April 23, 2025 • 39 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Signs Donald Trump is rethinking the most-aggressive elements of his combative stances on trade and the Federal Reserve spurred back-to-back gains in stocks and the dollar, while soothing volatility across asset classes.
The S&P 500 rose 1.7%, though it pared an earlier surge that had swelled to as much 3.4%, as investors tried to gauge how seriously to take pronouncements of flexibility in negotiations with China and other trading partners. The greenback climbed against most major currencies.
After a report that the US would be willing to phase in lighter tariffs on Beijing over five years on Wednesday, Trump told reporters that China was “going to do fine” once talks had settled. Meantime, Treasury Secretary Scott Bessent said the president hasn’t offered to take down US tariffs on China on a unilateral basis.
Long-maturity Treasury yields fell as Trump allayed fears he would fire Fed Chair Jerome Powell. The yen slid as Bessent said America won’t be pursuing specific exchange-rate targets in its talks with Japan. Bitcoin jumped while haven trades like gold pushed lower.
Today's show features:
- Eric Weiner, Bloomberg News Senior Editor, Equities Americas
- Katy Kaminski, Chief Research Strategist of AlphaSimplex
- Jefferies Senior Technology Research Analyst Brent Thill on IBM earnings
- Ross Gerber, President and CEO Gerber Kawasaki Wealth and Investment Management
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week,
Daily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy, plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:31):
We got with is Eric Wiener. He's Bloomberg News Equity
America's team leader. He's the author of several books, including
What Goes Up in Oral History of Wall Street from
the Great Depression through the Internet bubble in the nine
to eleven attacks. He joins us here in the Bloomberg
Interactive Brokers studio. You walked in, I asked how you're doing.
You said, it's been a day. I think it's fair
to say.
Speaker 3 (00:50):
That, say that every day.
Speaker 2 (00:52):
That's what I was just gonna say. But I want
to talk to you about a story that you just
edited that talks about retail traders coming in and buying
the day.
Speaker 4 (01:00):
Is that?
Speaker 2 (01:01):
Is that what we're seeing right now? They haven't been
scared away yet.
Speaker 5 (01:03):
They have not been scared away, and the money well
where it's interesting because we're seeing different kinds of buying.
Speaker 4 (01:10):
So the kind of buying we're.
Speaker 5 (01:12):
Seeing is actual individuals going into the market and buying
individual stocks or buying ETF's big flows coming from these guys.
And in the story which by Esha Day couldn't recommend
it enough, there are some really great quotes about people
looking for magic in the market and whatever else. And
(01:32):
but when you look at the broader UH indicators of
like iras four to one k's, that looks a little
bit more bearish, actually significantly more bearish. What's happening there
appears to be people sort of thinking should I take
my retirement into cash?
Speaker 2 (01:50):
That I yeah, that's scary to hear.
Speaker 4 (01:53):
Yeah, so after.
Speaker 3 (01:54):
The selling just saying had enough.
Speaker 5 (01:56):
It's enough, right, and that like that is actually the
biggest pilot cash we have.
Speaker 4 (02:02):
So if if.
Speaker 5 (02:04):
That turns bearish, that becomes a very different story because
that consistently adds to the stock market going up. There's
constantly this pressure of buying. Other countries don't have that.
So that's unique to the United States and it's.
Speaker 4 (02:18):
Part of our market.
Speaker 2 (02:20):
Maybe I'm just like naive here, but I thought that
I thought that in retirement portfolios. People had like target
date funds, and you basically don't touch it until you
You just don't touch it until you retire. Look, you're
not an investment advisor. I'm not gonna ask you to
give advice here. But I didn't know people played with
that money. They do, and so I do.
Speaker 5 (02:42):
I do not that the that is off limits, Yes,
that is, and you think about it. You try not
to look at it. You think about it once a quarter.
You adjusters don't look at it.
Speaker 4 (02:54):
I haven't looked at it, and it.
Speaker 3 (02:56):
Takes a lot, but I like in my head have
like percentages of what's been going on here, and so
I don't want to touch it, but anymy go ahead.
Speaker 5 (03:03):
Yeah, and the target date fun thing is important because
as you get closer I'm an old man, as you
get closer to retirement, you do different things. You de risk,
you know, you lessen stocks more in stable things. But
you do have people who view their IRA or their
(03:24):
formum one K as a trading vehicle.
Speaker 2 (03:25):
Well, and to be fair, we have seen the bond
market not do what it's typically supposed to do in
an environment where stocks go down, So that could cause
some people to maybe freaked out.
Speaker 3 (03:34):
So how do you make sense of this of someone
who follows the markets right, and you're thinking about the
role of retail traders who can be in and out
pretty quickly and stuff. Maybe it's not that long term bet.
So what does it really indicate about the markets other
than it's kind of a plaything.
Speaker 5 (03:47):
Well, what they're buying is the traditional stuff, Well, the
traditional stuff being like big tech and the big names
and those that they're like fans. It's like, you know,
rooting for your favorite football team, rooting for your favorite
baseball team.
Speaker 4 (04:03):
They are going to buy they believe in Ela Musk.
Speaker 5 (04:05):
They're going to keep buying those stocks until they're proven wrong,
or until they feel that they're proven wrong. So it's
a different kind of mentality. The shifting of retirement funds
to de risking, that's a more programmed move, and that
if that is in fact a long term trend that
(04:27):
actually is troubling.
Speaker 2 (04:29):
Does it ever become if we look at the retail
side of this, does it ever become Do we ever
get to the point where, and maybe this happened post
twenty twenty into twenty twenty one, when retail really ruled,
do we get to a point where retail doesn't have
the money to buy the dip.
Speaker 5 (04:44):
Yeah, that absolutely happens. The bigger point is that they
tend to turn bearish right as the market is ready
to turn bullish. It's kind of a country very indicator.
If you talk to Wall Street pros so there, when
they see over enthusiasm among the retail crowd, they kind
(05:09):
of get nervous.
Speaker 4 (05:10):
This would be an indicator of that.
Speaker 5 (05:14):
But when they start seeing that the fundamentals are strong,
growth should be you know, stock should be moving up,
growth is okay, and the retail crowd is going no,
that's when actually the Wall Street pro.
Speaker 4 (05:26):
Step in and they say, there's a contrary indicator.
Speaker 3 (05:28):
So you know, Eric like, I feel like, if you
want to tell a story, you can find the data
points right. So here I'm looking going back to the
end of twenty twenty two to today, we're up forty
percent on the S and P five hundred. We're down
about eight percent year to date, almost nine percent.
Speaker 6 (05:45):
So I think that.
Speaker 3 (05:46):
Doesn't feel so bad. But I mean, do we have
to think about the last two years or prior years.
We're maybe off the charts anomalies more so, I don't know, like,
how do you like when you start playing around with numbers?
You know what I mean? You can start looking at
things a little bit differently.
Speaker 4 (06:03):
There are a lot of ways to thin slice this.
Speaker 5 (06:05):
The big numbers to me are two straight years of
twenty plus percent returns. That's rare, and that's the kind
of thing where like, no matter who's president, no matter
what the market is, a kind of a pullback would
be expected. What's different now is that the political regime changed,
And normally that doesn't actually mean all that much, but
(06:28):
it really does here, so everybody.
Speaker 4 (06:30):
Wants as soon as if you.
Speaker 5 (06:32):
Take a step back and just look up to the
day the inauguration day on January twentieth, or if you
look at the tariff anounce the day of the tariff announcements,
can you start seeing a downward trajectory where you see
the market reacting to what is going on politically.
Speaker 4 (06:53):
That's different. So if you were looking at this year.
Speaker 5 (06:56):
And coming in and you're like, you know, it's president X,
doesn't matter who it is, and the plans are just
going to be to keep doing what we've been doing,
then the market sells off a little bit and you
look at it and you say, okay, well maybe I
take some profits here whatever, But it's not this cataclysmic
sweeping up, sweeping down in that story we talk about.
(07:17):
We've had just in like the last fourteen sessions, we've
had five two percent down more than two percent down
days and two or three two percent up days, which
like that's incredible, that's crazy swings. So this is the
difference between now and what was going on before, is
that this is actually directly related to Washington, and we
(07:39):
have no clarity on what's going to come out of there.
Speaker 3 (07:42):
All right, crazy stuff. As always, Eric, thank you so much.
Appreciate Eric Weener, Senior Editor Equities America's joining us here
in studio.
Speaker 1 (07:50):
You're listening to the Bloomberg Business Week Podcast. Catch us
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Speaker 2 (08:03):
As Carol mentioned, we're focused on the stock market, the
bond market. Earlier, the S and P five hundred rallied
as much as three point four percent. These were off
of media reports that the US was considering lower levees
on China. Then we saw stocks pair gains after Treasury
Secretary Scott Besson casts some doubts on a timely resolution
on the US China trade war. We want to get
into what's happening in the bond market because we are
(08:25):
seeing long maturity treasury yields fall, at least felt earlier
after the President laed fears that he would fire FED
chair J. Powell. A lot to unpack here. Fortunately, we
got Katie Kominski with us. She's chief research strategist air
portfolio manager at Alpha Simplex Group. She joins US from Boston. Katie,
it's been a bit since we spoke to you. There's
been a lot happening when it comes to the bond market,
(08:46):
so we wanted to get your view on really how
you're thinking about this asset class in an environment where
it's not necessarily behaving in the way that it typically
behaves when there's a sell off an aquities.
Speaker 7 (09:02):
That is such a good question. It is the most
important thing to look at this month. If you look
at what happened, equities were down and you didn't see
bonds rallying in response to such an extreme event, And
to me, this is a suggestion that the market is
much more concerned about sort of the vulnerability of US
assets but also the potential for inflation. So both of
(09:24):
those narratives are key here, and that means that bonds
are just not behaving like the safe haven asset that
we love, but gold has so who knows.
Speaker 6 (09:33):
It's definitely something to note.
Speaker 3 (09:35):
Yeah, how do you make sense of that? Like you're
someone who's watched this, first of all, the bond market
when it's not acting like it's supposed to, Like, do
alarm bells go off in your brain and you're like,
wait a bitute.
Speaker 7 (09:47):
Oh, definitely, because I mean, if you think about the
typical narrative of this type of move when you have
such a large risk off you know, trade like we've
seen in the last few weeks, although it has been volatile,
you think about the sort of where do you go
to find safe haven and that's usually fixed income and
that's not the case if you think there's a probability
(10:09):
that this type of risk off move could cause dumping
of US assets or a lack of trust in sort
of US treasuries, and that's what the market has been
concerned about. And we've definitely seen some of those signals,
albeit days like today in the last couple of days,
you're seeing some.
Speaker 6 (10:25):
Retraction of that concern.
Speaker 7 (10:27):
You're seeing a flattening of the yield curve, which would
kind of say that people are a little less concerned
about that.
Speaker 6 (10:33):
But it is definitely.
Speaker 7 (10:34):
Something we're going to have to watch because bonds are
just not behaving how we would think.
Speaker 2 (10:38):
Do you think the US is losing its status as
the haven, as the safety play, as the central bank
to the world.
Speaker 6 (10:49):
Well, I mean that is a clearly important narrative.
Speaker 7 (10:52):
I mean, look how much the markets have moved based
on the independence of the FED.
Speaker 6 (10:57):
And sort of concern over that.
Speaker 7 (11:00):
Concern as well is that when you have flows out
of US assets, that they don't get recycled back into
US treasuries. And so the concern with that is that
we're just losing some of that safe haven status. And
it's still too early to tell, but the early indications
in the market suggest that we should worry about it
and think about it.
Speaker 3 (11:19):
You know, it's funny I think about Katie. You know,
for such a long time in terms of US equities,
we talked about Tina, right, there is no alternative, and
so money just kept coming into the US equity story
and markets. So I feel like too, as you say,
with the ultimate safe haven US treasuries, that there was
no alternative. Is there, realistically, though, an alternative that I
(11:40):
understand there are that might give you higher yield or
but I mean with the same security and dependency that
the US treasuries have, is there an alternative?
Speaker 7 (11:52):
Oh, I forgot about, Tina, But yeah, I mean, I
know it wasn't so long ago. I love that it
wasn't that long ago. But it's been a busy month.
But yeah, you know, that is a really good question.
And that's why I think if you look at the
only place people.
Speaker 6 (12:04):
Have run to is gold, which you know, and.
Speaker 7 (12:07):
That has been such a big story because there's just
people don't know what that alternative is yet, and there's
still questionability of whether or not treasuries could be more vulnerable,
and so I think we're going to have to really
I don't know the answer, and I think the market
doesn't know the answer. So at this point, the alternatives
aren't clear, especially in a world where inflation could be
(12:29):
an issue.
Speaker 6 (12:31):
Definitely.
Speaker 3 (12:32):
So the whip saw the back and forth, you know,
is there a point this is something we talk about,
like with our Gena Martin Adams in terms and other
market strategists unlike yourself, where there's a point where there's
just so much back and forth that investors are like,
I'm out and there's long term implications. I don't know,
help me in terms of the markets here the treasury trade.
(12:53):
Is there a point where global investors truly say I'm out?
And what is that?
Speaker 8 (12:57):
Is it?
Speaker 3 (12:58):
Vetcher J. Powell being moved? Is it the constant back
and forth? Like, what is that tipping point where investors
are like, can't do this anymore?
Speaker 5 (13:07):
Well?
Speaker 7 (13:07):
I think, I mean we have seen those type of
actions in terms of speculative volumes. Yeah, when you look
at signals, signals have really reduced and generally technical signals
have become very muted.
Speaker 6 (13:20):
And that's consistent with.
Speaker 7 (13:21):
Sort of investor behavior as well. I'd say that, you know,
even though you've seen a lot of swings, there definitely
becomes a point where people just wait. And I think
if we get into that situation, it could take a
little bit of time for them to get risk back
on the table. I think this week is a good
example that you know, there are still people looking for that,
(13:42):
you know, recovery. They're looking for sort of potential opportunities,
which means that it's not there yet, but a lot
of people have de risks substantially already and they may
not be coming back right away.
Speaker 2 (13:55):
Katy, you want to go back to something that you
said that you have your eye on, which is the
status of the US as this haven, as the dollars
you know, as the safety or haven currency, the US
treasury market as one where people can rely on backed
by the full faith and credit of the US government.
You said you're watching that status closely, but let's play
(14:17):
that out a little bit. What happens if the US
does lose its status. What are the implications of that.
Speaker 7 (14:23):
Well, it would be massive flow into other assets and
potential for dumping of US treasuries, and what that would
do is steep in the US yield curve. And that's
why we've specifically seen.
Speaker 6 (14:34):
That type of movement, but not in extremity.
Speaker 7 (14:38):
So I think it's really a question of flows and preferences,
and that could be disadvantageous to US assets, depending of course,
on how extreme it would be. We've already seen massive
flows to the yen and the euro, and I think
as we navigate those trends if they continue much longer,
that that will get people concerned.
Speaker 3 (15:00):
What about the auctions, we had a five year today,
we did see demand rising at that seventy billion dollars
scale a five year note. How closely are you're watching
the auctions? What are they telling you in terms of
investor demand and still having confidence in the US government.
Speaker 7 (15:18):
Well, I'd say, I mean, the auctions have been reasonable
and there's been plenty of demand, so that is a
positive sign.
Speaker 6 (15:25):
Where we see the trends.
Speaker 7 (15:27):
That are more concerning is actually in the market pricing
less so in sort of the demand for auctions and
sort of imagine that you know, auctions is sort of
newly issued treasuries, but there's a lot of treasuries that
people are holding, and I think that is going to
be a little harder to measure and that will come
out in sort of pricing as well. So I think
(15:47):
it's really going to be watching if this theme accelerates
more or.
Speaker 6 (15:51):
If it calms down.
Speaker 7 (15:52):
And we're already seeing that in the policy right now
that there's sort of a backtrack to kind of avoid
some of that, So that may be something that they're
atally really thinking about.
Speaker 6 (16:01):
Even though they may not be saying that.
Speaker 3 (16:02):
Well, that's in our last minute. I mean, do you
feel like things are calming down or is it that
even the back and forth is calming down a little bit?
Speaker 7 (16:13):
I'd say that, you know, people are becoming a little
bit you know, numb to it a little bit, I'd say,
but I think if you look at the size of
the moves, I mean three percent moves, I know that
it abated.
Speaker 6 (16:22):
Some today are large moves.
Speaker 7 (16:25):
Generally, I would estimate those roughly as a three sigma move.
Speaker 6 (16:28):
For the S and P in a day. We have
those every day now.
Speaker 7 (16:30):
So so I think there's some of that that, you know,
kind of people fatigue, you know, uncertainty fatigue. But there
is also sort of some backtracking and some positive news
that sort of maybe it's not as extreme as I
had thought, and that that has an ability to kind
of calm.
Speaker 6 (16:49):
Investors a little bit. But I think it's going to
take time.
Speaker 3 (16:51):
What's more likely in this last thirty seconds ten you're
getting back up to five percent, are going back down
to four or below?
Speaker 7 (17:00):
Oh, I think I'm definitely more of a you know,
you know me, more of a bear. So I would say, like,
you know, five percent seems likely to be at some point,
especially if we see inflation prints later this year, bigger
and outside of what people would have liked due to
tariff impacts.
Speaker 6 (17:15):
So that's definitely possible.
Speaker 2 (17:16):
Five percent in twenty twenty five.
Speaker 6 (17:20):
Possibly we'll look to see you.
Speaker 3 (17:21):
The CPI moves a lot coming at us, Katie. Thank
you so much tying it all up so nicely. Kati Kaminski.
She's chief research strategist portfolio manager of at Alpha Simplex Group.
Joining us from Boston, Massachusetts.
Speaker 1 (17:36):
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Speaker 2 (17:54):
Because, as we mentioned, i'b just out with numbers. Shares
we're higher in the after hours now down about three
percent as we speak. I want to bring in Brent
Thale Phil he's senior technology research analyst to Jefferies. He
joins us from the West Coast. He's had literally six
minutes to look at these numbers.
Speaker 4 (18:13):
Brett, Brent, what.
Speaker 2 (18:14):
Is your what is your view? Because at first in
the after hours, and look, we have to take this
with a grain of salt, but at first in the
after hours, investors were happy with what they saw.
Speaker 8 (18:24):
Yeah, I mean it's an inline corner. You know, two
percent revenue growth is not going to blow your socks off.
But you know they are leading with nine percent software growth,
and that was good.
Speaker 9 (18:33):
The consulting business was expected to be negative. It was flat.
Speaker 8 (18:37):
Everyone thought, given what's happening with Doze and all these
potential economic slowdowns, the first place he would cut our consultants.
So you know, that business being flat was a little
bit better than the street thought.
Speaker 9 (18:48):
So cash flow had a really good.
Speaker 8 (18:50):
Number, So four point four billion versus two point seven estimates,
so you know, good bottom.
Speaker 9 (18:56):
Line, you know, mediocre in line.
Speaker 10 (18:59):
You know.
Speaker 8 (19:00):
Again, I think this has been a story that's just stable, steady. Arvin,
the CEO has done a really nice job transforming IBM
into a software company versus just a consulting, low margin company,
and we like their position. To your point, I think
no one is going to see what happened with the
tariffs or some of the concerns that are in place
(19:22):
in April so these are all March border earnings, and
again I think you know to your point, you're not
going to feel this until the second quarter, and so
I think investors are obviously excited that hopefully we get
some real resolution. But if we do see u sload on,
you're not going to see it in Q one numbers.
You're going to see it all in Q two. And
most of these companies are probably not going to guide
(19:43):
for it because they haven't seen it just disappear o
their pipeline in the last couple of weeks. So we're
keeping a close eye on it, but overall, I think
just expectations cross tech. It just got too bearish our
conversations with investors, institutional investors, as they just didn't want
to touch any of these names to the ten foot
point and everything got over sold. And so we're now
(20:03):
in a situation where service now is bouncing, IBM's bouncing
the rest of the industry, and tech is bouncing because
it's been the most hated group year to date.
Speaker 3 (20:12):
Well, what's interesting too, and the chief financial officer, Jim
Cavanaugh saying specifically that about fifteen of IBM's contracts with
the federal government have been canceled or paused, amounting to
about one hundred million in future payments. There is that,
but they did I'm just looking here. So they did
give though a forecast, and they do say just forgive
(20:35):
me as i'm looking through. In response, IBM took the
unusual step of giving quarterly guidance, saying that sales will
be about sixteen point four to sixteen point eight billion
in the period ending in June. Analysts on average had
projected about sixteen point three billions that they're willing to
commit to. A second quarter revenue guidance tells you.
Speaker 8 (20:53):
What, Well, again, this is a highly recurring revenue basis.
So I think the more granulary the better. And I
think ultimately every CFO is saying they have to put
it in a little more conservatism in the guide based
on everything that's going on. I mean, no one knows
which way is up right now in some of the
(21:14):
macro indicators, and so it's again, I think some of
these pipelines are misleading. I think some of the software
companies have done a disservice and not been a little
more conservative. And so I guess what I think they're
trying to showcase is that they have obviously visibility, they
have recurring contracts, and they've taken into account somebody's changes.
(21:35):
So I think IBM has been on a multi quarter,
if not now multi year rejuvenation and re excitement around
the software business. And investors keep scratching their head why
does the stock keep going higher. It's going higher because
they're cutting out the low margin business consulting, and they're
leaning into the high margin software business and are in
(21:57):
the CEO as a software guy. He wants to to
be a software led organization, not consulting, not hardware. And
there's an element of AI, and there's an element of
quantum computing. Quantum is still a long ways out, but
there's an element where you can own that.
Speaker 9 (22:13):
So you know, stock is outperformed. It's down a little bit.
Speaker 4 (22:16):
Uh.
Speaker 8 (22:16):
I think just probably on on on on was it
wasn't enough. I mean, stock is up twelve percent year
today and it's massively outperformed almost everything I cover.
Speaker 9 (22:26):
I mean almost every stock I cover is down. Yeah,
well the percent.
Speaker 8 (22:31):
So it's it's been a it's been a parking lot
in in the UH in this storm, and I think
everyone has felt like, hey, it's not gonna blow your
socks off either way.
Speaker 9 (22:40):
It's gonna be stable, steady.
Speaker 8 (22:42):
They're they're good, They're going through a good transformation, and
you know it's a it's a very well managed and
well run company.
Speaker 9 (22:49):
Yeah, so that's a that's a safety spot.
Speaker 10 (22:52):
You know.
Speaker 9 (22:53):
Does that wear off?
Speaker 8 (22:54):
Now as we go back we get terriff resolution? Is
that going to lag on the on the up? I
think the answer is yes. I would much rather own Amazon, Microsoft,
a handful of other names than IBM right here.
Speaker 3 (23:04):
And I do just want to point out that the
company also reaffirming it's fiscally your forecast, so there is
that as well.
Speaker 2 (23:10):
Okay, hey Brenta, I'm curious about the move toward more
software and services, less so with consulting, less so with
hardware at IBM, given that Arvin Krishna, the CEO, wants
to do that and has been doing that. Who are
their biggest competitors out there that they're selling against?
Speaker 8 (23:28):
Oracle, Microsoft, all the hyperscalers, Google, Microsoft, Amazon.
Speaker 9 (23:36):
You know, so like it's you know, I think the
way you think of it is, oh, IBM is.
Speaker 8 (23:41):
Very big into open source, right, and no religion is right,
but there are multiple religions same thing as software. Right,
there's closed source like Microsoft, and then there's open source
like IBM. And IBM firmly believes in an open source world,
and so a lot of big enterprises believe in that
world world uh and and I think IBM has a
(24:02):
really good perspective. They also do very well in regulated
industries government financial services, where you have a lot of
big heavy on prem workloads, right, they don't move them
to Amazon or Google Public cloud, and so they work
with some of the largest organizations out there. So they
tend to thrive really well in that environment. And so
(24:26):
you know, the competitors you know, on the cloud side
are Amazon, Microsoft on the on the on the traditional
enterprise side, it's Oracle, uh and and and.
Speaker 9 (24:36):
Others in that category.
Speaker 8 (24:38):
But I think you know what what IBM has said,
and I think this is a good strategic change is Look,
we can't do everything with our own portfolio.
Speaker 9 (24:45):
We'll sell Salesforce, we'll sell Adobe.
Speaker 10 (24:47):
Well, well, we'll partner.
Speaker 8 (24:49):
We want to lead with our software, but if it
doesn't work for you, we'll lead with others. It's like
a contractor, like no one should just use their own wood,
Like I'm gonna use someone else's would in Windows and this.
Speaker 9 (24:59):
Win from Anderson might be better than this window from.
Speaker 8 (25:02):
Marvin, So like, let's sell it all and that helps
their overall credibilities being independent, having driving the consulting business.
So it's a you know, I think it's a good strategy.
Is it the one again that is going to be
hyper growth? In the excitement in the world the way
the world is going.
Speaker 9 (25:21):
I don't believe so.
Speaker 8 (25:24):
I think still when you look at the growth rates
inside Microsoft growing double digits, and software and growing Azure
at thirty, Amazon still growing their aws cloud business and
the high teens, these are way more exciting growth businesses.
Speaker 9 (25:37):
So, you know, again, kudos to IBM.
Speaker 8 (25:40):
I'm I'm a huge believer of how they've architected this.
From a stock perspective, I just think there's way better
ways to play offense, especially in a world that has
gotten hit hard in tech.
Speaker 9 (25:50):
You're going to make a lot more money owning some
of these other names in tech.
Speaker 2 (25:54):
All right, Brent, phil thanks so much for joining us
on IBM. Brent Thill is senior technology research analyst. He's
joining us from the West Coast.
Speaker 1 (26:02):
You're listening to the Bloomberg Business Week podcast catch us
live weekday afternoons from two to five eas during listen
on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (26:15):
Tesla's shares rising today by more than five percent. The
big news last note on the earnings call was that
Elon valved to pull back significantly from his work with
the US government pay more mind to Tesla, and that
seemed to assuage investors who were concerned about the carmakers
worst quarter in years. We've got Ross Gerber back with us.
He's president and CEO at Gerber Kawasaki Wealth and Investment
(26:37):
Management got about three point four billion dollars as of
the end of last year under management. He joins us
once again from Santa Monica. Ross, we had you on
the program yesterday ahead of the earnings call. Now the
call is done. You set this threads yesterday that said
ahead of the call, that said, this is the worst
(26:57):
performance in Tesla's history. Elon, everyone about the tillions of
tam and robots taking over the world. Anything to get
you not to look at the facts. As Elon darts
off to Xai after he announces he's leaving dos, Tesla's
in bad shape. I'll just leave it there. I'm not
going to read the whole thing.
Speaker 10 (27:14):
I think I think I said it was a hot
mess or something something like that.
Speaker 2 (27:17):
Let's just say that. Let's just say that, we'll.
Speaker 10 (27:18):
Keep it at that.
Speaker 2 (27:20):
Do you now that the call happened? Do you stand
by that? Did he did he managing your view to
move people's attention away from the cars.
Speaker 10 (27:28):
I'm surprised people aren't like, how did you know? How
did you know?
Speaker 11 (27:31):
And I was like, well, because he's a special government employee,
he has to leave by May. It's not like he's
doing some gift to anybody. He actually has to leave
the government by May. But I think this perception that
somehow Elon's going to come back to Tesla and be
working at Tesla Moore is a false perception because I'm
also involved with Xai, and I'm an investor in Xai,
(27:51):
so I know exactly what's going on there. And they
just merged with Twitter and now they're raising even more
capital to even get bigger to compete with Chat and
all the other llms, and and that's his main focus,
and that's what he really cares about. So I think,
you know, it's nice what he says, but it's what
he does that will ultimately matter.
Speaker 3 (28:10):
Well, and you know, we love talking to you, and
we have for a few years now, and you know
we always remind and I always go here that you know,
you're not only just an investor in the company or
various Elon properties, but you have owned Tesla.
Speaker 2 (28:23):
He's got a cyber truck, multiple cyber truck.
Speaker 3 (28:26):
You got a cyber truck.
Speaker 10 (28:27):
But I drive a cyber truck.
Speaker 2 (28:29):
But he still drives a cyber truck.
Speaker 3 (28:31):
It's not so easy to drive a cyber truck, is
it anymore?
Speaker 11 (28:35):
I drive it right down the middle of Woke Avenue,
you know what I mean, which is where I live.
And you know, fortunately everybody else has a Tesla, so
it's kind of hard to yell at a guy and
a cyber truck from your Tesla, right.
Speaker 4 (28:47):
Yeah.
Speaker 8 (28:49):
And this is.
Speaker 11 (28:50):
Probably the biggest issue that I have is I feel
like Tesla is not Elon's company. It's a public company
that's owned eighty seven.
Speaker 10 (28:58):
Percent by the pub not Elon.
Speaker 11 (29:01):
And now the perception going from being this climate friendly,
changing the world for a better place company to being
associated with Elon Musk and Donald Trump is really one
of the saddest things that I can imagine for Tesla's brand.
So I kind of am like fighting back from that
because I'm like, no, I drive an environmentally friendly truck
and you're yelling at me from a Ford f one
(29:22):
point fifty. And Henry Ford was an actual Nazi, So
I'm like, this is really odd that an oil loving
Nazi driving car guy is flicking me off.
Speaker 10 (29:32):
You know.
Speaker 2 (29:33):
Do you like the cyber truck. There's a lot of
reports online about parts falling off, though I have read
a lot about how people love it. Hannah Elliott love
driving it around last year.
Speaker 4 (29:43):
Do you like it?
Speaker 10 (29:45):
You know?
Speaker 11 (29:46):
And this is Tesla should be paying me to do
ads for the cyber truck because I actually love the
cyber truck.
Speaker 10 (29:53):
The cyber truck saved my life during the Palisades fire.
Speaker 11 (29:56):
I can give you five reasons why you should have
a cyber truck, and I it also tell you five
things that are disappointing about the cyber truck that could
have been better or could be better in new versions
of it to make the car sell better, you know.
Speaker 10 (30:09):
So I know the truck in and out and.
Speaker 11 (30:11):
Part of the performance on the on the manufacturing side
is very disappointing. I have not had those problems personally.
My truck has been solid.
Speaker 10 (30:20):
You know. I let some kid drive it. He crashed it.
They fixed it quickly. You know. The car has been great.
The car's been great. But I can't tell you how
important it was to.
Speaker 11 (30:30):
My survival actually during one of the hardest periods of
time of my life.
Speaker 2 (30:34):
Is it because of the air filtration? Like what, yes,
how did you use it?
Speaker 4 (30:38):
Yeah?
Speaker 11 (30:39):
The al filtrations what saved my life because I was
in the middle of the fire and I couldn't breathe,
and so I was trying to fight the fire like
an idiot.
Speaker 10 (30:46):
And but this was before the fireman came and saved me.
Speaker 11 (30:49):
And it was so smoky that my and I had
an N ninety five mass that I was like dying,
and so I would like jump into the truck and
I had the Hepa filter thing running and it worked,
you know, and so I could breathe, and then I
would jump out of the truck and then like try
to deal with fire, and then I could only deal
with that for so long before I have to get
back in the Other thing about the.
Speaker 10 (31:10):
Truck, you know, was the Tonu.
Speaker 11 (31:12):
You know, it's a hard tone new So when I
when I put all my stuff, I was living out
of my truck for two months and it locks. And
this is a really nice thing where most pickup trucks
don't have a way to cover and lock everything in
your bed, and so I was able to basically keep
all my important belongings safe in this truck. And one
of the things that happened after the fire was people
(31:33):
looters were attacking people's cars knowing that they had all
their stuff in it, and a lot of people got
stuff stolen out of their cars even after they dealt
with the fire, which has sucked, you know, And that was.
Speaker 10 (31:45):
Not a problem I had.
Speaker 11 (31:46):
So, you know, there are many things about this truck
that are great, and the story just isn't being told.
Speaker 3 (31:52):
Are you okay, your family, your loved ones, okay?
Speaker 10 (31:55):
Now, yeah, my family's great. I'm not okay. I guess
it's the best way to put it. I've moved back
into my house. I'm one of the few people that
survived this fire. The fire ended two.
Speaker 11 (32:07):
Blocks from my house where I fought it, and the
fireman ultimately stopped it. And so my neighborhood's you know, normal,
except nobody lives there yet except for me.
Speaker 1 (32:17):
You know.
Speaker 11 (32:17):
I was able to fix my house pretty quickly, and
I felt it was best for me my family to
move back as quickly as possible, and that's been true.
Speaker 10 (32:25):
You know.
Speaker 11 (32:25):
But I live a very surreal life, you know, right
next to the edge of hell, and I see it
every day and it sucks and and you know, for me,
I'm mostly suffering from you know, some level of depression
and you know, PTSD from the event itself, which was
really traumatic.
Speaker 10 (32:42):
Like I don't recommend fighting fighters.
Speaker 3 (32:44):
We can only imagine, and we from Afar watching, you know,
certainly felt it, but I can't even imagine seeing it firsthand.
Speaker 10 (32:52):
But I'm doing better, you know, I'm doing better.
Speaker 3 (32:54):
Good, you know good.
Speaker 10 (32:56):
It's hard to see it every day though, you know.
Speaker 3 (32:58):
Yeah, it's hard, no easy turn, and I just I
want to go back to something that really struck me
and we wish you well, you know that, you know that.
Speaker 4 (33:08):
No, I'm good.
Speaker 10 (33:09):
I'm compared to so many other people, so.
Speaker 3 (33:11):
I know, I know, I know, but still, you know,
life keeps throwing us challenges, and some are tougher than others. Ever, well,
speaking of challenges, and forgive me for this segue, but
one of the things that struck me. You know, we've
been lucky to talk with you. This is, you know,
our second time in the last twenty four hours, and
one of the things that continue to kind of tim
and I want to know more and more. And you
(33:33):
really shed some great color and I want to share
it with our audience who are watching and listening right
now who may have missed it yesterday, of what you
had to say about what's going on in terms of
EV's in China. I think we don't have any concept
of how sophisticated, how good they are getting on stuff
like EV's and other things.
Speaker 10 (33:53):
Well, you know, once again, I haven't been to China.
Speaker 11 (33:55):
I only know because I follow all the car companies
in China, and I you know, there's a big mis
or perception about China. I think, and you saw it
a little bit with the trade negotiations, like they're somehow
behind us in technology, and like we're holding back our
technology from them and that will slow them down.
Speaker 10 (34:15):
That is a wildly incorrect way to look at China.
Speaker 11 (34:19):
If we hold our technology back from China, what happens
is they develop even better technology because we forced them
to in a way, you know, and they're extremely determined,
intelligent people who will work extremely hard to achieve whatever
goal they need to achieve.
Speaker 10 (34:35):
And so when Tesla came.
Speaker 11 (34:37):
To China, China was Tesla was the first company China
said you can have one hundred percent of ownership of
the factory. Come here with open arms, and we had
never really seen that before with companies we're trying to
always made them do a JV where they would own half.
Speaker 10 (34:51):
The company kind of thing.
Speaker 11 (34:52):
And so the part of that strategy was to send
a whole new generation of Chinese workers to work for
Tesla to learn how to do stuff.
Speaker 10 (35:00):
And they have and they have, and so you have Chinese.
Speaker 11 (35:04):
Entrepreneurialism, which is pretty good for a communist country.
Speaker 10 (35:07):
And then you add in know how and government support
and you get a pretty.
Speaker 11 (35:12):
Potent way to develop pretty good vehicles.
Speaker 10 (35:15):
And that's what they've done.
Speaker 11 (35:17):
And so China's built a whole new infrastructure around electric vehicles,
which was actually my dream for the United States.
Speaker 2 (35:23):
So it raises the question raws. Since China's evs are
so good, should and those are not available here in
the US, should investors really think about the US being
the only market for Tesla because it can't compete outside
of the US.
Speaker 10 (35:37):
No, No, Tesla can compete and can it?
Speaker 2 (35:39):
Can it compete on price? Can it compete on quality?
Speaker 10 (35:41):
It can't. You know.
Speaker 11 (35:43):
Once again, if Tesla had a focused CEO who wanted
to beat the Chinese composition, they could have released that
cyber cab as a model too with a steering wheel
on it, and made that thing for twenty five thousand dollars.
Like people would buy it. It would be really successful.
The problem with Tesla is they I want to sell
cars any It's fairly obvious. In fact, they work really
(36:03):
hard to convince people not to buy their cars. I
mean it's like the CEO every day talks people out
of the products. So the real issue to me is,
you know, if you don't really want to sell cars
and you want to sell cab rides instead or robots, boy,
that's going to be a long time till it makes
one hundred billion in revenue.
Speaker 10 (36:20):
You know what I mean.
Speaker 11 (36:20):
Yeah, So the Chinese are like, okay, we're fine with this,
and Tesla's falling behind and they're attacking everywhere they can.
The Europeans and the United States have a lot of
trade barriers against these Chinese vehicles because they're inexpensive and
they sell very well. And I was in Mexico City.
All you see are BYD's. They can't afford a tips,
you know. And so I think quality, you know, Europe
(36:44):
and the United States more.
Speaker 10 (36:45):
Europe has always won on quality of vehicles.
Speaker 11 (36:49):
Like design and interior style and things like that, where
China seems to be behind on that. But when it
comes to technology, China seems to be well ahead.
Speaker 3 (36:59):
All right, seconds left here, Just to wrap up, Ross,
Elon gets into your cyber truck. Not exactly, not exactly
cark karaoke, but you guys have a conversation.
Speaker 2 (37:10):
They know each other. Elon has responded to Ross. I've
seen the tweets. He knows Mess is an investor in Xai.
Speaker 3 (37:16):
I know he knows you. So what's the thirty second question?
You ask him?
Speaker 10 (37:20):
Why do you think he said he's coming back to
Tesla Because he knows. I've been saying it every.
Speaker 3 (37:24):
Day for like months, So that's what you ask him.
Speaker 10 (37:28):
Would would I say to Elon? Yeah?
Speaker 11 (37:30):
Seconds, I said to Elon when I when I first
met Elon long ago, when he was tweeting a bunch
of garbage and Tasla was struggling. I think it was
the end of twenty eighteen, and like I was like, dude,
you got to stop tweeting this garbage.
Speaker 10 (37:45):
This was like seven years ago, you know what I mean? Yeah,
And I was like, how is this the mission?
Speaker 11 (37:51):
And we got to raise money and we got to
save Tesla, and like this is just not helping. And
I remember him looking at me sort of like, yeah, right, sure,
like you think I care what you say Twitter?
Speaker 10 (38:00):
And I was like please, just like I'm just saying
this is nicely.
Speaker 11 (38:04):
And I remember, because I was standing with somebody from
ARC Investments and people were pretty surprised at it. Confronted
him about Twitter, and I was a little bit nervous
because he's a big guy, and you know, I like
Elon at the time, and so I was trying to
be nice, you know. And of course he didn't stop tweeting,
and he raised money the next day, which we invested
in Tesla at that time, and it was extremely profitable.
Speaker 10 (38:26):
And I would say the same thing to him today
and it's.
Speaker 11 (38:28):
Like I don't have to agree with your opinions in
your viewpoint in life. But do you have to share
that with everybody all the time. It's not necessary and
it's not helping you be successful. So why share opinions
that are so unpalatable to so many people when it's
completely hurting you.
Speaker 10 (38:45):
From achieving your goals? That's what I would say.
Speaker 3 (38:47):
All right, good stuff, Elon, if you're listening, we'd love
to hear what you would respond to to Ross. Ross,
thank you so much for all of it, and for
being so honest and real. Ros Gerber, He's present, and
stay safe, be well, of course, of Gerberg Kawasaki Wealth
and Investment Management out there in Santa Monica.
Speaker 5 (39:06):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (39:14):
Listen live weekday afternoons from two to five pm Eastern.
Speaker 5 (39:18):
On Bloomberg dot com, the iHeartRadio app, tune In, and
the Bloomberg Business App. You can also watch us live
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Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week,
Daily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy, plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:31):
We got with is Eric Wiener. He's Bloomberg News Equity
America's team leader. He's the author of several books, including
What Goes Up in Oral History of Wall Street from
the Great Depression through the Internet bubble in the nine
to eleven attacks. He joins us here in the Bloomberg
Interactive Brokers studio. You walked in, I asked how you're doing.
You said, it's been a day. I think it's fair
to say.
Speaker 3 (00:50):
That, say that every day.
Speaker 2 (00:52):
That's what I was just gonna say. But I want
to talk to you about a story that you just
edited that talks about retail traders coming in and buying
the day.
Speaker 4 (01:00):
Is that?
Speaker 2 (01:01):
Is that what we're seeing right now? They haven't been
scared away yet.
Speaker 5 (01:03):
They have not been scared away, and the money well
where it's interesting because we're seeing different kinds of buying.
Speaker 4 (01:10):
So the kind of buying we're.
Speaker 5 (01:12):
Seeing is actual individuals going into the market and buying
individual stocks or buying ETF's big flows coming from these guys.
And in the story which by Esha Day couldn't recommend
it enough, there are some really great quotes about people
looking for magic in the market and whatever else. And
(01:32):
but when you look at the broader UH indicators of
like iras four to one k's, that looks a little
bit more bearish, actually significantly more bearish. What's happening there
appears to be people sort of thinking should I take
my retirement into cash?
Speaker 2 (01:50):
That I yeah, that's scary to hear.
Speaker 4 (01:53):
Yeah, so after.
Speaker 3 (01:54):
The selling just saying had enough.
Speaker 5 (01:56):
It's enough, right, and that like that is actually the
biggest pilot cash we have.
Speaker 4 (02:02):
So if if.
Speaker 5 (02:04):
That turns bearish, that becomes a very different story because
that consistently adds to the stock market going up. There's
constantly this pressure of buying. Other countries don't have that.
So that's unique to the United States and it's.
Speaker 4 (02:18):
Part of our market.
Speaker 2 (02:20):
Maybe I'm just like naive here, but I thought that
I thought that in retirement portfolios. People had like target
date funds, and you basically don't touch it until you
You just don't touch it until you retire. Look, you're
not an investment advisor. I'm not gonna ask you to
give advice here. But I didn't know people played with
that money. They do, and so I do.
Speaker 5 (02:42):
I do not that the that is off limits, Yes,
that is, and you think about it. You try not
to look at it. You think about it once a quarter.
You adjusters don't look at it.
Speaker 4 (02:54):
I haven't looked at it, and it.
Speaker 3 (02:56):
Takes a lot, but I like in my head have
like percentages of what's been going on here, and so
I don't want to touch it, but anymy go ahead.
Speaker 5 (03:03):
Yeah, and the target date fun thing is important because
as you get closer I'm an old man, as you
get closer to retirement, you do different things. You de risk,
you know, you lessen stocks more in stable things. But
you do have people who view their IRA or their
(03:24):
formum one K as a trading vehicle.
Speaker 2 (03:25):
Well, and to be fair, we have seen the bond
market not do what it's typically supposed to do in
an environment where stocks go down, So that could cause
some people to maybe freaked out.
Speaker 3 (03:34):
So how do you make sense of this of someone
who follows the markets right, and you're thinking about the
role of retail traders who can be in and out
pretty quickly and stuff. Maybe it's not that long term bet.
So what does it really indicate about the markets other
than it's kind of a plaything.
Speaker 5 (03:47):
Well, what they're buying is the traditional stuff, Well, the
traditional stuff being like big tech and the big names
and those that they're like fans. It's like, you know,
rooting for your favorite football team, rooting for your favorite
baseball team.
Speaker 4 (04:03):
They are going to buy they believe in Ela Musk.
Speaker 5 (04:05):
They're going to keep buying those stocks until they're proven wrong,
or until they feel that they're proven wrong. So it's
a different kind of mentality. The shifting of retirement funds
to de risking, that's a more programmed move, and that
if that is in fact a long term trend that
(04:27):
actually is troubling.
Speaker 2 (04:29):
Does it ever become if we look at the retail
side of this, does it ever become Do we ever
get to the point where, and maybe this happened post
twenty twenty into twenty twenty one, when retail really ruled,
do we get to a point where retail doesn't have
the money to buy the dip.
Speaker 5 (04:44):
Yeah, that absolutely happens. The bigger point is that they
tend to turn bearish right as the market is ready
to turn bullish. It's kind of a country very indicator.
If you talk to Wall Street pros so there, when
they see over enthusiasm among the retail crowd, they kind
(05:09):
of get nervous.
Speaker 4 (05:10):
This would be an indicator of that.
Speaker 5 (05:14):
But when they start seeing that the fundamentals are strong,
growth should be you know, stock should be moving up,
growth is okay, and the retail crowd is going no,
that's when actually the Wall Street pro.
Speaker 4 (05:26):
Step in and they say, there's a contrary indicator.
Speaker 3 (05:28):
So you know, Eric like, I feel like, if you
want to tell a story, you can find the data
points right. So here I'm looking going back to the
end of twenty twenty two to today, we're up forty
percent on the S and P five hundred. We're down
about eight percent year to date, almost nine percent.
Speaker 6 (05:45):
So I think that.
Speaker 3 (05:46):
Doesn't feel so bad. But I mean, do we have
to think about the last two years or prior years.
We're maybe off the charts anomalies more so, I don't know, like,
how do you like when you start playing around with numbers?
You know what I mean? You can start looking at
things a little bit differently.
Speaker 4 (06:03):
There are a lot of ways to thin slice this.
Speaker 5 (06:05):
The big numbers to me are two straight years of
twenty plus percent returns. That's rare, and that's the kind
of thing where like, no matter who's president, no matter
what the market is, a kind of a pullback would
be expected. What's different now is that the political regime changed,
And normally that doesn't actually mean all that much, but
(06:28):
it really does here, so everybody.
Speaker 4 (06:30):
Wants as soon as if you.
Speaker 5 (06:32):
Take a step back and just look up to the
day the inauguration day on January twentieth, or if you
look at the tariff anounce the day of the tariff announcements,
can you start seeing a downward trajectory where you see
the market reacting to what is going on politically.
Speaker 4 (06:53):
That's different. So if you were looking at this year.
Speaker 5 (06:56):
And coming in and you're like, you know, it's president X,
doesn't matter who it is, and the plans are just
going to be to keep doing what we've been doing,
then the market sells off a little bit and you
look at it and you say, okay, well maybe I
take some profits here whatever, But it's not this cataclysmic
sweeping up, sweeping down in that story we talk about.
(07:17):
We've had just in like the last fourteen sessions, we've
had five two percent down more than two percent down
days and two or three two percent up days, which
like that's incredible, that's crazy swings. So this is the
difference between now and what was going on before, is
that this is actually directly related to Washington, and we
(07:39):
have no clarity on what's going to come out of there.
Speaker 3 (07:42):
All right, crazy stuff. As always, Eric, thank you so much.
Appreciate Eric Weener, Senior Editor Equities America's joining us here
in studio.
Speaker 1 (07:50):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five y's during Listen
on Applecarplay and Android Otto with the Bloomberg As, or
watch us live on YouTube.
Speaker 2 (08:03):
As Carol mentioned, we're focused on the stock market, the
bond market. Earlier, the S and P five hundred rallied
as much as three point four percent. These were off
of media reports that the US was considering lower levees
on China. Then we saw stocks pair gains after Treasury
Secretary Scott Besson casts some doubts on a timely resolution
on the US China trade war. We want to get
into what's happening in the bond market because we are
(08:25):
seeing long maturity treasury yields fall, at least felt earlier
after the President laed fears that he would fire FED
chair J. Powell. A lot to unpack here. Fortunately, we
got Katie Kominski with us. She's chief research strategist air
portfolio manager at Alpha Simplex Group. She joins US from Boston. Katie,
it's been a bit since we spoke to you. There's
been a lot happening when it comes to the bond market,
(08:46):
so we wanted to get your view on really how
you're thinking about this asset class in an environment where
it's not necessarily behaving in the way that it typically
behaves when there's a sell off an aquities.
Speaker 7 (09:02):
That is such a good question. It is the most
important thing to look at this month. If you look
at what happened, equities were down and you didn't see
bonds rallying in response to such an extreme event, And
to me, this is a suggestion that the market is
much more concerned about sort of the vulnerability of US
assets but also the potential for inflation. So both of
(09:24):
those narratives are key here, and that means that bonds
are just not behaving like the safe haven asset that
we love, but gold has so who knows.
Speaker 6 (09:33):
It's definitely something to note.
Speaker 3 (09:35):
Yeah, how do you make sense of that? Like you're
someone who's watched this, first of all, the bond market
when it's not acting like it's supposed to, Like, do
alarm bells go off in your brain and you're like,
wait a bitute.
Speaker 7 (09:47):
Oh, definitely, because I mean, if you think about the
typical narrative of this type of move when you have
such a large risk off you know, trade like we've
seen in the last few weeks, although it has been volatile,
you think about the sort of where do you go
to find safe haven and that's usually fixed income and
that's not the case if you think there's a probability
(10:09):
that this type of risk off move could cause dumping
of US assets or a lack of trust in sort
of US treasuries, and that's what the market has been
concerned about. And we've definitely seen some of those signals,
albeit days like today in the last couple of days,
you're seeing some.
Speaker 6 (10:25):
Retraction of that concern.
Speaker 7 (10:27):
You're seeing a flattening of the yield curve, which would
kind of say that people are a little less concerned
about that.
Speaker 6 (10:33):
But it is definitely.
Speaker 7 (10:34):
Something we're going to have to watch because bonds are
just not behaving how we would think.
Speaker 2 (10:38):
Do you think the US is losing its status as
the haven, as the safety play, as the central bank
to the world.
Speaker 6 (10:49):
Well, I mean that is a clearly important narrative.
Speaker 7 (10:52):
I mean, look how much the markets have moved based
on the independence of the FED.
Speaker 6 (10:57):
And sort of concern over that.
Speaker 7 (11:00):
Concern as well is that when you have flows out
of US assets, that they don't get recycled back into
US treasuries. And so the concern with that is that
we're just losing some of that safe haven status. And
it's still too early to tell, but the early indications
in the market suggest that we should worry about it
and think about it.
Speaker 3 (11:19):
You know, it's funny I think about Katie. You know,
for such a long time in terms of US equities,
we talked about Tina, right, there is no alternative, and
so money just kept coming into the US equity story
and markets. So I feel like too, as you say,
with the ultimate safe haven US treasuries, that there was
no alternative. Is there, realistically, though, an alternative that I
(11:40):
understand there are that might give you higher yield or
but I mean with the same security and dependency that
the US treasuries have, is there an alternative?
Speaker 7 (11:52):
Oh, I forgot about, Tina, But yeah, I mean, I
know it wasn't so long ago. I love that it
wasn't that long ago. But it's been a busy month.
But yeah, you know, that is a really good question.
And that's why I think if you look at the
only place people.
Speaker 6 (12:04):
Have run to is gold, which you know, and.
Speaker 7 (12:07):
That has been such a big story because there's just
people don't know what that alternative is yet, and there's
still questionability of whether or not treasuries could be more vulnerable,
and so I think we're going to have to really
I don't know the answer, and I think the market
doesn't know the answer. So at this point, the alternatives
aren't clear, especially in a world where inflation could be
(12:29):
an issue.
Speaker 6 (12:31):
Definitely.
Speaker 3 (12:32):
So the whip saw the back and forth, you know,
is there a point this is something we talk about,
like with our Gena Martin Adams in terms and other
market strategists unlike yourself, where there's a point where there's
just so much back and forth that investors are like,
I'm out and there's long term implications. I don't know,
help me in terms of the markets here the treasury trade.
(12:53):
Is there a point where global investors truly say I'm out?
And what is that?
Speaker 8 (12:57):
Is it?
Speaker 3 (12:58):
Vetcher J. Powell being moved? Is it the constant back
and forth? Like, what is that tipping point where investors
are like, can't do this anymore?
Speaker 5 (13:07):
Well?
Speaker 7 (13:07):
I think, I mean we have seen those type of
actions in terms of speculative volumes. Yeah, when you look
at signals, signals have really reduced and generally technical signals
have become very muted.
Speaker 6 (13:20):
And that's consistent with.
Speaker 7 (13:21):
Sort of investor behavior as well. I'd say that, you know,
even though you've seen a lot of swings, there definitely
becomes a point where people just wait. And I think
if we get into that situation, it could take a
little bit of time for them to get risk back
on the table. I think this week is a good
example that you know, there are still people looking for that,
(13:42):
you know, recovery. They're looking for sort of potential opportunities,
which means that it's not there yet, but a lot
of people have de risks substantially already and they may
not be coming back right away.
Speaker 2 (13:55):
Katy, you want to go back to something that you
said that you have your eye on, which is the
status of the US as this haven, as the dollars
you know, as the safety or haven currency, the US
treasury market as one where people can rely on backed
by the full faith and credit of the US government.
You said you're watching that status closely, but let's play
(14:17):
that out a little bit. What happens if the US
does lose its status. What are the implications of that.
Speaker 7 (14:23):
Well, it would be massive flow into other assets and
potential for dumping of US treasuries, and what that would
do is steep in the US yield curve. And that's
why we've specifically seen.
Speaker 6 (14:34):
That type of movement, but not in extremity.
Speaker 7 (14:38):
So I think it's really a question of flows and preferences,
and that could be disadvantageous to US assets, depending of course,
on how extreme it would be. We've already seen massive
flows to the yen and the euro, and I think
as we navigate those trends if they continue much longer,
that that will get people concerned.
Speaker 3 (15:00):
What about the auctions, we had a five year today,
we did see demand rising at that seventy billion dollars
scale a five year note. How closely are you're watching
the auctions? What are they telling you in terms of
investor demand and still having confidence in the US government.
Speaker 7 (15:18):
Well, I'd say, I mean, the auctions have been reasonable
and there's been plenty of demand, so that is a
positive sign.
Speaker 6 (15:25):
Where we see the trends.
Speaker 7 (15:27):
That are more concerning is actually in the market pricing
less so in sort of the demand for auctions and
sort of imagine that you know, auctions is sort of
newly issued treasuries, but there's a lot of treasuries that
people are holding, and I think that is going to
be a little harder to measure and that will come
out in sort of pricing as well. So I think
(15:47):
it's really going to be watching if this theme accelerates
more or.
Speaker 6 (15:51):
If it calms down.
Speaker 7 (15:52):
And we're already seeing that in the policy right now
that there's sort of a backtrack to kind of avoid
some of that, So that may be something that they're
atally really thinking about.
Speaker 6 (16:01):
Even though they may not be saying that.
Speaker 3 (16:02):
Well, that's in our last minute. I mean, do you
feel like things are calming down or is it that
even the back and forth is calming down a little bit?
Speaker 7 (16:13):
I'd say that, you know, people are becoming a little
bit you know, numb to it a little bit, I'd say,
but I think if you look at the size of
the moves, I mean three percent moves, I know that
it abated.
Speaker 6 (16:22):
Some today are large moves.
Speaker 7 (16:25):
Generally, I would estimate those roughly as a three sigma move.
Speaker 6 (16:28):
For the S and P in a day. We have
those every day now.
Speaker 7 (16:30):
So so I think there's some of that that, you know,
kind of people fatigue, you know, uncertainty fatigue. But there
is also sort of some backtracking and some positive news
that sort of maybe it's not as extreme as I
had thought, and that that has an ability to kind
of calm.
Speaker 6 (16:49):
Investors a little bit. But I think it's going to
take time.
Speaker 3 (16:51):
What's more likely in this last thirty seconds ten you're
getting back up to five percent, are going back down
to four or below?
Speaker 7 (17:00):
Oh, I think I'm definitely more of a you know,
you know me, more of a bear. So I would say, like,
you know, five percent seems likely to be at some point,
especially if we see inflation prints later this year, bigger
and outside of what people would have liked due to
tariff impacts.
Speaker 6 (17:15):
So that's definitely possible.
Speaker 2 (17:16):
Five percent in twenty twenty five.
Speaker 6 (17:20):
Possibly we'll look to see you.
Speaker 3 (17:21):
The CPI moves a lot coming at us, Katie. Thank
you so much tying it all up so nicely. Kati Kaminski.
She's chief research strategist portfolio manager of at Alpha Simplex Group.
Joining us from Boston, Massachusetts.
Speaker 1 (17:36):
This is the Bloomberg Business Week Podcast. Listen live each
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Auto with the Bloomberg Business App. You can also listen
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Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (17:54):
Because, as we mentioned, i'b just out with numbers. Shares
we're higher in the after hours now down about three
percent as we speak. I want to bring in Brent
Thale Phil he's senior technology research analyst to Jefferies. He
joins us from the West Coast. He's had literally six
minutes to look at these numbers.
Speaker 4 (18:13):
Brett, Brent, what.
Speaker 2 (18:14):
Is your what is your view? Because at first in
the after hours, and look, we have to take this
with a grain of salt, but at first in the
after hours, investors were happy with what they saw.
Speaker 8 (18:24):
Yeah, I mean it's an inline corner. You know, two
percent revenue growth is not going to blow your socks off.
But you know they are leading with nine percent software growth,
and that was good.
Speaker 9 (18:33):
The consulting business was expected to be negative. It was flat.
Speaker 8 (18:37):
Everyone thought, given what's happening with Doze and all these
potential economic slowdowns, the first place he would cut our consultants.
So you know, that business being flat was a little
bit better than the street thought.
Speaker 9 (18:48):
So cash flow had a really good.
Speaker 8 (18:50):
Number, So four point four billion versus two point seven estimates,
so you know, good bottom.
Speaker 9 (18:56):
Line, you know, mediocre in line.
Speaker 10 (18:59):
You know.
Speaker 8 (19:00):
Again, I think this has been a story that's just stable, steady. Arvin,
the CEO has done a really nice job transforming IBM
into a software company versus just a consulting, low margin company,
and we like their position. To your point, I think
no one is going to see what happened with the
tariffs or some of the concerns that are in place
(19:22):
in April so these are all March border earnings, and
again I think you know to your point, you're not
going to feel this until the second quarter, and so
I think investors are obviously excited that hopefully we get
some real resolution. But if we do see u sload on,
you're not going to see it in Q one numbers.
You're going to see it all in Q two. And
most of these companies are probably not going to guide
(19:43):
for it because they haven't seen it just disappear o
their pipeline in the last couple of weeks. So we're
keeping a close eye on it, but overall, I think
just expectations cross tech. It just got too bearish our
conversations with investors, institutional investors, as they just didn't want
to touch any of these names to the ten foot
point and everything got over sold. And so we're now
(20:03):
in a situation where service now is bouncing, IBM's bouncing
the rest of the industry, and tech is bouncing because
it's been the most hated group year to date.
Speaker 3 (20:12):
Well, what's interesting too, and the chief financial officer, Jim
Cavanaugh saying specifically that about fifteen of IBM's contracts with
the federal government have been canceled or paused, amounting to
about one hundred million in future payments. There is that,
but they did I'm just looking here. So they did
give though a forecast, and they do say just forgive
(20:35):
me as i'm looking through. In response, IBM took the
unusual step of giving quarterly guidance, saying that sales will
be about sixteen point four to sixteen point eight billion
in the period ending in June. Analysts on average had
projected about sixteen point three billions that they're willing to
commit to. A second quarter revenue guidance tells you.
Speaker 8 (20:53):
What, Well, again, this is a highly recurring revenue basis.
So I think the more granulary the better. And I
think ultimately every CFO is saying they have to put
it in a little more conservatism in the guide based
on everything that's going on. I mean, no one knows
which way is up right now in some of the
(21:14):
macro indicators, and so it's again, I think some of
these pipelines are misleading. I think some of the software
companies have done a disservice and not been a little
more conservative. And so I guess what I think they're
trying to showcase is that they have obviously visibility, they
have recurring contracts, and they've taken into account somebody's changes.
(21:35):
So I think IBM has been on a multi quarter,
if not now multi year rejuvenation and re excitement around
the software business. And investors keep scratching their head why
does the stock keep going higher. It's going higher because
they're cutting out the low margin business consulting, and they're
leaning into the high margin software business and are in
(21:57):
the CEO as a software guy. He wants to to
be a software led organization, not consulting, not hardware. And
there's an element of AI, and there's an element of
quantum computing. Quantum is still a long ways out, but
there's an element where you can own that.
Speaker 9 (22:13):
So you know, stock is outperformed. It's down a little bit.
Speaker 4 (22:16):
Uh.
Speaker 8 (22:16):
I think just probably on on on on was it
wasn't enough. I mean, stock is up twelve percent year
today and it's massively outperformed almost everything I cover.
Speaker 9 (22:26):
I mean almost every stock I cover is down. Yeah,
well the percent.
Speaker 8 (22:31):
So it's it's been a it's been a parking lot
in in the UH in this storm, and I think
everyone has felt like, hey, it's not gonna blow your
socks off either way.
Speaker 9 (22:40):
It's gonna be stable, steady.
Speaker 8 (22:42):
They're they're good, They're going through a good transformation, and
you know it's a it's a very well managed and
well run company.
Speaker 9 (22:49):
Yeah, so that's a that's a safety spot.
Speaker 10 (22:52):
You know.
Speaker 9 (22:53):
Does that wear off?
Speaker 8 (22:54):
Now as we go back we get terriff resolution? Is
that going to lag on the on the up? I
think the answer is yes. I would much rather own Amazon, Microsoft,
a handful of other names than IBM right here.
Speaker 3 (23:04):
And I do just want to point out that the
company also reaffirming it's fiscally your forecast, so there is
that as well.
Speaker 2 (23:10):
Okay, hey Brenta, I'm curious about the move toward more
software and services, less so with consulting, less so with
hardware at IBM, given that Arvin Krishna, the CEO, wants
to do that and has been doing that. Who are
their biggest competitors out there that they're selling against?
Speaker 8 (23:28):
Oracle, Microsoft, all the hyperscalers, Google, Microsoft, Amazon.
Speaker 9 (23:36):
You know, so like it's you know, I think the
way you think of it is, oh, IBM is.
Speaker 8 (23:41):
Very big into open source, right, and no religion is right,
but there are multiple religions same thing as software. Right,
there's closed source like Microsoft, and then there's open source
like IBM. And IBM firmly believes in an open source world,
and so a lot of big enterprises believe in that
world world uh and and I think IBM has a
(24:02):
really good perspective. They also do very well in regulated
industries government financial services, where you have a lot of
big heavy on prem workloads, right, they don't move them
to Amazon or Google Public cloud, and so they work
with some of the largest organizations out there. So they
tend to thrive really well in that environment. And so
(24:26):
you know, the competitors you know, on the cloud side
are Amazon, Microsoft on the on the on the traditional
enterprise side, it's Oracle, uh and and and.
Speaker 9 (24:36):
Others in that category.
Speaker 8 (24:38):
But I think you know what what IBM has said,
and I think this is a good strategic change is Look,
we can't do everything with our own portfolio.
Speaker 9 (24:45):
We'll sell Salesforce, we'll sell Adobe.
Speaker 10 (24:47):
Well, well, we'll partner.
Speaker 8 (24:49):
We want to lead with our software, but if it
doesn't work for you, we'll lead with others. It's like
a contractor, like no one should just use their own wood,
Like I'm gonna use someone else's would in Windows and this.
Speaker 9 (24:59):
Win from Anderson might be better than this window from.
Speaker 8 (25:02):
Marvin, So like, let's sell it all and that helps
their overall credibilities being independent, having driving the consulting business.
So it's a you know, I think it's a good strategy.
Is it the one again that is going to be
hyper growth? In the excitement in the world the way
the world is going.
Speaker 9 (25:21):
I don't believe so.
Speaker 8 (25:24):
I think still when you look at the growth rates
inside Microsoft growing double digits, and software and growing Azure
at thirty, Amazon still growing their aws cloud business and
the high teens, these are way more exciting growth businesses.
Speaker 9 (25:37):
So, you know, again, kudos to IBM.
Speaker 8 (25:40):
I'm I'm a huge believer of how they've architected this.
From a stock perspective, I just think there's way better
ways to play offense, especially in a world that has
gotten hit hard in tech.
Speaker 9 (25:50):
You're going to make a lot more money owning some
of these other names in tech.
Speaker 2 (25:54):
All right, Brent, phil thanks so much for joining us
on IBM. Brent Thill is senior technology research analyst. He's
joining us from the West Coast.
Speaker 1 (26:02):
You're listening to the Bloomberg Business Week podcast catch us
live weekday afternoons from two to five eas during listen
on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (26:15):
Tesla's shares rising today by more than five percent. The
big news last note on the earnings call was that
Elon valved to pull back significantly from his work with
the US government pay more mind to Tesla, and that
seemed to assuage investors who were concerned about the carmakers
worst quarter in years. We've got Ross Gerber back with us.
He's president and CEO at Gerber Kawasaki Wealth and Investment
(26:37):
Management got about three point four billion dollars as of
the end of last year under management. He joins us
once again from Santa Monica. Ross, we had you on
the program yesterday ahead of the earnings call. Now the
call is done. You set this threads yesterday that said
ahead of the call, that said, this is the worst
(26:57):
performance in Tesla's history. Elon, everyone about the tillions of
tam and robots taking over the world. Anything to get
you not to look at the facts. As Elon darts
off to Xai after he announces he's leaving dos, Tesla's
in bad shape. I'll just leave it there. I'm not
going to read the whole thing.
Speaker 10 (27:14):
I think I think I said it was a hot
mess or something something like that.
Speaker 2 (27:17):
Let's just say that. Let's just say that, we'll.
Speaker 10 (27:18):
Keep it at that.
Speaker 2 (27:20):
Do you now that the call happened? Do you stand
by that? Did he did he managing your view to
move people's attention away from the cars.
Speaker 10 (27:28):
I'm surprised people aren't like, how did you know? How
did you know?
Speaker 11 (27:31):
And I was like, well, because he's a special government employee,
he has to leave by May. It's not like he's
doing some gift to anybody. He actually has to leave
the government by May. But I think this perception that
somehow Elon's going to come back to Tesla and be
working at Tesla Moore is a false perception because I'm
also involved with Xai, and I'm an investor in Xai,
(27:51):
so I know exactly what's going on there. And they
just merged with Twitter and now they're raising even more
capital to even get bigger to compete with Chat and
all the other llms, and and that's his main focus,
and that's what he really cares about. So I think,
you know, it's nice what he says, but it's what
he does that will ultimately matter.
Speaker 3 (28:10):
Well, and you know, we love talking to you, and
we have for a few years now, and you know
we always remind and I always go here that you know,
you're not only just an investor in the company or
various Elon properties, but you have owned Tesla.
Speaker 2 (28:23):
He's got a cyber truck, multiple cyber truck.
Speaker 3 (28:26):
You got a cyber truck.
Speaker 10 (28:27):
But I drive a cyber truck.
Speaker 2 (28:29):
But he still drives a cyber truck.
Speaker 3 (28:31):
It's not so easy to drive a cyber truck, is
it anymore?
Speaker 11 (28:35):
I drive it right down the middle of Woke Avenue,
you know what I mean, which is where I live.
And you know, fortunately everybody else has a Tesla, so
it's kind of hard to yell at a guy and
a cyber truck from your Tesla, right.
Speaker 4 (28:47):
Yeah.
Speaker 8 (28:49):
And this is.
Speaker 11 (28:50):
Probably the biggest issue that I have is I feel
like Tesla is not Elon's company. It's a public company
that's owned eighty seven.
Speaker 10 (28:58):
Percent by the pub not Elon.
Speaker 11 (29:01):
And now the perception going from being this climate friendly,
changing the world for a better place company to being
associated with Elon Musk and Donald Trump is really one
of the saddest things that I can imagine for Tesla's brand.
So I kind of am like fighting back from that
because I'm like, no, I drive an environmentally friendly truck
and you're yelling at me from a Ford f one
(29:22):
point fifty. And Henry Ford was an actual Nazi, So
I'm like, this is really odd that an oil loving
Nazi driving car guy is flicking me off.
Speaker 10 (29:32):
You know.
Speaker 2 (29:33):
Do you like the cyber truck. There's a lot of
reports online about parts falling off, though I have read
a lot about how people love it. Hannah Elliott love
driving it around last year.
Speaker 4 (29:43):
Do you like it?
Speaker 10 (29:45):
You know?
Speaker 11 (29:46):
And this is Tesla should be paying me to do
ads for the cyber truck because I actually love the
cyber truck.
Speaker 10 (29:53):
The cyber truck saved my life during the Palisades fire.
Speaker 11 (29:56):
I can give you five reasons why you should have
a cyber truck, and I it also tell you five
things that are disappointing about the cyber truck that could
have been better or could be better in new versions
of it to make the car sell better, you know.
Speaker 10 (30:09):
So I know the truck in and out and.
Speaker 11 (30:11):
Part of the performance on the on the manufacturing side
is very disappointing. I have not had those problems personally.
My truck has been solid.
Speaker 10 (30:20):
You know. I let some kid drive it. He crashed it.
They fixed it quickly. You know. The car has been great.
The car's been great. But I can't tell you how
important it was to.
Speaker 11 (30:30):
My survival actually during one of the hardest periods of
time of my life.
Speaker 2 (30:34):
Is it because of the air filtration? Like what, yes,
how did you use it?
Speaker 4 (30:38):
Yeah?
Speaker 11 (30:39):
The al filtrations what saved my life because I was
in the middle of the fire and I couldn't breathe,
and so I was trying to fight the fire like
an idiot.
Speaker 10 (30:46):
And but this was before the fireman came and saved me.
Speaker 11 (30:49):
And it was so smoky that my and I had
an N ninety five mass that I was like dying,
and so I would like jump into the truck and
I had the Hepa filter thing running and it worked,
you know, and so I could breathe, and then I
would jump out of the truck and then like try
to deal with fire, and then I could only deal
with that for so long before I have to get
back in the Other thing about the.
Speaker 10 (31:10):
Truck, you know, was the Tonu.
Speaker 11 (31:12):
You know, it's a hard tone new So when I
when I put all my stuff, I was living out
of my truck for two months and it locks. And
this is a really nice thing where most pickup trucks
don't have a way to cover and lock everything in
your bed, and so I was able to basically keep
all my important belongings safe in this truck. And one
of the things that happened after the fire was people
(31:33):
looters were attacking people's cars knowing that they had all
their stuff in it, and a lot of people got
stuff stolen out of their cars even after they dealt
with the fire, which has sucked, you know, And that was.
Speaker 10 (31:45):
Not a problem I had.
Speaker 11 (31:46):
So, you know, there are many things about this truck
that are great, and the story just isn't being told.
Speaker 3 (31:52):
Are you okay, your family, your loved ones, okay?
Speaker 10 (31:55):
Now, yeah, my family's great. I'm not okay. I guess
it's the best way to put it. I've moved back
into my house. I'm one of the few people that
survived this fire. The fire ended two.
Speaker 11 (32:07):
Blocks from my house where I fought it, and the
fireman ultimately stopped it. And so my neighborhood's you know, normal,
except nobody lives there yet except for me.
Speaker 1 (32:17):
You know.
Speaker 11 (32:17):
I was able to fix my house pretty quickly, and
I felt it was best for me my family to
move back as quickly as possible, and that's been true.
Speaker 10 (32:25):
You know.
Speaker 11 (32:25):
But I live a very surreal life, you know, right
next to the edge of hell, and I see it
every day and it sucks and and you know, for me,
I'm mostly suffering from you know, some level of depression
and you know, PTSD from the event itself, which was
really traumatic.
Speaker 10 (32:42):
Like I don't recommend fighting fighters.
Speaker 3 (32:44):
We can only imagine, and we from Afar watching, you know,
certainly felt it, but I can't even imagine seeing it firsthand.
Speaker 10 (32:52):
But I'm doing better, you know, I'm doing better.
Speaker 3 (32:54):
Good, you know good.
Speaker 10 (32:56):
It's hard to see it every day though, you know.
Speaker 3 (32:58):
Yeah, it's hard, no easy turn, and I just I
want to go back to something that really struck me
and we wish you well, you know that, you know that.
Speaker 4 (33:08):
No, I'm good.
Speaker 10 (33:09):
I'm compared to so many other people, so.
Speaker 3 (33:11):
I know, I know, I know, but still, you know,
life keeps throwing us challenges, and some are tougher than others. Ever, well,
speaking of challenges, and forgive me for this segue, but
one of the things that struck me. You know, we've
been lucky to talk with you. This is, you know,
our second time in the last twenty four hours, and
one of the things that continue to kind of tim
and I want to know more and more. And you
(33:33):
really shed some great color and I want to share
it with our audience who are watching and listening right
now who may have missed it yesterday, of what you
had to say about what's going on in terms of
EV's in China. I think we don't have any concept
of how sophisticated, how good they are getting on stuff
like EV's and other things.
Speaker 10 (33:53):
Well, you know, once again, I haven't been to China.
Speaker 11 (33:55):
I only know because I follow all the car companies
in China, and I you know, there's a big mis
or perception about China. I think, and you saw it
a little bit with the trade negotiations, like they're somehow
behind us in technology, and like we're holding back our
technology from them and that will slow them down.
Speaker 10 (34:15):
That is a wildly incorrect way to look at China.
Speaker 11 (34:19):
If we hold our technology back from China, what happens
is they develop even better technology because we forced them
to in a way, you know, and they're extremely determined,
intelligent people who will work extremely hard to achieve whatever
goal they need to achieve.
Speaker 10 (34:35):
And so when Tesla came.
Speaker 11 (34:37):
To China, China was Tesla was the first company China
said you can have one hundred percent of ownership of
the factory. Come here with open arms, and we had
never really seen that before with companies we're trying to
always made them do a JV where they would own half.
Speaker 10 (34:51):
The company kind of thing.
Speaker 11 (34:52):
And so the part of that strategy was to send
a whole new generation of Chinese workers to work for
Tesla to learn how to do stuff.
Speaker 10 (35:00):
And they have and they have, and so you have Chinese.
Speaker 11 (35:04):
Entrepreneurialism, which is pretty good for a communist country.
Speaker 10 (35:07):
And then you add in know how and government support
and you get a pretty.
Speaker 11 (35:12):
Potent way to develop pretty good vehicles.
Speaker 10 (35:15):
And that's what they've done.
Speaker 11 (35:17):
And so China's built a whole new infrastructure around electric vehicles,
which was actually my dream for the United States.
Speaker 2 (35:23):
So it raises the question raws. Since China's evs are
so good, should and those are not available here in
the US, should investors really think about the US being
the only market for Tesla because it can't compete outside
of the US.
Speaker 10 (35:37):
No, No, Tesla can compete and can it?
Speaker 2 (35:39):
Can it compete on price? Can it compete on quality?
Speaker 10 (35:41):
It can't. You know.
Speaker 11 (35:43):
Once again, if Tesla had a focused CEO who wanted
to beat the Chinese composition, they could have released that
cyber cab as a model too with a steering wheel
on it, and made that thing for twenty five thousand dollars.
Like people would buy it. It would be really successful.
The problem with Tesla is they I want to sell
cars any It's fairly obvious. In fact, they work really
(36:03):
hard to convince people not to buy their cars. I
mean it's like the CEO every day talks people out
of the products. So the real issue to me is,
you know, if you don't really want to sell cars
and you want to sell cab rides instead or robots, boy,
that's going to be a long time till it makes
one hundred billion in revenue.
Speaker 10 (36:20):
You know what I mean.
Speaker 11 (36:20):
Yeah, So the Chinese are like, okay, we're fine with this,
and Tesla's falling behind and they're attacking everywhere they can.
The Europeans and the United States have a lot of
trade barriers against these Chinese vehicles because they're inexpensive and
they sell very well. And I was in Mexico City.
All you see are BYD's. They can't afford a tips,
you know. And so I think quality, you know, Europe
(36:44):
and the United States more.
Speaker 10 (36:45):
Europe has always won on quality of vehicles.
Speaker 11 (36:49):
Like design and interior style and things like that, where
China seems to be behind on that. But when it
comes to technology, China seems to be well ahead.
Speaker 3 (36:59):
All right, seconds left here, Just to wrap up, Ross,
Elon gets into your cyber truck. Not exactly, not exactly
cark karaoke, but you guys have a conversation.
Speaker 2 (37:10):
They know each other. Elon has responded to Ross. I've
seen the tweets. He knows Mess is an investor in Xai.
Speaker 3 (37:16):
I know he knows you. So what's the thirty second question?
You ask him?
Speaker 10 (37:20):
Why do you think he said he's coming back to
Tesla Because he knows. I've been saying it every.
Speaker 3 (37:24):
Day for like months, So that's what you ask him.
Speaker 10 (37:28):
Would would I say to Elon? Yeah?
Speaker 11 (37:30):
Seconds, I said to Elon when I when I first
met Elon long ago, when he was tweeting a bunch
of garbage and Tasla was struggling. I think it was
the end of twenty eighteen, and like I was like, dude,
you got to stop tweeting this garbage.
Speaker 10 (37:45):
This was like seven years ago, you know what I mean? Yeah,
And I was like, how is this the mission?
Speaker 11 (37:51):
And we got to raise money and we got to
save Tesla, and like this is just not helping. And
I remember him looking at me sort of like, yeah, right, sure,
like you think I care what you say Twitter?
Speaker 10 (38:00):
And I was like please, just like I'm just saying
this is nicely.
Speaker 11 (38:04):
And I remember, because I was standing with somebody from
ARC Investments and people were pretty surprised at it. Confronted
him about Twitter, and I was a little bit nervous
because he's a big guy, and you know, I like
Elon at the time, and so I was trying to
be nice, you know. And of course he didn't stop tweeting,
and he raised money the next day, which we invested
in Tesla at that time, and it was extremely profitable.
Speaker 10 (38:26):
And I would say the same thing to him today
and it's.
Speaker 11 (38:28):
Like I don't have to agree with your opinions in
your viewpoint in life. But do you have to share
that with everybody all the time. It's not necessary and
it's not helping you be successful. So why share opinions
that are so unpalatable to so many people when it's
completely hurting you.
Speaker 10 (38:45):
From achieving your goals? That's what I would say.
Speaker 3 (38:47):
All right, good stuff, Elon, if you're listening, we'd love
to hear what you would respond to to Ross. Ross,
thank you so much for all of it, and for
being so honest and real. Ros Gerber, He's present, and
stay safe, be well, of course, of Gerberg Kawasaki Wealth
and Investment Management out there in Santa Monica.
Speaker 5 (39:06):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (39:14):
Listen live weekday afternoons from two to five pm Eastern.
Speaker 5 (39:18):
On Bloomberg dot com, the iHeartRadio app, tune In, and
the Bloomberg Business App. You can also watch us live
every weekday on YouTube and always on the Bloomberg terminal
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Tim Stenovec
Carol Massar
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