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Bloomberg Intelligence: Nvidia Earnings, Bank Merger · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 2: This is Bloomberg Intelligence with Alex Steinhl and Paul'sweeny.
0:14
Speaker 3: The real app performance has been in US corporate high yield.
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Speaker 4: Are the companies lean enough? Have they trimmed all the fats?
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Speaker 4: The semiconductor business is a really cyclical business.
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Speaker 2: Breaking market headlines and corporate news from across the globe.
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Speaker 3: Do investors like the M and A that we've seen?
0:30
Speaker 5: These are two.
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Speaker 3: Big time blue chip companies.
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Speaker 6: The window between the peak and cut changing super fast.
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Speaker 2: Bloomberg Intelligence with Alex Steinhl and Paul'sweeny on Bloomberg Radio.
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Speaker 4: Today's Bloomberg Intelligence Show, we dig inside the big business
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Speaker 4: stories impacting Wall Street and.
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Speaker 3: The global markets.
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Speaker 4: Each and every week, we provided that research and data
0:50
Speaker 4: on some of the two thousand companies and one hundred
0:52
Speaker 4: and thirty industries of our analysts cover worldwide. Today, we'll
0:55
Speaker 4: look at why restaurants are confronting a slowdown in consumer spending.
0:58
Speaker 4: Plus we'll discuss why home post sales fell for a
1:01
Speaker 4: fifth consecutive quarter. For first, we dive into earnings from
1:04
Speaker 4: the world's most valuable chip maker, in Nvidia reported fourth
1:07
Speaker 4: quarter revenue that sailed past analyst expectations. It also delivered
1:11
Speaker 4: another eye popping sales forecast for the current quarter. This
1:14
Speaker 4: is thanks to insatiable demand for Nvidia's artificial intelligence accelerators.
1:18
Speaker 4: For more, co hosts Emily Grafeyo and I were joined
1:20
Speaker 4: by Kunjohn Sabani, Bloomberg Intelligence Senior semiconductor analyst. We first
1:25
Speaker 4: asked for his take on in Nvidia's earnings results.
1:27
Speaker 7: Any earning surprise from Nvidia is no longer a surprise.
1:30
Speaker 7: We have come to sort of expect this to be
1:32
Speaker 7: a new norm. But there were a lot of positive
1:35
Speaker 7: reassuring things on the supply side. We saw supply coming
1:38
Speaker 7: up really strong. More importantly, supply getting diversified and the
1:43
Speaker 7: benefits for which we're seen in their gross margin, which
1:46
Speaker 7: beat the estimates. But more important was the assurance that
1:49
Speaker 7: demand continues to stay strong, and not just from the
1:52
Speaker 7: large cloud players. We all are aware of how much
1:55
Speaker 7: money they're spending, but demand strength was broad based across
1:58
Speaker 7: their enterprise. Customers are different verticals, so that really reassures us.
2:03
Speaker 7: For the twenty twenty four what did.
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Speaker 6: You make of the CEO's statement that Generative AI has
2:08
Speaker 6: hit the tipping point. I saw that headline, and I
2:11
Speaker 6: didn't actually really understand what that meant. So what did
2:14
Speaker 6: you think of that?
2:15
Speaker 7: I mean, look, it's really Jensen. If you have been
2:18
Speaker 7: following the company for the lat past ten years, at
2:20
Speaker 7: every junction, that's what his messaging always is in whatever
2:24
Speaker 7: they're working on. So but apart from that, I would really,
2:27
Speaker 7: you know, ask investors to look into the end data
2:30
Speaker 7: points rather than what just he's saying. I mean, he's
2:33
Speaker 7: a very important person right now, but we look at
2:35
Speaker 7: the end data points. The customers are really increasing their
2:38
Speaker 7: AI spen right the IT total capex budgets are increasing,
2:42
Speaker 7: but the AI portion within that is also increasing. And
2:45
Speaker 7: it's not just at the chip level. The contracts that
2:47
Speaker 7: they have with their software customers, even those customers are
2:50
Speaker 7: guiding up their revenue targets.
2:52
Speaker 3: Hey, Kun John, I love their customer list that they
2:55
Speaker 3: read off.
2:55
Speaker 4: It's kind of a who's who of Silicon Valley, you know, Facebook, Google,
2:58
Speaker 4: whatever their new names are.
3:00
Speaker 3: What's the next?
3:01
Speaker 4: Is there a next set of customers out there above
3:05
Speaker 4: and beyond kind of the household names that we all
3:07
Speaker 4: know that maybe they're targeting.
3:09
Speaker 7: Yes, an enterprise segment is sort of the new the
3:12
Speaker 7: next area that they're really targeting. Right, They already have
3:15
Speaker 7: the big large spenders, but now they want to diversify
3:19
Speaker 7: and expand the reach across enterprises. And the second big
3:23
Speaker 7: target now is sort of governments and sovereign governments and
3:27
Speaker 7: sovereign wells. Right, that's what they're targeting that they believe
3:30
Speaker 7: AI will be, you know, because of geopolitical and trade
3:34
Speaker 7: issues will be more regional and every big economy will
3:37
Speaker 7: need to spend on that.
3:38
Speaker 6: Are there any headwinds that investors need to be looking
3:41
Speaker 6: out for because I just looked on the A and
3:44
Speaker 6: R function on Bloomberg and there are zero cells for
3:48
Speaker 6: in video. There was one last thing from morning Star
3:50
Speaker 6: and now he's upgraded to a hold.
3:53
Speaker 8: Yeah.
3:53
Speaker 7: I mean, look, if you look at just what the
3:55
Speaker 7: data says, usually the stock price follows the analyst price.
4:00
Speaker 7: It seems here the price targets are following the stock pride.
4:03
Speaker 7: When we look at the fundamentals, right, there was really
4:06
Speaker 7: nothing that to highlight as a risk factor in the
4:09
Speaker 7: earnings and really in the near term for twenty twenty four.
4:12
Speaker 7: But if we were to form a bare thesis, a
4:14
Speaker 7: couple of things that would we would look at as
4:16
Speaker 7: risk factors for the long term. One is the China risk.
4:19
Speaker 7: We did see China revenue almost reduced by half versus
4:23
Speaker 7: three q in this quarter, right and we know this
4:26
Speaker 7: problem is not going away, if at all, getting worse.
4:28
Speaker 7: So right now they are easily able to offset what
4:31
Speaker 7: they could have shipped to China while shipping to other
4:34
Speaker 7: customers in US and other regions. But at some point
4:37
Speaker 7: when the demand supply sort of normalizes and the growth
4:40
Speaker 7: rates become more of a normal run rate, you know,
4:44
Speaker 7: this is taking out a bite out of that opportunity
4:47
Speaker 7: that they could have served in China. So that's one
4:49
Speaker 7: risk factor on the long term. The second being their
4:52
Speaker 7: largest customers, which are the cloud players, have started to
4:55
Speaker 7: design their own ships. So again this is far out,
4:58
Speaker 7: but at some point this still take a bite out
5:01
Speaker 7: of the apple that N media could have served.
5:03
Speaker 4: So that's kind of where I wanted to go, John,
5:05
Speaker 4: I mean, just the competitive environment. Can you explain why
5:08
Speaker 4: these guys are the only game in town? That seems
5:10
Speaker 4: odd to me.
5:11
Speaker 7: I mean, it's not by an accident. These guys were
5:14
Speaker 7: sort of the inventor, if you will, for the GPU.
5:17
Speaker 7: They have been working on a GPU for decades and
5:20
Speaker 7: out investing everyone being at the leading edge. So this
5:24
Speaker 7: was the same question when we talked about gaming and
5:26
Speaker 7: when we talked about crypto, right, the last two waves
5:28
Speaker 7: which drove the growth for this company. It was not
5:31
Speaker 7: by accident. They have been at this forefront of these
5:33
Speaker 7: new applications where the application suddenly realized, well, GPU is
5:38
Speaker 7: the best case compute platform, and that's why they adopted GP.
5:41
Speaker 7: Same thing what we're saying with AI. So this was
5:44
Speaker 7: not by accident. If you look at that R and
5:46
Speaker 7: D spend, which they guided to be growing by mid
5:49
Speaker 7: thirties next year, that's a significant amount of rn NE
5:52
Speaker 7: dollars they continue to spend and to keep again being
5:55
Speaker 7: at the leading edge of the next cycle of innovation.
5:58
Speaker 6: Can you talk a little bit also about the gaming
6:01
Speaker 6: revenue here, because I'm looking at your report you said
6:03
Speaker 6: gamings better than seasonal top line, But what was really
6:07
Speaker 6: driving that because I actually don't really know if I
6:09
Speaker 6: know anything about in Video's gaming involvement.
6:12
Speaker 7: Yeah, so the last quarter was if you look at
6:15
Speaker 7: typical seasonality, we we expected it to be a down
6:17
Speaker 7: quarter at least by mid single digits, but it came
6:21
Speaker 7: in flat right, So and the strength the reason driver
6:24
Speaker 7: for there was better demand for their RTX products. These
6:27
Speaker 7: are their gaming cards you know in dex stops and
6:30
Speaker 7: what gamers get. So this is what came in better
6:33
Speaker 7: than they had expected due to the holiday season. Now
6:35
Speaker 7: this is again a temporary move and sort of not
6:38
Speaker 7: no longer a big focus for investors, but that was
6:41
Speaker 7: still good to see that in a typical down seasonal
6:44
Speaker 7: quarters they were still able to do better than seasonality.
6:46
Speaker 4: Thanks to Kunjan Sobani, Bloomberg Intelligence Senior Semiconductor analyst, we
6:50
Speaker 4: move next to a big M and a deal in
6:52
Speaker 4: the banking industry. Earlier in a week, Capital Won agreed
6:54
Speaker 4: to buy Discover Financial Services in a thirty five billion.
6:57
Speaker 3: Dollars all stock deal.
6:59
Speaker 4: This will create the large US credit card company by
7:01
Speaker 4: loan volume. To discuss this deal and the latest and
7:04
Speaker 4: consumer finance space, co host Bailly Lipschaltz and I were
7:06
Speaker 4: joined by Ben Elliott. He's a consumer finance analyst for
7:09
Speaker 4: Bloomberg Intelligence. Well asked him what Capital One is thinking
7:12
Speaker 4: with its latest deal.
7:13
Speaker 1: So everything's driven by scale and the credit card business.
7:16
Speaker 1: And the big thought here from Capital One is that
7:19
Speaker 1: if they can acquire this sort of rare and valuable
7:22
Speaker 1: thing that Discover has, which is a discrete, proprietary payments network.
7:27
Speaker 1: Then they can sort of start to compete with the
7:29
Speaker 1: Visa and MasterCard on a much bigger scale over time,
7:32
Speaker 1: and they're paying a premium for it.
7:34
Speaker 9: Ben is the timing at all surprise just given kind
7:37
Speaker 9: of the issues that Discover had towards the end of
7:40
Speaker 9: twenty twenty three.
7:41
Speaker 1: It leaves Capital One with a potential legal overhang. The
7:45
Speaker 1: legal issues are not settled yet at Discover. They've had
7:48
Speaker 1: a couple of new issues that are sort of outside
7:50
Speaker 1: of the scope of of what they've been dealing with
7:52
Speaker 1: over the past couple of years. Discover's been talking about
7:55
Speaker 1: sort of a five hundred million dollar a year run
7:57
Speaker 1: rate of additional compliance expense. It's sort of a burden
8:00
Speaker 1: that Capital One is going to have to take on
8:02
Speaker 1: with this acquisition. But I think it's probably pretty well
8:05
Speaker 1: understood the scope of that, and I think it's it's
8:07
Speaker 1: probably priced into the deal.
8:09
Speaker 9: All right.
8:09
Speaker 4: So give us a sense of the size of Visa.
8:13
Speaker 4: I guess the Visa network, the master Card network, and
8:15
Speaker 4: now this new combined network. Is it competitive to Visa
8:19
Speaker 4: and MasterCard? I guess even amics, So.
8:21
Speaker 1: Historically it's completely non competitive. Visa and MasterCard together are about
8:27
Speaker 1: ten trillion in domestic US credit and debit card volume,
8:31
Speaker 1: and Discover is about five hundred and fifty billion. So
8:34
Speaker 1: it's always been this sort of the tiny, you know,
8:37
Speaker 1: red headed stepchild of the of the large payment networks.
8:39
Speaker 1: But you know, if you add to that Capital One's
8:42
Speaker 1: hundreds of billions of dollars of credit card loans and
8:45
Speaker 1: you sort of extrapolate future growth there, it has the
8:48
Speaker 1: potential to sort of compete more like an American Express,
8:51
Speaker 1: which is closer to one and a half trillion.
8:53
Speaker 9: Ben I feel like we can't talk about deals without
8:56
Speaker 9: the threat of regulatory scrutiny. What does this bring and
8:59
Speaker 9: what could the FTC raise any red flags about?
9:03
Speaker 1: Overall, this deal I think will be relatively sort of
9:07
Speaker 1: non offensive to regulators. Discover is historically not been very
9:11
Speaker 1: competitive with the large networks, so actually bringing sort of
9:14
Speaker 1: the power of Capital One to bear will make it
9:17
Speaker 1: more competitive with the large networks, as the potential to
9:20
Speaker 1: give customers a real sort of fourth alternative, whereas in
9:23
Speaker 1: the past you really only had one option, Right you
9:25
Speaker 1: get a Discover card, it only has one sort of
9:28
Speaker 1: set of rewards. It's got a relatively low credit line
9:31
Speaker 1: versus some of the other offerings. It doesn't have sort of,
9:34
Speaker 1: you know, high end travel rewards offerings. So I think
9:37
Speaker 1: if Capital One can start to issue some of its
9:39
Speaker 1: sort of higher end cards on the Discover network, that
9:42
Speaker 1: could be pro competitive and that might make the deal
9:45
Speaker 1: somewhat more attractive to regulators.
9:47
Speaker 9: Ben in terms of kind of what these credit cards
9:51
Speaker 9: offer Discover from my understanding, mainly cash back. Capital One
9:54
Speaker 9: has a range of some of.
9:55
Speaker 3: Those rewards cards.
9:56
Speaker 9: How does that impact potentially acquiring new customers, new users
10:00
Speaker 9: of for both companies or I guess the folded end company.
10:03
Speaker 1: Yeah, So I think that will make it a challenge
10:06
Speaker 1: for Capital One to issue some of its sort of
10:09
Speaker 1: high fee, high reward cards on the Discover network because
10:13
Speaker 1: historically the Discover network's only been used for a very
10:16
Speaker 1: limited cash back card with caps that I think it's
10:19
Speaker 1: like fifteen hundred dollars a quarter of cash back. So
10:21
Speaker 1: for your high spenders, people who are putting tens of
10:24
Speaker 1: thousands of dollars on a credit card, that's not a
10:26
Speaker 1: very attractive offering. So that means that the brand has
10:29
Speaker 1: not been sort of in their minds as you know,
10:32
Speaker 1: a potential credit card they med aquire. So Capital One
10:35
Speaker 1: is going to have to do some relatively heavy lifting.
10:37
Speaker 1: And you see that in what is a very modest
10:40
Speaker 1: run rate synergy assumption in their in their sort of
10:43
Speaker 1: deal model which only cuts back discovers marketing costs about
10:47
Speaker 1: ten percent. So you know, Capital One is going to
10:49
Speaker 1: have to do some pretty heavy marketing I think, to
10:52
Speaker 1: start to leverage that network on the credit card.
10:54
Speaker 3: Side, the American Express. What's the investment call there these days?
10:57
Speaker 8: Ben?
10:57
Speaker 3: What are investors thinking about MS?
11:00
Speaker 1: You know, MX is the super premium fashion of the
11:03
Speaker 1: highest spending sort of most financially sound customers. So that
11:08
Speaker 1: is a sort of a recession safe trade, if you will.
11:12
Speaker 1: So you know, when people are looking at the forward
11:15
Speaker 1: curve and they're seeing rate cuts, you know they're expecting
11:17
Speaker 1: a recession. Potentially they look at the AMS spender and
11:20
Speaker 1: think that this person will last the longest and have
11:23
Speaker 1: the sort of lowest level of charge offs through a
11:26
Speaker 1: potential recession. So that makes it very attractive. And additionally,
11:31
Speaker 1: MS has a ton of momentum in acquiring millennial and
11:35
Speaker 1: gen z high earning customers, which is the most valuable
11:39
Speaker 1: sort of wallet chair that's out there, and MX does
11:41
Speaker 1: it better than anyone else, so that also kind of
11:43
Speaker 1: makes them attractive to investors.
11:45
Speaker 4: What is the big competitive overview of kind of consumer finance?
11:49
Speaker 4: Are we using more credit, more debit, more venmo what
11:54
Speaker 4: a kind of the big trends there.
11:56
Speaker 1: Yeah, so there's been a huge growth in credit volume
12:00
Speaker 1: over the last couple of years, especially sort of in
12:02
Speaker 1: the post pandemic period. There's been even more of a
12:05
Speaker 1: secular shift away from cash as for the various sort
12:09
Speaker 1: of channels. Right, credit is really attractive to higher end consumers,
12:14
Speaker 1: people with more discretionary income, because that offers the huge
12:18
Speaker 1: valuable reward potential. And then if you step down to
12:21
Speaker 1: debit cards, there's some cash back, but for the most part,
12:24
Speaker 1: not a lot of rewards there, but there's some convenience.
12:27
Speaker 1: And then sort of the lower tier kind of fintech
12:30
Speaker 1: payments systems, you know, they offer they're sort of targeted
12:33
Speaker 1: at sort of youngers or gen Z lower spenders, and
12:37
Speaker 1: they are the people who are exploring things like buy now,
12:39
Speaker 1: pay later, which is sort of a way to give
12:41
Speaker 1: credit to people who don't really have a lot of
12:43
Speaker 1: credit history or substantial earnings.
12:45
Speaker 4: History thanks to Ben Elliott, Bloomberg Intelligence consumer finance analysts
12:49
Speaker 4: coming up a conversation with Geens Soroka, Executive director of
12:52
Speaker 4: the Port of Los Angeles, on why cargo volumes are
12:54
Speaker 4: picking up. You're listening to Bloomberg Intelligence on Bloomberg Radio,
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Speaker 3: One hundred and thirty industries.
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13:26
Speaker 4: Let's turn out to the restaurant business. Restaurants are confronting
13:29
Speaker 4: a slow down in consumer spending. January same store sales
13:33
Speaker 4: fell across the restaurant industry, tough year of a year
13:35
Speaker 4: comparisons and cold weather.
13:36
Speaker 3: Hurt customer traffic.
13:38
Speaker 4: Co host Belly Lipschutz and I were joined by Michael Halen,
13:40
Speaker 4: Bloomberg Intelligence Senior Restaurant and Food service analyst.
13:44
Speaker 3: We asked them about some.
13:44
Speaker 4: Of the trends coming out of the pandemic and how
13:47
Speaker 4: much people are spending on restaurants these days.
13:49
Speaker 10: Yeah, you know, obviously there's a couple of tough years
13:52
Speaker 10: due to the pandemic, mainly for the full service restaurants,
13:55
Speaker 10: due to you know, limitations on hours and different regulations
14:00
Speaker 10: on indoor dining rooms. Also just apprehension by customers. But
14:06
Speaker 10: there was a pretty strong bounce back in restaurant sales
14:09
Speaker 10: in twenty twenty two, and then they kind of got
14:11
Speaker 10: hit with that margin pressure, right, twenty twenty three started
14:15
Speaker 10: off pretty strong in early twenty twenty three, or lapping Omicron,
14:19
Speaker 10: so the comparisons were very easy. So early twenty twenty
14:23
Speaker 10: three was very good. Sales started to slide in the
14:27
Speaker 10: second half of last year, and now that they're lapping
14:30
Speaker 10: those strong comps from a year ago. We saw some
14:33
Speaker 10: real weakness in January and so far in early February.
14:38
Speaker 9: And when I look at Michael, when I go to
14:40
Speaker 9: the fast food restaurants, when I do eat out ball,
14:42
Speaker 9: I'm a cheap guy. Prices are high. I go to
14:45
Speaker 9: Chipotle and it's cost me seventeen bucks. How do price
14:49
Speaker 9: hikes in expanding margins. How are those things playing out
14:54
Speaker 9: and how are those going to continue to play out
14:56
Speaker 9: in twenty twenty four given this uncertainty around consumers, maybe
15:00
Speaker 9: some of the spending.
15:01
Speaker 10: Yeah, you know, that's a great question. There was a
15:03
Speaker 10: lot of you know, Ruckus really online over the eighteen dollars,
15:07
Speaker 10: big mac meal and in some locations last week. So
15:11
Speaker 10: you know, this is something that we're looking at. And
15:13
Speaker 10: you know, same sort of sales were so weak in January.
15:15
Speaker 10: They were down over two percent for fast food, which
15:18
Speaker 10: we typically don't see unless we're in a recession. They
15:21
Speaker 10: were down seven point seven percent at casual dining. Investors
15:25
Speaker 10: are kind of looking past it, saying that the weather
15:26
Speaker 10: was really cold, but people still have to eat, right,
15:29
Speaker 10: and so so there's kind of some worry here for
15:32
Speaker 10: us because like some of the economic indicators we watch
15:35
Speaker 10: when you look under the hood aren't looking great. So
15:38
Speaker 10: credit card debt is at an all time high one
15:40
Speaker 10: point one trillion. Credit card rates are at an all
15:43
Speaker 10: time high at twenty one percent APRS. Delinquencies have been
15:47
Speaker 10: rising for auto loans as well as credit card loans,
15:51
Speaker 10: and they're now above the fifteen year average and pre
15:53
Speaker 10: pandemic level. So there is some concern, but right now
15:56
Speaker 10: there's just so many variables going on with the weather,
15:59
Speaker 10: with the tough comparison, and with these economic indicators to
16:01
Speaker 10: figure out exactly how much of this weakness is because
16:05
Speaker 10: of what right and so. But one thing we've seen
16:09
Speaker 10: is customers are dealing with the higher prices and with
16:11
Speaker 10: the higher inflation by putting it on their credit cards,
16:14
Speaker 10: which is not a sustainable situation.
16:15
Speaker 9: What are some of the names that you cover that
16:17
Speaker 9: if we do see the general consumers tightening spending, will
16:22
Speaker 9: be better positioned to continue to deliver sales.
16:25
Speaker 10: What we've seen one of the weakest segments has actually
16:27
Speaker 10: been fine dining. A lot of that has been just
16:30
Speaker 10: a pullback and spending. People have been buying less expensive lines,
16:34
Speaker 10: you know, cutting back maybe on appetizers. In a real
16:38
Speaker 10: economic slowdown, fast food and quick service tend to do
16:42
Speaker 10: better because they'll have value menu items, discountsable will be
16:46
Speaker 10: more prevalent, and so although you'll see a lot of
16:49
Speaker 10: low income consumers kind of trade down to the grocery store,
16:53
Speaker 10: the quick service change will see a lot of you know,
16:55
Speaker 10: middle and higher income consumers trade away from a higher
16:58
Speaker 10: price full service Asian and maybe dying at McDonald's a
17:02
Speaker 10: little bit more often.
17:04
Speaker 4: Hey, Michael talked to us about the labor situation in
17:07
Speaker 4: the restaurant business. I know, for a long time, like
17:10
Speaker 4: a lot of industries, you know, the restaurant industry had
17:12
Speaker 4: trouble getting labor.
17:14
Speaker 3: Where is it now?
17:15
Speaker 10: Full service is pretty much where it was prior to
17:17
Speaker 10: the pandemic, So you know, think of Chili's and Applebee's
17:22
Speaker 10: and most of those casual dining chains that we cover.
17:24
Speaker 10: Cheesecake Factory, they're fully staffed right now, so they've recovered
17:28
Speaker 10: pretty nicely. Quick service has been slower. Turnover remains a
17:33
Speaker 10: lot higher, which is crazy to say, because it's probably
17:35
Speaker 10: one hundred and forty percent for hourly turnover heading into
17:38
Speaker 10: the pandemic. Now it's it's probably about one hundred and
17:40
Speaker 10: seventy percent, So they're having a lot more of a
17:43
Speaker 10: difficult time holding onto employees. That being said, it's been
17:47
Speaker 10: improving and improved throughout the year. Last year, one of
17:50
Speaker 10: the toughest times to staff the store was that late
17:54
Speaker 10: night portion. But chains figured out it's supplying demand and
17:57
Speaker 10: they have to offer more a higher way to those
18:00
Speaker 10: employees to attract good workers, and they've been doing that,
18:03
Speaker 10: and so that last kind of part of the day
18:07
Speaker 10: that was really struggling to hire is starting to come
18:09
Speaker 10: back to. So it's getting better. It's not where it was.
18:11
Speaker 2: Two years ago.
18:12
Speaker 10: Two years ago, it is very difficult. You know, there's
18:14
Speaker 10: a lot of people concerned that restaurant workers would never
18:16
Speaker 10: come back, but a lot of them have and it's
18:19
Speaker 10: much better than it was.
18:20
Speaker 9: Michael to take the labor conversation and twisted just a bit.
18:23
Speaker 9: I was just in California for the last two weeks
18:25
Speaker 9: where minimum wage is going to be twenty boots in April. First,
18:28
Speaker 9: Oh went in and out twice, don't you worry. But
18:30
Speaker 9: so twenty dollars minimum wage. I'm seeing a lot of
18:33
Speaker 9: these self service kiosks getting rid of the kind of
18:36
Speaker 9: front of house, if you will, at some of these
18:38
Speaker 9: fast food chains. How does a higher minimum wage impact
18:42
Speaker 9: what these companies are going to do and impact their
18:44
Speaker 9: margins in turn?
18:45
Speaker 10: Yeah, I mean you hit the nail on the head.
18:47
Speaker 10: It's going to be more technology. And it's no coincidence
18:50
Speaker 10: that the companies that we cover that have the highest
18:52
Speaker 10: exposure to California. So that's Jack in the Box, that's Chapotle.
18:57
Speaker 10: They're leading the charge when it comes to automation technology.
19:00
Speaker 10: Right now, Jack in the Box is testing AI automated friars.
19:04
Speaker 10: Chipotle has an automated makeline that they're hoping to roll
19:07
Speaker 10: out in the coming years, as well as automated AI
19:11
Speaker 10: tortilla chip friars. Right, so, it's going to be more
19:15
Speaker 10: automation in the restaurant, but it takes time for that
19:19
Speaker 10: to be implemented because right now the cost for that
19:22
Speaker 10: automation technology is very high. Right but as the wage
19:25
Speaker 10: rates continue to rise and as the price of technology falls,
19:29
Speaker 10: which always does over time, eventually there's going to be
19:32
Speaker 10: an ROI and a lot of those fast food workers
19:34
Speaker 10: are going to be replaced by technology.
19:36
Speaker 4: Our thanks to Michael halein Bloomberg Intelligence Senior Restaurant and
19:39
Speaker 4: Food Service Analyst, we move next to the Port of
19:42
Speaker 4: Los Angeles, one of the world's busiest seaports in a
19:44
Speaker 4: leading gateway for international trade in North America. The Port
19:48
Speaker 4: of La recently reported the second biggest January on.
19:51
Speaker 3: Record for cargo volumes.
19:52
Speaker 4: For More, co hosts Emily Grafey and I were joined
19:54
Speaker 4: by Jean Soroka, executive director of the Port of Los Angeles.
19:58
Speaker 3: We started by asking Gene, how big this is going?
20:01
Speaker 11: Business is really good, We're running it about seventy five
20:03
Speaker 11: to eighty percent of full capacity at the Port of
20:06
Speaker 11: Los Angeles. Anything but normal though around the world, with
20:10
Speaker 11: issues in the Panama Canal, with respected drought in the
20:13
Speaker 11: Middle East, with concerns around safety and security, and broader
20:17
Speaker 11: looks at how this US economy is going to continue
20:20
Speaker 11: to propel itself thanks to the American consumer. So let's
20:24
Speaker 11: start off with where we're at right now, six consecutive
20:26
Speaker 11: months of growth, the second best January ever, up eighteen
20:31
Speaker 11: percent compared to last year, and our first quarter outlook
20:35
Speaker 11: is it about two point two million containers or a
20:37
Speaker 11: twenty percent year on year increase compared to Q one
20:40
Speaker 11: of last year.
20:42
Speaker 6: So how would you assess, then, the overall health of
20:45
Speaker 6: the global supply chain relative to what we saw during
20:48
Speaker 6: the pandemic, because, like Paul said, it seemed like everyone
20:51
Speaker 6: was suddenly talking about the supply chain and where are
20:54
Speaker 6: we relative to just a few years ago.
20:57
Speaker 11: Emily, I think we're in a lot better shape. We've
20:59
Speaker 11: learned a lot from what we saw then too, But
21:01
Speaker 11: we're front of mind now to so many people outside
21:04
Speaker 11: our general industry, whether it's us looking for our packages,
21:08
Speaker 11: what's on the store shelves, or just the general consciousness
21:11
Speaker 11: about how this port, supply chain and trade business impacts
21:16
Speaker 11: economies and jobs around the world. What we see in
21:19
Speaker 11: Los Angeles is that there are a couple things happening
21:21
Speaker 11: right now. The stability of that labor contract has given
21:25
Speaker 11: us about a four percentage point boost in market share,
21:28
Speaker 11: So some of that cargo that we lost during the
21:30
Speaker 11: protracted negotiations has started to come back, not all of it,
21:35
Speaker 11: much more work to do, but good trajectory now. With
21:38
Speaker 11: the Panama Canal suffering drought and the concerns of safety
21:42
Speaker 11: in the Middle East with respect to the Hohothy going
21:45
Speaker 11: after the ships and the cargo and oil tankers, you're
21:50
Speaker 11: starting to see more cargo shifted our way, not services
21:54
Speaker 11: being collapsed, not new vessels coming in, but higher levels
21:58
Speaker 11: of capacity and utilization, and importers and exporter are saying,
22:02
Speaker 11: I may not want to take that much time, but
22:05
Speaker 11: the bigger difference is the gap between cargo that's moving
22:09
Speaker 11: east and Gulf Coast versus the West Coast is wider
22:13
Speaker 11: from a freight cost perspective. That's important because we're right
22:17
Speaker 11: now in the middle of our annual contracting season for freight.
22:20
Speaker 4: All right, so you're again right on the Port of
22:23
Speaker 4: Los Angeles on the West coast. You probably have the
22:25
Speaker 4: best of you of anybody. What's it like now, what's
22:28
Speaker 4: your expectation for that important route of trade coming from
22:31
Speaker 4: China to your port?
22:32
Speaker 11: Paul, It's still our most dominant trading partner. Fifty three
22:36
Speaker 11: percent of Port of Los Angeles business is with China.
22:39
Speaker 8: Now.
22:39
Speaker 11: That's down from fifty seven percent at the end of
22:42
Speaker 11: year twenty twenty two, and it may drop into the
22:44
Speaker 11: mid forties as many supply chain executives are continuing with
22:49
Speaker 11: their China plus one strategy, looking at other locations to
22:53
Speaker 11: source and produce goods in. But still forty five fifty
22:57
Speaker 11: years of supply chain relationships exist. You don't tear that
23:00
Speaker 11: apart overnight.
23:02
Speaker 6: Just the other day, the White House said that they
23:04
Speaker 6: were concerned that more than two hundred ship to shore
23:07
Speaker 6: cranes at US ports are manufactured by China and can
23:11
Speaker 6: be serviced and programmed remotely, creating a cybersecurity vulnerability. What
23:16
Speaker 6: did you make of those comments. How legitimate are the
23:19
Speaker 6: White House's concerns.
23:20
Speaker 11: It's also very important to us. The Port of Los Angeles,
23:24
Speaker 11: Emily was the first in the nation to create a
23:26
Speaker 11: cyber security operations center back in twenty fourteen with the
23:30
Speaker 11: help of the Department of Homeland Security. Today that system
23:34
Speaker 11: is stopping more than sixty million cyber intrusion attempts per month.
23:39
Speaker 11: It also gave us awareness to create a cyber resilient center.
23:43
Speaker 11: Also one of the first in the world to bring
23:45
Speaker 11: in the private sector partners with us. That co helped
23:49
Speaker 11: with the IBM folks has now stopped to have a
23:53
Speaker 11: dozen cyber intrusion attempts to private sector interests that they
23:57
Speaker 11: were otherwise unaware of. This work must continue.
24:02
Speaker 4: So is your business, I mean it's a GDP business?
24:06
Speaker 4: Is that how you kind of plan it out here?
24:07
Speaker 4: And so do you get a sense of are your
24:10
Speaker 4: customers are they telling you? What are they telling me
24:11
Speaker 4: about their sense of the economy?
24:14
Speaker 11: Broadly speaking, most are upbeat. Seventy percent of our GDP
24:17
Speaker 11: is tied to you and me buying goods.
24:20
Speaker 2: Now.
24:20
Speaker 11: Although the consumer purchasing was down a little bit in January,
24:25
Speaker 11: it was not unexpected. Great sales for the holiday season
24:28
Speaker 11: nearly a trillion dollars, up three point eight percent last year.
24:33
Speaker 11: There was going to be a little bit of a
24:34
Speaker 11: lull in January, but the forward look is strong. The
24:37
Speaker 11: Atlanta Fed is currently estimating first quarter GDP around two
24:41
Speaker 11: point nine percent, healthier than some it expected, and fourth
24:44
Speaker 11: quarter GDP came in beyond expectations.
24:48
Speaker 2: Again.
24:49
Speaker 11: What we see in the forward look is an order
24:52
Speaker 11: cycle that runs about six months ahead of when we
24:54
Speaker 11: actually buy things in the store online. That inventory flow
24:58
Speaker 11: is a leading economic indicator. Appears good.
25:02
Speaker 4: So Geene, I'm the captain of this big monstership. I
25:05
Speaker 4: got my containers all over the place. At how they
25:07
Speaker 4: don't fall off? I have no idea. I come into
25:09
Speaker 4: your port. How long am I there before I get
25:12
Speaker 4: back on my way.
25:13
Speaker 11: I look at these vital statistics as I call of
25:16
Speaker 11: Paul every morning, and we're at or better than when
25:19
Speaker 11: we were pre COVID. The largest ships that come into
25:22
Speaker 11: the port of Los Angeles average twelve thousand containers on
25:26
Speaker 11: and off, best in the industry. Every call four and
25:28
Speaker 11: a half days is the amount of time a ship
25:30
Speaker 11: is in port working. That's right where it should be.
25:33
Speaker 4: Our thanks to Gene Soroka, executive director of the Port
25:36
Speaker 4: of Los Angeles. Coming up on the program, we'll discuss
25:38
Speaker 4: why President Biden's electric vehicle dreams are making life more
25:42
Speaker 4: difficult for US car makers.
25:43
Speaker 3: You're listening to.
25:44
Speaker 4: Bloomberg Intelligence on Bloomberg Radio, providing in depth research and
25:47
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25:50
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25:51
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25:53
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26:05
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26:23
Speaker 4: We take a look next at the home improvement retailer
26:26
Speaker 4: home Depot. This week, the company reported revenue that dropped
26:28
Speaker 4: for a fifth consecutive quarter. For More, co host Belly
26:32
Speaker 4: Lipscholtz and I spoke with Drew Redding, Bloomberg Intelligence US
26:34
Speaker 4: homebuilding analyst. I first asked for his take on Home
26:37
Speaker 4: Depot's earnings.
26:38
Speaker 8: Sure, so the three and a half percent decline in
26:40
Speaker 8: seamstore sales was pretty much free in line with what
26:44
Speaker 8: was expected. You have to keep in mind though, coming
26:47
Speaker 8: into the court the bar was pretty low for home depot.
26:50
Speaker 8: They continue to face the consumers who are pulling back
26:52
Speaker 8: in big ticket discretionary categories to think things like flooring, cabinets, countertops. Conversely,
26:59
Speaker 8: they're seeing rele of strength and some of the smaller
27:01
Speaker 8: scale projects, so there's big ticket projects are being deferred.
27:04
Speaker 8: We do think eventually they get completed, but that may
27:07
Speaker 8: be more of a twenty twenty five story. But coming
27:09
Speaker 8: into this quarter, the real debate was around how twenty
27:13
Speaker 8: twenty four was going to shape up. So they offered
27:15
Speaker 8: guidance suggesting that same store sales would fall about one percent,
27:20
Speaker 8: and given what we heard from a handful of their
27:22
Speaker 8: suppliers over the last couple of weeks, which we're calling
27:25
Speaker 8: for a flat market, I think people it called people
27:27
Speaker 8: a little bit off guard, ourselves included. We do think
27:30
Speaker 8: that the first half is going to be comparatively weaker
27:32
Speaker 8: than the second half as rates start to pull back,
27:35
Speaker 8: and we think you could maybe get a little bit
27:37
Speaker 8: bit of a boost from the housing market.
27:39
Speaker 9: Drew this may be a dumb question, but when I
27:41
Speaker 9: look at some of the consumer data that we've been seeing,
27:43
Speaker 9: we are seeing a rising ninety day credit card delinquencies.
27:47
Speaker 9: How do things like that? What does the normal spender
27:50
Speaker 9: at home depot look like? You're mentioning kind of a
27:52
Speaker 9: pullback on some of those bigger projects. What kind of
27:55
Speaker 9: demographic does home depot really see in terms of driving
27:58
Speaker 9: sales and kind of putting those numbers together.
28:01
Speaker 8: Yeah, so about eighty percent of home depots customers or
28:04
Speaker 8: current homeowners, they typically have higher incomes, so they are
28:08
Speaker 8: higher spenders and they're a little bit more resilient of
28:11
Speaker 8: a customer. I think where we're seeing the relative weakness
28:14
Speaker 8: is in some of the low end spending, which has
28:16
Speaker 8: kind of gone away on the DIY side. But you know,
28:19
Speaker 8: if we look big picture, what's happening in the home
28:21
Speaker 8: improvement market is we're seeing a reversion to more typical
28:25
Speaker 8: spending pattern. So if you think back to the pandemic,
28:29
Speaker 8: we had the share of PCEE that went towards household
28:33
Speaker 8: durables was at an all time record, and we've seen that
28:36
Speaker 8: moderate since really the first half of twenty twenty three.
28:39
Speaker 8: So we think that there's a bit more of a
28:41
Speaker 8: reversion that needs to take place or the remainder of
28:44
Speaker 8: this year, which is going to keep total industry sales muted.
28:46
Speaker 8: You know, But you talked about the consumer, you also
28:48
Speaker 8: have the consumer out there who's battling with the cumulative
28:52
Speaker 8: impact of massive inflation over the last couple of years. So,
28:56
Speaker 8: you know, while we look at that head headline number
28:58
Speaker 8: and we see that it's moderating, it's really the cumulative
29:00
Speaker 8: impact that's kind of pressuring spending in the category.
29:04
Speaker 4: Hey, Drew, what's the what do you think is a
29:06
Speaker 4: normalized top line growth rate for like a home depot.
29:09
Speaker 4: I'm looking you know, pre pandemic was kind of mid
29:11
Speaker 4: single digit grower, then of course exploded, you know during
29:14
Speaker 4: the pandemic with some you know, big double digit gains.
29:17
Speaker 4: What do you kind of model out here for top
29:18
Speaker 4: line growth?
29:19
Speaker 8: Yeah, I think I think in a normalized environment, which
29:23
Speaker 8: we think we get back to in twenty twenty five,
29:25
Speaker 8: is probably in the three to four percent range as
29:28
Speaker 8: a baseline. You know, there's a couple of industry factors
29:31
Speaker 8: that we think will support that. Like I mentioned, we
29:33
Speaker 8: think as rates start to moderate, perhaps as we get
29:37
Speaker 8: through this year, we think that you could start to
29:39
Speaker 8: see a boost from existing home sales. Remember, existing home
29:42
Speaker 8: sales are the lowest level more than twenty five years,
29:45
Speaker 8: and we know that people who move spend about twice
29:49
Speaker 8: as much on remodeling as those who don't. So while
29:52
Speaker 8: we don't see total housing turnover returning to you know,
29:56
Speaker 8: kind of that five and a half level anytime soon,
29:58
Speaker 8: we do think the fact that the have been so
30:00
Speaker 8: depressed does serve as a tail and as we move
30:03
Speaker 8: through the year. At the same time, you know, we've
30:05
Speaker 8: had over forty percent increases in home prices since the pandemic,
30:09
Speaker 8: so homeowtor's equity right now is at all time tighes.
30:13
Speaker 8: The average home has about three hundred thousand dollars in equity,
30:15
Speaker 8: So we think that's a source of pen of demand
30:18
Speaker 8: for big ticket projects that once again as rates start
30:21
Speaker 8: to moderate, people will get more comfortable with tapping that equity.
30:25
Speaker 9: And drew With that in mind, you mentioned some of
30:27
Speaker 9: those big purchases, bigger projects. How much of that was
30:31
Speaker 9: pulled forward though during the pandemic when people were buying homes,
30:35
Speaker 9: we saw a booming market around the US, and it
30:38
Speaker 9: did seem like cash being relatively free with the surplus
30:42
Speaker 9: spending and stimulus checks that people were putting money into
30:45
Speaker 9: home improvement.
30:47
Speaker 8: Yeah, great question, and I think that goes back to
30:50
Speaker 8: the share of personal consumption that was spent on home improvement.
30:53
Speaker 8: It was a lot of that stimulus money that was
30:55
Speaker 8: out there for everybody. In terms of the big ticket project,
30:58
Speaker 8: we think more of the pull forward was probably done
31:00
Speaker 8: in the DIY segment. That's really where you saw the
31:02
Speaker 8: boom early in the pandemic. That being said, we have
31:05
Speaker 8: seen contractor backlogs over the last couple of years be
31:10
Speaker 8: elevated compared to more traditional levels. So to some extent
31:14
Speaker 8: it has been in both the DIY and big ticket category.
31:17
Speaker 8: But we do think that the big ticket categories where
31:20
Speaker 8: we're likely to see more growth for home depot as
31:22
Speaker 8: they go after the professional contractor, as they leverage you know,
31:26
Speaker 8: the age investments consumers are making because of the age
31:29
Speaker 8: of the housing stock that penep equity they have in
31:31
Speaker 8: their home.
31:32
Speaker 4: Our thanks to Drew Reading Bloomberg Intelligence US Home Building Analyst,
31:35
Speaker 4: we move next to the auto industry. Recently, President Biden
31:38
Speaker 4: has been using his multi billion dollar Inflation Reduction Act
31:41
Speaker 4: to try and create a more US centric electric vehicle
31:44
Speaker 4: supply chain. One of the goals is to reduce China's
31:46
Speaker 4: influence over global metals markets, but US actions have only
31:50
Speaker 4: made life more difficult for its carmakers.
31:52
Speaker 3: From more On this.
31:53
Speaker 4: Co host Billy Lipscholtz and I were joined by Craig Trudell,
31:56
Speaker 4: Bloomberg Global Autos editor. He co wrote the Big Take
31:58
Speaker 4: column Biden's EV dream are a nightmare for Tesla and
32:02
Speaker 4: the US car industry. We first asked Craig for some
32:04
Speaker 4: context on what's happening.
32:06
Speaker 5: I think this is a really challenging thing that the
32:09
Speaker 5: Biden administration was trying to do right, they were trying
32:11
Speaker 5: to jump start the EV industry in the US. I
32:15
Speaker 5: would say, you know, you can give them high marks
32:17
Speaker 5: for what they've done in terms of the amount of
32:19
Speaker 5: manufacturing investment they've attracted. It's it's really been remarkable the
32:24
Speaker 5: response that we've seen there. On the other side of
32:27
Speaker 5: the equation, the demand side, I think, you know, the
32:29
Speaker 5: marks are way more mixed, and I think, you know,
32:32
Speaker 5: the challenges that we're going to see in the years
32:35
Speaker 5: to come, you know, assuming, of course, Ira, you know,
32:38
Speaker 5: stands up. If we see a change in the White
32:41
Speaker 5: House later this year. But whether or not manufacturers can
32:46
Speaker 5: sort of pull off what Biden you know, is asking
32:50
Speaker 5: of them, which is to really set up a EV
32:53
Speaker 5: and battery supply chain that is less reliant on China,
32:57
Speaker 5: and it eventually is just not reliant on China. And
33:00
Speaker 5: that's proven to be an extremely difficult task. And that's
33:03
Speaker 5: what we try to lay out today in ways that
33:05
Speaker 5: are you know, really it's a it's a complicated issue.
33:08
Speaker 5: You know, Tesla everyone thinks about, as you know, being
33:11
Speaker 5: a very sort of made in America car brand, and
33:15
Speaker 5: and you know, they sort of are recognized as one legitimately.
33:18
Speaker 5: But you know, when given the opportunity to import batteries
33:23
Speaker 5: because of the fact that the IRA you know, didn't
33:26
Speaker 5: really necessarily grow some teeth until the beginning of this year,
33:30
Speaker 5: we saw, you know, just in a matter of months,
33:32
Speaker 5: Tesla import two and a half billion dollars worth of
33:35
Speaker 5: EV batteries from China.
33:37
Speaker 9: Wow, and Craig, that's happening because it feels like every
33:40
Speaker 9: time we talk about GM for Tesla, a lot of
33:43
Speaker 9: these companies are losing money making their evs. So what
33:47
Speaker 9: was the point of the IRA if not to kind
33:50
Speaker 9: of streamline. I guess the kind of inputs of of
33:53
Speaker 9: these batteries.
33:54
Speaker 5: I think what you have here is a situation where
33:57
Speaker 5: you know, Joe Mansion was you know, the player who
34:01
Speaker 5: Washington really just had to sort of bend to his will,
34:03
Speaker 5: and he was really reluctant to you know, allow for
34:06
Speaker 5: electric vehicles to continue to get tax credits. He was
34:10
Speaker 5: opposed to them, and he said, okay, industry, well we'll
34:13
Speaker 5: give you these tax credits, but you build me as
34:15
Speaker 5: a supply chain that of course, you know, sort of
34:18
Speaker 5: didn't take into account sort of you know the complexities
34:21
Speaker 5: of the supply chain and the fact that China is
34:24
Speaker 5: just so dominant in this space and they've really sort of,
34:28
Speaker 5: you know, methodically, you know, for a time quietly, you know,
34:31
Speaker 5: built this, you know, staggeringly strong position in terms of
34:35
Speaker 5: you know, the control of you know, the inputs, whether
34:38
Speaker 5: it's you know, nickel and lithium graphite. You know, these
34:41
Speaker 5: inputs are going to be really really difficult to source,
34:45
Speaker 5: not only just you know, whether their mind in China,
34:48
Speaker 5: but whether they're sort of processed and refined, and you
34:51
Speaker 5: know the sort of cost difference that that the West
34:54
Speaker 5: is going to have to sort of overcome really just
34:57
Speaker 5: can't be you know, sort of overstated at.
34:59
Speaker 4: This And folks, if you want to see this article,
35:02
Speaker 4: it's fantastic article. Really deeply reporting great graphics makes it
35:05
Speaker 4: easy for me because I like the pictures. Bloomberg dot
35:08
Speaker 4: Com slash a big take is kind of where you
35:10
Speaker 4: find it.
35:10
Speaker 3: Big team effort.
35:11
Speaker 4: So you know, Craig, I see in your reporting here.
35:14
Speaker 4: In twenty twenty three, the IRA required that at least
35:16
Speaker 4: half of the value of battery components had to be
35:19
Speaker 4: assembled in North America and that forty percent of a
35:22
Speaker 4: raw materials had to be sourced from the US, And
35:25
Speaker 4: in twenty twenty seven, that raw material requirement is going
35:27
Speaker 4: to double to eighty percent. Those numbers can they be
35:29
Speaker 4: achieved in that timeframe?
35:31
Speaker 5: I think that's one of the things that you know,
35:34
Speaker 5: it sort of depends on which company you ask, And
35:36
Speaker 5: I think, you know, some of the concerns that the
35:39
Speaker 5: industry is having here is the fact that some of
35:42
Speaker 5: these raw materials the prices have really collapsed, and that
35:46
Speaker 5: you would sort of think, oh, that's a good thing
35:48
Speaker 5: for the auto companies, But if you're trying to build
35:51
Speaker 5: a supply chain in North America for these raw materials
35:55
Speaker 5: and the prices for them have absolutely, you know, sort
35:58
Speaker 5: of the bottom has come out. Think of lithium in particular,
36:01
Speaker 5: You've seen this dramatic drop in prices that significantly undermines
36:07
Speaker 5: the economics of those projects. And so I think the
36:10
Speaker 5: raw materials in particular are a real challenge. I think
36:14
Speaker 5: battery components will be less of a challenge, but even
36:17
Speaker 5: there it is a matter of you can't just sort
36:20
Speaker 5: of snap your fingers and open up a bunch of
36:22
Speaker 5: plants for these various components. It does take time, you know,
36:25
Speaker 5: to dig up the ground and put up these plants
36:28
Speaker 5: that are coming but are taking some time.
36:33
Speaker 9: And graig across the auto makers. I'm looking at the
36:37
Speaker 9: reporting again, seven of Tesla's twelve models sold in the
36:39
Speaker 9: US fully cleared the IRAS sourcing hurdles and qualified for
36:43
Speaker 9: the tax credit. What percentage of evs being sold in
36:47
Speaker 9: the US are clearing that hurdle?
36:50
Speaker 5: I think, because Tesla is still so dominant in the US,
36:53
Speaker 5: we're at a point where, you know, the evs that
36:57
Speaker 5: do the most volume are largely qualified at the moment.
37:00
Speaker 5: But I think the fact that those raw material requirements
37:04
Speaker 5: that kick in next year and then escalate in the
37:08
Speaker 5: years that follow. That's really where we're going to see
37:11
Speaker 5: even more of a sort of level of screws put
37:14
Speaker 5: on the industry. But I think, you know, the other
37:17
Speaker 5: carmaker that I think is particularly well positioned, I would
37:20
Speaker 5: just call out to General Motors. I think the fact
37:23
Speaker 5: that they have a localized supply chain four batteries, they
37:27
Speaker 5: have a joint venture with a Korean battery supplier. We're seeing,
37:32
Speaker 5: you know, more and more of those partnerships, you know,
37:34
Speaker 5: for the following suit. Stilantis, the maker of Jeep and
37:39
Speaker 5: Chrysler a similar deal where they're setting up battery plants
37:43
Speaker 5: in North America and sort of on and on. But
37:45
Speaker 5: those projects, I would say are much further behind where
37:49
Speaker 5: we have Tesla, which you know for years has been
37:52
Speaker 5: making batteries out Nevada with Panasonic, and GM, which has
37:55
Speaker 5: a partnership with LG.
37:57
Speaker 4: In us our Thanks to Craig Trudell, Blueborg Global Autos Editor.
38:01
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