Latest / Bloomberg Intelligence / 7-Eleven Owner Gets Buyout Offer

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7-Eleven Owner Gets Buyout Offer · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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  Speaker 4: All right, we'll get an M and a trade here today,
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  Speaker 4: which I think it's near and dear to a lot
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  Speaker 4: of folks that are particularly through seven eleven fans. I'm
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  Speaker 4: a wah wah guy myself.
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  Speaker 5: Crystal cover that story as well this morning. I mean
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  Speaker 5: seven to eleven has the Icy, which I like versus
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  Speaker 5: the Slurpie.
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  Speaker 6: What's the slur The Slurpy is? I think.
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  Speaker 5: Grainier? You know, the Icy is a lot smoother. Yep,
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  Speaker 5: And I'm a bigger fan of the Icy. Had one
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  Speaker 5: last night that my drive home from Gray State of Ohio.
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  Speaker 6: You were in Ohio? Yeah, what'd you drive?
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  Speaker 5: I drove back in my Dodge Challenger RT scat pack
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  Speaker 5: wide body on I eighty. Yeah that's a good cruiser.
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  Speaker 4: Yeah, exactly. Diana Rossettopania joints us here in our studios.
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  Speaker 4: She's a Bloomberg Intelligence consumer Staples Anos who is couch
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  Speaker 4: Tard and why are they buying seven eleven for thirty
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  Speaker 4: one billion dollars.
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  Speaker 7: Well, Cushtard is the second largest convenience store in the
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  Speaker 7: United States. They manage circle K, yes, and.
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  Speaker 5: That's why they have a French name that sounds funny
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  Speaker 5: to American years.
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  Speaker 7: Yes, it took me actually a while to be able
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  Speaker 7: to pronounce their name. But yeah, so they're very inquisitive.
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  Speaker 7: We're not that surprised that they are, you know, their stocks,
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  Speaker 7: that they want to buy something. But sevent eleven is
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  Speaker 7: actually a big name. There's valuations going from like fifty
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  Speaker 7: billion dollars to as much as like eighty five billion dollars.
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  Speaker 7: So for them to be able to do that, it's
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  Speaker 7: it's quite impressive. If they are able to.
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  Speaker 5: It's always surprising, I think to people who aren't in
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  Speaker 5: the know that seven to eleven is owned by a
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  Speaker 5: Japanese holding company, and I think they own Speedway as well.
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  Speaker 5: These seem like such American brands. So does Circle K
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  Speaker 5: and it's owned by a Canadian company. Is there going
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  Speaker 5: to be anti trust issues here?
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  Speaker 7: Well, for sure, the FDC, I mean, ask Kroger. They
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  Speaker 7: have been trying to purchase Albertson's for a couple of
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  Speaker 7: years now. So if they actually come up with the
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  Speaker 7: numbers and there's acceptance, I'm sure the FDC will have
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  Speaker 7: something to say. Seven eleven has like about fourteen percent
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  Speaker 7: of market share in the United States, whereas Skushtar with
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  Speaker 7: their Circle K brand, they have about five percent. So
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  Speaker 7: it definitely will be you know, up for again.
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  Speaker 6: I'm a wah wah guy, but you know I can.
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  Speaker 5: See is wah wah just like a New Jersey.
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  Speaker 6: No, no, but it is.
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  Speaker 7: What is it's the It's in the Northeast. There's mostly
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  Speaker 7: in the Northeast. So but yeah, there's.
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  Speaker 4: Explained to me this convenient store business. What's the economics
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  Speaker 4: of a convenience store?
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  Speaker 6: I just see people going in and out all the time.
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  Speaker 6: What's the economics?
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  Speaker 7: Well, basically, they want you to go in for your gas.
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  Speaker 7: They're very competitive in gas prices. Fuel margins have been
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  Speaker 7: improven in the past few years. Kush Star actually has
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  Speaker 7: about forty cents per gallon in terms of fuel margins.
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  Speaker 7: But what they're making money on is when you go
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  Speaker 7: into the store, particularly if you buy their sandwich sandwiches.
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  Speaker 7: The margins for that is like fifty percent.
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  Speaker 6: It's true.
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  Speaker 5: I was, by the way, I was filling up on
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  Speaker 5: the way there and back for more than four dollars
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  Speaker 5: and fifty cents a gallon.
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  Speaker 6: O because you're putting in the super duper high.
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  Speaker 5: I go with ninety three, and then I go in
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  Speaker 5: and I pick up a Snickers bar for my kid brother,
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  Speaker 5: and I got I don't know, like a TwixT. Each
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  Speaker 5: of those candy bars was more than two dollars and
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  Speaker 5: fifty cents.
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  Speaker 6: That's margin there.
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  Speaker 5: And I'm starting to feel like a really old man,
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  Speaker 5: you know, because when I was a kid, fifty cents
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  Speaker 5: is what you paid for these things.
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  Speaker 6: So are these good businesses?
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  Speaker 7: I mean, oh yeah, if they're buying, I'm sure you know.
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  Speaker 7: They they they think that there's some good business. I mean,
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  Speaker 7: Kushtart has Usually they they do big acquisitions. The last
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  Speaker 7: acquisition that they did was for eleven billion dollars for
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  Speaker 7: the total energy is in the in Europe, but they
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  Speaker 7: usually in the US they usually buy smaller operators. For example.
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  Speaker 7: Also this morning they announced that they bought get Go
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  Speaker 7: from Giant Eagle. So that's another convenience store which is
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  Speaker 7: in the you know, with.
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  Speaker 5: The delicious cold pork sandwich by the way.
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  Speaker 7: Oh well, I actually haven't tried it.
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  Speaker 5: Yeah, I had one to go this weekend. H where's
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  Speaker 5: the get go? I had them in Pennsylvania.
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  Speaker 7: Yeah, it's it's regional.
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  Speaker 5: Yeah, okay, all.
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  Speaker 6: Right, it's the Midwest. It's part of the world.
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  Speaker 3: I don't go to.
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  Speaker 5: I skipped the what's the one you like the cracker barrel?
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  Speaker 4: Cracker barrel, I declined, But you probably drove through past
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  Speaker 4: like one hundred of them month.
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  Speaker 5: Yes, yes, a lot of that. And I used to
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  Speaker 5: always stop because you get a books books on tape
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  Speaker 5: at one and then you'd return it at the next
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  Speaker 5: But you know, longer.
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  Speaker 4: What else were seeing in your space than in a
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  Speaker 4: retail space? What are some of the key things people
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  Speaker 4: are looking atuse you cover a.
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  Speaker 7: Lot of retail, Yeah, I mean, obviously, this is like
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  Speaker 7: the biggest thing that has happened today.
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  Speaker 5: It's one of the biggest deals of the year, right well, yeah,
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  Speaker 5: even Dollars puts it like number two.
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  Speaker 7: Yeah, I mean, obviously the Kruger Albertson's acquisition. It's also
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  Speaker 7: the talk of the town. There's like likelihood that it
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  Speaker 7: might not happen. The FDC might object So what.
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  Speaker 4: Are we going to hear about that deal, because we've
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  Speaker 4: been talking about Kruger's and Albertson's for a long time.
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  Speaker 7: Yeah, honestly, like it really depends on, you know, what
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  Speaker 7: happens with the election and how you know, M and
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  Speaker 7: A friendly the FDC will be afterwards, all.
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  Speaker 4: Right, Well, seven to eleven by the numbers, and this
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  Speaker 4: is according to Bloomberger reporting eighty five thousand stores. That's huge,
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  Speaker 4: and they've got one hundred and fifty seven thousand employees.
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  Speaker 6: That's a big business. Yeah, you know cushcharges.
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  Speaker 4: I mean it's cure Start's got a bigger valuation fifty
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  Speaker 4: eight billion dollars valuation versus thirty eight for the seven
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  Speaker 4: and eleven, so much higher valuation using that stock in cash,
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  Speaker 4: I guess to get bigger.
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  Speaker 7: Yeah, I think, you know, definitely, I mean, obviously I
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  Speaker 7: see this as an Asia play, to be honest with.
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  Speaker 5: You, which we've seen more and more and more of, right,
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  Speaker 5: I mean, if you look at activists investors involved in
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  Speaker 5: Japanese stocks, for example, it goes from fifteen and twenty
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  Speaker 5: twenty two to twenty five last year to twenty eight
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  Speaker 5: so far this year, and we're only in the first half.
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  Speaker 7: Yeah, I mean seven eleven has like thirty one percent
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  Speaker 7: of the Asia Pacific market share.
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  Speaker 6: So yeah, now we're talking.
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  Speaker 4: Now we're talking, Diana, Thank you so much for joining us. Diana, Orstopena,
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  Speaker 4: another one I hired back in today. She's blossomed into
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  Speaker 4: this great analyst. Very cool to see consumer staples analysts
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  Speaker 4: Bloomberg Intelligence joining us in the Bloomberg Interactive Broker studio,
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  Speaker 4: not mailing it in from like Nantucket or dear Value.
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  Speaker 5: Work from home.
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  Speaker 6: Yeah, so BI Management, we know what's going on.
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• 7:25
  Speaker 4: All right, our good friend Carl Icon in the news,
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  Speaker 4: but I don't think for reasons he wants to be.
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  Speaker 4: Crystal c joins us Bloomberg US Deals reporter Crystal. What's
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  Speaker 4: going on with our good friend Carl Icon? He had
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  Speaker 4: some some issues with the SEC.
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  Speaker 8: I think, yeah, I think he's probably quite glad about
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  Speaker 8: today's news This is like coming to an end something
• 7:44
  Speaker 8: that's hungover, like hangover his head on its friends for
• 7:47
  Speaker 8: a while. Today's news is that Hits firm and him
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  Speaker 8: are settling a charge with the SEC and paying a
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  Speaker 8: fine of two million dollars combined. And that is an
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  Speaker 8: investigation on the back of the Hindenburg recent report from
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  Speaker 8: twenty twenty three saying that they've inflated some of their
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  Speaker 8: asset values and quote unquote operate like a ponse scheme.
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  Speaker 8: So this is actually in some way good news, even
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  Speaker 8: though the stock doesn't quite reflect that today.
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  Speaker 3: Yeah.
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  Speaker 5: No, the stock took a hit I think was last
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  Speaker 5: year in May when we first learned about these investigations,
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  Speaker 5: and short sellers started questioning what carl Icon's loans were
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  Speaker 5: really based on. Does this wrap it up? Is this
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  Speaker 5: the end of it?
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  Speaker 8: It looks like the end of it. So there are
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  Speaker 8: two investigations, if you remember this. One is the SEC
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  Speaker 8: investigation at settlement. The other one they had previously disclosed
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  Speaker 8: that they were contacted by the US Attorney's Office, and
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  Speaker 8: today they put out a statement IEP and I competitive
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  Speaker 8: statement saying that they haven't received any substantive communication from
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  Speaker 8: the US Attorney's office since the initial approach, so they,
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  Speaker 8: I guess you can take it as a good sign
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  Speaker 8: no news and sometimes good news and off us reporter,
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  Speaker 8: but for like them.
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  Speaker 5: You know that fifty dollars company, you know, fifty dollars
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  Speaker 5: plus and now it's a fifteen dollars company.
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  Speaker 8: Yeah, all right, and shares it down today as well.
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  Speaker 6: What's the all right?
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  Speaker 4: I'm just looking at the stock here, as Matt saying,
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  Speaker 4: it's down seven percent today, down about eight percent year
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  Speaker 4: to date, and down thirty.
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  Speaker 6: Percent over the trailing twelve months. So not a great
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  Speaker 6: move there, Crystal.
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  Speaker 4: Thanks so much for joining us, Crystal, see just giving
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  Speaker 4: us the update there. Carl Icon settling it what is
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  Speaker 4: for him, I'm sure a very small number, couple of
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  Speaker 4: million dollars to settle some issues with.
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  Speaker 6: The se c i EP. Carl Ion is eighty eight
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  Speaker 6: years old.
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  Speaker 5: Icon, he's in good shape for eighty eight. That is
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  Speaker 5: still a very sharp guy. His company, I mean, this
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  Speaker 5: is a diversified holding company. They hold automotive investments, energy, gaming, railcar,
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  Speaker 5: food packaging, Marcus real estate, medals, home fashion.
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  Speaker 6: Market cap seven point five billion dollars.
• 9:58
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 4: Matthew Miller sitting in for Al Steel today in our
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• 10:22
  Speaker 6: Green on the screen today. Boy, that two weeks.
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  Speaker 4: Ago today when we had that big sell off and
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  Speaker 4: that man fixed jumping above sixty, you know, we got
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  Speaker 4: the vix back down below fifteen. It's just amazing the
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  Speaker 4: round trip we've had. So I don't know what to
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  Speaker 4: make of it, but I think our next guest might.
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  Speaker 4: Carl Schleife, chief investment officer at a Bimoh Family office,
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  Speaker 4: joined us via that Zoom thing. Carol, what's your opinion
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  Speaker 4: on what we've seen over the past couple of weeks again,
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  Speaker 4: starting with two weeks ago today when we had that
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  Speaker 4: panic sell off.
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  Speaker 9: Yeah, it's not necessarily unusual for August to be exceedingly volved.
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  Speaker 9: All we've got a lot of senior people on the beach,
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  Speaker 9: and it can very frequently lead to some choppy trading,
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  Speaker 9: like we saw. It was a little eye popping back then,
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  Speaker 9: but having lived through the nineteen eighty seven issue, which
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  Speaker 9: was October, but still did a Friday to Monday, if
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  Speaker 9: that Monday had been similar, it would have been down
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  Speaker 9: nine thousand points on the Dow, not just a mere thousand.
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  Speaker 5: That's great, but.
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  Speaker 9: It's not unusual at all to see that kind of volatility.
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  Speaker 9: I actually would have expected it to have to follow
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  Speaker 9: through for a few days, and I wouldn't write off
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  Speaker 9: that we're done seeing volatility, especially if we get into
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  Speaker 9: Friday and people don't like what Paul says in the speech,
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  Speaker 9: and or we're just in between earnings and now we're
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  Speaker 9: off a good earning seats and we don't have much
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  Speaker 9: going until the Fed meets again after this week in September.
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  Speaker 5: So well, we get to continuing claims out before that,
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  Speaker 5: and it seems like every little data point has become
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  Speaker 5: a big event for markets with I guess, you know,
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  Speaker 5: low volume, that's that's going to happen. But what could
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  Speaker 5: Powell say that would disappoint.
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  Speaker 9: If he pushed off the likelihood of a September card,
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  Speaker 9: because I think most of the expectations are you'll see
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  Speaker 9: a cut in September. The question is just how much
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  Speaker 9: twenty five basis points, fifty basis points will he be
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  Speaker 9: able to structure commentary that actually, FED policy currently is
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  Speaker 9: very restrictive given where the economic data is coming in.
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  Speaker 9: And yes, the FED has made us all very data
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  Speaker 9: dependent and data watchers on every single point trying to
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  Speaker 9: figure out which way the Fed's going to go. But
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  Speaker 9: there is a rationale and an ability for the FED
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  Speaker 9: to be able to say, hey, our policy is restrictive.
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  Speaker 9: We could actually chunk it down a time or two
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  Speaker 9: and it wouldn't be indicative of a softening economy. You've
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  Speaker 9: also got some retail numbers coming out this week which
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  Speaker 9: people will be watching closely at the biggest retailer report
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  Speaker 9: last week. And you've also got Nvidia coming out and
• 13:05
  Speaker 9: if people don't like that, they haven't knocked it out.
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  Speaker 10: Of the park.
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  Speaker 9: Over and above where the expectations are, you could see
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  Speaker 9: that volatility in the markets in the short run.
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  Speaker 4: All right, Carol, we've done this round trip over the
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  Speaker 4: past couple of weeks.
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  Speaker 6: What do I do now in the equity markets.
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  Speaker 9: Well, I think you stay invested. Hopefully you were invested
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  Speaker 9: through all of that and set tight. You know, we
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  Speaker 9: were advising clients.
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  Speaker 8: You know.
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  Speaker 9: The interesting thing is is if you had a diversified portfolio,
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  Speaker 9: even on that Friday and Monday that were very volatile,
• 13:36
  Speaker 9: your bonds did well because the rates came down to
• 13:38
  Speaker 9: the bond prices went up, so you had that durability
• 13:41
  Speaker 9: built into the portfolio. You also look more broadly at
• 13:44
  Speaker 9: things that should benefit if the FED does start to cut, right,
• 13:48
  Speaker 9: small caps should benefit, mid cap should benefit. Lots of
• 13:52
  Speaker 9: different industries here in the US should continue to benefit.
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  Speaker 9: And we do suspect that once those rates come down,
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  Speaker 9: you'll see a consumers continue to spend because they're employed.
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  Speaker 9: You'll see businesses we suspect spend more than is expected
• 14:07
  Speaker 9: right now. And maybe the biggest surprise out there is
• 14:10
  Speaker 9: how low that tenure yield is, because we suspect it'll
• 14:13
  Speaker 9: drift higher over the intermediate longer term.
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  Speaker 5: All right, So once the FED, I mean, I guess
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  Speaker 5: we're all on the same page that they are going
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  Speaker 5: to cut and buyk So twenty five basis points do
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  Speaker 5: they continue to do that? Carol? Because we're growing still
• 14:28
  Speaker 5: at two and a half plus percent, and unemployment, although
• 14:32
  Speaker 5: it ticked up, is still only four point three percent,
• 14:34
  Speaker 5: which is very low. Inflation is also well under three
• 14:39
  Speaker 5: percent now, which is back to well less than even
• 14:42
  Speaker 5: its historical average. So does the Fed really need to
• 14:46
  Speaker 5: be moving interest rates around? Why don't they just hold
• 14:49
  Speaker 5: tight so that they have more powder left if something
• 14:51
  Speaker 5: bad happens.
• 14:52
  Speaker 9: They still have an incredible amount of powder if you
• 14:55
  Speaker 9: think through that. For ten to fifteen years, they had
• 14:57
  Speaker 9: basically no powder because there was zero to zero point
• 15:01
  Speaker 9: five percent. They're at five and a quarter five point
• 15:05
  Speaker 9: three percent right now, so they've got substantial policy room
• 15:10
  Speaker 9: and still leaving policy room even if they brought it
• 15:12
  Speaker 9: down one hundred basis points over the next six months
• 15:15
  Speaker 9: or so, You've still got got room in there to
• 15:18
  Speaker 9: be able to cut if things really did tail off.
• 15:21
  Speaker 9: And the last thing they want to do is be
• 15:23
  Speaker 9: caught behind the curve too, especially on that employment market,
• 15:26
  Speaker 9: because you've seen the momentum tick up there, and granted
• 15:29
  Speaker 9: it's from people coming into the market, but one question
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  Speaker 9: you have for yourself is are they coming into the
• 15:35
  Speaker 9: market because of the they're being pinched by inflation? And
• 15:39
  Speaker 9: really feel a need.
• 15:41
  Speaker 4: Carol, I know in your notes here you've got industrials
• 15:44
  Speaker 4: and materials as a couple sectors you're looking at.
• 15:46
  Speaker 6: That's not very exciting. Why are you guys looking at that?
• 15:50
  Speaker 9: Well, the thing of it is you look at the
• 15:52
  Speaker 9: charts on some of those industrials and materials, and they've
• 15:54
  Speaker 9: looked the charts actually look a lot like in videos
• 15:57
  Speaker 9: chart does in terms of there's a lot of fiscal
• 16:01
  Speaker 9: stimulus or a lot of fiscal spending plans still in
• 16:04
  Speaker 9: the works. Much of that money has been allocated but
• 16:07
  Speaker 9: not necessarily spent, and a lot of that's not necessarily
• 16:11
  Speaker 9: going to be pulled back. And the reindustrialization that bringing
• 16:16
  Speaker 9: manufacturing back to the United States. A lot of those
• 16:19
  Speaker 9: plans are in process, they had to work through local permitting,
• 16:22
  Speaker 9: and we don't think they're going to be turned back.
• 16:24
  Speaker 9: You've also got infrastructure spent, so there's a lot of
• 16:27
  Speaker 9: reasons to think through that. But you've also got the
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  Speaker 9: notion where if you go back and look over the
• 16:32
  Speaker 9: last twenty or thirty years, the industrial component of the
• 16:36
  Speaker 9: S and P is shrunk, and given the attention and
• 16:43
  Speaker 9: the spending, we're focusing on that sector or those sectors.
• 16:47
  Speaker 9: We expect you'll see them expand and perhaps as a
• 16:51
  Speaker 9: percentage of the S and P as well as the
• 16:55
  Speaker 9: leadership shifts to a more broad group of participating industry.
• 17:02
  Speaker 5: Carol, when you look at your portfolio, do you need
• 17:06
  Speaker 5: to change anything if Donald Trump wins this election?
• 17:11
  Speaker 9: We're feeling pretty comfortable about where the portfolios are, and
• 17:15
  Speaker 9: a lot of it would depend on if mister Trump
• 17:17
  Speaker 9: wins the election and what does the composition of House
• 17:21
  Speaker 9: and Senate look like. So there's a big piece of that,
• 17:24
  Speaker 9: and we typically have always advised people not necessarily to
• 17:27
  Speaker 9: trade on potential who wins who doesn't. You know, the
• 17:31
  Speaker 9: theory have been, for example, that energy stocks should do
• 17:34
  Speaker 9: better under Trump presidency than a Biden presidency, but the
• 17:38
  Speaker 9: opposite to be the fact. So building sturdy portfolios for
• 17:42
  Speaker 9: intermediate long term investment always is the wise and being
• 17:46
  Speaker 9: able to adjust your tweak at the margins after we
• 17:49
  Speaker 9: see what the outcome is.
• 17:52
  Speaker 5: There.
• 17:53
  Speaker 9: We might make some adjustments, but most likely not because
• 17:56
  Speaker 9: we tend to build really sturdy portfolios and think the
• 17:58
  Speaker 9: economy is going to do quite well under either president.
• 18:01
  Speaker 4: All right, Carol, thank you so much for joining us
• 18:03
  Speaker 4: as always Kyle Schleich, chief investment Officer for Bemo Family Office.
• 18:09
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 18:13
  Speaker 2: weekdays at ten am Eastern on applecard.
• 18:15
  Speaker 3: Play and Android Otto with the Bloomberg Business App.
• 18:18
  Speaker 2: You can also listen live on Amazon Alexa from our
• 18:21
  Speaker 2: flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
• 18:27
  Speaker 6: We've got Matthew Miller sitting in for Alex Steele.
• 18:29
  Speaker 5: Here.
• 18:30
  Speaker 4: I'm Paul Sweeney. We're live here in our Bloomberg Interactive
• 18:32
  Speaker 4: Broker Studio. We're streaming live on YouTube's ahead over to
• 18:35
  Speaker 4: YouTube dot com search Bloomberg Podcast, and that's where you
• 18:38
  Speaker 4: will find us. Matt you want to talk about evs.
• 18:40
  Speaker 5: I would love to. Yeah.
• 18:41
  Speaker 6: Okay.
• 18:41
  Speaker 4: It's great timing that you're here, because we today we're
• 18:44
  Speaker 4: gonna talk a little bit about EV's with our good
• 18:45
  Speaker 4: friend Corey Kanter. He's the lead US Electric Vehicle Analyst. Yes,
• 18:49
  Speaker 4: there is such a thing. At Bloomberg and New Energy Finance,
• 18:52
  Speaker 4: they prefer bn EF.
• 18:53
  Speaker 6: I don't care.
• 18:54
  Speaker 4: Uh.
• 18:55
  Speaker 6: He joins us here on our Bloomberg Interactive Brokers studio.
• 18:58
  Speaker 6: Corey give us a state of the market.
• 19:01
  Speaker 4: These days about where we are in this long evolution
• 19:05
  Speaker 4: from you know, internal combustion engines to getting to an
• 19:08
  Speaker 4: all electric world.
• 19:09
  Speaker 6: Where kind of are we on that spectrum today? Yeah,
• 19:12
  Speaker 6: we're We're in twenty twenty four.
• 19:13
  Speaker 11: We're in a bit of i'd say a bumpy moment,
• 19:16
  Speaker 11: bumpy first half of the year. If we step back
• 19:18
  Speaker 11: and look at twenty twenty three compared to twenty twenty two,
• 19:21
  Speaker 11: you saw in the US about fifty percent year on
• 19:24
  Speaker 11: year growth for electric vehicles in the US. First half
• 19:27
  Speaker 11: of this year, you're looking more at that kind of
• 19:28
  Speaker 11: ten to fifteen percent, depending on where you get your numbers.
• 19:32
  Speaker 5: We were fifty percent growth last year and we're fifteen
• 19:35
  Speaker 5: percent this year.
• 19:36
  Speaker 11: So basically, if you take out the largest automaker, Tesla,
• 19:40
  Speaker 11: which has had a very difficult first half of this year,
• 19:43
  Speaker 11: you're still seeing amongst the automakers, your high endie your
• 19:46
  Speaker 11: Ford thirty forty percent year on year growth, more.
• 19:49
  Speaker 5: In the trajectory of what we saw last year.
• 19:51
  Speaker 11: But Tesla's stagnation and kind of i'd say aging lineup
• 19:55
  Speaker 11: has brought down that US average more to that kind
• 19:57
  Speaker 11: of ten to twenty percent.
• 19:59
  Speaker 5: Well, and elon Trump's pandering love for Elon Musk's pandering
• 20:03
  Speaker 5: love for Donald Trump. Did you listen to that interview
• 20:05
  Speaker 5: the other day? I think interviews the wrong word. Did
• 20:07
  Speaker 5: you listen to that conversation conversation? I mean it was
• 20:10
  Speaker 5: pretty crazy. Trump was like, you make great cars, but
• 20:13
  Speaker 5: we don't all need electric vehicles, and Musk didn't even
• 20:17
  Speaker 5: really go go up against them.
• 20:19
  Speaker 11: I saw some clips from the conversation. I think less
• 20:22
  Speaker 11: of the overall listening. I'm on Twitter maybe too much,
• 20:25
  Speaker 11: but more for sports and less for spaces. With Tesla
• 20:29
  Speaker 11: in particular, there's been some challenges in California, as Bloomberg
• 20:32
  Speaker 11: News his own down to Hall has covered. You've seen quarter,
• 20:36
  Speaker 11: you know, on quarter reduction of overall sales compared.
• 20:39
  Speaker 6: To the previous year.
• 20:40
  Speaker 11: So Tesla may have a California problem. Actually, my sister
• 20:44
  Speaker 11: just got a Tesla Model Why, which continues to be
• 20:46
  Speaker 11: the best selling vehicle amongst TVs, and Ludlow.
• 20:49
  Speaker 5: Just got one, the co host of Bloomberg Technology, I mean,
• 20:53
  Speaker 5: Marian just got one, who runs the makeup room back here.
• 20:56
  Speaker 5: It's a hot vehicle in terms of sales, right, but
• 20:59
  Speaker 5: it's not I guess, helping the overall number.
• 21:01
  Speaker 11: It's also they haven't released a new vehicle excluding the
• 21:04
  Speaker 11: cyber truck, which has had very limited production, and all
• 21:07
  Speaker 11: of those vehicles over one hundred thousand dollars. That kind
• 21:10
  Speaker 11: of expected more affordable Tesla, which you know, if you
• 21:13
  Speaker 11: talk to me a year ago, we would have expected
• 21:14
  Speaker 11: in twenty twenty five, has been kicked back to you know,
• 21:18
  Speaker 11: a couple of years afterwards. Tesla is aiming to introduce
• 21:21
  Speaker 11: some low cost models, but I think, just like anything,
• 21:23
  Speaker 11: Tesla's a moving target.
• 21:24
  Speaker 5: It's pretty low cost. You can get into a model.
• 21:27
  Speaker 3: Why.
• 21:27
  Speaker 5: I think after all rebates are said and done, for
• 21:30
  Speaker 5: about thirty four grand, which you know it's not less
• 21:34
  Speaker 5: than thirty I know that's where they want to go,
• 21:36
  Speaker 5: but it's near as damn it to it. It's a
• 21:39
  Speaker 5: problem though, when the governor of California asks people please
• 21:42
  Speaker 5: not to charge your electric vehicles because the grid can't
• 21:45
  Speaker 5: handle it, right, I mean, can we really get much
• 21:48
  Speaker 5: bigger if we're already warning people not to charge.
• 21:51
  Speaker 11: I think I'm a you know, it's going to continue
• 21:54
  Speaker 11: to be I think a challenge for electric vehicles in
• 21:56
  Speaker 11: this particular year. That being said, California has had a
• 21:59
  Speaker 11: lot of batter storage, right and if you look at
• 22:01
  Speaker 11: how they're handling their grid, it's completely different than three
• 22:04
  Speaker 11: four years ago. Utilities have to get more I think structured.
• 22:08
  Speaker 11: I'm more concerned about EV charging on the public side
• 22:11
  Speaker 11: compared to the vva G element of it. But sohos California,
• 22:14
  Speaker 11: so goes the nation. They've also had a stagnation there
• 22:17
  Speaker 11: around twenty five percent EV shriff sale in the first
• 22:20
  Speaker 11: half of this year. That's pretty much where they were
• 22:21
  Speaker 11: at at the end of last year.
• 22:23
  Speaker 6: Really high, Yeah, it is high.
• 22:24
  Speaker 5: Are we seeing more chargers put in? I live in Scarsdale,
• 22:29
  Speaker 5: and I've had problems with multiple EV charging stations either
• 22:35
  Speaker 5: broken or too full. It would make sense to me
• 22:39
  Speaker 5: for every gas station owner to just put in a
• 22:41
  Speaker 5: couple chargers, but they don't seem to be doing it.
• 22:43
  Speaker 11: There is a challenge with what's called demand charges, which
• 22:46
  Speaker 11: is then pulling from the grid. It may theoretically sound
• 22:48
  Speaker 11: like a great idea, but if you're adding for those
• 22:50
  Speaker 11: grid upgrades and those additional costs, it might not be
• 22:52
  Speaker 11: worth it for the gas station operator. I think the
• 22:54
  Speaker 11: good news is a lot of the federal money hasn't
• 22:56
  Speaker 11: been spent. I think there's been a misconception that you know,
• 22:59
  Speaker 11: the five billion dollars the nationally V infrastructure program has
• 23:02
  Speaker 11: actually gone out. It's gone to states, and they have
• 23:04
  Speaker 11: to actually begin to deploy those chargers. So it's it's
• 23:07
  Speaker 11: still moving too slow. In terms of the consumer, they
• 23:10
  Speaker 11: want to see a charging network that they feel comfortable
• 23:12
  Speaker 11: with them. Until you get to that point, you can
• 23:14
  Speaker 11: hardly say that it's going well enough. You're also seeing
• 23:16
  Speaker 11: this kind of NACS North American Charging Standard transition, the
• 23:20
  Speaker 11: Tesla supercharging network that has also been stymied by all
• 23:23
  Speaker 11: the firings of that supercharging team. So it's messy and
• 23:26
  Speaker 11: bumpy here in the US. I think in terms of
• 23:28
  Speaker 11: good news, we can point out the Inflation Reduction Act
• 23:30
  Speaker 11: investments beginning to actually come online and bear fruit if
• 23:33
  Speaker 11: we want to talk about that too.
• 23:34
  Speaker 6: Samantha writes in and says, is hybrid the way to go?
• 23:37
  Speaker 11: Oh okay, Well, hybrid hybrids have done well in the
• 23:42
  Speaker 11: first half of this year. You're looking at Toyota even
• 23:44
  Speaker 11: aiming to go at full hybrid. I think plug in
• 23:46
  Speaker 11: hybrids have maybe been overhyped in terms of the kind
• 23:49
  Speaker 11: of focus and attention that's when you have both the
• 23:51
  Speaker 11: battery electric engine and the kind of gas engine. There's
• 23:54
  Speaker 11: not too many models besides the Jeep Wrangler P have
• 23:56
  Speaker 11: that does well, so wait and see. I think both
• 24:00
  Speaker 11: and hybrid are going to play a major role in
• 24:01
  Speaker 11: the US market going forward. I think with plug and hybrid,
• 24:04
  Speaker 11: you need them to get a lot better.
• 24:05
  Speaker 2: I think.
• 24:05
  Speaker 5: I mean, my wife had the Volvo XC nine d T,
• 24:08
  Speaker 5: a plug in hybrid for two years.
• 24:10
  Speaker 6: Doesn't have anymore.
• 24:11
  Speaker 5: That was a lease and we got we got out
• 24:14
  Speaker 5: of that lease. But she loved it because for the
• 24:17
  Speaker 5: most part she was just around town on electric power
• 24:20
  Speaker 5: the whole time. In fact, in the first year that
• 24:23
  Speaker 5: we had the car, she only filled it up with
• 24:25
  Speaker 5: gas twice.
• 24:25
  Speaker 11: Yeah, that's pretty remarkable.
• 24:27
  Speaker 5: But is that like a niche use case or I mean,
• 24:29
  Speaker 5: I feel like there's a lot of suburban that's.
• 24:31
  Speaker 11: Probably the idealized use case right of a smart PEF driver.
• 24:35
  Speaker 11: And I think when we've done our reports and analysis
• 24:37
  Speaker 11: on pvs, just as you have the more savvy BEV
• 24:39
  Speaker 11: drivers battery electric vehicle drivers to you know, the more
• 24:42
  Speaker 11: mass market, it doesn't mean that future PF drivers would
• 24:45
  Speaker 11: would drive that way. They might just say, oh, we're
• 24:47
  Speaker 11: going to fill it up with gas because we're used
• 24:48
  Speaker 11: to it with the hybrid experience. What we want to
• 24:51
  Speaker 11: see more of is in China, the all electric mode
• 24:54
  Speaker 11: is about twice the volume weighted average all electric mode
• 24:57
  Speaker 11: here in the US. So you want to see more
• 24:58
  Speaker 11: of those kind of like Toyota, you have ranged fifty
• 25:01
  Speaker 11: miles forty miles less of this like eighteen because then
• 25:04
  Speaker 11: are you really going to fill it up on electric.
• 25:06
  Speaker 5: My favorite hybrid that I've test driven recently for my podcast,
• 25:11
  Speaker 5: which is called Hot Pursuit exactly. You can download that
• 25:13
  Speaker 5: on Bloomberg dot com or wherever your podcast.
• 25:15
  Speaker 6: Of course.
• 25:16
  Speaker 5: I drove the Corvette E Ray really, which has the
• 25:20
  Speaker 5: six point two liters V eight behind you and an
• 25:22
  Speaker 5: electric motor on the front axle, and that eliminates any
• 25:28
  Speaker 5: kind of lag that you might get, like zero to ten.
• 25:30
  Speaker 5: So as a result, six hundred and fifty five host
• 25:33
  Speaker 5: power zero to sixty and two and a half seconds.
• 25:35
  Speaker 6: Wow, how often you need to do that? Of course?
• 25:37
  Speaker 6: Cory Canter, thanks so much for joining US.
• 25:39
  Speaker 4: Corey Canter, lead US Electric Vehicle analyst at BNF.
• 25:44
  Speaker 6: He's still talking.
• 25:45
  Speaker 4: I'm not going there, but these guys can go out
• 25:47
  Speaker 4: and talk about it all they want, you know, but
• 25:49
  Speaker 4: maybe I'll go hybrid at some point.
• 25:51
  Speaker 5: I think it's the way to go. I think it's
• 25:53
  Speaker 5: the way forward for now, until we deal with the
• 25:55
  Speaker 5: grid and the charging issues. You know, depends on your
• 25:59
  Speaker 5: specific use case.
• 26:00
  Speaker 6: You're not driving the Volvo anymore.
• 26:01
  Speaker 5: Way, No, we switched over to uh. I'm actually I
• 26:05
  Speaker 5: wish we'd kept it. I'm a little bit disappointed.
• 26:07
  Speaker 6: All right, we have to figure that out.
• 26:10
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 26:14
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• 26:17
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• 26:20
  Speaker 2: live on Amazon Alexa from our flagship New York station,
• 26:23
  Speaker 2: just say Alexa playing Bloomberg eleven thirty.
• 26:28
  Speaker 4: We're here in our Bloomberg Interactive Broker Studio. We're streaming
• 26:30
  Speaker 4: live on Youtubes. To head over to that internet thing YouTube,
• 26:33
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• 26:36
  Speaker 4: We have a season professional like a trader investor, like
• 26:39
  Speaker 4: a person who does this stuff for a living, in
• 26:41
  Speaker 4: studio Frank Moncam Senior Portfolio Manager and Timo in our
• 26:44
  Speaker 4: Bloomberg Interactive Broker Studio.
• 26:47
  Speaker 6: Frank, what are you doing? In this market. Where do
• 26:49
  Speaker 6: you see opportunities today?
• 26:50
  Speaker 4: I mean, I got the FEDS going out to Wyoming
• 26:52
  Speaker 4: or something and they're gonna have some economists out there.
• 26:55
  Speaker 6: What do you how are you approaching this market these days?
• 26:58
  Speaker 10: Well, thanks thanks for having me on today. You know,
• 27:02
  Speaker 10: I think that you know, the FED here is is
• 27:05
  Speaker 10: probably getting everything he needs here to be able to
• 27:08
  Speaker 10: pivot a little bit into into the easing cycle. We
• 27:11
  Speaker 10: were looking at is just trying to be mindful of
• 27:13
  Speaker 10: the volatility. It's still plague in markets here. I mean,
• 27:17
  Speaker 10: we get into this Jackson Hole meeting at the end
• 27:20
  Speaker 10: of the week with a FED that's basically going to
• 27:22
  Speaker 10: look at you know, what's going on in finishing conditions,
• 27:25
  Speaker 10: right obviously we know to September rate cut that's not
• 27:28
  Speaker 10: baked ten and for for for obvious reasons, in plats
• 27:32
  Speaker 10: come down. We've seen this decceleration and growth. You know,
• 27:35
  Speaker 10: we had a little bit of an NFP scare here,
• 27:38
  Speaker 10: but you know, we got we got to remind remind
• 27:40
  Speaker 10: ourselves that this market has been super bowl though in
• 27:42
  Speaker 10: terms of pricing. You know, the easing cycle. We went
• 27:45
  Speaker 10: from seven cuts in the first quarter yeh to about
• 27:47
  Speaker 10: three and a half. I mean it was five and
• 27:49
  Speaker 10: a half two weeks ago. You know, I think one
• 27:52
  Speaker 10: thing I really want to watch is the FED is
• 27:54
  Speaker 10: really not going to you know, come out with anything
• 27:56
  Speaker 10: really decisive as far as the pace of right cuts
• 27:59
  Speaker 10: between nine end of the year. But it's mostly there
• 28:02
  Speaker 10: the tone with which they describe the current environment. So
• 28:06
  Speaker 10: what I want to keep my eyes on really is UH,
• 28:09
  Speaker 10: what they're going to say about UH financial conditions easing
• 28:12
  Speaker 10: UH and potentially our star right and you know, it's
• 28:16
  Speaker 10: it's it's really one of those things where in terms
• 28:19
  Speaker 10: of what we're seeing in the markets and how we
• 28:20
  Speaker 10: should be positioning with with this spread meeting and and
• 28:23
  Speaker 10: also the d n C. Right, there's there's there's a
• 28:25
  Speaker 10: couple of vital catalysts that are on that kind of
• 28:29
  Speaker 10: this week. It's it's really to think about the fact
• 28:32
  Speaker 10: that we're at a very liquid, you know market right now.
• 28:36
  Speaker 10: I was joking with friends of the weekend saying, you know,
• 28:39
  Speaker 10: the liquidity has migrated away from capital markets into into
• 28:42
  Speaker 10: rose and at this time of the.
• 28:44
  Speaker 6: Year, it's typical.
• 28:46
  Speaker 10: So you know, the the the NFB print print for
• 28:50
  Speaker 10: for August is going to be very critical. My my, my,
• 28:53
  Speaker 10: view in this market is that the way that we've
• 28:55
  Speaker 10: seen the Vics kind of retrace so quickly, to me,
• 28:59
  Speaker 10: it's not really a sign a healthy market. So I
• 29:01
  Speaker 10: continue to want to be watchful of volatility ahead of
• 29:04
  Speaker 10: us with the election cycle, with a geopolitical cycle, and
• 29:08
  Speaker 10: I think with the Vicks having collapsed basically from sixty
• 29:12
  Speaker 10: five to about sub fifteen today, I think it's an
• 29:15
  Speaker 10: opportunity to look for some downslaw protection again as we
• 29:18
  Speaker 10: get into the fall.
• 29:19
  Speaker 12: You know, Frank, you mentioned that sort of typical August
• 29:21
  Speaker 12: liquidity problem that we've run into a million times before.
• 29:24
  Speaker 12: Paul and I were talking about it before. Is that
• 29:27
  Speaker 12: the main story of that correction we saw from you know,
• 29:30
  Speaker 12: the first half of August that in the carry trade.
• 29:33
  Speaker 6: Was there anything else more there?
• 29:35
  Speaker 12: Do you think, you know, we're back almost.
• 29:36
  Speaker 5: To where we were before that that really nasty sell off.
• 29:39
  Speaker 10: Yeah, I think definitely. I mean it had to do
• 29:42
  Speaker 10: with it. But I also think that, you know, I've
• 29:44
  Speaker 10: been on the record saying that you know, you know,
• 29:46
  Speaker 10: protection was really really cheap. I thought volatility was cheap.
• 29:48
  Speaker 10: I thought, you know, skew was really cheap. It did materialize,
• 29:52
  Speaker 10: it was shortly, but it did materialize. But to your point,
• 29:54
  Speaker 10: I think there's also the fact that the market is
• 29:56
  Speaker 10: really over extending to the to the to the upside
• 29:59
  Speaker 10: in terms of positioning, right, I mean, positioning was super overstretched,
• 30:03
  Speaker 10: not just for the broader market, but also for you know,
• 30:06
  Speaker 10: within the mega megacap tech sector. And you know, whenever
• 30:10
  Speaker 10: you get you get to these levels, even with a
• 30:12
  Speaker 10: bullish market, you're kind of due for a bit of
• 30:14
  Speaker 10: a of correction. And and it's funny when the market
• 30:18
  Speaker 10: is is really overextended on technicals, which was the case,
• 30:21
  Speaker 10: because positioning is a technical indicator. All it takes is
• 30:24
  Speaker 10: just one little technical place to happen for things to unravel.
• 30:28
  Speaker 10: And I think that's what took place in addition to
• 30:31
  Speaker 10: you know the obviously the the the GPUI carry onlind
• 30:36
  Speaker 10: and and also just you know, the SAM rule has
• 30:38
  Speaker 10: has been triggered for a for a lot of augos
• 30:40
  Speaker 10: out there that that trade around these types of signals.
• 30:43
  Speaker 10: I mean, all these things kind of all happened at
• 30:45
  Speaker 10: the same time and in a period of time where
• 30:48
  Speaker 10: the liquidity is very thin, So you know, I think
• 30:50
  Speaker 10: it made a lot of sense for the market to
• 30:51
  Speaker 10: pull back the way it did.
• 30:52
  Speaker 4: How about on the commodities. I mean a lot of
• 30:55
  Speaker 4: people to say buy gold and short everything else. What
• 30:58
  Speaker 4: I mean, you know, Mike McGall and I'm coding.
• 31:00
  Speaker 10: Yeah, sure, yeah, Mike, Mike's Mike's a front I you know,
• 31:05
  Speaker 10: I it's hard to disagree with that, right, I mean,
• 31:07
  Speaker 10: when you look at the commodities complex where we are
• 31:09
  Speaker 10: right now, when you look at things like oil and copper,
• 31:13
  Speaker 10: you're still getting a lot of mixed signals. You know,
• 31:15
  Speaker 10: for the take the case of oil for instance, you know,
• 31:18
  Speaker 10: we we've we've got we've stayed into this range on
• 31:21
  Speaker 10: let's use brent as a as a benchmark, between seventy
• 31:23
  Speaker 10: five and ninety dollars a bow, and you can you
• 31:27
  Speaker 10: can clearly see that it's it's it's it's a range
• 31:30
  Speaker 10: that's that's been basically kept intact because you've got offsetting caalysts.
• 31:34
  Speaker 10: So it's really market that's really.
• 31:36
  Speaker 6: Hard to read.
• 31:37
  Speaker 10: On the one side, you don't really want to short
• 31:38
  Speaker 10: it because there's a cycular shortage of investment and crewd
• 31:43
  Speaker 10: and all that stuff. But it's cyclical, is really fair
• 31:46
  Speaker 10: fairly bearish, to be honest with you, And you know, opek,
• 31:49
  Speaker 10: Now the OPEC put to me, is getting softer and
• 31:52
  Speaker 10: softer and moving lower and lower. I think the Saudis
• 31:55
  Speaker 10: need cash. I mean there's a little bit of a
• 31:56
  Speaker 10: fiscal distress in Saudi's right now. I mean they've run
• 32:00
  Speaker 10: they've only run a fiscal surplus, you know one of
• 32:02
  Speaker 10: the last ten years, says a lot. So for them
• 32:05
  Speaker 10: now it's it's no longer trying to fight you know,
• 32:07
  Speaker 10: the the you know, the flat price as much as
• 32:09
  Speaker 10: they used to. But when we look at the market
• 32:12
  Speaker 10: like gold, you know, it's really all starts, you know,
• 32:14
  Speaker 10: being online. You know, there's there's I think there's additional
• 32:16
  Speaker 10: momentum here with central banks continue to buy. You know,
• 32:19
  Speaker 10: this Chinese I'm hearing are kind of looking for a
• 32:22
  Speaker 10: little bit of a pull back, you know, ten to
• 32:24
  Speaker 10: fifteen percent to probably add add more, you know, the
• 32:28
  Speaker 10: PBOC that is, which is the main buyer in this market.
• 32:31
  Speaker 10: So you know, gold looks really really good, and only
• 32:33
  Speaker 10: thing there it's it's it's a bit it's a slightly
• 32:35
  Speaker 10: overextended to be upside, but there could be momentum there.
• 32:38
  Speaker 10: So I think the strategy really in commodities is I
• 32:41
  Speaker 10: would want to ride this momentum and and you know,
• 32:44
  Speaker 10: potentially it keeps on dry powder on the side to
• 32:46
  Speaker 10: add on dips and also just just continue to look
• 32:49
  Speaker 10: for a relative value of dis locations within commodities. You know,
• 32:52
  Speaker 10: you know oil versus gold as in bullish bullish gold
• 32:57
  Speaker 10: kind of bearish or oil. There is these kind of
• 32:59
  Speaker 10: RB plays, and you know gold versus copper also. Yeah,
• 33:04
  Speaker 10: so you know, I think I think oil gold here
• 33:07
  Speaker 10: is the you know, the main game in town, and
• 33:11
  Speaker 10: the way to play really is to perhaps look for
• 33:13
  Speaker 10: dips and look for ob players versus other commodities.
• 33:16
  Speaker 3: Yeah.
• 33:16
  Speaker 12: To get back to the FED for a minute, you know,
• 33:18
  Speaker 12: I'm looking at our world interest rate probability function. It
• 33:21
  Speaker 12: basically just susses out how many interest rate cuts the
• 33:25
  Speaker 12: Fed funds futures traders are expecting.
• 33:27
  Speaker 6: It's look at it, like three and a half, maybe
• 33:30
  Speaker 6: almost four cuts this morning.
• 33:33
  Speaker 12: Yeah, yeah, by the end of you know, and we
• 33:34
  Speaker 12: only have three meetings coming up, so that's even thinking
• 33:37
  Speaker 12: people are thinking we'll get a fifty basis points at
• 33:40
  Speaker 12: one of them, I guess. But what's the risk there,
• 33:42
  Speaker 12: I mean, is the is the market in Fed fund's
• 33:45
  Speaker 12: futures just bracing for more bad eco news? And is there,
• 33:49
  Speaker 12: you know, a risk one way or the other that
• 33:50
  Speaker 12: they'll get this wrong.
• 33:52
  Speaker 10: Yeah, I you know, I thought five and a half
• 33:55
  Speaker 10: cuts two weeks ago was over stretched. In fact, we're
• 33:58
  Speaker 10: we're kind of we kind of took the other side
• 33:59
  Speaker 10: of that, which is worked out so far. I mean
• 34:01
  Speaker 10: we're down to three point eight that's roughly almost four
• 34:03
  Speaker 10: cuts between and the end of the year. I think
• 34:06
  Speaker 10: the real wager here is around the August jobs data.
• 34:11
  Speaker 10: Right if we were to break the one hundred k
• 34:15
  Speaker 10: jobs mark and the unemployment rate to take up maybe
• 34:18
  Speaker 10: to four point four percent or four point five percent,
• 34:20
  Speaker 10: and I think, you know, there's a chance that we
• 34:24
  Speaker 10: could get a fifty basis point cut in September. And
• 34:28
  Speaker 10: I think what the market is really getting at here
• 34:30
  Speaker 10: is that if we get fifty in September, we're probably
• 34:31
  Speaker 10: going to get fifty on the next one because the
• 34:33
  Speaker 10: Fed then realizes that maybe it's a little bit of
• 34:35
  Speaker 10: mind curve. So I think this whole wager is around
• 34:38
  Speaker 10: this August NFP, which my my view on that is
• 34:44
  Speaker 10: based on the seasonality of the data. I think the
• 34:46
  Speaker 10: July print could could easily have been it could have
• 34:49
  Speaker 10: easily been a bit of a an out liar here
• 34:52
  Speaker 10: because of seasonality right.
• 34:55
  Speaker 6: In Houston to correct, and then some of the heat waves.
• 34:57
  Speaker 10: There's been a lot of you know, activities being canceled
• 35:00
  Speaker 10: in the summer because of heat waves in a couple
• 35:01
  Speaker 10: of states. So that's all playing into that. So I
• 35:04
  Speaker 10: think it's one of those things where it could be
• 35:06
  Speaker 10: kind of almost binary, where we either get the fifty
• 35:08
  Speaker 10: to fifty twenty five, which gets you to the to
• 35:10
  Speaker 10: the what you know, what works is w rb S
• 35:13
  Speaker 10: pricing right now, or we might even get to a
• 35:15
  Speaker 10: point where we only get one or two cuts, right.
• 35:17
  Speaker 10: It could be one of those things where it's kind
• 35:19
  Speaker 10: of if if we realize July was a blip and
• 35:22
  Speaker 10: we get it one, we might get it one and
• 35:23
  Speaker 10: done with. I FED just makes an adjustment cuts because
• 35:26
  Speaker 10: I think this thing is super telegraphed. They can't really
• 35:28
  Speaker 10: backtrack on the September cut. I think it was spoop markets,
• 35:31
  Speaker 10: which is not what the FED wants to do. So
• 35:33
  Speaker 10: I think it might just deliver a twenty five and
• 35:35
  Speaker 10: kind of wait and see post election if that's if
• 35:38
  Speaker 10: we get a strong or decent NFB, you know in
• 35:42
  Speaker 10: the early.
• 35:43
  Speaker 12: So no taking off on the Friday's payroll day. No,
• 35:48
  Speaker 12: no summer Friday. Summer Fridays are over.
• 35:51
  Speaker 4: I'm for me, all right, Frank, thanks so much for
• 35:53
  Speaker 4: joining us. Frank Monham, he's a senior portfolio manager and
• 35:55
  Speaker 4: then team off. This whole money management thing doesn't work
• 35:57
  Speaker 4: after you you get a voice for radio. I mean
• 36:00
  Speaker 4: that's like, I mean incredible. I just told my producer,
• 36:03
  Speaker 4: let's get this guy in right.
• 36:05
  Speaker 6: In our Bloomberg Interactive Brokers studio. We appreciate getting some
• 36:08
  Speaker 6: of his time.
• 36:10
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 36:14
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• 36:17
  Speaker 2: Android Otto with the Bloomberg Business. You can also listen
• 36:21
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• 36:24
  Speaker 2: Just Say Alexa playing Bloomberg eleven thirty.
• 36:28
  Speaker 4: Paul Swynn here and Michael Reagan sitting and for Alex
• 36:30
  Speaker 4: Steele said, day, Stay Lauder, el's a ticker symbol. Stocks
• 36:35
  Speaker 4: down like thirty five percent that year to date turnaround
• 36:39
  Speaker 4: change in management. Red Brown Joints earnings reporter for Bloomberg News,
• 36:42
  Speaker 4: read what's going on with that stay Launder?
• 36:44
  Speaker 6: Yeah?
• 36:44
  Speaker 1: I think today you know, the highest level is just
• 36:47
  Speaker 1: like this is a clean slate I think for this company.
• 36:49
  Speaker 1: We saw obviously CEO stepping away at the end of
• 36:52
  Speaker 1: this year. CFO is actually also leaving on the same time,
• 36:56
  Speaker 1: so you know, a new management team. And also if
• 36:58
  Speaker 1: we look at the guidance that they gave out for
• 36:59
  Speaker 1: their fist with twenty twenty five today, it came in
• 37:02
  Speaker 1: much lower than what an elks we're expecting and else
• 37:05
  Speaker 1: we're expecting to see constant currency growth. They were expecting
• 37:08
  Speaker 1: to see earnings about the whole dollar higher than what
• 37:11
  Speaker 1: the company guided for. So again just kind of setting
• 37:14
  Speaker 1: a low bar for this company going forward, clean slate,
• 37:17
  Speaker 1: let's go from here, I think is kind of the
• 37:18
  Speaker 1: message that they're going to be trying to change the
• 37:21
  Speaker 1: narrative to going forward.
• 37:23
  Speaker 12: Red How big of a deal is China to Estay Lauder.
• 37:26
  Speaker 12: I know they have a pretty decent sized business. There
• 37:28
  Speaker 12: was that part of the sort of disappointing results this quarter.
• 37:31
  Speaker 1: Yeah, I mean, I think that is the main culprit
• 37:33
  Speaker 1: of the issues that they're they're going through. I mean,
• 37:35
  Speaker 1: we've seen throughout this earning season a lot of these companies,
• 37:38
  Speaker 1: especially in the luxury space, that have tied their fortunes
• 37:40
  Speaker 1: to China are paying the price of that at the moment.
• 37:44
  Speaker 1: So China came in really soft again this quarter and
• 37:47
  Speaker 1: als we're expecting for around three or four percent growth
• 37:50
  Speaker 1: in the Asia region, which is dominated by China obviously,
• 37:52
  Speaker 1: and what they saw was a four percent contraction in
• 37:55
  Speaker 1: that market. So yeah, again paying the paying the price
• 37:59
  Speaker 1: for the investment in that region. As China sales demand
• 38:05
  Speaker 1: for these luxury products, whether it's LVMH's goods or you know, fashion,
• 38:09
  Speaker 1: anything like that. And then also skincare, fragrance, things like
• 38:12
  Speaker 1: that are also weak as the demand waivers there.
• 38:16
  Speaker 4: Just reading some of the reporting on this here company
• 38:19
  Speaker 4: in the midst of a turnaround, I'm not sure necessarily
• 38:21
  Speaker 4: what it has to be turned around, but the stock's
• 38:22
  Speaker 4: down thirty five percent, so that tells me that a
• 38:25
  Speaker 4: year to date, So that tells me whatever they're doing
• 38:27
  Speaker 4: ain't working.
• 38:28
  Speaker 6: So when you get it, presumably a new management team
• 38:30
  Speaker 6: coming in.
• 38:30
  Speaker 4: Do they want somebody from inside or maybe some fresh
• 38:34
  Speaker 4: set of eyes coming from the outside.
• 38:36
  Speaker 6: What's the thinking there?
• 38:37
  Speaker 1: I think you know, both the CEO CFO have been
• 38:41
  Speaker 1: there for over a decade now, so I mean it's
• 38:44
  Speaker 1: always good to have somebody within the company knows the company,
• 38:47
  Speaker 1: but it might be time for some fresh eyes.
• 38:50
  Speaker 6: The company has.
• 38:51
  Speaker 1: Missed guidance or cut guidance several times over the last
• 38:54
  Speaker 1: few years. Analysts start to get when that happens, analysts
• 38:57
  Speaker 1: starts to feel they starts to lose comp It's in
• 39:00
  Speaker 1: in that management group's ability to understand or grapple with
• 39:04
  Speaker 1: the business dynamics at the moment. So I think there
• 39:07
  Speaker 1: could be some calls for an outside look. The company
• 39:09
  Speaker 1: says they're already undertaking the next CEO search. Obviously they're
• 39:14
  Speaker 1: going to say they're they're considering internal and external candidates.
• 39:16
  Speaker 1: But yeah, definitely might be time for a for a
• 39:19
  Speaker 1: fresh look.
• 39:20
  Speaker 12: I'm smirking here a little bit looking back on a
• 39:23
  Speaker 12: story we had out in February on Esta Lauter, where
• 39:27
  Speaker 12: CEO Fabrizio Freda said, I'm not going anywhere precedent, but Red,
• 39:33
  Speaker 12: you know, I don't know how much of an expert
• 39:34
  Speaker 12: you are on the beauty care market and skincare, but
• 39:38
  Speaker 12: you know, are they an outlier here? As far as
• 39:41
  Speaker 12: you know, you go through a million earnings reports every
• 39:43
  Speaker 12: quarter year? Are they are they an outlier as far
• 39:46
  Speaker 12: as that you know, consumer discretionary space or are we
• 39:50
  Speaker 12: seeing similar stories from other you know, companies that depend
• 39:54
  Speaker 12: on I don't know whether it's beauty care or you know,
• 39:57
  Speaker 12: high fashion, you know, is is there.
• 40:00
  Speaker 5: A theme here?
• 40:01
  Speaker 1: I don't know what gave it away that I'm not
• 40:02
  Speaker 1: ANX but you have good skin. No, I don't think
• 40:07
  Speaker 1: they're an outlier. Look, I think it's you see something
• 40:11
  Speaker 1: for me. The similar trend that I'm picking up across
• 40:12
  Speaker 1: all of the retail, even you know, something as far
• 40:14
  Speaker 1: away as home depot is that people are focused on needs,
• 40:18
  Speaker 1: not once and this luxury space skincare especially.
• 40:22
  Speaker 5: Is a want, it's not a need.
• 40:24
  Speaker 1: A fragrance is a want, not a need. So consumers
• 40:26
  Speaker 1: are cutting back where they can, whether it's you know,
• 40:30
  Speaker 1: fixing your house up or yeah, making yourself appear a
• 40:32
  Speaker 1: little bit better, it doesn't matter. That's that's kind of
• 40:36
  Speaker 1: the the macro pressure is gonna win out in this
• 40:38
  Speaker 1: this this this scenario.
• 40:39
  Speaker 4: But as our good friend Samantha writes in Alex Steele
• 40:43
  Speaker 4: has always told us that you have to invest in
• 40:46
  Speaker 4: your face, which she does and Michael John Tucker and
• 40:49
  Speaker 4: I do not.
• 40:50
  Speaker 12: So I mean, clearly, my face is a value stock
• 40:54
  Speaker 12: right now.
• 40:55
  Speaker 4: But all I know is during the lockdown across the street,
• 40:59
  Speaker 4: the Spore store packed.
• 41:00
  Speaker 6: Yeah, I mean, no matter what, people need to get
• 41:03
  Speaker 6: that stuff.
• 41:05
  Speaker 12: Yeah, I mean, I guess in the pandemic people had
• 41:07
  Speaker 12: a few extra bucks they weren't spending on concerts and movies.
• 41:10
  Speaker 6: It was just it shocked me how strong that category is.
• 41:14
  Speaker 1: Yeah, and then right after the pandemic as well, they
• 41:16
  Speaker 1: did really well because people were like, I'm.
• 41:18
  Speaker 6: Emerging from the world.
• 41:19
  Speaker 1: I want to make sure, Yeah, I haven't shaped my
• 41:21
  Speaker 1: face in six months, I might as well get moisturized
• 41:24
  Speaker 1: or something.
• 41:24
  Speaker 6: But yeah, it's there.
• 41:25
  Speaker 1: There's trends have just fallen off now and they haven't
• 41:28
  Speaker 1: really returned to like pre pandemic.
• 41:29
  Speaker 6: Levels of growth.
• 41:30
  Speaker 10: You know, excuse me.
• 41:32
  Speaker 1: Este later was a was a company that was like
• 41:34
  Speaker 1: really you know, flying into the pandemic and through the pandemic.
• 41:37
  Speaker 1: And then yeah, just the the fall off of China
• 41:39
  Speaker 1: and then the United States as well is kind of
• 41:42
  Speaker 1: not getting a lot of attention at the moment. But
• 41:43
  Speaker 1: like US sales contracted as well this quarter. It's maybe
• 41:46
  Speaker 1: hidden because there's been so much emphasis on China. Yeah,
• 41:49
  Speaker 1: but those are the two biggest markets and both are
• 41:50
  Speaker 1: are are underperforming I think at the moment.
• 41:52
  Speaker 12: So it still seems like China's consumer economy is a
• 41:56
  Speaker 12: bit of a black box to analyst, Do you find
• 41:59
  Speaker 12: a lot of surprise is either upside or downside on
• 42:02
  Speaker 12: companies as far as their their business in China goes.
• 42:04
  Speaker 1: Yeah, it's hard to get a read because if you think,
• 42:06
  Speaker 1: like there was so much worry and again jumping around here,
• 42:10
  Speaker 1: but I just connecting all the different kind of earnings threads,
• 42:13
  Speaker 1: Like there was so much worry going into Apple's report
• 42:15
  Speaker 1: of like where where's the Chinese consumer? Are they buying iPhones?
• 42:18
  Speaker 1: Things like that? You know, it's the same dollar that's
• 42:19
  Speaker 1: going towards these things. But yeah, it's really hard to
• 42:23
  Speaker 1: get a read because Apple well performs, Esday Lauder underperforms.
• 42:27
  Speaker 6: Yeah, it is.
• 42:27
  Speaker 1: It is just a kind of you know, most of
• 42:28
  Speaker 1: the analysts, they said here in New York, they're just
• 42:30
  Speaker 1: looking at data points, so it is kind of a
• 42:31
  Speaker 1: tough read.
• 42:32
  Speaker 4: I'm looking at the stock of Esday Lauder and looking
• 42:34
  Speaker 4: at the chart here at Pete at about three hundred
• 42:36
  Speaker 4: and seventy dollars literally on the last trading day of
• 42:39
  Speaker 4: twenty twenty one, down seventy five percent since then, Wow,
• 42:42
  Speaker 4: from three seventy to here we are at ninety four,
• 42:45
  Speaker 4: So a big move here, And I guess the next
• 42:48
  Speaker 4: you know, in Vidia is coming up.
• 42:50
  Speaker 6: That's still not for another week or so, right.
• 42:52
  Speaker 5: Yeah, that's next Wednesday.
• 42:53
  Speaker 6: I mean, they're so late in the earning cycle. I
• 42:56
  Speaker 6: don't know why. I'm sure there's a story there, but man,
• 42:58
  Speaker 6: it feels like the market's going to be hanging on
• 43:01
  Speaker 6: that one.
• 43:01
  Speaker 4: Are the expectations as high as they always have been
• 43:04
  Speaker 4: for in video?
• 43:06
  Speaker 1: Yeah, they will, of course, they will be flying extremely
• 43:09
  Speaker 1: high into that that report. And then if we think
• 43:12
  Speaker 1: kind of about the AI story of this earning season
• 43:15
  Speaker 1: is that people have been maybe investing a little bit
• 43:17
  Speaker 1: too much. We're not seeing the growth that we would
• 43:20
  Speaker 1: have liked out of those investments. But of course in
• 43:21
  Speaker 1: videos on the other side of that, they're one, they're
• 43:23
  Speaker 1: the ones receiving a lot of that investment. So could
• 43:26
  Speaker 1: be again kind of the outperformer of of of that group.
• 43:30
  Speaker 1: But yeah, definitely very high expectations. And yeah, with high
• 43:33
  Speaker 1: expectations there's high risk as well.
• 43:35
  Speaker 12: Anything else on your radar read that you're looking for.
• 43:38
  Speaker 12: You know, we're in that kind of weird period for
• 43:40
  Speaker 12: earnings where you only get the stragglers. Is there anyone
• 43:42
  Speaker 12: else we should really keep an eye on.
• 43:44
  Speaker 1: Yeah, I mean, it's just it's it's continue with the
• 43:46
  Speaker 1: retail stocks over the next week especially.
• 43:49
  Speaker 6: I'm just trying to think.
• 43:50
  Speaker 1: There's like a thousand names running through my mind now.
• 43:52
  Speaker 4: But the retailers, they tend to come late in the cycle. Yeah,
• 43:56
  Speaker 4: it'll be good, good read on the consumer. And then again,
• 43:59
  Speaker 4: as you mentioned that, the the Nvidia coming up, this
• 44:03
  Speaker 4: can be huge, not just for like Nvidia itself or
• 44:05
  Speaker 4: the tech stocks in general, but I think the market overall.
• 44:08
  Speaker 12: Yeah, it really seems like it's the will show us
• 44:10
  Speaker 12: the money phase of the AI craze right now, So
• 44:14
  Speaker 12: you know, you know, an end video might be the
• 44:16
  Speaker 12: outlier there.
• 44:16
  Speaker 6: But all right, we'll say on top of it, I'm
• 44:18
  Speaker 6: sure we'll be talking to you.
• 44:19
  Speaker 4: Red Red Brown, Ernie's reporter Bloomberg News, joining us live
• 44:21
  Speaker 4: here in our Bloomberg Interactive of Broker's studio here.
• 44:25
  Speaker 2: This is the Bloomberg Intelligence podcast, available on Apples, Spotify,
• 44:30
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• 44:33
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• 44:36
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