Trump, Western Alliance, FedEx, and Apple

Lower Manhattan. We're gonna roundtable listening today. Lisa Kamuso Miller, former Republican National Committee communications director and partner with Reset Public Affairs, joins us by phone, as does Bloomberg Washing correspond at Emily Wilkins, to discuss the indictment. Lisa, let's start with you here. What's the feeling in Republican circles about what took place in Lower Manhattan yesterday? Oh? Well,

it's really hard to tell. I mean, this is so unprecedented and just so different from anything we've ever seen in the history of this country. I think, you know, there is a different point of view from a lot of different parts of the party, but ultimately the thought is that wherever happened yesterday in front of the world did nothing to bolster any support for Donald Trump from

the Republicans that he lost in twenty sixteen. So he has a very core base of about thirty percent of the electorate on the Republican side that are still with him, regardless of how insane all of this really is. But there is just so much more to look at and

unpack as this unfolds. But really, yesterday, I mean, the fact that he wants to run for office in twenty four but can go to mar Lago and yell from the microphone about how the fabric of the country is eroded and this is all fake and false is just to me. It's just totally in contrast with what the party at once, at one time stood for. But it seems like everybody in the party has gotten behind him, at least to call this this indictment political move right.

I mean, we heard from Mitt Romney, who is no traditional fan of Donald Trump, he voted twice to impeach the former president, that this is overreached by Alvin Bragg and that this will damage the US judicial system. I guess you know, from from the Democrats point of view, Mitt Romney is as close to a voice of reason as a Republican Party has and he's calling out Bragg saying this is not right. Yeah, that's a real change

in tone from him, and that was really surprising. But I suspect that part of it, too, is not necessarily political. But I think maybe what Romney is thinking behind the scenes is that it does. It's not necessarily about what Bragg has done, because I cannot believe that someone like um, like Dia Bragg would do anything but bring the strongest possible case in an instance like this. The difference here, though, is your republic Huh. At one point I was now

I'm a little bit cot. I was confused. Well, I'm a never Trumper and there's no surprise about that, but I am still part of the Republican Party and I represent the side that's also more just confused by all of this. We're confused by this. But but this trend is not We're not going backwards here. That's the difference is that we're not going back to where we once were.

We have to go through this, so we have to figure out as a party, as a country, how it is we're going to manage And because Trump is not going away, So it's more of a how do we figure out what it is that he's done to unlock this core of voters in the Republican side. So back

to my point about Trump though, or excuse me about Romney. Romney, to me, if he is trying to unlock and talk about this in a way that he calls this political, he is most likely thinking that not only is the damage going to come from Trump, and the damage is going to be done in a way that will cause harm to the judicial system, it'll also cause a problem for any future case that will come because everything Trump is trying to do is this credit right, These all

of these allegations about payments have been confusing to people. No one fundamentally understands why it matters. The truth is that he but everyone sort of agrees that it happened

right in terms of the actual payments. Let me bring in Emily Wilkins from Bloomberg Government, Emily the senior statesman from Utah, and I mean, Mitt Romney is the one of the more statesman like people in the entire you know, uh, Senate, I think everyone would agree, he said, quote the prosecutors overreach that's a dangerous precedent for criminalizing political opponents and

damages the public's faith in our justice system. Are there any statesman, you know, are then there any like legit, respectable senators Emily who have come out on the other side of this, I mean for Democrats absolutely, you certainly see them, you know, say that that, you know, encouraging what da brag has done here, uh, kind of going after Trump saying like, look, you know, if a potential crime was being committed, that they have the right to

look into it. At the same point, I do think there is a sense in DC and on Capitol Hill that this is not the strongest case against Trump. I mean, remember, there are multiple cases that are looking into the former president right There's the one in Georgia that deals with the twenty twenty election and interference. There's the one in DC right now with the Special Special Council that's looking

into the classified documents. And there's a sense that some of those are actually bigger concerns than any sort of mismanagement in bookkeeping or hush money payments. And so I think there's kind of and I will be interested to see how Mitt Romney responds when some of those cases are brought forward because if you look at the Republican Party right now on Capitol Hill, they are really done with the twenty twenty election. They're done with calls that

it's fraudulent. They want to get past that and move past that. If you see another one of these indictments, they're going to have to confront it again. And I think for a number of them, you aren't going to see maybe as much support for Trump or as much blowback against uh. You know, whoever the DA is who

brings the case forward. I mean this particular instance, it's really easy for Republicans, you know, when you ask them about Trump, when you ask them about the indictment, they will immediately change the channel to district District Attorney Alvin Bragg. You saw Kevin McCarthy yesterday, you know, really did not comment about Trump much at all. But when after Alvin Bragg saying he's attempting to interfere with our democratic process, that Congress will hold him accountable. This is really a

talking point that everyone's so far been able to get behind. Lisa, you're the former communications director for the Republican National Committee. Has where has the Republican Party go gone in your in your opinion, I mean, is it gone to the Trump's party Trump wing? And is that permanent? I mean, where where did your Republican Party go? That's the million

dollar question. Uh. You know the funny thing about all of this, and it's really not very funny that the one thing that now Publicans behind the scenes are trying to figure out is how how do they access how do they unlock the lockbox that Trump has figured out how to hold onto in that thirty percent, that sort of core voter pool that is with him. The difficulty, though, and Emily's point is absolutely right Capitol Hill is not They are not wanting to talk anymore about twenty twenty

the leadership. There's a vacuum, right And the only thing that continues to draw attention and continues to hold onto those voters that are really hard the hardest to get

to is Trump. So I think that more than ever before, Republicans are brightened to step up and stand up to him, and so they're happier to talk about Alvin Bragg And I mean, he's a He's become a household name over the course of the last couple of months and years, the party itself, though, is going to have to figure out how to carve their own message out and talk to the elector at that portion of the electorate that stepped away from Trump in sixteen or excuse me that

we're with Trump in sixteen but stepped away from him in twenty twenty. Those are the voters. Those are like middle class voters that are They're desperate for support, They're desperate for help, they want to access the economy in a way. It's different. So all right, Lisa, thank you so much for joining us. Lisa's Camuso Miller partner, I Reset Public Affairs, and Emily Wilkins from a Bloomberg News joining us talking to us about this Trump in Diamond.

You're listening to the Team Cancer Line program, Bloomberg Markets Weekdays and ten Amias Daring on Bloomberg dot Com, the I Heart Radio app and the Bloomberg Business App. We're listening on demand wherever you get your podcast. We welcome now our Bloomberg TV viewers and radio listeners. The New York International Also show begins on Friday to help us prepare for its Jeremy pappin This On America's chairperson and Bloomberg's Matt Miller join us now, Matt, why don't you

kick things off? All right? Thanks? You know what I would love to start with the IRA, Jeremy, And this is the Inflation and Reduction Act that we all struggled for so many months to understand. It's key because if you get it right, consumers automatically get a seventy five hundred dollars tax credit for buying your electric vehicles. But if you get it wrong, they get Bob kiss and you need the lower prices or given centis incentives. So what have you got that I can get seventy five

hundred dollars off from Uncle sam on? And what are you planning on putting out that's gonna be IRA compliant? Good the good morning. Well today you've got a Nissan Leaf that fully qualifies for the seventy five hundred dollar tax incentive, and and you've got a Nissan Aria that fully qualifies for the commercial leaves under the forty five provision of the the IRA. So we've got two great offerings in the market today, and we think the IRA

IS it's tremendous opportunity. The rules are clear now, the framework is established for several years, and the company is developing plants to be fully compliant with IRA. We will be uh producing a number of EVS from our Campton plant in Mississippi by the end of twenty twenty five and and those and those vehicles would be fully compliant with IRA. So I think we we welcome the IRA, the clarity and the and the and and what it means in terms of developing the EV demand and business

in the in the USA. In terms of EVS, I mean, you did have the lead at one point. A lot of people forget that Nissan was a pioneer right with the Leaf and you still got that coming out. What are the higher end vehicles that you can produce here? You know, I've driven the QX sixty from Infinity, I've driven the QX aighty, fantastic vehicles, but they don't have the battery powered um uh sort of forward thinking power plant that that customers are going to need in ten years. Yeah.

Look today again, it's it's Leaved that you mentioned. Is Aria area is packed with technology. It's a it's a it's an evy, so you get all the driving pleasure out of it. We've enhanced the E force, which is motion control, which provides you a sense of safety that you know is unprecedented. The connected services in the car is amazing. We've added a poor Pilot two point zero, which is some you know, safety feature, and the autonomous

driving capability. So there's a lot of technology in an area today and that's that starts at forty three thousand dollars, so that's very competitive in the marketplace as well. Um and and the future. You know, Nissan is going to be launching about twenty seven new cars in the in the next seven years, nineteen of which will be full battery electric vehicles and most of which will come to the US. We'll have an EV in every market that

is significant to the US customer. Jeremy, if I have range anxiety and I want to stick with a traditional combustion engine, what can you offer me? Are we moving away from that too quickly? Now? I think you know today the area is a three hundred miles EV already, and you know it's a it's a it's a very good range for the for the for the daily use and the most commonly used routes in the US. I

understand the question and the charging experience. That's why the charging experience is so important, and that's why the efforts that are being put in place by private and public you know, funding to deploy charging infrastructure is so important because that's going to be critical to the to the to the ev experience of the of the customer. So I think it's it's a matter of of of the

charging the charging network development. We at Nissan already have a very well established charging network throughout dealer network and thinking about technology of the future of the company is investing into all solid state battery, which will you know, double the power density, lower the charging time, definitely increase further the range. And so that's the future of breaks

rain technology. The confidence in terms of the technology we're bringing and the breakthroughs means you know, in twenty thirty, we think ourselves of evs will largely exceed forty percent of ourselves. So there will be an answer for all. Okay, let's let's switch gears a little bit. I know you can't switch gears an electric vehicle, but nevertheless, we'll do it. Um, let's talk a little bit about where we are with

the daaler network. Jeremy, a year ago, if I'd gone to the dealer network, The biggest concern would have been the available of availability of inventory, the availability of newcasts to buy. I wonder whether now the biggest concern that the dealer network has is the certain manificant rise in rates interest rates that we've seen over the last year, the fact the ECB everybody is raising rates right now, and I'm wondering what impact you see that having. It's

a very good question. I think you're right that availability was an issue. It's less of an issue today, but still delier inventories are very tight at Nissan, so the market is clearly pulling. And today what we see in terms of the market demand is that it's it's exceeding the production that we have. And where we're seeing a change in terms of the interest rates having is people

are shopping for entry segments. They're showing interest in the entry segments that perhaps was less there a year ago. For Nissan, it's good news because we've got a Versa, we've got a center, we've got a Kicks. All of those are very strong value for many offerings in entry segments. We have a very well established pres since great products.

So the customer shopping shopping a Nissan that is shopping for a price point given where interest rates are as an answer in our product lineup today, you're just the product lineup today. Um, A lot of it is impressive to me. I love the z that's one that you can't make enough of, I'm sure. But Americans in general like bigger things like the q X eight, like the Armada, like the Titan, and that's scheduled um for ending production. What are you gonna do about the big truck big

suv segment beyond say twenty twenty five. The Titan, the Armada, the q x X eight that you've mentioned, they're all very good business for us today. The large SUVs are clearly an area where we are meeting customer demand and determined to remain very relevant in the in the marketplace. So these are these are good. These are good the good segments for us in the works. Again, you can find that you can find all of those vehicles as now. But what about in twenty twenty six, I mean, aren't

you going to end production of the Titan? Then the Titan again, is it's fully available today We're working on remaining very relevant in the marketplace, working on the solutions around the trucks, that are to world's electrification as well. So, um, the Titan as we know is, you know, is is meeting the customer and and and and we're working on what can come next. Guys, we'll wrap it up there. Really looking forward to the show, Jeremy. I'm sure Matt will be popping down to take a look at what's

on offer. Jeremy, happened of Nissan And of course Bloomberg's one and only Matt Miller. You're listening to the tape cans are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the t Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty. You want to focus on Europe right now? Tomas and Nets, senior equity analyst. He

covers the European banks for bloomerket Intelligence. He's based in London. Toomas, thanks so much for joining us here, framaut for us, what you think the risk could be for European banks? You know, we had Silicon Valley Bank here in the US and that kind of spook people got people focusing on the health of the banks. What's the concern about European banks and real estate? Hi, guys, thank you so

much for having me. Yes. Well, first of all, Yes, as you mentioned, everybody is right now looking at commercial real estate. This is the asset which everybody's focusing. After

SVB and crazy with drama. Everybody is trying to understand what is the impact of high elevated interest rates on highly leveraged the markets and commercial realistates take all the boxes unfortunately, and when we look at the European banks, we are then in fact that there's nearly one point four trillion of euros of cre loans on the balance street at the moment. It is spread across European markets, UK, France,

Germany has the highest volumes. In terms of the exposure as the persentage of total loans, Nordic banks actually are screening the worst. They have more than ten percent of the total loans versus around six to seven for European banks. And in terms of the risk, of course, there is a risk of refinancing, there is a risk of higher rates, there is a risk of not repaying the debt on time, so which for the banks. Means we can create some

imperment charges. Maybe there will be a right of even ever happening, but it's not going to happen over one quarter. If there's any stresses in the market, it's gonna take several quarters to play. But investors definitely want to understand who is most exposed, whose portfolio is most vulnerable, and how they will produce portfolio incoming quarters. What do we hear from regulators, what do we hear from the ECB?

I mean, the concern here Tamash as you know, is that you know, the FED drop the ball or didn't do anything with the ball. So is it gonna be a different story in Europe? You know, that's very interesting because it SB has been looking into cre market already for a couple of years. I think in two thousand and eighteen they started to collect data from the banks on their explorer to the to the market. Sadly this data is not available for public maybe it will be

right now, and it SB has had flagged already. Commercial real estate market is one of the vulnerabilities even before SB and courage with drama right, So definitely it is on the rather for the regulators. They may be looking into introducing some macropodential measures to ease the pressure for the banks, to ease the pressure to to to stop the financing maybe or make financing a little bit more safe. So definitely sb IT has will have to look into

this more more carefully. And it's all about what's going to happen the interest racing coming months, right, whether they're gonna be raising or not, and what is the policy over there? And Toomas, I mean unlike here in the US or we have a lot of regional banks that you know, maybe not may not be to take the risk. Here in Europe, the real estate loans are from big, big banks. So does that limit kind of the risk

a little bit or do they are you still concerned? Yes, as you mentioned it right right, No, for the biggest banks H S, B, C, BNP and the laws like that, it is around six to seven eight persons. For Nordics banks a little bit more, it's more than ten persons, so they are definitely more exposed. But also we are having we're having four Germans specialized banks which are just

doing commercial realized state financing. They are quite small, not all of them are publicly publicly treaded so definitely there would be kind of the Canary mind, you know, there would be there, there would be bad way, Okay, what's happening with the market these banks, these banks are which are very much specializing only in creft financing. What's happening with those loans in the incoming quarter, in the reporting period.

That would definitely be a providing as youthful information. What we can expect with other banks, all right, and we can also expect is to get some good news or good intelligence, good data. Bloomer Intelligence is holding an investor event on April twentieth talking about real estate, the Real Estate Summit twenty twenty three. Tell us about this uh conference you guys are having. Is it? Is it in London? Yes, it's based in London. It is organized by my colleagues

from the real estate team. So definitely were gathering all

the specialists in the market. It is it is second time we are organizing the even so a lots of market participants special will be there talking about actually what we are discussing at the moment, right, So definitely it's gonna be on agenda so very much, you know, inviting everyone who is interested in participating to learn more from the market experts from Bloomberg Intelligence team as well from analysts, from real estate specialists, to get the better understanding of

what's happening with the office prices in UK, you know, in France and Germany, across all the capital cities. What are the expectations and how how this situation can play out? All right, really interesting, so that so all our friends in London they can check that out. Got to Bloomberg dot com. They'll have some got the conferences sectionary. He'll

see some opportunities there to sign up for that. It's in conjunction with the European Public Real Estate Association, So Bloomberg Intelligence April twentieth in New York, Bloomberg Intelligence and EPRA. It's the real Estate Finance Summit twenty twenty three. So if you're in London, check that out, get the latest on the real estate business and perhaps you know the impact of the risks it means for some of the

European banks, and clearly that is a global issue. US banks are being questioned and it's gonna be a real focus for when the bank's report earnings in the next couple of weeks. Is a lot of folks are going to be spending a lot of time focusing on the real estate exposure and maybe how they are reserved against that, and what some of the risks will be for real estate. So when the bank's report, it will be about deposits

and in some of their loan portfolio. You're listening to the team cancer a live program Bloomberg Markets weekdays at ten am eastering on Bloomberg dot com, the I Heart Radio app and the Bloomberg Business app, or listening on demand wherever you get your podcast. We've got another guest in studio. It's just like back into the days before the pandemic and people would actually come into work, come into the office, come into the studio, and do this

stuff live. We're gonna talk regional banks here. There's a lot to talk about. Obviously, we had the concern over the last several weeks of some of these smaller regional banks failing. That's obviously front and center. That spooked a lot of people about the overall banking industry. Now we've got an additional headwind, which is kind of real estate loans and how that may be an issue for some of the banks. So let's bring in Herman Channy covers

the regional banks for Bloomberg Intelligence. He doesn't phone it in, he doesn't mail it, and he comes into the office, and we appreciate that he's in the studio here. Herman talked to us about when you talk to introditional investor clients these days, where are they in kind of the fear factor for the industry. Have we passed that initial panic that we had a few weeks ago and a little bit more rational out there? Maybe? Yeah, I think

the panic has receded for the industry. You're right, but there are certain banks that are still in the cares of the market. We can point to Western Alliance today. But in terms of the industry itself, at least from the FED data that we look at, it does seem like the emergency bar rings from banks from the discount window and also the new bank term funding program, those have the client which I think is a positive sign that banks can manage their liquidity issues without needing to

tap these emergency measures. All right, you mentioned Western Alliance stocks down fifteen percent today. What's the story there? Yeah, So Western Alliance came out with an updates yesterday after the market close and offered a bunch of interesting metrics in terms of the uninsured deposits. Sixty eight percent of their deposits are now insured versus fifty five percent a couple weeks back, so that's a positive sign. They also mentioned that they didn't tap the discount window at quarter end,

so that seems like a positive sign. But interesting enough, they didn't give any disclosures on the amount of deposits on their balance sheet at quarter end, so the markets a bit spooked in terms of why they did disclose these numbers when they were pretty open about disclosing other numbers. So that's that's a number that gets disclosed by these companies in their quarterly filings typically, right, so they would disclose this when they report their earnings, which is in

a couple of weeks. But they pre reported a bunch of other metrics, but not probably the most important metrics that investors are focused on now. So that's that's what's spooking the market. Investors are looking for a lot of data from the FED. Right, what do we see in terms of borrowing at the discount window and in this new facility. Yeah, so the discount window peaked two weeks ago.

The disclosure went when the direct aftermath of spob um, those discount window borrowings have declined sequentially each week thereafter, and the new bank term program is a bit more generous in the way the borrowings work with the FED. So you're you're seeing those numbers go up, but the overall, if you combine those to the overall borrowings from the FED are coming down, which is a good sign. What are we seeing then, in terms of lending from these banks?

You know, even if rates come down or frankly, whether they go up, it doesn't matter if banks aren't giving out loans right right, we can make the inference that if banks are seeing deposits go out the door, that there's probably less interest for banks to really ratchet up

their their appetite to lend. I think that's really the issue for the overall economy that banks could probably have less willingness to to to increase their their lending because there there's not a lot of funding available to them at advantageous prices. So you're seeing funding costs rise, so that that inherently means that loan rates and borrowing rates will have to increase as well, and that could affect both the demand for loans and the supply of loans.

So let's switch gears a little bit on the regional banks. Another potential headwind for the banks is real estate. And we were just talking to Thomas Nutzel Bloomber Intelligence. He's summarizing the risk for the European banks. How about for the regional banks here in the United States? Is there a concern? If so, what does the concern kind of circle around real estate? Right? So, commercial real estate is

something that's become more and more of an issue. It was starting to percolate during the pandemic period when folks weren't going into the office and there was not a

lot of travel, so hotel loans were another issue. It seems like now the focus is more on office than anything else because you're seeing these loans reach their maturity this year, next year, and the year after, and the cash flows of these office loans have really been challenged by less occupancy, less folks coming into the office, so the real estate has and square footage has really come down.

The needs for those real estate square footage has come down, So all that means that there's less cash flow more in higher vacancies, meaning there's it's going to be a challenge for the folks that own these properties to refinance given that rates are higher and your cash flows are lower, so that something has to give. They either have to inject more equity into these loans or they may have

to give the key back to the borrowers. So those are things where we're focused on and tracking, but it's going to be a longer term story that will play out over the next few years. So Herman, let's say a big client calls you up at the end of quarter. He says, listen, I gotta put a lot of money here into action. Which regional banks do I buy? You know, pick, pick your top three? What do you what do I want right now? Sure, you want a bank that has

demonstrated the ability to manage interest rate risking. No, I mean I want the names of the banks. I'll give them to you now. So you look at the banks that have the track record. You can look at banks like PNC mnc US bank that have strong management teams, have managed risks pretty definitely over multiple periods, and they've been around the block, and they understand credit risk, they

understand interest rate risks. So those are the ones that have been affected by this downturn in banks, then, so prices seem earlier reasons to repeat it slowly for those uh driving along, get out your pencil. PNC, US Bank, M and T and US Bank now full disclosure. Herman used to work at M ANDT in investor Relationshi is that's right? That's right. You own the shares. I do own some residual shares from some Oh thank god you got that out there. What if? What if you so

you moved to Buffalo? I did. I moved from New York City to Buffalo for the role. Have you ever jumped on a table? I have broken it. That's what the Buffalo Bills do. Dude, Okay, you not see that? It's yeah, it's a It's something that Bills mafia fans do so but I haven't unfortunately, haven't had the opportunity to do that. But would love to go back and see a Bills game and partake in all those. I mean, they are die hard fans up there, and that's interesting.

That's a good bank, quality bank. I usually use that as one of my kind of benchmarks for regional banks. And then P and C H Pittsburgh National Corporation or used to be P and D Pittsburgh National Bank. I think so some good stuff there, US Bank as well.

All right, regional banks some issues, but they seem to have weathered at least the initial wave of concern that we saw several weeks ago, and now people are gonna be focusing on the banks when they report their quarterly earnings coming up, Herman Chan, thank you so much for joining us yet again. As we wind our way through this regional banks story, Herman Chann, he covers the regional

banks from Bloomberg Intelligence. He joins us here in a Bloomberg Interactive broker studio as he is wanted to do. You're listening to the team cancer a live program Bloomberg Markets weekdays at ten am Eastern, Bloomberg dot Com, the I Heart Radio app, and the Bloomberg Business App. We're listening on demand wherever you get your podcast. Let's get right to our next guest, Dan Ives, Managing Director Senior Echo to analyst. He covers all the tech stuff for

web Bush Securities. Dan, thanks so much for joining us again. We appreciate getting some of your time here. I want to start with there's a million ways we can go here. But I want to start with Tesla. It seemed like they had a good delivery number. I know there was a number of the people were looking at, but the stock markets not buying it over the past couple of days.

What do you make of it? Yeah, I mean, look, this was obviously a lot of hype that we've seen in terms of what the stocks done this year post of price cuts. I view it as a strong number. I just think some of the bulls were hoping from more in terms of a bigger beat. And now this is sort of the drum roll into earnings April nineteenth to see what margins are doing. I think they're able to hold a line. I think this knee jerk is just sort of a sort of selling the news. We're

buyers here on weakness. Yeah, it should be noted that the number was better than the street's estimate, so they beat Not only did they post record deliveries in the quarter, but they beat what the average estimate of analysts had suggested. They would post our analysts just you know, sandbagging them. Here's what's the story. Look, I think it's always hard to peg the number because of the price cuts. Because obviously since the price cuts that they did earlier this quarter.

That's been a huge catalyst, specifically in China. So the numbers moved around a lot. And look, I think the big thing here is they are on a trajectory for one point eight million for the year in terms of units, and you look in the neighborhood of autos, it's still Tessa's world. Everyone else's paying rent. And I think that's what continues to stick out here despite this sella. Are the prices, you know, I mean the prices were too

high obviously, that's why they cut them. But now that rates continue to climb, is it just unaffordable for too many people to cover that monthly nut? Yeah, Matt, I think here it's really they're trying to find the level where they could cut prices stimulate demand, but also mean team margins. It's a tight rope, especially in China. There's essentially i'll call Mini to monitor a price war breaking out at a time where the macro is still cloudy.

And I think that's even though we're still in the second ending of the ev arms race GM others board, you know, for TESTA right now, this is it's a critical three to six months to put an iron fence around their installed these. So, Dan, with the price cuts, what does that do to the test a margin story,

the profitability story. Well, they are uniquely positioned because of their scale globally that they're able to cut prices and some still have margins, you know, significantly above the industry, and I think that's going to be the narrative when they are port earnings in a few weeks. But the big question is will they have to cut more to

stimulate demand? I think, look, it's mere term pain for long term gain because if they don't and just sit there and keep prices where they are, especially going back a few months ago, that would have been the wrong move.

I think it's the right strategic polker move. The stocks obviously had a you know, a huge run from the bottom and now it's really what I've used for the next step in the growth story with China front and center, as just eed, arms race placed out globally, both in China as well as in the US and the three WIN three area code with GM and FOURD aggressively going after evs. So again, how do you think as your

view of EV demand changed at all? Dan, I know there's some concerns out there when you see price cuts, that kind of calls into question what the ultimate demand is out there. Well, I think when you think a step back in the US, less than three percent of automobiles or evs, we weave that goes to ten percent in the next three years, So the demand story is going to be there. I think the issue really comes

down to prices. Now the tax credit has come through, which is a positive, but that's really going to be the question in terms of competition. And I don't view

it as a zero some game. I view this as just a mass of what I'll call green tidal wave that's going to benefit not just Tesla, the likes of GM for short plays like Goose and others, and in China, I think Neo is probably the one or with DYD that sticks out the domestic plays dan if If EV demand is that strong, if sales are as robust as you expect them to be, how on earth are we to power all of those vehicles? I mean, we can already not power the small amount of evs that sit

in California today. What will we do if the inventory doubles or triples? You just now then, because that's the big issue in the Beltway because it's the carrot and the stink. You want to move to green, you want to move to evs need the utilities, need charging statitions. Just to give numbers, we have one hundred ten thousand charging statitions in the United States. We need five hundred

thousand to get to twenty percent EV penetration. There's going to need to be a lot of government funding around this from a grid perspective and charging stations to ultimately build this out, especially when you have the biggest US automakers going fully ev GM over the next decade. Why do you think we don't see EV charging stations at every gas station? I mean, why don't the big raw duct Shell or BP or you know, Sonoco seventy six.

Why don't they get on board. They've had years and years to do it, so it can't be a time issue. Are they fighting against it? Well, look, I think part of it is just the economic decision in terms of especially real estate. For every gas station you know that that are obviously owned by individuals, do they want to

give that up? Doesn't make sense mathematically given what it looks like today in terms of EV as a penetration story, you clearly see more of that in China, more of that in Europe, and a lot of this hack contender. I mean, that's really the biggest you're fighting the tide here, but so far it's sort of a game of you know, roll call high stakes poker that they're playing. In so far for them, it's been the right decision because it's Tessa and the Supercharger network that is essentially built out

within the US EV demand. Right. All right, Dan, let's switch gears because we can always switch gears with you and you pivot fine. Apple Bloombard BusinessWeek is the great story. Dan Mark German is out saying Apple looks beyond China in Bidjory make Cook's supply chains. In reality, can Apple diversify away from China in terms of its supply chain

and if so, how long will that take? Well, German, you know there's Apple as well as anyone out there, look realistically, and it's part of why Cook was in China last week. I mean, that is the hearts and lungs of Apple, and they could talk to Game. But if they aggressively went after it in the next two years max, they can move five to seven percent production app of China now of course India, Vietnam and some

other areas. But you know that is right now the tight rope for Apple because that is one of the key ingredients and their success in the geopolitical essentially cold tech board that's playing out. But Coopertina can percent politician, you know, in terms of what Cook's being able to do, and that's how they've been able to navigate this. So thinking about it here, I mean, if I'm an Apple,

I'm you know, if I'm Apple, I'm happy. I gotta great story, great tailin But boy, my China risk is almost as large as it's ever been really, and it's not going away, is it. It's not going away? And but look if they if they decide to build production in New Jersey, those are going to be awesome thirty five hundred hour iPhones. And that's the problem is that to keep prices where they are key production. To look

at this balance China is a hard and one. It is a geopolitical risk, and it's also why they have to navigate that. But also at peak iPhone, they're the second biggest employer within China. Beijing loves have an Apple and on the trophy Kese Dan what do you like that you know, Tom Keane talks about this bifurcation, the

rich getting richer. It's the big profitable tech companies that have done so well in the first quarter, as you know, what are we missing in terms of the smaller companies, those that we haven't heard of, the you know, up and coming We would have once called them maybe unicorns or are possibly a little beyond that. But what do you see out there that you like that's not Apple? Yeah, I think it's Keen summarized so well. The strong will get stronger, and we've seen that in the first quart

especially Microsoft Redman terms. I'm from a software perspective. I think it's really going to be it's smidcap and cybersecurity in cloud. I mean, there's your names like I look at names like data Dogs, Snowflake. You look at in cybersecurity names like CrowdStrike and others. I think that's where this first quarter. I view this as really the start putting more gasoline in this tech rally rather than something that I hear. All right, Dan, great stuff. Appreciate it

as always. Dan. I'ves managing director and senior equity analysts for Webbush Securities were left checking in with Dan getting the latest on all things at tech. You're listening to the tape cancer our Line program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New

York station just say Alexa playing Bloomberg eleven thirty. You're here to tell us about FedEx, which, by the way, so Chridy's always pushing the FedEx story. I think it's very important, but a lot of people don't don't want to hear it. Why not, I don't know, because this is riveting stuff. I'll tell you, this is more riveting than the Trump stuff. I gotta say. FedEx is an enormous This is tech. You just don't realize the subtle

undercarn of online delivery. Can't imagine that's they're the logistic arms for everybody that's not Amazon. Well, Verry, I'm curious about you think about the FedEx story, because ultimately FedEx is seen as a spell weather naturally except the tropical

trade eers. If volumes are going up, if people are spending FedEx stock goes up, except it now feels like there's a little bit of a change here because today I'll give you the news first is that they came out to an investor event at the New York Stock Exchange. They're increasing their dividend by ten percent. But they're merging two of their core businesses, their express business and their

ground business. One is there kind of internal network, one is based purely on independent contractors basically for the consumer. One's more expensive postage than the other. Now they're combining them really to avoid some of the margin costs, which was mostly coming from labor, and that's why they're trying to kind of mesh the two. It's going to create four billion dollars in cost efficiency. The stock is rising off it. It's going to help their dividend appease some

of their activist investors as well. But at the core of it, to me, it feels like a macro story because this bell weather that is really not about weather. Given the stock has been trading more off margins than volume or economic activity, is now really trading off of labor. Yes, and no, to start with, this is a thirty year trend that's been in the making of the shift in retail from physical stores to online or even just drop shipping and various sorts of app or third party sellers.

You know, Instagram is a giant retailer, and FedEx gets to benefit because all the influencers who say I love this lipstick, Suddenly that lipstick sells out. So that's number one and then number two. Sometimes, you know, management looks at the logistics of what they're doing and to them to the end client. I don't care how the hell you ship this package. Send it by air, send it by truck. I don't care. I just want to get it from here to here in the least expensive way.

And whether the client is the end consumer or the retailer themselves, hey, whatever you could do to keep our costs down so we can move product from here to there. If you have that as one division or two, who cares. And in fact, I suspect you're gonna pick up my package in a truck, take it to an airport, and then express it to wherever it goes. Whether that's a single division, multiple divisions, it doesn't matter to the retailer or the consumer. All right, good stuff, and Kritty, thank

you for bringing the story to us. You've been consistent on this for the last several weeks, and then what we had is a good earnings. The company put out some good earnings, and then they put out some good cost cutting move raising a dividends. So it seems like they're getting themselves positioned. A lot of folks are saying, hey, maybe they're cutting costs because they sense a recession coming. So a couple of ways to look at this. Krittigupta

covers all that good stuff. Stocks Force Markets correspondent for Bloomberg TV Radio News. She's pretty much everywhere. You're listening to the Team Cancer Line program, Bloomberg Markets weekdays at ten Amias Daring on Bloomberg dot com, the I Heart Radio app, and the Bloomberg Business app. We're listening on demand wherever you get your podcast. We did get some economic news today. The ism services ism came in weaker than expected, and we got the weaker manufacturing isms earlier

in the weeks. And maybe this economy, like a lot of people have been saying for a long time, is in fact weakening and a recession is certainly in play. That could certainly hear those people talking about that a little bit more. But what does that mean for the credit markets. Our next guest has a thought or two on that. Roberta. Goss, Senior Managing director of Pretium Partners,

joins us. Roberta. In a credit space, what are you seeing here versus maybe a some other you know, maybe twenty twenty or even you know, during some more challenging times. What are you see in a credit markets these days? Good morning. So we have seen in corporate credit really over the last three years ongoing continued volatility, which we expect to see continue over the next couple of years.

By that, I mean, uh, you know, we are expecting an earnings recession, not one that's consumer led, and one that is impacting corporate earnings as a result of ongoing supply chain stabilization and labor costs that are really hard for management teams and companies to address. Still, as a result, we're seeing margin pressure across across corporates. But it's really a rolling set of opportunities and volatility that we expect

to be prolonged over the next couple of years. So we're seeing I mean, the fault rates have been so low even during the pandemic. There's so so much liquidity pumped into the marketplace, But in your recession scenario, do you think that is going to increase going forward? Are we're going to see some real stress maybe in some of these credits. Yes. So last year we reached sort of very low levels, historic lows in default rates in

the zero point five percent level. Our expectation we've already started to see default rates pick up the trailing numbers in the low two percent range, which is still below the historic average. But our expectation is that in twenty twenty three default rates will will rise to three and a half PERCENTUM, and then in twenty twenty four they will increase increase again to the four and a half

percent level. At those rates, that puts us UM, you know, not at certainly not at the levels we experienced during the GFCUM, but close to the five year level that we saw during the oil issues oil and gas issues of twenty twenty or twenty sixteen, leading into uh, sort of some elevated default late rates in twenty twenty as a result of COVID. And does that put us into a credit crunch situation, because we've heard some FED speakers

say that's a concern. Yes, we do think, um, that will uh you know, I think a month ago we would have said that this would have been a fairly short, uh you know period of recession. I think the banking volatility we've seen over the last several weeks, although that is stabilized recently, we think will result in tighter credit conditions over the next twelve to twenty four months. And as a result of that, we think that our default

assumptions are are you know, base case right now? So if I how about if I want to go out, I mean, you know, I want to do a deal, I need some acquisition capital. I got go to my private equity partners, they pony us some equity. I go to my big banker in New York or LA or somewhere, and I'd look for a leverage loan. What kind of terms am I going to have? And how's that different from maybe a year or two ago. Yeah, So in twenty twenty one, you know, leverage loans and credit capital

was freely available. UM. I would say that over the last six months that's certainly tightened in uh dramatically, And the main sort of underwriting banks, the large money center banks, UM are not as free to underwrite large LBOs and at very attractive levels. I'd say today, UM, if you're a PE sponsor coming with a with a new LBOUM, leverage levels are going to be dramatically lower than they

were in twenty twenty one. Um. And uh, you know, pricing on leverage loans right now, if you just look at the average yield on the leverage Loan index, that's at nine and a half percent. So the impact of rising rates, in particular with live or now over five percent and spreads on loans over four percent, financing four LBOs and private equity sponsors has gotten quite expensive. I think that also results in you a question of how much PE sponsors are prepared to pay as a result

of multiples on new transactions. Hi, Rebert, It thanks so much for joining us. Appreciate get an update there on the credit market. The leverage loan market, like most other markets, being impacted by the rapid raise increase in interest rates from the Federal Reserve over the past twelve to fourteen months. Rebert of Goss, Senior Managing director at Pretium Partners Here,

thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller in 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