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Twitter, Tesla, Markets, and Steel (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. As we promise, I
0:23
Speaker 1: want to get into this whole Twitter Tesla Elon Musk story.
0:27
Speaker 1: It just it keeps evolving every day, new news, every day,
0:31
Speaker 1: stocks moving all over the place. Uh. So we said,
0:33
Speaker 1: let's get a couple of smart people in here who
0:35
Speaker 1: can help us figure out what's going on. Uh and creative.
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Speaker 1: We did that today, Man deep Seeing, senior technology and
0:40
Speaker 1: also Bloomberg Intelligence and Dan Ives, senior equity analysts at
0:43
Speaker 1: web Bush Securities. Dan, you know, I kind of I
0:47
Speaker 1: feel for you and I feel for the shareholders of
0:50
Speaker 1: Tesla because the fundamentals of the company are one thing,
0:54
Speaker 1: and they're pretty darn good when you think about just
0:56
Speaker 1: the growth of the TV business, which you've been so
0:59
Speaker 1: right on for so along. Yet the stock comes under
1:01
Speaker 1: tremendous pressure for really some issues outside of the fundamentals,
1:06
Speaker 1: namely Elon Musk and the selling of all the stock.
1:10
Speaker 1: How do you put that in context for your clients? Yeah,
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Speaker 1: I mean, look, a big part of Tesla and the
1:17
Speaker 1: run is Musk. Musk is the hearts and lungs of
1:20
Speaker 1: the test of story, key part of the brand, and
1:24
Speaker 1: ultimately he's essentially using Tesla like his own a t
1:27
Speaker 1: M machine to buy Twitter and ultimately continue to fund
1:32
Speaker 1: that situation. It's been a black cloud over Tesla stock
1:36
Speaker 1: and the fiasco as we continue to see on Twitter
1:40
Speaker 1: that creates brand destruction for Musk and therefore for Tesla.
1:45
Speaker 1: And that's why I think we continue to be just
1:47
Speaker 1: in this very very frustrating spider web that in it
1:52
Speaker 1: speaks that I think the sell off and Tesla is
1:56
Speaker 1: must driven. Hey, Dan, that goes to the question I've
1:59
Speaker 1: been asking my off. At least I look on the
2:01
Speaker 1: Bloomberg terminal and I look at the board makeup of Tesla,
2:05
Speaker 1: and I see a couple of Musk names there. And
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Speaker 1: I don't know how independent the others are. Mr. Murdoch
2:09
Speaker 1: for example, but there is an independent board of directors.
2:12
Speaker 1: Presumably there aren't large institutional shareholders are can anybody rain
2:18
Speaker 1: an elon Musk from the Tesla perspective, I mean, look,
2:22
Speaker 1: in theory they could technically, but realistically not right. And
2:26
Speaker 1: I think that's part of the issue here is that
2:29
Speaker 1: you know, Musk listens to one person and the person
2:33
Speaker 1: in the mirror, and ultimately he's just doubled down because
2:37
Speaker 1: ultimately the way he is, the more that he gets
2:40
Speaker 1: criticized in terms of what he's doing, he just actually
2:43
Speaker 1: just dives further into the deep end of the pool.
2:46
Speaker 1: And that's what we've seen in terms of playing out
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Speaker 1: in the Twitter situation and as well as with Tesla
2:51
Speaker 1: in terms of selling the stock. And that's why the
2:54
Speaker 1: problem from an investor perspective is that even though it's
2:58
Speaker 1: couldn't non fundamental, it's also a lot of his attention
3:03
Speaker 1: seemingly all that right now, it's focused on Twitter instead
3:06
Speaker 1: of the golden child plus of his wealth, which is Tests.
3:10
Speaker 1: And that's why he lost that crown, which is personal
3:13
Speaker 1: world because of what's happening to Test of stock. Six
3:15
Speaker 1: under fifty billion of mark cap wiped out. Man Deep
3:20
Speaker 1: pop On in here and talked to us a little
3:21
Speaker 1: bit about the valuation side of things for Twitter. Now,
3:24
Speaker 1: I will say it was a lot easier to do
3:26
Speaker 1: this when Twitter was still public. You could see exactly
3:29
Speaker 1: what the stocks was trading at, you could exactly see
3:32
Speaker 1: exactly what the financials were at. But now that it's private, man, deep,
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Speaker 1: is there a sense of just how much Twitter is
3:39
Speaker 1: worth or what we would even need to find that out? Yes,
3:44
Speaker 1: if it was publicly traded right now, my guess is
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Speaker 1: it would be an under ten dollar stock. So Elon
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Speaker 1: boughted around about fifty. I bet you it already would
3:55
Speaker 1: have lost of its value at this point of time.
3:58
Speaker 1: And the reason for that is, uh, you know, Elon
4:02
Speaker 1: talked about changes, you know when it comes to free
4:05
Speaker 1: speech and how you know, the platform has to serve
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Speaker 1: a broader audience. Well, none of it seems to have happened. Yes,
4:12
Speaker 1: the services up, and he has cut costs, you know,
4:16
Speaker 1: and uh so far at least, you know, you could
4:19
Speaker 1: say the silver lining is Twitter hasn't gone down. But
4:22
Speaker 1: in terms of how Twitter operates, uh, you know, free
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Speaker 1: speech wise or just you know, what they have done
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Speaker 1: in terms of the ad formats or boosting revenue. Nothing.
4:32
Speaker 1: I mean, he has talked about subscriptions, but it's still
4:36
Speaker 1: a work in progress and I think it's gonna take
4:39
Speaker 1: months before they can roll out a good subscription offering.
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Speaker 1: So they've been losing ad revenue and net net. You know,
4:46
Speaker 1: there has been destruction in terms of what the business
4:49
Speaker 1: was prior to him buying the company, and Paul what
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Speaker 1: Mandy just said kind of talk him as this free
4:54
Speaker 1: speech idea a time the journalists Overnight, a lot of
4:57
Speaker 1: the journalists that had covered Elon Musk got their accounts
5:00
Speaker 1: suspended and then took to Twitter spaces every way around it,
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Speaker 1: and then Twitter spaces suspended got suspended. So it's it's
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Speaker 1: not trending well. And man deep you know, as if
5:08
Speaker 1: I started my career as a uh corporate banker, So
5:11
Speaker 1: I do look at the balance sheet, and you know,
5:13
Speaker 1: if I look at the f A terminal for Twitter
5:15
Speaker 1: before it was taken private, the forecasters like billion dollars
5:18
Speaker 1: of EBATA, maybe a little bit more. Then he layers
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Speaker 1: thirteen billion dollars of dead on top of the billion
5:23
Speaker 1: dollars of That's not good. I mean, how do you think,
5:28
Speaker 1: you know, how do you think that the capital structure
5:30
Speaker 1: should be on a company like Twitter. Well, so we
5:33
Speaker 1: know he has been selling stock and one of the
5:35
Speaker 1: things I think he would end up doing is pay
5:38
Speaker 1: off some of that debt because the interest expense will
5:43
Speaker 1: continue to add up. And my sense is he has
5:47
Speaker 1: already sold enough stock to UH pay off a lot
5:51
Speaker 1: of that debt, so I wouldn't be surprised if that
5:54
Speaker 1: happens a lot sooner. Hey Dan, you know going to
5:56
Speaker 1: these stock sales. I haven't. I have not seen any reporting,
6:00
Speaker 1: so I don't know. But I do raise the question
6:02
Speaker 1: how much of that stock was sold to as MENTEP
6:06
Speaker 1: suggests maybe service some of the debt. Payoff the debt
6:08
Speaker 1: at Twitter versus personal margin loan accounts that may know
6:13
Speaker 1: margin hall that may have come from investment banks. Do
6:16
Speaker 1: we have any knowledge of that? Well, that's part of
6:19
Speaker 1: this issue. I mean, really nuns to pay up the
6:21
Speaker 1: debts so far, because the problem is that the marginal
6:25
Speaker 1: mound situation that becomes a spiral because the lower that
6:29
Speaker 1: TASO stock goes, you need more collateral. And I think
6:33
Speaker 1: that that's beech. The problem here is that look for billion,
6:37
Speaker 1: it's gonna go down along with Time Winner a o
6:41
Speaker 1: L as the worst tech acquisitions in the history of
6:45
Speaker 1: eminem And I don't even know that. The question to
6:47
Speaker 1: Mandy's point, forty four billion days probably worth ten to
6:50
Speaker 1: fifteen billions. Okay, from from where twitters, the problem goes
6:55
Speaker 1: to the more reading Twitter has as advertisers leave. Now
7:00
Speaker 1: you you're not profitable. You have a four to five
7:03
Speaker 1: billion dollar hole every year. How do you pay for that?
7:06
Speaker 1: It's either investors or must which means you have sell
7:08
Speaker 1: more stock. But Dan, what does that then mean for
7:14
Speaker 1: this margin loan swap that we were talking about. I
7:16
Speaker 1: want to say, last week, the idea of a Twitter
7:20
Speaker 1: debt I think thirteen billion dollars of financing getting swapped
7:23
Speaker 1: out for I actually don't know how much in potential
7:26
Speaker 1: Tesla stock, and the idea here was that he would
7:28
Speaker 1: start shelling those shares and then take on the Twitter
7:30
Speaker 1: debt in a personal capacity. Now we've seen how Tesla
7:33
Speaker 1: investors are reacting to that, Is that really going to
7:36
Speaker 1: be enough to instill some sort of confidence from bankers
7:40
Speaker 1: who are extremely exposed to the Twitter deal? I mean
7:45
Speaker 1: that would be like, in terms of that piece, it's
7:48
Speaker 1: like the airplanes crashing and you're focused on salted or
7:52
Speaker 1: unsalted peanuts that they have, And I think that's part
7:57
Speaker 1: of the problem here. It's it's that's a small piece
8:00
Speaker 1: on the broader issue that continues to cast in you
8:03
Speaker 1: we saw last night. Every day it doesn't get better,
8:06
Speaker 1: the twilight Zone gets worse, and unfortunately episode don't end
8:10
Speaker 1: because Musk continues to double down on Twitter. Man Deep
8:14
Speaker 1: thirty seconds left. Where from an advertiser's perspective does Twitter
8:19
Speaker 1: fit in now with his new ownership? Well, so it
8:22
Speaker 1: was always about brand advertising, and and look, it's a
8:26
Speaker 1: handful of large brand advertisers and I wouldn't be surprised
8:29
Speaker 1: a few of them have already left and they don't
8:31
Speaker 1: want to be seen advertising on Twitter because they don't
8:34
Speaker 1: consider it to be a brand safe flatform anymore. So
8:38
Speaker 1: I don't think they're getting any new advertisers right now. Alright, alright, guys,
8:41
Speaker 1: I really appreciate your time and deep seeing senior technology
8:44
Speaker 1: anneals with Bloomberg Intelligence and Dan I've senior equity analysts
8:48
Speaker 1: at web Bush Securities. I mean, Dan was just really early,
8:52
Speaker 1: really right on the opportunities within the electric vehicle space
8:56
Speaker 1: and championing Tesla. And it's tough for guys Dan ives
9:00
Speaker 1: and other supporters of the company and of the technology
9:02
Speaker 1: and of the product and not to mention the shareholders
9:05
Speaker 1: who actually own the stock and put their money where
9:08
Speaker 1: their mouth is to now see a lot of that
9:10
Speaker 1: value wiped out um because of issues that are not
9:14
Speaker 1: necessarily fundamental. Yes, there's increased competition, but a lot of
9:17
Speaker 1: this has been because of Elon Musk and is deal
9:20
Speaker 1: with Twitter tough to take. We've got a Federal Reserve,
9:27
Speaker 1: We've got a Bank of England, we've got in European
9:30
Speaker 1: Central Bank and others, all in the last forty eight
9:33
Speaker 1: hours raising rates, talking tough, UH, and the markets certainly reacting.
9:38
Speaker 1: Chris Campbell joins US chief strategist at Kroll. He joins
9:42
Speaker 1: us here in a Bloomberg Interactive broker studio. So for
9:44
Speaker 1: a Friday, you get a double gold star. We appreciate that. Chris.
9:48
Speaker 1: You spent some time as former assistant secretary from the
9:52
Speaker 1: Universe's US Department of Treasury interact with FED Chairman J Pale.
9:57
Speaker 1: What do you make of our Federal Reserve UH and
10:01
Speaker 1: it's efforts over the past hours. Yeah, First of all,
10:04
Speaker 1: it's great to me be with you. It's a great
10:06
Speaker 1: to be in studio as well. It's it's a cold
10:08
Speaker 1: morning here in New York, so it's it's good to
10:10
Speaker 1: be here. But like I look, there's no question that
10:13
Speaker 1: the Cherman Palace is telegraphings as well as central banks
10:16
Speaker 1: around the world that they that the markets must take
10:19
Speaker 1: them seriously and they're going to do everything they can
10:21
Speaker 1: to make sure that that inflation gets under control. And
10:24
Speaker 1: they and they're gonna stay, They're gonna keep on the
10:26
Speaker 1: gas as for as long as it it's necessary for
10:28
Speaker 1: them to be able to you know, break break the
10:30
Speaker 1: back of inflation. Do the markets believe them? Do you
10:34
Speaker 1: think clearly? Not? Well? Look, I yeah, I look going
10:38
Speaker 1: into going into yesterday, No, I think yes. I think now,
10:41
Speaker 1: I think that they're actually seeing that there the extent
10:43
Speaker 1: of what uh you know what maybe possible, um and
10:46
Speaker 1: I think that there's you know, and you know, but
10:49
Speaker 1: for one one mistake that that that the chairman made
10:52
Speaker 1: pretty early on uh this year, I think, you know there,
10:56
Speaker 1: it's it's foolish for the markets to not take this
10:58
Speaker 1: Cherman seriously, well, not take it seriously. But I'm wondering
11:02
Speaker 1: what they're actually pricing in here, because it feels like
11:04
Speaker 1: we've been talking about recession for at least a year. Year.
11:07
Speaker 1: Going to half arguably is this just a result of
11:12
Speaker 1: the Federal reserves rate hikes and repricing the discount rate
11:15
Speaker 1: essentially for a lot of these companies, or is this
11:17
Speaker 1: actually pricing in a recession that may or may not hit.
11:21
Speaker 1: I think that the markets the consensus was. I think
11:24
Speaker 1: that that that you know, that the Federal Reserve is
11:26
Speaker 1: actually perhaps even can start reducing rates next year. That
11:29
Speaker 1: is not what the chairman indicated yesterday or the day before.
11:33
Speaker 1: And that's you know, so I think the market markets
11:35
Speaker 1: had had you know, just clearly we're pricing in just
11:38
Speaker 1: incorrectly where the where the Federal Reserve is going to go. Um.
11:41
Speaker 1: And yes, I think that there is a consensus that
11:44
Speaker 1: that the recessions are is going to hit next year sometime. UM.
11:47
Speaker 1: But I don't think anyone had had a clueist to
11:50
Speaker 1: kind of where where the FOMC was was and there
11:52
Speaker 1: where their thoughts were on just how long they're they're
11:56
Speaker 1: intending to maintain this posture of type of type of
11:59
Speaker 1: type polos. Well, you mentioned those FED cuts. Now, you
12:02
Speaker 1: haven't spent time with the Federal Reserve, but you've spent
12:04
Speaker 1: time certainly in Washington close by over at the Treasury.
12:06
Speaker 1: I'm curious about the playbook here because it feels like
12:09
Speaker 1: in the last I want to say, at least in
12:11
Speaker 1: the last decade, the idea of cutting rates when things
12:13
Speaker 1: get tough is part of the feds um mantra, basically
12:18
Speaker 1: the playbook. So if we do actually see a recession
12:20
Speaker 1: and say the second quarter or third quarter, isn't the
12:24
Speaker 1: go to to cut rates as shown by the last
12:27
Speaker 1: decade of Monterrey policy, at least here in the United Dates,
12:30
Speaker 1: So why is the market getting that wrong? If that's
12:33
Speaker 1: what they've done in the past. Look, this is way
12:35
Speaker 1: I described it. The Federal Reserve has lots of tools
12:37
Speaker 1: in their arsenal Uh, they're the biggest They're kind of
12:40
Speaker 1: their nuclear bomb, if you will, are interest rates. But
12:43
Speaker 1: they can they can buy, sell credit, and they can
12:45
Speaker 1: do they can do you know, lots of bonds. There's
12:47
Speaker 1: a lot of things they can do. Quantitine reasoning, quaritin
12:50
Speaker 1: of tightening quite have the same effect. No, that's true, right,
12:52
Speaker 1: So and they're they're more and again there it's kind
12:54
Speaker 1: of like a gradation of of what they're what they
12:57
Speaker 1: can do. But the reality is this, I I look
13:01
Speaker 1: got God loved fed Sherman Powell, and I'm so happy
13:04
Speaker 1: I'm not in his role right now. But I will
13:06
Speaker 1: say one thing, he is not going to be pull walker,
13:09
Speaker 1: and so what will not happen, what I'm confident will
13:11
Speaker 1: not happen under under his chairmanship, is that there'll be
13:15
Speaker 1: will be stops and starts, and so he is going
13:17
Speaker 1: to maintain a posture, and I'm very confident to maintain
13:20
Speaker 1: a posture until we see a dour trajectory on inflation.
13:24
Speaker 1: Is going to maintain the posture. And like, even if
13:26
Speaker 1: we have to go into recession, which I think likely
13:28
Speaker 1: is very likely, I don't think they're going to change
13:30
Speaker 1: their posture until he sees that happen, because stagflation is worse,
13:34
Speaker 1: is worse than than than what we're currently and I
13:37
Speaker 1: think that that would that would be the most devastating outcome.
13:40
Speaker 1: So is recession in your looking up? So how deep,
13:45
Speaker 1: how prolonged? How are you guys thinking about that? Yeah,
13:48
Speaker 1: we're we're we're suggesting it's going to be uh perhaps
13:51
Speaker 1: mid Q two, beginning of Q three and twelve months,
13:55
Speaker 1: which so like it could be longer. It really is
13:58
Speaker 1: impossible to really genuinely know us, but it's certainly looking
14:02
Speaker 1: like it's going to be, uh next year, I think
14:04
Speaker 1: we're gonna we're gonna be probably going into four in
14:08
Speaker 1: a recessionary environment. Well you said that, Um, he's not
14:12
Speaker 1: going to be like Paul Volker, which I think is interesting. Um,
14:16
Speaker 1: he's not going to fall to this kind of pressure,
14:18
Speaker 1: And to be fair, he hasn't yet, despite a lot
14:20
Speaker 1: of political pressure already being put on him. But I
14:22
Speaker 1: have to go back to the Trump era of tariffs
14:25
Speaker 1: and the idea that a lot of the policymakers, including
14:28
Speaker 1: President Trump himself, had said, Joe Powell, you have to
14:31
Speaker 1: cut rates, and then he did not because of that pressure,
14:33
Speaker 1: but as a kind of insurance cut. Why won't we
14:37
Speaker 1: get an insurance cut this time if you start to
14:39
Speaker 1: see the same layoffs, the same recessionary pressures that we
14:42
Speaker 1: were at the risk of at that point. Yeah, look
14:46
Speaker 1: at we all know that that CPI and inflationary data
14:48
Speaker 1: is is is a lagging indicator, and the and the
14:52
Speaker 1: Federalserve has enormous amount of information at their finger types
14:55
Speaker 1: at any given time. But there's no question again I'll
14:59
Speaker 1: just repeat myself, there's no question that this that I
15:02
Speaker 1: don't believe this Federal reserve is going to do anything
15:04
Speaker 1: approximating we saw in the nineteen seventies stops and starts. Uh,
15:09
Speaker 1: certainly not certainly not reductions in in in interest until
15:12
Speaker 1: there is meaningful downward trajectory on on inflation. All right,
15:16
Speaker 1: So what are you telling your clients here? You know
15:19
Speaker 1: you're talking about here's our forecast for three is what
15:22
Speaker 1: you guys should be doing? What do you guys crossing? Yeah,
15:26
Speaker 1: we expect a continued tightening environment with continuing interest rate
15:31
Speaker 1: increases UM and so it's you know, like we're we're
15:33
Speaker 1: going into a differy, difficult environment. One thing that's that's
15:36
Speaker 1: oftentimes missed is that you guys know well, is that
15:40
Speaker 1: sixtent of our country live paycheck to paycheck um and
15:43
Speaker 1: so with you if you put that on top of
15:45
Speaker 1: you know, get a tightening um monetary monetary policy and
15:50
Speaker 1: a slowing economy, uh and and an increase in job
15:53
Speaker 1: a job list rates. Um. You know that that's going
15:55
Speaker 1: to make for a very meaningful and very difficult for
15:58
Speaker 1: for retail investor, is for and for the average American
16:01
Speaker 1: UM and so and and for companies around around the country.
16:04
Speaker 1: So right right now, if you're if you're a company
16:07
Speaker 1: you haven't yet already gotten gotten in place where you're
16:10
Speaker 1: you know you can withstand um some really difficult economic times.
16:13
Speaker 1: You need to do that now, um and uh, for
16:17
Speaker 1: for and for investors, you know, I just it's going
16:20
Speaker 1: to be a bumpy ride in three and get prepared.
16:24
Speaker 1: Well is this that a reserve? Is it still behind
16:26
Speaker 1: the curve? Uh? Like I think it started late. UM.
16:29
Speaker 1: I don't know if it's beyond the curve now, but
16:31
Speaker 1: I think it's I think they're they're taking their jobs
16:33
Speaker 1: very seriously. But I think I clearly they started late,
16:36
Speaker 1: so they had some they have some catch up to do. Um.
16:38
Speaker 1: And but we see that, we see that with center
16:40
Speaker 1: banks around the world now, so and maybe they're following
16:43
Speaker 1: our our our path. UM. I will say this is
16:46
Speaker 1: that I you know, I don't want I wouldn't want
16:48
Speaker 1: to be in anyone's shoes around the world right now,
16:50
Speaker 1: and I would want to be in some center banker
16:52
Speaker 1: in any in any country. But if I had to
16:53
Speaker 1: choose one, I would choose the United States because I
16:55
Speaker 1: think that we will weather the storm better than anyone.
16:58
Speaker 1: Why is China uh in Europe not necessarily being taken
17:03
Speaker 1: too account in terms of the press conferences, I've been
17:06
Speaker 1: asking all of our guests this question. We know there's
17:08
Speaker 1: a more guaranteed recession in Europe right on the doorstep,
17:11
Speaker 1: might start showing the data as soon as next month
17:13
Speaker 1: or even this month. You have a cozy or policy
17:16
Speaker 1: in China that is going and stops and starts. In
17:19
Speaker 1: his press conferences, Chairman Powell hasn't mentioned either one once.
17:22
Speaker 1: Very focused on domestic policy, which is great and adorable.
17:26
Speaker 1: But at the end of the day, these other global
17:29
Speaker 1: factors do factor into the American economy. Why is he
17:32
Speaker 1: not talking about them as wild cards? Well, okay, both
17:35
Speaker 1: of them are outside of his control and the outside
17:38
Speaker 1: not only his control, but also policymakers in the United States, right,
17:41
Speaker 1: So both on the fiscal and monetary side, these are
17:43
Speaker 1: these are external factors, as is Russia. Um that you know,
17:46
Speaker 1: are just outside of our control. He has to, you know,
17:49
Speaker 1: and he has to, and I'm sure he is taking
17:52
Speaker 1: into account that the extential threats that those posed to
17:55
Speaker 1: the US economy. But those things that that are are
17:58
Speaker 1: in his control. I think he's obviously focused, quite quite
18:01
Speaker 1: candily and quite focused on to make sure that that
18:04
Speaker 1: you know that that those things that he can work
18:06
Speaker 1: in control and Jennet Yellow and others that can control,
18:09
Speaker 1: and policy makers in Washington can control, you know, the
18:11
Speaker 1: things that that the levers that he has and that
18:14
Speaker 1: they have to make sure that that we keep the
18:17
Speaker 1: we keep the economy as close to um and as
18:20
Speaker 1: as going as as strong as it can for as
18:23
Speaker 1: long as it can even there, even under extremely difficult
18:27
Speaker 1: head ones seconds. How politicized is that whole federal reserve
18:32
Speaker 1: do you think? Now? I know they try to remain independent,
18:34
Speaker 1: but you've been down in Washington, what's what's your view?
18:37
Speaker 1: You know, it's incredibly great question. I haven't actually asked
18:40
Speaker 1: that question a lot in a long time. I would
18:41
Speaker 1: say this, I before I went to Treasury, I I
18:45
Speaker 1: always had a question as if they're how independent it
18:48
Speaker 1: was while serving at treasure departments. There is no question
18:53
Speaker 1: that there's a level of independence that actually frustrates those
18:55
Speaker 1: as the Treasury um you know, I think, and but
18:58
Speaker 1: it needs to be that way. That's you know, there
19:00
Speaker 1: is there are so many difficult decisions and populated on
19:02
Speaker 1: both sides. Ken like you see what what what Washington
19:06
Speaker 1: has been doing now, which is spending a lot of
19:07
Speaker 1: money which is actually working at odds with what Federal
19:11
Speaker 1: Serve is doing. Right, So, uh, you know, I said,
19:13
Speaker 1: there is there's clearly a level independence on both sides,
19:16
Speaker 1: and it's really difficult. All right. Chris Campbell, thanks so
19:18
Speaker 1: much for joining us. Chris Campbell's chief strategist at CROWL,
19:21
Speaker 1: joining us here in a Bloomberg Interactive broker studio. Let's
19:26
Speaker 1: talk about our next guest here. There's a lot going
19:29
Speaker 1: on when it comes to a lot of these individual companies.
19:32
Speaker 1: We talked about the big tech names all the time.
19:34
Speaker 1: We have a really cool guest here who has a
19:36
Speaker 1: company called work Sport, publicly traded on the nastac to
19:39
Speaker 1: go w k SP. He joins us, Stephen Rossie. We
19:43
Speaker 1: thank you as always for joining the show on a Friday. Nonetheless,
19:47
Speaker 1: we really appreciate that. Let's start off with a very
19:50
Speaker 1: simple question, what does your company do explain to our audience? Well, first, yeah,
19:55
Speaker 1: thanks for having me, Creedy Paul um and um yeah,
19:59
Speaker 1: it's it's interesting. We take a very interesting approach to
20:02
Speaker 1: the automotive markets. Uh here at work Sports. So we
20:05
Speaker 1: started by making humbly producing truck accessories or automotive accessories,
20:11
Speaker 1: and then we took a very interesting approach UH to
20:14
Speaker 1: the automotive accessory market by hybridizing. So now we're UM
20:19
Speaker 1: into new energy products and we're the first company to
20:24
Speaker 1: launch a stolar tunnel cover for pickup trucks that will
20:27
Speaker 1: create micro grids out of pickup trucks or recharge electric
20:31
Speaker 1: pickup trucks and new energy storage systems battery operated generators
20:37
Speaker 1: for a better way of saying it, and both markets
20:41
Speaker 1: UM are at this time literally lightning in a bottle
20:44
Speaker 1: for us. So, who is your end market customers that
20:47
Speaker 1: the individual is that the auto O E M the
20:51
Speaker 1: stores that you know, the parts stores? How do you
20:54
Speaker 1: who is your customer? Uh? Great question? So on, So
20:59
Speaker 1: are our our our solar truck accessory UM is perfect
21:04
Speaker 1: for the O E M UM At this point we
21:07
Speaker 1: have a named partnership with Hyundai UM and we have
21:11
Speaker 1: various other discussions happening with O E M s in
21:14
Speaker 1: the North American side. UM. So the accessory could be
21:17
Speaker 1: installed on an electric pickup truck and charge the truck,
21:21
Speaker 1: or on a gas or diesel truck and turn that
21:23
Speaker 1: truck into a micro grid for you know, the job
21:25
Speaker 1: site campsite on our battery system. It broadens our market
21:30
Speaker 1: from a humble from from being a humbly in the
21:33
Speaker 1: automotive markets, which is somewhat niche, to the global consumer market. Anybody,
21:38
Speaker 1: whether they drive or or not, could use our power
21:41
Speaker 1: generator for a stormy day or as I said, the
21:44
Speaker 1: job site or campsite, and that fits perfectly directed consumer
21:48
Speaker 1: or through mass merchandisers like home people are lows for example.
21:52
Speaker 1: So let's talk about the risks here. At the end
21:55
Speaker 1: of the day. We are financial journalists, which means we
21:57
Speaker 1: like to look at things class half empty. It's part
21:59
Speaker 1: of the description. Let's talk about the risks here. You know,
22:02
Speaker 1: we hear a lot of doom and gloom out there
22:04
Speaker 1: about recession right on the horizon, a really tough after
22:08
Speaker 1: an already pretty in the market. What's your take? Are
22:12
Speaker 1: you worried about next year? UM? In the new energy
22:16
Speaker 1: markets among one of the fastest growing markets in the
22:19
Speaker 1: world UM, recession UM usually starts at the at the niceties,
22:25
Speaker 1: the the things that people don't necessarily need UM, and
22:29
Speaker 1: then it trickles down depending on how long as you
22:31
Speaker 1: guys know the things that uh, you know, perhaps people
22:34
Speaker 1: do need essentials, but UM new energy products like backup
22:38
Speaker 1: power systems for that stormy day are something more of
22:41
Speaker 1: an essential element, So that category is growing. We've found
22:45
Speaker 1: some very interesting market data that's that's opened our eyes
22:50
Speaker 1: that this market ten times larger than we had even
22:53
Speaker 1: anticipated by literal dollar sents on the on the truck side,
22:57
Speaker 1: on the on the consumer, UH pickup trucks sales side,
23:01
Speaker 1: pickup trucks are really recession proof, and I'll explain first off,
23:05
Speaker 1: the name plates are almost the domestics are no longer
23:09
Speaker 1: producing Sudans as you know UM and leaning very heavily
23:12
Speaker 1: in the pickup trucks. And it seems that the trend
23:15
Speaker 1: would be that in good times, good economic times, people
23:19
Speaker 1: buy pickup trucks. In tougher reckon amount of times where
23:21
Speaker 1: people have to get out and maybe do a little
23:23
Speaker 1: bit more work, people are still bud pickup trucks. So
23:26
Speaker 1: we find that we are in an enviable position in
23:29
Speaker 1: terms of the markets UM. But with with the recession,
23:34
Speaker 1: with you know, the economic times as they are coming
23:36
Speaker 1: out of covid UM, you know we we are. We
23:39
Speaker 1: are noticing supply chain issues, delays, price increases, but there
23:44
Speaker 1: are silver linings that I can talk about. So on
23:47
Speaker 1: the electric vehicle front. I mean, obviously it's it had
23:50
Speaker 1: been Tesla's market that we had Rivian and but now
23:53
Speaker 1: we've got all of the O E M s seemingly
23:55
Speaker 1: coming in gangbusters on electric vehicles. Do you guys kind
24:00
Speaker 1: of think about the growth trajectory, uh, of that business?
24:07
Speaker 1: The the O E M s are all very heavily
24:10
Speaker 1: focused on electric pickup trucks, almost predominantly focused on it.
24:17
Speaker 1: In fact, in some of our meetings in Detroit in
24:19
Speaker 1: the past weeks, um, you know, the words were literally
24:23
Speaker 1: we are putting almost everything we had into electrifying pickup trucks.
24:27
Speaker 1: On a small scale, like the little trucks like hund
24:30
Speaker 1: has a Santa Cruz that's more of a of a
24:32
Speaker 1: of a car with a or an suv with a
24:35
Speaker 1: pickup bed. But the the the O E M s
24:38
Speaker 1: on the electric pickup truck, it's kind of a race. Um,
24:41
Speaker 1: We've had an amazing amount of interest. And the reason
24:44
Speaker 1: why a solar tunnel cover for that truck kind of
24:48
Speaker 1: makes sense is just because you're now changing from something
24:52
Speaker 1: that used to be the big producer of carbon emissions
24:56
Speaker 1: too some step towards carbon neutrality, but as I've always said,
25:01
Speaker 1: is are we merely exchanging the emissions from the tailpipe
25:05
Speaker 1: of a gas fed pickup truck to the emissions of
25:08
Speaker 1: a natural gas or powered smoke stack. So with a
25:11
Speaker 1: push towards e s G. A solar tunnel cover, I
25:15
Speaker 1: mean the statistics are amazing. We produced ninety eight kill
25:18
Speaker 1: a lot hours per year. We reduce with a hundred
25:23
Speaker 1: thousand units of that we sell a hundred thousand solar
25:26
Speaker 1: tunnel covers, which pickup trucks sell on the millions. We
25:29
Speaker 1: are estimated to increase up to ninety five thousand mega
25:32
Speaker 1: LOTT hours, which reduces about one point three billion miles
25:36
Speaker 1: of vehicle emissions every year in exchange for clean energy
25:39
Speaker 1: that could again recharge the pickup truck electric pickup truck,
25:43
Speaker 1: or store energy and gas pickup trucks to be used
25:45
Speaker 1: for job site cancel. So it's very meaningful. Well, a
25:49
Speaker 1: lot of the technology is coming out from abroad. China,
25:52
Speaker 1: I believe, is the leader in electrification, even as we
25:56
Speaker 1: have the likes of Tesla for GM, these other companies
25:59
Speaker 1: that are really trying to advance the ev work here
26:01
Speaker 1: in the States. But it is still China that seems
26:03
Speaker 1: to be the center of it globally. Are you an
26:06
Speaker 1: active competition with Chinese companies? What's your relationship like with
26:10
Speaker 1: our Asian counterparts? We are so. There is a big
26:17
Speaker 1: push recently We've noticed from multiple businesses that were just
26:21
Speaker 1: colleagues with UM in in sourcing or domestification of UM
26:27
Speaker 1: of production UM so China is very strong on power electronics,
26:32
Speaker 1: very strong on UM battery production, but also very much
26:37
Speaker 1: so UM changing their laws, bills and regulations to eliminate
26:42
Speaker 1: the the ability for these factories to produce UM kind
26:47
Speaker 1: of almost with no real controls on emissions and and
26:50
Speaker 1: and carve you know, almost kind of smoggy plants, for
26:54
Speaker 1: lack of a better way of saying it. So with
26:57
Speaker 1: with the battery technology and PC and animation in North America,
27:01
Speaker 1: UM production in North America batteries although a little further out,
27:05
Speaker 1: it is very very possible and very exciting for the
27:08
Speaker 1: future in the next let's call it two to five years. Uh.
27:11
Speaker 1: And in terms of power electronics like like like circuit
27:14
Speaker 1: boards and whatnot, it's it's very very so we we
27:17
Speaker 1: we can compete, Yes, alright, Steve, great stuff. Really appreciate
27:20
Speaker 1: you taking the time to bring us up to date
27:22
Speaker 1: on what you guys are doing at work sport. Steve
27:24
Speaker 1: Rossi see of work sport. NASTAC traded Company w k
27:28
Speaker 1: SP is the ticker to put into your Bloomberg terminal.
27:31
Speaker 1: They make those covers for the beds of the pickup trucks,
27:34
Speaker 1: and now they make them they can be like solar
27:36
Speaker 1: panels to power the pickup trucks and other stuff. Pretty
27:39
Speaker 1: cool technology. All right, we are smack dab in the
27:46
Speaker 1: middle of the Hollywood shopping season. We've got a US
27:49
Speaker 1: retail sales print a couple of days ago. Those missed
27:52
Speaker 1: estimates calls calling the question maybe the strength of the consumers.
27:56
Speaker 1: So when we want to talk about the consumer, we
27:57
Speaker 1: want to talk about retail. We want to talk about
27:59
Speaker 1: shout opping. The name at the top of the list,
28:02
Speaker 1: Danna Tellsley, chief Research Officer and CEO Tellsley Advisory Group.
28:06
Speaker 1: She's been doing this stuff for decades. Hey, Danny, we
28:09
Speaker 1: got that retail sales print a couple of days ago,
28:11
Speaker 1: a little bit weaker than next or much weaker than expected.
28:14
Speaker 1: What was your takeaway from that? It was a week.
28:17
Speaker 1: It was first of all, Paul, thank you for having me.
28:19
Speaker 1: It was a weaker than expected number. Keep in mind
28:22
Speaker 1: that we know that the beginning of November was soft.
28:25
Speaker 1: Every retailer talked about it. You had to pull forward
28:27
Speaker 1: a demand that went into October a little bit compared
28:31
Speaker 1: to what you had in November. And we're having an
28:33
Speaker 1: extra Saturday in in the shopping calendar this year, given
28:37
Speaker 1: that Christmas is on a Sunday, Consumers are waiting. Last year,
28:40
Speaker 1: retailers didn't have enough inventory, and consumers knew that they bought.
28:44
Speaker 1: They were flushed with cash, and they bought a full price.
28:48
Speaker 1: This year, retailers have more than enough inventory. The promotions
28:52
Speaker 1: can continue to build until we get to and even afterwards,
28:56
Speaker 1: so consumers don't feel the same sense of urgency as
28:59
Speaker 1: specially when promotions have been going on for a while now. Dina,
29:03
Speaker 1: there's been this dynamic in the market, at least in
29:06
Speaker 1: the narrative here, that as we start to see inflation
29:09
Speaker 1: numbers increase headline cp I, even the spending ability of
29:13
Speaker 1: everyday Americans will erode, and we haven't actually seen that yet.
29:16
Speaker 1: I'm wondering in three as we see these inflation numbers
29:19
Speaker 1: that come down, will that actually mean that spending is
29:23
Speaker 1: going to rise? Is it as simple as that. I
29:27
Speaker 1: think overall, when we think about the income consumer, you
29:30
Speaker 1: got a bifurcation of the consumer going on. You definitely
29:33
Speaker 1: have the lower middle income consumers shifting their spend to
29:37
Speaker 1: grocery and essentials from discretionary. Inflation coming down would be
29:41
Speaker 1: a benefit for them. We know that the labor market
29:44
Speaker 1: has been strong, and frankly, wages are higher than they
29:47
Speaker 1: were even just a couple of years ago. So if
29:49
Speaker 1: they want a job, they can get a job. I
29:52
Speaker 1: would hope as inflation comes down it would be a
29:55
Speaker 1: boost to demand a DNA. As we sit here on
29:58
Speaker 1: December six, and I know you and your team, you're
30:01
Speaker 1: out at the malls all the time. You've got your
30:03
Speaker 1: fingers on the pulses of this retail economy. How do
30:06
Speaker 1: you think that's going to play out this year vs. V.
30:08
Speaker 1: Last year, or maybe you know more nor normalized year.
30:11
Speaker 1: First of all, I think one of the things we're
30:13
Speaker 1: saying is there is a lull we are in the law.
30:16
Speaker 1: You can see in the lull. Tomorrow is supposed to
30:18
Speaker 1: be the super Saturday. Will be out there saying if
30:21
Speaker 1: all the shoppers are out there. I think one of
30:23
Speaker 1: the big differences is we don't have the scare of
30:25
Speaker 1: omicron and COVID that you had last year. So I
30:28
Speaker 1: don't know about you, but it seems like people going
30:30
Speaker 1: out for dinner occasions. There's holiday celebrations that are happening,
30:35
Speaker 1: and part of those dollars, discretionary dollars, is going to
30:38
Speaker 1: events spending, and we're seeing that. So is the spend
30:42
Speaker 1: going to be gifts that are events and social occasions
30:45
Speaker 1: more than just gifts overall? Certainly seems that way in
30:48
Speaker 1: some instances, along with the travel pick up. Here in Manhattan,
30:52
Speaker 1: where I think you are and I am where you
30:54
Speaker 1: definitely are seeing more tourists. Hotel rooms are crazily priced,
30:58
Speaker 1: and overall, um, the holiday season I think is going
31:02
Speaker 1: to turn out okay, not a barn burner. I think
31:05
Speaker 1: the winner of the holiday season who is whose inventory
31:09
Speaker 1: levels are clean, and I think inventory levels will see
31:12
Speaker 1: an acceleration of promotion if they need to be moved.
31:16
Speaker 1: But doesn't that kind of increased spending require some sort
31:20
Speaker 1: of turnaround in consumer sentiment. It is still so striking
31:23
Speaker 1: to me that if you look at the data, consumer
31:25
Speaker 1: sentiment is still extremely low, but isn't actually denting to
31:29
Speaker 1: the same extent the spending ability. What happens when that
31:32
Speaker 1: turns around. I think when the sentiment picks up and
31:36
Speaker 1: you see labor things being stronger, well, then it's going
31:39
Speaker 1: to lead to demand and potentially go back towards some
31:43
Speaker 1: of the discretionary products instead of towards grocery. Where's shifting now?
31:48
Speaker 1: Keep in mind, consumers definitely are feeling fatigued. There's been
31:52
Speaker 1: multiople years of the pandemic. There's financial stress and also
31:56
Speaker 1: one of the things that consumers are looking to do
31:58
Speaker 1: do things conveniently. Why do you think retail stores today
32:01
Speaker 1: feel so many more functions than they did in the past.
32:04
Speaker 1: Buy online, pickup in store, shipp from store, go to store.
32:08
Speaker 1: How do you have that convenience and seamlessness in order
32:11
Speaker 1: to help consumers have more time on how they want
32:15
Speaker 1: to spend it and how they want to use it. So, Dana,
32:17
Speaker 1: what are people buying this season? Where some of the
32:20
Speaker 1: hot areas that you're seeing, I think some of the
32:23
Speaker 1: occasion we're still working. I mean you're seeing things like
32:26
Speaker 1: whether it is social occasion where like dresses and items
32:29
Speaker 1: like that that's good doing well. Luggage all of a
32:32
Speaker 1: sudden luggage is picking up, and that goes to show
32:35
Speaker 1: the travel that's out there. I think some some of
32:38
Speaker 1: the high end on luxury goods, those consumers continue to
32:42
Speaker 1: have the ability to spend, and the innovative product of
32:46
Speaker 1: some of the luxury brands is working for them. I
32:48
Speaker 1: think one of the categories it's been a bit softer toys.
32:51
Speaker 1: We just haven't seen the toy pickup that we've seen
32:54
Speaker 1: in the past. Luggage interesting because traveling. Am I traveling?
33:01
Speaker 1: I wish I was traveling, Trust me, I wish I
33:03
Speaker 1: was traveling. Um, I actually recently found out that I
33:06
Speaker 1: am actually working or was had the option to take
33:09
Speaker 1: the last week of the year off and I didn't,
33:11
Speaker 1: and I really regretted. Right Um, next year absolutely, But luggage, Paul,
33:17
Speaker 1: I mean, I'm still using my fifty dollar suitcase my
33:20
Speaker 1: dad got me first year of college. Need to upgrade
33:22
Speaker 1: your professional Hey, Dana talked to us about the big
33:26
Speaker 1: trend that's been, you know, impacting your industry of the
33:28
Speaker 1: last decade, which is just kind of e commerce. And
33:30
Speaker 1: I know we probably pulled a lot of e commerce
33:32
Speaker 1: market share forward during the pandemic. What are you telling
33:36
Speaker 1: your clients today about bricks and mortar worce versus e commerce.
33:39
Speaker 1: I don't think it's a versus. I think it's an end.
33:42
Speaker 1: I don't think it's either or. I think it's a bolt.
33:44
Speaker 1: And I think one of the things we've all seen
33:46
Speaker 1: is you're seeing companies. Number One, they've enhanced loyalty programs.
33:50
Speaker 1: Companies have put in more functionality. One of the things
33:52
Speaker 1: you learned during the pandemic, retailers got rid of boxes
33:56
Speaker 1: that were unproductive and not profitable. There sitting here with
33:59
Speaker 1: the best boxes out there. With the omni channel initiatives
34:02
Speaker 1: of like I mentioned the buy online, to pick up
34:05
Speaker 1: in storeship from store. There is multiple use functions and
34:08
Speaker 1: if anything, what came out of the pandemic, retail not
34:12
Speaker 1: only has a right to live. Retail is wanted by
34:15
Speaker 1: the retailers, by the consumers, and also by the enhancements
34:19
Speaker 1: that makes to operating a business. And don't forget the
34:22
Speaker 1: personalization it gives. It helps retailers be smarter about who
34:26
Speaker 1: their customers are, what their customers want to buy. And
34:30
Speaker 1: also they've put in store environments that make us say
34:33
Speaker 1: a wow. I think there's an energy to shopping that's
34:36
Speaker 1: coming out of some of these retail environments that we
34:39
Speaker 1: haven't seen in a while, and you're seeing it in
34:41
Speaker 1: pop up shops, and you're seeing it in full price
34:44
Speaker 1: stores too well. I find it interesting that you say
34:48
Speaker 1: it's a e commerce and brick and mortar story, because
34:52
Speaker 1: for me, I almost feel like brick and mortars coming
34:54
Speaker 1: back into vogue because you can try things on, you
34:57
Speaker 1: can see the product in person, um more so than
35:00
Speaker 1: I feel like we haven't really been able to do
35:02
Speaker 1: the past two years. Do you see some sort of
35:04
Speaker 1: um almost pull away from e commerce because of the
35:09
Speaker 1: hassle of return shipping, for example, or some of these
35:12
Speaker 1: new retailers adding restocking fees when it comes to returns.
35:16
Speaker 1: There could be some of that. I think there's also
35:19
Speaker 1: just people have been so cooped up for so long
35:21
Speaker 1: they want to get out, and I think they're getting
35:23
Speaker 1: out on their terms and their choice. One of the
35:26
Speaker 1: things that we've seen is that when you think about
35:28
Speaker 1: Black Friday weekend, stores don't need to be open twenty
35:30
Speaker 1: four hours a day, and there is definitely more There's
35:34
Speaker 1: not the same rush in the beginning of the day
35:36
Speaker 1: because you didn't have the door busters that you had
35:38
Speaker 1: in years past, So consumers are shopping when they want
35:41
Speaker 1: to shop and when it's convenient. Retailers are able to
35:44
Speaker 1: schedule their sales associates at some of those more productive times,
35:48
Speaker 1: and I think there's justin energy and excitement that's back
35:52
Speaker 1: in physical retail that we haven't had in years. Dana Leslie, Um,
35:56
Speaker 1: you know, you've told us in the past and others
35:58
Speaker 1: have that, you know, for a long time, the retail
36:00
Speaker 1: space in this country, the retail footprint was overstored over
36:03
Speaker 1: there's too many stores. Where are we in kind of
36:05
Speaker 1: right sizing that big we've come. We've right sized at
36:09
Speaker 1: a ton given all the closures that happened during the pandemic.
36:12
Speaker 1: As a matter of fact, one of the things we've
36:14
Speaker 1: seen is the watch list on retailers of concern, it's
36:18
Speaker 1: been steady. We haven't seen an uptick. The same retailers
36:21
Speaker 1: that we've heard about of concern, whether it's bed Bath,
36:23
Speaker 1: whether it's Bulks, whether it's cons whether it's Party City,
36:27
Speaker 1: are and Tuesday Morning, those are the same retailers that
36:30
Speaker 1: were of concern a year or two years ago. I
36:33
Speaker 1: don't have new names added to the list, and that's
36:35
Speaker 1: a good sign, all right, Danna Tellsy thank you so
36:37
Speaker 1: much for your time. You know this time of year
36:39
Speaker 1: is particularly busy for you in your team. Dana Telsey,
36:42
Speaker 1: chief Research Officer with Telsey Advisory Group, and folks, literally,
36:45
Speaker 1: she is the top retail analysts on Wall Street has
36:48
Speaker 1: been for a long time. All right, let's switch gears.
36:52
Speaker 1: I'm gonna talk about steelmakers. UM. Really interesting. First of all,
36:56
Speaker 1: I love the steel and nothing says Middle America and
36:59
Speaker 1: industrial like steel. But New Core, the largest U. S steelmaker,
37:03
Speaker 1: warn shareholders that recession concerns could impact a man as
37:07
Speaker 1: it looks ahead into the new year. So let's get
37:10
Speaker 1: the latest on that. Richard Bork, he's a senior analyst
37:12
Speaker 1: that with Basic Materials with Bloomberg Intelligence. He joins us here. So, so, Rich,
37:18
Speaker 1: what are we hearing from New Cora and and how
37:20
Speaker 1: are investors reacting? Well? I think if you kind of
37:24
Speaker 1: take a step back, UM, steal stocks have performed really
37:27
Speaker 1: well this year, especially considerative prices steel down. So with
37:34
Speaker 1: recession talk heating up and uncertainty concerning that, UM, I
37:39
Speaker 1: wouldn't be surprised if investors are starting to take way
37:42
Speaker 1: off the table here. But really, the demand uncertainty is
37:47
Speaker 1: really more long term issue because in the short term
37:51
Speaker 1: we have a very favorable set up um entering December
37:55
Speaker 1: all the mills and now it's a sixty dollars a
37:57
Speaker 1: ton price increase which seems to be kicking, and Cleveland
38:01
Speaker 1: Clifts this week announced the second increase. Also a main
38:05
Speaker 1: UM service centers, which are one of their main customers,
38:09
Speaker 1: have announced raising prices also, so so we're seeing price
38:15
Speaker 1: outlook a little more favorable after six the client um. Yeah,
38:20
Speaker 1: this year also historically we're heading into a seasonally stronger
38:24
Speaker 1: period as customers start to stock up have a construction season,
38:30
Speaker 1: and in contrast at times in the past there's been good,
38:34
Speaker 1: good supply discipline through the value chain. Demands slowed in
38:38
Speaker 1: the second half of two Mills cut back on production
38:43
Speaker 1: by extending maintenance ovledges and island assets. Service centers reduced inventory.
38:48
Speaker 1: As a year end, manufacturers cut back. UM customers indicate
38:54
Speaker 1: that leak times are extending and mills are less willing
38:57
Speaker 1: to negotiate on prices and they want to increases. Imports
39:01
Speaker 1: are down. Um US prices are actually less than import prices,
39:07
Speaker 1: so we shouldn't have any pressure from imports. You know,
39:10
Speaker 1: in the NERT terms so all all this sets up
39:12
Speaker 1: too for a good start to year, but everybody's concerned
39:17
Speaker 1: a longer term if there's a recession being on the table.
39:21
Speaker 1: So rich give us a sense of just today in
39:24
Speaker 1: our country, how much of our steel is sourced domestically
39:28
Speaker 1: versus imported, and maybe how's how's that changed over time? UM. So, basically,
39:35
Speaker 1: if you look at the industry and things are just
39:38
Speaker 1: kind of rough terms, UM, the U S steel industry
39:42
Speaker 1: require consumers require a little more heart million tons of
39:46
Speaker 1: steel a year, and normally the US ump I can
39:52
Speaker 1: supply about eighty millions, so we do need imports for
39:56
Speaker 1: another twenty or so. So this is kind of bounced
39:59
Speaker 1: around in the over the last few years. But what's
40:02
Speaker 1: happened is such a two thirty two gave UM and
40:07
Speaker 1: all you know, you've seen new course steal dynamics, UM
40:11
Speaker 1: U S Steel. All of them kind of said, you
40:15
Speaker 1: know what such a two two protection is, Maybe we
40:18
Speaker 1: can permanently displace imports by building new mills. So they've
40:23
Speaker 1: all kind of embarked on construction of various new mills
40:27
Speaker 1: over the last few years, and with the thought that
40:30
Speaker 1: that that once to thirty two tariffs expire. Um. You know,
40:36
Speaker 1: these new mills will permanently displace the imports and in
40:41
Speaker 1: the past, so we should see imports trend down in
40:44
Speaker 1: the future. And you know, like I mentioned earlier, you
40:48
Speaker 1: know we've seen that US actually um domestic prices, you
40:53
Speaker 1: are actually cheaper imports steel when you account for kind
40:57
Speaker 1: of travel, you know, the free cost everything to get
41:00
Speaker 1: over to the US. Alright, good stuff. We don't talk
41:04
Speaker 1: about steal enough. And that's the backbone of a lot
41:07
Speaker 1: of stuff that gets built. Yeah, Richard Bork's a senior Analds.
41:10
Speaker 1: He covers the basic materials and nothing is more basic,
41:13
Speaker 1: uh than steel. He does that for Bloomberg Intelligence, joining
41:16
Speaker 1: us via phone and new Core, which you know, I
41:18
Speaker 1: was looking at new Court's got you know, thirty five
41:20
Speaker 1: billion dollar market cap, and then I look at you know,
41:23
Speaker 1: US Steel and I thought that was always the biggest steelmaker,
41:28
Speaker 1: but it's not. It's one of the smaller ones. Sound's
41:30
Speaker 1: got a market cap of five point eight billion dollars,
41:32
Speaker 1: so that the market share, the dynamics of the U
41:35
Speaker 1: S steel businesses has really changed over the last couple
41:37
Speaker 1: of decades. But new Core again the biggest ones calling
41:40
Speaker 1: out some recession concerns and how that might impact uh
41:43
Speaker 1: their business in so, we thought we'd get rich On
41:46
Speaker 1: to kind of get a lay of the land and
41:47
Speaker 1: all things steal. Thanks for listening to the Bloomberg Markets podcast.
41:55
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
41:58
Speaker 1: or whatever podcast plas form you prefer. I'm Matt Miller,
42:02
Speaker 1: I'm on Twitter at Matt Miller three, and I'm fall Sweeney.
42:06
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
42:09
Speaker 1: can always catch us worldwide at Bloomberg Radio.