Latest / Bloomberg Intelligence / Yields, Markets, Tech, Oil, And Cars (Podcast)

Transcript

Yields, Markets, Tech, Oil, And Cars (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. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Ira Jersey, chief US
• 0:23
  Speaker 1: interest rate strategist for Bloomberg Intelligence. Uh, he joins us here,
• 0:26
  Speaker 1: I I gotta be honest with you. Back just left
• 0:28
  Speaker 1: the studio, he says, I got nothing to ask Ira.
• 0:31
  Speaker 1: I'm all about earnings. I don't really care about the
• 0:33
  Speaker 1: Federal Reserve right now. But so he's not even here. So, Um,
• 0:37
  Speaker 1: but I'm looking at these two year tenure it's still
• 0:40
  Speaker 1: inverted by you know, forty forty three points in terms
• 0:43
  Speaker 1: of the yield curve, and you know types like you
• 0:47
  Speaker 1: and Lisa Bramwins. You've teld me, I gotta pay attention
• 0:49
  Speaker 1: to that stuff. It's important, isn't really, because it's been
• 0:52
  Speaker 1: inverted for a while now and it's probably gonna continue
• 0:55
  Speaker 1: to be inverted. Um. I think it matters in so
• 0:58
  Speaker 1: far as um it is signaling that at some point
• 1:02
  Speaker 1: we're going to have a much slower economic activity, UM
• 1:06
  Speaker 1: in the future, and the Federal Reserve is going to
• 1:09
  Speaker 1: continue to hike interest rates, so you know, at least
• 1:12
  Speaker 1: well above four percent, and the market certainly price for
• 1:15
  Speaker 1: that right now, and so so it does matter. Is
• 1:19
  Speaker 1: it Is it going to affect economic growth in and
• 1:21
  Speaker 1: of itself, No, it won't, but it is just a
• 1:24
  Speaker 1: signal that the market thinks that we're going to have
• 1:26
  Speaker 1: lower interest rates at some point in the future. Talk
• 1:29
  Speaker 1: to us about some of these auctions, um, you tell
• 1:32
  Speaker 1: us we need to really pay attention to these auctions,
• 1:34
  Speaker 1: how they go, where's the demand, where's the demand coming from?
• 1:37
  Speaker 1: What's been your observation over last week or two. Yeah, So,
• 1:42
  Speaker 1: so the auctions really in both September and October have
• 1:45
  Speaker 1: been pretty pretty weak. Actually, Um, you've seen demand slip
• 1:48
  Speaker 1: a little bit. You've seen um, you've seen indirect bidder.
• 1:51
  Speaker 1: So these are those are end users so UM, so
• 1:54
  Speaker 1: you know mutual funds, central banks, UM, asset managers in general. UM,
• 1:58
  Speaker 1: that's actually fallen a little bit. So that means that
• 2:00
  Speaker 1: primary dealers have actually taken a larger share of these
• 2:04
  Speaker 1: auctions and and I think that that's a signal that
• 2:06
  Speaker 1: people are still not quite willing to go full bore
• 2:10
  Speaker 1: into the market yet because these um, you know, these
• 2:13
  Speaker 1: securities being auctioned right now are going to be out
• 2:15
  Speaker 1: there for you know, ten years, thirty years, and and
• 2:18
  Speaker 1: they've been reasonably uh reasonably weak, um you know that.
• 2:22
  Speaker 1: That being said, I think it will be really interesting
• 2:25
  Speaker 1: because in a couple of weeks we actually got the
• 2:27
  Speaker 1: Treasury refunding announcements, So they're going to uh, the Treasury
• 2:31
  Speaker 1: Department will determine how much it's going to issue over
• 2:34
  Speaker 1: the next three months, and I suspect that they might
• 2:37
  Speaker 1: actually reduce the amount that they're issuing just by a
• 2:39
  Speaker 1: little bit. Um. But but interestingly, they've asked primary dealers
• 2:43
  Speaker 1: and and we'll have some notes out on this in
• 2:45
  Speaker 1: the recent in the recent future, UM about the h
• 2:50
  Speaker 1: whether or not they're going to issue more debt at
• 2:53
  Speaker 1: auction in order to buy back UH currently existing debts.
• 2:57
  Speaker 1: So what we call off the run debt or or
• 2:59
  Speaker 1: um you know, debt that was issued, say say two
• 3:02
  Speaker 1: years ago, and a lot of that debt, remember, is
• 3:04
  Speaker 1: trading at like eighty cents on the dollar, and eighty
• 3:07
  Speaker 1: five cents on the dollar. So the Treasury Department can basically,
• 3:10
  Speaker 1: you know, sell bonds now at par at a hundred
• 3:13
  Speaker 1: and be able to buy back their uh you know,
• 3:16
  Speaker 1: treasury securities at eighty five cents in the dollar, actually
• 3:18
  Speaker 1: making the taxpayer you know, fifteen points effectively. And and um,
• 3:23
  Speaker 1: you know, even though they'll be paying more interest cost
• 3:25
  Speaker 1: on on the new debt compared to maybe the old debt,
• 3:29
  Speaker 1: the fact that that old debt is not um is
• 3:32
  Speaker 1: not trading at pars is an interesting um uh you know,
• 3:35
  Speaker 1: it's really interesting. I think that that they might do
• 3:38
  Speaker 1: this talk just about quantitative tightening. We don't I don't
• 3:41
  Speaker 1: talk about it much. I don't hear about it much.
• 3:43
  Speaker 1: Talk to us about is it happening? How is it happening?
• 3:47
  Speaker 1: Do we need to pay attention to it? Yeah, well,
• 3:49
  Speaker 1: it's it's it's kind of an autopilot. And I don't
• 3:51
  Speaker 1: think that the Treasury at that the Federal Reserve will
• 3:53
  Speaker 1: change the way that they do quantitative tightening at least
• 3:56
  Speaker 1: until January February of next year. Um. And it's so
• 4:01
  Speaker 1: basically for for the treasury market, um, the two big
• 4:05
  Speaker 1: days that you have, uh, you have treasuries coming off
• 4:08
  Speaker 1: the Fed's balance sheet, or the fifteenth of the month
• 4:10
  Speaker 1: when you get settlements of of of three year notes,
• 4:13
  Speaker 1: and then at the end of the month when you
• 4:15
  Speaker 1: get settlements of of two year, five year, and seven
• 4:18
  Speaker 1: year notes. When those bonds mature, they fall off the
• 4:20
  Speaker 1: Fed's balance sheet, and that's when you see the Fed's
• 4:22
  Speaker 1: balance eat shrink. And then of course mortgages roll off,
• 4:25
  Speaker 1: and they roll off on the twenty fifth of the month,
• 4:27
  Speaker 1: just the way that the um that that mortgages are
• 4:30
  Speaker 1: retired when when people make principal payments um the Federal
• 4:34
  Speaker 1: Reserves balance sheet falls from that. So so it does matter,
• 4:37
  Speaker 1: and you've seen it. It's not it hasn't affected recently
• 4:41
  Speaker 1: the treasury market. I think it affected the treasury market
• 4:43
  Speaker 1: when it was being thought of and when it was
• 4:45
  Speaker 1: announced earlier this year. So you really saw significant moves
• 4:49
  Speaker 1: in the treasury market in February when not only because
• 4:53
  Speaker 1: everyone was anticipating the FED raising interest rates, but also
• 4:55
  Speaker 1: because of the quantitative tightening. I think where you've seen
• 4:58
  Speaker 1: more of an of an effect is really in the
• 5:00
  Speaker 1: mortgage market, where you see mortgage spreads. So the difference
• 5:03
  Speaker 1: between mortgages and and the hedges that more that people
• 5:07
  Speaker 1: who buy mortgages make have really widened out quite a lot.
• 5:10
  Speaker 1: And liquidity in the mortgage market is as bet as
• 5:12
  Speaker 1: liquidity is in the treasury market. Liquiditying the mortgage markets
• 5:15
  Speaker 1: even worse. And and that's in part because um, there's
• 5:19
  Speaker 1: just a lot more of them that have to be
• 5:21
  Speaker 1: um uh they have to be absorbed by investors compared
• 5:24
  Speaker 1: to the compared to treasuries, where like I mentioned, the
• 5:26
  Speaker 1: Treasury Department has actually been shrinking the amount of bonds
• 5:29
  Speaker 1: it's been issuing real quick seconds. If I want to
• 5:33
  Speaker 1: unload a bunch of treasuries back in the day, I
• 5:35
  Speaker 1: have a bunch of investment banks bidding me for those bonds.
• 5:38
  Speaker 1: Is that still happen today? Uh? Yeah, well it does,
• 5:41
  Speaker 1: and and primary dealers have to. But but there has
• 5:44
  Speaker 1: been significantly less uh liquidity in the treasury market. So
• 5:48
  Speaker 1: you've seen bid offers wide and you've seen you know,
• 5:51
  Speaker 1: definitely challenge liquidity. Paul, I thought you were gonna ask
• 5:53
  Speaker 1: me about where I am. I'm I'm in London today
• 5:55
  Speaker 1: and I'm actually going to a to a soccer match tonight.
• 5:57
  Speaker 1: I'm gonna go to Selhurst Park to see uh to
• 6:01
  Speaker 1: see Crystal Palace play Wolverhampton Wanderers. So awesome. Alright, I
• 6:06
  Speaker 1: have you know, have a point for me, you know,
• 6:08
  Speaker 1: put a couple of shekels down on your favorite one there,
• 6:10
  Speaker 1: but enjoy the soccer. Enjoy London. Um, that would be
• 6:14
  Speaker 1: good fun. Our Jersey chief US interest rate strategist. So
• 6:17
  Speaker 1: why is he in London if he's the chief US
• 6:20
  Speaker 1: interest rate strategist? But anyway, shopping around his team may
• 6:23
  Speaker 1: be shopping. He's just going over there to see some football,
• 6:25
  Speaker 1: So good for him, Iro Jersey, good buddy of the show.
• 6:31
  Speaker 1: Let's check in right now with our next guest. I'll
• 6:33
  Speaker 1: hate Desponde, founder and chief investment officer of center Stone Investors.
• 6:39
  Speaker 1: Am I buying this little rally here in the past
• 6:42
  Speaker 1: couple of days? Hey, what do you make of it? Is?
• 6:43
  Speaker 1: It's just kind of a technical bounce here? Is there
• 6:46
  Speaker 1: something more there? Hey? Good morning? Yeah. I think basically
• 6:50
  Speaker 1: there's that two D week moving average people have been
• 6:52
  Speaker 1: fixating on has actually no relevance to the fundamentals. But
• 6:57
  Speaker 1: you know, there's probably a lot of stop losses and
• 7:00
  Speaker 1: and what not around there, So a couple of weeks
• 7:02
  Speaker 1: of moving around that kind of makes sense to me,
• 7:05
  Speaker 1: But the fundamentals are still uh, you know, deteriorating, not
• 7:09
  Speaker 1: bad sell the rip is that? Is that what you're
• 7:12
  Speaker 1: saying here? Um? At some point? Yeah, I don't know.
• 7:16
  Speaker 1: I mean, I'm not a trader. You know, we're long term,
• 7:19
  Speaker 1: but I'm not. I'm not you know, advocating one way
• 7:22
  Speaker 1: or the other. I'm just saying that the you know,
• 7:24
  Speaker 1: like this whole thing about capitulation and wall that you
• 7:26
  Speaker 1: know you need you need some of that or bad
• 7:28
  Speaker 1: news to confirm the capitulation. You don't have that yet,
• 7:31
  Speaker 1: you just had fundamental deteriorating. I mean it takes uh, well,
• 7:36
  Speaker 1: a lot of brains, a lot of guts, and a
• 7:39
  Speaker 1: gigantic wallet really to be able to trade a day
• 7:41
  Speaker 1: on a day to day basis. And even with all
• 7:44
  Speaker 1: of those threings, you're three things, you're probably losing money
• 7:47
  Speaker 1: in the long run for most people in terms of
• 7:49
  Speaker 1: long term investments. Um, what would you do right now
• 7:53
  Speaker 1: if you had cash to put to work? And apparently
• 7:55
  Speaker 1: you know a lot of people do. Um. The b
• 7:58
  Speaker 1: of A survey showed ASH at six point three percent,
• 8:01
  Speaker 1: the highest level since April of two thousand and one. Yeah,
• 8:06
  Speaker 1: you know, it's a tough one because if you have
• 8:09
  Speaker 1: cash already, you are not used to seeing it earn anything.
• 8:14
  Speaker 1: And now you're getting you're getting three well, just sitting
• 8:17
  Speaker 1: in a bank account of money market you are getting
• 8:19
  Speaker 1: almost three percent. UM. You're soon to get to four
• 8:22
  Speaker 1: percent at least that's what the toilet or the one
• 8:25
  Speaker 1: year notes are telegraphing. So it doesn't seem like a
• 8:28
  Speaker 1: bad place to sit and wait, right without the uncertainty
• 8:32
  Speaker 1: um the treasury. You know, there's going to be a
• 8:35
  Speaker 1: point at which treasury bonds will become attractive. I'm I
• 8:39
  Speaker 1: don't know exactly, but my initial work suggests that somewhere
• 8:43
  Speaker 1: between four and five percent seems to be a resting
• 8:46
  Speaker 1: place for treasure yields. UM. So you know, at some
• 8:49
  Speaker 1: point that will be attractive. But um probably even more
• 8:53
  Speaker 1: interesting is what you're starting to unearth overseas in some
• 8:57
  Speaker 1: of these international markets where you can by, you know,
• 9:00
  Speaker 1: very high quality franchises for twelve thirteen times earnings with
• 9:04
  Speaker 1: four dividend yields. So we've kind of gotten you know,
• 9:08
  Speaker 1: we're investors. You know, I'm not a money market fund, right,
• 9:10
  Speaker 1: so for the most part we've been allocating more and
• 9:14
  Speaker 1: more overseas to higher quality franchise type companies. Uh, you
• 9:18
  Speaker 1: know within our value framework, um, that that seems to
• 9:21
  Speaker 1: be from a three to five year perspective, very interesting
• 9:25
  Speaker 1: place to be. And of course in the United States,
• 9:27
  Speaker 1: we've also found plenty of interesting things to either buyer,
• 9:30
  Speaker 1: buy moreover or even hold. So but you know, in
• 9:34
  Speaker 1: two it's really unique year when you know, the whole
• 9:37
  Speaker 1: sixty forty portfolio scenario really did not work. I mean,
• 9:42
  Speaker 1: you know, you've got stocks down the mid twenties, you've
• 9:44
  Speaker 1: got bonds down load of mid teens in total return. Man,
• 9:49
  Speaker 1: what's an investor supposed to do here? Well, don't sell now, right, Yeah,
• 9:56
  Speaker 1: because you've had that. As you mentioned, it's been the worst.
• 9:59
  Speaker 1: I saw a Bank of America of studies that this
• 10:01
  Speaker 1: is the worst year for household wealth destruction ever, right,
• 10:05
  Speaker 1: going back back anyway, So at this point, um, you know,
• 10:11
  Speaker 1: you're well more than halfway through this. Even I don't
• 10:15
  Speaker 1: think that there's gonna be a banking crisis. I don't
• 10:16
  Speaker 1: think there's gonna be some systemic issue that's anything unusual
• 10:21
  Speaker 1: for a like a recessionary environment, which means that you know,
• 10:25
  Speaker 1: you're kind of like two thirds of the way three
• 10:27
  Speaker 1: quarters of the way down as far as stock price,
• 10:30
  Speaker 1: UH moves at least um and and as I mentioned,
• 10:34
  Speaker 1: if I think that UH inflation already peaked, which I do,
• 10:38
  Speaker 1: and you know, bond rates at four or you're not
• 10:41
  Speaker 1: that far from it, you know, just suggest holding and
• 10:43
  Speaker 1: you know, just just waiting. I can do that, all right,
• 10:47
  Speaker 1: I can do that. Thank you so much. We appreciate
• 10:50
  Speaker 1: always checking in with you. Founder and ce IO at
• 10:53
  Speaker 1: center Stone Investors, Mark Douglas is the CEO of Mountain.
• 11:01
  Speaker 1: He's in our studio, which guarantee I guarantee to see
• 11:09
  Speaker 1: the Yankees? Am I wrong? Now I look at him.
• 11:11
  Speaker 1: I think I might be wrong. Wrong. I'll squeeze in
• 11:14
  Speaker 1: some Yankees. I'll try my best. But it's New York.
• 11:18
  Speaker 1: Are we skipping fall? It's like yesterday man had the
• 11:21
  Speaker 1: wine shirt on him. So it was kind of, you know,
• 11:24
  Speaker 1: last vestiges of summer. Now we're all in fall. Yeah,
• 11:27
  Speaker 1: well like now I'm in the full flannel? Yes, are
• 11:29
  Speaker 1: you in full Flanney? So we went from sorry, talk
• 11:33
  Speaker 1: to me about the Yankees? Are they gonna win? Are
• 11:36
  Speaker 1: they playing this afternoon? Four oh seven? First pitch and
• 11:38
  Speaker 1: so what's the deal is it. It's a it's the
• 11:41
  Speaker 1: game five, it's the winn or go home. So we
• 11:44
  Speaker 1: got Nasty Nestor on the mound, one of our favorite
• 11:47
  Speaker 1: pictures for the year. Feeling good about it all right
• 11:50
  Speaker 1: that I just summarized that, and I think you got
• 11:51
  Speaker 1: it right. But if and if they lose, it's gonna
• 11:54
  Speaker 1: be bad, bad, mark Um. Netflix is a name that
• 11:59
  Speaker 1: we love to talk about around here, and we love
• 12:01
  Speaker 1: talking media with you, and we love talking media with you.
• 12:04
  Speaker 1: But now Netflix is going to introduce an advertising tier.
• 12:08
  Speaker 1: I thought that they the whole Netflix gig was we
• 12:11
  Speaker 1: don't do advertising. You just pay us a subscription and
• 12:13
  Speaker 1: it's a much better user experience. Well, I mean a
• 12:17
  Speaker 1: lot of their customers obviously like Netflix content without the ads,
• 12:21
  Speaker 1: but a lot of people want to pay less and
• 12:24
  Speaker 1: advertising brings in the dollars to pay for all the
• 12:27
  Speaker 1: content for those users. So this new tiers launching in November.
• 12:32
  Speaker 1: UM it's been very well received. The price point and
• 12:36
  Speaker 1: the number of minutes. It's not going to be a
• 12:38
  Speaker 1: lot of minutes of advertising. So people like four minutes
• 12:41
  Speaker 1: versus maybe five, fourteen or fifteen, Yeah, like four to
• 12:43
  Speaker 1: five minutes of ads per hour of content, So that's
• 12:46
  Speaker 1: pretty low at I think roughly half the price. So
• 12:51
  Speaker 1: you know, it's a nice trade off, especially in these times.
• 12:53
  Speaker 1: And I hear the CPM they're going to charge. The
• 12:55
  Speaker 1: cost per thousand is like almost super Bowl Like there's
• 12:59
  Speaker 1: a lot of the bait about that right now. Yeah,
• 13:02
  Speaker 1: I think it's a little higher than the Super Bowl.
• 13:04
  Speaker 1: I think, Um, I think that. I think maybe we'll
• 13:08
  Speaker 1: see a couple of months of that and then I'm
• 13:13
  Speaker 1: telling you, everyone I talked to they've rolled their eyes
• 13:15
  Speaker 1: when I hear the CPM, but they were we'll see
• 13:17
  Speaker 1: how it goes. Is that just because I know what
• 13:20
  Speaker 1: the audience is, I know who they are, and as
• 13:23
  Speaker 1: an advertiser, I'll pay up for that. Well, you know,
• 13:27
  Speaker 1: I was watching Netflix the other day and I thought
• 13:29
  Speaker 1: I was watching something that seemed like an ad. It wasn't.
• 13:32
  Speaker 1: It was just part of content. It made me look
• 13:34
  Speaker 1: at this, I was like, is that an ad? On Netflix?
• 13:37
  Speaker 1: So they're counting on people paying attention to the ads
• 13:40
  Speaker 1: and they can charge that premium CPM. My big question is, um,
• 13:44
  Speaker 1: who does the seven dollar package? I mean, is it
• 13:48
  Speaker 1: somebody paying fifteen dollars already that goes down to seven
• 13:53
  Speaker 1: or is it for new customers that started seven? I mean,
• 13:55
  Speaker 1: I think it's people who are not the binge watching
• 13:58
  Speaker 1: watches on the show bad or maybe watching a little
• 14:01
  Speaker 1: more casually and like, hey, I can say, you know,
• 14:04
  Speaker 1: seven bucks, but doesn't cannibalize the subscription subscriber base they
• 14:08
  Speaker 1: already had. That's the big questions. So their predictions that
• 14:11
  Speaker 1: this is going to bring back rejoiners that think is
• 14:14
  Speaker 1: the word, is going to bring back um former subscribers,
• 14:17
  Speaker 1: maybe expand the subscriber base, but yeah, there's a lot
• 14:20
  Speaker 1: of people who are gonna immediately want to go that
• 14:23
  Speaker 1: lower price here and the Yeah, can they bring the
• 14:26
  Speaker 1: ad revenue up as fast as they're gonna lose the
• 14:29
  Speaker 1: revenue and subscriptions. I think that's the big question. I
• 14:32
  Speaker 1: think the market is kind of immune to it right now.
• 14:34
  Speaker 1: I mean, Netflix is dealing with problems that other streaming
• 14:38
  Speaker 1: services wish they were dealing with. Yeah, I heard so,
• 14:41
  Speaker 1: By the way, fifteen is what I pay. I hear
• 14:43
  Speaker 1: there's a nine dollar subscription, which is what you can
• 14:47
  Speaker 1: like the least you can pay, and you can only
• 14:49
  Speaker 1: use it on one device, and they I guess they watch.
• 14:51
  Speaker 1: By the way, that was the price for this new
• 14:54
  Speaker 1: subscription is what Netflix was charging a few years right,
• 14:58
  Speaker 1: But now they're gonna be making I here about six
• 15:01
  Speaker 1: dollars six fifty on the ads per subscribers. So the
• 15:06
  Speaker 1: seven plus that yields doing the quick math is from
• 15:12
  Speaker 1: the Ohio state exactly. And so they're gonna be at
• 15:15
  Speaker 1: least making more than the nine dollars that the cheaper
• 15:18
  Speaker 1: subscribers would be paying, and almost as much as the
• 15:21
  Speaker 1: fifteen that um that the financially irresponsible people like me.
• 15:26
  Speaker 1: And and this is in the US. In the nationally,
• 15:28
  Speaker 1: I think there's a lot of potential there to to
• 15:31
  Speaker 1: offer them different priced tiers. So there you know. Again,
• 15:35
  Speaker 1: these problems are huge opportunities and Netflix is moving very
• 15:39
  Speaker 1: very quickly to capitalize on them. What else you're working on?
• 15:42
  Speaker 1: What else is interesting out there that you guys are
• 15:44
  Speaker 1: looking at? Well, I think the whole ads in terms
• 15:47
  Speaker 1: of media, I think we're seeing every major service. Disney
• 15:51
  Speaker 1: Plus is announced ads um. Amazon I think it is
• 15:54
  Speaker 1: likely expand their ads here. So it's a little bit
• 15:57
  Speaker 1: back to the future in the television industry. Looks like
• 16:00
  Speaker 1: I'm glad you brought up because it feels like again five, seven,
• 16:05
  Speaker 1: ten years ago, packages stuff up. Oh, that's what Comcast does,
• 16:09
  Speaker 1: that's what Charter does. I mean, we're getting back to
• 16:12
  Speaker 1: the same gig. You know. I had a dinner about
• 16:15
  Speaker 1: two weeks ago, actually less than two weeks ago. I
• 16:18
  Speaker 1: was at a table with someone who runs a major
• 16:21
  Speaker 1: cable company, and he's the CEO, and he was complaining
• 16:25
  Speaker 1: about the price the cable and he runs the company,
• 16:29
  Speaker 1: and he explained, look, you know, we have to in
• 16:31
  Speaker 1: order to offer choice as a cable provider, we have
• 16:34
  Speaker 1: to have every channel on streaming. You don't have you
• 16:37
  Speaker 1: just have to have the content. You don't have to
• 16:39
  Speaker 1: doll out dollars to all of these individual TV networks.
• 16:43
  Speaker 1: And so the price point and cable became very high streaming.
• 16:47
  Speaker 1: If you want all this choice, you're gonna have to
• 16:48
  Speaker 1: pay all these dollars exactly. I mean that that the
• 16:51
  Speaker 1: value proposition from streaming. I don't think it's relevant anymore
• 16:55
  Speaker 1: because I just I think, and maybe it's just from neglect.
• 16:57
  Speaker 1: People are just paying four or five, six, seven streamers
• 17:00
  Speaker 1: and you add it all up and it's the same
• 17:01
  Speaker 1: as I was paying the eighty bucks per month for
• 17:04
  Speaker 1: my cable for Comcast, which which is by the way,
• 17:07
  Speaker 1: John Farroh asked this um question of I think, um,
• 17:11
  Speaker 1: Michael Nathanson today, smart dude, which is is are some
• 17:16
  Speaker 1: people trying to put together the cable box, you know
• 17:18
  Speaker 1: as Disney with Hulu, trying to put together kind of
• 17:21
  Speaker 1: an ESPN a cable experience. Yeah, I mean, we're gonna,
• 17:24
  Speaker 1: we're gonna come back. You're gonna stick with us. But
• 17:26
  Speaker 1: Matt has an interview coming up with Guy Johnson. They're
• 17:28
  Speaker 1: gonna be interviewing the CEO of Rolls Royce, uh, which
• 17:33
  Speaker 1: is owned by BMW. So that's gonna be very cool.
• 17:36
  Speaker 1: That's coming up in just one which we're gonna bring
• 17:38
  Speaker 1: that to you. Uh. And they're gonna talk about the
• 17:40
  Speaker 1: car business, which Matt, as we know, loves to talk about.
• 17:43
  Speaker 1: The carbiss Matt Miller, Guy Johnson with the CEO of
• 17:46
  Speaker 1: Rose Royce, let's listen in. So Rolls Royce, talking of
• 17:50
  Speaker 1: the car sector, is debuting its first fully electric vehicle.
• 17:55
  Speaker 1: It's called the Specter. UH. This marks, of course, a
• 17:57
  Speaker 1: new era for the also maker. We welcome now our
• 18:01
  Speaker 1: TV and radio audience worldwide for an interview with Rolls Royce.
• 18:04
  Speaker 1: Motor Cars CEO tostenst and of course we bring into
• 18:08
  Speaker 1: this conversation as ever Bloomberg's Matt Miller Tosten thank you
• 18:12
  Speaker 1: very much indeed for taking the time. So you've made
• 18:15
  Speaker 1: the jump to the electric vehicle. What does demand look
• 18:18
  Speaker 1: like for this first car? Very pleasing. First of all,
• 18:24
  Speaker 1: good morning, Matt, really good. I mean we call it
• 18:28
  Speaker 1: it's a prophecy fulfilled. Our founding father, Charles Rowles said
• 18:32
  Speaker 1: in that he foresees the great future for electric cars
• 18:36
  Speaker 1: once charging is fixed and is available. And I think
• 18:40
  Speaker 1: now we are here fulfilling his prophecy, and we are
• 18:45
  Speaker 1: very excited and our clients are. I mean, it's the
• 18:48
  Speaker 1: very first time that you can acquire in the super
• 18:51
  Speaker 1: luxury segment an electric car. So it's the very first,
• 18:58
  Speaker 1: and for that reason we are also in pensively proud
• 19:00
  Speaker 1: that we are the first. Obviously it's a true Rose
• 19:03
  Speaker 1: Royce and an electric Ross Royce second, and that was
• 19:07
  Speaker 1: very important for our clients. So what Towardsen. First of all,
• 19:11
  Speaker 1: good morning to you and thanks so much for joining us.
• 19:13
  Speaker 1: Um the car looks spectacular. I don't think anyone would
• 19:16
  Speaker 1: have expected anything else. What about the performance the magic
• 19:21
  Speaker 1: carpet ride that Rolls Royce is so famous for. And
• 19:24
  Speaker 1: until now, Um, we've come to rely on the V
• 19:27
  Speaker 1: twelve six and Athlete of V twelve for that. Now
• 19:28
  Speaker 1: we're gonna rely on a big pound battery. I mean,
• 19:34
  Speaker 1: first of all, Matt, it is a true Ros Royce
• 19:36
  Speaker 1: that is promised, and we would never bring anything into
• 19:39
  Speaker 1: the market that doesn't carry magic carpet right, whaf stability.
• 19:44
  Speaker 1: Everything you know from Rose Royce is embedded also inspector,
• 19:48
  Speaker 1: that's for sure. And it is even a remarkable way
• 19:52
  Speaker 1: to drive it because it's even more silent, no slide
• 19:56
  Speaker 1: raw from the twelve cylinder. It's a very silent propulsion
• 20:01
  Speaker 1: fits perfect to the mark and for that reason, I
• 20:05
  Speaker 1: think a brilliant Rose Royce rest issued and all the
• 20:09
  Speaker 1: qualities you're used from Rose Royce embedded into it. So
• 20:14
  Speaker 1: and it's a it's a huge car. It's built on
• 20:17
  Speaker 1: a phantom like chassis, um and even heavier than a
• 20:21
  Speaker 1: colony in is I think Sunds right. The colony is
• 20:24
  Speaker 1: about six thousand, Um. Are you gonna put batteries in
• 20:27
  Speaker 1: the colony next? What's next for Rolls Royce in terms
• 20:30
  Speaker 1: of electrification mhm yeah. I mean I can't talk today
• 20:36
  Speaker 1: about let's say, obviously all the next steps, but one
• 20:39
  Speaker 1: just by end of twenties thirty met we will be
• 20:43
  Speaker 1: fully electrified. So every future Rose Royce we're gonna bring
• 20:47
  Speaker 1: into the market, every new one, is fully electrified Rose Royce.
• 20:52
  Speaker 1: So we are seizing building combustion engine cars end or
• 20:57
  Speaker 1: the beginning of twenty thirty m Tolsten. Let's talk about
• 21:02
  Speaker 1: the profitability that is going to be um with you
• 21:07
  Speaker 1: when when you make this this full move to electrification,
• 21:11
  Speaker 1: you make a lot of money of building traditional ice
• 21:15
  Speaker 1: engine cars. Your margins are being phenomenal. Are you going
• 21:19
  Speaker 1: to be able to match those margins when you go
• 21:22
  Speaker 1: all electric? Matt Yes, definitely, because that was always on
• 21:29
  Speaker 1: my mind when we have the plan to go electric.
• 21:32
  Speaker 1: That is not a plan that was born a year
• 21:35
  Speaker 1: ago or whatever. We basically came into it when we
• 21:39
  Speaker 1: experimented for the very first time over ten years ago
• 21:43
  Speaker 1: with a prototype of an electric Phantom, and the client
• 21:46
  Speaker 1: feedback was always fabulous, it fits to the brand great.
• 21:50
  Speaker 1: But obviously we also knew that one day we go
• 21:53
  Speaker 1: completely electric, and for that reason, contribution margins per car
• 21:57
  Speaker 1: are untouched. They are as strong as they have used
• 21:59
  Speaker 1: to be also in the past. For that reason, no
• 22:01
  Speaker 1: worries Rose Royce will stay a profitable, very profitable company.
• 22:08
  Speaker 1: Are you going to rely on the BMW New Class
• 22:12
  Speaker 1: platform to maintain those margins? Tolston though, um, and when
• 22:17
  Speaker 1: you're gonna, when you're gonna start bringing that in, what
• 22:19
  Speaker 1: can you do to that platform as well to tweak
• 22:21
  Speaker 1: it when it comes in? I think it's isn't it
• 22:24
  Speaker 1: when it comes in? It's five And the BMW brings
• 22:29
  Speaker 1: the NEYR class in new class in. That's right, And
• 22:33
  Speaker 1: obviously that is always and had happened also in the
• 22:36
  Speaker 1: past in a very successful way, whilst maintaining what the
• 22:40
  Speaker 1: Rose Royce stands for. We for instance, have our own architecture,
• 22:43
  Speaker 1: the architecture of Luxury, which is just preparatory for Rose
• 22:48
  Speaker 1: Royce motor cars. While it'st obviously we are taking whatever
• 22:52
  Speaker 1: technology is available and we do it, in our founders belief,
• 22:57
  Speaker 1: take the best that exists and make it even better.
• 22:59
  Speaker 1: So obviously, of course we would be allowed me to
• 23:02
  Speaker 1: say that mad not to use the technology we get
• 23:05
  Speaker 1: from the BMW group. We adjust it and we make
• 23:09
  Speaker 1: it Rose Royce technology. At the end, for instance, battery
• 23:12
  Speaker 1: cells software that is very much also helped by the
• 23:18
  Speaker 1: BMW Group and we modify it. So there are synergies
• 23:22
  Speaker 1: which are really very very helpful if it is purchasing
• 23:25
  Speaker 1: or whatever. And for that reason, I think it's a
• 23:28
  Speaker 1: great mix of getting help from the mother company BMW
• 23:33
  Speaker 1: Group whilst maintaining the own character of Rose Royce motorcas
• 23:39
  Speaker 1: and I think that has made us over the last
• 23:41
  Speaker 1: ten fifteen years so successful in the market. You know
• 23:44
  Speaker 1: that we go from one record to the next. Clients
• 23:47
  Speaker 1: love Rose Royces and they also love that we are
• 23:50
  Speaker 1: definitely stand alone in a way of what they buy.
• 23:53
  Speaker 1: At the end of the day, this is not in
• 23:55
  Speaker 1: any way modified BMW X seven. When you buy a
• 23:59
  Speaker 1: Culon in know that's a true Rose Royce, and the
• 24:02
  Speaker 1: same holds true worlds of respect. Specter is a true
• 24:05
  Speaker 1: Rose Roys first and then an electric car second. Obviously
• 24:08
  Speaker 1: based on also BMW technology or BMW Group technology. I
• 24:14
  Speaker 1: have to ask about um the battery and the changeability
• 24:18
  Speaker 1: of it, just because my colleague Hannah Elliott, I'm sure
• 24:21
  Speaker 1: you know her, she reviews cars for us, and she
• 24:23
  Speaker 1: bought like a nineteen seventies Silver Shadow which is so cool.
• 24:27
  Speaker 1: So she's a classic Rolls Royce owner. I'm wondering, you know,
• 24:31
  Speaker 1: in thirty years maybe my daughter will buy um a Specter,
• 24:36
  Speaker 1: but she'll want to put in a new battery pack
• 24:38
  Speaker 1: technology Shirley will have um evolved by then. Is that
• 24:42
  Speaker 1: going to be an incredibly difficult process. No, you might
• 24:48
  Speaker 1: know that Rose Royce is are well known for keeping
• 24:52
  Speaker 1: value of a long time and that we always provide
• 24:56
  Speaker 1: spare parts also in twenty five years thirty So in
• 25:00
  Speaker 1: that case, if your daughter one day by suspect battery
• 25:04
  Speaker 1: is available, make no error. So there is nothing to
• 25:07
  Speaker 1: be worried about that this might at one day be outdated,
• 25:10
  Speaker 1: doesn't work anymore, or whatever. It will always work and
• 25:14
  Speaker 1: we're gonna make sure. That's the promise from the Ross
• 25:16
  Speaker 1: roy side, that our cars will always be serviceable for
• 25:20
  Speaker 1: a long long time. So it's always great to catch up.
• 25:24
  Speaker 1: Congratulations on the vehicle. Looks fantastic to the Rolls Royce
• 25:28
  Speaker 1: motor cars. Of course, I thanks mate Miller. All right,
• 25:33
  Speaker 1: that's that is good stuff. Torsten Molars with the Rolls
• 25:38
  Speaker 1: Royce Specter. Matt, what what what's that going to set
• 25:42
  Speaker 1: me back? If I want to walk onto the lot
• 25:45
  Speaker 1: and get myself an electric Rolls Royce. I think you
• 25:48
  Speaker 1: know the answer if you have to ask. If you
• 25:51
  Speaker 1: have to ask, it's not for you. I mean, look,
• 25:54
  Speaker 1: I've I've spect out a Rolls Royce Ghost just for fun.
• 25:58
  Speaker 1: It's my favorite the vehicles that they make. I think
• 26:01
  Speaker 1: it's the most practical, the most fun to drive. And
• 26:04
  Speaker 1: I come in well over four grand, like four forty,
• 26:08
  Speaker 1: and that's not even a phantom. So this is a
• 26:10
  Speaker 1: phantom coop basically with electric power. I imagine it's gonna
• 26:15
  Speaker 1: go easily half a million dollars plus. You can't just
• 26:18
  Speaker 1: buy one, you know, straight off the lot or with
• 26:21
  Speaker 1: the specs that they sell it. You need to create
• 26:23
  Speaker 1: your own bespoke version, hopefully with some Paul T. Sweeney
• 26:27
  Speaker 1: pin stripes down the sides. You know. Let's go down
• 26:30
  Speaker 1: Park Avenue today and we'll see if we can find one,
• 26:32
  Speaker 1: you know, the dealership. They will be sold at the
• 26:34
  Speaker 1: end of watching on Bloomberg Television. A good stuff. Let's
• 26:40
  Speaker 1: bring back Mark Dougus. He's president CEO of Mountain Uh.
• 26:43
  Speaker 1: He's mysteriously in New York City today. We're assuming it's
• 26:47
  Speaker 1: because he's going up to the Bronx to see the
• 26:49
  Speaker 1: Yankees game. But Margot Bronx bombers, by the way, we
• 26:52
  Speaker 1: I always think that because you grew up near the stadium, right,
• 26:55
  Speaker 1: all right, So, but you're not really a super fan,
• 26:57
  Speaker 1: You're not really well. When I was in the when
• 26:59
  Speaker 1: I live to New York. Unfortunately I don't live in
• 27:01
  Speaker 1: New York anymore. I've definitely Yeah, I live in Miami.
• 27:07
  Speaker 1: Another one. I just came back from and I see
• 27:09
  Speaker 1: a lot of worlds. I didn't know so many Bloomberg
• 27:13
  Speaker 1: listeners were potentially going to be driving worlds. Round'm kind
• 27:16
  Speaker 1: of impressed. Sure, I will say we have I'm going
• 27:19
  Speaker 1: to say the wealthiest listeners of any radio station in America. Absolutely.
• 27:25
  Speaker 1: Why Netflix after the close today? Um? Again, the big
• 27:29
  Speaker 1: issue is, and it's rating your wheelhouse, Marcause you guys
• 27:32
  Speaker 1: in Mountain, you're an advertising software company. You work with brands,
• 27:35
  Speaker 1: you try to help them get into the digital age.
• 27:39
  Speaker 1: What does Netflix bring up? I'm an advertiser. I feel
• 27:42
  Speaker 1: like this is a really good platform for me to
• 27:46
  Speaker 1: put my digital dolledge. Well, there's not there's not been
• 27:49
  Speaker 1: this much opportunity to be like, you know, like on
• 27:52
  Speaker 1: a new platform that so many people watch, and all
• 27:56
  Speaker 1: of a sudden, you're the brand that appears next to
• 27:58
  Speaker 1: this content. So it's a unique opportunity. We were talking
• 28:01
  Speaker 1: earlier about the CPMs they want to charge and how
• 28:05
  Speaker 1: that's likely to play out. So I don't think that
• 28:07
  Speaker 1: window is gonna last long, but I think it's gonna
• 28:10
  Speaker 1: play out really well for Netflix and Ultimate is gonna
• 28:12
  Speaker 1: get more people content with a few minutes of advertising,
• 28:16
  Speaker 1: they see some hopefully some interesting products and some really
• 28:19
  Speaker 1: cool Madison Avenue I would guess has to up their game.
• 28:22
  Speaker 1: I mean, now I hear these ants are not going
• 28:24
  Speaker 1: to be within the show. They're gonna be before and after,
• 28:27
  Speaker 1: I think. But I would think if I'm going to
• 28:29
  Speaker 1: go onto a platform that has premium content like the Netflix,
• 28:34
  Speaker 1: I don't want to have premium well that I mean,
• 28:38
  Speaker 1: there's this idea of premium spots, um, yes, But I
• 28:42
  Speaker 1: actually I think most consumers want to learn about the
• 28:46
  Speaker 1: emerging brand, you know, like what's new, what's exciting. They
• 28:50
  Speaker 1: don't want to just see a car commercial or beer commercial.
• 28:54
  Speaker 1: They want to see something interesting in news. So maybe
• 28:57
  Speaker 1: on day one it's the biggest brands, but hopefully you're
• 29:00
  Speaker 1: gonna learn about some really cool new stuff over time
• 29:03
  Speaker 1: on Netflix and other other streamers. All right, good stuff.
• 29:07
  Speaker 1: Mark Douglas, President CEO of Mountain does all that digital advertising,
• 29:10
  Speaker 1: We didn't hear anything about Mountain, I know, we didn't
• 29:13
  Speaker 1: talk about Ryan Reynolds. Who cares what the hell is
• 29:15
  Speaker 1: in town? He is actually in town. Yes, I don't
• 29:24
  Speaker 1: have talk digital rather talk digital advertising, all right, Mark Douglas,
• 29:28
  Speaker 1: President CY of Mountain, matt You know, you get these
• 29:33
  Speaker 1: work from home guys, and they dat us with their presence,
• 29:36
  Speaker 1: you know, once in a while, okayday or a Friday,
• 29:41
  Speaker 1: no God forbid. So you know, when we do see
• 29:43
  Speaker 1: them in the office, we say, hey, let's get them
• 29:45
  Speaker 1: in studio. And even then sometimes I can't be on time.
• 29:48
  Speaker 1: It's just they're just they have their whole thing, the
• 29:51
  Speaker 1: whole sense of you know, yeah, exactly what that's you know,
• 29:56
  Speaker 1: it's entitled saying to their employer, guess what, you won't
• 29:59
  Speaker 1: be able to find another one on me. That's right,
• 30:01
  Speaker 1: that's working from home. That's right. That's the world. We
• 30:04
  Speaker 1: live in a rack ron and nobody takes advantage of
• 30:06
  Speaker 1: it better than him. Well, maybe Mike McLoone who's absconded
• 30:10
  Speaker 1: to Miami. In Miami, that's nice, and we've got we've
• 30:13
  Speaker 1: been dealing with the big banks. We've been reporting numbers
• 30:16
  Speaker 1: over the past few days. But we're tech companies are
• 30:18
  Speaker 1: coming up soon, and that's what the market really, really,
• 30:21
  Speaker 1: really likes to focus on. What are you focusing on
• 30:24
  Speaker 1: as we approached some of the earning season for the
• 30:26
  Speaker 1: big tech names. So I think the big thing is
• 30:28
  Speaker 1: going to be what kind of guidance do they give
• 30:30
  Speaker 1: for not just this year, and about some early indications
• 30:33
  Speaker 1: of what next year could look like. We already know
• 30:36
  Speaker 1: ex is going to be a very big problem this time.
• 30:39
  Speaker 1: We should see some softness and almost all their divisions.
• 30:42
  Speaker 1: But the question really is how much of that is
• 30:45
  Speaker 1: already accounted for in the stock price that has declined
• 30:48
  Speaker 1: over the past you know, three to five months. So
• 30:50
  Speaker 1: I mean I as an as an analyst, I used
• 30:53
  Speaker 1: to look through that, you know, kind of the the
• 30:57
  Speaker 1: FX impacts, like for a lot of big advertising holding companies,
• 31:01
  Speaker 1: they're complete global companies, and you'd always look at the revenue,
• 31:04
  Speaker 1: you know, ex acquisitions X, you know foreign exchange. The
• 31:08
  Speaker 1: tech investors do that as well, yes, but you know,
• 31:11
  Speaker 1: if you look at it. Companies like Microsoft or Salesforce
• 31:14
  Speaker 1: have done a very good job on even Amazon Web
• 31:16
  Speaker 1: Services of reporting revenue growth in constant currency. Now on
• 31:21
  Speaker 1: the other hand, Apple does not do that. Now, Apple
• 31:23
  Speaker 1: talks about it that it has an impact on um,
• 31:26
  Speaker 1: you know, their services business by five minute basis points.
• 31:29
  Speaker 1: But you could say, you can't really go back on
• 31:31
  Speaker 1: a trend line and look at it over a two
• 31:33
  Speaker 1: year basis as to what the growth rate was on
• 31:35
  Speaker 1: a on a x f X basis. So I think
• 31:38
  Speaker 1: they will have to explain that a little bit more,
• 31:40
  Speaker 1: or they'll have to start disclosing that or going forward
• 31:43
  Speaker 1: because now efex is going to hurt by you know,
• 31:45
  Speaker 1: somewhere in the sixth wait for some range for almost
• 31:48
  Speaker 1: all these companies. Yeah, I wonder if it's going to
• 31:51
  Speaker 1: affect M and A at all. We're starting to see
• 31:53
  Speaker 1: a little bit more. I haven't seen really a currency advantage,
• 31:57
  Speaker 1: but are big dollar earner is going to be able
• 32:00
  Speaker 1: to take over companies in euros? So that was, you know,
• 32:04
  Speaker 1: to be very frank, that was never a big issue.
• 32:06
  Speaker 1: The big issue in the M and A world is
• 32:08
  Speaker 1: who's eventually going to be the biot. It's only private equity,
• 32:11
  Speaker 1: you know, companies that are really the big bias right
• 32:14
  Speaker 1: now because frankly speaking, any of the other larger vendors
• 32:17
  Speaker 1: are it's not easy for them to buy any anything
• 32:20
  Speaker 1: at this point because of you know, antitrust issues on rock.
• 32:23
  Speaker 1: CNBC is reporting that activists investors Starboard has taken a
• 32:29
  Speaker 1: stake in Salesforce and now confirmed exactly that's confirmed the
• 32:33
  Speaker 1: conference here in New York, the Team de Monitor conference
• 32:37
  Speaker 1: in all right, So we got CRM, which is the
• 32:39
  Speaker 1: stock symbol of stocks down year to date, it's up
• 32:42
  Speaker 1: about four percent today. What do you think Starboards thinking
• 32:46
  Speaker 1: about here? What's the case investment case for an activist
• 32:49
  Speaker 1: taking a spot in Salesforce. It's the same investment case, Paul,
• 32:53
  Speaker 1: that I made. I would say about six seven months
• 32:55
  Speaker 1: ago that their margins need to go up far more
• 32:58
  Speaker 1: than where they are right now. That I think it's
• 33:00
  Speaker 1: going to be has to be a margin expansion story. Otherwise,
• 33:04
  Speaker 1: you know, investors are not going to give it the
• 33:05
  Speaker 1: multiple it used to get. So if you look at Salesforce,
• 33:08
  Speaker 1: for example, even if we ignore the pandemic period or
• 33:11
  Speaker 1: the software booming the pandemic period, it used to trade
• 33:14
  Speaker 1: about six points seven times forward price to sales at
• 33:17
  Speaker 1: that time, and now it's trading at four points sometimes
• 33:20
  Speaker 1: because at the peak of the pandemic when they bought Slack,
• 33:23
  Speaker 1: they were trading at ten eleven time sales. They went
• 33:26
  Speaker 1: and bought Slack and since then it's just been butchered.
• 33:29
  Speaker 1: And the reason is that for the longest period of time,
• 33:33
  Speaker 1: there are two things that matter to software investors. It's
• 33:35
  Speaker 1: organic growth rate and margin expansion. Salesforce has always been
• 33:39
  Speaker 1: good on the growth rate part of it, but they
• 33:42
  Speaker 1: never showed a decent amount of margin expansion like some
• 33:45
  Speaker 1: of their peers did, whether it's Adobe or Service Now
• 33:48
  Speaker 1: and investors really got bugged this time by the company
• 33:51
  Speaker 1: saying we're not going to take any more large act position,
• 33:53
  Speaker 1: and then they went went ahead and bought slack. Um. Now,
• 33:56
  Speaker 1: I think this deal in hindsight, it's not a bad
• 33:59
  Speaker 1: deal in a strategic way. But you know what happens
• 34:02
  Speaker 1: is when your investors get really fed up and tired
• 34:05
  Speaker 1: and say, you have not given me any margin expansion
• 34:07
  Speaker 1: over the past five to six years, where your peers
• 34:09
  Speaker 1: are giving why do I need to deal with you?
• 34:11
  Speaker 1: And not you know, by those stocks. But this is
• 34:14
  Speaker 1: Mark Bennioff. Isn't he one of the gods of Silicon Valley? Yeah,
• 34:18
  Speaker 1: the gods of Silicon Valley. Yes, but that happened to
• 34:20
  Speaker 1: Steve bamber also once. So I think now he owns
• 34:24
  Speaker 1: a basketball team. Yeah, so I think I think it's
• 34:26
  Speaker 1: I but I personally think they found religion at this point.
• 34:29
  Speaker 1: I really think that these guys are now looking to
• 34:31
  Speaker 1: look at their cost structures a little bit better, and
• 34:34
  Speaker 1: I don't think they're gonna spend that recklessly going forward.
• 34:37
  Speaker 1: I think they're going to show at least a hundred
• 34:39
  Speaker 1: and fifty to two hundred basis points of margin improvement.
• 34:41
  Speaker 1: And once they can show that, I think, you know,
• 34:44
  Speaker 1: that could help their multiple. By the way, we're gonna
• 34:46
  Speaker 1: see companies like Apple or Amazon going and buy um
• 34:52
  Speaker 1: some of these streaming businesses. They logically they should, but
• 34:56
  Speaker 1: as I said before, it's not it's not so much
• 34:58
  Speaker 1: whether they have the cash or what they should do.
• 35:00
  Speaker 1: The question is whether they'll be allowed to do it. Yeah,
• 35:03
  Speaker 1: that's the biggest issue at this point. They can't buy
• 35:06
  Speaker 1: those companies are just they can't really buy anything. They
• 35:08
  Speaker 1: pizza without look at it all, right, Salesforce equity go
• 35:13
  Speaker 1: uh CRMs is the ticker and then you put in
• 35:16
  Speaker 1: a n R for analysts recommendations. Forty five buys eight
• 35:21
  Speaker 1: holds zero cells. The cell side likes Salesforce dot Com
• 35:25
  Speaker 1: and Soda Starbirds. So okay, we got techery coming up
• 35:28
  Speaker 1: next week we'll be checking in with the Anora Ranas
• 35:30
  Speaker 1: and the man deep sings of the world from Blueberg Intelligence,
• 35:33
  Speaker 1: getting of the latest as those come across the tape.
• 35:36
  Speaker 1: Uh green on the screen here, but definitely way off
• 35:38
  Speaker 1: the day's highs. We'll see if you can hold onto
• 35:41
  Speaker 1: it for Carol coming up. I'll be with Carol this
• 35:43
  Speaker 1: afternoon looking at w t I crude oil here off
• 35:48
  Speaker 1: three point eight percent today two cents, about a far
• 35:53
  Speaker 1: cry from the one twenty we saw, uh reasonably what
• 35:57
  Speaker 1: was that six nine months ago? Um so again supply demand.
• 36:01
  Speaker 1: You have to have a call there, and you're talking
• 36:02
  Speaker 1: about those commodities and our next guests, I think I
• 36:05
  Speaker 1: will say gas prices are up because I filled up
• 36:07
  Speaker 1: this morning at a shell I get V power obviously
• 36:10
  Speaker 1: for my trucks, and it was five dollars and thirteen
• 36:12
  Speaker 1: cents a gallon. What are you doing? I see you
• 36:15
  Speaker 1: gotta just mind the wrong state or three dollars and
• 36:18
  Speaker 1: seven cents on a national basis. That's regular, that's regular.
• 36:22
  Speaker 1: All right, Well, I'm gonna go to my next guest.
• 36:24
  Speaker 1: But then, okay, here we go Scott Levine analyst Bloomberg Intelligence,
• 36:28
  Speaker 1: he covers the energy stuff. And Emily Wilkins, Congression reporter
• 36:30
  Speaker 1: with Bloomberg Government. Uh, Emily, let's start with you. Here
• 36:35
  Speaker 1: is the Biden administration. What's their policy as it relates
• 36:37
  Speaker 1: to the Strategic Petroleum Reserve? I know they did one release.
• 36:40
  Speaker 1: Are they considering more? Is the idea when they're less
• 36:43
  Speaker 1: popular than they release more oil? I mean at this point,
• 36:48
  Speaker 1: remember the Bide administration they said the spring they'd be
• 36:50
  Speaker 1: releasing a total of one million barrels of crude. So far,
• 36:54
  Speaker 1: they have released most of that at this point, but
• 36:57
  Speaker 1: they're moving towards another release of at least ten millions
• 36:59
  Speaker 1: to five team million barrels of oil. And of course,
• 37:02
  Speaker 1: this is coming just weeks before a very competitive midterm
• 37:06
  Speaker 1: for the Democrats. They're trying to hold onto the House,
• 37:08
  Speaker 1: they're trying to hold onto the Senate. U the headwinds
• 37:11
  Speaker 1: are are very much against them in this particular year,
• 37:14
  Speaker 1: and gas prices are not helping that if you take
• 37:17
  Speaker 1: a look at political ads, political polls, just to go
• 37:20
  Speaker 1: out there and talk with folks, I mean, gas prices
• 37:22
  Speaker 1: are really sort of one of the dominant issues on
• 37:25
  Speaker 1: voters minds, and the Biden administration is aware that kind
• 37:29
  Speaker 1: of the higher the prices are around November, the more
• 37:31
  Speaker 1: difficult it could be for Democrats to hold on to
• 37:34
  Speaker 1: control of Congress. So, Scott, how much oil do we
• 37:37
  Speaker 1: have in there? I mean, um, can administration keep giving
• 37:42
  Speaker 1: away gas for votes or are we're gonna run out soon? Well,
• 37:46
  Speaker 1: according to the traditional laws of supply and demand, they're
• 37:51
  Speaker 1: running out of capacity on the on the cuts that
• 37:56
  Speaker 1: they announced in the spring, which we're just alluded to there.
• 38:01
  Speaker 1: And the problem here, I think, Paul, is they're trying
• 38:04
  Speaker 1: to implement UH an upstream or crude oil solution to
• 38:10
  Speaker 1: a downstream or refining problem. At the end of the day,
• 38:14
  Speaker 1: the big issue in the bottleneck here and the challenges
• 38:17
  Speaker 1: on the refining side. So in introducing more reserves UH
• 38:23
  Speaker 1: and UH cutting the support UH the spr really isn't
• 38:28
  Speaker 1: going to help them solve the issue of high prices
• 38:30
  Speaker 1: at the pump. That's more a function of rising refining
• 38:34
  Speaker 1: crack spreads and tightness on the refining side, uh than
• 38:38
  Speaker 1: it is on the crude oil side. That's my opinion.
• 38:41
  Speaker 1: So what I guess in that case President Biden has
• 38:45
  Speaker 1: to go down to Oklahoma, He's got to go down
• 38:47
  Speaker 1: to Texas. Never been sweet talking those uh oil guys.
• 38:52
  Speaker 1: It's unlikely, isn't it. Emily. I mean, to certain extent,
• 38:56
  Speaker 1: you have seen the Biden administration UM give into sort
• 39:00
  Speaker 1: of a bit of a sort of tent back and
• 39:02
  Speaker 1: forth with some of these oil companies and saying, hey,
• 39:04
  Speaker 1: we need you guys to really sort of consider the
• 39:06
  Speaker 1: American consumer. We need you guys to sort of keep
• 39:09
  Speaker 1: them in mind. Um. And of course there's a lot
• 39:12
  Speaker 1: of questions right now because there is uh, you know,
• 39:15
  Speaker 1: a lot of need for oil in Europe. A lot
• 39:18
  Speaker 1: of these companies are trying to meet part of that need.
• 39:20
  Speaker 1: And so you definitely have seen the Biden administration kind
• 39:23
  Speaker 1: of try and put pressure on folks where they can
• 39:26
  Speaker 1: in terms of companies and to you're seeing candidates out
• 39:30
  Speaker 1: on the campaign trail go ahead and just blame companies
• 39:33
  Speaker 1: for the high gas prices, trying to tell voters no, no, no,
• 39:36
  Speaker 1: you shouldn't be blaming the Biden administration. You should be
• 39:39
  Speaker 1: blaming these major corporations for having prices as high as
• 39:42
  Speaker 1: they are. So and Scott on the refining side, is
• 39:45
  Speaker 1: you raised earlier? There really isn't any incentive for these
• 39:50
  Speaker 1: refining companies to go and build new refineries, is there?
• 39:53
  Speaker 1: I mean, the political environment is just it's not supportive
• 39:56
  Speaker 1: at all. No, there really isn't. And I think got
• 40:00
  Speaker 1: Ultimately the the problem here is that the thing that
• 40:03
  Speaker 1: will encourage them to produce more are higher our higher
• 40:08
  Speaker 1: diesel prices and higher gasoline prices, and that's something that
• 40:12
  Speaker 1: the administration obviously doesn't want to see, particularly ahead of
• 40:16
  Speaker 1: ahead of the mid terms. And so ultimately this problem
• 40:19
  Speaker 1: would be resolved naturally through supply and demand. I guess
• 40:23
  Speaker 1: the issue really is, Uh, the government doesn't really have
• 40:27
  Speaker 1: the time to Scott. What about a friendlier regulatory environment.
• 40:32
  Speaker 1: I mean, every time these CEOs go to Capitol Hill
• 40:35
  Speaker 1: or bank CEOs who financed them, Um, they're made to
• 40:38
  Speaker 1: look like the true criminals of the modern age. Is
• 40:42
  Speaker 1: that going to change? Well, you know, I think that's
• 40:45
  Speaker 1: a function of who's in in office and what their
• 40:49
  Speaker 1: m O is At the present time. The reality is
• 40:53
  Speaker 1: I wouldn't expect it to change much or too quickly.
• 40:56
  Speaker 1: I think the oil and gas companies have been more
• 40:58
  Speaker 1: vocal h and the fact that the government should stop
• 41:02
  Speaker 1: blaming the industry for problems that are macroeconomic in nature.
• 41:07
  Speaker 1: But I wouldn't expect the monstra to change anytime. All right, Scott,
• 41:11
  Speaker 1: thank you very much for joining us. Scott Levine analysts
• 41:14
  Speaker 1: with Bloomberg Intelligence covering all things energy, and Emily Wilkins,
• 41:16
  Speaker 1: congressional reporter with Bloomberg Government down in d C, giving
• 41:21
  Speaker 1: us the political angle there. But uh oil pulling back
• 41:24
  Speaker 1: again springing Stephen Lee right now, he's a brand manager
• 41:30
  Speaker 1: over at Ford Motor Company the FOMO code to talk
• 41:33
  Speaker 1: about what's going on with UM. I guess the move
• 41:36
  Speaker 1: to electrification is the sort of mid to longer term story.
• 41:40
  Speaker 1: But Stephen, right now, I guess, UH, chips are the
• 41:45
  Speaker 1: number one kind of question facing the auto industry. How
• 41:49
  Speaker 1: are you doing in terms of getting the chips you
• 41:51
  Speaker 1: need for the cars that we want? He Paul and
• 41:53
  Speaker 1: Matte thanks for having me on UM. You know, it's
• 41:56
  Speaker 1: certainly a lot of change in the world over the
• 41:58
  Speaker 1: course of the past four months. And ships and semiconductors
• 42:02
  Speaker 1: has certainly been on the forefront UM with us forward.
• 42:05
  Speaker 1: We've got dedicated teams working around the clock too with
• 42:09
  Speaker 1: each of our suppliers and then their suppliers even to
• 42:13
  Speaker 1: help try and get the parts that we need to
• 42:15
  Speaker 1: help sep the plants operating, and get customers the vehicles
• 42:20
  Speaker 1: that there UM and sometimes patiently been waiting for. Yeah,
• 42:24
  Speaker 1: some people for a year or two. Right. I have
• 42:27
  Speaker 1: a buddy who waited about two years to get his
• 42:29
  Speaker 1: Bronco full disclosure. He loves it now, He's very happy
• 42:33
  Speaker 1: with it, and I guess he wasn't that bothered about
• 42:35
  Speaker 1: the weight. But are we still seeing UM waits that long?
• 42:38
  Speaker 1: How long until I can get a Bronco if I
• 42:41
  Speaker 1: if I want one, or or if Paul can get
• 42:44
  Speaker 1: an F one fifty Lightning if he wants one. So
• 42:48
  Speaker 1: I mean we're looking at reducing that time overall between
• 42:50
  Speaker 1: when a customer can go in place their orders and
• 42:53
  Speaker 1: then when that that vehicle is built and then ultimately
• 42:58
  Speaker 1: UM shipped to the lear and the customer can take delivery.
• 43:01
  Speaker 1: I can I can speak to specifically three Super Duty,
• 43:05
  Speaker 1: which we're very excited to introduce. The all new Super
• 43:09
  Speaker 1: Duty and UH customers will be able to place orders
• 43:12
  Speaker 1: for the all new Super Duty UM later this fall,
• 43:15
  Speaker 1: and UM we aim to begin production early next year
• 43:20
  Speaker 1: and customers begin taking delivery in the first quarter. So Stephen,
• 43:24
  Speaker 1: you know, since the beginning of time, it seems like
• 43:27
  Speaker 1: you'd walk onto a lot, there's just hundreds of vehicles
• 43:30
  Speaker 1: on the lot. You'd find when you like, you go
• 43:33
  Speaker 1: haggle with a salesperson and you see how much blow
• 43:36
  Speaker 1: M s r P you can get this thing for
• 43:38
  Speaker 1: what kind of incentives there might be. Now it seems
• 43:42
  Speaker 1: like they're carrying a lot less inventory coming out of
• 43:45
  Speaker 1: this pandemic? Is that the new norm? I mean, do
• 43:48
  Speaker 1: I just walk on and take whatever I can get
• 43:50
  Speaker 1: and pay m srps? With how high Yeah, with how
• 43:55
  Speaker 1: high demand has been recently, certainly inventory levels are much
• 43:59
  Speaker 1: lower than historical barms, especially for us here at Ford
• 44:03
  Speaker 1: and and on vehicles like super Duty UH. Demand continues
• 44:08
  Speaker 1: to be very strong. And I mean most of our
• 44:11
  Speaker 1: our trucks as soon as they're arriving on dealers a
• 44:14
  Speaker 1: lot UM. You know, the dealers already have a name
• 44:18
  Speaker 1: assigned to that specific truck coming in and customers show
• 44:22
  Speaker 1: up and take delivery. It's uh, demand continues to be
• 44:25
  Speaker 1: very strong. So what are the hottest UM? I guess
• 44:31
  Speaker 1: trims right now? If I'm looking at a n F
• 44:34
  Speaker 1: two fifty, I want the Lariat package and a crew cab.
• 44:38
  Speaker 1: I'm gonna put a Tremor package on it, probably the
• 44:42
  Speaker 1: uh if I can afford it, drop in the six
• 44:44
  Speaker 1: point seven leader Um power stroke diesel. What do you
• 44:49
  Speaker 1: But the thing is I'm getting up to like eighty
• 44:51
  Speaker 1: five thousand dollars with that? What what do you? What
• 44:53
  Speaker 1: do you like? Stephen so? Uh? The Lariat Trum model
• 44:57
  Speaker 1: is certainly one of our most popular rims in the
• 45:01
  Speaker 1: individual retail customer space. UH. Certainly the off road capability
• 45:06
  Speaker 1: amongst these heavy duty trucks that's grown in popularity immensely.
• 45:11
  Speaker 1: And we offer the Tremor off Road Package, which which
• 45:14
  Speaker 1: provides during five inch off road tires and and ray
• 45:17
  Speaker 1: suspension to help navigate some of that off road terrain.
• 45:20
  Speaker 1: That is certainly one of our more popular configurations that
• 45:24
  Speaker 1: customers are opting for. And the great part is they
• 45:27
  Speaker 1: can they can get that configuration, they can get that
• 45:30
  Speaker 1: off road capability, but but they're not really sacrificing towing capability,
• 45:34
  Speaker 1: which when we're talking with our customers, even though the
• 45:37
  Speaker 1: off road space is increasing in popularity far and away,
• 45:41
  Speaker 1: towing is the number one usage for heavy duty trucks.
• 45:44
  Speaker 1: In our engineers, they take that to heart. They think
• 45:48
  Speaker 1: they seek out to create, you know what, what we
• 45:50
  Speaker 1: call a best in class towing experience. They really focus
• 45:54
  Speaker 1: on those pain points that customers have with towing and
• 45:57
  Speaker 1: trying to trying to deliver some utians to reduce those
• 46:01
  Speaker 1: pain points. One of them being visibility, especially with some
• 46:05
  Speaker 1: of these trailers, how big they're getting, the fifth wheel
• 46:07
  Speaker 1: campers that the big horse trailers you name it. Um.
• 46:12
  Speaker 1: Visibility is always, uh, you know, top of mind for customers.
• 46:15
  Speaker 1: And with the new super duties, we offer up to
• 46:18
  Speaker 1: twenty eight available camera views, including what's really cool, a
• 46:22
  Speaker 1: three six degree trailer camera system. So not only do
• 46:25
  Speaker 1: you get a bird's eye view above the truck, you
• 46:28
  Speaker 1: can now get a bird's eye view above the trailer
• 46:30
  Speaker 1: as well, so you can see around your trailer on
• 46:33
  Speaker 1: all sides, right on the built in six screen. And uh,
• 46:39
  Speaker 1: you know, you won't be free entertainment for those neighbors
• 46:41
  Speaker 1: at the camp side as you back that this wheel
• 46:42
  Speaker 1: into that type space. That's right, all right, Steven Lee,
• 46:45
  Speaker 1: thank you so much for joining us there. Stephen Lee,
• 46:47
  Speaker 1: barrant manager for Ford Motor Company, got the Super pick
• 46:50
  Speaker 1: up trucks. Thanks for listening to the Bloomberg Markets podcast.
• 46:56
  Speaker 1: You can subscribe and listen to interviews of Apple Podcasts
• 46:59
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 47:03
  Speaker 1: on Twitter at Matt Miller nineteen seventy three. Pet On
• 47:07
  Speaker 1: false Sweeney I'm on Twitter at p T Sweeney. Before
• 47:09
  Speaker 1: the podcast. You can always catch us worldwide at Bloomberg
• 47:12
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