BOJ, Ukraine, Markets, and AI (Podcast)

joining us here and our Bloomberg Interactor Broker studio. All right, let's stop currencies here. I'm looking at my Bloomberg Dollar Index. It's up slightly today. Um, you know, the yen has been the story. It's off a little bit today, but the yen has been the story over the last couple of days, with the Bank of Japan saying all right, maybe we'll let interest rates go higher. We'll fight this inflation thing. We'll be like everybody else around the world.

Audrey Child Freeman, she's a chief FX strategist. She focuses on the G ten country. She does that with Bloomberg Intelligence. She's based in London. She's actually in our London studios. So you get a virtual gold star for me, Audrey for being in the office. We appreciate that. UD give us your sense of what you know. Your takeaway is from what we saw from the Bank of Japan over

the past couple of days. Hi, good morning everyone. So I think it is the game changer, even though we kind of we all saw it coming, but there was this element of surprising in terms of the timing, and and that element of surprise probably exacerbated the price action. But the b o J action is basically a first step towards right normalization, and that means that we are moving away from the you know, the era of negative rates for for for Japan, and it is the game

changer for the currency. I mean, um, the YenS cubtainly reacted uh with a massive move yesterday, and I think it's just the beginning. I think we will see more strength and of the end in the weeks to come, and that will most likely be a theme that dominates early early in twenty twenty three at least. Well, speaking of some of the currency fluctuations, I'm curious about currency intervention. One of the issues that the b J, it feels like, has had as they've been exercising the reserves for far

too long. And if they don't use this um kind of yield curve control and whide in the bands even further in the face of inflation, to what extent are they going to be forced to entertain the idea of intervention. Well, I think when it comes to intervention, the message on the currency front is very clear. Uh, and it's not just the b O G it's the G seven view that excessive moves in the front exchange market are not welcome.

So you could argue that, you know, yesterday's move where excessive, but uh, let's let's see what happens, you know, in the days and weeks to come. But certainly in the current macro context, you know, we are now in a position where a stronger year it's actually kind of welcome for for the Japanese economy. We have moved away from the deflationary world that that we were, that would be used to for so many years, and we have now

a pick up in inflation. And and that's why the bo J had very little option but moving away from the monetary policy environment that had been in place for so long, and that may have been justified, and that's debatable by the way over the past few years, but certainly not justified in twenty twenty two and going into twenty twenty three. UM So I think effects intervention unless you know, the magnitude of the move continued in the kind of place that we've seen in the past few days,

and I don't think they will. I think it's not likely for for now, it's not the subject for for next year. We speaking about Audrey Child Freeman effect strategist for Bloomberg Intelligence, and Bloomberg Intelligence, in my opinion, is among the best and certainly most comprehensive investment research on Wall Street bar none. And if you want to argue

with that, you know where to find me. Audrey. You've got a research report out saying dollar agen may fall one five boy, and that's a that's a big move. We've got the the end here one thirty two spot one. What will drive it down? So, I mean you said it's it's a bit cool, but you know some people may go even more aggressive. I'm saying one twenty five by the first half of next year. So just think about the numbers. I think when you you know, when

you make some calls. It's always relevant to just look back at what happens and where we are and how much of the movie we've seen. So Dolligan is now down about twelve percent from the high that we had by late October. Remember we're trading near one fifty, so twelve percent in just six or seven weeks. But Dolan is still about above the ten year moving average, which is around one ten dollar. Yan is also about seventy

above the pre abnomics level of eighty. And we have our own model an intelligence are be our model valuation model, which you know I like to refer to on occasions. Uh And and that's that's telling us that fair value

on Dolloyan is at around one eleven UM. So what I'm trying to say here is that yeah, miss miss and punchy, but it isn't in the wake of the move that we've seen on Dollyan this year, and where where we are on on on valuation and on historical levels, and and beyond the bo j story, there's also a wide range of other reasons why you could argue for a week a dollar yen. And actually, even before the bog action yesterday, that was my strongest conviction for for

the year for early next year. It's just coming early. So let's see what I can. All right, if it gets there, I'm giving you all the credit. Audrey Child, Freeman, Chief G ten strategist currencies for Bloomberg Intelligence and again, Bloomberg Terminal users can find all of the world class investment research of Bloomberg Intelligence at b I go on

the terminal. Historic day in Washington, DC today is Ukrainian President Vladimir Zelenski arrives in Washington, d C. To meet with President Biden UH Joint Session of Congress UH and you know, really making the case for the war in Ukraine if a continued support. So our next guest is absolutely critical to that discussion. Tamila to Shiva. She is the permanent representative of the President of Ukraine for the Autonomous Republic of Crimea. Tamila, thank you so much for

joining us. We really appreciate you taking the time, which I know which is just a critical period of time in Kiev and in Ukraine. I'd love to get your sense of kind of way you think the objectives the aims are of your President Zelensky as it comes to Washington,

d C. Hello, everyone many thanks for inviting me. Actually it's not my mandate to committigate a visit of our president, but it's really very important for Ukraine because it's a first visit of our president and of course the United States, it's our strategic partner, and all our Ukrainian citizens really UH enjoy and really happy for this UH visit of our president, and of course we're waiting for all statements of our president and this meeting with President Biden and

with State Congress. Of course, for Ukraine is really very support to have more support on military sphere especially and financial support from US government. UH to me like, could you you're in Kiev, could you give us a sense of how things are today on the ground, uh in in Kieva. Uh. Today we have the two alarums in Kiev.

But during the last a few months sexually Russian Federation unfortunately destroyed our energetic infrastructure, electricity and to we have huge problems with water supply CELSO in Kiev and it's our daily based unfortunately problems in all cities, not only in the Kiev, but in Reef also region internalbly Jian in her In Harkief and Herson Region which is elaborated. Now you're the representative. In further, President of Ukraine in the Autonomous Republic of Crimea talked U a little bit

about the conditions there. Yes, unfortunately, we always say that war is not starting this Fabruary, yes, two, but eight years ago and in half years ago and now situation in Crimea also dramatically change. But because Russia used Crimia as a military base, huge military base, they used this UH, this territory Crimea to launch sale attacks. During this ten months of a huge war, big war, Russia attacked from Black Sea region and from Crimea territory and NIA eight

hundred missiles against Ukraine on the territory of Ukraine. UH. They stole our grain from territory of mainland of Ukraine in Herson region and the Parisia, and they used Crimea for stalling this grain. They use our people in a temporary occupied Crimea for UH for this battlefield. Because they mobilized our Ukrainian citizens to this war against their own country and their own people, and of course we understand

it's a war. Crimes. They prosecute our people. According to testimonies of Crimeans Nia UH two hundred and fifty cases of criminal or administ rates of persecutions of Cramians and to our activists, it's a lot of cases. We have one hundred and fifty five criminal persecutions, it's a political prisoners and one hundred and nine from them. UH, it's a crimean data. They persecute crimean dators. It's a huge and massive persecutions and human rights abuses in Cramia Tamila.

From the US perspective, we are reading headlines and news stories about the amount of assistance that is going to Ukraine right now as President Joe Biden due to unveil nearly two billion dollars in assistance and UH further moves to deliver things like missiles and weapons in addition to more funding. But at the same time, we do have sanctions that are underway globally against Russia. Do you feel like on the ground those things are making an impact. Yes,

of course, even for human rights defenders. UH, these sunctions is really work on the level of economical and economic but also for ordinary people. For example, when we proposed the sanctions for our partners from US government or for European our partners, and they do these sanctions against for example, those persecutors of Crimeans. They stopped some persecutions in prison in Cramian prisons against Crimans who now in prison or

in predicential centers, and they really understand it. And for Cremia, of course itself so very important because according to sanction regime UH, Crimea lens UH now easilated. And for Russia it's very hard to get some investments, for example to Crabia. And they really understand that Crania it's not really part of Russia according to yes, no, it's just and and t mel I just want to before we have to let you go, which want to get a sense of how is the morale of the Ukrainian people, the people

in Crimea that have been dealing with us for so long. Um, the fighting has been so brave by the Ukrainians against seemingly insurmountable odds. What's the morale on the ground of the average Ukrainian, all Ukrainians. We really understand that now we fight in UH for our values, for our freedom, and we fighting not only for territories but for people. Elsa and our people in Crania is really understand it, and they say that we waiting. Our Ukrainians are forces

also in Crimia. And according to Russian view, they say that Cremia is always Russia, but it's not true. And yes it's a Ukrainian lens, it's a Crimean lands. And now our president also always say ye, all right, Tamila, thank you so much for joining us to really appreciated Tamila to Shave a permanent representative of the President of Ukraine for the Autonomous Republic of Crimea. Please stay safe in Kiev. We've got some good earnings today. We had

FedEx put up some good numbers. Um, we had who was it, Ni Nike put up some some really good numbers. And that's not really responding. So we're gonna break that down. Let's start with FedEx and Lee Glasgow. He's the analyst at Bloomberg Intelligence. He fills FedEx railroads, trucks, shipping companies, logistics, air freight, all that stuff, all those companies that moved

stuff around. One of the best beats. Yeah, and I that was my beat back in the day, you know, starting in seven covered a little bit of everything I have, and I have I've made money every step along the way. I'll mention um, you know, humble brig there Hayley, you're the expert here FedEx. I mean, I don't know. I was sitting in front of the Starbucks and Summit yesterday. To the right of me is ups. To the left

of me was the FedEx door. Both places headlines out the door, people you know jump, you know, juggling boxes. What did FedEx have to say today, Well, hey, Paul, thanks for having me, and I hope you helped those people with all those boxes. FedEx had really a mixed message last night. You know, there was some good news. They did beat expectations, which is fantastic. You know, they beat it by about thirty eight cents, which is which

is great. They also announced another billion dollars in savings. But what they also did is reset earnings expectations for the second half lower about fourteen to fift at the high end of the range um. And the reason is is that volume for them is slowing more considerably. There's

two things going on. Uh there's the obviously we're we're going you know, we kind of like the pendulum swung really far during the pandemic where everyone was ordering stuff, and now the pendulum is coming back uh to you know, uh to to be for when we're talking about e commerce, e commerence demands going to be above pre pandemic level, but not at the peaks that we saw during the pandemic.

So the volume from there is going away. And then you have, you know, global economic issues, whether if we're talking about in the United States, obviously we're having our economic growth is moderating, humor, competence is waning, Inflation is impacting how much stuff people are buying. Europe you have a much weaker economic backdrop. And then China, China, you know, there's some headlines out there that they're opening up their economy, but the reality is it's it's really a slow opening

and uh, there's a lot of issues there. And so what FedEx is doing is their parking planes. They're you know, kind of putting off some some projects maybe into later into next year to see where the economy is heading.

And and part of also the good news, you know, in addition to the beats that they've been doing on the earning side, was that they were able to raise rates that you know, they still have pricing power, which is which is which is a good sign, especially you know when when volumes are are coming in and so you know, they announced a billion dollars more in in

cost savings. I think those cost savings are more reactive to the volumes, uh, and so they're probably more flexible, meaning that when volumes come back on, they're going to probably bring on some of those costs. But they're also looking at about four billion dollars in structural costs that they're looking to uh totally get out of their system. Good stuff from FedEx. We also and presumably some of those FedEx boxes were carrying Nike shoes and apparel. Put

them Coil. She covers all the retail stuff for Bloomberg Intelligence. A teammate of Lee classgow there and Bloomberg Intelligence put them talk to us about Nike. Some pretty good numbers there. The markets seem to like what we heard from Nike. Yeah, they continue to execute and their innovation remains a key driver. Told better sale that fool price, even after passing on

price increases earlier this year. UM, it was really encouraging to see the constant currency sales games of about twenty seven fix consis quarter, and they raised guidance for the full year from low double digits to low team. So I think overall, they just continue to show that they can execute. It's a team that can use innovation and execution at their advantage to really deliver in me customer demand. Well put them let me ask you about that and then like ly to to hop into this as well.

But when we talk about things like price increases for example, or and um for for for Nike, but also I mean you cover up I mean other retailers as well. We talk about price increases and the future of whether or not those price increases are gonna stay sticky. It's not like when inflation comes down all of a sudden, a lot of these retailers or even shipping companies like FedEx are going to decrease their prices. So if that's the view, then shouldn't the stop just go up and

up and up from here? I mean, yes, they can hold the price increases, especially for NIKEE for the innovation that they have, the new products, especially their strong footwear franchises. But um, there is margin concern right They have actiss inventory. Their inventory was up north to forty percent at the end of the quarter. It was down three percent from last quarter and night signal digits on a unit basis, which is a sign that they're making products, but a

lot more work still needs to be done. We will see more discounting, not against those products that are just being introduced, but you know some of the age inventory people like to call it that. Um, there will be more promotions. They're gonna be selling more into all price

to clear that inventory. And that's kind to what I'm watching for, because that's all we the catch two when you have to be careful how you sell an all strife under Armour went through this and too much inventory there isn't good for brand Heat in the long term. You know, it's great to have put them goil and in class go on at the same time because we can really you know, circulate and talk about the consumer here. We had the conference board released some data this morning.

Consumer competence data came in much better than expected for the month of December and the expectations Stata point was also a big improvement from last month. So UM consumers still seem to be in decent shape. So leaves. As you listen to the Fedexes of the world, how do they view the consumer as they look out to next year?

I mean I think they they they they from their outlook, I mean they're looking for, you know, global economic moderating growth, and so you know that is obviously being driven for their businesses by the consumer. UM. And I think that you know, they're kind of outlooked for decreasing costs. Even more is based on that outlook that volumes are probably going to be pretty weak in the first half of the year, with you know, fingers cross a better outlook

for the second half of the year. Um, because you know, with all the moves that the Fed is making, it is pretty clear that you know, is gonna tamp down the brakes on the economy eventually and put them again just from the consumer, just give us a sense of how do you think this this holiday season will be about. Seconds. Sure, so far the holiday season looks good. There will be promotion, but the consumer they're spending. Um. Not everyone will win

the season. There will be mixed results, but we think the strong brand will continue to show out performance over the weekend. One all right, good stuff. I have no intention of shopping, but that's just me put them Goyle. She's on a T day and folks here in Bloomberg speak, that means she's on vacation today. But she still talked the time to come check in with us and give us a sense of what's going on there with the

retailers and Nike in particular, put them Goyle. She covers retail for Bloomberg Intelligence, and Class Cow covers all the transportation and logistics stuff for Bloomberg Intelligence again for world class investment research. B I go r J. Gellow. He is with Federated Hermes. He's been doing this for a while. He's the senior portfolio manager there. R J. I. I'm gonna take just a second here and we'll look back

and then we're gonna move forward. But looking back on I bet even in your esteemed career, you haven't seen a year in fixed income like we did in two How do you kind of put that in context? Well, pretty much nobody has the the the Bloomberg you know index, the Bloomberg Ags so to speak. Uh, currently is down on a year today basis because we've had a bit of a recovery lately, but it's still down a whopping twelve. That's the worst performance in the history of the index.

The index only goes back to. As a result, there has been some academic takes on you know, how bad of bond return has been and I've seen a couple of different stories from different sources basically saying that since basically the Washington administration, like George Washington administration, we haven't seen treasuries perform as badly as they just did. Treasuries are down eleven point six five until the return this year.

So this has been an astounding experience. And it's all directly linked to the surgeon inflation to over forty year highs, and the Central Bank, the FED and others efforts to counter what has it essentially been a global inflation shock as the pandemic eased and the world surged, often spurred

by monetary and fiscal policy. All right, not only do we have r. J. Gallo from Federate Hermes here, but we also have Katarina Semonetti, Senior VP at Morgan Stanley Private Wealth Management joining us here and Katarina, you know, as we just heard from r J. Brutal, brutal as it relates to fixed income, Marco, what are you telling your clients here looking forward to Well, it certainly has been challenging year. You know, it's is getting seemingly close

to the end of the tightening cycle. We probably are going to get another rate high Confebruary first, you know, but that might be it. And when you think about you know, the twenty two twenty two was defined by the FED and inflation and interest rates, and we think that it's going to be a different story in twenty three.

We think that there are two major stories to watch in twenty three, and one, of course, this recession, whether we're going to get a recession and what kind of recession is going to be and hopefully short and shallow, but you know, of course that means to be seen. And the second one, you know, I would even say a bigger story would be earnings revisions and this could result in significant downside before we can comfortably call the end of this bear market and might catch some investors

by surprise. So we're telling our clients to be ready for it, to be ready for a continued volatility before things get better. But what does continued volatility even look like? It kind of makes me think that if things have been so volatile in two, is the tolerance for volatility in twenty twenty three that much higher? So for example, a VIX of twenty for example two years ago, um or even three years ago, pre COVID would have been um an extreme number to look at. Now it's completely normal.

Do you think the tolerance for volatility has increased and will increase in Well, there is there is a chance that that might be the case, because you know, we get used to things that we get used to, you know, the volatility, you know, but the question is what will it take to actually get us out of the spare market.

And once the earnings are significantly revised, you know, they will actually reflect this the true state of our economy and we will set the earnings expectations to a more realistic level and this might you know, be the path that will allow the companies to actually beat earnings and exceed earnings and will be that pivot that we're looking for into the next bol market. So volatility, you know, can look in various different ways, and things might get worse,

significantly worse before they get better. But we do think that the end is inside and there are things that we can do, you know, to r G point. You know, interest rates are higher, you know, there's value you know in sixed income. You know, this is you know, it was unbelievably challenging environment in twenty two you know. To my in my view, I think it's a better environment, you know, going forward, but we should still stay defensive.

Investors should, you know, pivot and look for the dividend things stock sectors like health care, financial industrials, and look for the dips in the market to improve both the quality of their investment portfolios, but also as opportunists advise. Hey r J. Just following up on Katarina's point there.

I'm an equity analyst by trade, so you know, when I see or when I hear experts like you say, hey, we haven't seen this kind of underperformance and fixed income like ever, my simple responses, all right, I'm jumping in the deep end of the pool. Um, if I want to go along some fixed income in three where should I start? Well, it's a good question, and I think Katerina hit the nail on the head. I mean, typically in this business, you do better off and you buy

low right. Uh. And the largest losses since the Washington administration and Treasury suggests it's pretty low. Uh. The the yield on the egg, just to go back to it again, UH is now around four and a half percent. UH. It was well below one percent in July. There's been a big, big move, and I think opportunities are being created.

Gave a presentation recently here in Pittsburgh that the bond storm clouds are starting to clear, which suggests that we've gone back to UH to slightly short and sometimes neutral over the last three or four months. We were much more aggressively short and our actively managed fixing and come portfolios for most of the last eighteen months. So we're of the view now that we're getting to a position where the FED is nearly done, the FED terminal rates

probably going to be give or take around five. The bond markets probably still touch rich for that. That's partly because I think the expectations of her session are so widespread. UM bottom line, we think you should be legging into fixed income UM getting out of UH you know, short term or even cash. Cash has been great. Cash gave you a positive nominal return in two and beat everything else. Cash was king. We think it's gonna lose its crown

moving forward, and fixed incomes getting more attractive. We have at our firm intermediate and total return bond funds at various sectors that are taking more duration risk, and people thought they were comfortable with in two for sure, but we think that they're getting much more appealing as we look forward as into twenty three. Well. R J talked to us a little bit more about the bond market here.

If you start to see FED cuts priced later than the back half of which is where they stand right now, how high could yields go? Now? It's a great question. You know a lot of people are very focused on the terminal rate, and oftentimes that even the ten year treasury didn't seem to flash value until it hit the terminal rate. And if the turn rate is going to be five, the ten years due low it's a three

sixties seven. But the reason for that is, UH, the shocking pace of monetary tightening UH is apt to take some prisoners in terms of creating recession in the U. S economy and elsewhere we're seeing the same type of risk.

That's why the Vaughan market is pricing right now with the trajectory of FED yields out say ten years that doesn't have a five handle, doesn't even have a four handle, because the expectation is that the shocking monetary tightening that we've gone through and is nearly complete, is not going to characterize the next ten years. Um. The two years and the three year are particularly interesting. They're around four

round four. They're probably a little too low to be frank Um, I would think the two years should be closer to four forty or four fifty, which would suggest the Fed gets to five, it holds it there and by their own dots, by their own dots, which people think the dots go back. The dots wily got back ten years. So you know, we got to use them. There are a new tool. They allow you to shape some expectations. And in the marketplace, of course, they move

as facts change. But by the Fed's own plan in the dots, they're easing to around four percent in so so the two years shouldn't be at five, It should be four fifty or four forty. We're almost there. Most of the bond losses are behind you. You should. Bonds are going to start behaving in the manner that we as investment professionals county to believe they should behave, which is an anchor to your portfolio, a bit of a hedge to your equities that didn't work this year, We

think it will start working going forward. All right, Catarina, just real quick thirty seconds. When you when you hear from your clients today these days here at the end of the year, what are they asking you about, Well, they're asking for the outlook for twenty three and here's what we tell them. We tell them that they need to be more strategic with their views of economy, policy, earnings and valuations and use tactical rollies, free balancing and

negative you know, downturns for tact loss harvesting. You know, So we just will have to be more selective. But this is definitely a stock picker's market that offers a lot of opportunity. Like Katerina, thanks so much for joining us as always, Katerina Semenetti, Senior vice president and Morgan Stanley Private Wealth Management and R. J. Gallo, Senior portfolio Manager, it UH Federated Hermes joining us here. A little roundtable,

little fixed income, a little broader markets here. Um, you know, I think kind of the message we're hearing from some of the smart people that we talked to is there's some light at the end of the tunnel. But um, you know, don't get too aggressive too quickly here. But I don't know when I see fixed income returns like that I'm thinking, Wow, I might want to jump in there stock Evies, you know, because I'm not a car

geek like Matt Miller. But I did drive the Ford f one fifty thanks to Matt Miller hooking me up with his Ford buddies, like three or four days. It was awesome strength for you. And he told me he would take me to like test drive cars and that never happened. He needs to make good on some of the Lamborghini stuff that he talks about, but let's talk Evies. It is really an interesting business, totally upending the auto

industry around the world. Xeno Mercer joins us here in our Bloomberg Interactive Broker studios, so he gets a gold star. He's a research channels for Robot Global Zino. Thanks so much for joining us here. I mean, give us a sense of where we are, like in a nine inning ball game. Where are we in the transformation from you know, internal combustion engines to e VS Do you think? Good question?

And thanks for having me on today. Um, I mean right now the US, you know, if we're looking at markets and penetration rates of e VS two ice internal combustion engines globally we're at five percent, California is at FI EU is way ahead. You've got you know, Norway I think has a majority of sales as e V s, and then China's you know, even higher still, so we're

kind of lagging behind. So if you kind of look at from a global perspective, I mean, we're in the second ending and you know, you have people who've never even been in e V today, So that's a lot of them until just just recently, well in the EV space, and I think electrification, I immediately think China the leader of it. And it's interesting when we talk about China, talk about Deero, COVID, we talk about your political tensions, we don't necessarily talk about competition for the e V space.

What's your take, Yeah, so I mean competition in the e V space. I mean, think about the timeline here. Ten years ago the Model S was released by Tesla, so we're just ten years into this. Yeah, so happy anniversary to the Models. But I mean, right now, you've got Ford, You've got GM, You've got incumbents that are retooling and rebuilding, manufacturing plants, pouring billions in the new plants. Fords putting their biggest Campex investment into building plants such

as their Blue Oval city outside of Memphis, Tennessee. Right now, Um, and that that's happening. So I think you're seeing, Um, you're gonna be seeing lots of competition. Tesla's market SHARE's job from around sev down to six and um, you know it's I think. And then you look at global numbers and other manufacturers worldwide, Um, you're gonna see a more I guess even ball field and playing field when all these other UH car manufacturers get up the speed

from that production lines. But that's gonna take some time and investment into these robotics, manufacturing automation lines. UH to build that out. Took us about some of the raw materials and the rare materials that are required for e v s. Where are the choke points. Somebody was telling me recently that you've gotta go to Africa to get some of these rare metals. And in China is really

investing in Africa, the US is not. That might be a risk for the whole electrification of the global auto fleet. What's the risk here for some of those UH raw materials needed? Sure? Yes, So I mean right now a majority of batteries used in cars are you know, based

on lithium, cobalt other materials like that. And yes, there are specific kind of choke points there, which is why there's lots of interest and intriguing and kind of just from a sourcing and sustainability, cost and environmental perspective, they're looking for ways to use other battering materials and reduced it dependence on those materials. So I think when you're looking at looking forward how the industry is going to evolve,

They're going to use different materials. You've got companies coming up, you know, IBM, You've got top AI companies around the world that are trying to figure out how to kind of eliminate that that sourcing risk. But most of the companies that are building pipelines of evs have already sourced and secured direct pipeline from providers of those So I mean, at least for the medium term length that they're they're all pretty much squared away. Paul, I have a fun

fact for you. When Tesla was first uh rising in whatever you saw the stock just kind of go up and up and up, um cobalt prices and Tesla prices. If you overlaid. The charts were identical. For this exact reason, the idea that EV batteries required cobalt and I think for the time lithium as well. It was like a

way to play Tesla through the commodities angle. Just a little fun fact for you, but then talk to us again about the sourcing there because one of the things another fun fact that Ed Ludlow or Bloombrick technology anchor and correspondence spoke to me about was that Tesla one of the things that they do really well is build their factory right where the commodities are kind of located. So the supply chain issues you saw on the rest of the car industry, Tesla didn't necessarily have to deal

with them on the same scale. Is that a type of model that you think might be adopted more broadly. Yeah, I think it's not just you know, source materials for batteries, it's kind of the whole component. I mean right now, Uh, these car manufacturers are building their their their plants with you know, additive manufacturing, three D printing, I mean for

different parts. So yes, the whole world saw semiconductor shortages and then nie products that that that really impacted their ability to UM the liver products at a at a and make margin. And I think I think it was Toyota decided to slow down and their ramp up because they just the component costs got too high. So ultimately, uh, you will see more streamline production and manufacturing and you know, custom builds for their for all the parts and components

to go into these plants. Robotics people tell me that's a big part of this new wave of auto manufacturing. Right, So I think, you know, there are a couple of reasons why we're seeing re shoring in the US. And and you know, I think yesterday Tesla announced a new Giga factory in Mexico, but UM increased automation. So this is just designing the system to be more automated, safer. You've got robot arms that are able to manipulate and move large pieces of the vehicles. Now, automation and robots

in the warehouse and manufacturing plants isn't new. That's been around for fifty years. But they're getting better. They're getting faster. They're able to do things that UM at a lower cost and faster cycle rate to enable uh, you know, better economies of scale. So while you know, for example, China has been leading manufacturing globally for many many years.

The ability and a lot of that was just human labor cost they were they had better, you know, lower input costs on that end, and they had some materials. But in the US, we're looking at cobots which can do kind of some more some more of the fine tuning, the more manipulation and placements things like that, not just assembling together. So UM, these robot companies like Pinook, Terra dyne Um, they're they're getting major placements and orders by

these car manufacturers that not just cars. You've got UM battery plants, You've got solar energy plants. So the Inflation Reduction Act that just came out earlier this year, UM put a lot of money. There's benefits. There's UH loans available for building these manufacturing plants, so we have less risk from depending on other countries. Thirty seconds, just your overview of charging stations. Where are we It seems like we need a lot more of those over the next

coming years. Yeah. So, I mean you've got the government and individual car manufacturers and batteries that are all looking to build this out. Since they're kind of all going all in looking to get you know, fifty percent of their their sales. You've got the EU looking to get electric vehicles by um. Yes, there's gonna be lots of level three level four charging, which you know, level four

charging really isn't out yet. That's one mega watt. But once you can charge you know, entire semi trucks in fifteen minutes, thirty minutes, etcetera, then we're gonna have, um, you know, major major adoption, major adoption. That's kind of what a lot of folks are looking for. Zeno Mercer, thanks so much for joining us. Zenni Mercery's the research channels, robo Global joining us here in our Bloomberg Interactive Broker Studio.

Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Put on ball Sweeney I'm on Twitter at pt Sweeney. Before the podcast. You can always catch us worldwide at Bloomberg Radio