July 23, 2025 • 43 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Tesla Inc. fell short of Wall Street’s expectations in one of the automaker’s worst quarters in years, a sign of the toll that rising competition and a backlash against Chief Executive Officer Elon Musk have taken on the company.
Adjusted earnings were 40 cents per share, Tesla said Wednesday in a statement, just below the average analyst estimate. Revenue fell 12% to $22.5 billion, the sharpest decline in at least a decade.
Still, the report was free of new bombshells and the company said it continues to move forward with robotaxi and affordable-vehicle plans, providing a measure of relief for investors. That comes “despite a sustained uncertain macroeconomic environment resulting from shifting tariffs, unclear impacts from changes to fiscal policy and political sentiment,” Tesla said.
The revenue drop was due to a decline in vehicle deliveries, lower regulatory credit revenue and a lower average selling price for its cars. Tesla also reported a decline in energy generation and storage revenue. The company did see a boost from the business segment that includes its supercharging network.
Meanwhile, Alphabet Inc. reported strong second-quarter revenue growth but said 2025 capital expenditures will be $10 billion greater than an earlier forecast, intensifying pressure on the company to justify investments it’s making to keep up in the AI race.
Shares slipped about 1.6% in late trading after the search giant, which owns Google, said capital expenditures will rise to $85 billion, compared with the $75 billion the company guided earlier this year.
Second-quarter sales, excluding partner payouts, climbed to $81.7 billion, the company said Wednesday in a statement. Analysts had projected $79.6 billion on average, according to data compiled by Bloomberg.
Today's show features:
- Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, discusses Tesla earnings and Elon Musk’s future
- Brent Thill, Senior Technology Research Analyst with Jefferies, and Bloomberg Intelligence Global Head of Technology Research Mandeep Singh break down Alphabet’s latest earnings
- Mike Cordonnier, Co-Founder, CEO and President of Carlsmed on the first day of trading for his company, with Bloomberg News Equities Reporter Natalia Kniazhevich
- Kristi Govella, Senior Adviser and Japan Chair at the Center for Strategic and International Studies (CSIS), on the US-Japan trade deal
See omnystudio.com/listener for privacy information.
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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.
Speaker 2 (00:08):
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 as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
Tesla said it's moving forward with its robotaxiing affordable vehicle
plans while reporting second quarter earnings that fell short of
Wall Street's estimates of justin earnings forty cents per share
that was just below the average analyst estimate. Revenue fell
twelve percent to twenty two and a half billion dollars
that was also lower than expectations and the sharpest decline
in at least a decade. Gross margin, which is a
(00:52):
measure of profitability, was higher than anticipated. Right Now shares
down about six tenths of one percent, and Tesla did
say many of its key in issaiess remain on track.
Quote despite a sustained uncertain macroeconomic environment resulting from shifting tariffs,
unclear impacts and changes to fiscal policy, and a political sentiment.
Let's bring in a Bloomberg Intelligence Global Autos and Industrials
(01:15):
research manager Steve Mann joining us once again from New Jersey.
You gave us a great preview earlier in the afternoon.
Now we have the numbers. Anything surprise you, Yeah.
Speaker 4 (01:26):
I think if you look at the stocks down after
hours a bit, I think I think the most important
thing there is they haven't given us enough visibility into
the future what their outlook is going to be. I mean,
the numbers they miss consensus. But if you kind of
dig into a little bit more and look under the cover,
(01:46):
it's actually not bad. If you look at automotive gross
margin excluding credits, it's actually fifteen percent better than the
last quarter of twelve and a half and better than
consensus estimates. And then if you look at free cash flow,
the reason why it's down versus the first quarter is
because they spend an extra nine hundred million on capex,
(02:09):
which is not a bad thing given that there's they're
launching the cheaper model and the cyber cap So if
you exclude that nine million of additional cap backs, their
free cash flow is actually over a billion, more than
six hundred and sixty million. In the first quarter.
Speaker 5 (02:26):
So that's good.
Speaker 4 (02:29):
That's good. I mean spending cap bacs given you know
what their product launches are is not a bad thing.
They're investing into the future. And look, they're also expanding internationally,
right they have. You know, we've seen over the quarter
improvement higher sales in South Korea, they announced entry into
(02:49):
into India, and then they're launching the extended version of
the Model Y in China. So it's a good thing.
But look, we do want to hear what you on
US has to say, uh, in terms of not just
the robotaxi, but you know, how how are they going
to face ahead when the challenges we were seeing the
US market, which is critical. It's it's their one of
(03:12):
the largest market uh in in their portfolio. So we'll
we'll have to hear more, uh on the on the call.
Speaker 3 (03:20):
How do you think Tesla's robotaxi stands up to the
other autonomous vehicle solutions that are out there right now,
namely Wemo.
Speaker 4 (03:29):
Well, I think the market can be very big, especially
in the US if we're not talking internationally, Uh, there's
definitely room for multiple players. Uh. You know, my perspective
is that you know, Tesla is using an all camera
system that actually is gives them a greater flexibility and
(03:51):
greater scalability with with that system.
Speaker 6 (03:55):
Uh.
Speaker 4 (03:55):
Weimo and others use a combination of radars lied on
and camera system. Cameras just are just cheaper right to build,
and uh, you know, and and so it's a lot
easier to scale, cheaper to scale for Tesla. So but
then again, I think the market's big enough. I think
(04:17):
there's going to be users that want in all camera system.
I think there's going to be users that don't feel
comfortable with that and want the redundancy redundancy of lie doars.
So you know, for example, Uber is partnering with Weimo.
Speaker 7 (04:32):
So I kind of go back to wait, all right,
So I'm looking at the FA function on the Bloomberg
and we just talked about free cash flow, and so
it's one hundred and forty six million dollars versus six
hundred and sixty four million in the first quarter of
twenty twenty five, as our live blog says, dropping eighty
nine percent. And I know what you're saying about, it's
good that they're spending for the future, right because you said.
Speaker 5 (04:52):
To us earlier that the best way to get to.
Speaker 7 (04:54):
That one point fifty six million unit delivery for the year, right,
that's the concessus estimate is that they've got to launch
that cheaper vehicle, right, so they've got to bring stuff out.
Do we have to be worried though about that low
number or they're they're going to be fine.
Speaker 4 (05:11):
Well, it's uh, I mean, it's it's technical, right, It's
that if free cash flow is overbuilain obviously the more
the better it is. Down Yeah, it's you know, compared
to a year ago, two years ago. But look like
if you look at the model Y, if you look
at the gross margin, you know, excluding credits, it is
(05:32):
up right, that actually tells you that, uh, you know,
the new vehicle is likely the model new model why
is likely built. They're able to build at lower cost.
The issue is, like I said in the preview, is
they just don't have enough volume.
Speaker 5 (05:47):
Yeah.
Speaker 4 (05:47):
So so if if they can expand volume with the
with the existing model Y, not just in the US
but in the international markets and as well as introduced
to cheaper model which is supposed to build to be
built within the existing capacity, you know, there could be
a lot upside, right in terms of margin in terms
(06:09):
of free cash flow. So uh, you know, it's really
execution at the moment, and that's what we want to
hear from Elon Musk. You know, how where where is
the second Where is the cheaper model? They said, it's
actually they said the production has started. Initial production has
started in June, but you know it could take some
time right before they launch and I have to get
(06:29):
all the kinks out. But you know, you want to
hear about India. India is a huge market, right and
where they taking India? Uh, you know, definitely Robotaxi is
an important and then the cyber cap. You know, we
need a little bit.
Speaker 5 (06:44):
More details, all right, details is certainly near.
Speaker 4 (06:47):
Term details, near term details.
Speaker 5 (06:50):
All right, great setup, Steve Man, thank you so much.
Speaker 7 (06:53):
We're going to look forward to reading your research in
the after hours and certainly into tomorrow's trade. Deeman Bloomberg
Intelligence Global Auto an Industrials research manager, joining us from
BI headquarters in Princeton, New Jersey.
Speaker 3 (07:04):
I want to go right now and bring in Ross Gerber.
He's president's CEO of Gerber Kawasaki Wealth and Investment Management.
As at the end of last year, had about three
point four billion dollars in assets under management. Long time
outspoken Tesla bull more recently expressing concerns about the company,
as he did three months ago after the last quarter
(07:24):
report earnings report. According to the Bloomberg terminal, gerber Kawasaki
still owns about seventy eight million dollars worth of Tesla stock. Ross,
good to have you with us this afternoon. What have
you been doing to your Tesla position over the last quarter?
Just before we get your take on the numbers.
Speaker 1 (07:42):
You know, we've been selling for years and I continue
to sell. I you know, we have so much stock,
and we have a lot of clients that really believe
in the Tesla story, and we've kept some stock obviously
in our portfolios, but in my ETF, I'm out of Tesla,
completely out of my GK. And it's mostly because the
business is declining, and these earning results continue to show
(08:06):
that the business continues to decline and in some kind
of troubling ways. So as much as the previous guest
is bullish on many of these things that Elon talks about,
nobody wants to talk about the truth that nobody wants
to buy Elon's products, like until that gets addressed there's
a huge elephant in the room that nobody seems to
(08:27):
want to point at because it's Elon. So he's the
innovator behind all of the things that are great about Tesla,
but he's also the sort of villain that's created so
much animosity around him that nobody wants to buy his products.
Speaker 7 (08:39):
We've had a great cover story by the team of
Max Chafkin and Ed Ludlow in Bloomberg business Week the
new issue coming out, the August issue. It'll soon be
on newstands, it's already on the Bloomberg But you know,
the whole idea ross as you know, since you understand
this guy, this company so well, you never kind of
count Elon out, And so I wonder, you know, if
(09:01):
he does get it right, if he maybe, I don't know,
We'll see what happens in terms of his involvement in politics,
because it does seem like he still wants to stay
according to the SpaceX filing. But I mean there is
always that caveat when it comes to Elon right that
he sometimes pulls it out, or he often pulls it out.
Speaker 1 (09:22):
Yeah, And I think that's been true in the past,
and I'm very grateful that he pulled it out five
years ago when it really mattered and Tesla was almost
on the verge of bankruptcy, and it has become a
very successful company. But it doesn't mean he's going to
do it again. And this idea that you know, these
kind of entrepreneur rock star people don't fall is actually
(09:44):
is not true. In fact, it's very common to what
we call the rise in fall story. That's all the
stories you see on Netflix and the documentaries, So you know,
this might be a rise in fall story, and things
don't rise forever, per se. And I always remind people.
I don't think most people even know who invented the television,
but the television was invented in the United States by
(10:06):
a company called RCA, which was like the hottest stock
of the fifties. Well, how many TVs are made in
the United States today And the answer is zero. So
the very same thing could happen in the ev business.
But that said, Elon can fix the company. It's solely
broken because of him. He can certainly fix the company
if he wants to do what's necessary to improve his image.
(10:28):
And in a year people forget and Tesla might be back.
But he just doesn't seem to care about fixing his image,
and he doesn't seem to be an understanding the responsibility
goes to him on why sales are down so.
Speaker 3 (10:42):
Much, So why even have any Tesla stock right now?
Speaker 1 (10:46):
I think the reason I hold personally still some Tesla
stock is for the same hope that we all have
that they are definitely focused on a future, and especially
for me a climate activist, you know, it's a green
future that I'm pushing and Tesla still is the leader
in green you know, transportation and energy, and I think
(11:07):
it's an incredibly important company to succeed. Hence why I'm
out here banging on elon all the time. It's not
you know, for any other reason than wanting to see
Tesla succeed because it's crucially important to climate change. But
this robotaxi business is not crucially important to anybody. So,
you know, I think Tesla's main business is selling evs
(11:28):
that and energy storage, and they should be focused on
repairing that main business. And I think there are other
future end of ours are interesting and that's why it's
a reason to hold the stock. But it also trades
at one hundred and fifty times earnings that are going down, okay,
and so you know you have to weigh that too.
Speaker 3 (11:45):
In the past, you've talked about how nice it is
to drive a Rivian, for example. Are you willing to
now invest in any other EV company that you've turned
on Tesla?
Speaker 8 (11:55):
No.
Speaker 1 (11:56):
You know, I've lost a lot of money and EV
businesses over the last five years that I've hoped would
succeed in, including Rivian and many others, And unfortunately, many
of the EV operators are now having all the incentives
taken away from them as well as traditional car companies
along with tariffs and everything else. It's just really a
horrible setup to be a car company. The car company
(12:17):
we own is Ferrari actually, which has no problem selling
their cars at forty percent margins that make Tesla look
like chump change. So you know, truthfully, it's just a
tough to be in a global auto business on a
great day, let alone with Trump as president. So it's
a very tough time for the businesses, and I'm just
not recommending that right now. Versus a stock like train
(12:39):
technology that makes you know, clean energy air conditioning units,
where the demand for air conditioning is off the charts,
and that's been a wonderful green energy investment along with
ge Vernova, which we also own. That's been a wonderful
green energy investment. But it's not EV's.
Speaker 7 (12:56):
Hey, listen, I do want to go back to We've
got the Tesla live blog going on and just tracking
everything that's coming out of the earnings. Are down a
Hull who covers Tesla and Elon, says Page twelve of
the shareholder deck shows the Tesla ecosystem, which includes optimists.
We know, the robot pushing a baby stroller, you know,
you know ross When it comes to Tesla and the
(13:17):
world of Elon, there are so many different moving parts.
There's you know, the shining beacon of SpaceX right that
that's a really great business. There's all the AI stuff
that's going on. There's so many different moving pieces. What
else do you want to know maybe on the call
today about you know, from the Elon universe.
Speaker 1 (13:38):
Well, I think the most important thing in my mind
that has the biggest opportunity to help Tesla is this
low cost vehicle they keep talking about. They have so
much excess capacity in their factories now because they're not
selling more cars that they need a new vehicle. And
also for addressing other markets, whether it be India, China
(13:58):
and Europe. You need a small vehicle that's inexpensive to
compete against the other EV players and regular traditional car companies.
And they need to do this now, and the sooner
they do this, the better, And that's the most important thing.
I know. We like to talk about the day a
robot is pushing my kid around in a stroller. That
day is long in the tooth from coming. Nor does
(14:20):
anybody in the world would trust some big robot made
by Elon Musk. Yeah, when I get out of that fantasy,
you know, Well, I was.
Speaker 3 (14:27):
Just going to say when I'm on my deathbed, I
know I'm not going to say, wish I spent less
time pushing my kid's stroller and had robots do it instead.
The dishes I want done, not less.
Speaker 5 (14:34):
Time with my kids. Laundry done.
Speaker 1 (14:36):
Yeah, the dishes, But I don't know my wife actually
likes doing the dishes, so I don't know.
Speaker 5 (14:41):
Tell her to ask her what her secret is. I
would love to know. Hey, Rob, I don't know she
likes it.
Speaker 7 (14:47):
Rus Gerber always appreciate you finding time for us.
Speaker 5 (14:51):
We got to run right now. Shares of Tesla just
down about six tens of a percent.
Speaker 2 (14:55):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
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Speaker 7 (15:09):
We do want to bring in to the conversation Brett Thill,
he's senior technology research out and said Jeffries, he's got
a buy rating on Alphabet. He's got a hold rating
on IBM, which also is that with their results and
we are seeing that that stock. Let me just bring
it up real quickly on the Bloomberg shares of IBM
or down about four point four percent, so we're both
(15:29):
seeing some movement there and right now Alphabet down one.
Speaker 5 (15:31):
Point two percent.
Speaker 7 (15:32):
Hey Brent, good to have you here to the conversation
with Tim Mandeep and myself. Your take on what we
got from Alphabet, Yeah, I.
Speaker 8 (15:40):
Mean it was pretty in line. I don't think there
was any big fireworks. You know, you had a bigger
capex number was about four and app billion higher, which
is a sign of investing in AI. They raised capex
by ten bill which again everyone knows it's going to
AI and so I think everyone likes that that they're
spending to keep pace, but obviously it's having a drag
(16:03):
on the margin. So the margin last course about forty percent,
they're at thirty eight point three percent, so a little
bit of a drag on the margin on the downside,
and then you know, just magnitude of upside just you know,
not a lot, and they don't give you a lot
of color what they're doing. So I think, you know, look,
this has been the worst sentiment of any name I
cover an internet. Our investors are not bought in everyone
(16:25):
starting their search, which actually BT and perplexity first be
stelling up in Google, and so the big question is
ultimately where are they going to end up in this
in this AI race, And many of the advertisers are
talking about the transition with AI overview and what they're
going through that it's more expensive and they're getting a
better impact from it. But it's still early. So you know, overall,
(16:51):
Cloud you know was did well. YouTube was thirteen percent growth,
it was ten last course, accelerated a bit off an
easy comp and so yeah, I think it's just basic
kind of quarter, nothing really exciting that The challenge right
now is investors just don't believe. You know, any investor
I talked to is like, I need to be underweight
(17:13):
Google because I just don't believe they're going to make
this transition.
Speaker 3 (17:16):
We'll make the case for us, make the case for
us that you think they will make the transition.
Speaker 8 (17:21):
Well, the case for the transition is that you need
three things for AI. You need data, users, and capital.
And they have more data and more users than anyone
in the world. So if like I've always said this,
like I think this is like pulling up to a
stoplight and you look right and it's like a tiny
little car and you might be in a car that
(17:41):
you think is faster, and then the car on the
right just takes off and you're like, wow, I didn't
realize that was underneath the hood or where the muscle
come from.
Speaker 5 (17:47):
There.
Speaker 8 (17:48):
They have a lot more AI muscle under the hood
than they're showing. They're terrible communicators, they're not good with investors.
They don't give you guidance, they don't go on the road,
they don't spend time with investors, like Nvidia, like Microsoft,
like the Rust, and so investors are just like, look,
they gave me the earnings call, four times a year,
and that's about it, and then the filing and that
(18:08):
there's nothing in it, and then I'm left to guess.
So every investor has to do their own work, and
we're all doing our own work. Your day starts in
chat abt and Perplexiti. It's not and it was starting
in Google maybe a year ago. There's alternatives. So I
think this is the same thing we're seeing with Adobe,
with Salesforce, other names we cover in tech. Is a
new crop of AI stories going to effectively, not necessarily replace,
(18:33):
but become the central spot where you start your your
your your search. And I don't think that you know
that that that boogeyman is going to go away for
a while. So you know again, I think you know
stocks underperformed has done nothing. You look at the IGV
the software next, It's up twelve percent. Google's flat.
Speaker 6 (18:54):
You look at the.
Speaker 8 (18:55):
Other index, the SMH, the Internet of Index, it's You're
up eighteen percent year.
Speaker 5 (18:58):
Date, Google's flat.
Speaker 8 (19:00):
I mean, there's literally been way better ways to make money,
whether it's DoorDash. When you look at what's going on
in meta, and we hear this from advertisers. Advertisers are
obsessed with what Meta is doing in AI, and so
again I'm not super super bearish or on Google, but
I think what we're seeing are the facts of the facts,
which is it's really hard to change the narrative and
(19:23):
they're going to have to make a change in their
own behavior, and the numbers and then the adoption rate,
and so that again we're never going to rule them out.
I think the stock's super cheap, so that's why I
still have a buy in it. But I would say
of all the large cap Internet names, they have the
most work to do.
Speaker 5 (19:39):
All right, So Man Deep, come on back in are
a Man Deep?
Speaker 7 (19:41):
Saying, globalhead of Technology research at our in house Bloomberg
Intelligence Team.
Speaker 5 (19:45):
I mean, do you think they could do better in
terms of messaging? I'm curious about your thinking.
Speaker 9 (19:51):
I agree with Brent on that that they are the
ones who give you the least when it comes through
the product pipeline and how it's going to change their business,
especially given they are getting disrupted, so they could do more.
But at the same time, like I said, you know,
a search business that is their cash cow growing double
digit is a very impressive performance. And to my mind,
(20:15):
you know, given all the competitive threat that we talk about,
they're still able to execute. And unless the search business
really starts to decelerate sharply, I don't see anything in
the fundamentals that has changed for Google.
Speaker 5 (20:31):
Is meta threat to Alphabet.
Speaker 9 (20:33):
No, because they're struggling with their own large anglid model.
That's why they're making all the aqua hiers, so they
don't have the talent. It's really Google and open Ais
that are going neck and neck when it comes to
the consumer side, and then you have Gottenthropic on the
enterprise side. But these three dominate the large angred model
race right now.
Speaker 8 (20:53):
Let me add that the advertisers are not saying that
our advertisers are saying they're shifteen dollars from too Mata
away from Google's. So I think when you look at
actually advertising dollars, they are shifting and that's coming from
our checks. So I think that there is a shift
that's been happening. I don't think Google goes to zero,
but I do think there's a shift in advertisers.
Speaker 9 (21:14):
Why did Google Search then grow double digits this quarter?
Speaker 8 (21:19):
It's starting to fade and we think that ultimately that
is results are much stronger.
Speaker 9 (21:24):
Okay, I mean that's where we have to wait for meta.
Maybe it grows high teens or over twenty percent, and
then probably the meta.
Speaker 8 (21:31):
Stocks are twenty two percent. You're to date for a
reason because the advertiser checks that. We all do are
saying that. Secondarily, the framework of what they can do
with AI is so much more powerful from what we're
seeing in the experiences. So I'm not again, I'm not
a Google hater. I just think that we're starting to
see a sudden they are behind it.
Speaker 9 (21:49):
It comes to LLLM. So it's not because of their
LLLM lead that their ad revenue is shifting. So it's
just better at surface and how meta is monetizing. It's
not Bella Lamps, right.
Speaker 8 (22:03):
I don't believe it's I don't believe it's because of
l arm Stone.
Speaker 3 (22:05):
Yeah, So, Brent, if if indeed there is this shift happening,
and I certainly see it in in my behavior, and
I do end up going back to Google, but there
is there are other options out there now, whether whereas
there used to not be other options. Uh, if that happens,
how does Google end up leveraging it's sor it's a
(22:27):
iproduct for actual ad revenue, What does that what does
that look like?
Speaker 8 (22:33):
Well, I think the challenge is when you go back
to Gemini, that if you've gone into perplexity, into the
app or chet Ebt where we all started in Gemini
was late, how do you how do you transition out
of those apps when you're when they're already front and center,
and so they've got to get people to kind of
get out of that. And then secondarily, like I go
back to like I plan a family vacation in Europe
(22:54):
on chet Ebt, and to your point, I had to
go back to Google to find the boat, rent all
the restaurants, all the things we want to do as
a family. So I do think that you ultimately end
up back. I think that the challenge right now is
it's unclear exactly how they're going to navigate through this
(23:15):
and are they going to end up in a better
or worse position? And right now Wall Street's betting a
worse position. Right stocks down on this print, which wasn't
that bad. Why is it down? Why is the sentiment
so bad? There's just better alternatives that people see, and
you hear these advertisers, these big advertisers are spending billions
of dollars a year on behalf of their clients, and
they're saying, well, this is what I'm doing with my
(23:36):
ad budget.
Speaker 5 (23:37):
So I think they need to do a better.
Speaker 8 (23:39):
Job of you know, you've got to get AIO review
in the market and get usage. You have to effectively
show a better ROI. You have to get Gemini usage up.
I think you know from a Wall Street A lot
of this is just actually management too, which is giving conviction.
We covered Microsoft when Bomber was there and stock did
nothing and people just didn't have a conviction. They had
(24:01):
conviction when the Dela came in the stock one thirty
and now it's five hundred and so a lot.
Speaker 5 (24:06):
Of this too is optical.
Speaker 8 (24:07):
You got to optically hold hands and help people. Because
investors get the help from a lot of the other companies,
they don't get the help from Google. So if you
can drive a car, you're probably more likely to buy it.
But if you can't drive it, then you know, like
maybe I'll just go buy another car I know I
can drive. So they need to do a better job
(24:27):
on that side.
Speaker 9 (24:28):
And to Brent's point about Gemini usage, I think on
the call, if they shared the token count, so last
quarter they mentioned four hundred and eighty trillion was a
token count and it grew almost you know, five x
month over a month. Microsoft shared a similar metric, and
to my mind, in the case of Alphabet, you'd not
(24:50):
only have the cloud lift, so cloud consumption is driving
token count, but also the surface area they have with
their family of apps. So they have six apps with
over two billion monthly active users. All the AI Gemini
AI that they are deploying on those apps, including Search,
that will show up in the token count. And that's
(25:11):
why Google is almost ten times that of Microsoft. So
Microsoft process fifty trillion tokens, right, Google process four hundred
and eighty trillion tokens. That's because of the surface area
they have to you know, show Gemini and deploy that,
and that for me is the key metric on the
earning score.
Speaker 5 (25:29):
So that's what you're going to be looking for.
Speaker 7 (25:31):
All right, We're gonna let you go because you, I know,
have lots to do, man deep seeing you are such
a gem Bloomberg Intelligence. Hey, bred before you go, just
a quick thought on IBM because they also report and
they're down almost five percent in the aftermarket.
Speaker 5 (25:43):
What do we need to know just quickly.
Speaker 8 (25:45):
Yes, software that did better consultings kind of like blah,
and I think the CEO and mentioned they'd like to
do better in consulting, but that that seems to be
the biggest concern across consulting overall. So you know, tell
two cities software business growing high single digit consulting not
massive grower and flat on a constanqurency basis, And so
(26:05):
you know you they're shifting to become a software company.
Arvind has done a great job, the CEO. The stock's
up almost thirty percent year today. The multiples almost at Microsoft.
Like I'm much rather own Microsoft. I'm much rather on Google.
There's other names I'd rather personally own. I can own
any these names, but we're advising ARC clients to own on.
Speaker 5 (26:24):
Over over IBM.
Speaker 8 (26:25):
We just we just see, you know, the stock pretty
full at the multiple it's at all.
Speaker 7 (26:29):
Right, just real quickly, what would be your top number
one question on alphabet on the call here?
Speaker 5 (26:35):
And the stock's down one still one point six percent lower?
Speaker 8 (26:38):
Just quickly, you know, the continued adoption of AI overview
and what's happening with Gemini?
Speaker 5 (26:43):
All right, gon I leave it there. This was fun, Brent,
Thank you so much.
Speaker 7 (26:46):
Brent Delle, you see your technology research analyst over at
Jeffries joining us on zoom on this Wednesday.
Speaker 2 (26:54):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting to two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 7 (27:12):
So we've seen initial public offerings definitely picking up some
momentum this year. As a group, IPOs are up about
five percent year to date as measured by the Renaissance
IPO Index, but up forty one percent from a low
back on April eighth.
Speaker 5 (27:25):
We've got a couple of.
Speaker 7 (27:26):
IPOs today, both are trading lower in their first day
of trading. We've got Niq Global Intelligence share slumping after
the company raised more than a billion in its IPO,
giving it tim.
Speaker 5 (27:37):
Just about a market cap of just under six billion dollars.
Speaker 3 (27:41):
Another a small cap Carls Med. It's a medtech company,
slipping in its first day of trading after raise one
hundred point five million dollars in its IPO. The company
with it approximately three hundred and eighty seven million dollar
market cap. Carlsmed uses AI to personalized spine surgery. It
sold six point seven million shares after offering them for
fourteen two sixteen dollars each. Here was more in the
(28:02):
company in the first day of trading as a public company.
Mike Cordonier, co founder and CEO and president of Carl's
Med from the Nasdaq. Also joining us a Bloomberg News
activities reporter and Tallya Kenny Javitch. She's here in the
studio with us, Mike. The stock is down on the
first day. How are you feeling on a day such
as today? Stock not necessarily moving in the direction you
(28:23):
want to see.
Speaker 10 (28:24):
Well, we're feeling really good about you know, how we're
doing today. You know, continue to focus on our mission
and building awareness about you know, really what we do
that ultimately we know has transformed spine surgery, and so,
you know, continue to focus on the fundamentals, and you know,
(28:47):
it's it's ultimately going to be a really strong day
for us.
Speaker 7 (28:52):
For those who mind, have I familiar Mike, just fill
us in on exactly what you do. From what we
understand you guys do personalized surgery, which got one of
our producers c see a little word, because we thought
all surgery was personalized elis. We hope that's the case
when we go under the knife. So they say, so,
what exactly do you guys do?
Speaker 10 (29:12):
Yeah, you know, we've really taken a very different approach
to what really a medical device company is. And so
we are a medical technology company, and we work with
surgeons and patients, and we take digital imaging of the
patients as well as surgical inputs from the surgeon, create
(29:35):
a virtual plan of that patient surgery, and then we
three D print personalized devices for their spine surgery, build
those on demand, delivered directly to the operating room. And
ultimately what this does is this gives a surgeon really
power to be able to perform very precisely what can
(29:58):
be a really complex spinal surgery.
Speaker 11 (30:02):
Mike Hi, congratulations on trading debut. I'm curious about your
path to profitability because companies like yours typically require a
lot of capecs. Do you guys have any timeline in
mind on when you become profitable?
Speaker 10 (30:19):
Yeah, well, we haven't provided direct guidance to that. However,
we have built our company very differently than a traditional
medical technology company because we don't carry any inventory. Everything
that we create is three D printed directly on demand.
And so as we think about this public offering the
(30:40):
use of capital to reinvest towards really our growth in
being able to provide this technology to a lot more.
Speaker 5 (30:48):
Patients, what's proprietary?
Speaker 10 (30:51):
Yeah, Ultimately, you know, we have a broad technology platform
that we built, and so as we think about rolling
this out much more broadly, we've been able to create
an end to end technology platform that is proprietary to
us that we've called our Digital Production System, and this
(31:14):
is a all in one system that allows us to
take digital data about the patient, about the surgeon, create
personalized plans and the devices to achieve those plans. And ultimately,
when we started down this journey just.
Speaker 5 (31:33):
A few years ago.
Speaker 10 (31:35):
This whole end to end process took us a little
bit longer than eight weeks. And now we've really reinvested
in our proprietary system that allows us to do this
in two weeks or less, which really allows these scheduled
surgeries to be able to be done in the time
that the surgeon and patient needs them.
Speaker 3 (31:55):
Mike, why was an IPO the right move here? If
the broad adoption by doctors around the US and around
the world. Is your goal here? Why not look to
be acquired by let's say, a Medtronic or a Johnson
and Johnson or a striker that already has these relationships
with doctors and can these roll this out more broadly.
Speaker 10 (32:14):
Yeah, we really, you know, think about this much more
than a product line and really much more as a
new way to run a business, because, you know, very
different than what the large players in this space do,
which tends to be a very capital intensive business model.
(32:34):
You know, we've built this new business model which is
really digital first, allows us, in conjunction with the surgeon
to do the procedure digitally first and then make one
demand everything that's needed. And so because of this, because
of ultimately our ability to do this on demand, we've
(32:57):
built a very nimble, agile company that we can deeply
target those key institutions and the patient population to directly
deliver exactly what's needed. And we see this really as
a platform technology that has a lot more applications, much
(33:17):
beyond our current indications that we have for spinal fusion.
Speaker 7 (33:22):
So can I just ask you, so, does that mean
you ultimately see yourself maybe for every complicated surgery figuring
out how to.
Speaker 9 (33:28):
Do this just quick.
Speaker 10 (33:29):
Yeah, yeah, absolutely. You know, we see this as a
continued innovation partnership with you know, surgeons as well as
us on the technology side to be able to profinde
a very novel personalized solution to patients.
Speaker 5 (33:48):
Yeah.
Speaker 10 (33:48):
That ultimately drives better outcomes because as we've looked at
our early data for spine fusion surgery, we've been able
to materially improve outcomes for patients because we can directly
personalize the devices needed for their surgery.
Speaker 11 (34:07):
Mike, what is your tariff exposure?
Speaker 10 (34:10):
Yeah, so we are one hundred percent supply chain in
the US, and so we're very well insulated from you know,
the news that's coming out around tariffs.
Speaker 9 (34:24):
Hey.
Speaker 5 (34:24):
One thing I want to ask you though, in terms
of the growth of the business.
Speaker 7 (34:27):
I know there's you're not going to give us anything
on profitability or when you get there, but what's the
growth that you are seeing in usage, growth in revenues?
Can you give us some numbers? We are Bloomberg and
you are a public now and ultimately you're going to
be sharing this stuff.
Speaker 5 (34:40):
Just got about forty seconds.
Speaker 10 (34:42):
Yeah, absolutely, you know, we've we've grown phenomenally since we started,
and we can we can report that, you know, in
the first quarter of this year, you know, we grew
one hundred percent year over year, and so you know,
we see this adoption very apid, with new surgeons, new
(35:03):
accounts coming on board, and you know, we anticipate, you know,
continued wide adoption of this new standard of care.
Speaker 5 (35:13):
All right, I think we have to leave it there.
Speaker 7 (35:14):
Hey, listen, stay in touch, love to know as you
continue along, and maybe on that first joarning you can
come join us after that. Mike Coordinair he is co
founder Cordon you or excuse me, co founder CEO president
of carlsmed joining us from the Nasdaq on their first
day of trading. And our own Natalia Kitty Javich, she's
here in studio. She's our Bloomberg News Equities Reports.
Speaker 2 (35:36):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 7 (35:50):
Those latest trade agreements still waiting to be done, including
one with the EU and then another that's already been
hammered out with Japan.
Speaker 3 (35:56):
Tip weigh in both US Treasury Secretary Scott Besson follow
by US Commerce Secretary Howard Lutnik.
Speaker 6 (36:03):
Fifteen percent for Japan for reciprocal terroriffts for autos. That
is a different kind of deal. But because the Japanese
proposed a very innovative solution, has it Russell's.
Speaker 5 (36:17):
Come up with anything innovative?
Speaker 6 (36:19):
Not yet. The EU has a collective action problem twenty
seven countries.
Speaker 5 (36:23):
That's up to them to negotiate.
Speaker 10 (36:24):
Right, are they willing to open their market?
Speaker 5 (36:27):
I don't think.
Speaker 11 (36:27):
I don't think anybody.
Speaker 10 (36:29):
Europe's not going to go and give us a trillion
dollars too.
Speaker 5 (36:32):
Well, can they get below fifteen percent? Or is fifteen
percent now the floor for autos? I would I would
know for a recip goal tariff the European.
Speaker 7 (36:41):
Union don't willing to accept.
Speaker 5 (36:44):
I don't think the countries can get low like that,
all right?
Speaker 7 (36:47):
That, of course is US Commerce Secretary Howard Lutnik, proceeded
there by US Treasury Secretary Scott Best. They were earlier
on Bloomberg Surveillance on TV and radio. Hey, check out
those full interviews. You can find them on the Bloomberg
and at Bloomberg dot com. Hey for the town though
on these trade agreements and what impact it may have
on global trade and for investments in the US. We
start in the Nation's Capital with a senior advisor in Japan,
(37:09):
Cheer at CSIS. It's the set of for Strategic and
International Studies, Christy Gavella, joining Tim and myself from the
Nation's Capital. Christy, it does seem like things are moving
along on trade deals according to what's kind of coming out.
Are these good trade deals for the United States? Are
they good for the economy? Are they good for the
(37:30):
global economy?
Speaker 5 (37:31):
And why or why not?
Speaker 12 (37:34):
Well, it certainly seems that the Trump administration is gaining
momentum in its quest to negotiate trade deals before the
August one deadline. If we look at the deal that
was announced with Japan yesterday, it's clear that these are
good deals for the US in the sense that the
US is raising tariffs by significant amounts and their horror
administration also by getting increased investment that addresses the trade deficit.
(37:55):
You know, some could argue that the concessions being offered
are perhaps not as significant as they might have wanted,
but they are getting, for example, Japan five hundred and
fifty billion dollars in investments, as well as concessions on
rice imports and also on auto safety standards. So these
are meaningful deals in a sense, and the deal with
(38:16):
Japan was the most substantial negotiated yet in terms of
trade volume.
Speaker 3 (38:19):
In your view, does it seem like the deal with
Japan is better for Japan or better for the United States?
Speaker 12 (38:26):
It represents a compromise on both sides. Japan's initial position
was that it wanted the removal of all US triffs,
which of course it did not receive. But a key
issue for Japan was the tariffs on automobiles, which were
at twenty five percent from earlier in the year. So
Japan received a reduction to fifteen percent on autos. It
also received an overall reduction from the proposed twenty five
(38:46):
percent reciprocal terifts to fifteen percent, so that is a
substantial improvement over the initial conditions Japan was facing. It's
also the lowest reciprocal teriff rate that's been negotiated to
date with a country that's running a trade surplus with
the US. Make no mistake of fifteen percent tariffs are
still a significant blow for the Japanese economy. So you know,
things were given and things were gained on both sides.
Speaker 7 (39:08):
Hey, you know, there was a Bloomberg story Christie out
this morning and included a quote from trin you and
senior economists for Emerging Asia at New Texas, and she said,
we live in a new normal where ten percent is
the new zero, and so fifteen percent and twenty percent
doesn't seem so bad if everyone else got it.
Speaker 5 (39:25):
And she's talking, of course, about teriff levels.
Speaker 7 (39:27):
She went on to say that at fifteen to twenty
percent tariff level, it's still profitable for US companies to
import from abroad rather than produce similar goods at home.
So wait a minute, I thought these trade deals were
about bringing back manufacturing and supply chains to the US
and investment back to the US.
Speaker 5 (39:44):
Is that going to really happen?
Speaker 12 (39:48):
Well, on your initial point, it is true that the
Trump administration has managed to reset people's perspectives on what
constitutes reasonable tariffs. So you know, what we see with Japan,
for example, would have been considered horrific. And the minimum
one percent that seems to be on the table is
also shocking. By previous standards, But it is true that
in the longer term, it's still up in the air
(40:09):
whether these tariffs will really achieve the goal of bringing
investment and jobs back to the US in a substantial way.
These tariffs are not necessarily the best tools to do that,
and it also is very difficult to predict how companies
and others will react to them, So we can only
really see the short term consequences in terms of rising
prices for consumers and also the revenue that it will
(40:30):
generate in the short term, But companies and others will
adjust in unpredictable ways, and it won't necessarily mean that
they will come back to the US.
Speaker 3 (40:38):
The President has talked about trade deals and economies opening
up to the United States, and in your view, was
the Japanese economy closed to the United States? I mean,
certainly from an automaker perspective. It's been a few years
since I've been in Japan, but I didn't see any
American cars on the roads of Japan. They were all
(41:00):
Andanese cars there. But has the market been closed to
the US?
Speaker 5 (41:06):
In general?
Speaker 12 (41:07):
Tariff barriers in Japan are not significant. Japan has had
open trade with the US for a long time. But
you're correct that on sensitive products like agriculture, there have
always been high tariffs. That's not unique to Japan. So
rice did become a significant issue in the negotiations. On
auto's the main issue there is more complicated. So the
(41:29):
concession that was given in the agreement related to auto
safety standards, which have long been perceived to be a
non tariff barrier that have made it more difficult for
US automakers to sell in Japan because they have to
meet different safety standards. But there are a host of
market factors that make US cars less competitive in Japan
that won't necessarily be addressed by these changes. So you know,
(41:51):
there are areas, in short where Japan's market has been
rather closed. But on the whole, you know, companies face
relatively open conditions on a relatively free and fair playing field.
Speaker 7 (42:02):
We've seen some reports about the EU seem to be
maybe working getting closer to a deal with the United States.
Speaker 5 (42:09):
We've got China next week.
Speaker 7 (42:11):
Just to wrap up, just remind everyone why having trade
deals with these big trading partners is important for the
US economy and the US overall.
Speaker 11 (42:22):
Well.
Speaker 12 (42:22):
From the perspective of the Trump administration. The issue is
that these countries are running trade surpluses, so they are
seen as a negotiating a tool in that sense. Overall,
these are our major trading partners in the US, and
so the trade volumes that are going through are significant
to the economy. It's important that these relationships are maintained.
(42:42):
It's important that, from the administration's perspective, they be rebalanced
in various ways. So, you know, getting these deals ahead
of the August one deadline minimizes disruptions to markets and
to companies' activities, so it's important that they move forward.
Speaker 7 (42:55):
Yep, we can cross a big, big uncertainty off our
list here, no doubt about it.
Speaker 5 (42:59):
Thank you so much. Christie Senior Advisor in Japan.
Speaker 7 (43:01):
Chair at CSIS, the Center for Strategic and International Studies,
joining us from the nation's capital.
Speaker 2 (43:08):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(43:29):
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Speaker 2 (00:08):
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 as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
Tesla said it's moving forward with its robotaxiing affordable vehicle
plans while reporting second quarter earnings that fell short of
Wall Street's estimates of justin earnings forty cents per share
that was just below the average analyst estimate. Revenue fell
twelve percent to twenty two and a half billion dollars
that was also lower than expectations and the sharpest decline
in at least a decade. Gross margin, which is a
(00:52):
measure of profitability, was higher than anticipated. Right Now shares
down about six tenths of one percent, and Tesla did
say many of its key in issaiess remain on track.
Quote despite a sustained uncertain macroeconomic environment resulting from shifting tariffs,
unclear impacts and changes to fiscal policy, and a political sentiment.
Let's bring in a Bloomberg Intelligence Global Autos and Industrials
(01:15):
research manager Steve Mann joining us once again from New Jersey.
You gave us a great preview earlier in the afternoon.
Now we have the numbers. Anything surprise you, Yeah.
Speaker 4 (01:26):
I think if you look at the stocks down after
hours a bit, I think I think the most important
thing there is they haven't given us enough visibility into
the future what their outlook is going to be. I mean,
the numbers they miss consensus. But if you kind of
dig into a little bit more and look under the cover,
(01:46):
it's actually not bad. If you look at automotive gross
margin excluding credits, it's actually fifteen percent better than the
last quarter of twelve and a half and better than
consensus estimates. And then if you look at free cash flow,
the reason why it's down versus the first quarter is
because they spend an extra nine hundred million on capex,
(02:09):
which is not a bad thing given that there's they're
launching the cheaper model and the cyber cap So if
you exclude that nine million of additional cap backs, their
free cash flow is actually over a billion, more than
six hundred and sixty million. In the first quarter.
Speaker 5 (02:26):
So that's good.
Speaker 4 (02:29):
That's good. I mean spending cap bacs given you know
what their product launches are is not a bad thing.
They're investing into the future. And look, they're also expanding internationally,
right they have. You know, we've seen over the quarter
improvement higher sales in South Korea, they announced entry into
(02:49):
into India, and then they're launching the extended version of
the Model Y in China. So it's a good thing.
But look, we do want to hear what you on
US has to say, uh, in terms of not just
the robotaxi, but you know, how how are they going
to face ahead when the challenges we were seeing the
US market, which is critical. It's it's their one of
(03:12):
the largest market uh in in their portfolio. So we'll
we'll have to hear more, uh on the on the call.
Speaker 3 (03:20):
How do you think Tesla's robotaxi stands up to the
other autonomous vehicle solutions that are out there right now,
namely Wemo.
Speaker 4 (03:29):
Well, I think the market can be very big, especially
in the US if we're not talking internationally, Uh, there's
definitely room for multiple players. Uh. You know, my perspective
is that you know, Tesla is using an all camera
system that actually is gives them a greater flexibility and
(03:51):
greater scalability with with that system.
Speaker 6 (03:55):
Uh.
Speaker 4 (03:55):
Weimo and others use a combination of radars lied on
and camera system. Cameras just are just cheaper right to build,
and uh, you know, and and so it's a lot
easier to scale, cheaper to scale for Tesla. So but
then again, I think the market's big enough. I think
(04:17):
there's going to be users that want in all camera system.
I think there's going to be users that don't feel
comfortable with that and want the redundancy redundancy of lie doars.
So you know, for example, Uber is partnering with Weimo.
Speaker 7 (04:32):
So I kind of go back to wait, all right,
So I'm looking at the FA function on the Bloomberg
and we just talked about free cash flow, and so
it's one hundred and forty six million dollars versus six
hundred and sixty four million in the first quarter of
twenty twenty five, as our live blog says, dropping eighty
nine percent. And I know what you're saying about, it's
good that they're spending for the future, right because you said.
Speaker 5 (04:52):
To us earlier that the best way to get to.
Speaker 7 (04:54):
That one point fifty six million unit delivery for the year, right,
that's the concessus estimate is that they've got to launch
that cheaper vehicle, right, so they've got to bring stuff out.
Do we have to be worried though about that low
number or they're they're going to be fine.
Speaker 4 (05:11):
Well, it's uh, I mean, it's it's technical, right, It's
that if free cash flow is overbuilain obviously the more
the better it is. Down Yeah, it's you know, compared
to a year ago, two years ago. But look like
if you look at the model Y, if you look
at the gross margin, you know, excluding credits, it is
(05:32):
up right, that actually tells you that, uh, you know,
the new vehicle is likely the model new model why
is likely built. They're able to build at lower cost.
The issue is, like I said in the preview, is
they just don't have enough volume.
Speaker 5 (05:47):
Yeah.
Speaker 4 (05:47):
So so if if they can expand volume with the
with the existing model Y, not just in the US
but in the international markets and as well as introduced
to cheaper model which is supposed to build to be
built within the existing capacity, you know, there could be
a lot upside, right in terms of margin in terms
(06:09):
of free cash flow. So uh, you know, it's really
execution at the moment, and that's what we want to
hear from Elon Musk. You know, how where where is
the second Where is the cheaper model? They said, it's
actually they said the production has started. Initial production has
started in June, but you know it could take some
time right before they launch and I have to get
(06:29):
all the kinks out. But you know, you want to
hear about India. India is a huge market, right and
where they taking India? Uh, you know, definitely Robotaxi is
an important and then the cyber cap. You know, we
need a little bit.
Speaker 5 (06:44):
More details, all right, details is certainly near.
Speaker 4 (06:47):
Term details, near term details.
Speaker 5 (06:50):
All right, great setup, Steve Man, thank you so much.
Speaker 7 (06:53):
We're going to look forward to reading your research in
the after hours and certainly into tomorrow's trade. Deeman Bloomberg
Intelligence Global Auto an Industrials research manager, joining us from
BI headquarters in Princeton, New Jersey.
Speaker 3 (07:04):
I want to go right now and bring in Ross Gerber.
He's president's CEO of Gerber Kawasaki Wealth and Investment Management.
As at the end of last year, had about three
point four billion dollars in assets under management. Long time
outspoken Tesla bull more recently expressing concerns about the company,
as he did three months ago after the last quarter
(07:24):
report earnings report. According to the Bloomberg terminal, gerber Kawasaki
still owns about seventy eight million dollars worth of Tesla stock. Ross,
good to have you with us this afternoon. What have
you been doing to your Tesla position over the last quarter?
Just before we get your take on the numbers.
Speaker 1 (07:42):
You know, we've been selling for years and I continue
to sell. I you know, we have so much stock,
and we have a lot of clients that really believe
in the Tesla story, and we've kept some stock obviously
in our portfolios, but in my ETF, I'm out of Tesla,
completely out of my GK. And it's mostly because the
business is declining, and these earning results continue to show
(08:06):
that the business continues to decline and in some kind
of troubling ways. So as much as the previous guest
is bullish on many of these things that Elon talks about,
nobody wants to talk about the truth that nobody wants
to buy Elon's products, like until that gets addressed there's
a huge elephant in the room that nobody seems to
(08:27):
want to point at because it's Elon. So he's the
innovator behind all of the things that are great about Tesla,
but he's also the sort of villain that's created so
much animosity around him that nobody wants to buy his products.
Speaker 7 (08:39):
We've had a great cover story by the team of
Max Chafkin and Ed Ludlow in Bloomberg business Week the
new issue coming out, the August issue. It'll soon be
on newstands, it's already on the Bloomberg But you know,
the whole idea ross as you know, since you understand
this guy, this company so well, you never kind of
count Elon out, And so I wonder, you know, if
(09:01):
he does get it right, if he maybe, I don't know,
We'll see what happens in terms of his involvement in politics,
because it does seem like he still wants to stay
according to the SpaceX filing. But I mean there is
always that caveat when it comes to Elon right that
he sometimes pulls it out, or he often pulls it out.
Speaker 1 (09:22):
Yeah, And I think that's been true in the past,
and I'm very grateful that he pulled it out five
years ago when it really mattered and Tesla was almost
on the verge of bankruptcy, and it has become a
very successful company. But it doesn't mean he's going to
do it again. And this idea that you know, these
kind of entrepreneur rock star people don't fall is actually
(09:44):
is not true. In fact, it's very common to what
we call the rise in fall story. That's all the
stories you see on Netflix and the documentaries, So you know,
this might be a rise in fall story, and things
don't rise forever, per se. And I always remind people.
I don't think most people even know who invented the television,
but the television was invented in the United States by
(10:06):
a company called RCA, which was like the hottest stock
of the fifties. Well, how many TVs are made in
the United States today And the answer is zero. So
the very same thing could happen in the ev business.
But that said, Elon can fix the company. It's solely
broken because of him. He can certainly fix the company
if he wants to do what's necessary to improve his image.
(10:28):
And in a year people forget and Tesla might be back.
But he just doesn't seem to care about fixing his image,
and he doesn't seem to be an understanding the responsibility
goes to him on why sales are down so.
Speaker 3 (10:42):
Much, So why even have any Tesla stock right now?
Speaker 1 (10:46):
I think the reason I hold personally still some Tesla
stock is for the same hope that we all have
that they are definitely focused on a future, and especially
for me a climate activist, you know, it's a green
future that I'm pushing and Tesla still is the leader
in green you know, transportation and energy, and I think
(11:07):
it's an incredibly important company to succeed. Hence why I'm
out here banging on elon all the time. It's not
you know, for any other reason than wanting to see
Tesla succeed because it's crucially important to climate change. But
this robotaxi business is not crucially important to anybody. So,
you know, I think Tesla's main business is selling evs
(11:28):
that and energy storage, and they should be focused on
repairing that main business. And I think there are other
future end of ours are interesting and that's why it's
a reason to hold the stock. But it also trades
at one hundred and fifty times earnings that are going down, okay,
and so you know you have to weigh that too.
Speaker 3 (11:45):
In the past, you've talked about how nice it is
to drive a Rivian, for example. Are you willing to
now invest in any other EV company that you've turned
on Tesla?
Speaker 8 (11:55):
No.
Speaker 1 (11:56):
You know, I've lost a lot of money and EV
businesses over the last five years that I've hoped would
succeed in, including Rivian and many others, And unfortunately, many
of the EV operators are now having all the incentives
taken away from them as well as traditional car companies
along with tariffs and everything else. It's just really a
horrible setup to be a car company. The car company
(12:17):
we own is Ferrari actually, which has no problem selling
their cars at forty percent margins that make Tesla look
like chump change. So you know, truthfully, it's just a
tough to be in a global auto business on a
great day, let alone with Trump as president. So it's
a very tough time for the businesses, and I'm just
not recommending that right now. Versus a stock like train
(12:39):
technology that makes you know, clean energy air conditioning units,
where the demand for air conditioning is off the charts,
and that's been a wonderful green energy investment along with
ge Vernova, which we also own. That's been a wonderful
green energy investment. But it's not EV's.
Speaker 7 (12:56):
Hey, listen, I do want to go back to We've
got the Tesla live blog going on and just tracking
everything that's coming out of the earnings. Are down a
Hull who covers Tesla and Elon, says Page twelve of
the shareholder deck shows the Tesla ecosystem, which includes optimists.
We know, the robot pushing a baby stroller, you know,
you know ross When it comes to Tesla and the
(13:17):
world of Elon, there are so many different moving parts.
There's you know, the shining beacon of SpaceX right that
that's a really great business. There's all the AI stuff
that's going on. There's so many different moving pieces. What
else do you want to know maybe on the call
today about you know, from the Elon universe.
Speaker 1 (13:38):
Well, I think the most important thing in my mind
that has the biggest opportunity to help Tesla is this
low cost vehicle they keep talking about. They have so
much excess capacity in their factories now because they're not
selling more cars that they need a new vehicle. And
also for addressing other markets, whether it be India, China
(13:58):
and Europe. You need a small vehicle that's inexpensive to
compete against the other EV players and regular traditional car companies.
And they need to do this now, and the sooner
they do this, the better, And that's the most important thing.
I know. We like to talk about the day a
robot is pushing my kid around in a stroller. That
day is long in the tooth from coming. Nor does
(14:20):
anybody in the world would trust some big robot made
by Elon Musk. Yeah, when I get out of that fantasy,
you know, Well, I was.
Speaker 3 (14:27):
Just going to say when I'm on my deathbed, I
know I'm not going to say, wish I spent less
time pushing my kid's stroller and had robots do it instead.
The dishes I want done, not less.
Speaker 5 (14:34):
Time with my kids. Laundry done.
Speaker 1 (14:36):
Yeah, the dishes, But I don't know my wife actually
likes doing the dishes, so I don't know.
Speaker 5 (14:41):
Tell her to ask her what her secret is. I
would love to know. Hey, Rob, I don't know she
likes it.
Speaker 7 (14:47):
Rus Gerber always appreciate you finding time for us.
Speaker 5 (14:51):
We got to run right now. Shares of Tesla just
down about six tens of a percent.
Speaker 2 (14:55):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 7 (15:09):
We do want to bring in to the conversation Brett Thill,
he's senior technology research out and said Jeffries, he's got
a buy rating on Alphabet. He's got a hold rating
on IBM, which also is that with their results and
we are seeing that that stock. Let me just bring
it up real quickly on the Bloomberg shares of IBM
or down about four point four percent, so we're both
(15:29):
seeing some movement there and right now Alphabet down one.
Speaker 5 (15:31):
Point two percent.
Speaker 7 (15:32):
Hey Brent, good to have you here to the conversation
with Tim Mandeep and myself. Your take on what we
got from Alphabet, Yeah, I.
Speaker 8 (15:40):
Mean it was pretty in line. I don't think there
was any big fireworks. You know, you had a bigger
capex number was about four and app billion higher, which
is a sign of investing in AI. They raised capex
by ten bill which again everyone knows it's going to
AI and so I think everyone likes that that they're
spending to keep pace, but obviously it's having a drag
(16:03):
on the margin. So the margin last course about forty percent,
they're at thirty eight point three percent, so a little
bit of a drag on the margin on the downside,
and then you know, just magnitude of upside just you know,
not a lot, and they don't give you a lot
of color what they're doing. So I think, you know, look,
this has been the worst sentiment of any name I
cover an internet. Our investors are not bought in everyone
(16:25):
starting their search, which actually BT and perplexity first be
stelling up in Google, and so the big question is
ultimately where are they going to end up in this
in this AI race, And many of the advertisers are
talking about the transition with AI overview and what they're
going through that it's more expensive and they're getting a
better impact from it. But it's still early. So you know, overall,
(16:51):
Cloud you know was did well. YouTube was thirteen percent growth,
it was ten last course, accelerated a bit off an
easy comp and so yeah, I think it's just basic
kind of quarter, nothing really exciting that The challenge right
now is investors just don't believe. You know, any investor
I talked to is like, I need to be underweight
(17:13):
Google because I just don't believe they're going to make
this transition.
Speaker 3 (17:16):
We'll make the case for us, make the case for
us that you think they will make the transition.
Speaker 8 (17:21):
Well, the case for the transition is that you need
three things for AI. You need data, users, and capital.
And they have more data and more users than anyone
in the world. So if like I've always said this,
like I think this is like pulling up to a
stoplight and you look right and it's like a tiny
little car and you might be in a car that
(17:41):
you think is faster, and then the car on the
right just takes off and you're like, wow, I didn't
realize that was underneath the hood or where the muscle
come from.
Speaker 5 (17:47):
There.
Speaker 8 (17:48):
They have a lot more AI muscle under the hood
than they're showing. They're terrible communicators, they're not good with investors.
They don't give you guidance, they don't go on the road,
they don't spend time with investors, like Nvidia, like Microsoft,
like the Rust, and so investors are just like, look,
they gave me the earnings call, four times a year,
and that's about it, and then the filing and that
(18:08):
there's nothing in it, and then I'm left to guess.
So every investor has to do their own work, and
we're all doing our own work. Your day starts in
chat abt and Perplexiti. It's not and it was starting
in Google maybe a year ago. There's alternatives. So I
think this is the same thing we're seeing with Adobe,
with Salesforce, other names we cover in tech. Is a
new crop of AI stories going to effectively, not necessarily replace,
(18:33):
but become the central spot where you start your your
your your search. And I don't think that you know
that that that boogeyman is going to go away for
a while. So you know again, I think you know
stocks underperformed has done nothing. You look at the IGV
the software next, It's up twelve percent. Google's flat.
Speaker 6 (18:54):
You look at the.
Speaker 8 (18:55):
Other index, the SMH, the Internet of Index, it's You're
up eighteen percent year.
Speaker 5 (18:58):
Date, Google's flat.
Speaker 8 (19:00):
I mean, there's literally been way better ways to make money,
whether it's DoorDash. When you look at what's going on
in meta, and we hear this from advertisers. Advertisers are
obsessed with what Meta is doing in AI, and so
again I'm not super super bearish or on Google, but
I think what we're seeing are the facts of the facts,
which is it's really hard to change the narrative and
(19:23):
they're going to have to make a change in their
own behavior, and the numbers and then the adoption rate,
and so that again we're never going to rule them out.
I think the stock's super cheap, so that's why I
still have a buy in it. But I would say
of all the large cap Internet names, they have the
most work to do.
Speaker 5 (19:39):
All right, So Man Deep, come on back in are
a Man Deep?
Speaker 7 (19:41):
Saying, globalhead of Technology research at our in house Bloomberg
Intelligence Team.
Speaker 5 (19:45):
I mean, do you think they could do better in
terms of messaging? I'm curious about your thinking.
Speaker 9 (19:51):
I agree with Brent on that that they are the
ones who give you the least when it comes through
the product pipeline and how it's going to change their business,
especially given they are getting disrupted, so they could do more.
But at the same time, like I said, you know,
a search business that is their cash cow growing double
digit is a very impressive performance. And to my mind,
(20:15):
you know, given all the competitive threat that we talk about,
they're still able to execute. And unless the search business
really starts to decelerate sharply, I don't see anything in
the fundamentals that has changed for Google.
Speaker 5 (20:31):
Is meta threat to Alphabet.
Speaker 9 (20:33):
No, because they're struggling with their own large anglid model.
That's why they're making all the aqua hiers, so they
don't have the talent. It's really Google and open Ais
that are going neck and neck when it comes to
the consumer side, and then you have Gottenthropic on the
enterprise side. But these three dominate the large angred model
race right now.
Speaker 8 (20:53):
Let me add that the advertisers are not saying that
our advertisers are saying they're shifteen dollars from too Mata
away from Google's. So I think when you look at
actually advertising dollars, they are shifting and that's coming from
our checks. So I think that there is a shift
that's been happening. I don't think Google goes to zero,
but I do think there's a shift in advertisers.
Speaker 9 (21:14):
Why did Google Search then grow double digits this quarter?
Speaker 8 (21:19):
It's starting to fade and we think that ultimately that
is results are much stronger.
Speaker 9 (21:24):
Okay, I mean that's where we have to wait for meta.
Maybe it grows high teens or over twenty percent, and
then probably the meta.
Speaker 8 (21:31):
Stocks are twenty two percent. You're to date for a
reason because the advertiser checks that. We all do are
saying that. Secondarily, the framework of what they can do
with AI is so much more powerful from what we're
seeing in the experiences. So I'm not again, I'm not
a Google hater. I just think that we're starting to
see a sudden they are behind it.
Speaker 9 (21:49):
It comes to LLLM. So it's not because of their
LLLM lead that their ad revenue is shifting. So it's
just better at surface and how meta is monetizing. It's
not Bella Lamps, right.
Speaker 8 (22:03):
I don't believe it's I don't believe it's because of
l arm Stone.
Speaker 3 (22:05):
Yeah, So, Brent, if if indeed there is this shift happening,
and I certainly see it in in my behavior, and
I do end up going back to Google, but there
is there are other options out there now, whether whereas
there used to not be other options. Uh, if that happens,
how does Google end up leveraging it's sor it's a
(22:27):
iproduct for actual ad revenue, What does that what does
that look like?
Speaker 8 (22:33):
Well, I think the challenge is when you go back
to Gemini, that if you've gone into perplexity, into the
app or chet Ebt where we all started in Gemini
was late, how do you how do you transition out
of those apps when you're when they're already front and center,
and so they've got to get people to kind of
get out of that. And then secondarily, like I go
back to like I plan a family vacation in Europe
(22:54):
on chet Ebt, and to your point, I had to
go back to Google to find the boat, rent all
the restaurants, all the things we want to do as
a family. So I do think that you ultimately end
up back. I think that the challenge right now is
it's unclear exactly how they're going to navigate through this
(23:15):
and are they going to end up in a better
or worse position? And right now Wall Street's betting a
worse position. Right stocks down on this print, which wasn't
that bad. Why is it down? Why is the sentiment
so bad? There's just better alternatives that people see, and
you hear these advertisers, these big advertisers are spending billions
of dollars a year on behalf of their clients, and
they're saying, well, this is what I'm doing with my
(23:36):
ad budget.
Speaker 5 (23:37):
So I think they need to do a better.
Speaker 8 (23:39):
Job of you know, you've got to get AIO review
in the market and get usage. You have to effectively
show a better ROI. You have to get Gemini usage up.
I think you know from a Wall Street A lot
of this is just actually management too, which is giving conviction.
We covered Microsoft when Bomber was there and stock did
nothing and people just didn't have a conviction. They had
(24:01):
conviction when the Dela came in the stock one thirty
and now it's five hundred and so a lot.
Speaker 5 (24:06):
Of this too is optical.
Speaker 8 (24:07):
You got to optically hold hands and help people. Because
investors get the help from a lot of the other companies,
they don't get the help from Google. So if you
can drive a car, you're probably more likely to buy it.
But if you can't drive it, then you know, like
maybe I'll just go buy another car I know I
can drive. So they need to do a better job
(24:27):
on that side.
Speaker 9 (24:28):
And to Brent's point about Gemini usage, I think on
the call, if they shared the token count, so last
quarter they mentioned four hundred and eighty trillion was a
token count and it grew almost you know, five x
month over a month. Microsoft shared a similar metric, and
to my mind, in the case of Alphabet, you'd not
(24:50):
only have the cloud lift, so cloud consumption is driving
token count, but also the surface area they have with
their family of apps. So they have six apps with
over two billion monthly active users. All the AI Gemini
AI that they are deploying on those apps, including Search,
that will show up in the token count. And that's
(25:11):
why Google is almost ten times that of Microsoft. So
Microsoft process fifty trillion tokens, right, Google process four hundred
and eighty trillion tokens. That's because of the surface area
they have to you know, show Gemini and deploy that,
and that for me is the key metric on the
earning score.
Speaker 5 (25:29):
So that's what you're going to be looking for.
Speaker 7 (25:31):
All right, We're gonna let you go because you, I know,
have lots to do, man deep seeing you are such
a gem Bloomberg Intelligence. Hey, bred before you go, just
a quick thought on IBM because they also report and
they're down almost five percent in the aftermarket.
Speaker 5 (25:43):
What do we need to know just quickly.
Speaker 8 (25:45):
Yes, software that did better consultings kind of like blah,
and I think the CEO and mentioned they'd like to
do better in consulting, but that that seems to be
the biggest concern across consulting overall. So you know, tell
two cities software business growing high single digit consulting not
massive grower and flat on a constanqurency basis, And so
(26:05):
you know you they're shifting to become a software company.
Arvind has done a great job, the CEO. The stock's
up almost thirty percent year today. The multiples almost at Microsoft.
Like I'm much rather own Microsoft. I'm much rather on Google.
There's other names I'd rather personally own. I can own
any these names, but we're advising ARC clients to own on.
Speaker 5 (26:24):
Over over IBM.
Speaker 8 (26:25):
We just we just see, you know, the stock pretty
full at the multiple it's at all.
Speaker 7 (26:29):
Right, just real quickly, what would be your top number
one question on alphabet on the call here?
Speaker 5 (26:35):
And the stock's down one still one point six percent lower?
Speaker 8 (26:38):
Just quickly, you know, the continued adoption of AI overview
and what's happening with Gemini?
Speaker 5 (26:43):
All right, gon I leave it there. This was fun, Brent,
Thank you so much.
Speaker 7 (26:46):
Brent Delle, you see your technology research analyst over at
Jeffries joining us on zoom on this Wednesday.
Speaker 2 (26:54):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting to two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 7 (27:12):
So we've seen initial public offerings definitely picking up some
momentum this year. As a group, IPOs are up about
five percent year to date as measured by the Renaissance
IPO Index, but up forty one percent from a low
back on April eighth.
Speaker 5 (27:25):
We've got a couple of.
Speaker 7 (27:26):
IPOs today, both are trading lower in their first day
of trading. We've got Niq Global Intelligence share slumping after
the company raised more than a billion in its IPO,
giving it tim.
Speaker 5 (27:37):
Just about a market cap of just under six billion dollars.
Speaker 3 (27:41):
Another a small cap Carls Med. It's a medtech company,
slipping in its first day of trading after raise one
hundred point five million dollars in its IPO. The company
with it approximately three hundred and eighty seven million dollar
market cap. Carlsmed uses AI to personalized spine surgery. It
sold six point seven million shares after offering them for
fourteen two sixteen dollars each. Here was more in the
(28:02):
company in the first day of trading as a public company.
Mike Cordonier, co founder and CEO and president of Carl's
Med from the Nasdaq. Also joining us a Bloomberg News
activities reporter and Tallya Kenny Javitch. She's here in the
studio with us, Mike. The stock is down on the
first day. How are you feeling on a day such
as today? Stock not necessarily moving in the direction you
(28:23):
want to see.
Speaker 10 (28:24):
Well, we're feeling really good about you know, how we're
doing today. You know, continue to focus on our mission
and building awareness about you know, really what we do
that ultimately we know has transformed spine surgery, and so,
you know, continue to focus on the fundamentals, and you know,
(28:47):
it's it's ultimately going to be a really strong day
for us.
Speaker 7 (28:52):
For those who mind, have I familiar Mike, just fill
us in on exactly what you do. From what we
understand you guys do personalized surgery, which got one of
our producers c see a little word, because we thought
all surgery was personalized elis. We hope that's the case
when we go under the knife. So they say, so,
what exactly do you guys do?
Speaker 10 (29:12):
Yeah, you know, we've really taken a very different approach
to what really a medical device company is. And so
we are a medical technology company, and we work with
surgeons and patients, and we take digital imaging of the
patients as well as surgical inputs from the surgeon, create
(29:35):
a virtual plan of that patient surgery, and then we
three D print personalized devices for their spine surgery, build
those on demand, delivered directly to the operating room. And
ultimately what this does is this gives a surgeon really
power to be able to perform very precisely what can
(29:58):
be a really complex spinal surgery.
Speaker 11 (30:02):
Mike Hi, congratulations on trading debut. I'm curious about your
path to profitability because companies like yours typically require a
lot of capecs. Do you guys have any timeline in
mind on when you become profitable?
Speaker 10 (30:19):
Yeah, well, we haven't provided direct guidance to that. However,
we have built our company very differently than a traditional
medical technology company because we don't carry any inventory. Everything
that we create is three D printed directly on demand.
And so as we think about this public offering the
(30:40):
use of capital to reinvest towards really our growth in
being able to provide this technology to a lot more.
Speaker 5 (30:48):
Patients, what's proprietary?
Speaker 10 (30:51):
Yeah, Ultimately, you know, we have a broad technology platform
that we built, and so as we think about rolling
this out much more broadly, we've been able to create
an end to end technology platform that is proprietary to
us that we've called our Digital Production System, and this
(31:14):
is a all in one system that allows us to
take digital data about the patient, about the surgeon, create
personalized plans and the devices to achieve those plans. And ultimately,
when we started down this journey just.
Speaker 5 (31:33):
A few years ago.
Speaker 10 (31:35):
This whole end to end process took us a little
bit longer than eight weeks. And now we've really reinvested
in our proprietary system that allows us to do this
in two weeks or less, which really allows these scheduled
surgeries to be able to be done in the time
that the surgeon and patient needs them.
Speaker 3 (31:55):
Mike, why was an IPO the right move here? If
the broad adoption by doctors around the US and around
the world. Is your goal here? Why not look to
be acquired by let's say, a Medtronic or a Johnson
and Johnson or a striker that already has these relationships
with doctors and can these roll this out more broadly.
Speaker 10 (32:14):
Yeah, we really, you know, think about this much more
than a product line and really much more as a
new way to run a business, because, you know, very
different than what the large players in this space do,
which tends to be a very capital intensive business model.
(32:34):
You know, we've built this new business model which is
really digital first, allows us, in conjunction with the surgeon
to do the procedure digitally first and then make one
demand everything that's needed. And so because of this, because
of ultimately our ability to do this on demand, we've
(32:57):
built a very nimble, agile company that we can deeply
target those key institutions and the patient population to directly
deliver exactly what's needed. And we see this really as
a platform technology that has a lot more applications, much
(33:17):
beyond our current indications that we have for spinal fusion.
Speaker 7 (33:22):
So can I just ask you, so, does that mean
you ultimately see yourself maybe for every complicated surgery figuring
out how to.
Speaker 9 (33:28):
Do this just quick.
Speaker 10 (33:29):
Yeah, yeah, absolutely. You know, we see this as a
continued innovation partnership with you know, surgeons as well as
us on the technology side to be able to profinde
a very novel personalized solution to patients.
Speaker 5 (33:48):
Yeah.
Speaker 10 (33:48):
That ultimately drives better outcomes because as we've looked at
our early data for spine fusion surgery, we've been able
to materially improve outcomes for patients because we can directly
personalize the devices needed for their surgery.
Speaker 11 (34:07):
Mike, what is your tariff exposure?
Speaker 10 (34:10):
Yeah, so we are one hundred percent supply chain in
the US, and so we're very well insulated from you know,
the news that's coming out around tariffs.
Speaker 9 (34:24):
Hey.
Speaker 5 (34:24):
One thing I want to ask you though, in terms
of the growth of the business.
Speaker 7 (34:27):
I know there's you're not going to give us anything
on profitability or when you get there, but what's the
growth that you are seeing in usage, growth in revenues?
Can you give us some numbers? We are Bloomberg and
you are a public now and ultimately you're going to
be sharing this stuff.
Speaker 5 (34:40):
Just got about forty seconds.
Speaker 10 (34:42):
Yeah, absolutely, you know, we've we've grown phenomenally since we started,
and we can we can report that, you know, in
the first quarter of this year, you know, we grew
one hundred percent year over year, and so you know,
we see this adoption very apid, with new surgeons, new
(35:03):
accounts coming on board, and you know, we anticipate, you know,
continued wide adoption of this new standard of care.
Speaker 5 (35:13):
All right, I think we have to leave it there.
Speaker 7 (35:14):
Hey, listen, stay in touch, love to know as you
continue along, and maybe on that first joarning you can
come join us after that. Mike Coordinair he is co
founder Cordon you or excuse me, co founder CEO president
of carlsmed joining us from the Nasdaq on their first
day of trading. And our own Natalia Kitty Javich, she's
here in studio. She's our Bloomberg News Equities Reports.
Speaker 2 (35:36):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 7 (35:50):
Those latest trade agreements still waiting to be done, including
one with the EU and then another that's already been
hammered out with Japan.
Speaker 3 (35:56):
Tip weigh in both US Treasury Secretary Scott Besson follow
by US Commerce Secretary Howard Lutnik.
Speaker 6 (36:03):
Fifteen percent for Japan for reciprocal terroriffts for autos. That
is a different kind of deal. But because the Japanese
proposed a very innovative solution, has it Russell's.
Speaker 5 (36:17):
Come up with anything innovative?
Speaker 6 (36:19):
Not yet. The EU has a collective action problem twenty
seven countries.
Speaker 5 (36:23):
That's up to them to negotiate.
Speaker 10 (36:24):
Right, are they willing to open their market?
Speaker 5 (36:27):
I don't think.
Speaker 11 (36:27):
I don't think anybody.
Speaker 10 (36:29):
Europe's not going to go and give us a trillion
dollars too.
Speaker 5 (36:32):
Well, can they get below fifteen percent? Or is fifteen
percent now the floor for autos? I would I would
know for a recip goal tariff the European.
Speaker 7 (36:41):
Union don't willing to accept.
Speaker 5 (36:44):
I don't think the countries can get low like that,
all right?
Speaker 7 (36:47):
That, of course is US Commerce Secretary Howard Lutnik, proceeded
there by US Treasury Secretary Scott Best. They were earlier
on Bloomberg Surveillance on TV and radio. Hey, check out
those full interviews. You can find them on the Bloomberg
and at Bloomberg dot com. Hey for the town though
on these trade agreements and what impact it may have
on global trade and for investments in the US. We
start in the Nation's Capital with a senior advisor in Japan,
(37:09):
Cheer at CSIS. It's the set of for Strategic and
International Studies, Christy Gavella, joining Tim and myself from the
Nation's Capital. Christy, it does seem like things are moving
along on trade deals according to what's kind of coming out.
Are these good trade deals for the United States? Are
they good for the economy? Are they good for the
(37:30):
global economy?
Speaker 5 (37:31):
And why or why not?
Speaker 12 (37:34):
Well, it certainly seems that the Trump administration is gaining
momentum in its quest to negotiate trade deals before the
August one deadline. If we look at the deal that
was announced with Japan yesterday, it's clear that these are
good deals for the US in the sense that the
US is raising tariffs by significant amounts and their horror
administration also by getting increased investment that addresses the trade deficit.
(37:55):
You know, some could argue that the concessions being offered
are perhaps not as significant as they might have wanted,
but they are getting, for example, Japan five hundred and
fifty billion dollars in investments, as well as concessions on
rice imports and also on auto safety standards. So these
are meaningful deals in a sense, and the deal with
(38:16):
Japan was the most substantial negotiated yet in terms of
trade volume.
Speaker 3 (38:19):
In your view, does it seem like the deal with
Japan is better for Japan or better for the United States?
Speaker 12 (38:26):
It represents a compromise on both sides. Japan's initial position
was that it wanted the removal of all US triffs,
which of course it did not receive. But a key
issue for Japan was the tariffs on automobiles, which were
at twenty five percent from earlier in the year. So
Japan received a reduction to fifteen percent on autos. It
also received an overall reduction from the proposed twenty five
(38:46):
percent reciprocal terifts to fifteen percent, so that is a
substantial improvement over the initial conditions Japan was facing. It's
also the lowest reciprocal teriff rate that's been negotiated to
date with a country that's running a trade surplus with
the US. Make no mistake of fifteen percent tariffs are
still a significant blow for the Japanese economy. So you know,
things were given and things were gained on both sides.
Speaker 7 (39:08):
Hey, you know, there was a Bloomberg story Christie out
this morning and included a quote from trin you and
senior economists for Emerging Asia at New Texas, and she said,
we live in a new normal where ten percent is
the new zero, and so fifteen percent and twenty percent
doesn't seem so bad if everyone else got it.
Speaker 5 (39:25):
And she's talking, of course, about teriff levels.
Speaker 7 (39:27):
She went on to say that at fifteen to twenty
percent tariff level, it's still profitable for US companies to
import from abroad rather than produce similar goods at home.
So wait a minute, I thought these trade deals were
about bringing back manufacturing and supply chains to the US
and investment back to the US.
Speaker 5 (39:44):
Is that going to really happen?
Speaker 12 (39:48):
Well, on your initial point, it is true that the
Trump administration has managed to reset people's perspectives on what
constitutes reasonable tariffs. So you know, what we see with Japan,
for example, would have been considered horrific. And the minimum
one percent that seems to be on the table is
also shocking. By previous standards, But it is true that
in the longer term, it's still up in the air
(40:09):
whether these tariffs will really achieve the goal of bringing
investment and jobs back to the US in a substantial way.
These tariffs are not necessarily the best tools to do that,
and it also is very difficult to predict how companies
and others will react to them, So we can only
really see the short term consequences in terms of rising
prices for consumers and also the revenue that it will
(40:30):
generate in the short term, But companies and others will
adjust in unpredictable ways, and it won't necessarily mean that
they will come back to the US.
Speaker 3 (40:38):
The President has talked about trade deals and economies opening
up to the United States, and in your view, was
the Japanese economy closed to the United States? I mean,
certainly from an automaker perspective. It's been a few years
since I've been in Japan, but I didn't see any
American cars on the roads of Japan. They were all
(41:00):
Andanese cars there. But has the market been closed to
the US?
Speaker 5 (41:06):
In general?
Speaker 12 (41:07):
Tariff barriers in Japan are not significant. Japan has had
open trade with the US for a long time. But
you're correct that on sensitive products like agriculture, there have
always been high tariffs. That's not unique to Japan. So
rice did become a significant issue in the negotiations. On
auto's the main issue there is more complicated. So the
(41:29):
concession that was given in the agreement related to auto
safety standards, which have long been perceived to be a
non tariff barrier that have made it more difficult for
US automakers to sell in Japan because they have to
meet different safety standards. But there are a host of
market factors that make US cars less competitive in Japan
that won't necessarily be addressed by these changes. So you know,
(41:51):
there are areas, in short where Japan's market has been
rather closed. But on the whole, you know, companies face
relatively open conditions on a relatively free and fair playing field.
Speaker 7 (42:02):
We've seen some reports about the EU seem to be
maybe working getting closer to a deal with the United States.
Speaker 5 (42:09):
We've got China next week.
Speaker 7 (42:11):
Just to wrap up, just remind everyone why having trade
deals with these big trading partners is important for the
US economy and the US overall.
Speaker 11 (42:22):
Well.
Speaker 12 (42:22):
From the perspective of the Trump administration. The issue is
that these countries are running trade surpluses, so they are
seen as a negotiating a tool in that sense. Overall,
these are our major trading partners in the US, and
so the trade volumes that are going through are significant
to the economy. It's important that these relationships are maintained.
(42:42):
It's important that, from the administration's perspective, they be rebalanced
in various ways. So, you know, getting these deals ahead
of the August one deadline minimizes disruptions to markets and
to companies' activities, so it's important that they move forward.
Speaker 7 (42:55):
Yep, we can cross a big, big uncertainty off our
list here, no doubt about it.
Speaker 5 (42:59):
Thank you so much. Christie Senior Advisor in Japan.
Speaker 7 (43:01):
Chair at CSIS, the Center for Strategic and International Studies,
joining us from the nation's capital.
Speaker 2 (43:08):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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afternoons from two to five pm Eastern on Bloomberg dot com,
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(43:29):
and always on the Bloomberg terminal
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