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GOP Debate, Nvidia, Russia, and Subway (Podcast) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moving news.
• 0:14
  Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
• 0:20
  Speaker 1: Right now, we're gonna get a little political with you.
• 0:22
  Speaker 1: We had that debate last night. So what we're gonna
• 0:24
  Speaker 1: do here is we're gonna talk to some smart people.
• 0:26
  Speaker 1: Wendy Schiller, professor of Brown Universities joining us here. And
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  Speaker 1: then at ten thirty we're gonna have that simulcast with
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  Speaker 1: Bloomberg Television Joe Matthew and Anri Horden interview GOP presidential
• 0:36
  Speaker 1: candidate NICKI Haley. So we're gonna go a little politics
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  Speaker 1: for the next twenty minutes or so.
• 0:41
  Speaker 3: Wendy, thanks so much for joining us here.
• 0:43
  Speaker 1: We had a debate last night, Sons President Trump, what
• 0:47
  Speaker 1: were your takeaways from the Republican candidates?
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  Speaker 4: Well, I mean, I think some of them did themselves
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  Speaker 4: some favors. I think Ron DeSantis held his own. Maybe
• 0:57
  Speaker 4: he didn't strike a knockout blow against anybody else, but
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  Speaker 4: I think he showed he was still formidable and wanted
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  Speaker 4: to fight.
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  Speaker 5: I think Mike Pence.
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  Speaker 4: Even though he's got a tough climb, really held his
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  Speaker 4: own and sort of emphasized his experience. Nikki Haley, whom
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  Speaker 4: you're going to speak with, I think she had a
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  Speaker 4: banner night.
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  Speaker 5: She did not shy away from debate.
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  Speaker 4: She tried to be more transparent I think about some
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  Speaker 4: issues like abortion, and she really I think wiped the
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  Speaker 4: floor with David Bromsway because she indicated that she was,
• 1:27
  Speaker 4: of course representative of the UN under Trump, that she knew
• 1:30
  Speaker 4: how to navigate international and foreign policy, and that he
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  Speaker 4: had a very simplistic response to engaging with the world,
• 1:37
  Speaker 4: and it just really showcased his inexperience and it really
• 1:39
  Speaker 4: highlighted her experience. So I thought that was one of
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  Speaker 4: her stellar moments throughout the whole debate.
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  Speaker 2: Abortion, because I know voters have been coming out, as
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  Speaker 2: evidenced by the recent referendum, I guess it wasn't in
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  Speaker 2: Ohio when it comes to abortion, and the GEO p
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  Speaker 2: has typically been more anti abortion or pro life, whereas
• 2:05
  Speaker 2: it seems like the majority of the country believes that
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  Speaker 2: at least in the early stages, a woman should be
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  Speaker 2: able to decide herself what she wants to do with
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  Speaker 2: her body.
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  Speaker 6: Yeah.
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  Speaker 4: Man, this was really a showcase for people who are
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  Speaker 4: trying to get the GOP to a place that the
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  Speaker 4: majority of Americans might agree with, like a fifteen week
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  Speaker 4: abortion ban. I'm not saying that would, you know, necessarily
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  Speaker 4: attract a majority position, but Mike Pence had it out there,
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  Speaker 4: and I think that seems quote unquote reasonable to a
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  Speaker 4: lot of people, particularly independent voters. So that's a position
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  Speaker 4: that would not lose the White House. An outright ban
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  Speaker 4: or a six week ban, I think, given that Roe v.
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  Speaker 4: Wade has been basically revoked by the Supreme Court, I
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  Speaker 4: think that's a losing position for the GOP to get
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  Speaker 4: the White House in twenty twenty four.
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  Speaker 5: And Nikki Haley understands that.
• 2:54
  Speaker 1: Hey, when you talk about Ron DeSantis, you know, one
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  Speaker 1: point was polling fairly well, but as kind of fallen
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  Speaker 1: off dramatically. Talk to us about his candidacy to date,
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  Speaker 1: and particularly about last night.
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  Speaker 4: Well, I think it shows you the difference between running
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  Speaker 4: on a national stage and running in Florida. Big state,
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  Speaker 4: running really well, winning a big campaign, you know, getting
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  Speaker 4: a lot of national attention, and I think the mismatch
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  Speaker 4: was in how to run a campaign on the ground
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  Speaker 4: in this GOP against Donald Trump. He never came out
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  Speaker 4: really hard against Donald Trump.
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  Speaker 5: He still won't.
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  Speaker 4: In fact, it was hard to get an answer from
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  Speaker 4: him about whether Mike Pence did the right thing and
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  Speaker 4: ratifying the twenty twenty election last night on the debate stage.
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  Speaker 4: So I think that was a mistake on his part.
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  Speaker 4: I mean, I think Trump voters want someone who will
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  Speaker 4: fight for them. That is constant refrain in the polling
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  Speaker 4: that we see, and that's what people want to see.
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  Speaker 5: So Desanta showed up last night as a fighter. But
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  Speaker 5: the issue is is he more of a fighter than
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  Speaker 5: Donald Trump?
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  Speaker 4: And if he's not willing to fight Donald Trump, how
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  Speaker 4: does he actually illustrate that.
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  Speaker 7: To the voters in the general?
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  Speaker 2: I mean, you know, everybody who hasn't followed his career
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  Speaker 2: closely is just going to know DeSantis for don't say
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  Speaker 2: gay and you know, trying to fight Mickey Mouse.
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  Speaker 7: Is that really going to help him?
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  Speaker 8: Well?
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  Speaker 4: I think amongst the core, you know, really conservative and
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  Speaker 4: highly religious wing of the primary elector at the Republican Party,
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  Speaker 4: which you also saw Senator Tim Scott from South Carolina
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  Speaker 4: trying to appeal to number of times last night at
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  Speaker 4: the debate stage.
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  Speaker 5: That will appeal to them.
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  Speaker 4: And we've seen the rise of a lot of anti
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  Speaker 4: gay legislation rhetoric and state legislatures. So in the core
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  Speaker 4: red states that might help the Santis in the primary process.
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  Speaker 4: But in some of the bluer or mixed purple states,
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  Speaker 4: you know, Michigan, Ohio, bigger states in the Republican primary,
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  Speaker 4: I'm not sure how that plays, and I just don't
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  Speaker 4: know how far that gets him. And I think his
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  Speaker 4: challenge is to really show that his poll numbers can
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  Speaker 4: move up in the next couple of weeks, that they
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  Speaker 4: can move at all. If you can show that by
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  Speaker 4: September twenty seventh, the next debate, then I think he
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  Speaker 4: becomes still the story of being the number.
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  Speaker 5: Two behind Trump.
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  Speaker 7: Did Mike Pence?
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  Speaker 2: You know, I had to get up very early this morning,
• 5:01
  Speaker 2: so I went to bed before the debate, but I
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  Speaker 2: heard there was a question of whether or not each
• 5:06
  Speaker 2: candidate would support Donald Trump if he wins the nomination.
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  Speaker 2: Did Mike Pence raise his hand there? Because you would
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  Speaker 2: think he would still harbor a little resentment from the
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  Speaker 2: time that Trump tried to have him lynched.
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  Speaker 4: He well, he so Mike Pence, I thought, as I said,
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  Speaker 4: I thought he held.
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  Speaker 5: His own and better than held his own.
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  Speaker 4: Last night he was very feisty for Mike Pence from
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  Speaker 4: what we've seen before, but he sort of hedged on it.
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  Speaker 4: But what he didn't edge on him was if Trump
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  Speaker 4: was convicted. That was a weird thing, like, well, you know,
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  Speaker 4: the question was if Trump is convicted, not indicted, but convicted,
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  Speaker 4: would you still support him? And most of the nominees
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  Speaker 4: except for Asa Hutchinson, raised their hand and Mike Christie
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  Speaker 4: sort of waved his hand and then said, oh, no, no,
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  Speaker 4: and then Mike Pence kind of raised his hand a
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  Speaker 4: little bit. But it was not a profile and courage
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  Speaker 4: for any of the people on that stage. And as
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  Speaker 4: one of them said to another, if you support the
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  Speaker 4: rule of law, you know, how can you possibly discount
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  Speaker 4: this kind of conviction. So this is going to be
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  Speaker 4: a problem for the Republicans moving forward. I didn't see
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  Speaker 4: anything last night from most of those candidates that would
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  Speaker 4: tell me independent voters would choose them over Biden yet
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  Speaker 4: and I saw some inkling that some of them could
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  Speaker 4: peel away that group from Biden.
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  Speaker 1: All right, Wendy, thank you so much for joining us.
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  Speaker 1: Wendy Schuler, Professor at Brown University. Right now, I want
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  Speaker 1: to bring in McK mulroy. He's the co founder of
• 6:28
  Speaker 1: the Lobo Institute, and he's got a lot of experience
• 6:31
  Speaker 1: within the US government, former US Marine Infantry officer, former
• 6:34
  Speaker 1: Power Military Operations officer at CIA Hey Nick. Part of
• 6:39
  Speaker 1: the debate last night, I was talking about Ukraine. Love
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  Speaker 1: to get your thoughts to where the Republican Party is
• 6:46
  Speaker 1: in its support of Ukraine. Did you learn anything at
• 6:48
  Speaker 1: the debate last night, one way or the other?
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  Speaker 9: So unfortunately I was I was on the news talking
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  Speaker 9: about precosions, possible demise night.
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  Speaker 3: Yeah, we want to get your thoughts on that as well.
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  Speaker 9: Yeah sure, but when it comes to Ukraine. And I
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  Speaker 9: do stay out of politics altogether, but not on the
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  Speaker 9: issue of national security. When it comes to Ukraine, I
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  Speaker 9: think it's important that this adminised, current administration does a
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  Speaker 9: better job explaining the why we're doing it, not just
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  Speaker 9: the what. It doesn't do much good just to talk
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  Speaker 9: about the billions of dollars that are going there. I'm
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  Speaker 9: not opposed to that at all, but it's more important
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  Speaker 9: to talk about why. And I think there's plenty of
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  Speaker 9: Republican candidates that do understand the why, and they are
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  Speaker 9: explaining it. We have a strong partnership with Ukraine. They
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  Speaker 9: have been invaded a lawfully by one of our most
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  Speaker 9: significant adversaries, who, if left unchecked, could easily continue on
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  Speaker 9: into a NATO country, which would put us at war.
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  Speaker 9: So I actually just got out of the Churchill War
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  Speaker 9: Room here in London about an hour before this. And
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  Speaker 9: if that tells you, if you look at that history
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  Speaker 9: and how the United States support support AR did England
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  Speaker 9: during the during that time, I view this very much
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  Speaker 9: the same. And I hope that everybody that would ever
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  Speaker 9: seek to be the commander in chief what as well.
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  Speaker 9: Partners deserve to have partners in times of peace and
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  Speaker 9: in times of war.
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  Speaker 2: Well only for so long, right, I mean? President Biden
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  Speaker 2: showed that no matter what kind of promises we made
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  Speaker 2: to the Afghani people, we pulled out of there without
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  Speaker 2: without saving them.
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  Speaker 7: Do you think that's going to be a problem for
• 8:26
  Speaker 7: him in the election.
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  Speaker 9: The Afghan withdrawal. I absolutely do think that's going to
• 8:32
  Speaker 9: be a problem, particularly not that we're a big voting
• 8:35
  Speaker 9: block with the Afghan veterans that you know. My position,
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  Speaker 9: although it doesn't matter much, was that we should have
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  Speaker 9: left for residual force to maintain what we fought for
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  Speaker 9: for twenty years. But we certainly shouldn't have not just
• 8:48
  Speaker 9: abruptly pulled out and left all of our partners, those
• 8:52
  Speaker 9: that fought alongside us for twenty years, to the whim
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  Speaker 9: of the Taliban. I think that was a national embarrassment,
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  Speaker 9: and I think most Americans, regardless of the party they're in,
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  Speaker 9: I agree with that, and I do agree with the
• 9:05
  Speaker 9: premiacy of question. I think that's going to cause some
• 9:08
  Speaker 9: problems at least as much as foreign policy does play
• 9:11
  Speaker 9: into a president election. That is a blight I think
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  Speaker 9: on this administrative.
• 9:15
  Speaker 2: Let's get to what happened in Russia yesterday. Reportedly you
• 9:20
  Speaker 2: have get any Pregotion was on a private plane that
• 9:23
  Speaker 2: crashed outside of Moscow, And as most commentators have said,
• 9:28
  Speaker 2: if that's true, it's not a huge surprise because his
• 9:30
  Speaker 2: days were numbered after leading some kind of mutiny against Moscow.
• 9:38
  Speaker 7: What's your take on that?
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  Speaker 2: How does that change the picture for Wagner, for Ukraine
• 9:42
  Speaker 2: for Russia.
• 9:45
  Speaker 9: So if progosion and apparently Utken and Utkin was actually
• 9:50
  Speaker 9: the person who started Wagner his call sign when he
• 9:53
  Speaker 9: was in Russian special Forces was Wagner. He was apparently
• 9:57
  Speaker 9: on the plane as well. If he is on that plane,
• 10:00
  Speaker 9: it looks like the Kremlin may have been trying to
• 10:03
  Speaker 9: figure out how do they deal with Wagner post pregosion,
• 10:08
  Speaker 9: and apparently, if this is true, they figured it out,
• 10:11
  Speaker 9: and that's how that's why this event occurred. They need
• 10:15
  Speaker 9: to figure out how to continue operations they find economically
• 10:19
  Speaker 9: viable in Africa, for example, without him, and maybe they
• 10:22
  Speaker 9: did that, and that is likely in my it's just
• 10:26
  Speaker 9: an analysis. I don't have any information specifically on that,
• 10:29
  Speaker 9: but why this took so long to happen, all right?
• 10:32
  Speaker 9: And I think from all the analysis I've seen, it
• 10:34
  Speaker 9: was definitely something that struck the plane that brought it down.
• 10:37
  Speaker 1: All right, Mick, thanks so much. We have to run
• 10:38
  Speaker 1: just because of the time. Mc morroy, co founder of
• 10:40
  Speaker 1: the Lobo Institute.
• 10:42
  Speaker 10: You're listening to the Team Ken's are Live program Bloomberg
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  Speaker 11: On Bloomberg dot Com.
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  Speaker 10: on demand wherever you get your podcast.
• 10:56
  Speaker 12: Welcome to Bloomberg Television. I'm Ann Recverder and alongside Joe
• 10:59
  Speaker 12: Matthew or please to have joining us now the former
• 11:03
  Speaker 12: South Carolina governor and u N Ambassador NICKI Haley Ambassador,
• 11:08
  Speaker 12: Thank you so much for your time this morning. The
• 11:09
  Speaker 12: Wall Street Journal editorial board is leading with this. Most
• 11:12
  Speaker 12: GOP voters who aren't in Iowa or New Hampshire are
• 11:15
  Speaker 12: only getting to know these candidates, and Miss Haley may
• 11:17
  Speaker 12: have been the most pleasant surprise.
• 11:20
  Speaker 7: How are you feeling this morning?
• 11:22
  Speaker 12: What have your overnight fundraising numbers looked like?
• 11:26
  Speaker 13: Well, there's more where that came from. So the Wall
• 11:28
  Speaker 13: Street Journal needs to get ready. But you know, it's
• 11:31
  Speaker 13: great when you can be on a debate stage and
• 11:33
  Speaker 13: allow everybody to see their options for who's going to
• 11:36
  Speaker 13: lead the country going forward. I think it's a good time.
• 11:39
  Speaker 13: This is the start of the debate season. We think
• 11:42
  Speaker 13: we did really well. We're seeing that we're getting support.
• 11:45
  Speaker 13: It hasn't stopped since the debate was over last night,
• 11:48
  Speaker 13: all the way into this morning, and we welcome it.
• 11:50
  Speaker 6: I hope your viewers will go to Nicki Haley dot com.
• 11:53
  Speaker 13: But I think what's really important is we have to
• 11:56
  Speaker 13: focus on the issues at hand.
• 11:59
  Speaker 6: How do we get inflation down.
• 12:01
  Speaker 13: Too many families can't afford groceries, they can't afford their rent,
• 12:05
  Speaker 13: they can't afford gas, they can't afford childcare. Fifty percent
• 12:09
  Speaker 13: of American families can't pay for diapers, and one in
• 12:11
  Speaker 13: six American families can't pay their utility bill. And while
• 12:15
  Speaker 13: everybody would love to say, oh, Biden did that to us,
• 12:18
  Speaker 13: we have to remember our Republicans did that to us
• 12:21
  Speaker 13: as well. And that's why I called out Tim Scott
• 12:24
  Speaker 13: and Ron Desanis and Mike Pens and Donald Trump for
• 12:27
  Speaker 13: the you know, spending like drunken sailors and raising the
• 12:30
  Speaker 13: debt limit. I think it's time that we start to
• 12:33
  Speaker 13: really make sure we get our fiscal sanity in order.
• 12:36
  Speaker 14: Yeah, that was a big moment for you last night,
• 12:38
  Speaker 14: calling out not only Democrats but members of your own
• 12:40
  Speaker 14: party on that debate stage and here in Washington, Ambassador,
• 12:44
  Speaker 14: as you pointed out, specifically, the Trump administration added eight
• 12:47
  Speaker 14: trillion dollars to our debts. So let's be specific today
• 12:50
  Speaker 14: on Bloomberg, the third rail that nobody wants to touch
• 12:54
  Speaker 14: is the entitlement Social Security, Medicare. How would you manage
• 12:57
  Speaker 14: the entitlements to try to start getting our arms around
• 13:00
  Speaker 14: soaring debt.
• 13:03
  Speaker 13: Well, you know, you've got multiple candidates on that stage
• 13:05
  Speaker 13: that said they wouldn't touch in titlements, including Trump, And
• 13:08
  Speaker 13: any candidate that says they're not going to touch entitlements
• 13:11
  Speaker 13: means that they're basically going to go into the go
• 13:13
  Speaker 13: into office, and then leave America bankrupt. Social Security is
• 13:17
  Speaker 13: going to go bankrupt in ten years, Medicare is going
• 13:20
  Speaker 13: to go bankrupt in eight. So the way we deal
• 13:22
  Speaker 13: with it is we don't touch anyone's retirement or anyone
• 13:25
  Speaker 13: who's been promised in. But we go to people like
• 13:28
  Speaker 13: my kids in their twenties when they're coming into the
• 13:30
  Speaker 13: system and we say the rules have changed. We change
• 13:33
  Speaker 13: retirement age to reflect life expectancy instead of cost of
• 13:37
  Speaker 13: living increases.
• 13:38
  Speaker 6: We do it based on inflation.
• 13:39
  Speaker 13: We limit the benefits on the wealthy, and we expand
• 13:43
  Speaker 13: Medicare advantage plans.
• 13:45
  Speaker 14: What's the right age there that investador?
• 13:48
  Speaker 13: Well, I think we have to do the numbers. We've
• 13:50
  Speaker 13: got to figure out what it is. But what we
• 13:51
  Speaker 13: do know is sixty five is way too low, and
• 13:54
  Speaker 13: we need to increase that.
• 13:55
  Speaker 6: We need to do it according to life expectancy.
• 13:59
  Speaker 11: You raise your hand.
• 14:00
  Speaker 14: And last night, when asked if you would support the
• 14:01
  Speaker 14: Republican nominee, of course if that ended up being someone else.
• 14:05
  Speaker 14: I know you're running for president here, but if Donald
• 14:07
  Speaker 14: Trump was responsible for adding eight trillion dollars to the
• 14:10
  Speaker 14: national debt, how could you support him again for another administration?
• 14:15
  Speaker 13: Well, first of all, I don't think Donald Trump's going
• 14:17
  Speaker 13: to win the nomination. I think I'm going to win
• 14:19
  Speaker 13: the nomination. And secondly, I think that we have to
• 14:22
  Speaker 13: focus on the fact that anybody is better than a
• 14:25
  Speaker 13: president Kamala Harris.
• 14:26
  Speaker 6: I mean, you look.
• 14:27
  Speaker 13: At the socialism creep that Biden and Harris have gotten
• 14:30
  Speaker 13: us into, whether it's the Chips Act, whether it's Inflation
• 14:33
  Speaker 13: Reduction Act, whether you see all of these subsidies that
• 14:36
  Speaker 13: they are green subsidies that they're doing. They're the ones
• 14:39
  Speaker 13: that have left us into a situation where I don't
• 14:42
  Speaker 13: think our kids are.
• 14:43
  Speaker 6: Going to forgive us for it.
• 14:44
  Speaker 13: And so any person on that stage is better than
• 14:47
  Speaker 13: Kamala Harris. And I'm going to say that all day long,
• 14:50
  Speaker 13: but I think the American people are smart. I don't
• 14:52
  Speaker 13: think Donald Trump's going to be the winner of the primary.
• 14:55
  Speaker 13: I think I'm going to be the winner of the primary.
• 14:57
  Speaker 13: And I think that's why we need a new generational
• 15:00
  Speaker 13: conservative leader, because we've got to leave the past and
• 15:03
  Speaker 13: the negativity behind us, and we've got to start focusing
• 15:05
  Speaker 13: on the real problems at hand and start getting things
• 15:08
  Speaker 13: done when.
• 15:10
  Speaker 12: Look at the new generation, the most googled individual today,
• 15:13
  Speaker 12: Ambassador is Vivek Ramaswami. You took issue as foreign policy
• 15:17
  Speaker 12: yesterday as an individual number one googled in America. Who
• 15:20
  Speaker 12: wants to give Ukrainian land back to Russia, something that
• 15:24
  Speaker 12: actually individuals in the Republican base agree with. Kind of
• 15:27
  Speaker 12: taking a playbook from the former president who has called
• 15:31
  Speaker 12: what Putin has done in Ukraine genius and savvy. You
• 15:35
  Speaker 12: chastise mister Rabiswami yesterday, but you worked for the former president.
• 15:39
  Speaker 12: Are both these men wrong when it comes to Russia's
• 15:41
  Speaker 12: invasion of Ukraine?
• 15:44
  Speaker 13: Well, you know, President Trump used to have it right
• 15:47
  Speaker 13: when it came to Russia and Ukraine. He reversed the
• 15:49
  Speaker 13: Obama strategy and he sent Javelin missiles to Ukraine and
• 15:53
  Speaker 13: I was proud to serve with him. Then he's now
• 15:55
  Speaker 13: backtracked now and is going into where he's weaken the
• 15:58
  Speaker 13: knees on Russia again. You've got vivid Ramaswami who basically
• 16:03
  Speaker 13: wants to side with a murderer over a pro America,
• 16:07
  Speaker 13: freedom loving country. That doesn't make sense. You've got Ramaswami
• 16:11
  Speaker 13: who wants to cut aid to Israel. He doesn't understand
• 16:14
  Speaker 13: that it's not that America needs Israel. It's not that
• 16:17
  Speaker 13: Israel needs America. America needs Israel. They're the frontline of
• 16:20
  Speaker 13: defense for Iran. He wants to feed Taiwan to China.
• 16:24
  Speaker 13: He's missing all the points of You can't be so
• 16:27
  Speaker 13: narcissistic to think America doesn't need allies. We do need allies,
• 16:31
  Speaker 13: and when you have an ally, you take care of them.
• 16:34
  Speaker 13: Everybody's talking about this funding to Ukraine. First of all,
• 16:37
  Speaker 13: I think economic aid should come from the Europeans, but equipment,
• 16:41
  Speaker 13: military ammunition, we should be sending that. And when we
• 16:45
  Speaker 13: send it. Let's keep in mind it is less than
• 16:48
  Speaker 13: three and a half percent of our defense budget that
• 16:50
  Speaker 13: has gone to Ukraine. If you look at the percentage
• 16:53
  Speaker 13: of GDP eleven European countries have paid more than the US,
• 16:58
  Speaker 13: but making sure we have to always a win for
• 17:00
  Speaker 13: Russia is a win for China, and we can't let
• 17:03
  Speaker 13: that happen.
• 17:05
  Speaker 12: You're saying Trump did get it right at one point,
• 17:06
  Speaker 12: but it was under the Trump administration that withheld millions
• 17:10
  Speaker 12: of dollars hundreds of millions to Ukraine that was appropriated
• 17:14
  Speaker 12: by Congress. Did they not prepare Kiev well enough for
• 17:18
  Speaker 12: this onslaught?
• 17:21
  Speaker 9: Well?
• 17:21
  Speaker 6: I think that.
• 17:21
  Speaker 13: Look, there was a problem with the fact that I
• 17:23
  Speaker 13: think Trump had two sets of ammunitions that were supposed
• 17:27
  Speaker 13: to go to military equipment and ammunitions that were supposed
• 17:30
  Speaker 13: to go to Ukraine before Russia invaded, and Biden pulled
• 17:33
  Speaker 13: it because he didn't want to upset Putin.
• 17:35
  Speaker 6: This war could have been prevented.
• 17:37
  Speaker 13: Biden was slow to the take he didn't act strong enough,
• 17:41
  Speaker 13: and that's what happened. And then you go and you
• 17:43
  Speaker 13: add the Afghanistan debacle.
• 17:45
  Speaker 6: I mean the idea that.
• 17:46
  Speaker 13: We left Bagram Air Force Base in the middle of
• 17:49
  Speaker 13: the night without telling our allies who stood shoulder to
• 17:52
  Speaker 13: shoulder with us for decades because we asked them to
• 17:54
  Speaker 13: be there. It was the green light putin needed. It
• 17:58
  Speaker 13: was the excitement that pressed she and China got. It's
• 18:01
  Speaker 13: why Ron started building a bomb and North Korea started
• 18:05
  Speaker 13: testing ballistic missiles. When they see weakness, that's when they
• 18:09
  Speaker 13: smell blood in the water, and that's why we saw aggression.
• 18:12
  Speaker 13: We need a strong American president who understands what it
• 18:16
  Speaker 13: takes to keep Americans safe. And the way you do
• 18:19
  Speaker 13: that is you make sure you defeat Russia when it
• 18:22
  Speaker 13: comes to Ukraine, because that sends the biggest sign to
• 18:24
  Speaker 13: China on not to invade Taiwan.
• 18:29
  Speaker 12: The Biden administration at the moment is sending billions of
• 18:31
  Speaker 12: dollars to Ukraine. They've also, under their leadership, were able
• 18:34
  Speaker 12: to help expand NATO.
• 18:36
  Speaker 6: Do you not agree with that?
• 18:39
  Speaker 13: I absolutely agree with defending Ukraine, and I agree with
• 18:42
  Speaker 13: the fact that we need to expand NATO. I mean,
• 18:45
  Speaker 13: it's good to see and I actually think that it
• 18:47
  Speaker 13: should go further than that. I think that an invitation
• 18:50
  Speaker 13: to NATO should go to Ukraine. They've proven that they're
• 18:53
  Speaker 13: good military fighters. And let's keep in mind, Russia has
• 18:56
  Speaker 13: never invaded a non NATO country. They've invaded Georgia, they've
• 19:00
  Speaker 13: invaded Ukraine, They've invaded Moldova. They don't ever invade a
• 19:04
  Speaker 13: non NATO country. So we need to make sure that
• 19:07
  Speaker 13: we continue to expand NATO. And we also need to
• 19:10
  Speaker 13: work with our other allies India, Australia, Japan, South Korea, Israel.
• 19:15
  Speaker 13: We need to start going to the Arab countries. We
• 19:17
  Speaker 13: need more friends, not less.
• 19:20
  Speaker 14: I have to ask you about an important issue on
• 19:22
  Speaker 14: the campaign trail, Ambassador, that loom large over the midterm
• 19:24
  Speaker 14: elections and will certainly be top of mind for voters
• 19:27
  Speaker 14: Democrats and Republicans in this next election cycle, and that
• 19:31
  Speaker 14: is abortion. It came up in the debate last night.
• 19:33
  Speaker 14: You've suggested that there are no votes for a national
• 19:38
  Speaker 14: abortion ban, or for that matter, a regulatory bill here
• 19:42
  Speaker 14: in Washington. You made that point last night, but I
• 19:44
  Speaker 14: also I know that your state of South Carolina has
• 19:47
  Speaker 14: put in place a six week minimum. Mike Pence and
• 19:51
  Speaker 14: some others and the Republican Party are suggesting a national fifteen.
• 19:55
  Speaker 7: Week What is your minimum?
• 19:57
  Speaker 14: What should be, in fact, the number of weeks for
• 19:59
  Speaker 14: this country to coalesce around.
• 20:03
  Speaker 13: I am unapologetically pro life, not because the Republican Party
• 20:07
  Speaker 13: tells me to be, but because my husband was adopted,
• 20:09
  Speaker 13: and I had trouble having both of my children, so
• 20:12
  Speaker 13: I am surrounded by blessings.
• 20:14
  Speaker 6: Having said that, I don't.
• 20:16
  Speaker 13: Judge anyone for being pro choice any more than I
• 20:18
  Speaker 13: want them to judge me for being pro life. We
• 20:21
  Speaker 13: didn't need unelected justices deciding something this personal and this important,
• 20:25
  Speaker 13: So I think it was right to send it back
• 20:27
  Speaker 13: to the people to decide. If the people of South
• 20:30
  Speaker 13: Carolina chose six weeks, you know, they decided.
• 20:33
  Speaker 6: I'm happy with that.
• 20:35
  Speaker 13: Other states have chosen other things, but at least the
• 20:37
  Speaker 13: people's voices are being heard. The debate that happened last
• 20:40
  Speaker 13: night was whether there should be a federal law. And
• 20:43
  Speaker 13: I think there is a place for a federal law.
• 20:45
  Speaker 13: I think that most Americans, you know. But we have
• 20:48
  Speaker 13: to decide. In order to get a federal law, you
• 20:51
  Speaker 13: have to win a majority of the House votes, and
• 20:53
  Speaker 13: you have to get sixty Senate votes. We have had
• 20:56
  Speaker 13: sixty Senate votes on the pro life side in over
• 20:59
  Speaker 13: one hundred years. So we need to come together on consensus.
• 21:02
  Speaker 13: Where is the consensus. Let's agree that we should ban
• 21:05
  Speaker 13: late term abortions. Let's agree that we should encourage more
• 21:08
  Speaker 13: adoptions and good quality adoptions. Let's agree that doctors and
• 21:12
  Speaker 13: nurses who don't believe in abortions shouldn't have to perform them.
• 21:15
  Speaker 13: Let's agree that contraception should be accessible. And let's agree
• 21:19
  Speaker 13: that no state law should tell a woman who's had
• 21:21
  Speaker 13: an abortion that she's going to jail or she's going
• 21:24
  Speaker 13: to get the death penalty.
• 21:25
  Speaker 6: Let's start there.
• 21:26
  Speaker 13: We have to humanize this situation. I'm not going to
• 21:29
  Speaker 13: be a part of demonizing this issue. It's personal for
• 21:32
  Speaker 13: everyone and we need to treat it with the respect
• 21:34
  Speaker 13: that it deserves.
• 21:36
  Speaker 12: And bastard, thank you for sharing some of your also
• 21:38
  Speaker 12: personal experience with this. Penn says, every candidate, though, should
• 21:42
  Speaker 12: support a banned abortion before fifteen weeks as a minimum
• 21:45
  Speaker 12: nationwide standard.
• 21:46
  Speaker 6: What is your minimum? First of all, why put women
• 21:53
  Speaker 6: through this?
• 21:53
  Speaker 13: Why put men through this in a way that they're
• 21:55
  Speaker 13: going to hate each other and demonize each other. We
• 21:58
  Speaker 13: don't have sixty Senate votes, so where is the consensus?
• 22:01
  Speaker 13: We have to figure out what the American.
• 22:03
  Speaker 12: Bable want to know from you, as a woman as well,
• 22:06
  Speaker 12: where you would stand on this. A lot of cadidates
• 22:09
  Speaker 12: have come out and said they're either for six weeks,
• 22:11
  Speaker 12: there for fifteen weeks.
• 22:12
  Speaker 6: What is your number?
• 22:15
  Speaker 13: Well, first of all, I'm for whatever the states decide
• 22:17
  Speaker 13: where they are. But I'm also going to tell you
• 22:20
  Speaker 13: my job is I'm going to support or promote saving
• 22:23
  Speaker 13: as many babies as possible and support as many moms
• 22:26
  Speaker 13: as possible. Wherever those sixty Senate votes come down, we're
• 22:30
  Speaker 13: going to do it. If you can't get sixty votes,
• 22:32
  Speaker 13: you can't save babies. So it's going to require a
• 22:35
  Speaker 13: lot of coming together and figuring out where people are.
• 22:38
  Speaker 13: But we're not going to divide our country over this issue.
• 22:40
  Speaker 13: We're going to bring our country together and where we
• 22:42
  Speaker 13: can get sixty votes, that's what we're going to do.
• 22:45
  Speaker 14: We have an honest conversation before we let you go, Ambassador,
• 22:48
  Speaker 14: about Donald Trump. He chose not to attend the debate
• 22:51
  Speaker 14: last night because of his commanding lead in the polls.
• 22:54
  Speaker 14: It's difficult to discount the trajectory here. I know you
• 22:58
  Speaker 14: don't think that he's going to be then, but he's
• 23:00
  Speaker 14: leading the field by anywhere between twenty and forty points
• 23:03
  Speaker 14: when you look at the poll. I remember the day
• 23:05
  Speaker 14: you endorsed Marco Rubio in the twenty sixteen campaign. You
• 23:08
  Speaker 14: said I will not stop until we fight a man
• 23:11
  Speaker 14: that chooses not to disavow the KKK referring to Donald Trump.
• 23:15
  Speaker 14: That is not a part of our party. That is
• 23:17
  Speaker 14: not who we are with. That said, your party seems
• 23:20
  Speaker 14: to be in love with Donald Trump. What is your
• 23:22
  Speaker 14: path to the nomination?
• 23:26
  Speaker 13: Well, look, I was proud to serve in Donald Trump's
• 23:29
  Speaker 13: administration and push the foreign policy that we did that
• 23:32
  Speaker 13: basically took the kick me sign off of our backs
• 23:34
  Speaker 13: at the UN and had America respected again. And I
• 23:38
  Speaker 13: support a lot of the policies that he supported. But
• 23:40
  Speaker 13: I think that you have to look at the fact
• 23:42
  Speaker 13: that three quarters of Americans don't want to see a
• 23:44
  Speaker 13: Trump Biden replay. The majority of Americans. I mean, Trump
• 23:49
  Speaker 13: is the most disliked politician in America, and the most
• 23:53
  Speaker 13: disliked politician in America can't win a general election. So
• 23:57
  Speaker 13: this was the kickoff to the debate season, to the
• 24:00
  Speaker 13: election season. I think now people are paying attention. I
• 24:02
  Speaker 13: think there's a big difference on people who support Trump
• 24:06
  Speaker 13: and people who are going to vote for Trump.
• 24:07
  Speaker 6: I think people know that.
• 24:09
  Speaker 13: We've got new issues, big issues that we need solutions.
• 24:11
  Speaker 13: We can't keep looking to the past. We've got to
• 24:14
  Speaker 13: lead the drama and negativity to the past. We need
• 24:16
  Speaker 13: a new generational conservative leader that's going to focus on
• 24:20
  Speaker 13: what it takes to really get America back on track.
• 24:23
  Speaker 13: I was a two term governor that took a double
• 24:25
  Speaker 13: digit unemployment state and turned it into an economic powerhouse.
• 24:29
  Speaker 13: I was at the un I didn't deal with one country.
• 24:31
  Speaker 13: I dealt with one hundred and ninety three. I'm not
• 24:33
  Speaker 13: a lawyer, I'm gonna accountant. I think it's time that
• 24:35
  Speaker 13: we get our fiscal house in order, close our border,
• 24:39
  Speaker 13: make sure we have law and order, get transparency in
• 24:41
  Speaker 13: the schools, and have a national security that will keep
• 24:43
  Speaker 13: American safe.
• 24:45
  Speaker 14: She's fresh off the debate station with us here on
• 24:48
  Speaker 14: Bloomberg former governor, former Ambassador Nikki Haley. We thank you
• 24:51
  Speaker 14: for the time this morning on Bloomberg.
• 24:52
  Speaker 10: If you're listening to the tape, catch our live program
• 24:55
  Speaker 10: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,
• 25:00
  Speaker 10: Bloomberg dot Com.
• 25:01
  Speaker 11: And the Bloomberg Business App.
• 25:03
  Speaker 10: You can also listen live on Amazon Alexa from our
• 25:05
  Speaker 10: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 25:11
  Speaker 1: All right, let's talk about the stock of the day,
• 25:14
  Speaker 1: and really the week and maybe a year to date.
• 25:16
  Speaker 1: In Vidia, little chip maker, all time high today it's
• 25:20
  Speaker 1: up one point three percent.
• 25:22
  Speaker 3: Just extraordinary story.
• 25:23
  Speaker 1: Let's talk to somebody who does his chip stuff for
• 25:26
  Speaker 1: a living, Kun John Sabani. He is the lead at
• 25:28
  Speaker 1: Semiconductor Analys. He doesn't follow anybody. He's the lead semiconductor
• 25:32
  Speaker 1: analys for Bloomberg Intelligence. I meant I did not hire
• 25:34
  Speaker 1: this guy, so let's see how he does though. Okay, scoo, John,
• 25:38
  Speaker 1: thanks so much for joining us.
• 25:39
  Speaker 3: Appreciate it.
• 25:39
  Speaker 1: He joins us via zoom in San Francisco. He says,
• 25:41
  Speaker 1: so cow guy undergrad USC Business School UCLA. I don't
• 25:46
  Speaker 1: know where his loyalties lie between those two schools. But
• 25:50
  Speaker 1: in Nvidiakujohn, talk to us about the quarter we had yesterday.
• 25:54
  Speaker 3: Just monster monster revenue.
• 25:56
  Speaker 11: Right.
• 25:58
  Speaker 15: All right, I mean it was not a big surprise
• 26:01
  Speaker 15: to us, at least it was in line with our
• 26:02
  Speaker 15: preview call. Yet again they delivered a blockbuster quarter. Most
• 26:07
  Speaker 15: of the upside, again was primarily given by their Data
• 26:10
  Speaker 15: center segment, which are their GPUs that go in all
• 26:13
  Speaker 15: the data centers and primarily used for AI these days,
• 26:17
  Speaker 15: so it was more of a function of them able
• 26:20
  Speaker 15: to get a lot more supply because the demand has
• 26:22
  Speaker 15: been rising and is running ahead of the supply, and
• 26:26
  Speaker 15: we expect similar growth to continue because again there's a
• 26:30
  Speaker 15: lot of signals that demand continues to rise.
• 26:32
  Speaker 7: Kunjan.
• 26:33
  Speaker 2: When in Vidia put in an order right because they
• 26:38
  Speaker 2: don't make their own chips, so they go to TSMC
• 26:41
  Speaker 2: and they say we want this many GPUs. Does TSMC say, well,
• 26:48
  Speaker 2: you know, get in line everybody wants these things, or
• 26:52
  Speaker 2: does Nvidia get to step to the head of the line.
• 26:57
  Speaker 15: I mean Avidia does have garnered a lot of high power. Look,
• 27:01
  Speaker 15: they're the number one player when it comes to GPU
• 27:04
  Speaker 15: and they've been getting the growing the most fastest, so
• 27:07
  Speaker 15: they do have a lot of pull. But it's not
• 27:09
  Speaker 15: just a function of getting lined. When you have growth
• 27:12
  Speaker 15: like this, it has not I've not seen I've been
• 27:14
  Speaker 15: in an industry for twenty years and I've not seen
• 27:16
  Speaker 15: such beats in the twenty years. So it's not just
• 27:19
  Speaker 15: easy to just bring up supply because it's not sitting somewhere.
• 27:22
  Speaker 15: These are leading edge nodes products, and especially the supply
• 27:26
  Speaker 15: crunches at the packaging side, because these are most advanced
• 27:29
  Speaker 15: packaging and the supply just didn't exist. So suddenly when
• 27:32
  Speaker 15: you go and say I need double than what I expected,
• 27:35
  Speaker 15: it takes time to bring up supply. So it's not
• 27:37
  Speaker 15: a function of ESMC not putting them back in the
• 27:40
  Speaker 15: Queue's just it takes time to bring up that supply.
• 27:43
  Speaker 8: Hey, Kunja, this is Barry Ritolts, and I'm looking at
• 27:46
  Speaker 8: this chart. A year to date, we're up two hundred
• 27:48
  Speaker 8: and twenty two percent in video raises the question how
• 27:52
  Speaker 8: much of the upside is priced in already?
• 27:57
  Speaker 15: I mean, coming into this quarter, there were a lot
• 27:59
  Speaker 15: of concerns exactly about that point. But look, we think
• 28:03
  Speaker 15: this another blockbuster print and raise should ease some of
• 28:08
  Speaker 15: those concerns because there's definitely less doubt when it comes
• 28:12
  Speaker 15: to sustainability of the demand. And like you saw, you know,
• 28:16
  Speaker 15: we've seen market reactions similar to last quarter. It's helping
• 28:19
  Speaker 15: boost another sort of rally to the AI exposed names.
• 28:23
  Speaker 2: In terms of the other chips, does it matter, does
• 28:26
  Speaker 2: it matter what they make for PCs? Does it matter
• 28:29
  Speaker 2: what they make for card, does it matter what they
• 28:31
  Speaker 2: make for phone?
• 28:33
  Speaker 15: I mean, overall for the company does matter, But right
• 28:35
  Speaker 15: now people are only focused about data center because that's really.
• 28:39
  Speaker 15: I mean it's become close to seventy percent or more
• 28:42
  Speaker 15: of the revenue. So that's what really people are focusing
• 28:45
  Speaker 15: on right now.
• 28:46
  Speaker 1: All right, So how about like AMD, Intel, Broadcom, Qualcom.
• 28:50
  Speaker 1: Were those guys in terms of I don't know just.
• 28:53
  Speaker 3: Their AI ness if you will, their exposure to AI.
• 28:56
  Speaker 3: How do you think about those companies?
• 28:59
  Speaker 15: I mean, this is the largest and the fastest growing
• 29:02
  Speaker 15: opportunity that we have seen in a long while in
• 29:05
  Speaker 15: the semi world. So everyone is trying to get get
• 29:08
  Speaker 15: a bite on the this large piece of the pie.
• 29:11
  Speaker 15: Now you know, they are all playing catch up, and
• 29:14
  Speaker 15: Media was the leader. We think there's definitely opportunity for
• 29:20
  Speaker 15: some other names like AMD, Broadcom to some degree Intel
• 29:24
  Speaker 15: to grab a small sliver of this pie, which against
• 29:27
  Speaker 15: even though it's a small percentage of the total market share,
• 29:30
  Speaker 15: adds to your tapline in terms of billions of dollars.
• 29:33
  Speaker 15: So they're all playing catch up. They should all still
• 29:35
  Speaker 15: see the benefits of it. But we believe and it
• 29:38
  Speaker 15: comes to GPU and accelerators and VIDIA will be the
• 29:41
  Speaker 15: dominant share.
• 29:42
  Speaker 2: I mean, but Kunjan, if you look at a pie
• 29:45
  Speaker 2: chart and it's you know, GPUs in server center today.
• 29:50
  Speaker 2: Not GPUs that they you know, have designed, Not GPUs
• 29:54
  Speaker 2: that they have for sale and maybe a customer is
• 29:56
  Speaker 2: going to buy, but GPUs that are already in the
• 30:00
  Speaker 2: big server centers. How much of that pie is Nvidia?
• 30:06
  Speaker 15: Oh gosh in like.
• 30:10
  Speaker 10: So huge?
• 30:11
  Speaker 8: So that is very reminiscent of Tesla. A decade ago,
• 30:16
  Speaker 8: all we heard was, hey, this is an up and
• 30:19
  Speaker 8: comer and they have a huge lead and it's gonna take.
• 30:22
  Speaker 2: Forever for people to catch up. It's still Tesla's world.
• 30:25
  Speaker 2: Everybody else is just paying rent. As Dan ives, I'm
• 30:29
  Speaker 2: not so.
• 30:30
  Speaker 7: Sure that's the case anymore.
• 30:31
  Speaker 8: They used to have the market all to themselves. You
• 30:35
  Speaker 8: can't say that anymore. There are credible competitors to Tesla.
• 30:39
  Speaker 8: That wasn't true five years ago. So the parallel I'm
• 30:43
  Speaker 8: trying to raise is it's in Vidia's world, everybody else
• 30:47
  Speaker 8: is living in it. How long is that going to
• 30:49
  Speaker 8: last for you don't have the same consumer loyalty issues
• 30:53
  Speaker 8: that have been driving Tesla. This is just who could
• 30:56
  Speaker 8: produce the most GPUs for the least cost. That's going
• 31:00
  Speaker 8: to be who's winning huge head start. When might other
• 31:04
  Speaker 8: companies begin to make a dent in that massive unsustainable
• 31:09
  Speaker 8: ninety plus percent market Tunjohn, what do you think?
• 31:12
  Speaker 15: I mean, Look, you're correct, there's definitely going to be
• 31:16
  Speaker 15: some dent, but we don't see it in the near term.
• 31:19
  Speaker 15: I mean worst case. You can think of what we've
• 31:22
  Speaker 15: seen numbers or what we think right the ninety five
• 31:24
  Speaker 15: share could go as low as like eighty five eighty
• 31:28
  Speaker 15: in the next maybe three or four five years, but
• 31:31
  Speaker 15: that's still huge. One thing you have to remember is
• 31:33
  Speaker 15: they are not even able to ship to the entire
• 31:36
  Speaker 15: orders they have, like even after such a high beat.
• 31:38
  Speaker 15: What we're hearing from customers is they can't get enough
• 31:41
  Speaker 15: Nvidia chips and they are not willing to go to
• 31:44
  Speaker 15: another chip maker right now that we cannot get Nvidia,
• 31:48
  Speaker 15: let's go and buy something else. They still are waiting
• 31:50
  Speaker 15: to get the Nvidia chips and solutions.
• 31:52
  Speaker 1: All right, what's the I don't know, I'm gonna say,
• 31:54
  Speaker 1: not gonna say the barecase from Vidio, But what's maybe
• 31:57
  Speaker 1: a headwind out there that maybe the market's not paying
• 31:59
  Speaker 1: them enoughing tention too?
• 32:00
  Speaker 3: Do you think.
• 32:02
  Speaker 15: One risk factor is definitely China, which people are paying
• 32:07
  Speaker 15: attention because, you know, any more incremental sanctions in this
• 32:10
  Speaker 15: area because the AI area comes under a lot of
• 32:13
  Speaker 15: focus when you think about US China trade sanctions they have,
• 32:17
  Speaker 15: they're already sanctioned last year from not allowing them aligned
• 32:21
  Speaker 15: selling their highest generationship.
• 32:23
  Speaker 11: To the China.
• 32:23
  Speaker 15: And look outside of the US, the largest cloud supply
• 32:27
  Speaker 15: service providers are in China, So that could be, you know,
• 32:30
  Speaker 15: in the case of really restrictive sanctions, that could be
• 32:33
  Speaker 15: that could limit that upside, that could limit their TAM opportunity.
• 32:37
  Speaker 15: So that's one of the risk cases right now.
• 32:41
  Speaker 8: Really really quite fascinating. Other than other than AI, is
• 32:46
  Speaker 8: there any other field than in Nvidia sort of the
• 32:49
  Speaker 8: way Qualcom took over mobile. Is there any other potential
• 32:53
  Speaker 8: use case for Nvidia chips or is this an AI
• 32:57
  Speaker 8: story only?
• 32:59
  Speaker 15: Well, there's definitely. The other up and coming market for
• 33:02
  Speaker 15: them is automotive. Look, everyone's aware cars are becoming sort
• 33:06
  Speaker 15: of computer running on wheels, as we go to autonomous driving,
• 33:10
  Speaker 15: as we get a higher penetration of evs. There's really
• 33:15
  Speaker 15: three key players when it comes to computed cars, and
• 33:18
  Speaker 15: then media is one of them.
• 33:20
  Speaker 1: All right, cu John, thanks so much for joining us.
• 33:22
  Speaker 1: Really appreciate getting your thoughts. John, Sohani he is the
• 33:26
  Speaker 1: lead semiconductor animals for Bloomberg Intelligency's based out there in
• 33:29
  Speaker 1: our San Francisco officer right smack in the middle of
• 33:33
  Speaker 1: the Silicon Valley and all the tech speak out there,
• 33:35
  Speaker 1: so giving us his thoughts on Nvidia and again just
• 33:38
  Speaker 1: a monster beat and raise again.
• 33:43
  Speaker 10: You're listening to the team can't live program Bloomberg Markets
• 33:47
  Speaker 10: weekdays at ten am Eastern.
• 33:48
  Speaker 11: On Bloomberg dot Com, the iHeartRadio.
• 33:50
  Speaker 10: App and the Bloomberg Business App, or listen on demand
• 33:53
  Speaker 10: wherever you get your podcast.
• 33:57
  Speaker 1: Matt Miller, Paul Sweeney joining in live here on a
• 33:59
  Speaker 1: Bloomberg Interactive Chris Studio. We're joined with Battery, Ridholtz, Ridholts
• 34:02
  Speaker 1: Wealth Management joining us here for a spell here, and
• 34:06
  Speaker 1: we're also on that YouTube thing. Boeing shares a Boeing
• 34:10
  Speaker 1: and its biggest supplier, Spirit Arrow Systems Holdings, fell after
• 34:14
  Speaker 1: the planemaker disclosed improperly drilled holes in a component that
• 34:18
  Speaker 1: helps maintain cabinet pressure within the seven three seven Max jet.
• 34:23
  Speaker 3: Here we go again. George Ferguson he joins us.
• 34:26
  Speaker 1: He covers all the aerospace stuff for Bloomberg Intelligence.
• 34:29
  Speaker 3: He is a veteran of the.
• 34:31
  Speaker 1: US Army so we thank him for his service, but
• 34:33
  Speaker 1: of course the highlight of his career was the four
• 34:35
  Speaker 1: years he spent at Penn State cheering on the Nitly Lions. George,
• 34:40
  Speaker 1: we love Boeing. It's a great, great American company.
• 34:42
  Speaker 3: What's going on? How serious is this latest issue?
• 34:46
  Speaker 16: So first, thanks as always for having me on. So, yeah,
• 34:50
  Speaker 16: the you know, Boeing has said that there's no safety
• 34:52
  Speaker 16: of flight issues for these these holes that were sort
• 34:56
  Speaker 16: of misdrilled in the rear pressure bulkhead.
• 35:00
  Speaker 17: I mean, so I think in the story that's the positive.
• 35:03
  Speaker 16: The challenge here is the challenge we've been seeing all year,
• 35:08
  Speaker 16: multiple years, right, it's really quality controlled down at the suppliers.
• 35:12
  Speaker 16: The supplier bases have really gone through a lot of
• 35:16
  Speaker 16: turnover employees since the pandemic, and that just keeps biting them, right,
• 35:22
  Speaker 16: and so again another story. We don't know full numbers
• 35:25
  Speaker 16: on what it's going to cost to repair. The great
• 35:27
  Speaker 16: news is we don't have to bring everything in from
• 35:29
  Speaker 16: out of the fleet right away to repair it. My
• 35:32
  Speaker 16: guess is that they'll worry about maybe crack propagation over time,
• 35:37
  Speaker 16: you know, as you do more takeoffs and landings on
• 35:39
  Speaker 16: an airframe. So that probably required some level of inspection.
• 35:43
  Speaker 16: It may slow down deliveries this year as they try
• 35:45
  Speaker 16: to fix what they have going through the processes right
• 35:48
  Speaker 16: now before they get into the fleet and don't need
• 35:51
  Speaker 16: to do the extra inspection later on. So it probably
• 35:54
  Speaker 16: puts some of Boeing's deliveries at risk this year. We'll
• 35:58
  Speaker 16: wait to hear what they've got to say. And again
• 36:00
  Speaker 16: the good news is I'm not gonna spend a lot
• 36:03
  Speaker 16: of money bring everything in from out of the fleet.
• 36:05
  Speaker 17: But again the challenge here.
• 36:07
  Speaker 16: Is supplier you know, is supplier skill set, supplier stability.
• 36:12
  Speaker 8: Hey, George Barry Ridholts. So you're you're touching on exactly
• 36:15
  Speaker 8: where he wanted to go. Which is is this just
• 36:18
  Speaker 8: a freakish one off or is there a larger problem
• 36:23
  Speaker 8: with process? How does something like this happen? How is
• 36:27
  Speaker 8: it not caught sooner? And what does it mean for
• 36:31
  Speaker 8: all the rest of the systems we don't know anything about.
• 36:34
  Speaker 16: Yeah, well, look I think there's a I think the
• 36:37
  Speaker 16: good news is on aircraft builds there it's very robust
• 36:42
  Speaker 16: and so there is some tolerance.
• 36:43
  Speaker 17: For everything not being perfect.
• 36:45
  Speaker 16: You clearly want to be it perfect right so that
• 36:49
  Speaker 16: you can minimize any risks as you build an airframe.
• 36:52
  Speaker 16: But I think Barry, we've gotten way past the one off.
• 36:55
  Speaker 16: There's been so many problems coming out of the supplier
• 36:59
  Speaker 16: base see Spirit, where I think you have to concern
• 37:03
  Speaker 16: yourself now with process, right. I think Boeing really needs
• 37:06
  Speaker 16: to get in there and figure out why Spirit can't
• 37:09
  Speaker 16: get the you know, these really critical manufacturing processes standardized
• 37:14
  Speaker 16: and stabilize, so they're coming through the factory correct the
• 37:18
  Speaker 16: first time.
• 37:19
  Speaker 8: Is this specific to the seven thirty seven or might
• 37:23
  Speaker 8: this be a broader problem that affects everything that comes
• 37:27
  Speaker 8: out with a Boeing logo on it.
• 37:30
  Speaker 16: So the seven thirty seven and the rear pressure bulkhead
• 37:34
  Speaker 16: would be built at Spirit, and no other Bowing airplane
• 37:38
  Speaker 16: would have that rear pressure bulkhead done its Spirit. So
• 37:41
  Speaker 16: I'm guessing this is going to be largely a seven
• 37:45
  Speaker 16: thirty seven issue. I mean, maybe the seven sixty seven
• 37:48
  Speaker 16: seven six seven runs through Spirit as well, but we
• 37:51
  Speaker 16: haven't heard anything about it.
• 37:52
  Speaker 17: It's low volume two. I'm guessing it's going to be
• 37:54
  Speaker 17: largely seven thirty seven issue right now.
• 37:57
  Speaker 1: Georgia, you also cover a Spirit aerosystem stock is down
• 38:01
  Speaker 1: fifteen percent on the news today, it's off thirty four
• 38:04
  Speaker 1: percent year to date. Most of us don't know anything
• 38:06
  Speaker 1: about Spirit Aero Systems. Tell us who they are, what
• 38:09
  Speaker 1: they do, and does this come as a surprise to you.
• 38:12
  Speaker 16: Yeah, So they make a lot of fuselage pieces for Boeing.
• 38:15
  Speaker 16: They make I think it's something like about seventy percent
• 38:18
  Speaker 16: of the seven thirty seven aircraft, so they're really integral
• 38:22
  Speaker 16: to that airplane. Spirit was spun out of Boeing a
• 38:25
  Speaker 16: bunch of decades ago. You know that it's a Wichita factory.
• 38:29
  Speaker 16: I think that Boeing probably wanted to get outside of
• 38:33
  Speaker 16: the main company so they could save a little bit
• 38:34
  Speaker 16: of money on labor. Again, it doesn't surprise me because
• 38:39
  Speaker 16: we've seen other problems at Spirit recently in processes.
• 38:44
  Speaker 17: You know.
• 38:45
  Speaker 16: One of the things I think very telling about how
• 38:47
  Speaker 16: important Spirit is to Boeing is i'd call Spirit somewhat
• 38:51
  Speaker 16: challenge from a financial standpoint. They've recently received advances from Boeing,
• 38:57
  Speaker 16: you know, to support some of their cash flow. We
• 39:00
  Speaker 16: saw them go into the markets, but I think it
• 39:03
  Speaker 16: was last year or early this year, actually early this year,
• 39:06
  Speaker 16: and they raised some bonds at over nine percent, which
• 39:09
  Speaker 16: I think is really difficult for a supplier to kind
• 39:11
  Speaker 16: of support that kind of that kind of that kind
• 39:14
  Speaker 16: of debt costs. But then Boeing has put money into
• 39:17
  Speaker 16: the supplier because they are so important to Boeing.
• 39:20
  Speaker 17: And I think part of.
• 39:21
  Speaker 16: This story is going to be I think the market's
• 39:24
  Speaker 16: telling you they think Spirit's going to be responsible and
• 39:27
  Speaker 16: ultimately have to pay for these repairs. Right Boeing would
• 39:30
  Speaker 16: try to recoup it from them, but Spirit only has
• 39:33
  Speaker 16: so much capability to pay for those, you know, for
• 39:37
  Speaker 16: the cost of these problems, And so it's going to
• 39:39
  Speaker 16: be interesting to watch Boeing as they work with Spirit
• 39:43
  Speaker 16: to figure out a repayment plan in some of this stuff.
• 39:45
  Speaker 2: George just got about thirty seconds here, but Boeing seems
• 39:49
  Speaker 2: to be beset with issues on the seven thirty seven,
• 39:52
  Speaker 2: even though Paul trusted more than any other plane. Is
• 39:55
  Speaker 2: the Airbus A three twenty just a better platform.
• 39:59
  Speaker 16: You know, I wouldn't call it a better platform, but
• 40:01
  Speaker 16: I think the Airbus does have more stability in the
• 40:04
  Speaker 16: builds of that They do more of it in the house,
• 40:07
  Speaker 16: and that's going to lead to higher build rates for
• 40:09
  Speaker 16: Airbus and better profitability.
• 40:11
  Speaker 17: So something that Boeing absolutely has this come out all right?
• 40:14
  Speaker 3: George, thanks so much for joining us.
• 40:15
  Speaker 1: As always, George Ferguson, He's the senior Aerospace, Defense and
• 40:19
  Speaker 1: Airline analyst for Bloomberg Intelligence. And as it relates to Bowing,
• 40:22
  Speaker 1: I'm going to go back to my personal opinion. They
• 40:25
  Speaker 1: never should have up left Seattle. They are Seattle. Seattle
• 40:28
  Speaker 1: is Boeing. One of the great drives in from an
• 40:30
  Speaker 1: airport to a downtown is Seattle. You come down whatever
• 40:33
  Speaker 1: that interstate is. It's a thirty minute ride roughly, and
• 40:35
  Speaker 1: almost the entire ride on the left of the interstate
• 40:37
  Speaker 1: is Boeing hangars.
• 40:39
  Speaker 3: Airfields, jets taking off. I mean, it's just the engineering
• 40:43
  Speaker 3: gut of the company. So what do you do? You
• 40:45
  Speaker 3: move to Chicago and now Washington, DC. This is Bloomberg.
• 40:49
  Speaker 10: You're listening to the tape cansur live program Bloomberg Markets
• 40:53
  Speaker 10: weekdays at ten am Eastern on Bloomberg Radio, the tune
• 40:56
  Speaker 10: in app, Bloomberg dot Com.
• 40:58
  Speaker 11: And the Bloomberg Business App.
• 40:59
  Speaker 10: You can also listen live on Amazon Alexa from our
• 41:02
  Speaker 10: flagship New York station Just Say Alexa, playing Bloomberg eleven.
• 41:08
  Speaker 3: Jordan Lopez joins as he does this stuff for a
• 41:10
  Speaker 3: living as.
• 41:10
  Speaker 1: A director and high yield portfolio manager at Payton and Regal.
• 41:14
  Speaker 1: Jordan talked to us about the high yield market this year.
• 41:16
  Speaker 1: How's it it been. It looks like it's outperforming, it
• 41:18
  Speaker 1: looks like it's the place to be. It looks like
• 41:21
  Speaker 1: they're not too worried about a recession.
• 41:23
  Speaker 3: Yeah.
• 41:24
  Speaker 18: I think that's been the story of the year. I
• 41:26
  Speaker 18: think coming into the year, you know, the the base
• 41:28
  Speaker 18: case expectation was for recession, and we're really seeing few
• 41:34
  Speaker 18: signs of a recession, which which is really keeping default
• 41:38
  Speaker 18: forecast low. So so if you look at you know,
• 41:42
  Speaker 18: both macro data on the employment side or the growth side,
• 41:47
  Speaker 18: they're both coming in much stronger than expected. And then
• 41:50
  Speaker 18: when we look at earnings, you know, earnings have been
• 41:52
  Speaker 18: very resilient. So when you take a step back and
• 41:55
  Speaker 18: look at the big picture, I think, you know, some
• 41:59
  Speaker 18: of these Dractconian default expectations just aren't coming to fruition.
• 42:04
  Speaker 18: Uh And and that's really what's what's driven at at
• 42:06
  Speaker 18: least the the rallying spreads.
• 42:09
  Speaker 8: So that's exactly where I was going to go. You know,
• 42:12
  Speaker 8: high yield look at look at a fund like HyG
• 42:14
  Speaker 8: you're getting five point three percent investment grade corporate not
• 42:19
  Speaker 8: getting a.
• 42:19
  Speaker 3: Whole lot less.
• 42:20
  Speaker 8: Why do I want to go out on the risk
• 42:23
  Speaker 8: scale and embrace high yield over investment grade corporates.
• 42:29
  Speaker 18: Well, when you when you look at the broader market,
• 42:31
  Speaker 18: the yields are closer to you know, mid to high
• 42:34
  Speaker 18: eight percent, and so there is still a decent pickup.
• 42:38
  Speaker 18: And like I said, if you're if your default expectations
• 42:42
  Speaker 18: aren't much, you are still getting paid to go out.
• 42:46
  Speaker 11: When when we.
• 42:46
  Speaker 18: Look at the high yield market itself, you know, credit
• 42:50
  Speaker 18: metrics are still very very strong. They are certainly coming
• 42:54
  Speaker 18: off of what we're all time highs. But you know,
• 42:58
  Speaker 18: when when you look at something like interest coverage ratio
• 43:01
  Speaker 18: or or a company's ability to service their debt, it's
• 43:05
  Speaker 18: still very very well above historical averages. So even if
• 43:11
  Speaker 18: we are to have some sort of recession, we think
• 43:15
  Speaker 18: that that you know, most of the companies within the
• 43:18
  Speaker 18: high yield space should be able to manage that, and
• 43:20
  Speaker 18: therefore you are getting paid above something like investment grade.
• 43:25
  Speaker 3: What sectors do you like out there?
• 43:27
  Speaker 1: I've had a lot of experience in the highield space
• 43:29
  Speaker 1: and the media, telecom space, and boy, the hyold market
• 43:32
  Speaker 1: loves that those companies.
• 43:33
  Speaker 3: Where are you guys looking.
• 43:34
  Speaker 7: Well, are you still going?
• 43:35
  Speaker 2: I mean, hasn't high yield done so well that it's
• 43:38
  Speaker 2: outrageously expensive at this point?
• 43:41
  Speaker 15: No?
• 43:42
  Speaker 18: You know, spreads are still slightly above historical averages, and
• 43:48
  Speaker 18: and you know, back to the conversation about which sectors
• 43:51
  Speaker 18: we like, media and cable will actually have some of
• 43:54
  Speaker 18: the more problematic companies in the in the space right now.
• 43:57
  Speaker 18: Surprisingly enough, what people don't really appreciate about the market
• 44:02
  Speaker 18: is the energy companies have done exceptionally well. I know,
• 44:07
  Speaker 18: they were kind of the black sheep of the market
• 44:09
  Speaker 18: back in twenty fifteen early twenty sixteen. But when we
• 44:13
  Speaker 18: look at a lot of those companies now, a lot
• 44:17
  Speaker 18: of them actually have investment grade credit metrics, and for
• 44:21
  Speaker 18: many of them, we just think it's a matter of
• 44:22
  Speaker 18: time before they get upgraded to investment grade. So although
• 44:27
  Speaker 18: that space trade is tight relative to the market, we
• 44:30
  Speaker 18: still think there are several opportunities there for further spread compression.
• 44:35
  Speaker 1: All right, So I'm looking here, so is it a
• 44:38
  Speaker 1: sense of this high yield market is feeling pretty good
• 44:42
  Speaker 1: about the economy that they're maybe just not pricing in
• 44:46
  Speaker 1: that risk at this point, or do you really still
• 44:49
  Speaker 1: have to be careful here.
• 44:52
  Speaker 18: I think where you have to be careful is the
• 44:54
  Speaker 18: companies you choose. So certainly there is going to be
• 44:58
  Speaker 18: some dispersion. There are going to be winners and losers.
• 45:02
  Speaker 18: But if if you're able to do your your credit work,
• 45:06
  Speaker 18: you know, you can still find plenty of opportunities out
• 45:09
  Speaker 18: there where you get paid a healthy yield and you
• 45:13
  Speaker 18: can sleep well at night owning a lot of these companies.
• 45:16
  Speaker 1: How about the in the in the media space, I'm
• 45:18
  Speaker 1: gonna go back to my Baileywick here, having punched out
• 45:21
  Speaker 1: a bunch.
• 45:21
  Speaker 3: Of these over the years, that's tough sector right now.
• 45:24
  Speaker 1: Advertising headwinds potentially here all the cord cutting issues, and
• 45:29
  Speaker 1: there's a lot of cable debt out there, there's a
• 45:31
  Speaker 1: lot of broadcasting debt out there.
• 45:33
  Speaker 3: What's your feeling on the broader media space.
• 45:36
  Speaker 18: Yeah, it's certainly been one of the most challenged spaces,
• 45:39
  Speaker 18: and from a fundamental standpoint, you're you're absolutely right, uh,
• 45:43
  Speaker 18: there there have been a lot of slowing of growth
• 45:48
  Speaker 18: in some of the you know, uh, some of some
• 45:51
  Speaker 18: of the cable operators. It is challenged, but you know,
• 45:56
  Speaker 18: when when you look at valuations, a lot of that's
• 45:58
  Speaker 18: already priced in that that's one area where you do
• 46:01
  Speaker 18: see more distressed type of companies. And so from a
• 46:06
  Speaker 18: fundamental standpoint, that's a tough story, but that is being
• 46:10
  Speaker 18: reflected in the overall spreads of the market. And again,
• 46:15
  Speaker 18: you know, like anything else, there will be winners and
• 46:18
  Speaker 18: losers coming out of that space, and there will be
• 46:20
  Speaker 18: some opportunities there.
• 46:22
  Speaker 3: All right, Jordan, thanks so much.
• 46:23
  Speaker 1: Jordan Lopez a director and high yield portfolio manager for
• 46:26
  Speaker 1: Paydon and Regal. I think it's interesting there that the
• 46:29
  Speaker 1: highyield market doing really well in front of what everybody's
• 46:33
  Speaker 1: been talking about for the last twelve months of recession.
• 46:35
  Speaker 8: Yeah, you could get about three hundred basis points, That's
• 46:38
  Speaker 8: what Jowan was talking about. But you're you're looking at
• 46:42
  Speaker 8: B grade companies. You're not even looking at double B.
• 46:45
  Speaker 8: You're looking at So do you what.
• 46:47
  Speaker 3: Do you do with high yielded with your clients? Do
• 46:49
  Speaker 3: you have anything in there? Not a whole lot?
• 46:51
  Speaker 8: You know, up until very recently, you weren't. First of all,
• 46:55
  Speaker 8: go back a year and a half, the spread between
• 46:58
  Speaker 8: investment grade and high yield was so tiny and the
• 47:02
  Speaker 8: returns were so pitiful. You know, who cares about the
• 47:06
  Speaker 8: difference between one and three quarters and two and a
• 47:09
  Speaker 8: quarter percent if you have to go out on the curve.
• 47:11
  Speaker 8: It's amazing how far everything has spread out. But keep
• 47:15
  Speaker 8: in mind, if you want to want a safe investment,
• 47:18
  Speaker 8: the ten year is well over four percent.
• 47:21
  Speaker 7: You could do okay without taking a lot of risk.
• 47:24
  Speaker 2: Yeah, I mean you can buy the twos and get
• 47:27
  Speaker 2: five right.
• 47:28
  Speaker 8: They're the risk is whether or not we run into
• 47:31
  Speaker 8: a rake cuts or a recession in the next year.
• 47:35
  Speaker 2: Yeah, but you're still getting five percent, so you don't
• 47:36
  Speaker 2: have to do anything except for let them be.
• 47:38
  Speaker 7: Sure if you want to.
• 47:38
  Speaker 2: Yeah, I guess's and frankly, yep, twenties you get four
• 47:42
  Speaker 2: and a half.
• 47:42
  Speaker 7: All right?
• 47:43
  Speaker 1: That was Jordan Lopez, director and High Yeld Portfolio Matter
• 47:45
  Speaker 1: Paydon and Regal helping us out with the High Yield space.
• 47:48
  Speaker 10: You're listening to the tape catch are live program Bloomberg
• 47:51
  Speaker 10: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 47:55
  Speaker 10: tune in app, Bloomberg dot Com.
• 47:56
  Speaker 11: And the Bloomberg Business app.
• 47:58
  Speaker 10: You can also listen live on was on Alexa from
• 48:01
  Speaker 10: our flagship New York Station. Just say Alexa play Bloomberg
• 48:04
  Speaker 10: eleven thirty.
• 48:06
  Speaker 2: Matt Miller here in the studio with Paul Sweeney and
• 48:09
  Speaker 2: Barry Ritholds, and we have a special guest. We were
• 48:12
  Speaker 2: talking about Hannah Elliott earlier from Bloomberg Pursuits. We've got
• 48:15
  Speaker 2: her on the cam from Los Angeles. Hannah, thanks so
• 48:19
  Speaker 2: much for joining us. I wanted to talk about the
• 48:23
  Speaker 2: car that I was driving last week, which is I
• 48:27
  Speaker 2: think widely controversial, and that's the BMW x M. It's
• 48:33
  Speaker 2: supposedly it's a dedicated M car and they haven't done
• 48:36
  Speaker 2: one of those since the M one, And this means
• 48:39
  Speaker 2: basically their speed shop, you know, their skunk works unit
• 48:43
  Speaker 2: is making this, and they're not gonna have a regular
• 48:46
  Speaker 2: kind of street version of it. But they detuned the
• 48:51
  Speaker 2: four point four leader twin turbo V eight to be
• 48:54
  Speaker 2: less powerful than it is in the X five M,
• 48:57
  Speaker 2: and there's no air suspension and a lot of people
• 49:02
  Speaker 2: think it's kind of ugly. And first I want to
• 49:04
  Speaker 2: get your take on it. What do you think about
• 49:05
  Speaker 2: this big behemoth of a hybrid.
• 49:09
  Speaker 19: Well, I have to say BMW is making us work
• 49:13
  Speaker 19: really hard to really like them these days. And I
• 49:16
  Speaker 19: don't really understand why. I do agree that they're styling choices,
• 49:24
  Speaker 19: and the choices they're making with their engines and power
• 49:26
  Speaker 19: plants right now are a little bit confusing and even puzzling.
• 49:31
  Speaker 19: I have to say, my disclaimer is I haven't driven
• 49:34
  Speaker 19: this vehicle, so I can't speak to that. But I
• 49:36
  Speaker 19: have driven the IX, which is the electric version, which
• 49:41
  Speaker 19: I thought was very capable but unfortunately didn't look great.
• 49:46
  Speaker 19: It sounds like you felt a little bit the same
• 49:48
  Speaker 19: way about this one, Matt.
• 49:49
  Speaker 2: Yeah, this so this is we're looking at pictures of
• 49:52
  Speaker 2: it now. For those of you only listening, you go
• 49:54
  Speaker 2: to YouTube dot com. You can stream us live by
• 49:57
  Speaker 2: searching for Bloomberg Radio there. I mean, I personally like
• 50:01
  Speaker 2: it because it's so big and aggressive, but I think,
• 50:07
  Speaker 2: first of all, it's way overpriced one hundred and sixty
• 50:11
  Speaker 2: seven thousand dollars for a car that doesn't even get
• 50:15
  Speaker 2: the sunroof option. I could understand if they're saying, like,
• 50:19
  Speaker 2: because it's a track car, you know, we want the
• 50:21
  Speaker 2: stiffness and the low low weight of just the flat roof.
• 50:27
  Speaker 2: But why then D two the V eight and there's
• 50:32
  Speaker 2: no air ride suspension, so It's not like a luxury
• 50:36
  Speaker 2: suv for you know, the well heeled. It's not like
• 50:38
  Speaker 2: a Kardashian mobile. So I just don't really get what
• 50:42
  Speaker 2: they're doing with it. And Barry, I love I'm a
• 50:45
  Speaker 2: huge fan of the brand, and I know you are too.
• 50:47
  Speaker 8: Yeah, I'm gonna I'm gonna give this car a sort
• 50:50
  Speaker 8: of backhanded compliment. This is the least ugly new BMW
• 50:55
  Speaker 8: in a couple of years, maybe because the I don't
• 50:59
  Speaker 8: know what the thing with those giant grills that are
• 51:02
  Speaker 8: on the three and four series are just horrific, and
• 51:06
  Speaker 8: some of the choices that have been made. I understand
• 51:09
  Speaker 8: you want the electric vehicles to have a different look,
• 51:12
  Speaker 8: and so they went for something that was a little
• 51:17
  Speaker 8: less rounded, let's say, than some of their other stuff.
• 51:20
  Speaker 8: This isn't a terrible looking car. I don't have a
• 51:22
  Speaker 8: problem with no air suspension. They're notoriously quirky. They break,
• 51:27
  Speaker 8: and they're really expensive to repair.
• 51:29
  Speaker 7: One hundred and sixty seven grand.
• 51:31
  Speaker 8: That's a whole different question, Hannah can answer. What are
• 51:36
  Speaker 8: they thinking? Who are they competing with with the exam.
• 51:40
  Speaker 19: You know what, This seems to me like a case
• 51:42
  Speaker 19: of we're gonna price it. Again, we're gonna price it
• 51:46
  Speaker 19: compared to the people that we think we're competing against,
• 51:48
  Speaker 19: which is probably Portia and Mercedes. But the price is
• 51:52
  Speaker 19: a bit aspirational, like BMW is hoping that the price
• 51:55
  Speaker 19: means that they're competitive with those other vehicles, but I
• 51:58
  Speaker 19: just don't think the product is. And when you can
• 52:01
  Speaker 19: get a Cayenne for less than that, again, I think
• 52:06
  Speaker 19: you're absolutely right. The price does seem wildly inappropriate.
• 52:13
  Speaker 3: Well, k I learn the GTS or the turbo. What
• 52:16
  Speaker 3: are you getting from that?
• 52:17
  Speaker 7: You can get the Cayenne Turbo for less than one second?
• 52:19
  Speaker 7: Oh really?
• 52:20
  Speaker 3: Yeah for sure?
• 52:21
  Speaker 2: And this goes up against the Cayenne Turbo Hybrid, and
• 52:24
  Speaker 2: I think you're right, that's what they want.
• 52:26
  Speaker 7: But you can't beat that car tough.
• 52:28
  Speaker 19: Right, That's that's the thing. Just because you make your
• 52:31
  Speaker 19: price the same as another company's product doesn't mean your
• 52:35
  Speaker 19: product is comparable. It doesn't work like that. I don't
• 52:39
  Speaker 19: think you know, certainly, consumers are not dumb, and they're
• 52:42
  Speaker 19: going to pick up on that really quick.
• 52:44
  Speaker 2: I did drive the snot out of this thing, and
• 52:48
  Speaker 2: it was super fun. I mean, it's a gigantic, obviously
• 52:51
  Speaker 2: beast but it's got this active electronic anti roll bar
• 52:59
  Speaker 2: in it that holds it flat and neutral even when
• 53:01
  Speaker 2: you rip it around corners at speeds that.
• 53:04
  Speaker 7: Are super legal.
• 53:06
  Speaker 2: But I feel like I could get a lot more
• 53:10
  Speaker 2: car from the same manufacturer for so much less. I'd
• 53:14
  Speaker 2: much prefer the X five if you need the suv.
• 53:17
  Speaker 2: If you don't need something like that, I much prefer
• 53:20
  Speaker 2: the two series. Hannah, what do you think about BMW
• 53:23
  Speaker 2: in terms of their you know, competitiveness and in other segments.
• 53:27
  Speaker 19: Well, obviously they're competitive in in the X five and
• 53:31
  Speaker 19: the two series, and of course you know their sedans
• 53:34
  Speaker 19: and they have been. I think where it gets confusing
• 53:39
  Speaker 19: is when BMW is doing the hybrid things, the electric things,
• 53:43
  Speaker 19: and they're also, let's not forget doing hydrogen. It's just
• 53:47
  Speaker 19: a little muddled to me, and I think their messaging
• 53:51
  Speaker 19: is muddled and they haven't really figured out what it
• 53:54
  Speaker 19: means for a BMW to be running a hybrid or
• 53:57
  Speaker 19: an electric power plant, whereas other company. And he's just
• 54:00
  Speaker 19: seen miles ahead in that regard, Hannah.
• 54:03
  Speaker 8: I know you just spent the past week at Monterey.
• 54:06
  Speaker 8: What'd you see there? And oh my, did it reach
• 54:10
  Speaker 8: your expectations? That this is simply the best auto show
• 54:14
  Speaker 8: in the world anywhere, anytime.
• 54:17
  Speaker 19: Yes, yes, it's a little bit mind blowing. We saw
• 54:20
  Speaker 19: more than twenty new car debuts. This is obviously the
• 54:23
  Speaker 19: new auto show. If you want to see new cars,
• 54:25
  Speaker 19: you go there. I'll tell you what really interested me,
• 54:28
  Speaker 19: which was this three hundred thousand dollars Ford Mustang GTD.
• 54:34
  Speaker 19: Ford's Jim Farley has made no bones about the fact
• 54:37
  Speaker 19: that he's going right after Porsche with this Mustang. It's
• 54:40
  Speaker 19: a street legal Mustang based on the car that they're
• 54:42
  Speaker 19: going to run in Lamon next year. And Jim Farley
• 54:46
  Speaker 19: told me straight up, Hey, I've been a fan of
• 54:48
  Speaker 19: Porsche for fifty years. I've been watching what they did
• 54:51
  Speaker 19: with their racing programs, their GT three cars, their GT
• 54:53
  Speaker 19: two cars, and we want to do that with Mustang.
• 54:56
  Speaker 19: There's no reason why we can't. So I'm very interested
• 55:00
  Speaker 19: that particular car three for.
• 55:02
  Speaker 2: Uh, I mean, they price themselves higher than any Porsche competition.
• 55:08
  Speaker 8: You could get two, almost get two of the MX's
• 55:12
  Speaker 8: for that much.
• 55:12
  Speaker 19: Money, Yeah, you could. I mean here's the thing. I
• 55:16
  Speaker 19: think if the race car version of that car wins
• 55:19
  Speaker 19: next year at Lemon, all will be forgiven, including the
• 55:23
  Speaker 19: the rear transactal on the production car and the front
• 55:26
  Speaker 19: engine and the pricing. Honestly, I think it all goes
• 55:30
  Speaker 19: away if they win next year, so we'll see.
• 55:32
  Speaker 8: What else did you see that caught your eye?
• 55:35
  Speaker 19: Okay, there's this, I'm sure you read about it, the
• 55:38
  Speaker 19: thirty million dollar Rolls Royce droptail. This is part of
• 55:43
  Speaker 19: their Coach Built series, which basically means consumers can design
• 55:47
  Speaker 19: a car from the ground up. They're making four of them.
• 55:51
  Speaker 19: They don't want to say who's buying it, but you
• 55:53
  Speaker 19: have to imagine this is an international family, longtime collectors.
• 56:00
  Speaker 19: Rolls Royce says, it's not about just who can come
• 56:02
  Speaker 19: to us with a blank checkbook. It's not just about
• 56:05
  Speaker 19: people who own twenty Rolls Royces. It's actually a mix
• 56:09
  Speaker 19: of things, and it's people who are engaged with the brand.
• 56:12
  Speaker 19: But this thirty million dollar droptail, it's a roadster. Actually
• 56:17
  Speaker 19: was was pretty striking.
• 56:19
  Speaker 7: It looks hot.
• 56:19
  Speaker 2: I mean I saw it on your either your on
• 56:22
  Speaker 2: your Twitter feed or your Instagram feed. One of the
• 56:25
  Speaker 2: other things that I saw on your social media is
• 56:29
  Speaker 2: the new Lamborghini or.
• 56:31
  Speaker 7: I guess it's a prototype electric.
• 56:35
  Speaker 3: So hot.
• 56:35
  Speaker 7: Yeah, that looks great.
• 56:36
  Speaker 8: I'm excited about that me too.
• 56:39
  Speaker 19: It's all electric, and I have to say there there
• 56:42
  Speaker 19: was some grumbling among of course the Lamborghini periods that
• 56:48
  Speaker 19: what is happening? We swore we'd never do this, et cetera,
• 56:51
  Speaker 19: et cetera, et cetera. But that car looks amazing.
• 56:55
  Speaker 15: Uh.
• 56:55
  Speaker 19: That's a Mitcha Boker creation. Mitya is the head designer
• 56:58
  Speaker 19: of Lamborghini. He actually was formerly at Portia. He's actually German,
• 57:02
  Speaker 19: but he's making some great Italian cars. This is his
• 57:06
  Speaker 19: latest concept. I think it looks fabulous and they kind
• 57:10
  Speaker 19: of have to make it right.
• 57:12
  Speaker 2: Yeah, they have to go electric at some point. And
• 57:15
  Speaker 2: of course Lamborghini's in the Porsche stable. They're all folks,
• 57:18
  Speaker 2: few orud East.
• 57:20
  Speaker 7: But yeah, yeah, I can't wait to see that Elliott.
• 57:26
  Speaker 3: Business. We're talking cars with a couple of car geeks.
• 57:28
  Speaker 1: What could go wrong here in the Bloomberg Interactive Broker studio. Concourse,
• 57:33
  Speaker 1: the elegance, I've been there many many times, very very
• 57:35
  Speaker 1: cool on the Monterey Peninsula.
• 57:38
  Speaker 10: You're listening to the tape Cancer Live program Bloomberg Markets
• 57:41
  Speaker 10: weekdays at ten am Eastern on Bloomberg Radio, the tune
• 57:45
  Speaker 10: in app, Bloomberg dot Com, and the.
• 57:46
  Speaker 11: Bloomberg Business App.
• 57:48
  Speaker 10: You can also listen live on Amazon Alexa from our
• 57:50
  Speaker 10: flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
• 57:56
  Speaker 1: A bit of an m and a trade here in
• 57:59
  Speaker 1: the I guess the restaurant business, the fast food restaurant,
• 58:02
  Speaker 1: the sandwich business. Rowar Capital is in a deal to
• 58:05
  Speaker 1: buy a subway for more than nine billion dollars. Row
• 58:09
  Speaker 1: Our Capital, as private equity firm, owns brands including Arby's, Duncan,
• 58:14
  Speaker 1: Buffalo Wide, Wings.
• 58:15
  Speaker 3: And rival substore Jimmy Johns.
• 58:18
  Speaker 1: Let's break down this transaction get a sense of what's
• 58:20
  Speaker 1: happening in the restaurant business. We check out with Mike Alen.
• 58:22
  Speaker 1: He's a senior restaurant analyst for Bloomberg Intelligence. Hey, Mike,
• 58:25
  Speaker 1: talk to us about row Our Capital.
• 58:27
  Speaker 3: And this deal for subway. What's What's what's going on here?
• 58:31
  Speaker 7: Yeah, Rourck has.
• 58:33
  Speaker 20: A long history of activity in the restaurant space. They
• 58:37
  Speaker 20: currently own a ton of brands, you know, a lot
• 58:39
  Speaker 20: of a lot of great brands that you mentioned. They've
• 58:42
  Speaker 20: been very active in.
• 58:43
  Speaker 3: The space over the last decade or so.
• 58:46
  Speaker 20: Uh, and and this is you know, another interesting addition
• 58:50
  Speaker 20: to their portfolio, you know, to their to your point,
• 58:54
  Speaker 20: they own Arby's and Jimmy John's. That's through their Inspire
• 58:58
  Speaker 20: Brands group. And so you know, they've had a lot
• 59:03
  Speaker 20: of experience turnaround brands, turning around brands. They've had a
• 59:06
  Speaker 20: lot of experience running sandwich shops, and so they see
• 59:10
  Speaker 20: some value here. They pay thirteen times ebitdah, which is
• 59:13
  Speaker 20: kind of high considering some of the problems that they have,
• 59:16
  Speaker 20: but you know, clearly with the scale that they have,
• 59:21
  Speaker 20: you know, there is definitely some potential in this brand.
• 59:25
  Speaker 8: So, Mike, this is Barry Riddholts. Subway has thirty thirty
• 59:30
  Speaker 8: seven thousand stores across one hundred countries. What is it
• 59:36
  Speaker 8: that Rourke Capital is looking for? Is it the footprint,
• 59:39
  Speaker 8: is it the real estate or is it just Hey,
• 59:42
  Speaker 8: this is a lot of potential that's been underperforming.
• 59:46
  Speaker 20: I think it's the latter, right. This is a franchise
• 59:50
  Speaker 20: brand that you know, spits off a lot of cash flow, right,
• 59:54
  Speaker 20: and so that's very attractive to somebody like Rourke. You
• 59:56
  Speaker 20: can you can lever it up and you know, really
• 1:00:00
  Speaker 20: juice to returns on something like this. You know, this
• 1:00:03
  Speaker 20: is a chain where average unit volumes have really lagged
• 1:00:07
  Speaker 20: over the last you know, five, six, seven years, and
• 1:00:10
  Speaker 20: average unit volumes are less than a half a million dollars.
• 1:00:13
  Speaker 20: You know, that's less than half of what Jersey Mikes
• 1:00:16
  Speaker 20: is doing. They're at about one point one million. So
• 1:00:19
  Speaker 20: there's definitely some room for growth. And you know, I
• 1:00:22
  Speaker 20: think that the chain has been moving in the right direction.
• 1:00:26
  Speaker 20: You know, adding slicers is going to improve you know,
• 1:00:29
  Speaker 20: what they've done recently has improved the quality of the
• 1:00:33
  Speaker 20: of the meat. They spent a lot of money on
• 1:00:36
  Speaker 20: advertising with like very high profile celebrities. They've made some
• 1:00:39
  Speaker 20: menu changes, and they're closing a lot of stores, right
• 1:00:43
  Speaker 20: and so when you close your underperforming stores. You know,
• 1:00:46
  Speaker 20: they've closed six thousand stores I think since twenty fifteen
• 1:00:49
  Speaker 20: or twenty sixteen. Even they're still closing it. I think
• 1:00:52
  Speaker 20: six hundred stores or so. We're closing twenty twenty two.
• 1:00:55
  Speaker 20: So when you start pairing the underperforming stores, the returns
• 1:01:00
  Speaker 20: on investment cash on cash returns start looking a lot
• 1:01:03
  Speaker 20: better for franchise ease. And then franchisees are from outside
• 1:01:07
  Speaker 20: the system, you know, might kind of look back into
• 1:01:10
  Speaker 20: Subway again, Right, So I think they're all pushing the
• 1:01:13
  Speaker 20: right buttons. But you can't turn around an aircraft carrier
• 1:01:17
  Speaker 20: on a dime, right, It's going to take some time.
• 1:01:18
  Speaker 8: So let's address that. Because Josie Mike's feels younger, newer, fresher.
• 1:01:23
  Speaker 8: They haven't been around quite as long Subway. This is
• 1:01:27
  Speaker 8: a storied brand that's been around, you know, more than
• 1:01:29
  Speaker 8: half a century, and it feels like it's kind of
• 1:01:32
  Speaker 8: gotten tired and stodgy. How can you inject new life
• 1:01:36
  Speaker 8: into a company like this when you know there's a
• 1:01:40
  Speaker 8: lot of history to overcome.
• 1:01:43
  Speaker 20: Yeah, I think you know, quality is usually a great
• 1:01:47
  Speaker 20: starting point for a good turnaround, and like you know,
• 1:01:50
  Speaker 20: to my point earlier, like spending money on slicers is
• 1:01:53
  Speaker 20: a good start, but you know, maybe there's some other
• 1:01:55
  Speaker 20: things that they need to do. Maybe it's upgrades on
• 1:01:58
  Speaker 20: the quality of the meat. Maybe it's a grades on
• 1:02:00
  Speaker 20: the quality of the bread and things of that nature.
• 1:02:04
  Speaker 20: But you know, you know, to your point, you have
• 1:02:06
  Speaker 20: to get people in the door, right, Like Jersey Mikes
• 1:02:09
  Speaker 20: is bringing twice as many customers, maybe more into their stores,
• 1:02:12
  Speaker 20: and so by proxy, the food is going to be fresher, right,
• 1:02:16
  Speaker 20: inventory is not going to sit there in the deli case,
• 1:02:20
  Speaker 20: So you know, it's gonna definitely take some take some time.
• 1:02:25
  Speaker 20: But you know, listen, they have this massive footprint. They
• 1:02:28
  Speaker 20: have a ton of scale, right, so they can source
• 1:02:31
  Speaker 20: product more cheaply than anybody. They are in a lot
• 1:02:35
  Speaker 20: of locations that Jersey Mikes isn't, So there's the risk
• 1:02:37
  Speaker 20: of Jersey Mike's continuing to move down the street from
• 1:02:40
  Speaker 20: them and kind of maybe take some of their market
• 1:02:43
  Speaker 20: share if they don't act aggressively enough, you know. So
• 1:02:48
  Speaker 20: you know, it's going to be interesting to watch. But
• 1:02:50
  Speaker 20: we're Capital and Inspire brands. I don't know if they're
• 1:02:52
  Speaker 20: going to fold this into Inspire brands. Both have a
• 1:02:55
  Speaker 20: tremendous track record of turning around restaurants and running great
• 1:02:58
  Speaker 20: restaurants and restaurant brands. So it's going to be interesting
• 1:03:01
  Speaker 20: to watch.
• 1:03:01
  Speaker 1: Hey, Mike, you covered the entire restaurant space. Where where's
• 1:03:05
  Speaker 1: the consumer spending money these days?
• 1:03:07
  Speaker 3: What do you see?
• 1:03:07
  Speaker 1: What are the trends out there and who's doing a
• 1:03:09
  Speaker 1: good job in the restaurant space.
• 1:03:12
  Speaker 3: Yeah, I thinks it's slowing a little bit.
• 1:03:14
  Speaker 5: You know.
• 1:03:14
  Speaker 20: I was talking to a client essay, which was kind
• 1:03:17
  Speaker 20: of on the opposite side of the spectrum. What had
• 1:03:19
  Speaker 20: surprised me on the downside, and that's fine dining, and
• 1:03:23
  Speaker 20: I've heard, you know, some some issues with some of
• 1:03:25
  Speaker 20: the high end retailers, and it looks like that's kind
• 1:03:28
  Speaker 20: of spilling over into restaurants, which is interesting and kind
• 1:03:32
  Speaker 20: of surprising, right because we've had this K shaped recovery
• 1:03:35
  Speaker 20: where people that on the higher end of the income
• 1:03:38
  Speaker 20: scale were able to work from home and during the
• 1:03:41
  Speaker 20: pandemic and saved a lot of money because they weren't
• 1:03:42
  Speaker 20: going on vacations and going out to restaurants, have all
• 1:03:45
  Speaker 20: this disposable income and continue to spend, whereas the low
• 1:03:48
  Speaker 20: income consumer and middle income consumer were more we're tightening
• 1:03:53
  Speaker 20: their belts a little bit.
• 1:03:55
  Speaker 3: You know, who's doing well.
• 1:03:56
  Speaker 20: There's a couple of chains though, that continue to do well,
• 1:03:58
  Speaker 20: you know, McDonald's, even in a slowing in A McDonald's
• 1:04:02
  Speaker 20: in a slowing environment for restaurants tends to have a
• 1:04:06
  Speaker 20: pretty good advantage, you know, like Subway, they have a
• 1:04:08
  Speaker 20: ton of scale and they can offer price points that
• 1:04:10
  Speaker 20: competitors just can't match, and so their sales trends continue
• 1:04:14
  Speaker 20: to be very strong, but we've seen a slow down
• 1:04:18
  Speaker 20: in the second quarter. A few chains saw some some
• 1:04:21
  Speaker 20: slowdowns versus twenty nineteen Starbucks, Chipotle, A bunch of names
• 1:04:26
  Speaker 20: that we cover started to slow a bit. But in general,
• 1:04:29
  Speaker 20: those those fast casual, those quick service type names and
• 1:04:32
  Speaker 20: fast casual type names are probably better positioned than the
• 1:04:35
  Speaker 20: full service chains that we cover. Some casual diners companies
• 1:04:39
  Speaker 20: like Cheesecake Factory and Brinker.
• 1:04:41
  Speaker 1: And of course my favorite, as you well know, is
• 1:04:43
  Speaker 1: Cracker Barrel Stock said a fifty two week low today
• 1:04:47
  Speaker 1: off thirteen percent. The country Boy breakfast to die for.
• 1:04:51
  Speaker 1: Just loosen the belt, sit right down, Boom you hit it.
• 1:04:54
  Speaker 1: Mike Klin, senior restaurant analysts for Bloomberg Intelligence, joining us.
• 1:04:57
  Speaker 1: I know what I'm talking about when it comes to restaurants.
• 1:05:00
  Speaker 1: Mike Kaylin is the experts. We appreciate that S and P.
• 1:05:03
  Speaker 1: Five hundred and off a half of one percent.
• 1:05:06
  Speaker 3: I will keep that in mind.
• 1:05:07
  Speaker 1: Barry Reholds, thanks for stopping by giving us some of
• 1:05:09
  Speaker 1: your time on Thursday.
• 1:05:12
  Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
• 1:05:16
  Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
• 1:05:19
  Speaker 2: podcast platform you prefer I'm Matt Miller. I'm on Twitter
• 1:05:23
  Speaker 2: at Matt Miller nineteen seventy three.
• 1:05:26
  Speaker 3: And I'm fall Sweeney. I'm on Twitter at pt Sweeney.
• 1:05:28
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 1:05:31
  Speaker 1: Bloomberg Radio