Latest / Bloomberg Intelligence / Airlines Report, IBM and Tesla Earnings Recap, Outlook on the Markets

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Airlines Report, IBM and Tesla Earnings Recap, Outlook on the Markets · Bloomberg Intelligence

• 0:01
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US Live
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• 0:16
  Speaker 2: Something that also is helping equities move higher. Here are
• 0:19
  Speaker 2: airlines you got. Delta has been up for the last
• 0:22
  Speaker 2: United I should say it's been up for the last
• 0:24
  Speaker 2: few days since it reported. You also had Southwest American
• 0:27
  Speaker 2: Airlines all kind of beating on earnings. The overall airline
• 0:31
  Speaker 2: passenger index is also doing quite well. Hi, Paul, I
• 0:34
  Speaker 2: thought no one was traveling anymore.
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  Speaker 3: I don't know.
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  Speaker 2: I mean he did, but he's a late bloomer. So
• 0:37
  Speaker 2: there's that. Joining us now is George Ferguson. He's a
• 0:40
  Speaker 2: Bloomberg Intelligence senior Aerospace, Defense and airlines analyst. George, I
• 0:44
  Speaker 2: thought we were going to be looking at twenty twenty
• 0:46
  Speaker 2: four weakness because everyone spent their money and they're done traveling.
• 0:49
  Speaker 2: What is happening with airline earnings right now?
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  Speaker 4: I think a lot of it is being driven frankly
• 0:55
  Speaker 4: by guidance. Well you know, well some of the excuse me,
• 0:58
  Speaker 4: some of the profit reports becoming out better than people expected.
• 1:04
  Speaker 4: When I look at yields this morning, you know we
• 1:07
  Speaker 4: got American, Alaska, and Southwest yields were down in the
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  Speaker 4: domestic business on all three. Alaska yields were down six
• 1:14
  Speaker 4: or seven percent, American yields down similar number. Southwest really
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  Speaker 4: just let a load factor fade away into the seventies
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  Speaker 4: and took a yield down sort of two percent.
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  Speaker 5: So to me, you know they're guiding to better.
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  Speaker 4: Results is as you know next year, as we get
• 1:31
  Speaker 4: into one actually one queue doesn't kind of doesn't look great,
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  Speaker 4: but as we get past one queue, the overall guidance
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  Speaker 4: for the year looks a bit better. So airlines, I think,
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  Speaker 4: I think things are going to a firm as they
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  Speaker 4: get into next year. But I don't think it looks
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  Speaker 4: like a healthy market at all from the numbers I've
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  Speaker 4: seen QUE four.
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  Speaker 6: So it's interesting, George, are we give us a sense
• 1:51
  Speaker 6: of where we are and just in terms of air travel,
• 1:53
  Speaker 6: have we established a new post pandemic normality in terms
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  Speaker 6: of where leisure traffic is and where business trasse? Do
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  Speaker 6: we kind of know how that market looks?
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  Speaker 4: So comments from United where that business traffic wasn't back
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  Speaker 4: to twenty nineteen levels.
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  Speaker 5: They said they saw hopeful signs in one queue.
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  Speaker 4: So yeah, so, as near as we can tell, sorry,
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  Speaker 4: with some of these results, business hasn't come back fully.
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  Speaker 5: Is this the new normal? I would guess it is
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  Speaker 5: right because.
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  Speaker 4: We're, you know, we're I don't know when the pandemic
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  Speaker 4: actually sort of ended, but we're probably a year and
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  Speaker 4: a half past, and I would expect most of you know,
• 2:32
  Speaker 4: normality to have returned to our lives. So it seems
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  Speaker 4: like we still have some level of deficit on pre
• 2:38
  Speaker 4: pandemic business travel, but leisure travel has definitely exceeded at
• 2:43
  Speaker 4: I think the airlines are just sold capacity. They would
• 2:46
  Speaker 4: have sold the businesses into the leisure side, and I
• 2:48
  Speaker 4: think that's making the fair softer.
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  Speaker 2: So you say that the quarter, in that great first
• 2:53
  Speaker 2: quarter looks soft. I get that. But then you said
• 2:55
  Speaker 2: that after Q one things start to look a little better.
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  Speaker 2: What's going to look a little better? Is it business travel?
• 3:02
  Speaker 2: Is it we just keep doing vacation stuff, we do
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  Speaker 2: it domestically rather internationally, or is it still across the board.
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  Speaker 4: I said that after Q one, the airlines, I think
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  Speaker 4: it's going to look better I don't see it right.
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  Speaker 4: I think the big leisure bounce back was last year,
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  Speaker 4: twenty twenty three, and I think that you could see
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  Speaker 4: software domestic yields all.
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  Speaker 5: Through the year.
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  Speaker 4: But you know, we had Scott Kirby at United Airlines
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  Speaker 4: earning earlier in the week and he's telling us how
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  Speaker 4: you know, he's getting traction from premium products and that's
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  Speaker 4: going to help him drive better profitability through next year.
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  Speaker 4: I mean, you know, companies like Alaska they have premium product,
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  Speaker 4: but I think they're a roughly the same amount ni United.
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  Speaker 5: It's adding it.
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  Speaker 4: Southwest has no premium products, and there's a lot of
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  Speaker 4: other airlines that have no premium product. And I think
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  Speaker 4: they're going to be fighting for the base leisure traveler.
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  Speaker 4: I think it's going to be difficult and jury against
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  Speaker 4: the airlines, and they could see it coming.
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  Speaker 6: Starry, George, you're out in Los Angeles the Aerospace Supply
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  Speaker 6: Chain conference. How is the supply chain for the airline industry?
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  Speaker 6: Can they get the planes they need?
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  Speaker 5: That's rough.
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  Speaker 4: So we saw the news I'm boeing today or I
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  Speaker 4: guess late last night from the FAA about not allowing
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  Speaker 4: them to increase the discussion that the Aerospace Supplier Conference
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  Speaker 4: is all about labor, labor and labor.
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  Speaker 5: There's been a lot of turnover. Yeah, there's a lot
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  Speaker 5: of turnover in the industry.
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  Speaker 4: The backfill needs to be trained, they're not fully trained,
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  Speaker 4: they're not efficient, and there's still people having a hard
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  Speaker 4: time finding labor. And so the US aerospace industry is
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  Speaker 4: in pretty tough tough straits. I think, I think young kids,
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  Speaker 4: you know, A lot of discussion here is that young kids,
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  Speaker 4: you know, young professionals don't want to come to this industry.
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  Speaker 4: They'd rather work for Amazon, they'd rather work for Google
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  Speaker 4: than go to work in the aerospace industry, and so
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  Speaker 4: having a real hard time backfilling and training and keeping
• 5:00
  Speaker 4: people in the industry.
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  Speaker 2: So to that point, what happens if Boeing isn't allowed
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  Speaker 2: to produce the plane that the FAA said, I can't
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  Speaker 2: even treat keep track, to be honest with you. But
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  Speaker 2: if they can't produce it, what happens to those that
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  Speaker 2: have ordered it?
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  Speaker 5: Okay?
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  Speaker 4: So I mean right now, what the fa said is
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  Speaker 4: that Boeing can't increase production, right, increase of the minutes
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  Speaker 4: they're already building. They were building about thirty one a
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  Speaker 4: month last year. They were supposed to rate break to
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  Speaker 4: about thirty eight.
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  Speaker 5: A month at the end of the year.
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  Speaker 4: The question is have they so will the FA let
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  Speaker 4: them continue at thirty eight? And then as I understand
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  Speaker 4: that the FA is going to inspect their manufacturing processes
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  Speaker 4: because they're quite concerned obviously after the Alaska incident, to
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  Speaker 4: make sure it's stable, make sure that Bone can build
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  Speaker 4: aircraft safely. So my guess is you got something that's
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  Speaker 4: going to last part of this quarter. I mean, there's
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  Speaker 4: only so many sites that can really inspect or You've
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  Speaker 4: got a lot of inspection down in which Chitah, a
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  Speaker 4: lot of inspection.
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  Speaker 5: Up in Renton, Washington.
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  Speaker 4: Those are the two main factories they f they could
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  Speaker 4: go deeper into so many other suppliers, which they probably will,
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  Speaker 4: but there's not a lot of sites to inspect. My
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  Speaker 4: guess is that deliveries for customers that expect the airplanes
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  Speaker 4: in twenty twenty four could get pushed out, probably will
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  Speaker 4: get pushed out, maybe into twenty twenty five. Could be
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  Speaker 4: customers core customers like United Southwest, Ryanair, Alaska Airlines, they
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  Speaker 4: take the majority of the orders recently, so you'll hear
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  Speaker 4: some howling from them. I think you already heard some
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  Speaker 4: howling from United CEO Kirby right on the Max ten.
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  Speaker 4: So I think that's what's going to happen. You go
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  Speaker 4: to see deliveries get pushed out and pushed into next year.
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  Speaker 4: Hopefully Bowling can recover that and bounce to higher rates.
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  Speaker 4: That's all about their recovery.
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  Speaker 6: So, I mean, the Boeing stock is off five point
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  Speaker 6: eight percent today on the news, off twenty two and
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  Speaker 6: a half percent year to date here, So the street
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  Speaker 6: is really concerned, George, I mean, is there a I
• 7:01
  Speaker 6: mean I just kind of feel like they're kind of
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  Speaker 6: too big to fail. They're too big for anybody to
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  Speaker 6: really do anything because it's a daopoly them an airbus.
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  Speaker 6: But are there some what is it like a downside
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  Speaker 6: scenario here for Fox? It would it be government regulation?
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  Speaker 6: Would it be what's kind of spooking the market?
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  Speaker 4: Well, I think you already have part of that downside right,
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  Speaker 4: and that's more intense oversighting regulation.
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  Speaker 5: Frankly, that probably should have occurred anyways.
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  Speaker 4: You know, the FAA has also going through some difficult
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  Speaker 4: times during the pandemic, lost a bunch of personnel they
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  Speaker 4: need their skill sets developed sharpened, so this process could
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  Speaker 4: be slow. But I don't I mean, I do think
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  Speaker 4: they're you know, I think they are close to too
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  Speaker 4: big to fail, given that there's such an.
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  Speaker 5: Important government contractor.
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  Speaker 4: You know, one of the few big primes that can
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  Speaker 4: make airplanes in serial production.
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  Speaker 5: Questions.
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  Speaker 4: You know, what could the government do if they had
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  Speaker 4: real big problems on the commercial side. I don't think
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  Speaker 4: we're there yet, though, I think it still is at duopoly.
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  Speaker 4: If you wanted to get in the back of the
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  Speaker 4: line for an Airbus eight three twenty the competitor right now.
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  Speaker 4: You know, if we just add up all the orders
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  Speaker 4: they have in their production increases, you're.
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  Speaker 5: Out eight years. I think some of those orders are
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  Speaker 5: definitely long data orders.
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  Speaker 4: So maybe if you got in the back of that line,
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  Speaker 4: you'd be out five or six years before you started
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  Speaker 4: getting airplanes. That alone is going to keep Boeing, keep
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  Speaker 4: folks going towards Boeing for airplanes. But that's only if
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  Speaker 4: things don't degrade from air. Things degrave from air. You
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  Speaker 4: got a much bigger.
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  Speaker 2: Problem, George. You have like forty seconds. But for an
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  Speaker 2: airline that was supposed to get a plane, that's not
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  Speaker 2: getting it. Can they do they have other planes that
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  Speaker 2: can suffice for them or are they going to be
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  Speaker 2: in the hot seat.
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  Speaker 4: So I think you're going to see the airlines holding
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  Speaker 4: on to their older aircraft. If they have older aircraft,
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  Speaker 4: will fly them longer. It's been good for the maintenance business.
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  Speaker 4: If they don't, they'll have to shut down some of
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  Speaker 4: their schedule will not fly as much.
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  Speaker 5: That could you want a airline in twenty twenty four?
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  Speaker 3: All right, George Ferguson, Thank you so much. We appreciate that.
• 9:05
  Speaker 6: George Ferguson, he's a senior aerospace, defense and airlines analysts
• 9:08
  Speaker 6: Bloomberg Intelligence.
• 9:11
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• 9:29
  Speaker 6: One of the big drivers, as Nor was just reporting,
• 9:32
  Speaker 6: was ibm Our good Friends in ARMANC, New York, great
• 9:35
  Speaker 6: headquarters by the way up in ARMONK. This stock's a
• 9:38
  Speaker 6: big I mean it's close to when all time height.
• 9:40
  Speaker 6: It's at a fifty two week high. I'm going to
• 9:42
  Speaker 6: break out what's driving our good friends at IBM. On
• 9:45
  Speaker 6: rog Rana, he joins us. He covers set technology for
• 9:48
  Speaker 6: Bloomberg Intelligence and turns out he's pretty good at it.
• 9:52
  Speaker 6: On rug, you've been following Tessa for a long time,
• 9:55
  Speaker 6: give us the give us the bulk case for Tesla
• 9:58
  Speaker 6: right here.
• 9:58
  Speaker 3: That market really seems to like what they say on
• 10:00
  Speaker 3: the earnings last night.
• 10:01
  Speaker 7: So for IBM, you know, one of the biggest things
• 10:03
  Speaker 7: we talked about yesterday was the free cash flow number
• 10:06
  Speaker 7: came out at twelve billion. I think we were you know,
• 10:08
  Speaker 7: we were slightly above the street and saying that, you know,
• 10:11
  Speaker 7: I'll be happy if they do eleven billion. So I
• 10:13
  Speaker 7: think that really speaks both to the organic growth rate
• 10:16
  Speaker 7: of the company, operational efficiencies, you know, improving margins, taking
• 10:21
  Speaker 7: care of accounts, receivers, all sorts of things. So I
• 10:24
  Speaker 7: think it's really good print for IBM in terms of
• 10:27
  Speaker 7: free cash flow, but also the you know, the guidance
• 10:30
  Speaker 7: on the you know, organic growth rate because we were
• 10:34
  Speaker 7: going in so in fourth quarter they did three percent
• 10:37
  Speaker 7: growth rate in constant currency. We thought at least for
• 10:39
  Speaker 7: the first you know, a few quarters, they're going to
• 10:41
  Speaker 7: talk about three to four percent and then accel rate,
• 10:44
  Speaker 7: but they strayed away went with a mid single digit number.
• 10:47
  Speaker 7: So I think overall, good for IBM, good for the
• 10:49
  Speaker 7: rest of the tech space, and I feel pretty happy
• 10:52
  Speaker 7: about it.
• 10:54
  Speaker 2: What I know, this is kind of a probably dumb question,
• 10:56
  Speaker 2: but like what in IBM's business model to let it
• 10:58
  Speaker 2: like me, are they doing well? Like break down the
• 11:00
  Speaker 2: different categories in a way that makes sense to Alex
• 11:03
  Speaker 2: So they.
• 11:04
  Speaker 7: I mean, they still are a very big piece of
• 11:06
  Speaker 7: the entire tech ecosystem. They have very strong relationships, they
• 11:09
  Speaker 7: have a good consulting business, they have red hat, they
• 11:12
  Speaker 7: tell mainframes. Now, remember one thing, I mean, I know
• 11:15
  Speaker 7: people got very getting very excited, but if software spending
• 11:19
  Speaker 7: is climbing between ten to twelve percent, IBM still growing
• 11:22
  Speaker 7: you know, six to seven. So they are still underperforming
• 11:25
  Speaker 7: the entire broader software space. But that's okay because you know,
• 11:28
  Speaker 7: when you go from three to six, that's a big change.
• 11:31
  Speaker 7: Also in terms of the growth rates. This is just
• 11:34
  Speaker 7: a matter of overall tech spending improving after two years
• 11:37
  Speaker 7: of under investment. This is something that we have been
• 11:39
  Speaker 7: saying for so long. Tick as a portion of total
• 11:42
  Speaker 7: GDP is a very small number. Most of the companies
• 11:45
  Speaker 7: around the world, barring the consumer technology companies that we see,
• 11:48
  Speaker 7: have underinvested in technology. So when you have rail companies
• 11:53
  Speaker 7: or airlines or auto insurance companies, they really need to
• 11:56
  Speaker 7: be more digital. And one way to get digital is
• 11:59
  Speaker 7: to move a lot of their infrastructure in the cloud.
• 12:02
  Speaker 7: So all of those things play in well. We have
• 12:04
  Speaker 7: not seen good spending in two years. I'm pretty happy
• 12:07
  Speaker 7: that twenty twenty four May we may see a rebound.
• 12:10
  Speaker 6: So Anaur, how does IBM and fit into the AI discussion,
• 12:16
  Speaker 6: because I know the CEO called out the client demand
• 12:19
  Speaker 6: for AI is accelerating.
• 12:21
  Speaker 3: How do they play in that space.
• 12:23
  Speaker 7: The majority of the stuff that they're going to do
• 12:25
  Speaker 7: is on the consulting side. So if you are a
• 12:27
  Speaker 7: large company, you need to figure out what to do.
• 12:29
  Speaker 7: They have a lot of consultants that can help you
• 12:31
  Speaker 7: clean up the data. You know, use whichever model we
• 12:34
  Speaker 7: want to use. You want to use something from open
• 12:36
  Speaker 7: AI Andthropic, all these companies that are out there. They'll
• 12:39
  Speaker 7: help you with that, help you train the models, and
• 12:42
  Speaker 7: then at the end of the day make it for
• 12:44
  Speaker 7: your business case. It's not as easy as just you know,
• 12:47
  Speaker 7: using chat GPD and answering questions. For this, for an
• 12:51
  Speaker 7: enterprise use, you need to do a lot of data
• 12:53
  Speaker 7: clean up, data aggregation, because that's what's needed to clean
• 12:57
  Speaker 7: up your you know, the models itself.
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  Speaker 2: And long can that kind of growth rate of six
• 13:02
  Speaker 2: seven percent go?
• 13:04
  Speaker 7: I think if this year they are able to go
• 13:06
  Speaker 7: to six seven percent, you know, I could expect then
• 13:09
  Speaker 7: you know, another one hundred to two hundred basis points
• 13:11
  Speaker 7: improvement next year. And that's actually not a bad deal
• 13:14
  Speaker 7: because you remember the old IBM just about four or
• 13:16
  Speaker 7: five years ago, they were not growing at all. So
• 13:19
  Speaker 7: in order for them to actually come up with a
• 13:22
  Speaker 7: high single legit number next year would be would be
• 13:25
  Speaker 7: really welcome by the market.
• 13:27
  Speaker 6: So what's the read through here, Ana rog for you know,
• 13:30
  Speaker 6: greater tech here from IBM?
• 13:31
  Speaker 3: As can I can?
• 13:33
  Speaker 6: I say, I'm just going to go out and start
• 13:35
  Speaker 6: buying more of these stands I'm looking at like Nvidia
• 13:37
  Speaker 6: for example, up one and a half percent today of
• 13:39
  Speaker 6: twenty five percent year to date, and of course up
• 13:40
  Speaker 6: two hundred and twenty percent over the trailing twelve months.
• 13:43
  Speaker 3: I guess this is a pretty good readthrough. Is that
• 13:45
  Speaker 3: can I do that?
• 13:46
  Speaker 7: Yeah, So for you know, we had run a CIO
• 13:49
  Speaker 7: survey back in December, and you know, we were we
• 13:51
  Speaker 7: kind of got the indication that it's going to be
• 13:54
  Speaker 7: a year of spending more aggressively compared to the last
• 13:57
  Speaker 7: two in twenty twenty four. But you know, the way
• 13:59
  Speaker 7: we have built that and you know, we got the
• 14:01
  Speaker 7: chip strength going on right now that probably carries on
• 14:04
  Speaker 7: till the summer, and then after that we see you know,
• 14:07
  Speaker 7: strength in the software and the and the consulting area,
• 14:10
  Speaker 7: which are more of the downstream play. But it's possible
• 14:12
  Speaker 7: that we may see that bounce back, you know, as
• 14:15
  Speaker 7: early as second quarter or you know, going into it
• 14:17
  Speaker 7: because you know things, I think the leading indicators are
• 14:20
  Speaker 7: good at this point. So so I'm pretty optimistic that
• 14:24
  Speaker 7: you know, when we were thinking about a second half
• 14:26
  Speaker 7: recovery for tech spending, you know, it may actually happen
• 14:30
  Speaker 7: in second quarter or maybe even as late late as
• 14:32
  Speaker 7: first quarter.
• 14:33
  Speaker 2: What are the derivative players from IBM, their suppliers that
• 14:36
  Speaker 2: kind of trade.
• 14:37
  Speaker 7: Yeah, so you have you know, companies on the services sides.
• 14:40
  Speaker 7: You have companies like Excenture, you have Capturemini in Europe,
• 14:43
  Speaker 7: you have TCS, and infests in India. So those are
• 14:46
  Speaker 7: the four big ones for the consulting side. On the
• 14:49
  Speaker 7: software side, I think this bodes well for everybody, whether
• 14:51
  Speaker 7: it's you know, Microsoft Aws Service Now, Sales Force, Workday,
• 14:57
  Speaker 7: you know, you know, the big software vendors, all of
• 15:00
  Speaker 7: them should see some downstream effect if we if you know,
• 15:03
  Speaker 7: text spending does recover this year.
• 15:06
  Speaker 6: All right, let's preview Microsoft here. I mean again, the
• 15:09
  Speaker 6: stoctors hit a three trillion dollar market capitalization, which got
• 15:13
  Speaker 6: a lot of people's attention. What's kind of the story
• 15:16
  Speaker 6: here for Microsoft?
• 15:17
  Speaker 7: Yeah, I mean it's a very similar story. We recently
• 15:20
  Speaker 7: published a piece today that says, you know, there is
• 15:22
  Speaker 7: going to be a bigger delta between Microsoft and Apple's
• 15:24
  Speaker 7: growth rate going forward, and large portion of that is
• 15:28
  Speaker 7: an improvement in the cloud and the other product growth
• 15:31
  Speaker 7: rate in the second half. Now, if you look at
• 15:33
  Speaker 7: the you know, the Bloomberg terminal and look at the
• 15:36
  Speaker 7: function EM ten, you will see that Microsoft growth rate
• 15:39
  Speaker 7: has picked up for the next four quarters. But majority
• 15:42
  Speaker 7: of that is because of the activation deal. If you
• 15:45
  Speaker 7: peel through that and you know, look at it organic
• 15:48
  Speaker 7: growth rate, Street is still expecting that eleven to twelve
• 15:50
  Speaker 7: percent over the next four quarters. We think that's going
• 15:53
  Speaker 7: to change. We think the second half that growth actual
• 15:56
  Speaker 7: rates to you know, thirteen percent or so, and that's
• 15:59
  Speaker 7: because of the reasons that we mentioned above that after
• 16:03
  Speaker 7: two years, companies are finally spending and one of the
• 16:07
  Speaker 7: things we saw was if you have a cloud business infrastructure,
• 16:11
  Speaker 7: then you can reduce your usage because that helps you
• 16:14
  Speaker 7: reduce your costs, and that's what a lot of the
• 16:16
  Speaker 7: companies have done over the last two years. We think
• 16:18
  Speaker 7: that's going to take a reversal this year. On top
• 16:21
  Speaker 7: of that, Microsoft should get more benefit of their relationship
• 16:25
  Speaker 7: with open Ai because their open Ai is back end infrastructure,
• 16:28
  Speaker 7: so I think that's also contributes. So we are expecting,
• 16:31
  Speaker 7: you know, growth rates to pick up for Microsoft in
• 16:33
  Speaker 7: the second half.
• 16:34
  Speaker 2: IMM trades at twenty estimated times PE and you're taking
• 16:38
  Speaker 2: a look at Microsoft trades like thirty five. Are these
• 16:42
  Speaker 2: accurately valued here?
• 16:44
  Speaker 7: I think it's it's a very tough question to say,
• 16:46
  Speaker 7: because you know, frankly speaking, I do not know if
• 16:48
  Speaker 7: IBM will ever catch up to the software industry growth
• 16:52
  Speaker 7: rates because they have two units in there that you know,
• 16:54
  Speaker 7: may may be able to bring it down. But Microsoft,
• 16:57
  Speaker 7: you know, one could argue being almost one third of
• 16:59
  Speaker 7: the software market, such a big company, it's still growing
• 17:02
  Speaker 7: twelve thirteen, fourteen percent. That's a that's a pretty big number.
• 17:06
  Speaker 7: And you can't really say that about any you know,
• 17:09
  Speaker 7: large tech company in terms of high growth margin and
• 17:12
  Speaker 7: high growth rate. It's very unusual to see that.
• 17:16
  Speaker 6: All right, Honor Agrana, thank you so much for joining us.
• 17:19
  Speaker 6: As always on Ragrana senior technology analyst for Bloomberg Intelligence,
• 17:23
  Speaker 6: coming to us from the technology capital that is, of course, Chicago, Illinois.
• 17:28
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 17:32
  Speaker 1: weekdays at ten am Eastern on Appocarplay and Android Otto
• 17:36
  Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
• 17:39
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 17:43
  Speaker 6: Look at Tesla stocks down ten percent for most companies,
• 17:47
  Speaker 6: that would be tragic, but this is like another just
• 17:49
  Speaker 6: an average day for the volatility of this stock over
• 17:52
  Speaker 6: the years.
• 17:52
  Speaker 3: But again some fundamental concerns coming out of their earnings
• 17:55
  Speaker 3: last night.
• 17:55
  Speaker 6: That's where we want to start in the tech space today,
• 17:57
  Speaker 6: and we can do that with none better than Dan Ives,
• 17:59
  Speaker 6: Managing Director and senior equity analyst a web Buch Securities
• 18:02
  Speaker 6: joining us live here in our Bloomberg Interactive Broker studio.
• 18:05
  Speaker 6: So Dan, thanks so much for joining us here with Tesla.
• 18:08
  Speaker 6: And it's not just a Tesla sory, it's an EV story.
• 18:11
  Speaker 6: There's real concern in there about end of market demand
• 18:14
  Speaker 6: for evs. Did Tesla help us off last night or
• 18:17
  Speaker 6: maybe not so much on that particular issue.
• 18:19
  Speaker 8: Look, I think it was a train wreck conference call.
• 18:22
  Speaker 3: And is that a train wreck elon Musk?
• 18:26
  Speaker 8: Yeah, I would call this just a train wreck conference call,
• 18:30
  Speaker 8: even for Musk, because the problem here is that it's
• 18:33
  Speaker 8: actually not even so much demand issue. It's about the
• 18:36
  Speaker 8: price wars, okay, and not giving guidance, not giving strategic goalposts. Look,
• 18:42
  Speaker 8: the dream AI, we're a huge believers disruptive tech where
• 18:45
  Speaker 8: this is all going. But in the near term, when
• 18:48
  Speaker 8: the plane's crashing, people not focus on salt or on
• 18:51
  Speaker 8: salted Prenzels. And that's the problem here that's happening on
• 18:56
  Speaker 8: that call because of the price wars in China.
• 18:59
  Speaker 2: Well, it did Tesla miss a trick by not spending
• 19:03
  Speaker 2: more money making a cheaper car, no doubt.
• 19:05
  Speaker 8: I mean, like, if ideally right now, we'd have a
• 19:09
  Speaker 8: sub thirty thousand, Yeah.
• 19:11
  Speaker 2: Exactly, have a cyber truck that no one on city
• 19:14
  Speaker 2: street can park.
• 19:15
  Speaker 8: Look, I mean, but that's one of the balances because
• 19:17
  Speaker 8: they have to also go innovative, high end. You can
• 19:21
  Speaker 8: just be low cost and the technology here it's taken time.
• 19:25
  Speaker 8: I mean, you really had to have a Mexico facility.
• 19:27
  Speaker 8: You have to build out Austin. In terms of from
• 19:30
  Speaker 8: a gigafactory perspective, they are Look, they're doubling down. EV's
• 19:35
  Speaker 8: where Detroit and others are peeling back. No one argues
• 19:38
  Speaker 8: with the strategy longer term, but from an investor perspective,
• 19:41
  Speaker 8: a lot more questions and answers. And that's why I
• 19:44
  Speaker 8: think it was a little bit of a black eye
• 19:46
  Speaker 8: last night in terms of a call from Musk.
• 19:48
  Speaker 6: So where is the company in terms of communicating the
• 19:52
  Speaker 6: real on the ground situation in China?
• 19:55
  Speaker 3: What do they really think China can be for them?
• 19:57
  Speaker 8: Oktail two cities, the demand inside I think I actually
• 20:01
  Speaker 8: stabilized to They've gained some net share. Clearly BID is
• 20:06
  Speaker 8: really the formerable competitor there. But then it comes down
• 20:09
  Speaker 8: to the price war and that's Look, that's the crux
• 20:12
  Speaker 8: of everything.
• 20:12
  Speaker 3: Is there a price work just in Japan? Are we
• 20:14
  Speaker 3: talking kind of globally here?
• 20:15
  Speaker 8: I'd say globally, but the heart of the price war
• 20:19
  Speaker 8: is in China.
• 20:19
  Speaker 3: Okay, And with.
• 20:20
  Speaker 8: Price war, you've already had prices come down twenty twenty
• 20:24
  Speaker 8: five percent. You wanted to see last night a line
• 20:27
  Speaker 8: in the sand. Okay, we'll cut around the edges, but
• 20:29
  Speaker 8: we feel like most of that's in the rear view,
• 20:32
  Speaker 8: left the door open, and that's that's the frustration here.
• 20:35
  Speaker 8: This is really a more of a margin declining story
• 20:38
  Speaker 8: rather than a demand falling off story.
• 20:42
  Speaker 2: I have to say, Dan, this sounds like you're a
• 20:45
  Speaker 2: little bit cautious on Tesla. I always think of you
• 20:47
  Speaker 2: as like the tech bowl, like, no matter what, you
• 20:50
  Speaker 2: get to find the silver lining. Like this feels like
• 20:52
  Speaker 2: a big moment.
• 20:53
  Speaker 8: Look, I think it's I'll call it. It's another inflection
• 20:56
  Speaker 8: point where we've had over the last decade period. It's
• 21:00
  Speaker 8: where backwards against the wall, how you're going to perform
• 21:04
  Speaker 8: And this is another one of those. So the long terms,
• 21:06
  Speaker 8: to your point, the long term story decade long, it's there.
• 21:10
  Speaker 8: But also you can't be smoking mirror, right, I'm not
• 21:13
  Speaker 8: gonna wear the rosecr Glasses saying that this is a
• 21:15
  Speaker 8: great conference call. I mean, if you looked up in
• 21:18
  Speaker 8: the dictionary disaster right now, although there be a picture
• 21:21
  Speaker 8: that company.
• 21:22
  Speaker 6: Well, I think that the analys on the street reflected out.
• 21:24
  Speaker 6: I mean you look at the A n R function
• 21:26
  Speaker 6: on the Bloomberg terminal for analysts recommendations, there's twenty two buys,
• 21:30
  Speaker 6: twenty four holds, and twelve cells.
• 21:32
  Speaker 2: But this also raises the question and I got some
• 21:34
  Speaker 2: grief on this yesterday, but like what is Telsla? Is
• 21:37
  Speaker 2: a car company, is a software company, is a tech company?
• 21:39
  Speaker 2: And then how you value it? So if it's going
• 21:41
  Speaker 2: to be a software company, an AI company, maybe it's okay.
• 21:44
  Speaker 2: But if it's going to be a car company, and
• 21:46
  Speaker 2: then you can't value it the way it is, like
• 21:47
  Speaker 2: how do you even start to price all that in?
• 21:50
  Speaker 8: Yeah, and we've always viewed it and we talked about
• 21:52
  Speaker 8: a looting, the disruptive tech. It's all of it and that,
• 21:55
  Speaker 8: and it speaks to where I could argue like this
• 21:59
  Speaker 8: could be a trillion and a half mark cap as
• 22:02
  Speaker 8: it goes through on AI and the vision on evs,
• 22:05
  Speaker 8: especially as they double down, but as they go through
• 22:08
  Speaker 8: this interim period. Must talk about there in the middle
• 22:10
  Speaker 8: of two waves, and that's essential where they're caught. You
• 22:13
  Speaker 8: cannot keep giving up margins. You start selling Gucci sunglasses
• 22:18
  Speaker 8: for one hundred dollars of CVS, you're not selling for
• 22:21
  Speaker 8: two thousand dollars of Madison Avenue. So the problem is
• 22:23
  Speaker 8: that it's a margin story. That's the issue right now
• 22:27
  Speaker 8: for investors. You need guidance, you need an adult in
• 22:31
  Speaker 8: the room, and instead it was felt like more like preschool.
• 22:34
  Speaker 6: Well that's kind of what you know of the people
• 22:36
  Speaker 6: that aren't recommending the stuff.
• 22:38
  Speaker 3: Most of them are traditional auto analysts and they know it.
• 22:41
  Speaker 6: Eventually it gets down to bending metal and the bending
• 22:45
  Speaker 6: metal business is not a great profit business, sure.
• 22:49
  Speaker 8: And I think we've seen that in the three one
• 22:51
  Speaker 8: three area code is they're the transition to EV's and
• 22:54
  Speaker 8: everything that GM and Ford have gone through. But Paul,
• 22:57
  Speaker 8: to your point, like it is disruptive tech, but this
• 23:01
  Speaker 8: is this is a little white knuckle period right now.
• 23:03
  Speaker 2: All right, let's brought it now to other tech because
• 23:05
  Speaker 2: like IBM, awesome, Microsoft, three trillion dollar company, like I mean,
• 23:11
  Speaker 2: the old school what do you call them? Yesterday?
• 23:13
  Speaker 6: The boring?
• 23:14
  Speaker 2: Yeah, like you know tech like the old school tech
• 23:17
  Speaker 2: so hot right now sustainable?
• 23:19
  Speaker 8: What do you think the AI revolutions here? And we've
• 23:22
  Speaker 8: talked in the New Tech BALLMARKT, which is about starting
• 23:25
  Speaker 8: in the fall, we with this goes well in twenty
• 23:28
  Speaker 8: twenty five because it's the biggest tech transformation thirty years
• 23:31
  Speaker 8: since start the Internet nineteen ninety five. So when you
• 23:34
  Speaker 8: look at IBM, you look at SAP and some of
• 23:36
  Speaker 8: the others, they're going to benefit from this. They're clearly
• 23:39
  Speaker 8: reading this is the godfather of AI. Jensen Navidian. Of course,
• 23:43
  Speaker 8: what's happened Redman within Nadella, which is why I believe
• 23:47
  Speaker 8: in a year from now, we're talking about four trillion
• 23:50
  Speaker 8: dollar mark aps with Microsoft and Apple. And I think
• 23:54
  Speaker 8: that's why next week you look at Apple, you look
• 23:57
  Speaker 8: at Microsoft. I think that's really gonna be an eye
• 24:00
  Speaker 8: opener for a while. Those bears that maybe they came
• 24:03
  Speaker 8: out of hibernation mode a little the first week or
• 24:06
  Speaker 8: two of the of the year, I think it sends
• 24:08
  Speaker 8: back into the caves.
• 24:10
  Speaker 6: When we think about AI, that's clearly the long term,
• 24:14
  Speaker 6: intermediate term, long longer term growth driver for just all
• 24:17
  Speaker 6: things tech. I guess my question for smart people like you,
• 24:19
  Speaker 6: is how much of that spend do you think is
• 24:21
  Speaker 6: going to be incremental versus maybe just pulling out of
• 24:24
  Speaker 6: my IT tech budget or something like that.
• 24:26
  Speaker 8: I probably think about fifty to sixty percent of it
• 24:30
  Speaker 8: is incremental. And I think that's the difference is that
• 24:34
  Speaker 8: when you look at the incremental use cases, it's jaw dropping.
• 24:38
  Speaker 8: And I think that's why CIOs A recognizing the process
• 24:43
  Speaker 8: and actually the ability to use software. And we'd think
• 24:47
  Speaker 8: use cases right now are over eighty it was fifteen
• 24:49
  Speaker 8: use cases six months ago.
• 24:51
  Speaker 2: What I also find interesting about this is that this
• 24:52
  Speaker 2: is the structural shift in the industry, yet it's still
• 24:55
  Speaker 2: a cyclical industry. How do you know what an appropriate
• 24:59
  Speaker 2: valuation is looking at that, like, you know this is
• 25:02
  Speaker 2: going to be huge, you know this is going to
• 25:03
  Speaker 2: spend all the money, but hey, in the short term,
• 25:05
  Speaker 2: maybe there'll be a downturn.
• 25:06
  Speaker 8: Well, I think a lot of the DCF spreadsheet warriors,
• 25:10
  Speaker 8: what they can't find in their tenth four of their
• 25:13
  Speaker 8: office building in the spreadsheet is where growth going next
• 25:17
  Speaker 8: two to three years. So I think that they don't know,
• 25:19
  Speaker 8: and that's why we're boots on the ground trying to
• 25:22
  Speaker 8: understand like what the growth looks like two three years out,
• 25:26
  Speaker 8: then you could start to have a good better sense
• 25:28
  Speaker 8: incrementally what these stocks are valued. I still think numbers
• 25:32
  Speaker 8: for tech we sit here, I think numbers are Tech
• 25:35
  Speaker 8: are up another twelve to fifteen to twenty percent over
• 25:38
  Speaker 8: the next twelve to eighteen months, not just because of
• 25:40
  Speaker 8: the efficiency, but because right now, a lot of these
• 25:43
  Speaker 8: models I think very conservative relative how they're laid out.
• 25:46
  Speaker 3: So as you sit here, what's your top pick right here, Dan.
• 25:50
  Speaker 8: Well, it's Microsoft and Apple. I mean to me, Microsoft
• 25:53
  Speaker 8: as a cloud play Apple, I continue to think that's
• 25:56
  Speaker 8: probably the top tech pic here, especially on rnaissance of growth.
• 26:00
  Speaker 8: And then you look at cybersecurity. It's a golden need
• 26:03
  Speaker 8: for cybersecurity. You look in names like powe out though,
• 26:06
  Speaker 8: and for those looking for smidcap, the messy of AI,
• 26:09
  Speaker 8: you know that that's names like pall Andeer.
• 26:12
  Speaker 2: What don't you like?
• 26:13
  Speaker 9: Look?
• 26:13
  Speaker 8: So I think I most hated as Cisco just because
• 26:17
  Speaker 8: I think there is a shared donor and I think
• 26:20
  Speaker 8: that you're gonna continue to see the legacy b shared
• 26:23
  Speaker 8: donors software gonna be the shared gainers.
• 26:25
  Speaker 6: All right, I'm just gonna quote from Dan's research note
• 26:27
  Speaker 6: on Tesla, we maintain our outperform rating while lowering our
• 26:30
  Speaker 6: price target from three hundred and fifty dollars to three
• 26:32
  Speaker 6: hundred and fifteen dollars reflecting reduced estimates. Our near term
• 26:34
  Speaker 6: confidence in the story is shaken, but we remain firm
• 26:38
  Speaker 6: in our long term both pieces around Tesla and the
• 26:40
  Speaker 6: broader AI story set to take hold. This is a
• 26:43
  Speaker 6: pivotal period for Musk to get Tesla through. What will
• 26:47
  Speaker 6: help shape or haunt it's evy future. Serious check out
• 26:55
  Speaker 6: Dan's research out there from web Bush Securities. As tom
• 26:58
  Speaker 6: Kin likes to say, we protect the integrity of our research. Dan,
• 27:02
  Speaker 6: I've joined us managing director senior equity analysts for web
• 27:05
  Speaker 6: Bush Securities.
• 27:08
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 27:12
  Speaker 1: weekdays at ten am Eastern on applecar Play and Android
• 27:15
  Speaker 1: Auto with the Bloomberg Business Act. You can also listen
• 27:18
  Speaker 1: live on Amazon Alexa from our flagship New York station
• 27:21
  Speaker 1: Just Say Alexa playing Bloomberg eleven thirty Alex.
• 27:26
  Speaker 6: Let's talk sustainable energy, actually investing in sustainable energy. If
• 27:30
  Speaker 6: you remember back to the Inflation Reduction Act at the
• 27:33
  Speaker 6: time back in mid twenty twenty two.
• 27:34
  Speaker 3: A lot of folks are sampoint.
• 27:35
  Speaker 6: This is going to be huge for sustainable energy investing.
• 27:38
  Speaker 6: One key investor is like, I'm not so sure right now.
• 27:41
  Speaker 6: Charles Charlie Donovan joins us. He's a senior economic advisor
• 27:44
  Speaker 6: at Impacts.
• 27:45
  Speaker 3: Charlie, you're part of a story on.
• 27:48
  Speaker 6: Bloomber the January fifteenth that says a fifty billion dollar
• 27:51
  Speaker 6: investor says Biden's green law in Rich's middlemen.
• 27:56
  Speaker 3: What's going on there, Charlie, Well.
• 27:59
  Speaker 9: As you said, Inflation Reduction Act in twenty twenty two
• 28:02
  Speaker 9: a lot of high hopes and clearly a necessary move
• 28:06
  Speaker 9: in order to reclaim leadership in a crucially important industry.
• 28:11
  Speaker 9: But we have seen the implementation quite honestly, be disappointing,
• 28:14
  Speaker 9: and a lot of that goes to the complexity around
• 28:16
  Speaker 9: relying upon tax equity as the major channel with which
• 28:21
  Speaker 9: new projects get done, and there are alternatives, there are
• 28:24
  Speaker 9: other ways to do this. So we really see right
• 28:26
  Speaker 9: now that the technology is in the right place, the
• 28:28
  Speaker 9: economics are increasingly in favor, but there are a number
• 28:31
  Speaker 9: of ways in which the implementation of the IRA has
• 28:33
  Speaker 9: proceeded more slowly than investors would have liked, and certainly
• 28:37
  Speaker 9: the complexity doesn't lend itself to a scale which what
• 28:43
  Speaker 9: is really trillions of dollars of new money that can
• 28:45
  Speaker 9: flow into infrastructure can do so at the pace that's necessary.
• 28:49
  Speaker 2: You're basically saying that a bill passed by the government
• 28:51
  Speaker 2: in some ways is inefficient. So I get that. However,
• 28:54
  Speaker 2: if we take a look at just GDP today, like
• 28:56
  Speaker 2: within that the contribution a business investment, you can make
• 29:00
  Speaker 2: an argument that that did reflect energy projects and also
• 29:04
  Speaker 2: the idea of the IRA. It is a ten year thing,
• 29:07
  Speaker 2: so just because you're not breaking ground today, it doesn't
• 29:10
  Speaker 2: mean you're not gonna be breaking breaking ground in three years.
• 29:13
  Speaker 9: Well, that's exactly right. And also we see a canvas
• 29:16
  Speaker 9: across a value chain in clean energy that is much
• 29:19
  Speaker 9: more expansive than just thinking about solar and wind manufacturers.
• 29:23
  Speaker 9: So we think about it in an area where there's upstream,
• 29:26
  Speaker 9: just like there is an oil and gas where that's
• 29:28
  Speaker 9: the production, but you have a much much bigger set
• 29:31
  Speaker 9: of companies who are involved in what we call midstream.
• 29:33
  Speaker 9: So this is transmission and distribution, it's about storage, and
• 29:37
  Speaker 9: then downstream, which is really much closer to the consumer
• 29:40
  Speaker 9: and reflects the changes in which electrification of N demand
• 29:44
  Speaker 9: is happening much more quickly than people thought. And there's
• 29:47
  Speaker 9: a huge number of companies who are benefiting from the
• 29:50
  Speaker 9: stimulus in more indirect ways there, and so it's really
• 29:53
  Speaker 9: important to keep in mind that, as you say, although
• 29:55
  Speaker 9: certain projects are now in the pipeline, have been announced,
• 29:58
  Speaker 9: will take some time to come through, there are another
• 30:01
  Speaker 9: number of other ways in which investors can play this,
• 30:03
  Speaker 9: this this structural theme.
• 30:05
  Speaker 5: In the years ahead.
• 30:06
  Speaker 6: So I guess Greed, thank you for the little button there,
• 30:10
  Speaker 6: Ken Green investors.
• 30:12
  Speaker 3: Oh it's not just me, No, No, I know, I
• 30:17
  Speaker 3: know you got a person I knew. This is day
• 30:19
  Speaker 3: three four, only a year four for me.
• 30:21
  Speaker 6: Tucker's been in this for thirty all right, So talk
• 30:23
  Speaker 6: to us about the investment returns that green investors have
• 30:26
  Speaker 6: been dealing with not so great here?
• 30:28
  Speaker 3: And if so, why why is that?
• 30:32
  Speaker 9: Well? I think it's important to keep in mind this
• 30:34
  Speaker 9: is an industry that has been around for a lot
• 30:35
  Speaker 9: of people think of it as new, but it's been
• 30:37
  Speaker 9: around for a while. We have had a number of
• 30:39
  Speaker 9: really important waves of interest and investment, you know, going
• 30:43
  Speaker 9: all the way back to the late nineteen nineteen nineties.
• 30:46
  Speaker 9: A lot of what we see in hydrogen today, for example,
• 30:48
  Speaker 9: are companies that had their IBOs in the late nineteen nineties.
• 30:50
  Speaker 9: So there are some there is some cyclicality here, and
• 30:53
  Speaker 9: there are going to be times at which sentiment is
• 30:55
  Speaker 9: more or less in favor. What's different now is that
• 30:58
  Speaker 9: we have lived in the last day through a technological
• 31:01
  Speaker 9: miracle in which the technologies then enable not just more
• 31:04
  Speaker 9: green energy, but actually a global energy transformation in which
• 31:08
  Speaker 9: electrons become the backbone of the energy system and begin
• 31:12
  Speaker 9: to increasingly replace hydrocarbons. We are on the cusp of
• 31:17
  Speaker 9: something that we've never seen before, and that's really about
• 31:19
  Speaker 9: where technology costs have gotten to. It has certainly something
• 31:23
  Speaker 9: to do with the policy environment, It has something to
• 31:25
  Speaker 9: do with what is able and the innovations that have
• 31:28
  Speaker 9: come through that drive to make this more accessible and
• 31:32
  Speaker 9: cheaper for consumers. So you know, there are going to
• 31:35
  Speaker 9: be ups and downs, as they're going to be in
• 31:36
  Speaker 9: every industry. But I think it's important to keep in
• 31:38
  Speaker 9: context with these previous waves and these previous areas of interest.
• 31:42
  Speaker 9: What's different now, and that finally comes down to the
• 31:44
  Speaker 9: economics of these technologies.
• 31:47
  Speaker 2: I mean, sure, but I got to be honest, Like
• 31:49
  Speaker 2: when I talk to clean energy players and even hydrocarbon companies,
• 31:53
  Speaker 2: what all they like these tax credits? Like they dig
• 31:56
  Speaker 2: them and they're in deep with them. And that's making
• 31:58
  Speaker 2: a lot of these projects economics. Like I hear you
• 32:01
  Speaker 2: that the cost of technology is going down, but without
• 32:04
  Speaker 2: certain parts of the IRA, their economics are toast when
• 32:07
  Speaker 2: it comes to this, and these are like billion dollar
• 32:09
  Speaker 2: worth of companies.
• 32:11
  Speaker 9: Absolutely, And what we have said and what we have
• 32:14
  Speaker 9: written about is that these are appropriate ways in which
• 32:18
  Speaker 9: to stimulate its industrial policy writ large and it really
• 32:21
  Speaker 9: is about the jobs and the inward investment that's going
• 32:24
  Speaker 9: to happen in the future, which industries and how is
• 32:27
  Speaker 9: the US in particularly in US companies positioned for that.
• 32:31
  Speaker 9: What we have tried to call out is the complexity
• 32:33
  Speaker 9: about how we get there. So it's not when you
• 32:37
  Speaker 9: look at the more broad canvas, and the IMF has
• 32:39
  Speaker 9: talked about seven trillion dollars last year of subsidy into
• 32:42
  Speaker 9: the oil and gas industry, we still have an un
• 32:45
  Speaker 9: leveled playing field and so that's why this kind of
• 32:48
  Speaker 9: stimulus is necessary. So it's not the reason for stimulus,
• 32:52
  Speaker 9: but it's much more about the mechanisms for implementation that
• 32:54
  Speaker 9: we're trying to shed light on because we see such
• 32:58
  Speaker 9: a vasked opportunity and we see how how many investors
• 33:02
  Speaker 9: are seeing just such a thin slice of this opportunity
• 33:05
  Speaker 9: and clearly trying to just call out that there are
• 33:07
  Speaker 9: a number of other ways in which this can happen,
• 33:10
  Speaker 9: and there's a much bigger value chain there that can
• 33:13
  Speaker 9: be invested in.
• 33:14
  Speaker 6: Hey, Charlie, let's step away from the inflation Reduction Act.
• 33:18
  Speaker 6: I get a sense, and it's just a sense from
• 33:21
  Speaker 6: an outsider that kind of the move to green energy
• 33:24
  Speaker 6: is stronger let's say in Europe that it is in US,
• 33:29
  Speaker 6: you know, and some are saying it's maybe getting a
• 33:31
  Speaker 6: little politicized here in the US. You can't even say
• 33:35
  Speaker 6: esg anymore in many parts, with many parts of the audience.
• 33:39
  Speaker 6: How do you view that broader sense in terms of support, Well.
• 33:43
  Speaker 9: This clearly, you know, Europe is more vulnerable on energy,
• 33:46
  Speaker 9: and so there's a very natural reason why that's the case.
• 33:50
  Speaker 9: And clearly what we see is on the policy side,
• 33:53
  Speaker 9: much more aggressive implementation of targets, much more national priorities
• 33:59
  Speaker 9: with regardards to both energy efficiency and clean energy itself.
• 34:04
  Speaker 9: But I don't think that any country in the world
• 34:06
  Speaker 9: is not touched by what is really now a competitive
• 34:09
  Speaker 9: race for positioning in what is going to be inevitably
• 34:13
  Speaker 9: a cleaner energy future. And that comes down to not
• 34:16
  Speaker 9: just cleaner, but also cheaper and so again coming back
• 34:19
  Speaker 9: to the point that yes, green energy is one way
• 34:22
  Speaker 9: to describe this, but actually the energy of the future,
• 34:24
  Speaker 9: I think is a much more viable way to think
• 34:26
  Speaker 9: about it. And in that sense, you know, the US
• 34:29
  Speaker 9: has been asleep at the wheel and really has ceeded
• 34:32
  Speaker 9: a lot of early technology leadership to companies in China.
• 34:36
  Speaker 9: And this is the European companies as well as American
• 34:39
  Speaker 9: companies are scratching their heads and figuring out how do
• 34:42
  Speaker 9: they get back into the driver's seat. And there are
• 34:44
  Speaker 9: some stunning examples of companies in Europe and the US
• 34:47
  Speaker 9: who have that advantage, but that is not a very
• 34:50
  Speaker 9: deep bench and in a lot of ways, that's what
• 34:52
  Speaker 9: needs to happen now is for those companies, whether the
• 34:55
  Speaker 9: European or American, to find a way to become competitive
• 34:59
  Speaker 9: in this race.
• 35:00
  Speaker 2: Charlie, we gotta leave it there. Thanks a lot, Charlie Donovan,
• 35:02
  Speaker 2: Senior Economic Advisor, at impacts on issues really investing sustainable.
• 35:07
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