speaker 8: I think that if you were asking the same questions
22:06
Speaker 8: in October five, fifth, or six, you probably will see
22:09
Speaker 8: a lot of dissent among Palestinians with respect to their
22:14
Speaker 8: support of Ramas. Remember that the last elections in the
22:19
Speaker 8: Gaza strip was in two thousand and six, which means
22:21
Speaker 8: it was seventeen years ago. Very difficult to assess that
22:25
Speaker 8: level of legitimacy. Most moreover, we know that Human Rights
22:29
Speaker 8: Watch have criticized heavily Hamas for detaining, incarcerating, torturing its
22:35
Speaker 8: own people, and not being the most friendly when it's
22:38
Speaker 8: come to their women's right. So a lot of these
22:40
Speaker 8: sense among its population. But you can make the same argument,
22:44
Speaker 8: not quite the same, but a somewhat similar argument with
22:47
Speaker 8: respect to Israeli. They have distrusted their government. Now since
22:51
Speaker 8: November twenty twenty two, it was an elected government, but
22:55
Speaker 8: still very much distrusted as a result of the protest movement. Nonetheless,
23:00
Speaker 8: during time of war, there is a unity. Three hundred
23:04
Speaker 8: thousand peoples have been mobilized among the reservists to fight
23:08
Speaker 8: that war unconditionally, among them many protesters. So I will
23:12
Speaker 8: assume that the same will happen in wartime.
23:15
Speaker 2: On the other side, how would you know a human
23:19
Speaker 2: rights advocate prosecute a war against an enemy that doesn't
23:24
Speaker 2: care about its own people. You know that even takes
23:28
Speaker 2: refuge in You know Hamas military activities come out of
23:33
Speaker 2: schools and hospitals. You know that use their own people
23:37
Speaker 2: as a defense. How do you prosecute that kind of
23:40
Speaker 2: war if you're concerned about civilian you know, injuries and deaths.
23:48
Speaker 8: Well, it is from an international humanitarian law certainly are
23:52
Speaker 8: very difficult propositions. First of all, as you know, internationally,
23:56
Speaker 8: manitarian law have to be reciprocal, so it it has
24:00
Speaker 8: to be consistent for Hama's side and for the Israeli side,
24:04
Speaker 8: even if one side does not do with the other.
24:06
Speaker 8: Still as the burden of being constrained by those international law,
24:11
Speaker 8: how it prosecuted, it will be very different difficult. Israel
24:14
Speaker 8: as the right to defense with respect to international law,
24:17
Speaker 8: but it has also been its constrain with respect to
24:20
Speaker 8: the how it targeted military versus civilians. Civilians, as you
24:24
Speaker 8: said before, already part or already embedded in the military
24:29
Speaker 8: wings of Hamas, which makes it very difficult to go
24:32
Speaker 8: after the military wings of Hamas. But what they really
24:36
Speaker 8: have done and have tried at the very least, it's
24:38
Speaker 8: to first of all called for and evacuations of the
24:42
Speaker 8: north side of Gaza to the south of Gaza in
24:45
Speaker 8: order to make sure that the target the target, the
24:47
Speaker 8: object of target was not the innocent civilians but the
24:51
Speaker 8: military wing very difficult to do on the long round
24:54
Speaker 8: because they will be sssive casualty in the cross fire.
25:00
Speaker 1: Thank you so much for joining us. We really appreciate
25:01
Speaker 1: getting the benefit of all your experience. Micheline ishe professor
25:06
Speaker 1: of International Studies and Human Rights at the University of Denver,
25:11
Speaker 1: and Folks, I'm just looking at her bio and she's
25:12
Speaker 1: been everywhere talking about human rights and teaching about human rights.
25:16
Speaker 1: We appreciate getting few minutes of Professor Eeshay's time.
25:20
Speaker 6: You're listening to the team. Ken's our live program Bloomberg
25:24
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,
25:27
Speaker 6: the iHeartRadio app, and the Bloomberg Business app, or listen
25:30
Speaker 6: on demand wherever you get your podcasts.
25:34
Speaker 1: One of the big stories in markets really over the
25:37
Speaker 1: last several weeks and months has been crude oil and
25:39
Speaker 1: we've got another move higher today and wtat crude oil
25:42
Speaker 1: over ninety. Fernando Valley joins us. He covers all the
25:45
Speaker 1: global energy markets. Fernanda, What's what's happening in the oil
25:48
Speaker 1: market these days?
25:50
Speaker 5: Well, so much.
25:51
Speaker 9: Oh, it's been pulling all directions, especially this past week.
25:57
Speaker 9: We had very large drops and then for both crude
26:01
Speaker 9: oil and refined products in the US, which definitely added
26:05
Speaker 9: to the geopolitical tensions and bringing oil prices higher over
26:09
Speaker 9: the past few days.
26:11
Speaker 2: So we have enough here in the US to even
26:16
Speaker 2: if we're cut off from the rest of the world,
26:19
Speaker 2: to serve our needs. Right, Is that true as well?
26:23
Speaker 2: As I know it's true for crude oil? Is that
26:25
Speaker 2: true as well as refined products as well?
26:28
Speaker 9: For the most part, yes, we have. Between the US
26:32
Speaker 9: and Canada, we have nearly nineteen million barrels a day
26:36
Speaker 9: of oil production, and then if you add Mexico and
26:39
Speaker 9: some other friendly nations, we're in good steed. On refined
26:43
Speaker 9: products is a little bit lower, and the biggest issue there.
26:46
Speaker 9: We are net importers of gasoline, especially into the East Coast,
26:50
Speaker 9: because it's usually cheaper to bring it from Europe than
26:53
Speaker 9: it is to the Gulf Coast thanks to Paul's favorite
26:56
Speaker 9: law of the Jones Act.
26:57
Speaker 1: Exactly right, don't worry, I'm working on that. I'm working
26:59
Speaker 1: on that, all right. I know it's a supplying demand
27:02
Speaker 1: kind of story, and you're talking about commodities here. We
27:04
Speaker 1: It appears to me that OPEC, plus their cuts in
27:08
Speaker 1: production have in fact worked is that. Can we give
27:12
Speaker 1: them some credit there?
27:14
Speaker 9: I mean it has worked slightly, but I think ultimately
27:18
Speaker 9: a lot of this has been geopolitical risk. And you
27:20
Speaker 9: think when you cut as much as they have, you know,
27:23
Speaker 9: over two million barrels a day, theoretically you should have
27:28
Speaker 9: a larger impact. You shouldn't be struggling to get to
27:32
Speaker 9: the nineties, and obviously external events conspiring to that. I
27:36
Speaker 9: think it's very clear when you look at the US
27:39
Speaker 9: that the demand is not The demand side of the
27:42
Speaker 9: equation is not sticking to the ninety dollars plus oil
27:46
Speaker 9: or even the high crack spreads as well. If you
27:50
Speaker 9: look at just how much gasoline came off, the came
27:53
Speaker 9: off in July and now in the past few weeks
27:57
Speaker 9: is even more so, it's clear that they US consumer
28:01
Speaker 9: and that can be a kind of the benchmark. The
28:04
Speaker 9: bell Weather for others is struggling with elevated fuel prices.
28:08
Speaker 2: Hey on, when you say the Jones Act, are you
28:09
Speaker 2: talking about the Merchant Marine Act of nineteen twenty. This
28:13
Speaker 2: is a law requiring that all goods transported on the
28:17
Speaker 2: water between two US ports are transported on either ships
28:22
Speaker 2: that have been instructed in the US. Oh, well not either.
28:25
Speaker 2: Both ships that have been constructed in the US and
28:28
Speaker 2: that fly the US flag and that are owned by
28:30
Speaker 2: US citizens and that are crewed by US citizens and
28:34
Speaker 2: permanent residents. So I guess that makes it more expensive
28:37
Speaker 2: sometimes to ship crude from the Gulf up to the
28:41
Speaker 2: East Coast.
28:42
Speaker 1: So if you little on the East coast, every time
28:44
Speaker 1: you got shale oil in your backyard and gas, you
28:47
Speaker 1: can't get it.
28:49
Speaker 2: Where you can't pipe, you can't get it. But you
28:52
Speaker 2: just have to pay for US built ships crewed by
28:54
Speaker 2: US servicemen, owned by US A pipeline.
28:58
Speaker 4: They can't build a pipeline, will let you build pipe.
29:00
Speaker 4: There's a pipeline running through my backyard.
29:02
Speaker 2: You live New Jersey. There's nothing to destroy there. Right
29:05
Speaker 2: through the rest of America. Pipe, there's important wildlife.
29:09
Speaker 4: While Fernando Valley, thank you so much. We appreciate it.
29:12
Speaker 4: Good stuff.
29:13
Speaker 1: Yeah, I mean, I don't know, build a pipeline from
29:15
Speaker 1: the shale of Pennsylvania into John Tucker's backyard into Jersey.
29:19
Speaker 1: The problem solved. I don't know why we don't do that,
29:21
Speaker 1: but that's the Jones Act.
29:22
Speaker 2: Well, it can't go from Pennsylvania, right, We're going to
29:24
Speaker 2: refine it.
29:25
Speaker 4: I don't know, build a refinery.
29:27
Speaker 2: I thought you had to go down to Oklahoma to
29:29
Speaker 2: do that.
29:30
Speaker 4: Well, we'll build a refinery in New Jersey. I think
29:32
Speaker 4: we've got plenty of millions, so we've already got plenty
29:34
Speaker 4: of them.
29:35
Speaker 6: You're listening to the tape Cat's are live program Bloomberg
29:38
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
29:41
Speaker 6: tune in app, Bloomberg dot Com.
29:43
Speaker 5: And the Bloomberg Business App.
29:45
Speaker 6: You can also listen live on Amazon Alexa from our
29:47
Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
29:54
Speaker 1: I'm gonna show off my telecommunications chops to you right now.
29:58
Speaker 1: Wide area networking as one one yep, Local area networking Loe. Okay, see,
30:05
Speaker 1: I don't know, it's kind of all, I kind of know.
30:07
Speaker 4: I justin.
30:08
Speaker 1: We got these little nodes all over the office, and
30:10
Speaker 1: apparently they tie you all together and so you can
30:12
Speaker 1: do the wireless of wireline and all that networking stuff.
30:14
Speaker 1: But the people actually do that for a living. One
30:17
Speaker 1: of those gentlemen's right here today with us in our
30:19
Speaker 1: Blueberk Interactive Broker studio. That's Phil Montrium. He is executive
30:22
Speaker 1: EP and general manager at Aruba, which is a Hewlett
30:26
Speaker 1: Packard Enterprise company.
30:28
Speaker 4: Phil, thanks so much for joining us here. I know
30:30
Speaker 4: you're based on the.
30:31
Speaker 2: I just thought I just kind of occurred to me, Phil,
30:35
Speaker 2: the work you do is important to nearly every single
30:39
Speaker 2: person on a daily, if not an hourly or minute
30:44
Speaker 2: to minute basis, and no one understands what you do.
30:52
Speaker 10: No, is that like you're exactly right? Yeah, no, we
30:55
Speaker 10: reckon that. So these access points on the ceiling that
30:58
Speaker 10: connect your Fi Fi devices and get you to the Internet.
31:02
Speaker 10: We've shipped about twenty eight million of those since we
31:06
Speaker 10: started as a company about twenty years ago. And we
31:09
Speaker 10: believe it is a Ruba or yeah, no, this is
31:11
Speaker 10: Ruba before Hulett Packard Enterprise acquired us. And we think
31:15
Speaker 10: at any one time you would have one hundred million
31:18
Speaker 10: people connected to these access points around the world and
31:21
Speaker 10: they'll be in schools, hotels, offices, emergency services. I mean,
31:27
Speaker 10: this stuff is real. So yeah, you've got to have
31:28
Speaker 10: a really good, stable platform for customers.
31:31
Speaker 2: So when you're at a cocktail party and someone says
31:33
Speaker 2: what do you do, you don't start talking about you know,
31:36
Speaker 2: wireless SD one solutions so that we can edge to
31:41
Speaker 2: cloud you've seen you've never seen cloud? No, I mean,
31:45
Speaker 2: how do you make it easier for like.
31:47
Speaker 10: Yeah, look, you know I talk about the fact that
31:49
Speaker 10: I work for Hulett Packard Enterprise, which is a great
31:51
Speaker 10: technology company, and we focus in three areas. We focus
31:55
Speaker 10: on hybrid cloud, we focus on AI, and then we
31:58
Speaker 10: focus on networking. And then after that, I'll talk about
32:01
Speaker 10: the fact that, you know, we supply these access points
32:03
Speaker 10: and then the access points link to something called a
32:07
Speaker 10: campus switch and we provide those and then they link
32:10
Speaker 10: to a network that you just talked about, which is
32:12
Speaker 10: sd WAN. So you know, I talk about the fact
32:15
Speaker 10: that we kind of follow the change and the network
32:18
Speaker 10: and so that's where we expand our technology.
32:21
Speaker 1: How has that business changed with the pandemic and more
32:26
Speaker 1: people working from home remotely and all that kind of stuff.
32:29
Speaker 10: Yeah, I mean, look, the good thing about being a
32:32
Speaker 10: network provider is anytime something changes in a business, there's
32:36
Speaker 10: an impact on the network. So people go and work
32:39
Speaker 10: from home, and it's like, right, we need to change
32:41
Speaker 10: the network so that people can communicate remotely. People come
32:44
Speaker 10: back into an office, you need to upgrade the Wi Fi.
32:47
Speaker 10: People move workloads out to the cloud. Whenever there's a
32:50
Speaker 10: change in business, there's a resulting impact on the network,
32:54
Speaker 10: and that's good for our business because that's what drives demand.
32:58
Speaker 1: So is the growth for your business just I would
33:02
Speaker 1: think like in emerging markets, is that where the growth?
33:05
Speaker 10: No, it's everywhere. I mean, which which your organization doesn't
33:09
Speaker 10: want to stay on top of the network. I mean
33:11
Speaker 10: this is technology correct, Yeah, yeah, because it goes faster.
33:15
Speaker 10: You go from Wi Fi five to Wi Fi six
33:17
Speaker 10: to Wi Fi seven. So these upgrades obviously make the
33:20
Speaker 10: network go a lot faster. Obviously, people are more concerned
33:23
Speaker 10: about security as well now, so we made some investments
33:26
Speaker 10: in security. We bought a company called Access Security about
33:29
Speaker 10: four or five months ago. Because this stuff is very real,
33:32
Speaker 10: isn't it? For customers? You know, you want better, you
33:34
Speaker 10: want faster networks, and you want to make sure they're secure.
33:37
Speaker 4: So who is response? That's a good question. Who's responsible
33:39
Speaker 4: for the security of a network? So is it kind
33:42
Speaker 4: of like you guys? Is it me as the customer?
33:46
Speaker 10: It's it's it's a team, isn't it? So you as
33:49
Speaker 10: the user? You know, if I'm the network manager, right,
33:52
Speaker 10: obviously I have a responsibility to make sure there's secure network.
33:56
Speaker 10: But as users, you know, you need to make sure
33:58
Speaker 10: that you're not downloading the wrong apps and you know,
34:01
Speaker 10: get in court, phishing or whatever it might be. You know,
34:04
Speaker 10: it's a collective responsibility to make sure that the you know,
34:08
Speaker 10: the information and enterprise is secure.
34:11
Speaker 2: I'm always worried about getting caught edging to cloud. Sure
34:14
Speaker 2: what what what's the AI component of your business?
34:19
Speaker 10: Okay, So we do a lot in AI. We bought
34:21
Speaker 10: We've got quite a good history in this area because
34:24
Speaker 10: we bought Craze supercomputers. Heard about them, yeah, years ago,
34:27
Speaker 10: and so they they're i mean world experts in building
34:32
Speaker 10: these kind of big models for weather systems and all
34:34
Speaker 10: this sort of stuff. And obviously more recently you've seen
34:37
Speaker 10: a huge demand for AI. And what we're doing there
34:41
Speaker 10: is using some of that knowledge and smarts from Cray,
34:45
Speaker 10: blending it with the infrastructure that we provide, and then
34:48
Speaker 10: really supporting customers as they develop their large language models
34:52
Speaker 10: and other developments in the AI space. So we see
34:55
Speaker 10: huge demand right now as a company from AI.
34:59
Speaker 2: How do you make how you make these things more sustainable?
35:03
Speaker 2: Because AI in these data centers is going to use
35:06
Speaker 2: like it's going to dwarf. Yeah, the electricity use of bitcoin,
35:09
Speaker 2: which already gets slagged down by everybody coming on this program.
35:12
Speaker 2: So how do you deal with that demand?
35:15
Speaker 10: Yeah, I mean just generally across the board. By the way,
35:18
Speaker 10: we are huge unsustainability and I think we're only I mean,
35:21
Speaker 10: it's a little bit sad to say this, but we're
35:23
Speaker 10: one of only two technology companies that have actually committed
35:27
Speaker 10: to hitting net zero targets, right. But it's a big
35:29
Speaker 10: part of what HP does as an organization, so we
35:33
Speaker 10: take it very seriously. On the AI space, we do
35:36
Speaker 10: like water cooling and that sort of stuff, and we
35:38
Speaker 10: pick data centers that are really efficient to make sure
35:41
Speaker 10: that we're sustainable. And then in the network space, we
35:44
Speaker 10: do all sorts of things. I mean we'll actually take
35:47
Speaker 10: back old equipment from customers and recycle it and then
35:51
Speaker 10: sell it onto other markets. So actually, in the last
35:54
Speaker 10: two or three years, we've taken back eight point two
35:57
Speaker 10: million devices, so old pieces network equipment, and in eighty
36:02
Speaker 10: two percent of cases we've been able to refurb it
36:05
Speaker 10: and sell it onto another market. So sustainability is huge
36:08
Speaker 10: for here at Packard Enterprise.
36:09
Speaker 1: Who's your competitor in the networking business for your competitors, plur,
36:12
Speaker 1: I guess.
36:13
Speaker 10: I mean, look, you know there's a ranger companies. Cisco
36:15
Speaker 10: is obviously a big player in the network space, and
36:17
Speaker 10: then you get some other startups as well, but you know,
36:19
Speaker 10: Cisco's probably the big kind of what's.
36:22
Speaker 4: The revenue growth driver for you?
36:24
Speaker 1: Is it just is it more customers? Is it more
36:26
Speaker 1: revenue per customer?
36:28
Speaker 10: Both?
36:28
Speaker 4: Kind of yeah, it's both really.
36:29
Speaker 10: I mean, obviously you saw, as I said earlier, when
36:32
Speaker 10: you see big changes in the way that people work,
36:34
Speaker 10: then that drives demands. So as I say, you know,
36:37
Speaker 10: when the pandemic happens, people start to work from home.
36:40
Speaker 10: That meant people had to spend on the networks to
36:42
Speaker 10: make them secure. Now that they're trying to get people
36:44
Speaker 10: back in the offices, you know, people are only going
36:46
Speaker 10: to come back to the offices if you've got great
36:49
Speaker 10: Wi Fi coverage in the office. Otherwise why would you
36:51
Speaker 10: come back in right, So these changes they drive demand,
36:55
Speaker 10: and where we benefit is that means existing customers are
36:58
Speaker 10: buying more, but we're attracting a lot of new customers
37:01
Speaker 10: as well, because you know, we kind of link all
37:04
Speaker 10: this into technical we link all of this stuff together
37:07
Speaker 10: through a platform called HPE Green Lake, and that allows
37:10
Speaker 10: customers to be able to provision and manage network and
37:14
Speaker 10: it all from one platform, so that brings in new
37:17
Speaker 10: customers as well for us.
37:19
Speaker 4: Fascinating stuff. Somebody's got to do it. I know, I can't.
37:22
Speaker 2: Why are Aruba? We only have ten seconds? But why
37:24
Speaker 2: is it called I mean, it makes me want to go.
37:25
Speaker 5: To a Ruba.
37:26
Speaker 10: Why would only want buy Ruber?
37:28
Speaker 2: Why is it called Ruber?
37:29
Speaker 10: Why is it called Ruber? So? I think the founders
37:31
Speaker 10: they were looking for a name, and I guess one
37:33
Speaker 10: of them have been on a nice holiday ago. Yeah,
37:35
Speaker 10: that was the main reason.
37:36
Speaker 1: I think going down in January. Very nice, Phil Matron,
37:40
Speaker 1: thanks so much for joining us. Appreciate Executive VP and
37:42
Speaker 1: GM at Aruba, hule at Packard Enterprise Company.
37:45
Speaker 6: You're listening to the tape Cat's are live program Bloomberg
37:48
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, tune
37:52
Speaker 6: in app, Bloomberg dot Com, and.
37:54
Speaker 5: The Bloomberg Business App.
37:55
Speaker 6: You can also listen live on Amazon Alexa from our
37:58
Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven.
38:04
Speaker 1: It is that time of the week when we asked
38:06
Speaker 1: the question, what is Matt Miller driving? Yeah, and I
38:10
Speaker 1: think it really different ways on this, but I'll let
38:12
Speaker 1: you take well.
38:12
Speaker 2: I love that Denise ended her report with shares of
38:15
Speaker 2: Harley Davidson because I was just looking at the comp
38:18
Speaker 2: function on Harley Davidson. You know, that's the function that
38:23
Speaker 2: looks at a stock with total return over a certain
38:26
Speaker 2: period of time at defaults to five years. And although
38:30
Speaker 2: it's not apples to apples, Polaris stock has outperformed Harley
38:35
Speaker 2: Davidson stock over the past five years with a total
38:38
Speaker 2: return included. You see Polari's stock is up eighteen percent
38:43
Speaker 2: and Harley is down fifteen percent. Now I say Polaris
38:48
Speaker 2: because they make Indian motorcycles, Okay, and that's what I'm riding. Oh,
38:51
Speaker 2: that's what I'm driving this this week. I'm driving an
38:54
Speaker 2: Indian Chief Bobber dark Horse. Nice, but suffice it to
39:00
Speaker 2: say it's kind of the mid range in terms of
39:03
Speaker 2: weightiness of bikes for Indian. They make well, they make
39:06
Speaker 2: a flat tracker that's extremely extremely popular, and then they
39:11
Speaker 2: make a Scout which is kind of the entry level.
39:14
Speaker 2: It's a very like cool looking dark old bobber style.
39:18
Speaker 2: The Chief is a little bit heavier and maybe for
39:20
Speaker 2: a little bit longer range rides. And then they make
39:23
Speaker 2: the big bikes that are a little too big for me.
39:26
Speaker 2: But I want to bring in Mike Doherty. He's the
39:28
Speaker 2: president of Indian for Polaris. He joins us right now,
39:32
Speaker 2: I'm gonna say, out of Medina, Minnesota, is that right?
39:37
Speaker 5: Yeah? You got it right? Nice exactly.
39:39
Speaker 2: So I talked to I was talking to Mike earlier
39:43
Speaker 2: and told him a little story about me test driving
39:47
Speaker 2: this bike, and I'll share it with you. It's kind
39:49
Speaker 2: of it's kind of corny. But when I moved into Scarsdale,
39:52
Speaker 2: I had all these guys to deal with, right my
39:55
Speaker 2: mortgage broker and the contractor and my insurance guy. Insurance
40:00
Speaker 2: guy is totally cool. He lives in the neighborhood. He's
40:03
Speaker 2: got kids that go to the schools. And I was like, dude,
40:06
Speaker 2: let's go get beers. And he was never like ready
40:08
Speaker 2: to brow out, you know. He was like, yeah, no,
40:11
Speaker 2: I'm too busy.
40:12
Speaker 6: Okay.
40:12
Speaker 2: He never really talked to me that much, even though
40:14
Speaker 2: I'm insuring all my vehicles with him, you know. But
40:17
Speaker 2: the other day he comes by to pick up some
40:18
Speaker 2: plates and he says, man, that is a cool Indian.
40:22
Speaker 2: You've got parked in your driveway. Now all of a sudden,
40:24
Speaker 2: he's calling me.
40:25
Speaker 4: He wants to come over, he.
40:26
Speaker 2: Wants to hang out, you know, bros. He wants to
40:29
Speaker 2: be a bro. And this is like, to me, this
40:32
Speaker 2: is one of the coolest aspects of motorcycling. Like it
40:35
Speaker 2: it's beyond just obviously a method of transportation that gets
40:38
Speaker 2: you from a to B or a lifestyle. It's like
40:42
Speaker 2: really creates a community. And I love the journey that Indian,
40:48
Speaker 2: the Indian brand has gone since Polaris took it over.
40:51
Speaker 2: You've also, Mike really been selling a lot more of these, right,
40:55
Speaker 2: I've seen a lot of stories about the jump in
40:57
Speaker 2: sales for Indian. You're taking market share away from Harley
41:00
Speaker 2: Davidson and you're becoming like one of the big American players.
41:04
Speaker 2: You are arguably one of the two. Right tell us about.
41:08
Speaker 11: Indideah, Absolutely, yeah, and welcome to the cool kids club.
41:11
Speaker 9: I'm glad that you like the bike.
41:14
Speaker 11: And you've had some positive experiences with it. It's a
41:17
Speaker 11: Indians on a roll right now, for sure. You know,
41:20
Speaker 11: we launched the bike once we purchased the brand in
41:23
Speaker 11: twenty eleven. We came out with our first versions of
41:27
Speaker 11: the Indian in twenty thirteen, so really just the last decade,
41:31
Speaker 11: but we've been gaining share really in every market we
41:35
Speaker 11: compete in in most every segment for the ten years since.
41:40
Speaker 11: And yeah, we continue to take share from the big player.
41:45
Speaker 11: But people are thrilled with their bikes, and the Chief
41:48
Speaker 11: is kind of the bike that kind of comes right
41:50
Speaker 11: in the middle. It kind of plugged a gap we
41:53
Speaker 11: had in our product lineup, so now we really have
41:56
Speaker 11: a range of bikes for every type of rider right now.
41:58
Speaker 2: So to me, the chief Is is my favorite. It's
42:01
Speaker 2: the sweet spot of the line because I want a cruiser.
42:03
Speaker 2: I don't need a big bagger, you know, with a
42:06
Speaker 2: full faring although some people you know want those for
42:10
Speaker 2: obvious reasons. But the thing that I think sets Indian
42:14
Speaker 2: apart is the success that you've had with the flat tracker,
42:18
Speaker 2: the FTR it's a twelve hundred, and the success that
42:21
Speaker 2: you've had in flat track racing, which is kind of
42:23
Speaker 2: where Indian made its name. So tell us about that
42:25
Speaker 2: bike and that endeavor.
42:28
Speaker 11: Yeah, racing goes way back, you know, to the origins
42:32
Speaker 11: of the brand, and when we came back with the brand,
42:35
Speaker 11: we knew that we had to compete and really live
42:39
Speaker 11: up to the performance heritage of the of the brand,
42:43
Speaker 11: and we have. We've been kind of dominant on the racetrack,
42:47
Speaker 11: in particular the flat track racetrack. We just won our
42:51
Speaker 11: fifth series and we've got a champion and Jared Meese
42:55
Speaker 11: that I think he's tied for now for the all
42:58
Speaker 11: time championship. So yeah, we've been winning, dominating on the racetrack,
43:04
Speaker 11: and then we've also been super competitive in the King
43:08
Speaker 11: of the Baggers and the other racing circuits that we do.
43:11
Speaker 11: But the flat tracks a great bike. It has global
43:14
Speaker 11: appeal and yeah, a lot of people.
43:16
Speaker 9: Are loving it right now.
43:17
Speaker 1: Hey, Mike Hoo's the prototypical Indian motorcycle buyer.
43:24
Speaker 5: Good question.
43:24
Speaker 11: You know, most of the people that buy an Indian
43:27
Speaker 11: it's not their first motorcycle. They've they've been around motorcycling
43:31
Speaker 11: for a while, their experience, they know what they want,
43:35
Speaker 11: maybe want a more premium experience, either ownership or riding experience,
43:41
Speaker 11: and so they jump onto the Indians. We sell more
43:45
Speaker 11: of Scout than anything else, so that's our entry into
43:47
Speaker 11: the brand and then they work their way up over
43:51
Speaker 11: their riding lifestyle to the chief and ultimately to a
43:55
Speaker 11: roadmaster or one of our touring or bagger bikes. But
43:58
Speaker 11: experience knowledge people that are probably looking for a little
44:01
Speaker 11: bit more performance. Our bikes provide more performance.
44:05
Speaker 2: What's the key to you think the growth that you've experienced,
44:09
Speaker 2: the market chair you've been able to take. Is it
44:12
Speaker 2: the racing is it? You know, just the design and
44:16
Speaker 2: production of the bikes? Is it the dealership network. I've
44:19
Speaker 2: got a very cool dealer by me, Shane at White
44:21
Speaker 2: Plains Indian. He's like obsessed with the brand. What is
44:25
Speaker 2: it you think that's helping you helping you win?
44:28
Speaker 11: You know, all those things combined. Really it's important, right,
44:31
Speaker 11: You've got to honor the brand.
44:32
Speaker 5: In the right way.
44:34
Speaker 11: You need to give the consumers a premium ownership and
44:38
Speaker 11: buying experience. Our dealers are first class. I'm glad that
44:41
Speaker 11: you've had a good experience with them. That's normal for us,
44:45
Speaker 11: and we build beautiful motorcycles. You know, the first thing
44:49
Speaker 11: that attracts people to Indian is the style of the bikes.
44:51
Speaker 11: That they look cool, they are cool, and then once
44:55
Speaker 11: they ride them, they appreciate the performance that they have
44:58
Speaker 11: and and once they own them, we have world class
45:03
Speaker 11: satisfaction scores. So you know, once you get on one,
45:07
Speaker 11: you kind of stay on one. You convince your buddy
45:09
Speaker 11: to kind of, you know, go check them out. And
45:11
Speaker 11: that's how we've been winning in the marketplaces, word of mouth,
45:14
Speaker 11: and you know, continue to have world classic satisfaction.
45:18
Speaker 2: What's the experience like coming out of the pandemic, because
45:21
Speaker 2: you know, I think for a lot of people when
45:24
Speaker 2: we went into lockdown, a lot of people were like, man,
45:26
Speaker 2: I got to get on a motorcycle and get out
45:28
Speaker 2: there because you're definitely social distancing, right, you know Paul,
45:32
Speaker 2: you know, Paul was on one of those bicycles what
45:35
Speaker 2: do you call those bikes? No, No, the oh the
45:38
Speaker 2: with Jen Sherman and the oh yeah, the peloton, the peloton, right,
45:42
Speaker 2: but he was so he was doing a lot during
45:43
Speaker 2: the pandemic and then he's not doing it so much after.
45:46
Speaker 2: Do you have the same experience with the motorcycle sales? Did
45:49
Speaker 2: they soar when everyone had a social distance and had
45:52
Speaker 2: they softened a little bit since.
45:54
Speaker 11: Yeah, exactly, we couldn't keep enough bikes in stock. You know,
45:58
Speaker 11: it was hard enough trying to keep the factories running,
46:03
Speaker 11: but the demand was through the roof and so a
46:06
Speaker 11: lot of people had to place orders for them and
46:09
Speaker 11: wait for them to come. That subsided a little bit.
46:12
Speaker 11: We're kind of back to a normal, sort of pre
46:15
Speaker 11: pandemic level. The rising interest rates, you know, makes it
46:19
Speaker 11: a little bit challenging for some customers to finance their bikes.
46:23
Speaker 11: But we're still seeing healthy demand and we're still gaining
46:27
Speaker 11: market share, so we're in a good spot. But it
46:30
Speaker 11: was a crazy couple of years.
46:31
Speaker 6: For sure.
46:32
Speaker 4: Do motorcycles are motorcycles? Are they going electric?
46:36
Speaker 11: Some of them are not. The not the category that
46:40
Speaker 11: we're in. You know that people like to go a
46:43
Speaker 11: longer distance. There are some in the smaller urban setting
46:47
Speaker 11: that are going electric. The challenge right now most brands
46:52
Speaker 11: have an electric offering or will be or have announced them.
46:56
Speaker 11: But the finding the perfect balance of where the technology
47:01
Speaker 11: of the battery power and the cost of that marries
47:05
Speaker 11: up into a motorcycle that's affordable and kind of can
47:08
Speaker 11: thrill a customer that that perfect balance isn't there yet.
47:12
Speaker 2: Yeah, electric power and like self driving capabilities are for caterers. Yes,
47:18
Speaker 2: you're a cajor I'm a I don't need that. Yeah,
47:21
Speaker 2: I had the freedom and especially at the Big V twin,
47:24
Speaker 2: you know, the American experience. It's sure, it's so cool
47:28
Speaker 2: with the thunderstroke engine. The development of that has been
47:30
Speaker 2: has been awesome for Indians. So I appreciate you guys
47:33
Speaker 2: giving me a chance to ride this bike. Absolutely love it. Mike,
47:36
Speaker 2: thanks so much for joining us as well on the show.
47:39
Speaker 2: Mike Doherty there is the president of Indian Motorcycles for
47:42
Speaker 2: Polaris Cagre.
47:43
Speaker 4: I've never heard that term.
47:44
Speaker 1: It's a derogatory term for automobile people from motorcycles.
47:48
Speaker 2: Yeah, somebody sits in the car, you know, texting during
47:52
Speaker 2: his commute, which is what pretty much everybody does.
47:55
Speaker 5: Yeah, we do.
47:57
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
48:00
Speaker 2: subscribe and listen to interviews on Apple Podcasts or whatever
48:04
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
48:08
Speaker 2: at Matt Miller nineteen seventy three. And I'm fall Sweeney.
48:11
Speaker 4: I'm on Twitter at Ptsweeney.
48:13
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48:16
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