Musk Says He Needs Bigger Tesla Stake to Avoid Being Ousted

This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

We're keep it a close watch and shares of Tesla. Tim It is down about thirteen percent, just off its worst session or worst level I should say, of the session.

Yeah, lots of superlatives to go with here. It's the top decliner in the Nasdaq one hundred, it's the biggest drag in the S and P five hundred. It's down the most in a year to its lowest and wow months at this point. Investors loved the stock last year, Carol sending it up one hundred and one percent. New Year New.

Tesla, absolutely, and that is really thanks to Elon Musk's pitch for investors to look past lower sales growth that fell flat Tesla narrowly missing Earning's estimates and warning its rate of expansion will be notably lower this year. Their words, the company spent all of twenty twenty three cutting prices to boost sales, which eight in two profits. So we knew in the interview today we wanted to get more on Tesla.

Yeah. For that we bring in Bloomberg business. We call him this Max chafkintributor to the Elon Inc. Podcast and keep her too, along with a few other Bloomberg colleagues of the Elon Musket Bingo card, which, by the way, there was no Bingo last night.

No on for tim. Unfortunately, we did not hit Bingo. We came very close, one square away. I believe it was in the end column. If he had only said production is hard, which he often has used as a sort of catchphrase to describe the difficulty manufacturing the cyber truck, we would have hit Bingo. But I think, possibly in an effort to kind of try to not have told tons of bad news, he soft peddled some of those difficulties on the earning.

BINGO card apparently.

Well, one thing that wasn't on the Bingo card was not providing guidance on the number of new vehicles for twenty twenty four, which I think surprised a lot of observers.

You know, and not only that, but you also had him saying essentially we're in between two waves of growth. I mean in effect saying things that this is not going to be a great time. He's saying sort of two things going on. One is that they're struggling to make cyber trucks. They've they've pursued this incredibly incredibly ambitious design. First of all, not clear that anyone wants it, not

But originally it was supposed to do that was the original car.

Yes, yes, don't want to be naive here, but you know, so many times he's been counted out, you know, and then it just takes a few weeks or a few months of sleeping on the factory floor and all of a sudden they pull something out. So how do you, as someone who has tracked Tesla Elon for a while, kind of look at this situation. Are they maybe really between two cycles?

Yeah, well I think, first of all, it's important to say that Tesla swings around a lot, and we saw it. We saw it drop a lot ahead of the beginning of twenty twenty three. It then kind of bounced back. It grew in this huge way, largely because as you were saying that, you know, they cut prices, sales went up, and investors were willing to bet that that wasn't going to hurt margins that much.

And two things have happened.

Margins have gone down and the demand has not been there, And so much of his stock trades on expectations on what is Elon going to do next? And we saw him yesterday kind of try to do that. He was talking about optimists. That's this kind of robot. It feels it's hard to say that it's a real product. Although Elon Musk was out there saying, hey, this is going to change the economics of everything.

And I think the question is who is going to believe him?

How many people are going to really buy into that as a near term possibility.

And then how do you value that?

And I think the more Elon Musk promises and when he failures to meet those goals, then that hurts his ability to spin these fantastical yarns.

I guess, I guess the question that I have is really about control. Because Carol talked about this earlier, and it's something that he tweeted about a couple of weeks ago. We kind of knew this was was going to come up. But this is a guy who has now now wants more of his company. He wants you know, it's not a dual class share structure, so it's not like he controls that like Mark Zuckerberg does, and you know, other other leaders of tech put tech and quotes tech companies.

Yes, so he sold down a bunch of his equity to buy Twitter, as you said, and in retrospect looks like maybe not the what the best time to buy a flailing social media company has lost a lot of value. And what he's saying now is that he feels he needs to have twenty five percent of equity in Tesla in order to to sort of be sufficiently committed to this, to this enterprise and not just committed but committed to the innovation part of the enterprise.

Is that a wild thing for an executive to say?

Like?

What where? What are I mean?

Are It would be a wild thing for any executive.

Look at any executive in the S five hundred, you'd be hard pressed to find one that doesn't isn't in controlling a family owned company, or does not have dual class share structure that own that has that type of contrucy, you know.

And not only that, but things have not gone great for Tesla over the past six months. Normally, when you ask for a massive pay raise and pay raise that could amount to you know, tens or even hundreds of billions of dollars in equity, you know, normally, you'd expect to do that on a high rather than at a time when the stock is kind of has been falling and and so on. The thing is Elon Musk has so much leverage over this company because so much of the company's value is tied up in his own identity.

And he has proved that time and again.

But but of course, you know, nothing lasts forever, and at some point it's not going to work, and we're going to see a real test for Elon Muski, you.

Know, Max.

It's so interesting though, when we talk about Elon, we talk so much, of course, about Tesla. We talk about SpaceX, we talk about Twitter, We talked about the boring company.

We talk about what was it, Neuralink. I'm going through my list.

We're talking about Elon, the person, the disruptor, the provocteur, you know, who can say something and shake things up. You know, we've got a great chart just to show that, you know, it's standing has been kind of weakening. Among the world's largest megacaps Apple, Microsoft, way up top. You know, Tesla's there, number nine, but it's a lot smaller than some of its other tech. I guess, brethren, if you will, Having said that, I mean Tesla is really the core of his wealth, correct.

And kind of his power seat.

Yes, and I do think you know one of the big mysteries, you know, what is Elon doing with Twitter? Why is he starting an anti woke AI company that's that's this thing called Xai and their product is grock.

The ev story, though, to be fair, GM struggling, Ford struggling. We've talked how many times at nauseum, but for a good reason about yep, people are still buying evs, but the growth rate is slower, So is he getting kind of stuck in that also, well.

Sure, and not only just getting suck in that, but getting something in the fact that that Tesla sells a lot of cars now and when you want to have you know, he he's they've seem to have backed off their growth promises. But if you want to have fifty percent annual growth, that gets hard when the numbers get big and and investors have sort of come up with stories that they've they've told to explain why that would

Know, many people outside of the Tesla enthusiast.

Community buy it. So that's kind of the challenge. You got to give credit where it's due, which is in some sense, these challenges are a product of Elon Musk's success. Because Elon Musk set out to make electric cars mainstream, and he has done that. I mean, they are selling a lot of Model wise that's the suv version of the Model three mentioned earlier.

Kind of betting against him.

Yeah, and not only that, but he's but but there are many other companies who are also in this market. There is a lot of there's consumer demand, but there's arguably more companies trying to meet that demand than there is demand.

Hey, Max thirty seconds left byd is one of those companies that's not struggling right now, and a big part of that is because they're selling cars in China twenty five thousand dollars price point for a future less expensive Tesla that's still too expensive compete with a lot of the companies in China.

Now, well, yeah, I mean, and and then there's the question of how what what China.

Of course, there are a lot of potential restrictions.

Elon Musk has had a very i'd say positive relationship with Beijing to date, but it does seem like the goal of China, of course, is to help its domestic companies, and at some point you wonder how how that's going to play long term in China. Is there other potential restrictions that Elon mushould be worried about you know, he's had a really easy time opening up factories. Does that always? Is that always the case? So I think there are

All right.

Max Chaffin, colmnist, Bloomberg Business Week, Thank you so much, contributor to the Elon Inc. Podcast. The latest episode of the podcast on the Bloomberg and at Bloomberg dot com slash Elon Inc.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on applecar Play and then brought auto with a Bloomberg Business app or wanted us live on YouTube.

So addition to the gdp AT initial job list gams data that we got this morning, we also got a real estate update. Sales of new homes in the US exceeding forecast in December. This is a drop in mortgage rates entice prospective buyers. That news shows that some momentum heading into twenty twenty four is underscored by the first pickup in annual sales when it comes to three years.

All right, so we knew we wanted to get a real estate update for that. Return to Michael Levy. He's CEO at Crow Holdings. It's the Dallas based privately owned real estate investment and development firm, about thirty one billion in assets under management. And Michael kind enough to join us here in studio.

Hello, Hello, welcome here.

Thanks great to be here.

You're are New Yorker.

H I am a lifelong New Yorker and it's nice to be in Bloomberg's fabulous studios here.

Thank you, Thank you.

We want to talk about your business because you guys do it all. You've got multifamily, residential, industrial, office, So talk to us about the different verticals of real estate, and then geography, what you are seeing in terms of trent and sure where the strength is and where there's some weaknesses.

Sure well, let me try and answer in a little higher level than what we do. But you know, I'd boil down to three things.

You know.

The first is the market is highly bifurcated in terms of haves and have nots, and today the have nots as office buildings, and the have nots is a lot of the downtown urban cores that are impacted by the flexible workforce and not having as many people there in the issues. There's a lot of halves in the business today, which is the industrial sector and the residential rental sector, the data center sector. So it's a highly bifurcated not painting with a single brush across real estate in anyway.

But you guys have some commercial office we have very little.

We do have were building a fabulous mass timber building, the largest mass timber office building. We have a fabulous office campus in Dallas at the very upper end of the office sector. Buildings like this, they're very attractive to people, they meet the modern needs. They're well leased. So the top third of offices great. The bottom third is going to be dirt. It just doesn't know it.

I just want to make sure I get this right. You're actually actively building.

We're active.

We have a development company.

But an office building.

Correct.

It's the largest Jallas.

It's in Frisco, which is effectively Dallas Fort Worth metroplex.

Okay, So when did you start, When did you make the plans for that? Versus and right after COVID, right after right after So how are you designing that in this flexible work environment that you described?

First of all, the building is not made of steel, it's made of timber using a construction technology. So from a sustainability perspective, you know, it's a much more sustainable building,

Want, all right.

So you are in New Yorker, you understand this market really really well. I'm assuming you play in the commercial real estate space. Would you not want to be someone here in New York who owns maybe that's second or third to your office property right now.

Like most things, it's all about what your basis, your cost. But yes, as a general rule, let's just call it the bottom third of office buildings. A lot of these buildings you see, for example, on Third Avenue, for example, these are really tough properties that are likely to wind up in the hands of people who buy them at huge discounts to their value of just a few years ago and ultimately look to repurpose them. But this is

So no crisis.

There's not a broader real estate crisis. There is distress in the office space, but if you really look at the percentage of disposure that people have to this asset class in the totality of the real estate sector, it's relatively small. If you talk to the banks and their exposure. It's not going to take the financial system down, it's

Why do you think it's going to be such a multi decade long turnaround or at least experience.

Well, one, you can look at things that have already happened, like the mall sector, which started to get disintermediated in the early two thousands, and you can see lots of dormant malls all over America. The issue is one it needs to from a price perspective, get down to ultimately the value of the land so someone can redevelop it and it makes sense. And secondly, the entitlement process, you know,

Michael, your company's seventy five years years old. Obviously you haven't been there the whole time. But you guys have seen a lot of different cycles. I mean, if you had one word two words to describe the real estate cycle right now, how would you And I know that's hard because different geographies, but would how would you describe it?

Sure, I would describe it as we are just beginning to merge because of the interest rate cycle and inflation. We are just becoming beginning to emerge, literally just beginning to emerge from a very contracted, frozen period of time. Twenty twenty four, it looks like in terms of the capital markets and lending, because of inflation and interest rates, the friction that's been in the business is beginning to be alleviated. So there's a capital market cycle that's been

You are obviously watching the rate cycle very carefully. Does it matter if the FED does two rate cuts, three rate cuts, five rate cuts this year in terms of what it means for your business?

I I don't think there's a very direct course. I certainly would not speculate the two is bad and five is good. I can just say in general, for our levered asset class, don't fight the FED. And the FED is relaxing rates and they're coming down. That's going to be good for our industry in terms of transaction, activity, financing, valuation levels, the you know, the grease that allows the industry to move forward.

We recently spoke about a Bloomberg big take by our own Sean Donn and about how Americans are moving around, especially in swing states, and that could impact the presidential election outcome. You have people all over the country, you have businesses and properties all over the country. Give us some color about the demographic trends that you're seeing.

Yeah, look, there is no doubt America is moving to the southeast and southwest, now at one level, that's a set, you know, seventy five year trend when air conditioning started, but it is accelerated, it's sustaining itself, and it's it's a virtuous cycle. Cities that thirty years ago, as someone from New York you may not wanted to have lived in today are vibrant and with restaurants and culture and food, and so this trend is continuing.

Does that make you barish on New York?

I think be careful. There's a lot of New Yorkers right.

I understand New York has some very significant challenges, not as difficult as some other cities such as San Francisco. But the reality is our office buildings. This was a city that forever has been first work, second play, third live. Well, people are coming into the office a lot less. And if they come into the office a lot less, that means not only the offices occupied less, the retailers have less.

We got to run really a great perspective. Michael Levy, Chief executive Officer of cro Holdings, joining us here at our New York studio. This is Bloomberg Business Week.

Michael.

Thank you.

You're listening to the Bloomberg Business Week podcast. Listen live each weekdays starting a two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business And you can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.

So last week I get any email from my insurance company about renewing my auto insurance. You get this every six months. We were can I buy a year of insurance? By the way, this happens every six You can't buy a year of insurany make me do it every six months. This email was different though. One thousand, nine hundred and eighty four dollars and sixty five cents for six months of auto insurance. Yeah, okay, three hundred and thirty dollars a month, up from seventeen to fifty just six months ago.

I think you need a new insurance.

He's a broker though, like he has he has the view everywhere in the market's.

Telling you I could buy a policy for a year.

No, there are companies now in New York that don't even they don't even write insurance in New York.

New Jersey.

It's out there, all right. So the couse of auto insurance in the US rose more than twenty percent in twenty twenty three. It's the biggest annual jump since nineteen seventy six. That's according to data from the US Bureau of Labor Statistics. Rates are up with thirty seven percent carrol since January of twenty twenty.

All right, Well.

In the forthcoming issue Bloomberg Business Week, which is at on newstands tomorrow, already online at Bloomberg dot com Slash BusinessWeek also on the Bloomberg Bloomberg News, auto reporter Keith Naughton gets at the reasons why insurance has gone up so much in such a short time. He joins us on Zoom from Detroit, so glad you are back with us to talk about this story. What the heck is going on?

And how can we help him? No, but what can't help me?

What's going on?

Well, there isn't much hope for any of us on the auto insurance front. To complement Ten's story, I was talking to another editor at Bloomberg Today who lives in New York, and he said, the insurance premium quotes he was getting on his new car were five hundred dollars a month. So it's like having two car payments on the same car.

Oh my god, why yeah?

So yes.

So the why here is that cars are just loaded with more technology now to help you avoid accidents, and those technological bits it's cameras and sensors and sonar from bumper to bumper on the car, really drives.

Up repair costs.

And then those repair costs are being passed on through your auto insurance rates, which are skyrocket.

If you have Keith Starry tired interrupt. I just want to make sure I get this point. If our cars are filled with this technology that helps us avoid accidents, shouldn't we be getting in fewer accidents and therefore there should be fewer repairs and insurance companies wouldn't have to pay out as much.

Basically drives itself.

It's so much safer.

Than rather me driving it.

To be quite honest, yes that's way too logical.

That's exactly what should be happening but is not happening. And in fact, what's been happening since twenty twenty is auto insurance claims are going up, not down, despite all this whiz bang crash avoidance technology that today's cars are laden with. The reason behind that has something to do

To tell you guys, I even get a dividend check at the end of the year from my insurance company, which I've been with for almost thirty years since I was a teenage driver on my dad's policy and I kept it, and then when they have a good year, we get a dividend check.

So I'm going to.

Oh, it's just I'm sorry.

You should check to see how much you're paying though, because I bet it's a lot.

No, I do look, but I will check again. It's kind of wild and you know what I'm worried about is and well, wait a minit I'm going to go on my soapbox for a little bit more here, Keith, because I do feel like I wish I wish like traffic cops actually police driving too, because I do feel like driving has gotten more aggressive. People fly through stop signs, Like I just feel like there's some stuff going on that it's kind of the wild wild West on the road.

I don't know, And that's why auto insurance companies now, some of them offer you the option of you know, attaching and device to your car so they can monitor your driving, and if you prove to be a good driver, like I'm sure you would, Carol, then you actually get a reduction in rates.

But that raises sort of privacy concerns.

Lots of folks don't want their insurance company knowing everywhere they're going at all hours, so people decline that. But that is one way to try and reduce your rates. But rates are climbing. I did the same thing Tim did last year. I looked at what I was paying and I couldn't believe it, and so I started shopping around and found a cheaper rate.

But it's getting.

Harder and harder to find a lower rate because all of them are going up. And the insurance companies are not only doing it because they have higher repair and crash costs, but also because they are now making a lot more money doing that.

I'm glad you bring up the more money part, because it turns out that insurance companies are doing pretty well right now. So Travelers closed at an all time high earlier this week. We learned from Progressive earlier this week that profit for the most recent quarter more than doubled from a year.

Earlier, so maybe they're charging too much. If their profit is going up that much, that means obviously, even when we have an accident, it's not clusting that much.

Even whatever they.

Pay out, I don't know, I mean, what are we logically? It turns out that you know, we're all paying for like, it's pretty good to be an investor in some of these companies, Keith, And perhaps not so good because we're paying so much as customers, right, And it's.

Not just that the insurance companies are gouging us. There really are goodness reasons that it costs more. Let me give you one example from my story, and that is the Toyota camera. So that was the best selling Current America for decades, and in twenty eighteen, Toyota redesigned it and added a whole bunch of driver assist features technology Radar sonar camera is throughout the car, but just looking at the front bumper assembly, it went from having eighteen

A Toileta came. And I'm not picking on Toyota.

This is.

Strong cars.

But this particular example given to me by the folks at Mitchell International said, what that did is it drove repair costs for the camera when you get in a front end collision. It drove them up by forty three percent.

That makes sense, Yeah, Keith.

One thing that was so shocking to me about your story was the difference with EV's and you bring up the Hurts issue. We only have about a minute left, but talk to us about how much more complicated evs are to repair and why that's also driving uprates.

Right, and Hurts is selling off a big chunk of its EV fleet and one of the reasons they cited is that eve's cost twice as much to repair as regular cars. One of the reasons is that big battery tim that's in every EV. You have to disconnected, power it down, or in some cases remove it all together to avoid injury to the technicians, to avoid fire risk.

And this just adds time in the repair shop.

And cost unbelievable. There's also an interesting part of your story where you talk about a new all this new technologies also added a costing step to the repair process. It has to do with calibration, which is you just understand, you know, I've.

Got to calibrate the sensors. It costs five hundred bucks more to do that. When you get a right, it's amazing it. Thank you for this story. I sent it to my whole family because I was complaining to them about insurance recently. So it turns out I said a lot of key stories to my whole family. This is a street Yeah, it's like he writes about cool stuff.

It does and it makes so much sense.

Keith, Thank you, Bloomberg News Auto reporter Keith Not as we said. This is in the upcoming new issue of Bloomberg Business Week. It's going to be a newstands tomorrow, but it's already at Bloomberg dot com and on the Bloomberg turbil Actually think the news Dan today.

Okay, go check go check out how much you're paying for insurance?

Thank you for insurance.

I know I just saw the bill come in.

Yeah.

Well, husband just kind of slides it away, so maybe maybe wait.

To see it. This is Bloomberg BusinessWeek inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news as it happens. Bloomberg Business Week with Caro Messer and Tim Stenebek on Bloomberg Radio.

All Right, everybody, as you just heard, Intel earnings are out. The stock is down about six percent in the aftermarket. Some concerns in terms of the outlook. So we want to get to a breakdown the quarter even more.

Yeah, we got Dan Morgan, with a senior portfolio manager at Sonovis Trust, joining us on Zoom from Atlanta. We check in with Dan. In the wake of many a company, including Intel, Snovis Trust Company has about eighteen point eight billion dollars in assets under management. That was as of last month. Dan, you have had about five minutes. That's generous, about three minutes to look at these time for usually give me. Yeah, it is a of a time frame

Well, obviously, Timmy Carroll, the guidance going into the first quarter is disappointing. Even if you look at the midpoint of that range at they gave in revenues and the came at twelve point seven billion, Street was at fourteen point two billion, and then that EPs number was a big miss. You know, when you look at the area I was kind of focusing on, which was client computing, which is their chips that they sell to lapsetops and PCs.

That pretty much came in with expectations eight point eighty four.

Why are you watching the sorry? Why are you watching? Why are you watching that segment?

Well, Tim, I was really looking for a little bit of a rebound here in regards to PC chips. We know that Intel is behind both AMD in Nvidia in regards to AI we can talk about a little bit later in terms of the chips that they have, but they had a pretty strong quarter last quarter in terms of that client computing group. So I was expecting that momentum to kind of carry over and maybe and get

A little bit better than that.

Yeah, yeah, it kind of hap to blow out their quarter.

Well, what's interesting too, and I'm looking at our right through by our own semiconductor king, and that is Ian King, and he says that the chip maker's PC business is recovering. You were talking about this, it has been losing ground in the lucrative market for data center chips. Tim and I were talking earlier about you know, and even kind of on the residential side or commercial real estate side, I mean data centers. People continue to build, they continue

That's been the condundrum for Intel is that we know that we've talked about Nvidia before on the show. There's been a huge adoption of their GPU chips A one hundred and the H one hundred, which are their key.

AI chips.

We know that for example, Events micro Devices has their three hundred X and I three hundred A that's both going to be coming out. They're going to be in that same space which is the most lucrative so far, which has been data center for AI. Now, Intel does have some products coming out. They have their Falcon Shores. They also have their Habana Gandhi. I'm hoping I'm pronouncing

How's Pat Gelsinger doing with turning the company around with the transition.

Well, Tim, that's exactly what this is as a turnaround.

As they moved towards becoming a foundry, they actually had some revenues they posted on this quarter from that.

So in terms of getting back on top, I mean.

Intel was the top player over AMD forever just in terms of performance and everything, and they've kind of climbing a staircase back.

To get back to where they were before. So he's got a lot of moving parts.

Right, and it's just you know, getting AI chips out, getting the founderies up and running, getting that performance and so forth back to what it was to compete against AMD.

So just a lot of moving parts for them to execute on.

And I think that's kind of coming out here, guys in this upcoming guidance that we're seeing for the first quarter, where you are kind of seeing some of those doubts come to fruition with the blow the estimates in terms of what the street was looking for.

So, Net Net Dan, I mean, do you see signs that the transformation that Pat Keelsinger is doing to kind of restore Intel's might that it had for so long and so many years, do you see signs of those changes kind of paying off?

I think so, Carol.

I mean, if you reported on the Electronics show in Vegas a couple of weeks ago, we know that Intel came out introduced two new chips, AIPC chips. They're targeting one hundred million of those chips to be sold going forward, and aipcs. They're very you know, feeling really good about that. They had some really good, strong performance coming from those two. I believe one is called Lunar and one is called arrow Lake. Which are they always come up these interesting

Like how much time should investors expect here?

Well, probably the next quarter, Tim, I'm just kidding.

I mean I would have seen the different guidance.

That's the case, right, Yeah, Yeah, the street has no patients.

I think we have to bear in mind too that even though we were looking for encouraging numbers in that client computing group, if you look at the overall framework of what's happening in the semiconductor industry, you know, we've been in an ever present increase in terms of turnaround since the first quarter of twenty three, roughly around February of twenty three. I've had ten consecutive quarters of consecutive

Yeah, no, no doubt. It's like, what have you done for me yesterday? So having said that, I'm looking at you know, some of the actually corporate releases from Intel, and they talk about, you know, efficiencies in the fourth quarter comfortably achieved our commitment to deliver three billion cost

You know what's interesting, Carol, is that I followed have followed Intel stock for over thirty years, and they had a standard gross margin that was between sixty and sixty five percent for like, until more recently. Now their margins are around forty six percent. So I think what they're trying to do is they're trying to get their margins back right through these efficiencies, trying to basically, you know, cost cut, try to retool. You know, they cut their

So again, it's just it's it's a it's a it's going to be a challenge for them to do it.

But that's the goals, Tim, What would you ask Pat Gelsinger tonight.

Again, the street is going to really focus on the timing of these upcoming AI chips, Tim, I mean, really, they are in a different situation because the AI chips that they produce are under a CPU technology. The Nvidia chips are using GPU their graphic processors, where they're using computer processing units. It's a little bit of different way

Hey, real real quickly, thirty seconds you know ASML hit record as orders for its high end chip machine sore. You've got the Intel news today KLA Core coming out too. They're down about six percent in the aftermarket following their earnings. It's not just the same for everyone. Is there some story that you're you're getting from the semi industry about the overall economy and just got forgive me twenty seconds for.

You, Yeah, Carol, I mean t I, as you know, reported numbers that didn't meet expectations. They're mostly auto and industrial.

Yeah, you mentioned ASML and the equipment space. They get kind of subdued forecast, but I expect them to beat that.

Yeah.

So I guess there's just a lot of moving things happening right now in chips. It's very exciting. We'll getting a lot of different contradictory information, not.

Cross currents, Dan Morgan, but you make sense of it all, Senior portfolio manager at so Novas on Zoom in Atlanta.

This is bluebarbalymuck.

The journal about you.

Let me drive.

Oh no, no, no, no, honey, please, I'll do the driving gravel right, I want to try.

It's a good question.

This is the drive to the globes on Bloomberg Radio.

All right, everybody definitely grind on Wall Street. I mean we're in the green across the board, but just barely on the Nasdaq could be another record though it could.

Be in the green exactly.

Yeah, that works right, exactly and likely.

For the S and P five hund But we're in the red.

Yeah, what do you mean for the year?

No, no, no, no, just for today.

Well we're not We're up three points.

I'm looking at the Nasdaq one hundred. Yeah, I'm sorry, Okay, all.

Right, you're right about that.

Uh and then doubt really the opper former we heard Charlie just bringing down the number is just an interesting trade.

Here we're off our lows.

So let's get to with Greg Halter, see what he has to say, Director of research at Carnegie Investment Council. They got about four billion in assets under management. He's with us on Zoom from Cleveland, Ohio. Hey, Greg, nice to have you here with us. I am curious among the investors that you deal with, institutional or otherwise, what's top of mind when they pick up the phone and give you a call or shoot you a message.

Again, thanks you, thanks for having me on the program.

Again.

I would say top of mind is the disbelief that the market did as well as it did in twenty twenty three.

When they're looking at their statements and their.

Returns and of course wondering what that leads us into for twenty twenty four.

Well, past performance is no guarantee of future results. I've heard that. I've heard that somewhere before. Where does it lead us in twenty twenty four?

Greg, Well, we're we haven't an election year. We have the potential for FED, the FED to cut rates.

Our belief is in long term investing, and our general long term belief is the market goes up, not every year, but goes up over time eight to ten percent. We do think twenty twenty four is going to be a decent year for the market, certainly not as strong as twenty twenty three, but we think.

It'll be up all right.

So if you think it's going to be up, though, what do you think is going to get it there? And where do you think that investors should commit money to?

Sure?

I think the larger names excluding Tesla today will continue to do well. I mean this is not like two thousand.

Okay, well, let's talk about some of those smaller names that you've got your eye on. I mean, well, not actually that small. Strikers are pretty huge company, medical device maker. It's on our radar because one of the I don't want to say Air, but I guess we would say Air of the Striker Fortune just made a huge gift to Spelman College. So far, it's up three percent year to date. You're bullish on the company moving forward?

Why?

We are definitely bullish long term.

They have a medical business and then of course the orthopedic implants, shoulders, knees, hips.

I can speak from an experience.

It's two months ago today I had my hip replace wow, and it's been actually quite amazing.

The pain is gone.

Obviously there's a recovery, but I've done all the work that you need to do. But it's quite incredible what can happen when you get these implants and the change in your life and lifestyle where I couldn't walk half a mile non walking three miles cycling thirty miles. It's huge difference. And we're talking only two months so far. So we think Striker will continue to do well. People are looking for those types of implants. I can't tell you how many people when I did my research said

People laughed at them. They're not laughing now.

I think it's still early early innings for that, and certainly for that internationally.

Hey Greg, just real quick. First of all, it's great to hear that you're doing so well after such an invasive surgery, So congratulations, and yeah, we're sending you our best wishes. Before you went and did that, did you know you wanted to use a Striker product? Like take me through the decision making process as a patient here if you don't mind me asking, because I don't know if if it's really up to patience, right, is it? It's the provider who chooses this stuff.

Now, correct?

And in fact, I did not have a Striker I'm just speaking generally interesting because orthopedic implants. Mine's a JNJ, which is depew And you're right, it is up to the surgeon, so I could not go in and say, oh, mis or missus, surgeon, please use Striker. You know they're going to use what they're comfortable with. So obviously there's there's maybe different variations, but I think a hip en plant is kind of a hip and plant at this point.

Yeah, no, it's interesting. You get a little bit of a dividend play too. I was just kind of looking at it. It was up about twenty two percent last year. But yeah, it really plays into we're all getting older and someday you and I Tim will need one as well. I know no, but it makes sense, right And I hear that from a lot of people who finally get surgery and like a hip replacement, and they're like, oh my god, game changer, Like I can kind of go

Yes, it's a great question.

There's lots of interest given what happened last year and is continue and so far this year, at least from the on the semiconductor side with AI chips, I'm calling this the chip ripper market so far. I mean, you've got Nvidia up another twenty five percent this year, Yeah, AMD, Broadcom. I mean, there's so many of these chip names that are doing well. So we think it's going to be those types of companies as well as again the Microsofts of the world that have this AI technology.

Google.

Again, these are not small companies. They're spending I can't remember what the number was that I looked at. Maybe it was on Google or Amazon. Seventy five billion in R and D in a year. That's incredible. That's more than the GDP of some company countries.

You're probably not going to be surprised, but the second best performing stock in the S and P five hundred was the number one top stock performing name in the S and P five hundred last year. We're talking about Nvidia. It's already up about twenty four percent so far this year, and I know it's something We're going to watch Intel to see whether or not they are making any kind of gains on video. Everybody's gunning for envideo.

So Greig, thirty seconds left. Do you see any frothiness when it comes to this AI?

Definitely.

Again, you look at some of these stock charts and they're just spiking, you know, in a flag pattern, if you will. That gets us a little nervous when you get so far away from the two hundred day moving average. So there may be some weakness or softening there or pullback. But over the long term, it certainly seems to be a place to be.

Not chef, we can jam this in, but we did have a story today Alphabet, Amazon, Microsoft, they're going they have to provide information to the us FTC on their investments and partnerships with AI startups like open ai and some others. Twenty seconds Is that anything to be concerned about? Any thought on that?

Real quickly?

Sure?

This has been going on for a decade probably at least.

Yeah, with Microsoft and all these others relative to the regulatory side and whether or not they're too large, it's going to continue, whether or not they break these companies up, who knows.

Yeah, they're definitely different approaches from the FDC on that. Hey, Greg, really great to catch up with you. And we hope your recovery continues to go well. Greg Halter, he's director of Research at Carnegie Investment Council. Joining us on zoom from Cleveland, Ohio. You're listening and watching Bloomberg Radio.

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