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Bloomberg Intelligence: Biden Impact on U.S Carmakers, Fed Minutes, Nvidia Earnings · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 2: You know, we love the big take stories here at
• 0:27
  Speaker 2: Bloomberg News, almost like on a daily basis, puts out
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  Speaker 2: these big take stories, really deep dives, deeply reported. Teams
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  Speaker 2: of people focused on this thing and they go deep
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  Speaker 2: and they get good data, good reporting. And today is
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  Speaker 2: a big one. Biden's EV dreams are a nightmare for
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  Speaker 2: Tesla in the US car industry. Craig Trudell joins US
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  Speaker 2: Global Autos editor for Bloomberg News on Zoom from London. So, Craig,
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  Speaker 2: this is a big deal here because President Biden, that
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  Speaker 2: Inflation Reduction Act putting a lot of money behind EV's here.
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  Speaker 2: But you can't take China out of the here. What's happening.
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  Speaker 3: Yeah, I think this is a really challenging thing that
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  Speaker 3: the Biden administration was trying to do. Right, they were
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  Speaker 3: trying to jump start the EV industry in the US.
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  Speaker 3: I would say, you know, you can give them high
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  Speaker 3: marks for what they've done in terms of the amount
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  Speaker 3: of manufacturing investment they've attracted. It's it's really been remarkable
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  Speaker 3: the the response that we've seen there. On the other
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  Speaker 3: side of the equation, the demand side, I think, you know,
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  Speaker 3: the marks are way more mixed, and I think, you know,
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  Speaker 3: the challenges that we're going to see in the years
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  Speaker 3: to come, you know, assuming, of course, Ira you know,
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  Speaker 3: stands up if we see a change in the White
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  Speaker 3: House later this year. But you know, whether or not
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  Speaker 3: manufacturers can sort of pull off what Biden you know,
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  Speaker 3: is asking of them, which is to really set up
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  Speaker 3: a EV and battery supply chain that is less reliant
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  Speaker 3: on China, and it eventually is just not reliant on China.
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  Speaker 3: And that's proving to be an extremely difficult task. And
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  Speaker 3: that's what we try to lay out today in ways
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  Speaker 3: that are you know, really it's a it's a complicated issue.
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  Speaker 4: You know. Tesla everyone thinks about, as.
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  Speaker 3: You know, being a very sort of made in America
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  Speaker 3: car brand, and and you know, they sort of are
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  Speaker 3: recognized as one legitimately, but you know, when given the
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  Speaker 3: opportunity to import batteries because of the fact that the IRA,
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  Speaker 3: you know, didn't really necessarily grow some teeth until the beginning.
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  Speaker 4: Of this year.
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  Speaker 3: We saw, you know, just in a matter of months
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  Speaker 3: Tesla import two and a half billion dollars worth of
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  Speaker 3: EV batteries from China.
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  Speaker 5: Wow, and Craig, that's happening, because it feels like every
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  Speaker 5: time we talk about GM for Tesla, a lot of
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  Speaker 5: these companies are losing money making their evs. So what
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  Speaker 5: was the point of the IRA if not to kind
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  Speaker 5: of streamline I guess the kind of inputs of of
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  Speaker 5: these batteries.
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  Speaker 3: I think what you have here is a situation where
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  Speaker 3: you know, Joe Mansion was was, you know, the player
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  Speaker 3: who you know, Washington really just had to sort of
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  Speaker 3: bend to his will, and he was really reluctant to
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  Speaker 3: you know, allow for electric vehicles to continue to get
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  Speaker 3: tax credits. He was opposed to them. And he said, okay, industry,
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  Speaker 3: well we'll give you these tax credits, but you build
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  Speaker 3: me a supply chain that, of course, you know, sort
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  Speaker 3: of didn't take into account sort of you know the
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  Speaker 3: complexities of the supply chain and the fact that China
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  Speaker 3: is just so dominant in this space and they've really
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  Speaker 3: sort of you know, methodically, you know, for a time
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  Speaker 3: quietly you know built this this you know, staggeringly strong
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  Speaker 3: position in terms of you know, the control of you know,
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  Speaker 3: the inputs, whether it's you know, nickel and lithium graphite.
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  Speaker 3: You know, these inputs are going to be really really
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  Speaker 3: difficult to source, not only just you know, whether their
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  Speaker 3: mind in China, but whether they're sort of process and refined,
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  Speaker 3: and you know, the sort of cost difference that the
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  Speaker 3: WES is going to have to sort of overcome really
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  Speaker 3: just can't be you know, sort of overstated at this point.
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  Speaker 2: And folks, if you want to see this article, it's
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  Speaker 2: fantastic article. Really deeply reporting. Great graphics makes it easy
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  Speaker 2: for me because I like the pictures. Bloomberg dot Com
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  Speaker 2: slash a big take is kind of where you find it.
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  Speaker 2: Big team effort. So you know, Craig, I see in
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  Speaker 2: your reporting here. In twenty twenty three, the IRA required
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  Speaker 2: that at least half of the value of battery components
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  Speaker 2: had to be assembled in North America and that forty
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  Speaker 2: percent of the raw materials had to be sourced from
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  Speaker 2: the US. And in twenty twenty seven, that raw material
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  Speaker 2: requirement is going to double to eighty percent. Are those
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  Speaker 2: numbers are they can they be achieved in that timeframe?
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  Speaker 3: I think that's that's one of the things that you know,
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  Speaker 3: it sort of depends on which company you ask.
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  Speaker 4: And I think, you know.
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  Speaker 3: Some of the concerns that the industry is having here
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  Speaker 3: is the fact that some of these raw materials the
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  Speaker 3: prices have really collapsed.
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  Speaker 1: And you know.
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  Speaker 3: That that you would sort of think, oh, that's a
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  Speaker 3: good thing for the auto companies. But if you're trying
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  Speaker 3: to build a supply chain in North America for these
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  Speaker 3: raw materials and the prices for them have absolutely you know,
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  Speaker 3: sort of the bottom has come out. I think of
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  Speaker 3: lithium in particular, you've seen this dramatic, you know drop
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  Speaker 3: in prices that significantly undermines the economics of those projects.
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  Speaker 3: And so, you know, I think the raw materials in
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  Speaker 3: particular are a real challenge. I think battery components will
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  Speaker 3: be less of a challenge. But even there, it is
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  Speaker 3: a matter of you can't just sort of snap your
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  Speaker 3: fingers and open up a bunch of plants for these
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  Speaker 3: various components. You know, it does take time, you know,
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  Speaker 3: to put you know, dig up the ground and put
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  Speaker 3: up these these plants that are coming, but are taking
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  Speaker 3: some time and.
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  Speaker 5: Graig across the auto makers. I'm looking at the reporting again,
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  Speaker 5: seven of Tesla's twelve models sold in the US fully
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  Speaker 5: cleared the eye R raise sourcing hurdles and qualified for
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  Speaker 5: the tax credit. What percentage of evs being sold in
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  Speaker 5: the US are clearing that hurdle?
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  Speaker 4: I think because Tesla is still so dominant in the US,
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  Speaker 4: we're at a point where, you know, the evs that
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  Speaker 4: do the most volume are largely qualifying at the moment.
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  Speaker 4: But I think the fact that those raw material requirements
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  Speaker 4: that kick in next year and then escalate in the
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  Speaker 4: years that follow that's really where we're going to see
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  Speaker 4: even more of a sort of you know, level of
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  Speaker 4: screws put on the industry. But but I think, you know,
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  Speaker 4: the other carmaker that I think is particularly well positioned,
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  Speaker 4: I would just call out to General Motors. I think
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  Speaker 4: the fact that they have a localized supply chain, UH
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  Speaker 4: for batteries, they have a joint venture with a Korean
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  Speaker 4: battery supplier.
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  Speaker 3: We're seeing, you know, more and more of those partnerships.
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  Speaker 3: You know, for about following suit Stilantis, the maker of
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  Speaker 3: Jeep and Chrysler, you know, similar deal where they're setting
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  Speaker 3: up battery plants in North America and sort of on
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  Speaker 3: and on. But those projects, I would say, are much
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  Speaker 3: further behind where we have Tesla, which you know for
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  Speaker 3: years has been making batteries out Nevada with Panasonic and
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  Speaker 3: GM which has a partnership with.
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  Speaker 4: LG in US.
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  Speaker 2: Hey, Craig, I think the narrative out there just kind
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  Speaker 2: of the bigger picture on EV's right now is, Gee,
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  Speaker 2: maybe demand isn't as high as we all thought at
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  Speaker 2: one point. We've got you know, the big automate manufacturers
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  Speaker 2: pulling back like Ford for example. Loss is still big.
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  Speaker 2: What's your understanding when you talk to your sources as
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  Speaker 2: to how people are thinking about the ultimate demand for
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  Speaker 2: EV's over the next one to three to five years.
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  Speaker 3: I think, you know, perversely, it was a challenge that
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  Speaker 3: you know, for a time, you know, business was too good.
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  Speaker 4: The fact that you know, for a while there, uh you.
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  Speaker 3: Know, so many companies uh you know actually had back orders.
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  Speaker 1: Uh.
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  Speaker 4: Tesla in particular, you.
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  Speaker 3: Know, had demand issues as opposed to a supply issue
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  Speaker 3: that you know really sort of caused this uh you know,
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  Speaker 3: unsustainable you know, jacking up of prices. The fact that
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  Speaker 3: that has had to come down, I would say more
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  Speaker 3: dramatically than we've seen for the rest of the industry
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  Speaker 3: has had all sorts of you know, unintended unintended consequences
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  Speaker 3: when you uh, you know, so dramatically bring down prices
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  Speaker 3: on the new side. Uh, the the use side is
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  Speaker 3: of the equation. The use vehicles really lose their value
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  Speaker 3: and the fact that I think evs maybe have some
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  Speaker 3: sort of you know, particular challenges with you know, maintaining
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  Speaker 3: their value. When you think about a used uh, you know,
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  Speaker 3: gas car, you don't worry about, you know, the engine
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  Speaker 3: holding up. You maybe have you know, relatively more concern,
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  Speaker 3: rightfully or not, as to whether or not the battery
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  Speaker 3: has been going to hold up. And so what we're
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  Speaker 3: seeing is is you know, that really come into play
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  Speaker 3: in terms of total cost of ownership. I think that's
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  Speaker 3: one of the things that we've really paid close attention
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  Speaker 3: to lately. I think when we step back, you know,
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  Speaker 3: the fact that EV's is sort of you know, the
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  Speaker 3: way forward, particularly in terms of you know, where the
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  Speaker 3: regulators want to see this industry group go. I think
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  Speaker 3: we've seen that China is able to make this work.
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  Speaker 3: We've seen that Europe is much further along in this transition.
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  Speaker 3: I think the question for the US is whether you know,
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  Speaker 3: whether we can sort of, you know, get Americans who
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  Speaker 3: tend to like bigger vehicles to come around to electric vehicles.
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  Speaker 3: I think that also adds some complications to the mix
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  Speaker 3: as well.
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  Speaker 2: All Right, Craig, thanks so much as always. Craig Trudel
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  Speaker 2: Global autis editor for Bloomberg News, joining US visa zoom
• 9:49
  Speaker 2: from London. You know, I tested thanks to Matt Miller's
• 9:52
  Speaker 2: connections with Ford, he got me a F one fifty
• 9:56
  Speaker 2: lightning the EV.
• 9:57
  Speaker 1: Yeah.
• 9:57
  Speaker 2: I got the test start of that for like a week.
• 9:59
  Speaker 2: How is it awesome? Awesome? Now I have to full disclosure.
• 10:03
  Speaker 2: I'm a Wall Street guy. I don't drive pickup truck,
• 10:04
  Speaker 2: so it's a first pickup truck average rope. It was awesome,
• 10:07
  Speaker 2: and it's the first electric vehicle average drope. But the
• 10:09
  Speaker 2: sticker price was ninety four thousand dollars and I think
• 10:13
  Speaker 2: it's just one of the challenges that haves this cost. Yeah.
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  Speaker 5: No, well, and that's going to be interestingly enough, we
• 10:18
  Speaker 5: get earnings from Rivian and Lucid after the bell today,
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  Speaker 5: so we're going to hear how some of these smaller
• 10:23
  Speaker 5: ev makers are hanging in there just given as you mentioned,
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  Speaker 5: high costs. These companies are losing money on pretty much
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  Speaker 5: every car vehicle they make, and demand doesn't seem to
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  Speaker 5: really be there.
• 10:34
  Speaker 2: Yeah. So anyway, big take story coming out of Bloomberg
• 10:36
  Speaker 2: News today, looking at the you know, the battery side
• 10:39
  Speaker 2: of it and kind of where we're sourcing all this stuff.
• 10:40
  Speaker 2: So again Bloomberg dot com slash Big, Big Take, and
• 10:44
  Speaker 2: that that's where you'll find it.
• 10:46
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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• 11:04
  Speaker 2: Let's check in with Irin Jersey here because I want
• 11:07
  Speaker 2: to know what my Federal Reserve is going to do.
• 11:08
  Speaker 2: I mean, that's got you know, the Fed watchers, they
• 11:10
  Speaker 2: were pounding their chest March. We're gonna get a you know,
• 11:12
  Speaker 2: a rate cut, six rate cuts. Yeah, and now it's
• 11:16
  Speaker 2: kind of May. Now people are talking about June, and
• 11:19
  Speaker 2: we've had a couple of smart people come in here
• 11:21
  Speaker 2: over the last couple of days and say, hey, you
• 11:23
  Speaker 2: better have a scenario where they raise he raise rate.
• 11:25
  Speaker 2: So I have no idea what's going on. So let's
• 11:27
  Speaker 2: bring in Iri Jersey because it's his job. Ira Jersey,
• 11:30
  Speaker 2: Bloomberg Intelligence Chief US interest rate strategist. Ira. It seems
• 11:34
  Speaker 2: like this thing changes day by day. And I guess
• 11:36
  Speaker 2: that's why the good folks of Bloomberg made the warp function,
• 11:40
  Speaker 2: because it just changes all the time. It's a fluid situation.
• 11:43
  Speaker 2: Given kind of what we know here in the economics
• 11:45
  Speaker 2: and some of the data we've seen, how do you
• 11:48
  Speaker 2: think the Fed's feeling today?
• 11:50
  Speaker 6: Yeah, so you know, we're get a lot of Fed
• 11:53
  Speaker 6: speak this week. We have the minutes at two o'clock today,
• 11:55
  Speaker 6: so we'll see what they were talking about in some
• 11:59
  Speaker 6: more detailed than than we got during the press conference
• 12:02
  Speaker 6: from the January meeting. But you know, my view has
• 12:05
  Speaker 6: always been that we were probably gonna only get a
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  Speaker 6: few cuts this year, so we'd we'd thought three cuts
• 12:11
  Speaker 6: going into the going into the year over the course,
• 12:15
  Speaker 6: and part of the reason for that was we thought
• 12:16
  Speaker 6: that it would be pretty slow going and getting inflation
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  Speaker 6: back toward the fed's target, and you know, so far
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  Speaker 6: that's played out more or less the way that we thought.
• 12:25
  Speaker 6: So so we'd been figuring that they would cut one
• 12:27
  Speaker 6: time before the middle of the year in part to
• 12:31
  Speaker 6: kind of get that first cut over with UH before
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  Speaker 6: the before the election, and that gives them some flexibility
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  Speaker 6: depending on what the how the numbers come in, you know.
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  Speaker 6: That being said, as as you noted, Paul, one of
• 12:42
  Speaker 6: the one of the factors that that we highlighted last
• 12:45
  Speaker 6: week was that that people are buying options on the
• 12:48
  Speaker 6: potential for higher rates. So so there are some people
• 12:51
  Speaker 6: who are getting a little bit concerned that there might
• 12:53
  Speaker 6: be this tail event where maybe you know, the FED
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  Speaker 6: is on hold most of the year, but sometime in
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  Speaker 6: the in say the fourth Court or maybe just after
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  Speaker 6: the electure or something, they have to hike because inflation
• 13:03
  Speaker 6: in the economy is holding up reasonably well. So so
• 13:07
  Speaker 6: even though that you know, that's not a base case
• 13:08
  Speaker 6: of just about anybody that that we talked to, although
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  Speaker 6: there are a few outliers there that that certainly think
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  Speaker 6: that it's a possibility. You know, I think that that
• 13:18
  Speaker 6: you know, an on hold case is much more likely,
• 13:20
  Speaker 6: and you've heard some people in the fixed income markets
• 13:24
  Speaker 6: talking about that as being more and more realistic possibility
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  Speaker 6: that the FED just you know, doesn't cut for a
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  Speaker 6: long time or doesn't move at all.
• 13:31
  Speaker 5: Yeah, iira with that notion hold higher for longer, has
• 13:34
  Speaker 5: been something j Powell said for quite some time. You're
• 13:37
  Speaker 5: talking about a cut coming later in the year. Are
• 13:39
  Speaker 5: we talking September November timeframe?
• 13:43
  Speaker 6: So September I think will be a little bit hard,
• 13:45
  Speaker 6: even though you know, the feder Reserve says that they're
• 13:47
  Speaker 6: a political but I think that they wouldn't want to
• 13:50
  Speaker 6: start any new actions just prior to the election in September.
• 13:54
  Speaker 6: Is that meeting that sits in between the conventions and
• 13:57
  Speaker 6: the and the general elections. So I think they wouldn't
• 14:00
  Speaker 6: start anything then, which is again another reason why thinking
• 14:03
  Speaker 6: that that maybe they would do a move in say May,
• 14:06
  Speaker 6: June or July, just to have it out of the
• 14:08
  Speaker 6: way and that gives them flexibility to continue those actions.
• 14:13
  Speaker 6: You know, It's it's definitely possible just given the strength
• 14:15
  Speaker 6: and the data that maybe the FED doesn't move or
• 14:18
  Speaker 6: doesn't have to move until after the election. That that's
• 14:21
  Speaker 6: you know that there's a non zero chance of that,
• 14:24
  Speaker 6: and I think that you know, if we continue to
• 14:25
  Speaker 6: get data as good as we've seen recently, then then
• 14:29
  Speaker 6: certainly that that's a possibility. Again, like our view continues
• 14:32
  Speaker 6: to be at the moment that that the Fed will
• 14:34
  Speaker 6: cut a few times this year, but not nearly as
• 14:36
  Speaker 6: much as what the market was pricing, say two months ago.
• 14:39
  Speaker 2: Hey, in your work looking at rates, what is the
• 14:42
  Speaker 2: stuff you're working on now that maybe we're not asking
• 14:44
  Speaker 2: you about that? Maybe we should.
• 14:46
  Speaker 6: Yeah, well, so so you haven't asked us about supply recently,
• 14:49
  Speaker 6: because supply is certainly something that has gotten a lot
• 14:52
  Speaker 6: of attention in the markets recently, just with with all
• 14:55
  Speaker 6: of the treasury bond auctions and with deficits you know,
• 14:59
  Speaker 6: two trillion ishtops and looking like they're going to remain
• 15:02
  Speaker 6: at those kind of levels for the next couple of years.
• 15:05
  Speaker 6: Is something that that is still getting a lot of
• 15:07
  Speaker 6: attention and is one of the reasons why it might
• 15:09
  Speaker 6: be more and more difficult as time goes on, just
• 15:12
  Speaker 6: given the stock of treasury securities outstanding for the market
• 15:15
  Speaker 6: to to rally just because you have some supply demand
• 15:18
  Speaker 6: and balances. But interestingly, you know, once we get through
• 15:22
  Speaker 6: through April, it looks like the Treasury Department will be
• 15:25
  Speaker 6: able to stabilize the treasury auctions at the levels what
• 15:30
  Speaker 6: they'll end up in April. And because of that, you
• 15:33
  Speaker 6: might have a better supply demand and balance. So might
• 15:36
  Speaker 6: you might actually see more a little bit more propensity
• 15:39
  Speaker 6: for the market to rally when we're talking about more
• 15:41
  Speaker 6: rate cuts than it has over the last over the
• 15:44
  Speaker 6: last year or so, as the treasury departments had to,
• 15:47
  Speaker 6: you know, keep on increasing the size of the debt aira.
• 15:50
  Speaker 2: What are you looking at? What matters?
• 15:52
  Speaker 5: I was talking to a PM this morning who kind
• 15:55
  Speaker 5: of laughed when I asked him about the minutes later today.
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  Speaker 6: Yes, so within the minutes, you know, it's the details, right,
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  Speaker 6: So the details matter, and so the two things that
• 16:05
  Speaker 6: will be focused on or one is the normal stuff, right,
• 16:08
  Speaker 6: it's it's what is their reaction function? Has it changed?
• 16:11
  Speaker 6: Is there the chance that some members have gotten somewhat
• 16:14
  Speaker 6: more cautious given the strength of the data that we
• 16:17
  Speaker 6: had in January, And therefore, will there be a change
• 16:20
  Speaker 6: in the dots and in some of their forecasts when
• 16:23
  Speaker 6: we get the March when we get the March Summary
• 16:25
  Speaker 6: of Economic Projections. But more importantly, and I guess this
• 16:28
  Speaker 6: goes also to Paul's questions just a second ago about
• 16:31
  Speaker 6: what we're not talking about. But it's also a balance
• 16:33
  Speaker 6: sheet runoff, right, So it's it's completely possible that even
• 16:37
  Speaker 6: if the Federal Reserve doesn't cut interest rates at all
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  Speaker 6: this year and keeps keeps rates relatively high, it is
• 16:44
  Speaker 6: possible that the FED is going to have to reduce
• 16:46
  Speaker 6: the amount that it's running off its balance sheet. So
• 16:48
  Speaker 6: there's so called quantitative tightening, and they as that happens,
• 16:53
  Speaker 6: I think the market will take that as somewhat of
• 16:55
  Speaker 6: a Dubvish bent to the FED and the FED activities.
• 17:00
  Speaker 6: You'll probably see things like risk assets do pretty well, right,
• 17:02
  Speaker 6: credit spreads, tighter, equities do okay. The rate market will
• 17:07
  Speaker 6: probably rally just a little bit on that, just as
• 17:10
  Speaker 6: they'll take it as a duthersh signal. I don't think
• 17:12
  Speaker 6: it is, because I think that the balance sheet policy
• 17:15
  Speaker 6: at this point is going to be somewhat disconnected from
• 17:17
  Speaker 6: rate policy, because balance sheet policy has other implications in
• 17:21
  Speaker 6: the banking sector, and you know how many how much
• 17:23
  Speaker 6: bank reserves do people need in order to comply with
• 17:26
  Speaker 6: some of the capital regulations and the like. So that's
• 17:29
  Speaker 6: going to be completely different. But that is something in
• 17:32
  Speaker 6: the minutes that I'm really looking forward to to seeing
• 17:34
  Speaker 6: what they talked about and how they're going to frame
• 17:36
  Speaker 6: the discussion that they're going to have in March, because
• 17:39
  Speaker 6: you know, J. Powell did say that in March they're
• 17:41
  Speaker 6: going to start their talk about balance sheet policy.
• 17:44
  Speaker 2: All right, So I get home my new hours. I
• 17:46
  Speaker 2: get home in the afternoon, I turn on CBS. I
• 17:49
  Speaker 2: see Inter Milan playing Athletico Madrid. I think that's what
• 17:54
  Speaker 2: I was seeing. Good match. I don't know why I
• 17:56
  Speaker 2: was on the CBS network in the middle of the afternoon.
• 17:58
  Speaker 2: That's another question, Ira, What was I watching yesterday?
• 18:02
  Speaker 6: So the Champions League? I guess, so that the best
• 18:06
  Speaker 6: the best teams in Europe all play each other, or
• 18:08
  Speaker 6: the teams that won their leagues and or came in
• 18:10
  Speaker 6: the top a couple of spots in their leagues. So
• 18:13
  Speaker 6: Athletico Madrid would be playing Milan in the Champions League.
• 18:16
  Speaker 6: The reasons middle of the day is because it's evening
• 18:18
  Speaker 6: in Europe.
• 18:19
  Speaker 2: So my question was why was it on CBS network.
• 18:22
  Speaker 2: I'm not watching some silly soap operas or game shows
• 18:25
  Speaker 2: or something like that. So that's for that's for me.
• 18:27
  Speaker 2: That's the media question. I'll call my friends.
• 18:28
  Speaker 6: So, yeah, CBS has the has the rights to the
• 18:31
  Speaker 6: Champions League, just like just like NBC has the rights
• 18:33
  Speaker 6: to the Premier League and the like. So you're going
• 18:35
  Speaker 6: to see it on whatever network you know bought those
• 18:38
  Speaker 6: rights in the US.
• 18:39
  Speaker 2: So who is favorite in the Champions League? Is that it?
• 18:44
  Speaker 7: Yeah?
• 18:44
  Speaker 6: I think it has to be last year's champions Manchester City, Right,
• 18:47
  Speaker 6: there's still one of the Kreme de la Crem's. But
• 18:49
  Speaker 6: you know name, you know, the Milan teams and Byron
• 18:53
  Speaker 6: Munich and PSG like those teams can never be ruled
• 18:57
  Speaker 6: out for sure.
• 18:59
  Speaker 2: I'm an inter. So you're watching that Send zero. I've
• 19:03
  Speaker 2: been to the Cent zero. Oh really Yeah? Some ac
• 19:05
  Speaker 2: Milan play there back in the day. So that's awesome. Yeah,
• 19:07
  Speaker 2: it's pretty cool. They are insane over there, the stuff
• 19:10
  Speaker 2: that they do. I mean they light stuff on fire,
• 19:12
  Speaker 2: fireworks and it's just crazy. All right, Very good, Ira Jersey,
• 19:16
  Speaker 2: thanks so much. As always, Ira Jersey. He's our chief
• 19:18
  Speaker 2: US Interest rates strategist. He's also our go to soccer
• 19:21
  Speaker 2: officient out of you're.
• 19:23
  Speaker 1: Listening to the Bloomberg Intelligence podcast. Catch us Live weekdays
• 19:28
  Speaker 1: at ten am Eastern on Affo car, playing Android Auto
• 19:31
  Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
• 19:34
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 19:38
  Speaker 2: Bailey, you know it's bad when your cab driver says,
• 19:40
  Speaker 2: are you going to be listening to the Nvidia call today?
• 19:42
  Speaker 4: No way?
• 19:42
  Speaker 2: I mean this is going to be missing. So the
• 19:44
  Speaker 2: implied volatility which you showed you from the Bloomer turmal
• 19:47
  Speaker 2: is ten percent and for a company with one hundred
• 19:49
  Speaker 2: and one point seven trillion market app that could be
• 19:52
  Speaker 2: some shekels gained the lost here here coming up sore.
• 19:55
  Speaker 2: Gene Monster joins us because we have to get the
• 19:57
  Speaker 2: bottom line here and Gene can certainly do that. Geene
• 19:59
  Speaker 2: Monsters partner, co founder deep Water Asset Management. He's been
• 20:03
  Speaker 2: all over the tech space for decades. Hey, Gene, have
• 20:06
  Speaker 2: you ever seen anything like this where a company has
• 20:09
  Speaker 2: not only a big impact I guess on itself on
• 20:12
  Speaker 2: but even in its sector, but also kind of the
• 20:15
  Speaker 2: broader market mentality and video is really outsized, isn't it?
• 20:21
  Speaker 8: Absolutely? Answer your question, I've maybe seen it back when
• 20:27
  Speaker 8: the iPod iPhone was starting to get going, and that
• 20:30
  Speaker 8: an outsized impact on overall tech. But if you put
• 20:32
  Speaker 8: that into perspective, that was iPhone sixteen years ago, so
• 20:36
  Speaker 8: it's been a long time. When you think about the
• 20:39
  Speaker 8: transformation of AI, it's understandable that and video has gotten
• 20:43
  Speaker 8: attention and the expanding market cap that it's had over
• 20:47
  Speaker 8: the past year, because of course it is in a
• 20:49
  Speaker 8: poll position. It is benefiting tremendously from this AI infrastructure.
• 20:54
  Speaker 8: That of course is all in the rear view mirror,
• 20:57
  Speaker 8: and it's all about looking forward. But to answer your question,
• 21:00
  Speaker 8: and this is pretty special times we're in one just
• 21:03
  Speaker 8: final thought, outside of their earnings here, if I look
• 21:06
  Speaker 8: back over the past year and look what's happened to
• 21:10
  Speaker 8: Nvidia relative tech expectations, how they've beat expectations, what they've
• 21:14
  Speaker 8: done to guidance that period those three quarters, That's something
• 21:18
  Speaker 8: I have never seen multi billion dollar company beating by
• 21:22
  Speaker 8: thirty forty to fifty percent, guiding up by twenty percent,
• 21:25
  Speaker 8: and then beating that upward guide by another thirty forty percent.
• 21:28
  Speaker 8: It is simply breathtaking from a tech investors perspective.
• 21:32
  Speaker 2: Yeah, folks, so what you just heard is really has
• 21:33
  Speaker 2: some gravitusk because Jean's been investing in analyzing tech companies
• 21:38
  Speaker 2: for decades here, you've seen them from the cradle to
• 21:40
  Speaker 2: the grave, So that means something one point seven bill
• 21:43
  Speaker 2: truly in market cap. Company here stocks up up two
• 21:45
  Speaker 2: hundred and thirty percent over the trailing twelve months, So Gene,
• 21:48
  Speaker 2: that tells me, boy, the bar is extraordinarily high here.
• 21:52
  Speaker 2: What's a win for this company? What's a loss for
• 21:54
  Speaker 2: this company? Here? After the close, I.
• 21:58
  Speaker 8: Don't know what the stock's going to do tomorrow. It's
• 22:00
  Speaker 8: hard really when you see that kind of volatility built
• 22:03
  Speaker 8: in the options. That means there is a lot of
• 22:05
  Speaker 8: jocking beyond what's going on with kind of fundamental investors.
• 22:08
  Speaker 8: So anything can happen. The stock could be up big
• 22:11
  Speaker 8: on the print and could fade tomorrow. The opposite could
• 22:14
  Speaker 8: happen too. From my perspective, what is most important is
• 22:18
  Speaker 8: understanding how the commentary for the company is going to
• 22:23
  Speaker 8: impact calendar twenty five revenue growth. And just to kind
• 22:27
  Speaker 8: of put this in a quick perspective, the company's going
• 22:29
  Speaker 8: to grow this quarter at around two hundred and fifty
• 22:32
  Speaker 8: percent year ofvery year. The growth expectations for calendar twenty
• 22:36
  Speaker 8: four is sixty four percent, a pretty big slode on
• 22:38
  Speaker 8: because the law of large numbers and then another big
• 22:41
  Speaker 8: slowdown in twenty five down to seventeen percent. So effectively,
• 22:45
  Speaker 8: investors recognize this company has been through just a breath
• 22:48
  Speaker 8: taking growth period here. But the general consensus is that
• 22:52
  Speaker 8: the business is going to hit the wall. And even
• 22:55
  Speaker 8: if you look at the valuation right now, it's actually
• 22:57
  Speaker 8: a pretty reasonable valuation. It trades essentially in line with
• 23:00
  Speaker 8: its earnings growth expectations for twenty five. So to answer questions,
• 23:04
  Speaker 8: what I'm looking for tonight is for CFO Jensen Wong
• 23:08
  Speaker 8: just to reiterate what he has said related to where
• 23:11
  Speaker 8: we are with an AI and just to briefly recap
• 23:14
  Speaker 8: that he has this these four talking points. He talks
• 23:17
  Speaker 8: about these four waves of AI and the current phase
• 23:21
  Speaker 8: that we're just starting in is BAI infrastructure. That's the hyperscalers,
• 23:25
  Speaker 8: that's AI startups. Phase two is enterprise applications that would
• 23:29
  Speaker 8: be like copilot. Phase three is going to be heavy
• 23:32
  Speaker 8: industry getting generit of AI, and he said that is
• 23:35
  Speaker 8: the largest opportunity. Phase four is sovereign nations. I mean,
• 23:39
  Speaker 8: there's a lot here. So my bottom line is that
• 23:42
  Speaker 8: if investors ultimately walk away from this quarter tomorrow, tonight
• 23:48
  Speaker 8: next week and say we're still very early in this
• 23:51
  Speaker 8: and Nvidia has got a great pole position, then those
• 23:54
  Speaker 8: expectations for calendar twenty five probably start moving higher, which
• 23:59
  Speaker 8: is ultimately going to be for the stock and gene when.
• 24:01
  Speaker 5: We look at it from a valuation standpoint, about thirty
• 24:04
  Speaker 5: times twenty twenty five EPs.
• 24:07
  Speaker 2: When you look at what the path.
• 24:09
  Speaker 5: Forward that you're mentioning Foreign Video looks like, is it
• 24:12
  Speaker 5: just continuing to grow the AI PI, if you will,
• 24:14
  Speaker 5: or is it being able to fend off would be rivals.
• 24:20
  Speaker 8: Well, I think that just the pie the TAM expansion.
• 24:23
  Speaker 8: I mean, this has been one of the talking points
• 24:25
  Speaker 8: from AMD. If you look at what they've said at
• 24:28
  Speaker 8: their analyst day last fall versus what they've said a
• 24:31
  Speaker 8: month ago. They've basically said that their addressable market would
• 24:36
  Speaker 8: four x, and then that was three four months ago,
• 24:38
  Speaker 8: and a month ago they said it with two x
• 24:40
  Speaker 8: from that four x. I mean, these are just it's
• 24:42
  Speaker 8: mind boggling kind of how fast these numbers are going up.
• 24:45
  Speaker 8: And the reason why they're saying that is they're seeing
• 24:47
  Speaker 8: the odor flow and so ultimately, and Video has got
• 24:52
  Speaker 8: an amazing product. They've got a product cycle coming up
• 24:55
  Speaker 8: they have basically a code and operating system that works
• 24:59
  Speaker 8: around what these chips do. It's a developer platform, that's
• 25:02
  Speaker 8: a better way to say it. So, but if they've
• 25:05
  Speaker 8: got such high market share right now eighty five percent
• 25:08
  Speaker 8: in the GPU market, it's really about continuing to expand
• 25:11
  Speaker 8: the TAM and I think that that's ultimately going to happen.
• 25:13
  Speaker 8: I mean, I'm in the camp that AI is going
• 25:17
  Speaker 8: to be more transformative. Twice is transformative what the Internet
• 25:20
  Speaker 8: has been, which is hard to wrap your head around that,
• 25:24
  Speaker 8: but I think that there's and video is just in
• 25:27
  Speaker 8: a great position relative to that opportunity.
• 25:30
  Speaker 2: Well, you know, gen, one of my questions is, you know,
• 25:33
  Speaker 2: just as a layperson here as it relates to tech spending,
• 25:35
  Speaker 2: how much of this tech spending associated with AI do
• 25:38
  Speaker 2: you believe is incremental versus maybe just shifting it around
• 25:42
  Speaker 2: from other budgets Here.
• 25:45
  Speaker 8: The most commentary we've heard is from those big tech companies.
• 25:48
  Speaker 8: Those are the hyperscalers. That's the companies like Google and Meta, Microsoft.
• 25:54
  Speaker 8: Apple hasn't said as much, but they're going to get
• 25:56
  Speaker 8: more into this, but what they've shared is that it
• 25:58
  Speaker 8: is incremental. I've talked about you know, their typical run
• 26:03
  Speaker 8: rate of CAPEX. Let's just call that at a typical
• 26:07
  Speaker 8: growth rate of ten fifteen percent a year, and those
• 26:10
  Speaker 8: growth rates, the spending in CAPEX is going to go up,
• 26:13
  Speaker 8: call it twenty five thirty percent. This is an average
• 26:16
  Speaker 8: if you look at some of those big companies. So
• 26:18
  Speaker 8: this is incremental. I mean they're seeing this as you
• 26:21
  Speaker 8: have to pay to play to invest in the future,
• 26:24
  Speaker 8: and so I think it is incremental. When you when
• 26:26
  Speaker 8: you kind of process, like go through the theory of
• 26:31
  Speaker 8: this incremental spend, that's how you get expanding addressable markets.
• 26:35
  Speaker 8: Is when you get that incremental spend. When things are
• 26:37
  Speaker 8: shuffling around, it's hard to get those expanding markets. But
• 26:40
  Speaker 8: in this case, I think it is. It is true.
• 26:42
  Speaker 8: This is just a whole new infrastructure that's being built
• 26:46
  Speaker 8: largely on GPUs versus the old infrastructure on CPUs, and
• 26:49
  Speaker 8: that is incremental spend.
• 26:51
  Speaker 5: And gene As we've seen the valuation skyrocket and it's
• 26:54
  Speaker 5: leaping above a number of well known names, the Metas
• 26:57
  Speaker 5: and the.
• 26:58
  Speaker 2: Berkshires of the world.
• 26:59
  Speaker 5: Can we catch Microsoft Microsoft just south of three trillion
• 27:03
  Speaker 5: dollars in market value compared to Nvidia's one point seven.
• 27:08
  Speaker 8: I think the AI opportunity is big enough that it
• 27:11
  Speaker 8: can catch that. I mean if in fact I'm right,
• 27:15
  Speaker 8: and I mean our firm is the firm deep water
• 27:17
  Speaker 8: firm believes that this is you know, ninety nine out
• 27:20
  Speaker 8: of a scale of zero to one hundred. Is AI
• 27:22
  Speaker 8: electricity is one hundred. It's that close and the internet's fifty.
• 27:27
  Speaker 8: If that's true, Yes, there is continues to be this
• 27:31
  Speaker 8: upside to I don't want to get carried away by
• 27:34
  Speaker 8: the way in the moment of kind of the hype.
• 27:36
  Speaker 8: I'm just trying to step back and again, I don't
• 27:38
  Speaker 8: know what the stock is going to do tomorrow, but
• 27:40
  Speaker 8: I do have a sense about how impactful AI is
• 27:44
  Speaker 8: ultimately going to be. And so what is that kind
• 27:47
  Speaker 8: of that high end of the market cap expansion When
• 27:50
  Speaker 8: I was talking about that fourth point sovereign nations, this
• 27:53
  Speaker 8: is countries needing to have their own AI to really
• 27:57
  Speaker 8: reflect their intelligence and their culture. There are some pretty
• 28:01
  Speaker 8: bold and big objectives that these very deep pockets are
• 28:05
  Speaker 8: going after. When you think about that relative to the
• 28:08
  Speaker 8: market cap, you can build a case that it can
• 28:10
  Speaker 8: go much higher.
• 28:11
  Speaker 2: Gene, thanks so much again, always appreciate getting your time.
• 28:13
  Speaker 2: Gen Munster, managing partner and co founder of deep Water
• 28:15
  Speaker 2: Asset Management in Nvidia. After the close gene Monster, one
• 28:18
  Speaker 2: of the best voice coming out of the valley.
• 28:21
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 28:25
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• 28:29
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• 28:32
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• 28:35
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• 28:39
  Speaker 2: Potentially a big day in the market today. After the clothes,
• 28:41
  Speaker 2: we get in Vidia reporting. We'll see what it means
• 28:43
  Speaker 2: for that stock, for the tech sector, for the market overall.
• 28:46
  Speaker 2: So let's just get a sense of what's happening out
• 28:48
  Speaker 2: there in this market place.
• 28:49
  Speaker 4: Here.
• 28:50
  Speaker 2: Carol Pepper joins us. She's a founder and CEO of
• 28:52
  Speaker 2: Pepper International. Joining us on a zoom call from NYC. Carol,
• 28:58
  Speaker 2: thanks so much for joining us here. I don't know
• 29:00
  Speaker 2: if you're a tech geek or you're into this old
• 29:03
  Speaker 2: in vidio thing, but boy, it's certainly had an impact
• 29:06
  Speaker 2: on this market. Certainly the AI has been a big,
• 29:08
  Speaker 2: big narrative for this market. How do you think about that?
• 29:12
  Speaker 9: Well, AI is the next large trend that people need
• 29:15
  Speaker 9: to ride.
• 29:16
  Speaker 10: As you know, I manage money for family offices that
• 29:19
  Speaker 10: have greater than one hundred million dollars in net worth,
• 29:22
  Speaker 10: So we're always looking for the important long term trends.
• 29:25
  Speaker 10: And when Vidias burst on the scene and began to
• 29:28
  Speaker 10: support the development of AI, it became a very interesting stock.
• 29:34
  Speaker 10: The reporting today whether it's up or down, and whether
• 29:36
  Speaker 10: the market likes it short term, it's a long term play.
• 29:39
  Speaker 9: So I tell.
• 29:40
  Speaker 10: People on a fear day when in video is perhaps
• 29:42
  Speaker 10: down a bit, even perhaps after earnings are announced, it
• 29:45
  Speaker 10: might go down slightly for a few days.
• 29:48
  Speaker 9: That's what happens. That's a stock to buy and hold
• 29:51
  Speaker 9: long term.
• 29:52
  Speaker 10: Ten years from now, you'll be very glad you bought
• 29:54
  Speaker 10: that security because it's it's really a way to start
• 29:57
  Speaker 10: riding the trend, as is Microsoft, by the way, because
• 29:59
  Speaker 10: Microsoft is not going to let Nvidia take that whole market.
• 30:03
  Speaker 10: They're starting to develop some new technology as well toward AI.
• 30:06
  Speaker 5: So caro, what else do you like in the call
• 30:09
  Speaker 5: it AI semiconductor space. Then if buying the dip or
• 30:13
  Speaker 5: sell off on Nvidia and kind of the ripple effects
• 30:16
  Speaker 5: does play out, where else would you be looking to
• 30:18
  Speaker 5: put money to work.
• 30:19
  Speaker 9: Well, I just think you want to go with a
• 30:22
  Speaker 9: big basket if you can.
• 30:23
  Speaker 10: So for a lot of the investors out there that
• 30:26
  Speaker 10: aren't necessarily buying single stocks, you can look at even
• 30:29
  Speaker 10: baskets like QQQ. There are other AI baskets that are
• 30:32
  Speaker 10: going to be coming out very shortly, you know.
• 30:35
  Speaker 9: I think you buy market leaders right now.
• 30:37
  Speaker 10: So I would stick with Nvidia for your main play
• 30:39
  Speaker 10: on AI and Microsoft at the moment. It doesn't mean
• 30:42
  Speaker 10: there won't be new players that are interesting coming forward,
• 30:45
  Speaker 10: but at the moment, market leaders have continued to lead.
• 30:49
  Speaker 10: So this has been a market where the biggest, biggest
• 30:52
  Speaker 10: caps with the most money whatever sector you're looking at,
• 30:55
  Speaker 10: or leading. So don't get too cute, buy the leaders
• 30:58
  Speaker 10: just on a fear day when you can get in
• 31:00
  Speaker 10: at a decent price.
• 31:01
  Speaker 5: All right, Carol, So you're mentioning in Nvidia, Microsoft two
• 31:04
  Speaker 5: of the Magnificent seven people wanting to call it the
• 31:07
  Speaker 5: Fab five. Is a shout out to the Michigan basketball team.
• 31:12
  Speaker 5: What's your take on the rest of the group, just
• 31:16
  Speaker 5: giving kind of the divide that we've seen within Nvidia
• 31:19
  Speaker 5: really kind of carrying the baton at this point.
• 31:22
  Speaker 10: Yeah, Well, the one I would toss out, which is
• 31:25
  Speaker 10: which I think will get tossed out itself, is Tesla.
• 31:28
  Speaker 9: I mean, I think Elon musk is.
• 31:30
  Speaker 10: You know, his attention is to divide between too many things,
• 31:33
  Speaker 10: and he's becoming a political liability. He's putting himself far
• 31:36
  Speaker 10: out on the spectrum. So that's the one that I
• 31:39
  Speaker 10: would toss. I don't think they're going to be a
• 31:41
  Speaker 10: market leader five years from now at all, because his
• 31:44
  Speaker 10: attention is too split and he's too troublesome. So I
• 31:47
  Speaker 10: get rid of Tesla and I'd buy the others as
• 31:49
  Speaker 10: a basket. My favorite stock for years and yours.
• 31:52
  Speaker 9: Has been Amazon.
• 31:53
  Speaker 10: I think that will continue to be a strong leader.
• 31:56
  Speaker 10: They're continuing to expand, and that they will take.
• 32:00
  Speaker 9: Over the pharmacy spase eventually. That's something they're trying to do,
• 32:03
  Speaker 9: and that's the stock to watch.
• 32:05
  Speaker 2: Hey, Carol, you've been in this managing you know, the
• 32:07
  Speaker 2: wealth of these high networth families for decades. Now. How
• 32:12
  Speaker 2: does that change? How's that business change? What are your clients?
• 32:14
  Speaker 2: Are your clients today different than maybe they were twenty
• 32:16
  Speaker 2: years ago?
• 32:18
  Speaker 10: Yeah, I think family offices and high net worth individuals
• 32:21
  Speaker 10: have become extremely sophisticated. Over the last twenty years, most
• 32:24
  Speaker 10: of them have pulled the acid allocation decision and the
• 32:28
  Speaker 10: stock selection decision inside of their own private family offices.
• 32:32
  Speaker 10: That's what I do. I act as a CIO to
• 32:35
  Speaker 10: the single family offices. They used to give all of
• 32:38
  Speaker 10: those decisions to the banks, but that's like you know,
• 32:40
  Speaker 10: handing the fox the keys to the henhouse.
• 32:42
  Speaker 9: They understand that.
• 32:44
  Speaker 10: Banks are actually like supermarkets, and you should go shopping
• 32:47
  Speaker 10: at a bank with a list of what you want.
• 32:49
  Speaker 10: For example, don't let the bank tell you how much
• 32:52
  Speaker 10: large cap growth to put in your portfolios. You tell
• 32:55
  Speaker 10: the bank what you want and you let them show
• 32:57
  Speaker 10: you the products that they have.
• 32:58
  Speaker 9: So the power balance has really changed. Now we see family.
• 33:02
  Speaker 10: Offices taking control of their risk appetite, their asset allocation.
• 33:07
  Speaker 9: They're not following every trend that comes out on the street.
• 33:10
  Speaker 10: You know, suddenly Germany's gonna outperform the US, or some
• 33:13
  Speaker 10: trend will be pushed by Wall Street for a few
• 33:15
  Speaker 10: months and then fizzle. The families aren't buying it. You know,
• 33:18
  Speaker 10: the families were out of China long before the general
• 33:21
  Speaker 10: market was. Because the bankers don't like to admit mistakes
• 33:24
  Speaker 10: so they don't pivot very quickly. But the family offices
• 33:28
  Speaker 10: can pivot in a day and change their mind about something.
• 33:30
  Speaker 10: So that's why they tend to be really leading investors.
• 33:34
  Speaker 10: They're into these trends long before everybody else is because
• 33:38
  Speaker 10: they have no one to answer to about themselves.
• 33:40
  Speaker 5: And Carol, with kind of that topic in mind, how
• 33:44
  Speaker 5: far out are you going at this point in time
• 33:46
  Speaker 5: on the risk curve you mentioned in video really kind
• 33:48
  Speaker 5: of setting the tone for AI and being a long
• 33:49
  Speaker 5: term buying opportunity. You're focusing on some of these big
• 33:52
  Speaker 5: tech names. Are you dabbling and putting exposure into smaller
• 33:56
  Speaker 5: maybe emerging technologies.
• 33:59
  Speaker 9: Yeah, I mean Eaton.
• 34:00
  Speaker 10: Family offices tend to look at direct smaller place, so
• 34:03
  Speaker 10: we go in at the very early stage, sometimes pre
• 34:06
  Speaker 10: seed or seat stage, into venture capital. We don't tend
• 34:09
  Speaker 10: to be you know, in the pink sheets or the
• 34:12
  Speaker 10: small publics. Those are in difficult places. That's why you
• 34:15
  Speaker 10: see now a lot more companies staying private and then
• 34:17
  Speaker 10: going public with a billion dollar valuation because there's a graveyard.
• 34:21
  Speaker 10: Unfortunately with a lot of small caps. They'll rally for
• 34:24
  Speaker 10: a few days and then they'll die again. So we
• 34:28
  Speaker 10: take the bets in the small companies, in directs or
• 34:30
  Speaker 10: in private equity not so much fun sometimes funds, but
• 34:33
  Speaker 10: more direct frankly, and then go for the market leaders
• 34:37
  Speaker 10: in the market. And that's how we sort of split
• 34:41
  Speaker 10: the risk reward scenario.
• 34:44
  Speaker 9: There than cal on the side.
• 34:45
  Speaker 2: How much what do your clients ask of you as
• 34:48
  Speaker 2: it relates to alternative investments and if to the extent
• 34:51
  Speaker 2: they have that, how do you scratch that?
• 34:54
  Speaker 4: Oh?
• 34:54
  Speaker 10: Well, it's Alternatives are a huge part of family office portfolios.
• 34:58
  Speaker 10: Sometimes they're thirty to forty percent of portfolios. Why because again,
• 35:01
  Speaker 10: family offices can go into things like venture debt, they
• 35:04
  Speaker 10: can go into private lending, they can go into all
• 35:07
  Speaker 10: kinds of you know, esoteric areas or very specialized real
• 35:11
  Speaker 10: estate plays in an area that they know well. So
• 35:14
  Speaker 10: alternatives are huge for family offices because generally there's more risk,
• 35:18
  Speaker 10: there's less liquidity, but there's more return and alternatives and
• 35:21
  Speaker 10: that's something family offices can definitely handle.
• 35:25
  Speaker 9: You know, my family offices, I always.
• 35:26
  Speaker 10: Have them have at least two years worth of expenses
• 35:29
  Speaker 10: set aside in cash and money markets earning four or
• 35:32
  Speaker 10: five percent, and then we go take risk with longer
• 35:34
  Speaker 10: term money so they're.
• 35:35
  Speaker 9: Very open and very interested on alternatives.
• 35:38
  Speaker 10: Alternatives in real estate funding, biotechs funding, you know.
• 35:42
  Speaker 9: Research, genetic research.
• 35:44
  Speaker 10: There's all sorts of very very interesting deals that go
• 35:47
  Speaker 10: family office to family office and never see the inside
• 35:49
  Speaker 10: of JP Morgan or.
• 35:51
  Speaker 4: Oldman Sachs Carol.
• 35:53
  Speaker 5: During my day job, when I'm not hanging out with Paul,
• 35:54
  Speaker 5: I read about the IPO market and it still very
• 35:57
  Speaker 5: much feels when I talk to venture cap less investors
• 36:00
  Speaker 5: as well as kind of some of the crossover funds,
• 36:02
  Speaker 5: that it is a investor friendly market where you can
• 36:05
  Speaker 5: walk away on valuation or pick up some of these
• 36:08
  Speaker 5: shares of companies in the private markets at a steep discount.
• 36:12
  Speaker 5: How are you putting money to work in the private
• 36:14
  Speaker 5: arena and how has that really shifted from a peak,
• 36:18
  Speaker 5: you know, just over two years ago.
• 36:21
  Speaker 10: Yeah, I think the private market obviously you can't expect
• 36:24
  Speaker 10: a big and quick in and out right now.
• 36:27
  Speaker 9: Markets drifts still very tenuous.
• 36:29
  Speaker 10: I think they'll get less tenuous when rates come down
• 36:31
  Speaker 10: a bit so that financing gets easier.
• 36:34
  Speaker 9: But things have not.
• 36:36
  Speaker 10: You know, people are out there trying to beat up
• 36:37
  Speaker 10: the small companies and get in at the good valuation.
• 36:40
  Speaker 10: And you know, evaluation for a company that might have
• 36:42
  Speaker 10: been twenty million is now five and it's heartbreaking for
• 36:45
  Speaker 10: the entrepreneurs. So you can pick up some discounts in
• 36:49
  Speaker 10: that respect because they're just people that couldn't get funded.
• 36:52
  Speaker 10: But you still have to look for the fundamentals, which
• 36:55
  Speaker 10: is a very strong team, a very strong you know,
• 36:58
  Speaker 10: go back to Michael Porter Competitive Advantage. You know, Harvard
• 37:01
  Speaker 10: Business School, read that book. It's a classic. Why is
• 37:04
  Speaker 10: this company in existence? And why should it win? Because
• 37:08
  Speaker 10: if there's no winning strategy, it doesn't matter how cheap
• 37:10
  Speaker 10: you get the company, it's just going to die. Because
• 37:13
  Speaker 10: a lot of these companies are dying now because they can't.
• 37:15
  Speaker 10: The old model was you just live on rounds and
• 37:18
  Speaker 10: rounds of financing until eventually you pop.
• 37:21
  Speaker 9: That model's gone.
• 37:22
  Speaker 10: There's less tolerance for continually refunding. A company that can't
• 37:26
  Speaker 10: earn can't make earnings unless it's led by somebody huge,
• 37:30
  Speaker 10: you know, like the founder of Uber or something where
• 37:32
  Speaker 10: you know that guy knows how to do it. But
• 37:34
  Speaker 10: for new startups, you're looking for cash flow a lot earlier,
• 37:37
  Speaker 10: and that gives and people are raising smaller rounds, so
• 37:40
  Speaker 10: you get into a lot of sprinkle into some small
• 37:42
  Speaker 10: pre seed rounds and then help the company grow is
• 37:45
  Speaker 10: more of the strategy these days in my experience.
• 37:48
  Speaker 5: Gotcha, Carol, we only have about thirty seconds left. One
• 37:50
  Speaker 5: of the stocks we talked about at the top of
• 37:52
  Speaker 5: the show, Palato Networks, down twenty six percent. This is
• 37:55
  Speaker 5: a big cybersecurity play. Are those type of selloffs that
• 37:58
  Speaker 5: you would look to buy?
• 38:01
  Speaker 10: Absolutely, I don't happen to know that company very well,
• 38:04
  Speaker 10: but yes, I mean there are the market swings a lot,
• 38:07
  Speaker 10: So you should have your favorite names, know why you
• 38:09
  Speaker 10: like them, now, how they're going to fit into your portfolio,
• 38:11
  Speaker 10: and what size you want, and then wait for the
• 38:13
  Speaker 10: fear day. You know, there'll be a fear day for
• 38:16
  Speaker 10: Nvidia too. Even though it's so high, people have said
• 38:18
  Speaker 10: to me, I can't get in. You know, people were
• 38:20
  Speaker 10: saying that about Amazon ten years ago. Oh it's too high,
• 38:23
  Speaker 10: I can't get in. So those value guys miss the
• 38:26
  Speaker 10: entire run. So just you know, hold your breath, hold
• 38:28
  Speaker 10: your nose, and get in on a fear day to
• 38:31
  Speaker 10: the stocks that.
• 38:32
  Speaker 9: You're interested in.
• 38:32
  Speaker 10: And by the way, cybersecurity long term is a very
• 38:35
  Speaker 10: important play and trend that is.
• 38:37
  Speaker 9: Not going away.
• 38:38
  Speaker 2: Hi, Carol, Thank you so much for your time. Really
• 38:40
  Speaker 2: appreciate it. Carol Pepper, President, founder and CEO Pepper International,
• 38:44
  Speaker 2: joining us via that Zoom thing from New York City.
• 38:47
  Speaker 2: I appreciate getting a few minutes of your time.
• 38:50
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 38:54
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• 38:58
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• 39:01
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• 39:09
  Speaker 2: Looking at bitcoin here memory of Matt Miller boys since
• 39:13
  Speaker 2: a March low last year March of last year, except
• 39:16
  Speaker 2: about one hundred and fifty five percent. It just had
• 39:18
  Speaker 2: such a huge move and there's a lot of reasons
• 39:20
  Speaker 2: behind that, including we got to spot bitcoin ETF, which
• 39:23
  Speaker 2: I think the crypto kids are all happy about. Cave
• 39:25
  Speaker 2: Tagupta joins and she's a founder and managing partner of
• 39:28
  Speaker 2: Delta Blockchain Fund. She joins us on Zoom from New
• 39:32
  Speaker 2: York City. Coveta, big move here in bitcoin. I'd love
• 39:36
  Speaker 2: to get your thoughts about kind of what's really driving
• 39:39
  Speaker 2: it here over the last you know, kind of eight
• 39:41
  Speaker 2: to nine ten months.
• 39:44
  Speaker 11: First of all, paulin Biley, thank you for having me.
• 39:48
  Speaker 11: I think it's been a very interesting journey. People in
• 39:50
  Speaker 11: the space already knew that.
• 39:53
  Speaker 7: Of course, the.
• 39:53
  Speaker 11: Anticipation of Bitcoin ETF plus the halving of bitcoin which
• 39:58
  Speaker 11: is about to happen in May starting from April, which
• 40:01
  Speaker 11: is going to make it more difficult to.
• 40:03
  Speaker 7: Produce new bitcoins.
• 40:05
  Speaker 11: So the basic principle of economics of supply and demand
• 40:08
  Speaker 11: is going to be off. Are going to trigger a
• 40:11
  Speaker 11: lot of bitcoin movement in a positive direction to.
• 40:15
  Speaker 5: The downside, though with the underlying risk a lot of
• 40:18
  Speaker 5: uncertainty from the stock markets perspective. Is fifty thousand a
• 40:23
  Speaker 5: support level? Kind of what do you look at when
• 40:25
  Speaker 5: you're seeing potential downside, just given how volatile bitcoin historically
• 40:29
  Speaker 5: has been pulling back from some of these big rallies.
• 40:32
  Speaker 11: Yeah, and I don't think this is all time high.
• 40:35
  Speaker 11: As you said that, it is a support point. The
• 40:38
  Speaker 11: support point may go down to early forties or mid forties,
• 40:42
  Speaker 11: but I doubt it's going to go down before it
• 40:45
  Speaker 11: reaches an all time higher. We see a cryptosummer end
• 40:48
  Speaker 11: of this year to mid of next year, back to
• 40:50
  Speaker 11: sixteen or in twenties anytime soon for an year or two.
• 40:55
  Speaker 7: I feel like there is so much of new.
• 40:57
  Speaker 11: Capital because of the Bitcoin ETF, which has come into
• 41:00
  Speaker 11: the market multi billion dollars, that the there is now
• 41:03
  Speaker 11: going to be a continuous demand for bitcoin.
• 41:06
  Speaker 2: So come to hell else? I mean, should we expect
• 41:09
  Speaker 2: an ethereum bitcoin? I mean e ETF going forward? Is
• 41:13
  Speaker 2: that kind of the next thing you guys are looking.
• 41:15
  Speaker 11: For Ethereum is the technology and ether ETF. Yes, there
• 41:19
  Speaker 11: is a conversation going on. And why not because at
• 41:22
  Speaker 11: the end of the day, ETF is the wages for
• 41:24
  Speaker 11: the institutional investors within us to be able to hold
• 41:27
  Speaker 11: it in a much more credible manner and to have
• 41:32
  Speaker 11: more capital injected in it.
• 41:34
  Speaker 7: I am, personally, honestly at this point of time, if
• 41:36
  Speaker 7: it's just.
• 41:37
  Speaker 11: The price or the technology from both perspective, more bullish
• 41:42
  Speaker 11: on Ether than Bitcoin. I do feel like the Ether
• 41:47
  Speaker 11: has been going between two point nine to three point
• 41:50
  Speaker 11: one kin last two three days. Again, I feel like
• 41:54
  Speaker 11: even if it goes down a little bit, we're going
• 41:56
  Speaker 11: to see the resting price in two But I am
• 41:58
  Speaker 11: more bullish on Ether the overall technology for ethereum.
• 42:02
  Speaker 5: Okay, so your bullush Ether over bitcoin. Where else are
• 42:05
  Speaker 5: you seeing opportunities? It seemed like coinbase was seen as
• 42:09
  Speaker 5: a big winner and a number of these other platforms
• 42:12
  Speaker 5: and technologies just given the approval of the ETFs that
• 42:16
  Speaker 5: Paul mentioned.
• 42:17
  Speaker 11: Yeah, I think within the space there is a lot
• 42:21
  Speaker 11: of technologies. The other layer twos which I'm really bullish about,
• 42:24
  Speaker 11: or the roll ups is optimism is a big one.
• 42:28
  Speaker 11: I do see resurrection of Solana when the DeFi institution
• 42:31
  Speaker 11: is going to happen, and a lot of defive which
• 42:34
  Speaker 11: is very similar to how the hedge funes work with
• 42:37
  Speaker 11: USD or different currencies. The same thing with ether, bitcoin
• 42:41
  Speaker 11: and with the stable coins. We have decentralized financial products
• 42:46
  Speaker 11: like aw A, compound, a lot of lending protococols. I
• 42:50
  Speaker 11: do feel like there's going to be an institutional staking
• 42:54
  Speaker 11: around that and that's going to really take over a
• 42:57
  Speaker 11: lot of technology solutions. So I'm also bid bullish on
• 43:01
  Speaker 11: Celestia and different data layers two.
• 43:04
  Speaker 2: So who's capta Who are you talking to? You've got
• 43:08
  Speaker 2: a fund, you invest in companies, you see very early
• 43:11
  Speaker 2: stage companies out there. How broad do you think is
• 43:15
  Speaker 2: the support out there for just crypto blockchain because we
• 43:19
  Speaker 2: still have the likes of a Jamie Diamond just giving
• 43:21
  Speaker 2: it no love whatsoever, and I'm wondering just how deep
• 43:25
  Speaker 2: your market is.
• 43:27
  Speaker 11: So you do have people like Jamie Diamond who doesn't
• 43:30
  Speaker 11: love it and very vocal about it. But at the
• 43:32
  Speaker 11: same time, the market continues, right he has been vocal
• 43:36
  Speaker 11: against it since sixteen or fifteen if I remember it correctly,
• 43:40
  Speaker 11: and we didn't disappear. The market continued, it has become
• 43:44
  Speaker 11: more strength, and I don't see a space wear JP
• 43:47
  Speaker 11: margat at any given point of time will not offer
• 43:50
  Speaker 11: its clients and ETF option.
• 43:54
  Speaker 7: On Bitcoin or on Ether over time.
• 43:57
  Speaker 11: So I do believe that the technology is here to stay.
• 44:02
  Speaker 11: Now what form of it is going to be there
• 44:05
  Speaker 11: and what form of token's going to be there?
• 44:07
  Speaker 7: Some crypto and some technology tokens that will have to
• 44:10
  Speaker 7: see within us.
• 44:11
  Speaker 11: But one of the most interesting part about this space
• 44:14
  Speaker 11: is it's very global. So one country, even if they
• 44:18
  Speaker 11: have tried in the past, has not been able to
• 44:21
  Speaker 11: really close.
• 44:22
  Speaker 7: The chapter on it.
• 44:24
  Speaker 11: So we continues to see countries like Abu Dhabi coming
• 44:27
  Speaker 11: up giving licenses, or Singapore trying to be ahead of it,
• 44:31
  Speaker 11: or countries in euro from UK to Lisbon trying to
• 44:34
  Speaker 11: be an amazing hub.
• 44:35
  Speaker 7: For the growth. So I just see a lot of
• 44:39
  Speaker 7: growth in the space.
• 44:40
  Speaker 5: Well, Kavita, you can't talk about crypto without mentioning binance
• 44:44
  Speaker 5: and FTX. How do you approach investing given the fact
• 44:49
  Speaker 5: that bulls will argue that bad actors are being flushed out,
• 44:52
  Speaker 5: But on the flip side, it feels like that could
• 44:54
  Speaker 5: just open up an opportunity for other people to take advantage.
• 44:58
  Speaker 11: So I think the game anytime when there is finance
• 45:02
  Speaker 11: and money and dollar involved in it, whether it's made
• 45:05
  Speaker 11: of scheme or whether it's like anything out there, you
• 45:09
  Speaker 11: are going to see scams, some sort of scams or
• 45:12
  Speaker 11: some things which you don't have regulations and have a
• 45:15
  Speaker 11: great area people really pushing beyond. So we do have
• 45:18
  Speaker 11: FTX and finance and to be very honest, and I
• 45:21
  Speaker 11: don't take away that what FTX did was completely stupid,
• 45:26
  Speaker 11: which was very similar to Bernie.
• 45:28
  Speaker 7: Made of scheme, but also the lack of regulations.
• 45:33
  Speaker 11: Even though you understand the space is here to stay,
• 45:36
  Speaker 11: you are still doing ETFs, you are you have companies
• 45:39
  Speaker 11: like Coinbase going IPO which are signed by everyone. Lack
• 45:43
  Speaker 11: of regulations from SEC is the biggest thing which hurts
• 45:47
  Speaker 11: and push more fear or more.
• 45:49
  Speaker 7: Scams around it. And I think that's where we should
• 45:52
  Speaker 7: focus on.
• 45:53
  Speaker 2: All right, Very good, Covet, I thank you so much
• 45:55
  Speaker 2: for joining us. Coveta Gupta, founder and managing partner of
• 45:58
  Speaker 2: Delta Blockchain Fund based here in New York, and joining
• 46:01
  Speaker 2: us via zoom and again looking at bitcoin here fifty one,
• 46:05
  Speaker 2: one hundred and four bitcoin and that whole heaving thing
• 46:08
  Speaker 2: ha lvig basically reducing the number of new bitcoins that
• 46:14
  Speaker 2: can be mined kind of just puts that a further
• 46:16
  Speaker 2: constraint on the supply. And then that's one side of
• 46:19
  Speaker 2: the equation. The other side of the equation, as Mike
• 46:21
  Speaker 2: mcloan explained it to me years ago, is presumably more
• 46:25
  Speaker 2: use cases for bitcoin, so fixed supply, presumably higher demand
• 46:29
  Speaker 2: that should push the price up. That's Mike mcloone's pitch
• 46:32
  Speaker 2: to me, which I could understand.
• 46:33
  Speaker 5: Yeah, I mean that's the kind of economics, right, you know,
• 46:36
  Speaker 5: he limit supply, increased demand, prices rise. When you look
• 46:40
  Speaker 5: at from a seasonal perspective. One thing that stands out
• 46:43
  Speaker 5: over last decade, best two of the three best months
• 46:46
  Speaker 5: out of the year April and May. But bitcoin right
• 46:49
  Speaker 5: now up twenty percent in February alone, YEP, absent of
• 46:53
  Speaker 5: which is really not as in line with big tech
• 46:57
  Speaker 5: as it had been historically.
• 47:00
  Speaker 2: Seem to see how that plays out. And the spot,
• 47:02
  Speaker 2: you know, having that spot ETF is big, and I
• 47:06
  Speaker 2: guess there were nine ETFs that think that came out.
• 47:09
  Speaker 2: So presumably that's expanding the base of investors in this
• 47:13
  Speaker 2: football since it Yeah, that's what the bulls say, so
• 47:17
  Speaker 2: we'll have to see. But the again, ETFs, let's do
• 47:21
  Speaker 2: a blockchain. Let's do it, you know, crypto ETF, and
• 47:23
  Speaker 2: that is perfect XBT.
• 47:25
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