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Manus out of our good friends at Tesla. Tesla cuts roughly forty person growth content advertising team, so they're elimiting the marketing team is part of those layoffs. That's according people familiar with the matter. Here, stock off four percent today, fifty two week low down forty three percent a year to date. Let's check in with Steve Man. He's a global autos analyst for Bloomberg Intelligence. He joins us from the Princeton campus and I mean campus down there. It
is beautiful down there in Princeton. That's kind of where we got a lot of the Bloomberg Intelligence folks housed down there. Steve, this is brutal here. Let's start with something basic, which is really the fundamental issue here, which is pricing. I believed mister Musk cut prices. Again, if he wakes up on the wrong side of the bed, does he cut prices? What's going on with the pricing and Testa these days.
There's a lot of things going on at Tesla right now. Bruto is probably not it's that's mildly calling it. You know, we always thought that they will have to reverse prices. We're not sure why. You know, early in the year they increase prices. But you know, price prices have been dropped in the US, prices over the weekend, it's been dropped in China. China is a different quite different market. It's hyper competitive. Everybody's cutting prices, especially by d early
in the year and late last year. So we're not surprised going to cut prices. The question is, you know, where are the earnings going to be? And there's gonna be a lot of questions that Elon must has to answer tomorrow at their earnings call.
Yep uh. Web Bush Securities were with me a couple of weeks ago and they said, it's a hurricane five storm coming towards him. That's gone from a Cinderella story to that. But who if you look at BYD, if you look at Lee, and you look at Tesla, they're all cutting prices. So is is is this the bottom of that cycle? Has Tesla got the capacity to weather a price cutting storm in China.
That's a good question. I don't think it's the end of it. We're actually seeing second quarter sales to be uh, you know, uh probably the same as what we saw in the first quarter. And remember our first quarter Tesla actually in the industry itself actually show uh slower growth and even some declinentes uh for certain automakers like Tesla. So uh, you know, second quarter is not gonna be pretty as well. And I think Tesla, you know, fortunately for them, they are pr They are still the only
profitable EV maker in the industry right now. You know, they have about seventeen percent gross margin compared to four in GM. They're at you know, single high single digit, so you know, they do have some room to give. And you know, I think part of it is really they're they're really hoping, Tesla is really hoping to drive more volume, generate more cash. And you know, one of the things that they want to get to sooner than rather than later is really to you know, monetize that
robo taxi. All the investment they've made in AI and autonomous vehicles.
Gross margin is seventy percent, is that just on the manufact on the manufacturing side, or is that with the credits and so on and so forth, Because my question is, you know, if they start cutting prices, are they going to sacrifice unit profitability?
Yeah, the seventeen percent thinking autumn, Yeah, seventeen is on the automotive side. Look, they you know, we're hoping they don't cut more prices because seventeen percent is not as good as the mid twenty percent they were getting last year and the year before. And cutting prices is not the not the solution. You know, the industry does not need to be in that spiral of cutting tit for
tat price cuts. It's gonna hurt everyone, and at the same time, it's gonna hurt you know, the GMS and four because it doesn't really make it, you know, feasible even for them to roll out a cheaper model down
the road. So, you know, what we're trying to do is create greater adoption in the EV market, in the EV industry for every consumer, and cutting prices is gonna you know, weed out a lot of the competition that are actually trying to introduce a more affordable model for the for the market, for the greater market Steve, I mean.
We can debate adaptability in China in the United States of America forever. I mean the infrastructure is one could coin phrase probably not there again, going back to a web Bush note delivered in my inbox this morning by Dan Ives, which is it comes down to delivering a model TO in the next twelve to eighteen months to deliver a second wave of growth. If they don't deliver a new model TO, that growth will not come and robotaxis would be a tragic gamble in our opinion, as
full autonomy we do not see until twenty thirty. This comes down to innovation in model two at the base, doesn't it.
Yeah, Model two is important. I think what the industry is looking for and what investors are looking for is looking They're looking for more affordable models for consumers so that the penetration rates, so the addressable market for EV. Actually, it's going to be greater than what it is today now.
Like I said earlier, Tesla it has been aggressive, probably the most aggressive and cunning EV prices, and they've redesigned a vehicle that they can manufacturing at a lower cost than you know, than it is today.
So you know, they.
Could launch a model to the other option. You know, I don't think the market has really talked about is you know, the price cutting will allow them potential, the cost cutting will probably allow him the cut prices even further. You know, it wouldn't be a surprise down the road that they're going to offer the model three below thirty thousand, you know, if they can manage that costs wisely.
Hey, Steve, After the close tomorrow, Tesla will report numbers. They have a conference called five thirty pm Wall Street Time. What does Elon Musk need? What message does he need to get across to kind of you know, shore up this stock price.
Here well as you know, the stock price is you know, mostly driven by the anticipation of robotaxi, of autonomous vehicle of AI. I think what he needs really needs to come out and tell people, give certain milestones for the investors to follow. Understand, you know, how he's taking that company forward into you know, into the next decade, how his robotaxi is going to generate the revenue and the profit that he's so much been advocating for. So, you know,
automotive business. We all know it's it's it's a small part it's in terms of valuation, but they you know, I think Elon Musk and the company really needs to come out to make the investor feel comfortable that he is still on track and there is a light at the end of the tunnel sooner rather than later.
Is there a sense that he's focused enough on this company here? Is there still that concern that he spread too thin?
Do you think?
I don't think so. I think, you know, he's He's one person. I mean, he's done a lot with SpaceX uh, he's done a lot with Tesla obviously, and I think he's even though there's been some departure, I think still I think he still has a very very strong behind him. He's still hiring a lot for the AI for the town of his vehicle business. So I'm not too concern
at the moment. I think communication is key for the company in the next you know, tomorrow, in the next few weeks yep, and through August eighth, when he actually reveals his ROBOTAXI.
Oh, okay, all right, Well I'm going to listen to this call tomorrow, so that'll be interesting. I think I think a lot of people are going to pay attention to that call. Steve, thanks so much for joining us. Steve Man Global Global Autos and Industrials research Channels for Bloomberg Intelligence, joining USROM Princeton, New Jersey via zoom.
And here it's you know, it's Dan Iives of.
Webbush said, this is a critical, critical, maybe the most important conference call for Elon Musk here because there.
Is a whole host of headwinds for this company.
It's about reinstilling confidence.
Yeah, it's confidence in genius. I never said the genius had left right. No, exactly right. So we'll see that Tesla again.
Fifty two week low here today off about forty five percent, just a year to date, significant loss of value.
There. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Otto with the Bloomberg Business Act. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
The Right Smack in the Middle Earning season Menace Verizon Communications. I'm a customer of Horizon Wireless.
You know I think I am as well. Yes, I am the riison.
I've gotten, I've cut my kids off just about everywhere. Financially, they're pretty much on their own. With one glaring exception the Celluar telephone bill. They're all still on this whole family plan. I'm carrying all of them, so I haven't figured out how to get rid of them.
Maybe that helped with the Verizon's earnings.
Here.
John Butler joins us. He covers all things telecom for Bloomberg Intelligence. He's here in the Bloomberg Interactive Broker studio. He doesn't mail it in like some of his managers do. He comes into the New York office, which we appreciate.
John. What'd you see from Verizon this quarter?
So, Paul, I thought, overall, a very solid quarter from Verizon. I mean, one thing that I always look at is pricing, right because when they raise prices, which they did on me and you, by the way, it extends across the whole base, their base of one hundred million plus subscribers. So pricing was up strongly in the quarter, and I thought, overall,
a solid quarter. I mean, it's interesting because the telecoms throw all these metrics at you, and you can always point to one or two and say they were weak. Here they were strong there, you know, and it all comes out in the wash. In my opinion, I sort of look, I take that ten thousand foot view and I say, how is pricing and how were subscriber net ads? How many netnews subscribers did they add? And there's still a shared donor. They're still losing a bit of subscribers on the margin.
At every quarter they're getting better and better.
So on balance, I thought a decent quarter in terms of the trends, and.
You know, I like where they're headed for the year.
I remember when we used to try to get used to acronyms when we were covering Vodafone and different things in Europe. You know, you've got your average revenue per user, but you look at the you just switch on your television at home, and you got Apple, You've got Netflix, you've got Prime, and you've got you just consuming so much more at so much more faster speed. So where are they in terms of pricing differential for that additional
bandwidth that I'm I'm going to use more of. It's just a natural evolution of gorging on data.
Well, I'm glad you asked that, manus, because what Verizon is doing so well is They've come out with a new family of unlimited plans called My Plan, and it allows people to not only buy wireless service, but also so the streaming services at.
A pretty good deal.
Finally, there's a bundle, right, there is a bundle praise, and you get to control the bundles, so they don't set preset bundles and say you can get planned a B or C. You can sort of mix and match and say I want wireless service and I want Disney but not Hulu, so you can sort of customize the plan yourself. Ergo the name my Plan, and it's resonating really well, Like I'm really surprised after about a year they've got a quarter of the base on My Plan.
It's very good for them because they're highly profitable plans, and by year end they hope to have half the base on that My Plan structure, which is big.
You know, I'm looking at the stock here about two and a half percent today, but up about five percent year to date.
This seems got a six and a half percent dividend yield. That's what I'm talking about.
So I don't know why you can't talk to your good I saw Tim Cook that Duke recently and I said, can you raise your dividend.
A little bit? And he gave me the heisman. But six percent dividend, seven percent divin in yield? Yeah, is that sustainable for these guys?
You know, I think most telecoms know the danger of cutting a dividends. So let's put it that way. But if you look at Verizon stock you touched on it, it's had a bit of a run here, and so is that stock price goes up? Obviously the yield goes down. But you know they're very focused on shareholder returns as they mature here AT and T is the same way, so is T Mobile, and so in terms of the divinend, I think it's very safer right now.
You see, you use the web maturity and that brings that brings a lot of connotations, and one of them is M and A. You remember the most fabled disaster telecoms murder of all time at and what was it? Aol Time Warner. But when you use the word maturity.
Got paid on that, thank you? Yeah, we got paid Yeah, good.
For you represent everything, We represent what you know what. But there's the question is is the next iteration in this market some form of M.
And A or is it innovation?
So they got asked that in the call, and I thought the answer was very good, which is, we have the assets in place right now to execute on the growth plan that we see for the next few years. And I think that's right. But they also have the ability if they want to make either tuck in acquisitions.
He wants disitions.
I think I think they know that investors want that dividend. So in terms of any grand ambition, ambitious M and A like we saw with AT and T in Time Warner, I'm not saying it with Verizon.
What's the competitive landscape these days? Is it just price, price, price price.
It is very tough at the low end, it's all about price. At the higher end, which is where Verizon plays, it's.
All about value.
What kind of value are you offering with that package? And I think we were talking about verizons my plan, the mix and match that has high value, and I think I think it's resonating well with the subscriber base.
All right, very good, John Butler. He has our go to guy and all things telecom. Verizon putting out some numbers here, decent number stock off a couple of percent. Today, John Butler covers telecom for Bloomberg Intelligence.
We appreciate getting some of his time.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Affle Card, playing Android outo with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
So my tech m and A bankers are not happy because it apparently Salesforce takeover talks with Informatica are cooling off, and that might have been a nice mm A trade in the tech space. Let's break it down a little bit here on a rag ran a senior technology analyst.
You know him. He's out in Chicago. This guy I.
Don't know Sunil rog Gopaul, senior software analyst. But the goodness is he's in our Bloomberg Interactive Broker studio. He doesn't mail it in from Chicago like an rock Ron. It does, Honor Rock. I didn't hire this guy, Roger Capal did. I.
I don't know him.
No, Samiel's awesome and he does all things infrastructure. You'll really like him.
Good stuff. At least he's here in the office. We make note of that. All right. So, Anrak, I was kind of surprised to see.
This news to begin with, Like, I didn't think Salesforce needed to really buy.
Anything, So what's going on here do you think?
Yeah, it was just a big head scratcher for us to almost a few days ago because last March, Bennehoff comes and says, I've disbandled the MNE committee, no more m and A. I'm going to focus on margins and organic growth. And in less than a year, you know, just around that one year mark, he's like, oh, we've got to go back and you know, buy something now. He didn't say that, the company didn't say that, but that was the rumor on the street that they're looking
to buy Informatica. For us, that was a bit of a surprise because Informatica grows six to seven percent compared to Salesforce, which is growing north of ten percent. So why would anybody buy something that.
Is slow growth?
I get the data angle of it, but you know, it was it was not something that we really liked.
Sunil, first of all, thanks so much for joining us here in studio. Sunil Rochkopal, senior software analyst for Bloomberg Intelligence, tell us about Informatica, I don't know a lot about it. I don't think a lot of investors know a lot about it. And that was one of the reasons that they're saying, what is Salesforce buying here or maybe thinking about buying? What tell us about this company?
Sure, Informatica is all about data management, which is about clean cleaning all the data that comes from different sources and aligning it with the applications and getting all things sorted out. For data, so data comes in various shapes, forms and different sources, so all of that needs to be cleaned up to be used in a proper shape. So I think Informatica is that layer that acts as a cleanser of data and gets you to that right usage. So that's where it comes in as a player.
So with if they're not going to tie up with Salesforce, what's the call on this company, what's the call on the stock?
Either you know, bullsh or bears.
Look strategically for Informatica, such an alliance would have been a great move that would have helped fuel its cloud journey, and that now accounts for roughly one third of its revenues. With the deal not happening. Informatica now has to focus on fueling its cloud growth organically. The company is boosting its partnership and rolling out new AI powered features, but
this space is highly fragmented and competitive. The company has continued to lose market share, especially with the challengers that
have risen substantially over the last few years. There are other big players like SAP and IBM that also compete, So I think going forward the market will definitely look a lot more challenging because now Salesforce are not having to go through with this tale will put more resources into MuleSoft, which I think will raise the competitive intensity and I think that is a big challenge for Informatical going forward.
An rag on your side from the Salesforce side, I mean, is it just steady as she goes?
I mean, it's just such a great company.
What's the call for the next twelve to eighteen months for Salesforce dot com?
So, Paul, what we're thinking. You know, hopefully by the end of this year we get a little more clarity on technology spending and perhaps from next year onwards we can see that, you know, load double digit growth in earnings as well as I take that back load. Double digit growth in sales coupled with some margin expansion getting
you to that mid to high teens earnings growth. That's what we want from salesforce, organic growth, organic earnings, not so much driven by M and A. And I'm hoping that that's what the company delivers.
On the software side, what are the most exciting areas for you?
You that you're looking at here.
Look for me in the overall enterprise software space, I still like names in the observability sector. The Yeah, all right, So the observability is they act as a layer that monitors all of your systems applications, so be it any kind of an application that you're running your enterprise, everything needs to be monitored if there are like any bugs, if there are like system downtimes, et cetera. So observability
vendors typically monitor all your applications and the infrastructure. So they play a very critical role in the overall enterprise software space. And I think players such as the data Dog diner trays are very well positioned in.
Public recently, like recently as a couple of years.
Yeah, yes, that's right.
So so what is I mean? I love the name.
I'm looking at the stock here and bringing up the stock Data Dog.
The DG this is kind of forty billion dollar market cap.
It's kind of flat stock price on the year, but up to seventy five percent over the trailing twelve months.
What's the call on Data Dog here?
Look, it's a very I would say it has been a fast growing company. And of course last year we have seen a slow down in the overall enterprise software space, and the Data Dog of course has been impacted with
that slow it spending trends. But overall, if you look at the observability space as we see, I think that is a space that will continue to grow because the number of applications and the infrastructure that enterprises are deploying, especially with what is supposed to come with Jenny AI and others, we will continue to see a massive rise in the infrastructure and applications and that should all bode well for Data Dog and the players such as a Diner, Trace and others in the observatory space.
An rob We've getting earnings coming up for the tech names.
What are you looking for here?
Should we be just kind of saying count how many times they mentioned AI and the conference call?
Yeah, a little bit of that I think it's going to be a steady growth rate. But I'm getting a little concerned about the guidance because I think the macro environment is getting a little bit diceee, not sure what's
going to happen in the Middle East. So I'll be very surprised if any company comes up with a bullish guidance, but I think, you know, one should be prepared for it because we have seen some of these names go up pretty strong over the last twelve months, so they could be a period of consolidation for the next quarter or two.
You know.
Our big call is that we do see tech spending recovery, perhaps now in the later half of the year into next year, but we don't want any one of that to be delayed, So not baking any massive positive surprises over the next quarter or two, but hoping for a rebound by the end of the year.
So but a rebound, you're I mean, there's no declines here. Let's be clear, it's just a question what is the growth rate in tech spending? So just give us an eyeball kind of where we are now, where it has been, and where do you think it could go.
So let's talk about, for example, I'll throw out a number a w as constant currency growth rate. That's a big leading indicator of what's happening. Last quarter it was thirteen percent in constant currency, the quarter before that twelve, and the quarter before that twelve. We think this time
it comes to around fourteen to fifteen. But next quarter again it comes to in that same range of about fourteen to fifteen because now we are looking at stabilization of the growth rates, but we do we expect that to pick up by the end of the year. You can correlate that for any company, whether it's Salesforce, whether it's Microsoft, as your growth rate a similar chart in the rate of growth of the growth rates rather than
anything else. And that's why I'm saying the next quarter or two is where we see stabilization in that rather than a big leg up.
So Neil, in your software space where you play, are you trying to are your companies trying to go them onto the AI trend?
And if so, how are they doing it?
Look, I think most of the companies that I cover are in the initial phase of the AI wave, and most of them are piloting new products, bringing up features like copilot and others But one interesting fact that data Doc pointed out very recently is three percent or so of their arr is being driven by these gen AI focused companies, which is interesting that you're still in very early stages, and I think that will be a momentum that will continue to grow.
Are we going to get Sneil?
Do you think like I came up when the Internet was first started, you had companies from public that were Internet names, whether it was America Online, whether it was Google for.
Search, Facebook for social.
You had companies that defined or help define and then so simple people like me could say, oh, if I want explosures to the Internet by go by Google or by Facebook, if I want social. Are we gonna have AI specific companies coming public?
Do you think?
I think that's a move that everyone is watching. Of course, we have companies like open ai and others that are potentially growing in size and have a massive amount of I mean say users, etc. So that's a market that will continue to be on watch out. And there are a number of other smaller companies that are coming up in the AI space. I think over the course of next twelve months we will see a lot of them in the market.
All right, good stuff studio.
Roj Capal, senior software Anas Bloomberg Intelligence, joining us here in a studio, and of course Ana rod ron, a senior technaist for Bloomberg Intelligence at Chicago, breaking down what's happening in the world of technologies. Apparently Salesforce, the rumor discussions between Salesforce and software company Informatica cooling off here, so we're seeing the Informatica stock down a little bit today. We thank both of those guys for bringing us up to speed here.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Outo with the Bloomberg Business app. You can also listen live on Amazon Alexa from our Flag New York station just Say Alexa playing Bloomberg eleven.
Coming into today's trading, SMP five hundred goes down roughly five percent off of its recent high, and a lot of folks were just saying, hey, is this.
A bump in the road.
Is this the beginning of a sustained drawdown which may or may not be healthy for this market longer term. That's some of the questions we've been hearing from a lot of the smart folks who cover these markets. Sylvia Jablonski Joints, and he's the chief executive officer and chief investment officer at Defiance ETFs. Sylvia, how do you view the trading we've seen over here over the last week and a half here, this five percent pullback in the market, How does that kind of strike.
You in terms of the overall market behavior?
Good morning.
Well, it's you know, it's been a painful couple of weeks, that's for sure. You know, I think that some new headwinds came into the market, right that that kind of weren't there before.
We came out of the gate really strong.
The inflation readings were looking you know, kind of good and solidly pointing downward, and then you know, we got some potter than expected factory number jobs numbers CPI and
things like this recently. And so I think that until we get the data going back in the direction that we want it too, which is essentially you know, coming in below estimates and downward on inflation, and then we start to feel the security of the Fed potentially cutting this year again, whether it's one or two times, and you know, kind of just knowing that the foot the FED put is still in play, right and that we're not going to turn around the other way.
I think that'll help the markets turn around.
And then I think the other thing that you know is sort of trepidations for investors is geopolitics. I mean, there's there's some you know, notable things going on in the world right now that I think really rocked markets over the last.
Week and a half.
And then I you know, I think that there's a need for kind of knowing what happens next there. But in terms of like the fundamentals and the macro picture, you know, I'm still very constructive and bullish on the market, provided that those things, you know, don't surprise us out of left field.
How About on the earnings front here, we're just kind of another real busy week here for the S and P five hundred earnings. What do you think this market needs to see?
I mean, how dependent?
I mean, and obviously earnings matter, but it seems like this is a market that's been pushed around by the FED one way.
Or the other. Here, what are you looking for in earnings this cycle?
So, I mean, I guess the you know, the good thing about earnings is over the past couple of weeks or so, a lot of analysts have revised their earnings expectations downward, and so I think that you know, beats are going to be easier to come by in terms of earnings.
You know, we live in this world now where the Mac seven.
You know, maybe we've subtracted Tesla from that list or or you know a couple of names here and there. But the top tech companies, let's call it as well as Navidia are are really you know, names that investors want good news from, and so then I think if they deliver, that tends to broaden the rally, and that tends to lift stocks in other sectors. You know, bank earnings haven't been so bad, right and we haven't seen kind of this this you know recent from that news.
So it's really those names that I think that have to perform. So I'll be looking at that.
So, you know, one of the the big themes last year and coming into this year was AI and obviously Nvidia and all.
Those types of things.
We saw some pretty violent action on Friday some of those names kind of coming down.
Was that kind of a technical move for you or do you.
Feel like the bloom is kind of coming off the roads a little bit on some of those AI driven thematic names.
So I think that this is you know I always talk about like buy on the dip opportunities.
This is it.
I mean, I think that with some of the top names, if you're looking to get invested in AI or quantum computing, and you know you're a stock picker, you're an ETF buyer, these five to ten percent recent pullbacks and some of these top names are really good opportunities to get back in. You know, AI innovation isn't going anywhere. It's just in
the beginning. It's it's in its infancy. And when you think about when other companies and sectors start talking about how AI has transformed what they do, whether it's the defend section or you know, banks talking about better risk mitigation, pharmaceuticals talking about more efficient drug discovery, price discovery, you know, more effective surgeries in the healthcare system, things like this.
You know you're going to start to.
See how compelling it is to continue to buy these stocks. Is that innovation builds out and you know, we're barely scratching the surface with supercomputing and quantum competing too. So when you have all of this data, it has to be processed quickly. In order for that to happen, you're going to have to kind of like buy up supercomputers and quantum computers and things like this too. So I just think that it's a great time to get back in or get in if you know, if you've kind of had FOMO.
Even though the stock prices are high, they have pulled back.
What's the I guess you know, it defines ETFs. Where are you guys seeing the fund flows these days?
Yeah, so two places, well the three places really, So we see a lot of flows into target income funds. So the investor that just likes to have that, you know, double digit monthly return at the end of the month and have broad based index exposure.
So we see a lot of flows.
Into our SPYT and iwmy off of investors that want dividends. But I would say the fun that people are talking about the most and has kind of grown the most, even though it's been around kind of the longest is quantum.
And that's the AI and machine learning what we were just talking about.
You know, I think a lot of investors realize that Navidia and AMD while they all know stocks, there's got to be something else. They don't necessarily know who the winners are going to be, or who that's something else, what that something else is, And so they liked the you know, equal weighted basket of seventy stocks that are covering semiconductors, graphics, you know, technology, computers, cloud, cyber things like this, and so we've seen a lot of interest there from investors.
How about only the fixed income side, I mean, are you seeing money flow in? Because I mean you can sit there at a two year treasure, you can get close to the five percent. I know some folks were saying in some ETFs they were seeing like the folks at bond blocks, for example, will focus on ETFs seeing a lot of fun flow into there.
Are you seeing that as well?
Yeah?
And so when the market pulls back, I mean we definitely see that. We don't see that on our side,
we don't really have those types of products. But when when you see that, it's usually you know, it was it was years of inflation that was too high and stocks thats just weren't running like a twenty twenty two tech recession where you're going to put your money at five percent treasuries made sense, but I would argue that this year is different, and those trillions of dollars that are sitting in those products and on the sidelines, I think we'll eventually make their way back into the market.
You know, Yes, we've had a five percent pullback, but look at Broadway secuity performance this year. I think you'd rather be invested there than you wouldn't treasuries. And I think that that'll slowly start to you know, revert back into the markets, particularly if we get you know, a broadening.
Of performance in the markets. But for now, you know, market pulls back yup.
Geopolitical risk you have, you know, a FED that's kind of you know, less less iffy about those rate cuts and things like that, and some investors tend to flee to safety, you know.
So if I know one of the names on your list, and we've talked about it in the past, is IBM in the world of AI or in quantum computing, what does it the likes of an IBM play.
Yeah.
So it's so funny because I think, and we talked about this before too, it's almost like that sleeper tech tech stock, right, just what happened to IBM, And I would say that they're back, you know, I mean they were always here, they had Watson. They're sort of the first you know, true AI play I think, but they
just weren't kind of known for it, I guess. And now they're coming out of the woodworks because they're doing so much work in quantum computing and supercomputing and they're you know, kind of providing services to Fortune five hundred companies using their AI technology. But then they're also building and scoping out quantum computing. So they have deals with Cleveland Clinic to to you know, create better drugs and pharmaceutical discovery processes.
They have a project with Korea Quantum where they're looking.
At, you know, more precise information around aerospace and defense and then also you know military types of logistical projects that they're working on. And you know, you think about the US government pumping into pumping money into you know, kind of defense and quantum competing in AI as it relates to that, You're going to see IBM have a good seat at the table I think in the future.
All right, Sylvia, thanks so much for joining us. Always appreciate getting a few minutes of your time. Sylvia Jablonski, Chief Executive Officer and Chief Information Officer Defiance ETF.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Last week, Alex and I were at the Bloomberg BNF conference that's New Energy Finance. These are the folks that really look at the energy space in depth, including all the new energy and new energy businesses that are being created.
Across the world.
Where we're looking at from the business perspective of global energy. They had great conference last week in New York, some really smart people. They were talking about some of the bigger picture, bigger picture issues and what's getting done on the ground. David dharerty joints US here today. He's head of Oil and Renewable Fuels Research at Bloomberg BNEF here in our Bloomberg Interactive Broker Studios. So, David, great conference
you guys had last week. I learned a lot because I'm not an energy geek like Alex is, so I learned a lot here just buy and large. What's the view of the big energy companies here in the US towards making that migration to maybe greener energy.
How committed are they? How long of a path do you think this will be for global energy?
Yeah, long path, regardless whether you're European or American and an oil producer, completely different angles. US companies have gone into sort of a cleaner molecule when they're willing to invest in low carbon tech, so think of like renewable fuels ccs, hydrogen, and the Europeans have pretty much piled into a bit of everything, but a lot of clean electrons, wind,
solar batteries, evs. Very different cultures. You know, Europe doesn't produce as much oil as the US, so you know, default position makes sense.
I think are you surprised just looking at I'm looking at Brent crude here, You've got your Irish accent. I'm assuming you look at Brent more than my WTI crude oil just under eighty seven dollars per barrel.
I could make a case that it should be a lot higher.
Given what's going on in the world with in the Middle East, in Ukraine, with Russia and so on.
What's going on in it energy markets?
Yeah, everybody's looking at one hundred dollars, right, three digits that the eyes are sort of focused on. The market's just completely different to the way it used to be. Right, if you had an attack on Iran five years ago, you would have seen fifteen dollars upside on the price. The market's one smarter. We've satellites, we can track things. We've got people like Bloomberg, you know, counting ships going in and out of regions. But also the market was
braced for it. It wasn't news, right, it wasn't.
It wasn't.
I guess we're expecting something to happen. The price is built in. We've had a couple of months of sort of like anxiety around the oil price, what could happen to fundamentals? And then it was a bit anticlimactic. I guess in the end, I mean.
I guess what's changed?
Just we're talking about it in the break here, I mean, just in the blink of an eye. It seems like the United States has gone from a big, big net importer of oil so now being a pretty big net exporter of oil. What does that mean for the global markets? Does that mean we don't have to worry about Opek or any of those guys.
Absolutely have to worry about Opeking.
Those guys.
Yeah, yeah, I.
Mean, if you look at the world of sanctions about just over, just over, the amount of Saudi Arabia and exports is now sanctioned Venezuela around and Russia. Right, that's huge. You're taking let's say, the equivalent of the biggest producer that's falling under our form of sanctions. US produces a bunch of oil, yes, but it's not the right kind of oil for the US, so it's got to swap it out into the market.
You know, there's a lighter crud.
Yeah, exactly where You've got really great refineries here that are built for Venezuela and Mexican oil. Right, Okay, so there's this swap happening. And then if you bring in sort of disruptions around straights from US et cetera, any disruption and shipping adds back clog into the whole, you know, the pipeline of how to get oil from A to B where it's needed. So the market's changing, the disruptions
are changing. The US is a big producer and we've seen that makeup for some of those OPEC cuts in the last couple of months, but absolutely still got to pay attention to what OPEC seeing and those big sanctioning exports.
Well, let's go to the sanctions.
I mean, I'm just I don't know anything about the energy market other than what alex Steel tells me. But it just doesn't seem like sanctions really work on it. The oil finds its way around, whether it's from Russia to India. India refines it and then it ends up in my car in New Jersey. I mean, how does the sanctions work from your perspective?
I think they're probably working the way they're intended to this time. But this sort of round and sanctions on Russian Russian oil is just meant to be different to those on around Right. If you think about Iran, it was like stop exporting, stop producing, they want to contain it. We've saw obviously volumes get to China about one and a half million hours a day go to China from around right, So pretty big Russia. The idea was not to shock the market right by taking this big, big
export off the off of the market. About four million bars per they exported out of Russia. That's huge, right, much bigger than a run election year. They don't want to rock the boat too much. Gasoline prices even when you're seeing evs in California breach like twenty percent of sales. You tell your average person on the street that and they'll say, why is my gasoline gallon so expensive? Right?
Super sensitive election? You're us people like to drive. You don't want to have that taken out of the pocket.
Right, all right, So as you sit back and take a look at your history is with oil trading, oil, all the distillates, all that kind of stuff you're from. You know, you're kind of like John Talkern, we're kind of old energy people. But you live in a world of new energy finance. How do you think, Like if you what's what are the NEF people saying ten years now, twenty years now, what percentage of global energy supply will.
Be you know, lack of a better word, green.
Versus kind of the fossil fuels is or a feeling that that could be material.
It will be material.
But it's important to put into context what's growth versus what's currently existing. Right, the world isn't slowing down and its energy can asumption growth story. So you're seeing more green, but it's meeting a lot of that upside that growth. Right, You're still seeing a lot of fossil fuels in the mix.
That's way harder to displace. So you're seeing evs being like really high percentage of sales in places like China, but you're still seeing healthy internal combustion engine sales in China, right, That growth and mobility demand in markets like that. It's just outstripping anything we can do to disrupt the sort of status quo of a fossil any.
So, where's the argument today, which I've heard for twenty years? Peak oil? Are we is that even a concept?
Or is because the world economy is growing that there always will be I guess increasing demand for oil.
I don't know.
I mean, yeah, we are house here is twenty twenty nine, right, but it's you know, it's modeling, it's it's oil at twenty twenty nine demand exactly, Yeah, twenty twenty nine. For every EV displaced, does an airplane going into the sky or demand for plastics. Some things are a lot easier to displace than others. But road is important. It's really interesting. It's forty five percent of all oil consumers wheels on
the ground. Right, So this electric story that people sometimes shift off and say whatever, Yep, that's the one to watch, I think.
So, I mean, do you think that, Like here, Tesla stocks down over forty percent year to date, Some people think we've seen peak EV demand.
What do you think?
Because I know in other parts of the world it continues to grow dramatically.
You know, that will get clicks in a headline, but realistically that's the world is not just Tesla when it comes to EV's and if you look outside of the US, there's a huge range of automakers piling into that. China, Europe over twenty percent of sales. We're at the point the US might not be. California is rapid tipping point. Some will go faster than that. There's in some some wones, right, there's a lot of growth there still in some markets.
Yeah, I mean, I thanks to Matt Miller, I drove testra of the F one fifty electric thing.
That was a right beast man. That is really cool.
So I could see a bunch of the F one to fifty people switching over electric. It looked, I mean looked great, drove great had huge power, so good stuff. Will see how it goes Tesla earnings after the closes tomorrow. Listened in that it's called David Dharty joins us here. Appreciate getting a couple of minutes of his time. He's set of Oil and Renewable Fuels research at Bloomberg NEEF. That's new Energy finance for the people that don't know.
Joining us here in our Bloomberg Interactive Brooker Studio.
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