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One of the big stories that come out of this trip to the Middle East, at least for the Boeing company, Boeing won the single biggest deal in US planemaker's history, with Qatar Airways placing in order for at least one hundred and sixty wide body aircraft during.
A visit to Doha by US President Donald Trump. So we're going to dig into that story.
Sid, Philip joints his deputy team leader for Global Aviation a good day for Boeing here, what do you make of it?
Sid's what's Boeing saying about this?
So Boeing hasn't already said a whole lot about this, But I mean, this is a significant deal for Boeing because they can sort of add another sort of milestone order to their backlog, especially for their seven eighty seven, which is the sort of state of the odd white Buddy jet, as well as potential for the Triple seven X, which is again a jet that Katara Airways has ordered and is still to be certified and so as airlines sort of look to the next generation of aircraft that
they're looking to order, this is sort of these are these You're going to see these mega deals coming up where everyone's looking to sort of replace their current generation planes with newer models which are more advanced, better fuel economy, and that sort of great for Boeing in terms of just building out that backlog and sort of selling out aircraft past the end of the decade.
What is the delivery time for something like this, but when it's clearly had some operational execution issues exactly.
I mean Boeing has been struggling to deliver both the seven eight seven as well as seven three seven Max and get the seven Triple seven X, which is their latest sort of generation aircraft certified. So it is we're still not clear on the details for what the sort of intricacies of this Qatara deal are, but potentially these will sort of play out and go out into the next decade because I mean, they've got a significant backlog of aircraft that need to deliver in the short term.
So this is not going to be aircraft deal that sort of happens in the next two or three years. Is going to be a drawnout deal that goes into the next into the next decade.
Well, stock market likes it.
Stocks up one point four percent today, Boeing is hitting a fifty two week HI. It's up sixteen and a half percent year to date, So maybe Boeing's finally digging itself out of its hole from the last several years. So that kind of goes to the big question said, it's all about production, you know, getting planes off, and people just say, like George Fergus from Bloomberg Intelligence says, just focus on the seven thirty seven Max deliveries. That's
the number. Is there a sense that Boeing's making improvements there?
We have seen Boeing deliveries inch up and we've sort of they've had sort of milestone in terms of just hitting better production levels on the sevent three seven, And we've heard from Aline customers, including United Airlines yesterday saying that the deliveries of the seven three seven Max are sort of going up and they're waiting on the seven eighty seven, which is the aircraft that we understand that
Katara Airways ordered. That's also going to be sort of key to getting production and profitability going.
What other kind of pitch can Boeing make to outstrip Airbus because in a duopoly market, and I appreciate that China has some smaller players, but if you're dealing with a duopoly, like I mean, people got to buy your planes exactly.
I mean, we have adopoly in at the moment.
And does that change it all? You think? It sort of has.
Changed a little bit in terms of just the sort of there's a lot of politics behind aircraft orders again, and that's something that we've seen where Trump's been announcing these mega Boeing orders. I mean, yesterday announced the deal for thirty planes in Saudi Arabia, and so there is a lot of politics attached to aircraft orders. But at the same time, both Airbus and Boeing are sort of sold out of aircraft until the end of the decades. So it is sort of you're notching up all these orders.
But at the same time, the biggest thing that airlines are talking about is give me my plane, because that's really the biggest question where airlines are saying that plane deliveries are delayed, and the air Bus has repeatedly talked about how supply chain issues continue to haunt the industry now five years after the pandemic.
Yeah, which I can't imagine, although again I'm what I understand is one of the bottlenecks is labor getting the This is not just you know, sitting an assembly line and hitting a hammer. You've got to be really, really skilled at labor, and during the pandemic you lost a lot of that and retraining these folks are getting new people in it. I'm hearing that's a big problem.
Labor is a major problem as well as I mean, just one part being short holds up the entire production line. I mean, you have millions of parts that go into an aircraft, and Evers and Boeing are the final assembly lines where the plane actually gets put together. But then if parts are not available in the sort of process, you can't actually build those planes. And that's where the bottlenecks come up. Because you have smaller suppliers who are
struggling financially, You've got parts in short supply. I mean EBUS talks about it's sort of it's whack a mole where you get one part sorted out and something else breaks, and so it's it's really a question of getting that supply chain to sort of hum along nicely and then actually building those planes and delivering those planes because you've now got record backlogs at both Boeing and Airbus.
So are they exempt from tariff issues?
That's again a really important question. No one's quite clear about in terms of what the tariff impact is going to be because for fifty years almost that the aviation industry has largely functioned tariff free, and the tariffs added complexity to it because now everyone's not quite sure if
aircraft are example. I mean, you've seen like all sorts of industry players and industry groups making representations to President Trump saying that we would like to have tariffs removed on aircraft and aircraft parts, and so we're trying to see where that sort of actually lands up, because potentially aircraft manufacturers and airlines may have to pay tariffs on planes depending on what they're mean and what parts they have.
Right, which makes all of this that much more complicated and more difficult.
All right, should be great to say that.
Thanks very much joining us here, said Phillip, Deputy Team leader for Global Aviation. We appreciate that. Always good to see you in New York too. Thank you.
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Alex Deal, Paul Swiney, we are live here in our Bloomberg Interactive Brokers studio in New York City, or streaming live on YouTube as well. I'm looking at the S and P five hundred, absolutely flat on the year. So you know, we were down thirteen fourteen percent of the year, peaked the trough twenty percent, climbed, you know, crawled out of that hole.
Right here, and we'll see where we go from here. Sean oh Harry joins US.
President Pastry Ets join us via zoom from Florida. Hey Sean, what do you do now? I mean, you're we were really selling off hard. Recession talk was getting pretty heated. Now the President has kind of walked back seemingly some of the tariff uncertainty in the marketplaces, and that seems to be enough for investors that come back into the markets.
What do you guys see?
Yeah, thanks for having me. I think there was three things that were sort of headwinds into the market earlier this year. One was the tariff stuff. I think, you know, I don't think anybody was surprised that he was going to make an issue of it.
I think the.
Severity, if you will, sort of spooked people a little bit. I never thought they were ever going to come in at that rate, you know, I always thought this was going to be a negotiation, and as you see, where are in the midst of a lot of negotiations. I think the second sort of headwind was uncertainly about tax policy, and hopefully that will get itself resolved.
And then the third ist.
Has always been the Fed and whether they're being too slow in terms of their approach to interest rates. One of those tailwinds I think has turned into a I mean headwinds has turned into a tailwind, and that's the tariff policy.
I think we're seeing.
Terrific progress there across the board, and I think we'll continue to see that. Hopefully, you know, Congress will get their act together and they'll get the quote unquote big beautiful bill done, and then we'll wait and see with regard to what's going with with with with Sherman Pale.
So I think the environment has changed from a somewhat die or you know, oh gosh, we're going to have it in a recession and inflation is going to be horrible because of all these tariffs, to an environment where I think there's less talk of a recession and less concerned about the potential inflation regarding terrorists. There is, you know, some good news in this market, and that is that energy prices are down and energy has a big input
to inflation. And we saw a really nice print the other day, So I think you can be somewhat optimistic now, whereas I think earlier, with those three headwinds, you had to be a little bit more cautious.
Do we still see the buy the mentality?
Uh? You know, it's interesting, Alex. We're seeing two different camps here. The big institutional investors in the hedge funders are have been net short, and so I'm looking for some kind of a short rally it's, you know, as
they finally capitulate on their short positions. But the retail investor has been really, really strong, and so I think the retail investor is sort of thinking about this differently than the big institutional investors and putting money in every time they get a chance to and that's probably, you know, the smarter move in the long run. I mean, in the short run, nobody knows what the market's going to do. But in the long run, over time, you know, you
could describe this dock market in eight simple words. The advance is permanent and all declines are temporary. So we're seeing sort of two camps out there.
So Sean as president Pacer ETFs, where are you guys seeing fun flows?
Is it different maybe this.
Week versus a couple of weeks ago when we had companies pulling guidance and again real angst in the marketplace.
Well, it's funny, you know, Paul. A couple of weeks ago, our volumes were insane, like three four times the average down volume on ours across the board, and so that was to me a sign of panic in the market. They've now sort of settled down. We're seeing, you know, surprisingly some good flows into international and global as you know, those markets have done better. I think our global fund is up somewhere around nine or ten percent year to date.
I just looked at emerging markets the other day. It's up pretty handily as well. So we're seeing flows there we're seeing consistent flows into the cash Cow series on the value side, so you know, those are high quality stocks that generate higher return on assets and traded a discount, so that's sort of a more conservative quality play. And then we're seeing really significant flows into one of our
growth ETFs that uses free cash flow margin. And then there's a little bit of sort of in the financial advisor community, there's really two camps as well, those that sort of want to tap the brakes a little bit and those that want to put their foot on the gas. For those that want to tap their brakes a little bit, we're seeing flows into some of the risk management strategies.
That we have.
Interesting so, I mean, guess is how you make a market? I mean you have two different directions and then and then you move around that really interesting stuff. Thank you so much, Sean Shaan O'Hair, president of Pacer ETFs, joining us about all the flows within the market.
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We bring you all the top news and business, economics and finance through a lens of our Bloomberg Intelligence folks take over two thousand companies and one hundred and thirty industries all around the world.
We're also privileged to speak to a lot of CEOs.
From all around the world, and one of us joins us in the studio right now, EOS Energy Enterprise. It is a zinc powered grid scale batteries. We know we need updates to the grid. We know we need batteries and storage, and how we make them and where the supply chains are are also a key. Now this company is interesting because it has a US manufacturing plant and supply chain. Joining us now in the studio is a CEO, Joe Mastragello mass Strandgello.
There we go, I got it. Welcome, It's good me withee you.
So basically you're looking at a seven hundred and twenty percent increase in your stock in the last year.
What is a zinc powered grid scale battery. Let's start there.
Yeah, so when you think about this, think of think about the battery you see in your car. So we have a plastic enclosure that has the active materials of the battery inside of it, the zinc, so zinc, bromine based water based electrolyte base on what you're doing. You put a charge in the zinc and the bromine separate. When the charge goes in the zinc plates onto a conductive plastic, the bromine is absorbed into a carbonized felt and then you discharge it. And you can do that
anywhere from two hours up to fifteen hours. It's all common core raw materials, highly flexible in its operation and at scale, is very cost competitive.
All right, I'm looking you are a Puppety Trader company, and we'll set your income statement on the Bloomberg terminal twenty twenty four. You at like fifteen million of revenue. Consensus looks like the analysts are looking for a one hundred and sixty million this year, maybe four or fifty million and twenty twenty six.
What are you guys doing helping your business?
So we are scaling up the manufacturing of our battery modules. So basically we manufacturer battery modules that go into an enclosure. The enclosure goes out into the into the field. It's coupled with some energy source. It could be coupled direct to the grid to help with grid firming or peak shaving. It could be coupled with a power generating source wind solar or traditional fossil fuels, or could be put and
a microgrid for a commercial and industrial application. The growth that you're seeing is basically taking our manufacturing process and going from a semi automated manufacturing line to a fully automated manufacturer manufacturing. So we manufacture in Turtle Creek and outside Pittsburgh, Pennsylvania, and our headquarters is in Edison, New Jersey.
Edison, there you go.
There is this You mentioned it's cost competitive at scale? Are you at scale?
We're getting there. So we first the way we did this was we.
Went in and got the assembly of the battery automated, and now we're doing our upfront parts to automate those. That gets our line to two gigawat hours a year of production.
From there, you take the lines.
The way we designed this was you cut and paste lines to expand capacity, and we have plans to get our Pittsburgh facility, our Turtle Creek facility up to eight gigawat hours a year in production.
Who's your customer, generally.
Type utility utilities, utility scale developers. We also have a large segment now that's emerging with data centers for all the energy needs they have.
So we can now I get it.
This is another play on the AI story.
Is that the investment call out there, it's one of them, one of yes.
Well, when you think, when you think about so, it took me a while to understand this, right, I'm a simple guy, right, So I always saw the hey, data centers go up and they run of the EU power. But there's a lot of fluctuations in the power demands that you have.
So we help smooth those out and.
We make it more efficient and give them, give them lower cost energy to run their operation.
Which which is sort of the whole deal with intermitt and power. You need the batteries that go with it.
You can have intermittent power, but you need the batteries or a variety. Right, Okay, So talk to me about then your costs. How are they looking? Are they coming down? When you sign contracts with customers? What does that look like? How hard is it to get to agreements?
Yeah?
So on the on the product cost side, you know, we designed when we designed this battery as a small startup, we only used materials that are used somewhere else.
So we basically drafted.
Off of other supply chains and said there's another supply chain, use that material, don't put anything custom in the battery.
Because it is a small company, we can't afford it.
So that allows you as you scale, the cost comes down, Like we've taken our cost down from launch of our new product. The cost is down over seventy five percent since we launched the product. When you think about on the flipping that over to like the seal side in the industry, you know, like like the miracle of flipping your light switch, there's a lot of technology and a lot of safety that goes into that. Customers want to
make sure that the product works. We've gone through the process of qualifying that technology, improving that it works, and showing people where it is. So like what we're doing is we go out, we sell the product, show the use case, and when they see the use case.
In the return, they wind up purchasing.
Right now, our backlog in order stands above six hundred and fifty million dollars in backlog with an opportunity pipeline, that's over fifteen billion.
Wow.
How are you capitalizing the company this growth?
So we're publicly traded. We we got an investment last year from Service Capital, very very good strategic strategic partner that's helping us grow.
We have a loan from the Loan Program's.
Office and the DOE which will help us expand the manufacturing in the United States. And then we're starting to get the company as we scale. And getting back to Alex's question on the cost is that you know we're going to we're targeting to fund ourselves from operations as we get into into twenty twenty six.
So you've also had a Department of loan three hundred and three point five million dollars to fund some new production lines, new.
Administration, different world. Is that loan still intact?
It is? And look, I think, like anybody.
Do confidence that will stay intact?
I do?
I Well, Look, I think when you look at the company, this company at fifty employees in twenty eighteen, we have over six hundred. Now we created four hundred manufacturing jobs in an area that lost a lot of manufacturing jobs.
It's right down the fairway. What we want to do as a country.
Is, so how do you guys, what's the future of the company just just grow internally.
Is that kind of the play?
Yeah? Maybe.
Look, I think there's a lot of opportunities, opportunities to think a little bit bigger.
The way we thought about the strategy.
The company is a differentiated battery technology packaged really well with software around it to optimize operations when you think about what customers buy. There are other opportunities there, but right now we're focused on get factory one at scale, get factory two launch, and then look from there.
All right, great stuff, great story, Joe, appreciate you. It's taking a few minutes coming to the studio. Joe Masta Angelo, he's the CEO of EOS Energy Enterprises, joining us here in our Bloomberg and Directive Broker studio talking about the smart battery stuff. It's chemistry. I did take chemistry, but not.
Really that good at it. So that's why.
Which is girt Because you like numbers, well, like.
Wall Street numbers. Ok yeah, like big round numbers. You'll be a bonus of X.
Okay, so that number.
See I'm charging you for this option. That is why you get paid that.
You're listening to the Bloomberg Intelligence Podcast. Catch us Live weekdays at ten am Eastern on Applecarclay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Remember before all this towers tariff in discussion over the last several months, we were talking about something called AI that was kind of a big topic for the market. So we had this Deep Seek come out of China and really throw a wrench into the narrative, which is more tech growth, more growth overall, were riding this thing to the moon than the Deep Seat came out.
Let's rethink this.
A little bit.
Let's go revisit that story. We can do that.
Austin Krb, Bloomberg Technology Reporter. Now he's got the big take story here. It's in Bloomberg BusinessWeek. Deep sakes tech madman is threatening us dominance over AI.
That got my attention. I clicked on it.
Austin, talk to us about your column here in Bloomberg BusinessWeek.
Talk to us about Deep Seek.
What do we know about them and the individual behind them?
So Deep Seek, as you'll recall, gained a lot of attention a few months ago when it released its new R one reasoning model as well as another one called V three, And the big deal about this was they sort of claimed to have trained it without access to a lot of the most cutting edge Nvidia chips, and they also trained their models for a lot less, at least on the surface than a lot of the model's equivalent models here have been trained in the US, and
that raised a lot of questions about some of the fundamental notions about how many chips are needed to train these big AI models and how much it's going to cost to develop them. The reason it was also a big deal was just because the startup was sort of
very mysterious. There had not been much written about them before sort of January twenty twenty five, and we spent a lot of time the last couple of months talking to about a dozen former employees that worked for this company, it's founder Leong Win Feg, as well as forty sources close to the Chinese AI scene, to really just give you a sense of how their sort of market is developing very differently than what's happening in the US, which is they're doing a lot more with less and sort
of just trying to innovate despite the constraints that the US has placed on it with all its export controls.
How did he do it?
How is he able to undercut the price in such a tremendous way.
Well, I think that's one of the big topics that we explore in the story. We trace it actually back to the history. Leong Win Fang had started a quant fund back in about fifteen twenty sixteen, and you actually see a lot of those sort of quant sensibilities looking for efficiencies in the market, which they later applied to their AI models. It was sort of a sort of spin off of what they were doing with that quant
fund that became Deep Seek. One of the big things they did was called mixture of experts, basically a lot of the sort of when you used CHATCHVT back in the day, you asked it a question, it activated the entire model. So think of that like your entire brain is activated just for the question two plus two. What Deep Seat did that was a little bit different was
chop it up into what are called experts. So every time you ask a question, it actually routes that to the particular part of the brain that is expert in math, or expert in physics, or expert in cooking, what have you. So it's a lot more efficient approach. But the downside is it risks hallucinating more or perhaps sending the question
to the wrong part of the brain. But that's one of the techniques that they use to really bring this model to life for a lot cheaper and according to the Deep Seek, with a lot less or a lot fewer of in vidio chips than to them a lot of the Western players like open Ai have access to.
I guess one of the things that surprised people, maybe scared some people, is how deep Seat was able to make so much progress when supposedly all these Western sanctions on technology going to China didn't really seem to slow it down at all.
What's the status saying, I think that's that's one of the big ironies actually, if incidentally, I had interviewed Jensen Huang from the CEO of Nvidia in May twenty twenty three, and that was the very month, coincidentally that you know, on the other side of the world, China was, you know, getting started with deep Seek, and Jensen told me at the time, you know, one of his big concerns about export controls is it's actually just going to incentivive Chinese
chip makers to work a lot harder to develop chips
that can compete within videas. But the other near term threat is actually software makers sort of their constraints from the sources that we've talked too close to Deep Seek are actually what really drove this company to develop workarounds do a lot more with less, and that's become a sort of founding DNA of a lot of the Chinese startups that we've talked to, a lot of these what are called AI dragons across Beijing and Hangzhou that are doing a lot more with a less access to compute.
And I think that that's you know, I think the other sort of component of that is they almost have this national pride that we've heard resonate throughout our interviews that really doesn't exist in the US in quite the same way. No one's you know, quite as excited or you know, we don't think of Sam Altman necessarily as a celebrity as the same way as in China. People descend on that campus, the Deep Seek office just to
see pictures of him. It seems like a national hero they are, just because he's over able to overcome these constraints, And I think that's a really interesting component of the AI scene in China, which we don't have puite in the US.
So about forty five seconds here, what's to prevent the AI companies here in the US doing the same thing that deep Seek does.
There's really not I mean, that's one of the things that you know, they did make their models open source for so the most part they did, you know, unveil some of their secret sauce, but they didn't quite explain all the techniques and how they did them under the hood. But that said, yes, I mean that was part of the really compelling things. By making this model open source, they really have this ethos. One of the first quotes they put with their first public announcement was takis cheap,
show me the code. And so they have this really aggressive, let me prove it to you attitude that I think in the in the US space, with these proprietary models,
they're not willing to do. And I think the difference here is that Deep Seek having an open source approach is really putting the pressure on Google and OpenEye to do something similar or at least undercut the costs of their models, and you can get the same completing power for thirty six dollars through deep Seek, as it would cost one thousand dollars in open AI.
All right, Austin, thank you so much.
Fascinating story, Austin Car Technology Reporter four Bloomberg, Bloomberg News, and you can read all that story on the Bloomberg termin on Bloomberg dot com slash Big Take.
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