Supply Chain, Housing, Tesla, and WWE (Podcast)

But I don't know if that's the thing anymore. I mean, our ships still sitting out there in the ports. I don't. Let's go to the Let's go to the absolute source. Gene Siroca. He's the executive director of the Port of Los Angeles. He is on our Bloomberg Interactive Broker Studio. We appreciate it making the trip just to see us. I'm sure maybe look at some ships that are off the coast of Bayo, New Jersey. Maybe Gene talked to us about LA. How are things there? How many ships

are waiting off the coast? Are you getting stuff to the trains into the warehouses? How's it going? Yeah, good morning, Paul and Matt. Things that the port look relatively normal. That backlog of ships that started at one hundred and nine almost at this point last year was worked down to single digits by August, while breaking records in five of the first seven months, effectively worried about eighty percent

of throughput capacity. Today the dwell times of how long cargo sits before it moves out by truck or rail back to pre pandemic points, not the whole supply chain though, right. I mean, Jean, you guys are doing your job and you've taken care of the mess. You've basically mocked it up. Nonetheless, that doesn't mean that the stuff coming in through your ports is still completely full of all the chips that that stuff needs to be full of. Yeah, chips usually

take the air freight route. But to your point, Matt, the supply chain has still got dislocations globally and here in the US, for example, the inventory sales ratio for retailers is at about one point three seven from the last report of the Saint Louis FED. That's all all time highs, but still much of a higher level than a lot of folks would see. So if you're like me, you're getting email blasts and techs every day from retailers with deep discounts, And if you're like me, you're still

buying right. How about China reopening? I mean, you guys, when the ships leave of China, they come right to your port. Geane, what do you guys, how are you thinking about the reopening of China? You know, it's been

pretty steady, Paul. Even when there were so many ships outside of the port of Shanghai back last summertime and folks were saying it's going to be a deluge coming across the Pacific, the central government and the Young Shaan Deep Seaport in Shanghai, along with Ningbo and other ports,

prioritized that long leg cargo. So while we may have seen a little bit of a dip, a little bit of a pickup, that was the extent of it, not so much this crush or wave of cargo that's coming across the Pacific, but it will ease pressures there domestically as well, whether it's land, transport, barge, factory subassembly units. All right, So in terms of we'res have you got everybody you need? And in terms of price pressures. Have you seen a lot of them? Do they continue? Yeah?

On the worker front, three big segments. As we've talked about before, Matt, the dock workers average six days a week on the job during all of this import surge. They continue to work and the productivity is great. The dock worker contract with their employers, the Pacific Maritime Association, is now being negotiated for the tenth month. We're at the outer edge of where this usually reads some level

of agreement, but it's not quite there yet. We've got to get this contract done because the people that control the cargo importers and exporters have shifted their goods to East and Gulf Coast ports. Some of that may stick permanently on the truck driver's side, pretty good shape, but again, you're only running at eighty percent of capacity. Warehouses are still pretty full, and that's where a little bit of

the challenge comes in getting workers. How do you so, we did hear stories, and you told us stories over the last couple of years about some of that cargo to East coast ports. How do you compete for that? I presume part of the reason you're in New York is talking to some customers and things like that. How do you compete with the Norfolks, the Savannahs, the Baltimore and of course New York. Yeah, these ports have hired, switched on people, they've aligned with their policy makers, and

they're doing huge investments. We've got to stay ahead of the curve. And they have a different union, and they've got a different union, that's correct. The International Longshore Association covering the East and Gulf Coast has their contract coming up for renegotiation next summertime. At this point right now, what we've got to do is continue to add value where people continue to tell me your costs are too high, you've got labor complications, and you're overly regulated in California.

So we've got a band together and continue to push the envelope on these issues because we've got to compete. Before the pandemic, forty percent of the nation's imports came through this gateway. Now it's down to thirty three percent. And the big number for the listeners to remember is in two thousand and two, eighty percent of the Transpacific trade came through West Coast ports. Today that's fifty six percent. So what is the state government in California, for example.

How do they respond because that's such a natural advantage for West Coast ports with this, the Transpacific sounds like they respond with way too much regulation as usual. I mean you've been there for how many years as now on the West Coast. I mean that's part of living in California, isn't it? You accept that bad if you want to put it that way with the good, which is living in such a fantastic place, right. We've got

to capture the moment here. Never in a generation have we seen a linement between the federal, state and local governments. The Infrastructure Investment in Jobs Act, the Inflation Reduction Act, and the California Governor's budget all have investment ready for us at the ports. On the regulatory side, we want

to get to zero carbon or zero emissions. The technology is just not there yet, So we've got to keep working with regulators and private sector industry to make these investments and encourage create a market maker concept that gets manufacturers enticed to us as a customer. Are the carbon costs at your level or is that on a shippers level? We asked today we saw carbon in Europe go to one hundred euros, which is the highest price we've seen

so far. Right, combination of all three things. So we've got a pretty big bucket of money out of Washington, another one out of Sacramento. We've put attacks on containers coming through to incent cleaner trucks. Yet we can't spend the money because the technology is not there yet. We've collected about thirty five million dollars on that new container fee, and we've only spent about one million. We've got a long way to go, both on hydrogen fuel cell electric

as well as battery electric trucks. They've got to be affordable. Today the prices on those rigs are eight to ten times more than what the average trucker pays for a used diesel. But you've got a fantastic use case for those kind of I mean, you've got a ship stuff ruck stuff, I should say, rather from the port to the warehouses. That's the first place you need to use trucks, right, and so you don't need to worry about nationwide electric trucks.

You can use a number of other alternative sources. That's right. About two thirds of the trucks mat that move the car will come in and out of the port by the third of the cargo goes by rail. But you've got to have duty cycle, you got to have torque, and you've got to run these trucks. You've got to

sweat the assets. You cannot waste time charging. The biggest bugaboo that we have is that a battery right now weighs about sixteen thousand pounds, So you either haul the battery or you haul the fright, you can't haul both. And the hydrogen fuel cell electric, while really good performance wise, still very elevated in pre production stage pricing. So we've got to work all this down to the middle. It's not going to happen overnight. Wow. And do the East

Coast ports have the similar challenges. No, they're asking for the trucks that we no longer use, wow, as we implement cleaner near zero and zero emissions because they don't have the same regulatory restraints. That's right. A federal standard would be great. California wants to lead the way, they want other states to follow. But we've got to bring

all of these folks together. I want nothing more than zero emissions at the port, but we got about be smart about how our focus is on accelerating the technology and finding the funding streams. Do you have like the coolest job in the world. It's always it's always great coming to see you guys, and so many things. I couldn't keep all the balls in the year. I know

this whole going green Wait, wait, wait a second. My jobs to get stuff off its ships and get it, but now I have to do it in a green way. But you clearly care about going green as well. I mean, it's obviously something that's top of mind for you, right and as you transition into this greener technology, that means upskilling and reskilling workers for those new jobs. The mechanic no longer works with a wrench sheer, he can work with a computer. Yeah, Geen Saroka, great stuff as always.

Jean Stroka, he's the executive director of the Port of Los Angeles. He has our go to source for all things supply chain. He has been during the entire pandemic. We appreciate him taking a few minutes and joining us here in our Bloomberg Interactive Broker studio. Mixed day. Here, I thought we might get a little bit of a lift, but it's kind of mixed here. We got fed minutes coming up later today. Michael McKee from Bloomberg Television. He's

down at DC. He'll have all the details. Let's check it with Efan Devitt, chief investment officer of Moneta Group. She joins us talk about these markets here. If we're kind of at the end of the earning season, which getting some of the retailers coming in here, let's kind of wrap it up here. What are your takeaways from earnings? I know the markets really focused on the FED, but let's put into context what we saw this earning season.

The really interesting thing about this earning season was that markets were quite unwilling to punish disappointing earnings where they fell shorts. We saw that with the big tech stalks, with quite a bit of leniency in effect there, and that was surprising. It really reflects that overall, that sense of fomo, perhaps that sense of markets and participants were willing themselves into risk assets and really back to the races, which is where they were for most of twenty twenty one.

So that's interesting. The other parallels that I think it's fascinating is that these warnings coming out of retail are almost exactly like the warnings we saw coming out at the first part of twenty twenty two. We remember Target and Walmart's coming out with some forecasts there where they

talked about building inventory. This is back in the post COVID era when we just had the Russian invasion of Ukraine, also building inventories, a slacker consumer, and them having all this garden furniture that they needed to sell off, and this was a trigger of a market weakness in twenty twenty two. So we're seeing almost exactly the same pattern play out. Now. We're seeing that these retailers have actually had pretty good results. The results are core positive, but

their forecast is negatives. Their expectations are more gloomy. I suspect that is them getting some of this bad news out of the way first, telegraphing this an advance so that they can surprise on the upside later in the year. Under promise over ever, always been a great strategy. Is this is the bad news, mostly inventory related. They're going

to have to slash prices. We just heard from Gene Siroca, who runs the ports in Well, the biggest ports in the US and on the West Coast, saying that you know he's seeing dip deep discounts from retailers all over the place, or is the bad news that they want to get out of the way. We're going to see higher rates, business is going to slow down, the consumer is going to be hurt. I think it's the ladder.

It's around the consumer being slackered. For the most part, any supply chain issues have been resolved now, their inventory was a little bit around the shifting pattern of demand around COVID, and certainly the home depot numbers may reflect a little bit of that less money being spent on home renovation because of maybe they're being simply more money to spend on services and getting out of the home.

So it's around the consumer. We've seen a really stark disconnect between hard data and soft data in recent months. The hard data has actually been somewhat positive. We've seen positive direct direction of travel when it comes to inflation. We've also seen quite a positive story and continuing unemployment. But it's that soft data, that consumer sentiment that actually been depressed for some time. It just hasn't manifested in sales. And we saw January with positive retail tales much put

more positive than November and December. So clearly the consumer is still standing, but they're not feeling great about it. So that's where the retailers are trying to get ahead of it, even just kind of broadly on these markets here. Obviously, twenty twenty two in hindsight just such a brutally year for both equity investors and maybe even more to the point,

fixed income investors going into twenty twenty three. How did you kind of frame this year for your clients, maybe your portfolio managers or your analys and things like that, or do you see it differently now because it seems like the market changed its mind yesterday. Yeah, well, there's certainly a flip flopping of the narrative that we taught was the case. We were actually quite interested to see US market SIUs perform at the beginning of the year.

That was something we expected to reverse to some time. Now that narrative seems to have ever reversed again. We saw a week er dollar. Now it's firming up, so all of those things have certainly changed. So may coming off a year like twenty two, which is clearly somewhat unprecedented in terms of the poor performance of bonds and equities, that balanced portfolio was really on its knees at the end of twenty two. Clearly we don't see the same

negativity in the bond market. We're actually quite keen on some of them where we can get those yields with interesting yields even net and inflation available in bonds where encourage our clients not to have their cash set and sweet accounts. You want to see that invested at a higher yield elsewhere, and because of that inverted yield curve, you can get that in pretty short dated paper. So we're certainly not seeing the same leg down lightly in bonds.

As all in all, we're not going to see that kind of massive rate hike that we saw on twenty two. The bonds are looking interesting. When it comes to equities, we've always had a very balanced allocation to equities in core so not too much growth, not too much value,

just to balance allocation. It's been tough. We would have underperformed when the growth was really strong in specially in twenty one and post COVID, But having that balanced allocation is really key today because when we see things like consumer safe will start to come through, we see those real assets that the some of the infrastructure holdings start to come through because they're more defensive names. That's where our balance comes in. So we're actually not making great changes.

What we're thankful to see is fewer inquiries around some of the more sizzle type, more volatile perhaps areas, which is cryptocurrency. We're definitely not seeing the same level of interest in that today. Well, no volatility there. I mean yesterday the NASDAC tanked and bitcoin it's still twenty four thousand dollars. That correlation seems to have been broken. I don't know why, what's behind it, And maybe it's not as interesting to you just because it's not such a

huge asset anymore. Even the whole universe isn't as big as it one was a lot of the traditional investors in stocks and bonds seem like they are in kind of a waiting game. They expected a dip in the first half. Now it looks like that's happening and then

a recovery in the second half. Are you in that camp as well in terms of the recession on the economic athletes, in terms of in terms of asset prices, yeah, well we we actually were somewhat surprised by the resilience and markets and the strong performance in the first quarter. We wouldn't necessarily agree with JP Morgan that the best

is in, that the highest levels are in. We think there will be ongoing strength throughout the year, particularly as some of the clarity emergence on the state of the consumer and on this recession, which you know, we said was widely forecast almost to the points where now it was so discounted in that positive news was well received,

so we were not We were a little surprised. So there will be a bit of giveback in asset prices now as we moved to the end of the first quarter, but we're quite optimistic base something the year like twenty two. We've been building in higher expectations for return across the board and our asset class. Where do you go in fixed income here, even fixed income, as I've said, there are number of places you can go, and first of all, you don't have to go into the highest risk areas

in order to get a decent yield. As far as cash, staying in cash makes sense today, as long as in the right kind of account and accounts that's actually earning something closer to a short term yields, even a six month treasury yield is interesting today, so that's you don't have to go into the highest end of the spectrum. High yield is interesting, and even high yields itself, higher quality within high yield is still yielding quite meaningful returns today.

So we've been looking across the board. Investment grade itself has also had deals that are interesting for the first time. So we also in our clients accounts do advocate introducing some private credit in there besides the public fixed income, just to get that diversification. How do they get that? I mean that used to be the realm of sophisticated investors. Only can your average retail investor get that kind of exposure now if if they are accredited usually that would

be that the key cutoff there. We are really enthused by the greater selection we're seeing that are now suitable for credit investors. Obviously, there has to be a full understanding of different liquidity terms that might be in place for something private. It might be quardally liquidity. Acquardally liquidity doesn't necessarily mean easy access in and out. We've seen that with some of the reafs at the moment. But at the same time, as long as there is an

understanding and is appropriately sized. We're quite excited by the different level of credit investor offerings today. Then, of course, if the clients has qualified purchase or status, they can move up the spectrum. Again, what about non accredited investors just looking you mentioned to move cash. You know, if if Paul has one hundred grand of cash just sitting in his checking account, do you is there an easy way for him to get at you know, four and

a half five percent from that. Certainly, even something like a high grade if we're looking to say and say a mutual funds and the index funds, we can look at something in the short term government bombs or short term investment grade credit, all of that and should be yielding something that's closer to four or five percent. It may, obviously, we have to be health in order to see that, and it doesn't mean that there won't be some volatility along that path, but any of those mutual sound options

are quite suitable for that type of level. All right, Evan, thank you so much for joining us. Always appreciate getting your perspective, your thoughts there. Ifan Devitt, chief investment Officer for Manetta Group c Suite conversation today, let's talk commercial real estate, and we can do that today with the Hassam Naji. He is the president and CEO of Marcus and Millichap and a Hassam is in our Bloomberg Interactor Broker Studio Live, which is good stuff, so it gets

the gold star. It's a publicly traded company New York Stock Change. MMI is the ticker to put into your Bloomberg terminal there. Sam, thanks so much for joining us here. You know, we were just talking about I know you guys are a real estate commercial real estate biz. Talk to us about kind of the commercial office real estate business. How do you think about it? Because boy, the world has changed and we have some seven thirty one lex

where we're located here. Fantastic building, one of the best buildings in New York City, but it's tough to fill it up. And this used to be the hard of commerce, right We had the Gap downstairs and Jay Crew, and we had Victoria's Secret and H and M and all of that is gone. Well. First of all, it's great to be with you in person, yep at seven thirty one, even though those stores are not here. I love seeing you guys. I love being at Bloomberg it's great to

be in person. There is no substitute for it. And that let me just jump start the conversation by saying, is the reason I think the situation with office usage will improve over time. People will come back in the office more than they are today. But I don't believe we are headed for pre pandemic full occupancy anytime in the future. No, you just gave me my stat of

the day when you walked in. You said, we're just back to fifty percent, right, Yeah, Nationally, we just crossed the fifty percent daily occupancy rate across office space since the pandemic. That's a national index, if you will see in some markets it's twenty twenty three, right, Yes, so since the problem that erupted at the end of really twenty nineteen. It's named for that COVID nineteen. This is the first time we've gotten back to fifty percent office

space occupas average. Correct. Now, let's let's take that apart for a moment. Places like Florida, Texas and other growth oriented markets have a much higher daily occupancy rate and didn't fall as much. The urban markets New York, Chicago, San Francisco, Seattle, Downtown, LA are really skewing an average because their occupancies even less than fifty. Well, there's also a big political divide there, so you're what you're saying is the Red States are doing fine. They never left

the office, and they're all back. I'd rather think of it more as an urban versus suburban. Okay, Well, you just mentioned Florida in Texas and Paul and I often talk about I wonder how well they did. Well. They didn't leave the office. That's right, they did just fine. So if I'm a commercial I don't know a bunch of commercial real estate, what do I do? Particularly office space.

I'm looking around here in New York City and somebody these amazing buildings they just opened up right before the pandemic, Hudson Yards. I think spectacular office space. It is what do I do? Great mixed use? Well, this is a snapshot in time. Real estate is a long term investment vehicle, as you well know, and if you really step back and look at commercial real estate is an alternate investment.

Office space is one of many seconds you have self storage, hospitality, retail of all forms, by the way, retail is the comeback hit. Retail right now is the darling of our industry and offices a new retail, which is really kind of an interesting shift. Apartments. Commercial apartments are a significant part of commercial real estate investing, and they've also been the darling of the industry for the past ten plus years. They're having a little bit of a rough go of

it right now because of interest rates. The FED, you know, answering your question of the overall view on the business, The FED has always been a solution when there's been a crisis. This time around, the FED became the crisis because we missed the window in twenty twenty one to gradually tighten financial conditions, get out of the post pandemic recovery with an easing back to normal financial conditions with

interest rates going up gradually. That missed opportunity meant the sledgehammer had to come out in twenty twenty two and create a spike in interest rates, create a spike in liquidity draw and shocked the industry. That's what industry is absorbing right now, is that shock. And you know, I always think of Jean claud Trichet was ahead of the ECB and twenty years ago he told somebody and I was listening, it doesn't matter the level of the currency price.

It just matters how quickly we get there. That's exactly right. And isn't it the same for real estate, Like, it doesn't matter to you if it's six percent or six and a half. But if we got there in less than a year from zero, that's that's a problem, Matt. You just nailed it. Five percent interest rate on the federal funds rate is normal, but going from zero to five percent in less than a year is the shock,

and the market just didn't have time to adjust. A lot of lenders have pulled out of the market or their underwriting has tightened so much. Lender spreads have gone up so much because their risk averse to the point where liquidity is there. The capital is there, but the

flow of capital is not so qualifying. For a loan where you could get seventy percent leverage sixty percent leverage a year a year and a half ago is down to forty or fifty percent leverage, and you have to put in much more equity and absorb at two D two hundred and fifty basis point increase, and that cause to debt at a time when the economy is slowing and the buyers are worried about demand for space. Now.

The reason I ask is that you know, there's not a huge difference in people's views on the terminal rate. The Fed may go to five percent or five and a quarter, or some people are saying five fifty, and that's pretty much the upper end. The real struggle, the real push and pull in the market has been are they going to cut at the end of the year in twenty twenty four or are they going to hold through the end of the year and into twenty twenty four. And if they do hold, is that a killer for you?

Or are you is that going to give you time to adjust to that terminal rate. Our view is that the catalyst for cuts later this year aren't there. Right now. We don't see it. Unemployment is still at a record low, job creation still above the level of the FED wants it. We have five hundred thousand jobs in January versus consensus of one hundred and eighty seven, so we're still creating a lot more jobs than the Fed would like to see.

From an inflation easing perspective, I don't see the catalyst for lowering interest rates, But what the market is looking for is three points of clarity one, the FED being done. It doesn't, like you said, it doesn't even matter what the final rate really is. Is that a quarter point higher or lower. It's being done so they can have that clarity. It's answering the question of a recession. Are

we really going into a recession? Seems like the odds are less and less that there is a big recession around the corner because of consumer strength, because of employment strength. So even if we just basically slow down to little or no growth for a while, that's clarity. We should know that in the next few months because of the effect of the interest rates, that increases that have already happened are showing up in the market. And lastly, for

real estate, it's price adjustment. Sellers always take time to come to reality. Buyers just need those two points of clarity on interest rates and the recession question. The capital is there? Always at an industry event national the Housing Council with a couple of thousand large apartment owners in the audience, and I basically told them there is record capital, but there are a few buyers. We have liquidity, there's plenty of demand for correctly priced assets. We get multiple

offers right now. On listenings we bring to market that are appropriately priced. There's no shortage of buyers. You just have to price the asset correctly. All right, great stuff. Hassam Naji joining us here in our Bloomberg Interactive broker studio. Hassam Naji. He's a president and CEO of Marcus and Millichap. They are commercial national brokerage firm on the commercial real estate side. MMI is the ticker they are in New

York Stock Exchange traded company. So getting some good thoughts on kind of the commercial real estate business, all facets of it, you know, higher rates, kind of adjusting this market, both on the residential side and on the commercial side. Of course, we appreciate checking in with mister uh Nagi. Looking at our good friends market cap six hundred and

sixteen billion as of today. Year to date, this bad boy's up fifty eight percent um so the whole Twitter hangar it's still down twenty eight percent trailing twelve month basis. By the way, in the market where the Dow Jones Industrial average yesterday raised its games for the year to date, did it we had the biggest drop on the S and P and then Nazdak yesterday. This year, the SNP I believe is about four percent option year to date.

So so all right, Elon's getting it going. Uh. Matt Winkler joins us here in our Bloomberg Interactor Broker studio. That's always a good thing. He is the founder of Bloomberg News way back in the day. He's now our editor emeritus. UM got a fascinating column out here on mister Elon Musk and Tesla. UM that stock price performance kind of got my tension there, Matt, What are you looking at when you look at Tesla? Always great to

be with you and Matt as well. Um. What we look at is what we all should be looking at, which is first thing is sales. And no car company in the world over the past ten years has had the sales growth of Tesla, and more recently, no car company in the world, particularly the top ten the ten largest car companies, have been anything close to the gross

margin or profitability of Tesla. UM. And that's saying a lot, which means that, for example, Tesca can turn one hundred dollars of sales if you like, into twenty six dollars of profit at how much production cost. Matt just fresh. I remember how much of that is that the credits they get for the you know, the BV versus the actual profit per they those credits actually weren't there recently

in the period that we're talking about. They will come back. Okay, they are coming back because of the um Biden legislation. But um, you know, Tesla has become the most profitable company. So if you look at those two things, sales growth will say a decade, and then profitability over the same period, you see something that is unique. It's it's it's absolutely insane. I mean, having covered the car industry for for you know, ninon twenty years, here this is better than Porsche levels

of profitability. And we used to always remember, right, Porsche the most profitable carmaker in the world. I'm looking on the FA page right now for Tesla, and if you click into Ratiosum, Paul, look at the gross margins line, it just climbs up. From twenty eighteen, we are at eighteen percent, then sixteen percent in twenty nineteen, but now twenty one percent, the twenty five percent, twenty six percent.

What is happening here is this just because they've been making the product for long enough that they know where to cut costs and they can raise prices in environment. It's a combination of everything you just said, and it should be said right now as we speak, that you're talking about a company that's worth more than Toyota, which

sells more cars than any company in the world. It's worth more than Mercedes Volkswagen, BMW, General Motors, Stellantis, which is Chrysler of course, in Pougeot, Citron, and then Ford Motor combined. Okay, all of them put together, all of them put together, and you know, it's what the eight times the value of Porsche which you referenced below. What have they done well? They started out with the models, which people forget maybe was the car of the year,

Motor trend car of the Year in twenty thirteen. That was totally unexpected for an ev I remember when Consumer Reports tested it and they couldn't believe how good it was. And then there's you know, not just the S, but the Model three, the Model Y, which is an suv, the Model X, all these models and more recently Tesla has been able to or has decided to discount to

the point where Bloomberg News reported it this week. It's selling evs at a lower cost to the consumer than the internal combustion engine, you know, and the Model three, for example, the Tesla Model three is out selling the introductory BMW if you like, pretty much everywhere in the world. So that gives you some example of how competitive it is and just how sticky the product is with the consumer. So night you're you're a Tesla owner? Correct, almost ten

years now? Almost ten years now? How is the ev aging versus an internal combustion auto? Well, the only thing I do every year is I switched to snow tires in the winter, which I didn't have to do this winter if we haven't had much snow. And then I go back to you know, regular tires because because I have one of the oldest models, which is a weird wheel drive vehicle. H And by the way, they do

that in my driveway. I just I just go on the app and I say this is what I want, and pick a day and somebody comes and switches my tires. I don't do anything else. So the maintenance factor is just almost nine miles and it's the tires that's all I change. That's amazing. I don't do anything, you know, And so uh, we're talking about it, I said, almost

a decade. Is there a concern that these sales figures in these margins take a hit after Elon musk Um, you know, not only bought Twitter, but became almost like an outspoken, you know, political activist, and a lot of his values run counter to those of what I would

expect his his broader customer base feels Matt. So anyone googling the phrase Tesla failed is immediately inundated with, you know, all these purported shortcomings of the company, whether it's you know, the vehicles themselves, the workplace culture, business practices, occupational safety, and of course the antics of the CEO himself, Elon musk So my colleagueshouldn't pay And I thought, okay, that's

where we start. What does the data say that isn't when you google Tesla failed, and the data on the Bloomberg compiled by Bloomberg is overwhelmingly the opposite of what you read the prevailing narrative. It's all there in the numbers, which by the way, explains why last year, when you know Tesla lost something like sixty five of its market value, it's still worth more than Toyota. After the climax of short selling, but Anais, in an unprecedented move, upgraded Tesla.

In that whole period, Analysts became more bullish about Tesla for the first time since the company went public in twenty ten last year, at a period when just about everybody was saying Tesla had failed. So I did at a trillion, you love it at three billion. Why did that happen? It happened because you know, they're looking at those things that we're supposed to look at, which is sales growth, and nobody comes close to Tesla sales growth.

And they're also looking at profitability and profit margins, and again this is where Tesla shines. So that's what makes it a leader. Yeah, you're talking about the analyst ratings and you can see that on a Bloomberg terminal with the Tesla A n R as a function and right now there's thirty buys, twelve holds, and six cells. So you know, for me, what's different about Tesla today versus prior to its anytime it's history is a competitive landscape.

I now have major OEMs around the world going all in on electric vehicles, and that is a twenty twenty two event. I wonder how Tesla's gonna fair in it. I don't know, but I think that Wall streets saying we're pretty comfortable with it, you know, Paul, You know, to put it in perspective, if you go back to just two thousand and thirteen, or actually even more recently, go back to twenty seventeen, Tesla's market share the market

was thirteen percent. Today it's twenty percent, right, yea, And everybody is now selling evs and their market share is greater than it was in two seventeen. Interesting. Yeah, that's gonna be the big change. I mean, I think to see how they compete. You know, it's yeah for sure, because you have not only incumbents with a ton of money to throw at the problem, which they're doing right.

Mary Barrow was in here last week and she said that business is like a spring that's coiled and ready to But you know, here's the thing, and nobody talks about this. Tesla makes one thing, zero mission vehicles. Everybody

in Tesla is focused on that one thing. Everybody else who's competing safe for except for BYD and the Chinese companies, everybody else in Europe, the US is making the internal combustion engine as they always did ye and so that bifurcation, that dichotomy is I think a very big obstacle to catching Tesla. Yeah, because they have to do two things that are diametrically opposed every single day, sell the fossil fuel vehicle and make our numbers for the quarter, and

try to come out with something for the future. It's called the EV which is a cross purposes with the fossil fuel machine. Yep. Absolutely, But interesting to see how this plays out of the next decade or so. When we've got Matt Miller right next to us, who was the car guide your head and he was gonna be our peatree dish to see how this all plays out. Matt Winkler, thanks for joining us here. Matt Winkler is the founder of Bloomberg News editor emeritus as well joining

us here on our Bloomberg Interactive Broker Studio. Are you a wrestling fan like ww Absolutely not. I you know, back in the day when I was a kid, I was big time into a Bruno, Sammartino, all that kind of chief Ja strongbow. But it's savage. What was his name, Randy Andy? I don't know. Randy macho man's right. Now it's just become huge. It's bigger than the movie business. I mean, it's just amazing how big this stuff is has gotten WWE. I think they want to sell themselves

or something. I don't know what's he's back and he threw out his daughter, who was like the boss. Ye and now they want to sell it. I mean it was, uh, you know, I don't know, but Keith Rung and she's the media analyst. She knows this stuff. Keith, what do we need to know? Like, I don't view you Githa as a w w E. I'm just going to go out on a limb there, But I know you're a

world class analyst. So you know what's going on at Worldwide Wrestling Entertainment market cap six point four billion dollars, big company? What's going on there? Yeah? So Vince McMann, as you just mentioned, a controlling shareholder, he has returned to kind of run the company in January, and he basically the idea was to kind of oversee this strategic review where he would explore options to sell the company.

And Bloomberg News Lukashaw just broke the story last week, saying that he is looking at a nine billion valuation for the company. Now that dollars, Yeah, nine billion dollars. And you know, so we were just kind of crunching some numbers in terms of what that translates to in terms of multiples. So it's a twenty two x multiple EV to EBITDAM multiple. It's about twice the level of

media and media companies. So if you just look across the board across the media landscape, most media companies are trading right now at about ten to eleven times forward EBITDA. So this is obviously a pretty steep ask. Having said that, though they do own some really valuable intellectual property. Um, I mean, if you just look in general, and one of the areas intellectual I mean across the media landscape.

I think one of the areas that we're pretty bullish on, or at least most investors seem fairly bullish on, is sports rights. Now, one could argue, I mean, this is really fake sports, right, It's it's scripted, but it's still

pretty valuable. Um And and in general, we've seen about you know, seventy percent increase in these rights fees um And you know, so one could argue that any of the current media partners, which is you know, Fox and Comcast could potentially I mean, why would they want to rent the rent these uh content rights in perpetuity, right, It would make just more sense to own it. UM. And so that's kind of you know, some of the thinking out there. But again with Vince McMahon, I mean,

he's he's a fairly brash, outsized personalities. I'm not really sure how many people want to get involved here, and I never know, UM when I read stories about Vince and Stephanie, how much of is that is made up drama and how much of that is real? Yeah, I

don't know too much either. UM. So obviously, his son in law still pretty much runs the creative part of it UM and I think the the idea is that he will continue to run the creative because what we've seen is ever since you know, Triple H H has been doing the creative process at the company, it's it's done really, really well, UM and investors are extremely happy. Triple Edge. What what's Triple edge or Triple H Triple H. Yeah, that's that's that's the Sun involved, that's the Sun law.

Triple H got it all right down with that. UM. So he you know, he's been in charge, um and I I think any any deal will be contingent on him kind of pretty much staying on, you know, in the media space, one of the things that you when investors in media space you're dealing with this is sole transition to streaming. How has Worldwide Wrestling? How are they positioned themselves for the streaming world. So that's a really

interesting question. I mean, this was one of the companies that made its foray into streaming, way back before Disney or any of these other companies had even done it. And they created something called the ww E network, and they went out and they got about one to two million subscribers. However, they did hit a wall, and so they realized that after that you know, one and a half million subscriber mark, they were really not able to get much, you know, much more, and so they actually

sold all of those streaming rights. They sold the entire WWE network, or at least the rights to the ww E network to Peacock, which is owned by Comcast. And so they have a one billion dollars deal with Comcast for that portion of the streaming business. So really, I mean, again, if you kind of look at where they make most of their money. It is from media rights, both the streaming as well as the core TV rights. Oh that's about eighty percent of their revenue. Stream wow, and the library.

I mean, Ken Felio points out they have a massive library, right They've They've still own everything that they've ever bought, everything that they've ever made. They have the video rights to all that, Yes, they do, so you know, basically in a sale, all of that kind of comes into play. I just wonder how they compete with I do love to watch MMA, and I will pay. However, however, much like the pay per view fight costs for UFC, I'll pay it. Really it's awesome, dude. It is brutal and

it's real, which is what I like about it. Now. I know that I've seen the Mickey Rouric movie, and my brother is friends with the CULK and kids, and they're all into this WWE. I know it's hard and physically taxing, but it's just not to me at the level of UFC. They have some big competition in those kind of leagues. So, I mean, so here's the big you know, you bring up a great point for the UFCUM.

So UFC is now owned by Endeavor, which actually has been a big talent agency, right, Yeah, that's a big talent agency, and that's that's just been such a home run for them because you know, really the idea there was our Emmanuel kind of bought UFC to kind of increase the scope of the talent agency's business to live events,

and so it would make sense. They obviously have a lot of interest in acquiring WWE as well, and I think it would be a great fit because if you just kind of look at McMahon, you look at his personality, you look at the relationship between the WWE brand and his own brand, it really fits well with you know, UFC and Dana White. Um. The problem there is, you know, you talked about competition with the UC. I don't I don't necessarily think there's going to be competition as such

for viewership. I think there could be in some nice synergies. The problem is, I don't think Endeavor can actually afford the deal because they already have about six billion dollars in debt, you know, the nine billion dollars asking price, it's going to be really really hard. So it's got to be Fox or Comcast or Disney. So you know, yes,

potentially that those are what makes most sense. I mean, Comcast makes the most sense just because they're already paying them about four hundred and seventy million a year for the TV rights as well as the streaming right, and in a renewal, they'll probably end up paying them at least six hundred and fifty million per year. So you know, multiply that by five. They're paying them about three billion

dollars over a span of about five six years. And so it does it really make sense for them to, you know, rent that when they can just go and buy it out right? But I'm not so sure what you know, whether Brian Roberts would want Vince McMahon to actually continue on at the company. And I'm just not sure how those personalities will mash and with Comcast, one always thinks of a much more kind of transformative deal, right, They're ambitious. So yeah, not really sure how that's going

to play out. Well, I can tell I met Githa thirteen years ago. She's a data analyst at Bloomberg, one of the best. Little did she know then that she would be covering a wrestling company thirteen years later. Keithan, thanks so much. For joining us. Keith at Ranganathan. She's the media anna slash wrestling analyst at Bloomberg. Can tell just one of the best out there on the street for all things media WWE. Maybe It's for sale. 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 nineteen seventy three, and I'm fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.