Latest / Bloomberg Intelligence / Elon Musk's U-Turn Move On Bitcoin

Transcript

Elon Musk's U-Turn Move On Bitcoin · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
• 0:06
  Speaker 1: you interviews from ceo s, market crows, and Bloomberg experts,
• 0:11
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:15
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:18
  Speaker 1: and at Bloomberg dot com slash podcast. If you think
• 0:21
  Speaker 1: about all the way back to early February, Tesla announced
• 0:25
  Speaker 1: that the company goes investing one point five billion dollars
• 0:28
  Speaker 1: in bitcoin it's on the balance sheet, and also said
• 0:30
  Speaker 1: it was gonna accept bitcoin is a form of payment
• 0:32
  Speaker 1: for its cars. But last night, in a tweet, Elon
• 0:35
  Speaker 1: Musk made a major U turn, saying that Tesla has
• 0:39
  Speaker 1: suspended vehicle purchases using bitcoin. And it's just three months
• 0:43
  Speaker 1: after that head scratching move, so really strange. Here, let's
• 0:46
  Speaker 1: get some color on this, return to one of the
• 0:48
  Speaker 1: experts on all things Tesla. That's Dan Ives, Managing director
• 0:52
  Speaker 1: Equity Research at web Bush Securities. Dan, what do you
• 0:54
  Speaker 1: make of Mr musk kind of surprise tweet last night?
• 0:58
  Speaker 1: And it's a head scratch? Sure, I mean the U
• 1:01
  Speaker 1: turn in the matter of three months. It's it's called
• 1:05
  Speaker 1: crypto investors and testa investors off guard because nothing's changed
• 1:10
  Speaker 1: in terms of the nature of mining crypto in the
• 1:13
  Speaker 1: last three months, right, Like presumably Elon musk knew going
• 1:17
  Speaker 1: into it what the potential environmental effects of crypto mining
• 1:21
  Speaker 1: would be. Right, It's like me going into a pizza
• 1:25
  Speaker 1: place ordering a sway and being surprised or sauce and cheese.
• 1:30
  Speaker 1: And I think that's the frustration. And also are from
• 1:34
  Speaker 1: one of the biggest proponents of crypto, and that's why
• 1:37
  Speaker 1: you know Tessa. It doesn't really dramatically change the Tessa
• 1:42
  Speaker 1: stories from a transaction perspective, but in terms of crypto,
• 1:46
  Speaker 1: you know, this is it's been a U turner, and
• 1:48
  Speaker 1: I think many investors feel like carpet was sort of
• 1:51
  Speaker 1: pulled out from under them. Yeah, that's kind of you know,
• 1:55
  Speaker 1: if I'm a Tesla investor, I'm used to a certain
• 1:58
  Speaker 1: level of volatility. I'm used with level of Elon musk
• 2:01
  Speaker 1: risk in my investment. And you know, whether it's an
• 2:05
  Speaker 1: odd tweet here or there, I take that because of
• 2:08
  Speaker 1: the tremendous upside I see and maybe the e V
• 2:10
  Speaker 1: market that's the bargain I've made, but now these stocks
• 2:13
  Speaker 1: are under pressure. Dan, I know you've talked about it
• 2:15
  Speaker 1: with us before. You know, the trade has been the
• 2:17
  Speaker 1: kind of let's let's invest in some of these um
• 2:20
  Speaker 1: you know, rotation names, cyclical names, and that's not certainly
• 2:24
  Speaker 1: the Amazons are the Teslas of the world. How do
• 2:27
  Speaker 1: you view the as you talked to investors today, how
• 2:29
  Speaker 1: do you view the Tesla story here? I think you
• 2:33
  Speaker 1: hit on a great point because this is not what
• 2:37
  Speaker 1: we were were six months ago, and so you know,
• 2:40
  Speaker 1: investors are frustrated. You're seeing risk off, multiple inflation worries,
• 2:44
  Speaker 1: so right now in that's what they're focusing on, deliveries
• 2:47
  Speaker 1: and fundamental perform So patience is wearing sin, especially when
• 2:52
  Speaker 1: it comes to Tessa investors that don't want to see
• 2:56
  Speaker 1: the sort of sideshow on off, on off. When it
• 2:58
  Speaker 1: comes to Bitcoin, I think what it's doing is really
• 3:02
  Speaker 1: just adding to the volatility and some of the risk
• 3:05
  Speaker 1: around test that's now been brought in from doing a
• 3:10
  Speaker 1: one e D in three months. We remember, they haven't
• 3:14
  Speaker 1: even had a car that's been transaction in bitcoin yet.
• 3:18
  Speaker 1: Very Fair just continues to be um. You know, one
• 3:22
  Speaker 1: of the more head scratching moves that I've seen even
• 3:25
  Speaker 1: in covering Musk for all these years, but covering it
• 3:28
  Speaker 1: as an analyst looking at it from a fundamental perspective,
• 3:31
  Speaker 1: in the most recent quarter, Tesla did reap a pretty
• 3:34
  Speaker 1: decent windfall from selling bitcoin, and it also has continually
• 3:38
  Speaker 1: reaped the reward of carbon credits the company profiting from those,
• 3:42
  Speaker 1: and those aren't necessarily going to last forever. What happens
• 3:45
  Speaker 1: if both of those things go away? Well, from a
• 3:49
  Speaker 1: carbon credit perspective, I mean that that's still a toe
• 3:52
  Speaker 1: and that that's going to last for another eten twenty
• 3:55
  Speaker 1: four months and ultimately in a Biden green tide away
• 3:57
  Speaker 1: back could be more of an accelerate, but but no doubt,
• 4:00
  Speaker 1: I mean there's more and more pressure on them to
• 4:03
  Speaker 1: just make more money selling cars. Remember they saw more
• 4:06
  Speaker 1: you look on their bitcoin profit. It was more than
• 4:08
  Speaker 1: they did in all the EV profits you know, last year.
• 4:12
  Speaker 1: So you you're starting to see now, especially in China,
• 4:17
  Speaker 1: especially on e V globally, you know, more focused on
• 4:22
  Speaker 1: Tassa even despite chip short is really accelerating on the
• 4:26
  Speaker 1: EV delivery side. And you've seen a stock that's the
• 4:29
  Speaker 1: glass half empty or stock that's up seven a year ago,
• 4:33
  Speaker 1: and and now you know, right now it's a risk
• 4:37
  Speaker 1: off market. Investors want to see fundamental performance, not noise
• 4:43
  Speaker 1: in terms of what they're seeing with his on off
• 4:45
  Speaker 1: on bitcoin that ultimately just really puts a little bit
• 4:49
  Speaker 1: of an overhang around the store real quickly, Dan, when
• 4:53
  Speaker 1: will it come to be profitable on a per unit
• 4:55
  Speaker 1: basis manufacturing? We're glad that depends on China. I mean
• 4:59
  Speaker 1: China the key you know, as we will out into
• 5:01
  Speaker 1: the next year where they could start to turn more
• 5:04
  Speaker 1: profitable on just on the standalone basis. And as you
• 5:07
  Speaker 1: talk about from n e V credit that's going to
• 5:09
  Speaker 1: continue to be there, but especially as we're going to
• 5:12
  Speaker 1: next six to a month, more and more believes or
• 5:15
  Speaker 1: focus on profitability when it comes to the standalone EV business.
• 5:20
  Speaker 1: All right, Dan, thanks very much for joining us. We
• 5:22
  Speaker 1: always appreciate getting your perspective, your thoughts on all things
• 5:25
  Speaker 1: Tesla and Elon must and I've managing director equity research
• 5:29
  Speaker 1: analysts at web Bush Securities, and you know, Dan was
• 5:32
  Speaker 1: just suggesting, you know, investors obviously don't like uncertainty, um,
• 5:36
  Speaker 1: and you get a lot of uncertainty with Elon Muskin.
• 5:39
  Speaker 1: This is just another reminder here for some of the
• 5:41
  Speaker 1: risk that test investors have to get used to. Kind Well, Paul,
• 5:49
  Speaker 1: just about twenty four hours ago, there was a pretty
• 5:51
  Speaker 1: important meeting going on in the Oval Office at the
• 5:53
  Speaker 1: White House, President Biden having his first face to face
• 5:56
  Speaker 1: meeting with Congressional Republicans trying to bring them around the
• 5:59
  Speaker 1: table on his long term economic plan. And coming out
• 6:02
  Speaker 1: of that meeting, Republicans did say, you know, it was good.
• 6:04
  Speaker 1: There are places where we can find by partisanship on
• 6:07
  Speaker 1: infrastructure spending. But the red line is going to be
• 6:10
  Speaker 1: the taxes. So let's get more on taxes right now.
• 6:13
  Speaker 1: Kate Barton, Global Vice Chair of tax at e Y
• 6:16
  Speaker 1: joins us now to discuss Kate, I am sure you
• 6:19
  Speaker 1: have poured over every detail of what the President has proposed.
• 6:23
  Speaker 1: What part of it to you could be the most damaging. Well,
• 6:28
  Speaker 1: there's a lot in both of the plans, the American
• 6:31
  Speaker 1: Job Plan in the American's Family Plan, and you're right,
• 6:34
  Speaker 1: we are looking at them. We would like more information
• 6:37
  Speaker 1: on our clients would and so there's a lot here,
• 6:41
  Speaker 1: I mean, you know, and it's based on the corporate side.
• 6:44
  Speaker 1: Tax rates going from twenty one to twenty eight. But
• 6:47
  Speaker 1: on the individual side, there's also some significant changes, um,
• 6:52
  Speaker 1: not the least of which is the capital gains rate change,
• 6:55
  Speaker 1: which really has a big impact on businesses as well
• 6:59
  Speaker 1: as where where individuals will invest their capitals. And so
• 7:03
  Speaker 1: those are some of the highlights. All of that is
• 7:06
  Speaker 1: really important in the days ahead, and probably one of
• 7:09
  Speaker 1: the biggest aspects is the relationship that the US um
• 7:14
  Speaker 1: UH Treasury will have with the O e c D
• 7:17
  Speaker 1: efforts and the connection to the global sides UM. So
• 7:21
  Speaker 1: that's a big change in administration, so that we're watching
• 7:24
  Speaker 1: like crazy as well. So, Kate, let's talk about the
• 7:27
  Speaker 1: capital gains tax specifically. What have we seen historically as
• 7:32
  Speaker 1: maybe rates go up versus rates go down, do we
• 7:36
  Speaker 1: see capital formation or capital investment materially change as capital
• 7:41
  Speaker 1: gains rates are in fact moved up and down. We
• 7:45
  Speaker 1: do see that having a big impact. And so historically
• 7:48
  Speaker 1: rates capital gain rates have been kept lower because it's
• 7:52
  Speaker 1: really thought by most leading economists to encourage more investment
• 7:55
  Speaker 1: and more efficient investments. So higher capital gains rates increase
• 8:00
  Speaker 1: the cost of capital, and typically what we've seen from
• 8:03
  Speaker 1: economic studies is that it can cause the holder to
• 8:07
  Speaker 1: hold onto the investment for longer, so they'll just wait,
• 8:12
  Speaker 1: you know, waited out, if you will, for the rates
• 8:15
  Speaker 1: to change or for a sunnier day, and so um,
• 8:19
  Speaker 1: you know that can be less efficient quite frankly over
• 8:22
  Speaker 1: the longer term or even the mid term. Kate, If
• 8:24
  Speaker 1: I'm one of your clients and I'm staring down the
• 8:26
  Speaker 1: barrel of a higher capital gains tax or a higher
• 8:29
  Speaker 1: corporate tax, what do you tell me to do to
• 8:32
  Speaker 1: protect myself against that? Now, well, there's a lot to this,
• 8:36
  Speaker 1: I mean, so you know, the headline rates are not
• 8:38
  Speaker 1: about what it's you know, it's it's actually what you pay.
• 8:41
  Speaker 1: So you know, you really do need to get into
• 8:43
  Speaker 1: the detail. And we actually do need more details. So
• 8:46
  Speaker 1: what we're really saying is stay calm uh, model it
• 8:50
  Speaker 1: up and so they'll be more coming out. We're waiting
• 8:52
  Speaker 1: for Treasury to release the Green Books, which should come
• 8:54
  Speaker 1: out at the end of May, and so we'll have
• 8:56
  Speaker 1: more details then and then we've got to see how
• 8:58
  Speaker 1: the legislation takes form. But I think the companies really
• 9:03
  Speaker 1: are modeling um this all out, particularly the multinationals, trying
• 9:07
  Speaker 1: to figure out how the attax rate will go up
• 9:10
  Speaker 1: and what can they do now to UM to plan
• 9:13
  Speaker 1: against that. On the individual side, I think everyone is
• 9:16
  Speaker 1: holding and waiting to see what will happen. Remember, this
• 9:19
  Speaker 1: is legislation that's going to come in to pay for
• 9:23
  Speaker 1: all the infrastructure spending that the President wants to do,
• 9:27
  Speaker 1: and it's really just the beginning of the negotiations. And
• 9:30
  Speaker 1: so you don't want to act prematurely because there's still
• 9:33
  Speaker 1: a lot of steps that have to happen before this
• 9:36
  Speaker 1: becomes legislation. Okay, a lot of folks that are opposed
• 9:39
  Speaker 1: to raising taxes, UM just say, hey, if the I
• 9:43
  Speaker 1: R S would just collect what's out there and close loopholes,
• 9:48
  Speaker 1: that that would raise a tremendous amount of money. What's
• 9:51
  Speaker 1: your view on just kind of again, some of these
• 9:54
  Speaker 1: I guess, for lack of a better term, loopholes in
• 9:56
  Speaker 1: the current tax system. Well, from a perspective, enforcement is important.
• 10:02
  Speaker 1: I mean, I don't think there's a country around the
• 10:04
  Speaker 1: world right now that's not focused on making sure that
• 10:07
  Speaker 1: the tax laws they have on the books right now
• 10:09
  Speaker 1: are actually being enforced and paid. In the US, who
• 10:12
  Speaker 1: certainly heard a lot about that, so so clothe, you know,
• 10:15
  Speaker 1: making sure everybody's paying that taxes is important and and
• 10:19
  Speaker 1: part of the plan too is to beef up this
• 10:22
  Speaker 1: aspect of the I R S so that they would
• 10:24
  Speaker 1: get more resources focused on enforcement focused on corporations or
• 10:29
  Speaker 1: businesses that um or high networks individuals that are not
• 10:32
  Speaker 1: paying uh their fast share of tax. So so that is,
• 10:37
  Speaker 1: you know, a necessity, and the US isn't the only
• 10:40
  Speaker 1: country that's going to be doing that, so um So
• 10:43
  Speaker 1: that's important, but it's not going to be enough to
• 10:46
  Speaker 1: really if the plan is to pay for uh the spending,
• 10:51
  Speaker 1: than other things are going to have to happen as well.
• 10:54
  Speaker 1: All Right, Kate, thanks so much for joining us. We
• 10:56
  Speaker 1: really appreciate getting your perspective, your global perspective, Kate Barton,
• 11:00
  Speaker 1: Global Vice Chair of tax at Ian y UM. Again,
• 11:03
  Speaker 1: taxes are on the table. The question is what can
• 11:07
  Speaker 1: get done politically, and uh, you know, as you mentioned, Kaylee,
• 11:10
  Speaker 1: the the Republicans said we are not going to reopen
• 11:14
  Speaker 1: the tax law. So that feels like a redline. It
• 11:18
  Speaker 1: does feel like a red line. And it's not just
• 11:20
  Speaker 1: the Republicans. You have moderate Democrats as well. Joe Mansion,
• 11:23
  Speaker 1: West Virginia is not on board with a corporate tax rate.
• 11:26
  Speaker 1: So President Biden has some work to do on both
• 11:29
  Speaker 1: sides of the aisle Pas absolutely in Bloomberg News. We
• 11:31
  Speaker 1: will be following that up closely, of course, as it
• 11:33
  Speaker 1: impacts corporations, uh and individuals. Lots going on market, Kayley,
• 11:40
  Speaker 1: snap back in the market today, you know, after the
• 11:43
  Speaker 1: two day sell off, it's kind of I guess it's
• 11:45
  Speaker 1: a good sign. Um. You know, some few people saying, hey,
• 11:49
  Speaker 1: interest rates, maybe inflation not that big of a deal.
• 11:51
  Speaker 1: But all right, let's bring in Shawn O'Hara. He's a
• 11:53
  Speaker 1: president of Pacer et F Sean, thanks so much for
• 11:55
  Speaker 1: joining us here. Katy and I were just kind of
• 11:57
  Speaker 1: going back and forth with a you know, bull bear
• 12:00
  Speaker 1: scenario as it relates to this market. Is the bull
• 12:03
  Speaker 1: market still very much intact? Or are there some concerns
• 12:06
  Speaker 1: coming in here about inflation about maybe the Fed may
• 12:09
  Speaker 1: need to taper end or tighten. What's your view? Oh,
• 12:13
  Speaker 1: thanks for having me a good morning. Um. I think,
• 12:16
  Speaker 1: you know, I think what's going on right now is
• 12:18
  Speaker 1: the market is you know, is further ahead of its
• 12:21
  Speaker 1: current earnings then it would normally be. And so we
• 12:25
  Speaker 1: need sort of a perfect reopening in order for earnings
• 12:28
  Speaker 1: to continue to accelerate to justify these equity valuation levels,
• 12:32
  Speaker 1: and any little crack and if you will, in that
• 12:35
  Speaker 1: facade of it's going to be perfect and everything is
• 12:37
  Speaker 1: going to be fine, potentially threatens the markets value valuations
• 12:42
  Speaker 1: in the short run. And so what feeds into that
• 12:45
  Speaker 1: is the supply chain issues. You know, we have the
• 12:47
  Speaker 1: colonial pipeline thing, You've got the chip shortage, you've got
• 12:50
  Speaker 1: lumber prices skyrocketing, um and it was all sort of
• 12:54
  Speaker 1: you know, I guess highlighted by yesterday's CPI number, which
• 12:59
  Speaker 1: you know the Fed tells us as transitory. I'm not
• 13:02
  Speaker 1: sure what transitory means are how long transitory lasts. But
• 13:06
  Speaker 1: when you have a market this extent, and particularly on
• 13:08
  Speaker 1: the growth names, where in a rise in inflation and
• 13:12
  Speaker 1: a corresponding rise in interest rates potentially threatens their future earnings,
• 13:17
  Speaker 1: then I think we need to start to discount those
• 13:19
  Speaker 1: levels a little bit. And so I think that's the
• 13:21
  Speaker 1: battle that's going on. It's it's no different than the
• 13:23
  Speaker 1: battle that's been going on all year as it relates
• 13:25
  Speaker 1: to inflation and interest rate sources, growth stock. So yesterday
• 13:29
  Speaker 1: was just a bit more severe and we're seeing a
• 13:32
  Speaker 1: nice bounce back here. Um, but there are places in
• 13:35
  Speaker 1: this market that you know that are not over valued
• 13:38
  Speaker 1: that you can do well with. You know, we have
• 13:40
  Speaker 1: a strategy at Pacer, for example, it's a hundred large
• 13:43
  Speaker 1: gap stocks. We labeled a value strategy, but it's not
• 13:46
  Speaker 1: traditional value. Don't use price to book. We use free
• 13:48
  Speaker 1: cash flow yield. And in this environment that finds up
• 13:52
  Speaker 1: like year and a day. It's not the traditional names
• 13:56
  Speaker 1: that everybody knows. We're overweight tech, but we're not overweight
• 13:58
  Speaker 1: The big social media tech names were overweight. Names like
• 14:01
  Speaker 1: Intel and IBM were overweight the consumer. You know, the
• 14:05
  Speaker 1: only real number that's better currently today than it was
• 14:08
  Speaker 1: going into side stock prices which are way ahead of
• 14:12
  Speaker 1: where they were, even though earnings aren't back. There is
• 14:14
  Speaker 1: consumer spending. So this consumer has a lot of money
• 14:18
  Speaker 1: in their pocket. They do, you know, I never I
• 14:21
  Speaker 1: never bought the argument that they were going to buy
• 14:22
  Speaker 1: stocks in bitcoin. I always thought they just start to
• 14:24
  Speaker 1: spend it on really the stimmies. You didn't think the
• 14:27
  Speaker 1: Stimmies were at play in the whole game stop phenomenon, Yeah,
• 14:30
  Speaker 1: not really. I mean, I think there's probably some of that,
• 14:33
  Speaker 1: but I think you know, people have been locked up
• 14:35
  Speaker 1: and they want to spend the money and go do
• 14:36
  Speaker 1: things and have some fun. And so you know, we're
• 14:39
  Speaker 1: overweight consumer discretion, which is a great place to be
• 14:41
  Speaker 1: because of that that that underlying if your and of
• 14:46
  Speaker 1: course consumers going out and spending more money feeds back
• 14:49
  Speaker 1: into that inflation conversation. How do you hedge against that?
• 14:52
  Speaker 1: How is that showing up in the et F world? Well,
• 14:55
  Speaker 1: I mean I think the way people traditionally would hedge
• 14:57
  Speaker 1: against that would be to use come podities. Although commodities
• 15:01
  Speaker 1: are fairly difficult to own um and you know in
• 15:04
  Speaker 1: the traditional et F because you know, like oil for example,
• 15:08
  Speaker 1: you can't own in an e t F because you
• 15:09
  Speaker 1: can't get to you own oil futures as the underlying
• 15:12
  Speaker 1: and that's cut. But how could you maybe play the
• 15:15
  Speaker 1: boom we're seeing in commodities through an E t F?
• 15:18
  Speaker 1: What you know, what's the side play there? I think
• 15:21
  Speaker 1: it's the producers perhaps is the best way to play that.
• 15:24
  Speaker 1: You know, the miners as an example, if you wanted
• 15:26
  Speaker 1: to you know, move away from gold or oil or
• 15:29
  Speaker 1: just by you know x L E, which is the
• 15:32
  Speaker 1: energy producers, I mean, financials and energy have been on
• 15:34
  Speaker 1: a terra so far this year as well, and so
• 15:39
  Speaker 1: you know, if you're worried about inflation, you know, then
• 15:42
  Speaker 1: the the the the the producer of those commodities as
• 15:46
  Speaker 1: a way to play it. You're not getting pure exposure,
• 15:49
  Speaker 1: but it's very difficult for people to get pure exposure
• 15:52
  Speaker 1: to commodities outside of gold, which you could buy like
• 15:55
  Speaker 1: via g LD. You actually have physical behind you. What's
• 15:59
  Speaker 1: one of the most some them or one of the
• 16:00
  Speaker 1: more popular ETFs that you're seeing in the market right now. Well,
• 16:06
  Speaker 1: I mean from our perspective, just sort of broad labeling,
• 16:09
  Speaker 1: if you will, high yield. We have a strategy that
• 16:12
  Speaker 1: you know, moves between high yield and treasuries. It's been
• 16:14
  Speaker 1: a great product for us, not only in performance, but
• 16:17
  Speaker 1: also in terms of inflow and as the investors are
• 16:20
  Speaker 1: looking for yield in this environment where there isn't any
• 16:23
  Speaker 1: um you know, where the tenure treasuries at one sixty ish,
• 16:26
  Speaker 1: you know, bouncing around a little bit, and even corporate
• 16:28
  Speaker 1: bond funds are at like one sixty, which is kind
• 16:30
  Speaker 1: of ironic. Um. You know, anything that has an attractive
• 16:33
  Speaker 1: yield to it is attractive in this market. You're starting
• 16:35
  Speaker 1: to see flows there. All right, I think you're starting
• 16:38
  Speaker 1: to see flows to lower p higher quality names that okay,
• 16:41
  Speaker 1: start to de risk their portfolio. Hey, Sean, thanks so
• 16:43
  Speaker 1: much for joining us. We really appreciate it. Sean O'Hara,
• 16:45
  Speaker 1: President Pacer et F S giving us his view on
• 16:48
  Speaker 1: the markets and the E t F space. We'll have
• 16:50
  Speaker 1: more coming up. This is Bloomberg, Paul. We've been talking
• 16:57
  Speaker 1: about how people are starting to take their vacation days.
• 17:00
  Speaker 1: Summertime is coming and I think a lot of people
• 17:01
  Speaker 1: might be spending some time by the pool this summer.
• 17:05
  Speaker 1: And we're going to talk to a guy that knows
• 17:06
  Speaker 1: a lot about that, Kevin Holler, and he is Hayward CEO.
• 17:09
  Speaker 1: It is a leading global manufacturer of both residential and
• 17:12
  Speaker 1: commercial pool and SPA equipment. Kevin, great to talk to you.
• 17:16
  Speaker 1: I am looking forward to summertime, but first I need
• 17:18
  Speaker 1: to get your take on something I've heard a lot
• 17:20
  Speaker 1: about in the past twenty four hours. Forget about a
• 17:22
  Speaker 1: gasoline shortage, there is a serious chlorine shortage out there.
• 17:26
  Speaker 1: What's going on? Yeah, there's uh. Good to be with
• 17:30
  Speaker 1: you that this morning, Kayley and Paul. Uh, there is
• 17:33
  Speaker 1: uh chlorine shortage out there resulting from Hurricane Laura late
• 17:37
  Speaker 1: last summer. But Heyward, we're actually part of the solution.
• 17:41
  Speaker 1: We have alternatives. We actually make a more natural form
• 17:44
  Speaker 1: of chlorine salt chlorine generation UM, and we have inventory available.
• 17:50
  Speaker 1: We moved very quickly to what to try and provide solutions.
• 17:53
  Speaker 1: We also have some UV and some ozone product which
• 17:56
  Speaker 1: when paired with any form of chlorine can actually use
• 18:00
  Speaker 1: your need buy up to. So there is a shortage
• 18:03
  Speaker 1: out there, but at Hayward we're trying to be part
• 18:05
  Speaker 1: of the solution and get people in the pools this summertime. Kevin,
• 18:09
  Speaker 1: give us a sense of how your business was impacted
• 18:12
  Speaker 1: by the pandemic. Did people build more pools, did they
• 18:16
  Speaker 1: use their pools more often? Was there increased demand for
• 18:19
  Speaker 1: your products and services? Gives a sense yes to all
• 18:23
  Speaker 1: three paul Um. You know, I'd say the pandemic really
• 18:26
  Speaker 1: became an advertisement for a trend that was already in
• 18:29
  Speaker 1: existence for five or eight years leading up to to
• 18:32
  Speaker 1: COVID UH people were looking to get in their pools
• 18:35
  Speaker 1: earlier last year people started building pools UH more more frequently.
• 18:41
  Speaker 1: So what we saw was, you know, the strength of
• 18:45
  Speaker 1: our business really after markets, so we benefit greatly from
• 18:49
  Speaker 1: the new construction that's going on, but that's really just
• 18:52
  Speaker 1: adding to the installed base, which creates this annuity like
• 18:56
  Speaker 1: revenue stream for us as folks you know, used their
• 19:00
  Speaker 1: pools more often. The other thing that we really saw
• 19:02
  Speaker 1: was people were starting to upgrade their pool pad so
• 19:06
  Speaker 1: the equipment needed. They started bringing in some some more
• 19:09
  Speaker 1: comfort products like salt clorine generation or automation controls or
• 19:14
  Speaker 1: heaters for example, to extend their pool season, open it
• 19:17
  Speaker 1: up sooner and be able to swim later into this season.
• 19:20
  Speaker 1: But Kevin, to what extent was that demand pulled forward
• 19:24
  Speaker 1: by the pandemic? How sticky is that? Do you expect
• 19:26
  Speaker 1: it to continue once we kind of re emerge from this.
• 19:31
  Speaker 1: I absolutely do. I think that again, the trend was
• 19:34
  Speaker 1: there prior and it's going to continue. People have been
• 19:37
  Speaker 1: investing in outdoor living for for for years. The pool
• 19:42
  Speaker 1: is the centerpiece of that out backyard investment, and this
• 19:47
  Speaker 1: is this is an amenity that we're seeing the boomers
• 19:50
  Speaker 1: invest in. This is an amenity that we see the
• 19:55
  Speaker 1: millennials looking to add to their homes. So again, with
• 19:59
  Speaker 1: the migration out of the city's UH are and into
• 20:03
  Speaker 1: warmer climates. This is gonna be a trend that's going
• 20:05
  Speaker 1: to continue for years to come. All right, fascinating story.
• 20:10
  Speaker 1: We really appreciate you taking a time there, Kevin, Kevin
• 20:13
  Speaker 1: hollerand president and CEO of Hayward Industries, just with the
• 20:17
  Speaker 1: people using their pools a little bit more. Oh yeah,
• 20:19
  Speaker 1: I wish I was one of them. I really do. Yeah,
• 20:21
  Speaker 1: it's interesting. I think I think is Kevin was suggesting, Um,
• 20:26
  Speaker 1: the pool is you know, people are spending more and
• 20:28
  Speaker 1: more time outdoors and that's likely to be a longer
• 20:30
  Speaker 1: term issue, and more and more people leaving the city
• 20:33
  Speaker 1: for the suburbs, and one of the things they're really
• 20:34
  Speaker 1: are leaving for is outdoor space and outdoor living. I mean,
• 20:38
  Speaker 1: that's what I lack here in the city and why
• 20:40
  Speaker 1: I do not have a swimming pool that I have
• 20:42
  Speaker 1: access to. Thanks for listening to the Bloomberg Markets podcast.
• 20:46
  Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
• 20:50
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 20:54
  Speaker 1: on Twitter at Matt Miller three. Put on false Sweeney
• 20:58
  Speaker 1: I'm on Twitter at pt Sweeney Before podcast. You can
• 21:00
  Speaker 1: always catch us worldwide at Bloomberg Radio m