Avis Electric Cars Plans Creates Stock Flurry

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. Let's get to it. One of the voices that we've turned to a lot during the health crisis, Dr Harold Pause. He is the executive vice president for Health Sciences at Stonybrook University, former Chancellor for Health Affairs at the Ohio State University, and CEO of Worsner Medical Center. Also a former Chief medical officer

at ETNA. So he really understands so many different aspects of our healthcare and medical world and has been really, like I said, a great voice to us during the pandemic. He joins us on the phone from Stony Brook, New York. First of all, congratulations you're in a new position. Yes, thank you very much, Carol, I appreciate it. Hey, we were thinking, you know, on our planning call. We're just thinking about you going from you know, your position before and being in Ohio to now being in New York.

What are I don't know, the differences in terms of what you're seeing about communication, the handling, and just the processes involving the pandemic. What's the same? Looks different? Yeah? Yeah, So I'm originally from New York and it's uh, it's great to be back. UM. I would say there are a lot of similarities, many many more similarities in terms of how the pandemic has been handled by the health

care workforce, both both here and UM in Ohio. Uh, in terms of the number of individuals that have been tested,

the number of vaccinations that have been offered. Here at Stony Brook Medicine, we've vaccinated over half a million individuals to date, and this week we're very very busy with the boosters for Maderna and and Johnson and Johnson in addition to Fiser so UM A lot of similarities in terms of vaccination and testing and certainly in terms of treatment, stony Brook Medicine has cared for UM hundreds and thousands

of patients with COVID UH. At the peak there were over four hundred patients in the hospital with COVID and thousands have been cared for across across Long Island. So

a great deal of similarities. I think. The other big similarity is is that as part of this research university stony Brook University, a lot of research work has been going on testing the vaccines, including you mentioned children of the Maderna vaccine has been tested here on children ages UM five to eleven and and just a lot of research work over two hundred and thirty research studies and

clinical trials across Stonybrook Medicine and stony Brook University. Hey, dr pause, We want to go back to boosters before we talk about vaccines for kids who should get boosters right now? And in which boosters should they get? Well, you know, that's that's a great question, and you know there's CDC has been very clear about about boosters, particularly those who are sixty five and older, without a doubt,

those that have certain types of medical conditions. UM, the whole question of mixing and matching UM boosters with the original vaccine is you know, is an open question. And um, I can tell you that I received my booster today as a matter of fact. And my thinking is is that if if I've received a vaccine and uh it worked well for me originally the first and second shot, if it was either Maderna or Visor, you know, I made the decision to go ahead and get Maderna for

the booster as well. Uh. If someone had some reaction to a vaccine, then you know, certainly it would make sense to think about a booster a different booster than they originally received. But we're a waiting for the research to indicate if there is any advantage to mixing the booster later on from what they are originally received, and we're gonna need some research studies to show if that

makes any sense or not. UM, But I would just underscore one thing most importantly, get the booster if you fit one of the categories that require you or suggest that you get the booster, because frankly, that's the most important thing, and worry less about trying to tailor it to the specific situation unless you are in the circumstances

I described before. So do you not if you don't meet those circumstances, because we Tim and I have talked about we know individuals where you can basically walk into a pharmacy and get a shot, and it's pretty easy to get should you hold off? You know I've and I've practiced this myself because you know, I waited until this week to get the Maderna booster, and i have advised everyone in my family, and I've been asked many many times follow the CDC recommendations that that's how I've

worked all through this pandemic. It makes a lot of sense to me because there are so many people looking at the data at the FDA and the CDC in

real time and are being guided by the science. And I think for all of us dealing with so much information, so many reports that they hear in the media, what they hear from from neighbors, even I think the one thing that is consistent is is that we should try to depend as much as we can on the information that's available from our physicians, from our local healthcare workers that care for us, and from organizations that have access

to huge amounts of data. All Right, that's a good final thought in an important one, Hey, thank you so much and congratulations again. Dr Harold Pause. He is the executive vice president for Health Sciences at Stonybrook University. Joining us on the phone from stony Brook US some really clear thinking that is. I have to tell you I have a friend who yesterday his they're both vaccinated. His

wife has a breakthrough case and she's symptomatic. He got a PCR test, he's negative, and he's not finding a lot of answers for what should he do right now? Should he where should he be? Where should she be? How does he stay negative? How long is she infected? How long does she have this for? There's still so many wearing masks, like what are they doing? He's texting me all these questions and I say to talk to your doctor. This is Bloomberg Business Week with Carol Messer

and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio. Right now, we got to talk about what's going on with car We're talking about Avis budget group up and ten percent. Meantime, we're seeing Tesla under pressure, although it's still skyrocketing so far in this year. So let's get to it. What is going on? Bloomberg News West Coast correspondent Ed Ludlow is on it joining us. If you're watching on YouTube, he's in our San Francisco bureau. Smile for the cameras. No,

I'm just kicking so Tesla down. Although it's been on a tear this year, Avis off the charts. You know, there's definitely uh, what is it? I feel like the trading platform is getting in play on that. On what's going on for it? Yeah, there's a lot to unpack,

and it is all links. You know. For Advis's part, they had earnings strong top and bottom line performance, but at one point the stock was up, so you ask yourself, you know, no market pare's that much attention to the fundamentals that they make a bi call to send a stock up to an eighteen percent So you know, we know there's a lot going on here. We know the retail trader has come in. If you look at stock twits, if you look at Wall Street bets on Reddit, you

know Avis is being mentioned with high frequency. Another factor at play here is that short interests is about twenty one of the float according to his three partners data. So there's a lot to unpack. But what it all ties to it appears is comments that executives made on the call about Avis's ev ambitions in the context, of course of that Hurts Tesla order that we we've known about for the last week. Yeah, more on that in just a minute, in the context of Tesla, of course.

But AVIS didn't actually talk about any plans to add evs to its fleet though, right, No they didn't. So I'm just gonna bring up the full quote here and what I do that what I'll say is that they basically said they're committed to electrification, right and that you would see in time them add evis to their fleets. But they essentially through shade at Hurts. I mean, well, I don't want to call it shade myself. I'm just gonna read it to you, the comments from Brian Choi,

CFO of AVIS. The reason you haven't heard from us publicly is because, for competitive reasons, we like to execute on our strategy before announcing it. I mean, without it with Tom Brady. Without Tom Brady, that kind of sounds like shade or or it's like, oh darn, they got out ahead of us, like you know, you do wonder and this is a very competitive world in the auto space. Right now, and it does feel like our better off.

It's changing as we move from the combustion engine to write e vs and so on, and so everybody's looking to have that first mover advantage like a Tesla. Yeah, there's definitely a school of thought as well that car rental companies have a role to play with e V adoption. You know, there are lots of consumers out there who are still nervous about owning an e V, whether that's range anxiety, whether it's literally about how you pull that off if you can't install a charger in your home.

So the idea that you could experience what it's like to drive and us an electric vehicle for a car rental company is important. You know, market analysts and commentators say, um, what it all links back to when it comes to testa and hurts those remember every player, Tesla being the leader, the others chasing the pack. Our supply constraint, there's you know, they can't build enough electric vehicles to quickly hand over the keys to a hundred thousand cars. It's just not

going to happen tomorrow. And even Elon Musk tweeting about this last night in response to a question about why about the company's stock, He said that if any of this is based on Hurts, I'd like to emphasize that no contract has been signed yet. Tesla has far more demand than production. Therefore, we will only sell cars to Hurts for the same margin as to consumers. Hurts deal has zero effect on our economics. And in essentially saying the contract is not signed yet, and as a result,

Tesla shares down close to four percent. Well, it's semantics, he says, Yet the contracts not signed yet, but you know there's clearly agreement in place. You know, Hurts has got its own troubles, it's coming out of bankruptcy. You know it made an official announcement about this. But again, this comes back to the idea Tesla is supply constrained.

It cannot build enough vehicles to meet demand. If you go on this testa website right now and try to order yourself a Model three or a Model Why, it will give you an estimated date for when you'll receive it. That can be a matter of months, months and months away. And you know, Elon Musk is very close to retail trade. He communicates often with Tesla owners and if you read the quote in full as you did. Tim. You know it seems very much like LA must saying we're not

prioritizing the corporate empity hurts over our existing customers. Fascinating story. Just to watch the ups and downs of all this again, uh Avis. Right now Tesla down just about four percent. Thanks. I'd love the West Coast correspondent for Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. This is among the most read on the Bloomberg today. It's about the one trader of that calls all the shots in the treasury

bond market. It's a story in the upcoming issue of Bloomberg business Week magazine out later this week. On the Bloomberg and of course at business week dot com. Joel Weber is at her at Bloomberg business Week. He's with us in the Bloomberg Interactive Broker Studio. Liz McCormick is bond and FX reporter at Bloomberg News. Joel, take us, give us a history lesson here and take us back to who the bond vigilantes work. What's upon a time

on a bount of time. H not sus that the universe controlled basically, um, you know, the pricing, and they had pricing power and could actually exert that influence on government. And uh in the in the Clinton administration especially uh kind of memorable moment that we had in the draft um uh an earlier draft was how James Carver was like, I know nothing about the bond market, but like these vigilantes and times have changed, right listen, Oh yeah, a

lot of change. And that was a great comment he made because then it was like they kind of pushed Clinton around to change his his agenda and the bond market. You know, the Feds the game in town now on the bond market. Of course, there's been a lot going on which you've all been talking about through the days.

But still the Fed owns five point five trillion in treasuries, so they go a long way as far as keeping a lid on rates and you know, just seeing where rates can go, and they play play a major role. I think of Edyard Jenny years ago, right and that you know, and and coining that term, I believe bond vigilante. Uh. And this is what's interesting and lets you see it in the bond market are the treasury market for years, it doesn't feel like it moves a whole heck of

a lot. And you gave some you know, great perspective of younger treasury traders today versus older treasury trades when there really was volatility in the treasury market, right. Yeah. I mean John Kirshner, who talked to me from James Henderson. I thought was funny because he's like, listen, you know, with all due respect to the newer people, like people

getting all jazzed about what's going on. I remember when we really had these moves, and you know, and then you kind of get so exciting and you look at him. My goodness, the tenure treasury yields only at one point five five, you know, it's just kind of amazing. So yeah, you just don't have the volatility, and that's part of what the Fed wants, you know, part of their scheme of keeping things calm is less volatility is usually good

for them. I mean, we've seen some lately, but but I I know people, we have a few in here, and I know others not that I didn't mention that through the year, So I'm getting out of this. You know, it's just as you can't trade the way you used to and it's just not the same business for them. So what happens at Tin Tin every morning, Well, the said does these operations which is all public. This is no secret. They laying out on their website. This is

part of their quantitative easing. But they go in they tell, you know, it's all laid out two dealers what they're going to be buying, and the said, you know, not to say that they don't use their pricing models to where to go. But it's not like they're you know in the marketplace, you know, bidding and offering and you know people are cajoling them, you know, where we want to do it. It's you know, a pretty set thing.

But they you know, for a while now, especially you know since March when the pandemic unfortunately kind of struck, they've been a major role. I mean, they still had a lot of bonds going into that because they hadn't gotten them down after the Great Financial Crisis, how much death they held. But then they came in and now

they've bought a couple trillions sins. So yeah, every day, most every days, you know their operations and we know we you know, as you know, we have a FED meeting tomorrow, so they might announce that they're going to scale back these purchases, but that's probably gonna take, you know, till mid next year, till they stop, and then they'll just be rolling them over, which they do in a different way, but they're just not going away as a source,

you know, for a long while. I'm wondering, Lizzen, you write about this in your piece for Bloomberg Business Week, what's writing on a FED chair Powell's gamble that the surgeon inflation is just transitory, a word that I expect will hear several times tomorrow when you hear from the FED chair. Yeah, and I think they've tried to kind of what was one of the FED officials said, can we retire this word? As I think it's causing them trouble because the transitory is lasted longer. But there is

a lot riding on. And you know that the market has even priced in a little bit more hawkish moves as far as tightening next year than they had a few months ago. So there is a lot riding on, you know, especially Pal six to his guns and says, you know, we do yeah, it's lingered a little longer, but we think it's a lot of the supply chain and temporary stuff and it's going to pass. And if the market doesn't think, you know, the FED will move if they need to. You know, the big, big role

of any central bank is to contain inflation. Then we could, you know, see things, you know, kind of get ginned up even more. So. I think a lot is writing he's got a tough maneuver because they do want a more broad and inclusive employment mandate, you know, which makes a lot of sense. So they don't want to crimp off the economy, but they don't want to lose their credibility and fighting inflation. So you know, I wouldn't want to be him tomorrow. So Liz, you you got to

speak to um. A lot of a lot of folks in this world, some of whom you know, we're from a former bund Villgilantes are still all I guess what's the what's the mood into tomorrow, Joel? In general? Yeah, in general? But yeah, yeah, well I'll talk a little bit about both. Well. I think I think into tomorrow it's um. I think people are wondering ing, you know,

there's different camps. Some people feel like he's got a push back on this kind of hawker is tilt in the marketplace, some people feeling he has to kind of hold his guns that you know, we're going to keep being easy for a while. And I think in the marketplace, it's just a different marketplace, like we've been talking about, like, um, you know, I just speak to Jack valley Um during this story, who's been around for a long time, and he was talking about it's just a commoditized market. You know,

the treasury market is a different marketplace. So I think some of the mood is. I mean, there's a lot of interesting trades you can do, but it's just not the same you know. Wow, you know, bon yields went a hundred basis points today, et cetera like yester year. Well, and Liz, I guess bottom line, especially the old guys the stages, do they think it's a better treasury market or not with the FED being such a significant player and for so long, Well, I think Caroline depends on

what avenue of their business they're in. If they you know, are more the economic side and think, you know, you know, it has really helped, you know, engender growth and things. Because stability is good for companies who know where their interest rate levels are going to be, where they can borrow. It's the positive for those who are like floor trading and doing other things. You know, it hasn't been so so good. Even some of the sales people I've heard complain,

you know, on the bond desk. You know, that's just not as much activity through the last decade. Um. So I think it depends on where you're sitting. Yeah, and with something that you can find them on. I'm sure it's real quick. Just what a wrapping up? What are we missing by not having them be such a dominant force? Well, I would say people like Edgardenny and some others would say, you know, if they're not, then that might give the

Fed a little more rooms. Let's just say, who are not saying that like projecting it that the Fed like let inflation run too hot, that the risk is it runs away, right, and then they can't put tampa ound, so the bond vigilantes are slower to push back. The said has some more Leewood got it, and you end up with more inflation. Gotta run Always important reporting when Liz McCormick's on the case. I'm roa yeah, but you let me drive? Oh no, no, no, no, this is

not a right. Please, I want to drive. It's good question. Drive. This is the Drive to the Clothes on Bluebird Radio. All right, everybody, let's get to it. We've just got about thirteen minutes left in today's trading session. We are so delighted to have actually in our Interactive Broker studio a friend of the show and Miletti. She's head of active equity at all Spring Global Investments. They've got some seven billion in assets under management. She's with us. As

I said in studio, how are you. I'm great. It's great to be back in studios to see you here. It's just a reminder that things are continuing to reopen, and I feel like the equity markets, there's a lot of enthusiasm still that the world is, you know, continuing to kind of make its way back to normal. It does feel that way, and it's the equity markets have been predicting it far sooner than we all have, so

it's amazing they still are continuing. Before we get to discussion of the equity markets, we've got to talk about the big news because Walls Fargo Asset Management, which for all intensive purposes you worked for before, has been rebranded now uh, just starting off operations right now as an independent company now owned by GTCR and Reverence Capital. What are the differences. It's just such. It's such an exciting time for us because we do get to re emerge

as an independent asset manager. I think that is truly the big difference. We have scale. We have all of that scale we had over at Walls Fargo, but we get to bring it now to all spring um independent company with a sole focus on our clients and houset management. So great time, especially with all the moving pieces in her industry. Well, there is something to be said, and I was reading a descriptive phrase that said pure play

independent asset management manager. There is something and right to be said that where you can just really focus on managing money and not to poo poo. Any of the big financial houses are out there, but sometimes there's moving parts in conflicting parts, and you guys are just about managing money. We are, and I think it's been a piece that has been somewhat hidden hidden in the industry.

Certainly our clients know est and consultants know us, but we haven't been as well known because we're part of this big bank. Now we get the chance to really show our clients and potential new clients that, you know, what we can do for them. So it's great, very interesting time to be doing this. All right, So what

a clients want to know? Because as we say, you know, Tina, you know, pick your acronym, because it just seems, like I said, it was like wicked today defined gravity when you look at the equity markets because its record after record, and I understand that we fell off a cliff and then we bounced back, but are the fundamentals there to justify the continued run up on the equity side of things?

You know, I was looking at some numbers because I think, you know, we very much focus on bottom up stock selection. That's what our investment teams are great at doing. But you hear a lot about is the market expensive and eureupe. You know, I mean, this is just ending in October up in the SMP but fort higher than pre pandemic lows or in pre pandemic since the pandemic low. So you go, okay, well how does that translate? Where did that come from did that come from multiple expansion? Well,

we've only gotten one point of multiple expansion. We've gone from twenty to twenty one times, which means we've had earnings growth. So it has been fundamentally really really good this you know, I always talked about we're turning on the economy. You know, we turned it off with a light switch. We felt like we were turning it on with a dimmer switch. But but consumer demand is really

really much stronger than any of us anticipated. And it does seem like a big question that investors had going into earning season, which we are right now and smacked up in the middle of, is to what extent companies have been able to pass along rising costs, whether those are supply chain costs or labor costs, onto consumers. And it does seem like to a great extent companies have

been able to pass on those costs. They have. I mean, you know, top line growth has been really strong, but tim Asoo, you know, as you point out, when you look at the earnings margins that have held up really well too, which means they have been able to pass on those costs. So I think the real question is can they continue to do that? While in the face of rising costs for consumers in other places like energy and you know a lot of you know, a lot

of other food inflation, rent inflation, other things. How do you make sense of? Okay, so consumer led recovery, I get it right. Individual balance sheets are probably the healthiest they've been for a lot of Americans. There's been a lot of stimulus that has come out because of the pandemic.

But I do wonder trying to make sense of are there a bunch of Americans that ultimately and who haven't entered the workforce again, that will have to enter the workforce again, or are we going to see as the stimulus efforts go away, that that consumer let recovery will go away. You know, that's a million dollar question. It is very interesting that it's been a little bit harder to get the workforce back. I think it has been

because of the stimulus. I do know some people retired how little you know, people who was just that I'm done. But but even those people, you know, after sitting home for a little bit, if they're incentivized to come back, if there's something really interesting for them to do, they will come back. And so I do think that you'll get the workforce pick up, UM. But but we'll have to watch these pressures on consumers. Demand is really really strong,

it's pent up. It doesn't look like it's going away anytime soon. Although you know, I live in the Midwest, as you know, Caroline, and I hear people talk about it all the time. What's happening with their heating bill, what's happening at the fuel pump does matter to them, and that could damper demand UM over time. So how

do those rising energy costs manifest in earnings? How do they manifest in demand for products and services that companies that are reporting this week and you know, operating the most important quarter of the year, how do they get hit? You know, it's it's not just in transportation costs, which we've seen rise UM. In fact, we're seeing a little bit of a rollover of freight and m trucking prices right now. But I'm not sure that that's sustainable. Lot

to see. But it also manifests itself in material you know, costs as well, and so we'll continue to see a pickup in material material costs for companies that have and energy and put to them a fuel and put to them in oil and put to them so and also just keeping the factories open costs more so, those rising costs are real. Some people say, you know, gosh, I

don't have to worry about them yet. But energy is the one area, the one sector that has been somewhat starved for capital while the rest of the sectors have continued to be flush. Well, you do want to will it continue to be starved for capital as we see this you know transformation or you know dislocation as we go from you know, combustion engines to alternative energy. Like, I think this is such an important trend that's going on, and it's going to be painful, and I think that's

some of it. But you're smarter than me when it comes to UH companies and what's going on in the market. Is that's what's going on. But it's gonna take ten years, fifteen, I don't know. I think it's going to take a little longer than we all hope. And the challenges how do you get the TRANSI transition to go smoothly right so that we don't suffer as consumers with really unnecessarily high costs um But it's just difficult to get there and Um, you know, there's a lot of push, a

lot of things. Great technology continues to solve a lot of problems for us. But I think energy is going to be real. And I know I'm not sure how I forget how much you can drill down and in this new company, But I mean, is energy a place that you and investors come to you and say, and is that a place that I should be committing new money or how should I play it? Um? You know, I'm thinking Cup twenty six. We're watching you know, all these pledges in terms of how do we improve our environment?

What should be the strategy? It's your top performing group this year, it's at as a whole. Yeah, it's incredible. And look, I think our investor base is very diverse and what their needs are. And you know, one thing I think our mission at all Spring is really to elevate investing for whatever that our clients want. Right, So some they may want exposure to energy, while others and many others don't want that exposure in their portfolio. And that's part of the reason why it's been capital starved.

That's fine for us. We are just servicing the needs of our clients as investors, right so we are just caring for their money. If they don't want to be invested in the energy sector, we can do that too. By the way, it's a very small part of the index. I know it used to be right, much more significant, and it's really a changing world. He and very briefly, well we have you. I want to talk about taxes and potential implications from tax changes in Washington. President Biden

looking to push through a spending package. We don't know exactly how he plans to pay for it now. Uncertainty around taxes priced in I don't think it is. And I think it's because there's so many changing dynamics to this every single day. What kind of tax increase might we get? Is it going to be individual? Is it going to be corporate? I don't think it's fully priced into the market. That is a risk. All right, we're gonna leave on that note. First of all, just so

wonderful to have you in studio. Safe travels, and look forward to having you back again. And we letty she's head of let's try to get head of active equity. I can say that all Spring Global Investments five eighty seven Billy in an assets under management and as we said in our Interactive Brokers Studio, and thank you so much.

Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News