Yields, Markets, Tech, Oil, And Cars (Podcast)

I I gotta be honest with you. Back just left the studio, he says, I got nothing to ask Ira. I'm all about earnings. I don't really care about the Federal Reserve right now. But so he's not even here. So, Um, but I'm looking at these two year tenure it's still inverted by you know, forty forty three points in terms of the yield curve, and you know types like you and Lisa Bramwins. You've teld me, I gotta pay attention

to that stuff. It's important, isn't really, because it's been inverted for a while now and it's probably gonna continue to be inverted. Um. I think it matters in so far as um it is signaling that at some point we're going to have a much slower economic activity, UM in the future, and the Federal Reserve is going to continue to hike interest rates, so you know, at least well above four percent, and the market certainly price for

that right now, and so so it does matter. Is it Is it going to affect economic growth in and of itself, No, it won't, but it is just a signal that the market thinks that we're going to have lower interest rates at some point in the future. Talk to us about some of these auctions, um, you tell us we need to really pay attention to these auctions, how they go, where's the demand, where's the demand coming from?

What's been your observation over last week or two. Yeah, So, so the auctions really in both September and October have been pretty pretty weak. Actually, Um, you've seen demand slip a little bit. You've seen um, you've seen indirect bidder. So these are those are end users so UM, so you know mutual funds, central banks, UM, asset managers in general. UM,

that's actually fallen a little bit. So that means that primary dealers have actually taken a larger share of these auctions and and I think that that's a signal that people are still not quite willing to go full bore into the market yet because these um, you know, these securities being auctioned right now are going to be out there for you know, ten years, thirty years, and and they've been reasonably uh reasonably weak, um you know that.

That being said, I think it will be really interesting because in a couple of weeks we actually got the Treasury refunding announcements, So they're going to uh, the Treasury Department will determine how much it's going to issue over the next three months, and I suspect that they might actually reduce the amount that they're issuing just by a

little bit. Um. But but interestingly, they've asked primary dealers and and we'll have some notes out on this in the recent in the recent future, UM about the h whether or not they're going to issue more debt at auction in order to buy back UH currently existing debts. So what we call off the run debt or or um you know, debt that was issued, say say two years ago, and a lot of that debt, remember, is trading at like eighty cents on the dollar, and eighty

five cents on the dollar. So the Treasury Department can basically, you know, sell bonds now at par at a hundred and be able to buy back their uh you know, treasury securities at eighty five cents in the dollar, actually making the taxpayer you know, fifteen points effectively. And and um, you know, even though they'll be paying more interest cost on on the new debt compared to maybe the old debt, the fact that that old debt is not um is not trading at pars is an interesting um uh you know,

it's really interesting. I think that that they might do this talk just about quantitative tightening. We don't I don't talk about it much. I don't hear about it much. Talk to us about is it happening? How is it happening? Do we need to pay attention to it? Yeah, well, it's it's it's kind of an autopilot. And I don't think that the Treasury at that the Federal Reserve will change the way that they do quantitative tightening at least

until January February of next year. Um. And it's so basically for for the treasury market, um, the two big days that you have, uh, you have treasuries coming off the Fed's balance sheet, or the fifteenth of the month when you get settlements of of of three year notes, and then at the end of the month when you get settlements of of two year, five year, and seven year notes. When those bonds mature, they fall off the Fed's balance sheet, and that's when you see the Fed's

balance eat shrink. And then of course mortgages roll off, and they roll off on the twenty fifth of the month, just the way that the um that that mortgages are retired when when people make principal payments um the Federal Reserves balance sheet falls from that. So so it does matter, and you've seen it. It's not it hasn't affected recently the treasury market. I think it affected the treasury market when it was being thought of and when it was

announced earlier this year. So you really saw significant moves in the treasury market in February when not only because everyone was anticipating the FED raising interest rates, but also because of the quantitative tightening. I think where you've seen more of an of an effect is really in the mortgage market, where you see mortgage spreads. So the difference between mortgages and and the hedges that more that people who buy mortgages make have really widened out quite a lot.

And liquidity in the mortgage market is as bet as liquidity is in the treasury market. Liquiditying the mortgage markets even worse. And and that's in part because um, there's just a lot more of them that have to be um uh they have to be absorbed by investors compared to the compared to treasuries, where like I mentioned, the Treasury Department has actually been shrinking the amount of bonds

it's been issuing real quick seconds. If I want to unload a bunch of treasuries back in the day, I have a bunch of investment banks bidding me for those bonds. Is that still happen today? Uh? Yeah, well it does, and and primary dealers have to. But but there has been significantly less uh liquidity in the treasury market. So you've seen bid offers wide and you've seen you know, definitely challenge liquidity. Paul, I thought you were gonna ask

me about where I am. I'm I'm in London today and I'm actually going to a to a soccer match tonight. I'm gonna go to Selhurst Park to see uh to see Crystal Palace play Wolverhampton Wanderers. So awesome. Alright, I have you know, have a point for me, you know, put a couple of shekels down on your favorite one there, but enjoy the soccer. Enjoy London. Um, that would be good fun. Our Jersey chief US interest rate strategist. So why is he in London if he's the chief US

interest rate strategist? But anyway, shopping around his team may be shopping. He's just going over there to see some football, So good for him, Iro Jersey, good buddy of the show. Let's check in right now with our next guest. I'll hate Desponde, founder and chief investment officer of center Stone Investors. Am I buying this little rally here in the past couple of days? Hey, what do you make of it? Is? It's just kind of a technical bounce here? Is there

something more there? Hey? Good morning? Yeah. I think basically there's that two D week moving average people have been fixating on has actually no relevance to the fundamentals. But you know, there's probably a lot of stop losses and and what not around there, So a couple of weeks of moving around that kind of makes sense to me, But the fundamentals are still uh, you know, deteriorating, not bad sell the rip is that? Is that what you're saying here? Um? At some point? Yeah, I don't know.

I mean, I'm not a trader. You know, we're long term, but I'm not. I'm not you know, advocating one way or the other. I'm just saying that the you know, like this whole thing about capitulation and wall that you know you need you need some of that or bad news to confirm the capitulation. You don't have that yet, you just had fundamental deteriorating. I mean it takes uh, well, a lot of brains, a lot of guts, and a gigantic wallet really to be able to trade a day

on a day to day basis. And even with all of those threings, you're three things, you're probably losing money in the long run for most people in terms of long term investments. Um, what would you do right now if you had cash to put to work? And apparently you know a lot of people do. Um. The b of A survey showed ASH at six point three percent,

the highest level since April of two thousand and one. Yeah, you know, it's a tough one because if you have cash already, you are not used to seeing it earn anything. And now you're getting you're getting three well, just sitting in a bank account of money market you are getting almost three percent. UM. You're soon to get to four percent at least that's what the toilet or the one year notes are telegraphing. So it doesn't seem like a bad place to sit and wait, right without the uncertainty

um the treasury. You know, there's going to be a point at which treasury bonds will become attractive. I'm I don't know exactly, but my initial work suggests that somewhere between four and five percent seems to be a resting place for treasure yields. UM. So you know, at some

point that will be attractive. But um probably even more interesting is what you're starting to unearth overseas in some of these international markets where you can by, you know, very high quality franchises for twelve thirteen times earnings with four dividend yields. So we've kind of gotten you know, we're investors. You know, I'm not a money market fund, right, so for the most part we've been allocating more and

more overseas to higher quality franchise type companies. Uh, you know within our value framework, um, that that seems to be from a three to five year perspective, very interesting place to be. And of course in the United States, we've also found plenty of interesting things to either buyer, buy moreover or even hold. So but you know, in two it's really unique year when you know, the whole

sixty forty portfolio scenario really did not work. I mean, you know, you've got stocks down the mid twenties, you've got bonds down load of mid teens in total return. Man, what's an investor supposed to do here? Well, don't sell now, right, Yeah, because you've had that. As you mentioned, it's been the worst. I saw a Bank of America of studies that this is the worst year for household wealth destruction ever, right, going back back anyway, So at this point, um, you know,

you're well more than halfway through this. Even I don't

think that there's gonna be a banking crisis. I don't think there's gonna be some systemic issue that's anything unusual for a like a recessionary environment, which means that you know, you're kind of like two thirds of the way three quarters of the way down as far as stock price, UH moves at least um and and as I mentioned, if I think that UH inflation already peaked, which I do, and you know, bond rates at four or you're not that far from it, you know, just suggest holding and

you know, just just waiting. I can do that, all right, I can do that. Thank you so much. We appreciate always checking in with you. Founder and ce IO at center Stone Investors, Mark Douglas is the CEO of Mountain. He's in our studio, which guarantee I guarantee to see the Yankees? Am I wrong? Now I look at him. I think I might be wrong. Wrong. I'll squeeze in some Yankees. I'll try my best. But it's New York. Are we skipping fall? It's like yesterday man had the

wine shirt on him. So it was kind of, you know, last vestiges of summer. Now we're all in fall. Yeah, well like now I'm in the full flannel? Yes, are you in full Flanney? So we went from sorry, talk to me about the Yankees? Are they gonna win? Are they playing this afternoon? Four oh seven? First pitch and so what's the deal is it. It's a it's the game five, it's the winn or go home. So we got Nasty Nestor on the mound, one of our favorite

pictures for the year. Feeling good about it all right that I just summarized that, and I think you got it right. But if and if they lose, it's gonna be bad, bad, mark Um. Netflix is a name that we love to talk about around here, and we love talking media with you, and we love talking media with you. But now Netflix is going to introduce an advertising tier. I thought that they the whole Netflix gig was we don't do advertising. You just pay us a subscription and

it's a much better user experience. Well, I mean a lot of their customers obviously like Netflix content without the ads, but a lot of people want to pay less and advertising brings in the dollars to pay for all the content for those users. So this new tiers launching in November. UM it's been very well received. The price point and the number of minutes. It's not going to be a

lot of minutes of advertising. So people like four minutes versus maybe five, fourteen or fifteen, Yeah, like four to five minutes of ads per hour of content, So that's pretty low at I think roughly half the price. So you know, it's a nice trade off, especially in these times. And I hear the CPM they're going to charge. The cost per thousand is like almost super Bowl Like there's a lot of the bait about that right now. Yeah, I think it's a little higher than the Super Bowl.

I think, Um, I think that. I think maybe we'll see a couple of months of that and then I'm telling you, everyone I talked to they've rolled their eyes when I hear the CPM, but they were we'll see how it goes. Is that just because I know what the audience is, I know who they are, and as an advertiser, I'll pay up for that. Well, you know, I was watching Netflix the other day and I thought I was watching something that seemed like an ad. It wasn't. It was just part of content. It made me look

at this, I was like, is that an ad? On Netflix? So they're counting on people paying attention to the ads and they can charge that premium CPM. My big question is, um, who does the seven dollar package? I mean, is it somebody paying fifteen dollars already that goes down to seven

or is it for new customers that started seven? I mean, I think it's people who are not the binge watching watches on the show bad or maybe watching a little more casually and like, hey, I can say, you know, seven bucks, but doesn't cannibalize the subscription subscriber base they

already had. That's the big questions. So their predictions that this is going to bring back rejoiners that think is the word, is going to bring back um former subscribers, maybe expand the subscriber base, but yeah, there's a lot of people who are gonna immediately want to go that lower price here and the Yeah, can they bring the ad revenue up as fast as they're gonna lose the revenue and subscriptions. I think that's the big question. I think the market is kind of immune to it right now.

I mean, Netflix is dealing with problems that other streaming services wish they were dealing with. Yeah, I heard so, By the way, fifteen is what I pay. I hear there's a nine dollar subscription, which is what you can like the least you can pay, and you can only use it on one device, and they I guess they watch. By the way, that was the price for this new subscription is what Netflix was charging a few years right, But now they're gonna be making I here about six

dollars six fifty on the ads per subscribers. So the seven plus that yields doing the quick math is from the Ohio state exactly. And so they're gonna be at least making more than the nine dollars that the cheaper subscribers would be paying, and almost as much as the fifteen that um that the financially irresponsible people like me. And and this is in the US. In the nationally, I think there's a lot of potential there to to

offer them different priced tiers. So there you know. Again, these problems are huge opportunities and Netflix is moving very very quickly to capitalize on them. What else you're working on? What else is interesting out there that you guys are looking at? Well, I think the whole ads in terms of media, I think we're seeing every major service. Disney Plus is announced ads um. Amazon I think it is likely expand their ads here. So it's a little bit

back to the future in the television industry. Looks like I'm glad you brought up because it feels like again five, seven, ten years ago, packages stuff up. Oh, that's what Comcast does, that's what Charter does. I mean, we're getting back to the same gig. You know. I had a dinner about

two weeks ago, actually less than two weeks ago. I was at a table with someone who runs a major cable company, and he's the CEO, and he was complaining about the price the cable and he runs the company, and he explained, look, you know, we have to in order to offer choice as a cable provider, we have to have every channel on streaming. You don't have you just have to have the content. You don't have to doll out dollars to all of these individual TV networks.

And so the price point and cable became very high streaming. If you want all this choice, you're gonna have to pay all these dollars exactly. I mean that that the value proposition from streaming. I don't think it's relevant anymore because I just I think, and maybe it's just from neglect.

People are just paying four or five, six, seven streamers and you add it all up and it's the same as I was paying the eighty bucks per month for my cable for Comcast, which which is by the way, John Farroh asked this um question of I think, um, Michael Nathanson today, smart dude, which is is are some people trying to put together the cable box, you know as Disney with Hulu, trying to put together kind of an ESPN a cable experience. Yeah, I mean, we're gonna,

we're gonna come back. You're gonna stick with us. But Matt has an interview coming up with Guy Johnson. They're gonna be interviewing the CEO of Rolls Royce, uh, which is owned by BMW. So that's gonna be very cool. That's coming up in just one which we're gonna bring that to you. Uh. And they're gonna talk about the car business, which Matt, as we know, loves to talk about. The carbiss Matt Miller, Guy Johnson with the CEO of

Rose Royce, let's listen in. So Rolls Royce, talking of the car sector, is debuting its first fully electric vehicle. It's called the Specter. UH. This marks, of course, a new era for the also maker. We welcome now our TV and radio audience worldwide for an interview with Rolls Royce. Motor Cars CEO tostenst and of course we bring into this conversation as ever Bloomberg's Matt Miller Tosten thank you very much indeed for taking the time. So you've made

the jump to the electric vehicle. What does demand look like for this first car? Very pleasing. First of all, good morning, Matt, really good. I mean we call it it's a prophecy fulfilled. Our founding father, Charles Rowles said in that he foresees the great future for electric cars once charging is fixed and is available. And I think now we are here fulfilling his prophecy, and we are very excited and our clients are. I mean, it's the very first time that you can acquire in the super

luxury segment an electric car. So it's the very first, and for that reason we are also in pensively proud that we are the first. Obviously it's a true Rose Royce and an electric Ross Royce second, and that was very important for our clients. So what Towardsen. First of all, good morning to you and thanks so much for joining us. Um the car looks spectacular. I don't think anyone would have expected anything else. What about the performance the magic

carpet ride that Rolls Royce is so famous for. And until now, Um, we've come to rely on the V twelve six and Athlete of V twelve for that. Now we're gonna rely on a big pound battery. I mean, first of all, Matt, it is a true Ros Royce that is promised, and we would never bring anything into the market that doesn't carry magic carpet right, whaf stability. Everything you know from Rose Royce is embedded also inspector,

that's for sure. And it is even a remarkable way to drive it because it's even more silent, no slide raw from the twelve cylinder. It's a very silent propulsion fits perfect to the mark and for that reason, I think a brilliant Rose Royce rest issued and all the qualities you're used from Rose Royce embedded into it. So and it's a it's a huge car. It's built on a phantom like chassis, um and even heavier than a colony in is I think Sunds right. The colony is

about six thousand, Um. Are you gonna put batteries in the colony next? What's next for Rolls Royce in terms of electrification mhm yeah. I mean I can't talk today about let's say, obviously all the next steps, but one just by end of twenties thirty met we will be fully electrified. So every future Rose Royce we're gonna bring into the market, every new one, is fully electrified Rose Royce. So we are seizing building combustion engine cars end or

the beginning of twenty thirty m Tolsten. Let's talk about the profitability that is going to be um with you when when you make this this full move to electrification, you make a lot of money of building traditional ice engine cars. Your margins are being phenomenal. Are you going to be able to match those margins when you go all electric? Matt Yes, definitely, because that was always on my mind when we have the plan to go electric. That is not a plan that was born a year

ago or whatever. We basically came into it when we experimented for the very first time over ten years ago with a prototype of an electric Phantom, and the client feedback was always fabulous, it fits to the brand great. But obviously we also knew that one day we go completely electric, and for that reason, contribution margins per car are untouched. They are as strong as they have used

to be also in the past. For that reason, no worries Rose Royce will stay a profitable, very profitable company. Are you going to rely on the BMW New Class platform to maintain those margins? Tolston though, um, and when you're gonna, when you're gonna start bringing that in, what can you do to that platform as well to tweak it when it comes in? I think it's isn't it when it comes in? It's five And the BMW brings

the NEYR class in new class in. That's right, And obviously that is always and had happened also in the past in a very successful way, whilst maintaining what the Rose Royce stands for. We for instance, have our own architecture, the architecture of Luxury, which is just preparatory for Rose Royce motor cars. While it'st obviously we are taking whatever technology is available and we do it, in our founders belief, take the best that exists and make it even better.

So obviously, of course we would be allowed me to say that mad not to use the technology we get from the BMW group. We adjust it and we make it Rose Royce technology. At the end, for instance, battery cells software that is very much also helped by the BMW Group and we modify it. So there are synergies which are really very very helpful if it is purchasing

or whatever. And for that reason, I think it's a great mix of getting help from the mother company BMW Group whilst maintaining the own character of Rose Royce motorcas and I think that has made us over the last ten fifteen years so successful in the market. You know that we go from one record to the next. Clients love Rose Royces and they also love that we are definitely stand alone in a way of what they buy. At the end of the day, this is not in

any way modified BMW X seven. When you buy a Culon in know that's a true Rose Royce, and the same holds true worlds of respect. Specter is a true Rose Roys first and then an electric car second. Obviously based on also BMW technology or BMW Group technology. I have to ask about um the battery and the changeability of it, just because my colleague Hannah Elliott, I'm sure you know her, she reviews cars for us, and she bought like a nineteen seventies Silver Shadow which is so cool.

So she's a classic Rolls Royce owner. I'm wondering, you know, in thirty years maybe my daughter will buy um a Specter, but she'll want to put in a new battery pack technology Shirley will have um evolved by then. Is that going to be an incredibly difficult process. No, you might know that Rose Royce is are well known for keeping value of a long time and that we always provide spare parts also in twenty five years thirty So in that case, if your daughter one day by suspect battery

is available, make no error. So there is nothing to be worried about that this might at one day be outdated, doesn't work anymore, or whatever. It will always work and we're gonna make sure. That's the promise from the Ross roy side, that our cars will always be serviceable for a long long time. So it's always great to catch up. Congratulations on the vehicle. Looks fantastic to the Rolls Royce motor cars. Of course, I thanks mate Miller. All right,

that's that is good stuff. Torsten Molars with the Rolls Royce Specter. Matt, what what what's that going to set me back? If I want to walk onto the lot and get myself an electric Rolls Royce. I think you know the answer if you have to ask. If you have to ask, it's not for you. I mean, look, I've I've spect out a Rolls Royce Ghost just for fun. It's my favorite the vehicles that they make. I think

it's the most practical, the most fun to drive. And I come in well over four grand, like four forty, and that's not even a phantom. So this is a phantom coop basically with electric power. I imagine it's gonna go easily half a million dollars plus. You can't just buy one, you know, straight off the lot or with the specs that they sell it. You need to create your own bespoke version, hopefully with some Paul T. Sweeney

pin stripes down the sides. You know. Let's go down Park Avenue today and we'll see if we can find one, you know, the dealership. They will be sold at the end of watching on Bloomberg Television. A good stuff. Let's bring back Mark Dougus. He's president CEO of Mountain Uh. He's mysteriously in New York City today. We're assuming it's because he's going up to the Bronx to see the

Yankees game. But Margot Bronx bombers, by the way, we I always think that because you grew up near the stadium, right, all right, So, but you're not really a super fan, You're not really well. When I was in the when I live to New York. Unfortunately I don't live in New York anymore. I've definitely Yeah, I live in Miami. Another one. I just came back from and I see a lot of worlds. I didn't know so many Bloomberg listeners were potentially going to be driving worlds. Round'm kind

of impressed. Sure, I will say we have I'm going to say the wealthiest listeners of any radio station in America. Absolutely. Why Netflix after the close today? Um? Again, the big issue is, and it's rating your wheelhouse, Marcause you guys in Mountain, you're an advertising software company. You work with brands, you try to help them get into the digital age. What does Netflix bring up? I'm an advertiser. I feel like this is a really good platform for me to

put my digital dolledge. Well, there's not there's not been this much opportunity to be like, you know, like on a new platform that so many people watch, and all of a sudden, you're the brand that appears next to this content. So it's a unique opportunity. We were talking earlier about the CPMs they want to charge and how

that's likely to play out. So I don't think that window is gonna last long, but I think it's gonna play out really well for Netflix and Ultimate is gonna get more people content with a few minutes of advertising, they see some hopefully some interesting products and some really cool Madison Avenue I would guess has to up their game. I mean, now I hear these ants are not going to be within the show. They're gonna be before and after,

I think. But I would think if I'm going to go onto a platform that has premium content like the Netflix, I don't want to have premium well that I mean, there's this idea of premium spots, um, yes, But I actually I think most consumers want to learn about the emerging brand, you know, like what's new, what's exciting. They don't want to just see a car commercial or beer commercial.

They want to see something interesting in news. So maybe on day one it's the biggest brands, but hopefully you're gonna learn about some really cool new stuff over time on Netflix and other other streamers. All right, good stuff. Mark Douglas, President CEO of Mountain does all that digital advertising, We didn't hear anything about Mountain, I know, we didn't talk about Ryan Reynolds. Who cares what the hell is

in town? He is actually in town. Yes, I don't have talk digital rather talk digital advertising, all right, Mark Douglas, President CY of Mountain, matt You know, you get these work from home guys, and they dat us with their presence, you know, once in a while, okayday or a Friday, no God forbid. So you know, when we do see them in the office, we say, hey, let's get them in studio. And even then sometimes I can't be on time.

It's just they're just they have their whole thing, the whole sense of you know, yeah, exactly what that's you know, it's entitled saying to their employer, guess what, you won't be able to find another one on me. That's right, that's working from home. That's right. That's the world. We live in a rack ron and nobody takes advantage of it better than him. Well, maybe Mike McLoone who's absconded to Miami. In Miami, that's nice, and we've got we've

been dealing with the big banks. We've been reporting numbers over the past few days. But we're tech companies are coming up soon, and that's what the market really, really, really likes to focus on. What are you focusing on as we approached some of the earning season for the big tech names. So I think the big thing is going to be what kind of guidance do they give for not just this year, and about some early indications

of what next year could look like. We already know ex is going to be a very big problem this time. We should see some softness and almost all their divisions. But the question really is how much of that is already accounted for in the stock price that has declined

over the past you know, three to five months. So I mean I as an as an analyst, I used to look through that, you know, kind of the the FX impacts, like for a lot of big advertising holding companies, they're complete global companies, and you'd always look at the revenue, you know, ex acquisitions X, you know foreign exchange. The tech investors do that as well, yes, but you know, if you look at it. Companies like Microsoft or Salesforce have done a very good job on even Amazon Web

Services of reporting revenue growth in constant currency. Now on the other hand, Apple does not do that. Now, Apple talks about it that it has an impact on um, you know, their services business by five minute basis points. But you could say, you can't really go back on a trend line and look at it over a two year basis as to what the growth rate was on

a on a x f X basis. So I think they will have to explain that a little bit more, or they'll have to start disclosing that or going forward because now efex is going to hurt by you know, somewhere in the sixth wait for some range for almost all these companies. Yeah, I wonder if it's going to affect M and A at all. We're starting to see a little bit more. I haven't seen really a currency advantage, but are big dollar earner is going to be able

to take over companies in euros? So that was, you know, to be very frank, that was never a big issue. The big issue in the M and A world is who's eventually going to be the biot. It's only private equity, you know, companies that are really the big bias right now because frankly speaking, any of the other larger vendors are it's not easy for them to buy any anything at this point because of you know, antitrust issues on rock.

CNBC is reporting that activists investors Starboard has taken a stake in Salesforce and now confirmed exactly that's confirmed the conference here in New York, the Team de Monitor conference in all right, So we got CRM, which is the stock symbol of stocks down year to date, it's up about four percent today. What do you think Starboards thinking about here? What's the case investment case for an activist taking a spot in Salesforce. It's the same investment case, Paul,

that I made. I would say about six seven months ago that their margins need to go up far more than where they are right now. That I think it's going to be has to be a margin expansion story. Otherwise, you know, investors are not going to give it the

multiple it used to get. So if you look at Salesforce, for example, even if we ignore the pandemic period or the software booming the pandemic period, it used to trade about six points seven times forward price to sales at that time, and now it's trading at four points sometimes because at the peak of the pandemic when they bought Slack, they were trading at ten eleven time sales. They went and bought Slack and since then it's just been butchered.

And the reason is that for the longest period of time, there are two things that matter to software investors. It's organic growth rate and margin expansion. Salesforce has always been good on the growth rate part of it, but they never showed a decent amount of margin expansion like some of their peers did, whether it's Adobe or Service Now and investors really got bugged this time by the company saying we're not going to take any more large act position,

and then they went went ahead and bought slack. Um. Now, I think this deal in hindsight, it's not a bad deal in a strategic way. But you know what happens is when your investors get really fed up and tired and say, you have not given me any margin expansion over the past five to six years, where your peers are giving why do I need to deal with you? And not you know, by those stocks. But this is Mark Bennioff. Isn't he one of the gods of Silicon Valley? Yeah,

the gods of Silicon Valley. Yes, but that happened to Steve bamber also once. So I think now he owns a basketball team. Yeah, so I think I think it's I but I personally think they found religion at this point. I really think that these guys are now looking to look at their cost structures a little bit better, and I don't think they're gonna spend that recklessly going forward. I think they're going to show at least a hundred and fifty to two hundred basis points of margin improvement.

And once they can show that, I think, you know, that could help their multiple. By the way, we're gonna see companies like Apple or Amazon going and buy um some of these streaming businesses. They logically they should, but as I said before, it's not it's not so much whether they have the cash or what they should do. The question is whether they'll be allowed to do it. Yeah, that's the biggest issue at this point. They can't buy

those companies are just they can't really buy anything. They pizza without look at it all, right, Salesforce equity go uh CRMs is the ticker and then you put in a n R for analysts recommendations. Forty five buys eight holds zero cells. The cell side likes Salesforce dot Com and Soda Starbirds. So okay, we got techery coming up next week we'll be checking in with the Anora Ranas and the man deep sings of the world from Blueberg Intelligence, getting of the latest as those come across the tape.

Uh green on the screen here, but definitely way off the day's highs. We'll see if you can hold onto it for Carol coming up. I'll be with Carol this afternoon looking at w t I crude oil here off three point eight percent today two cents, about a far cry from the one twenty we saw, uh reasonably what was that six nine months ago? Um so again supply demand.

You have to have a call there, and you're talking about those commodities and our next guests, I think I will say gas prices are up because I filled up this morning at a shell I get V power obviously for my trucks, and it was five dollars and thirteen cents a gallon. What are you doing? I see you gotta just mind the wrong state or three dollars and seven cents on a national basis. That's regular, that's regular. All right, Well, I'm gonna go to my next guest.

But then, okay, here we go Scott Levine analyst Bloomberg Intelligence, he covers the energy stuff. And Emily Wilkins, Congression reporter with Bloomberg Government. Uh, Emily, let's start with you. Here is the Biden administration. What's their policy as it relates to the Strategic Petroleum Reserve? I know they did one release. Are they considering more? Is the idea when they're less

popular than they release more oil? I mean at this point, remember the Bide administration they said the spring they'd be releasing a total of one million barrels of crude. So far, they have released most of that at this point, but they're moving towards another release of at least ten millions to five team million barrels of oil. And of course, this is coming just weeks before a very competitive midterm for the Democrats. They're trying to hold onto the House,

they're trying to hold onto the Senate. U the headwinds are are very much against them in this particular year, and gas prices are not helping that if you take a look at political ads, political polls, just to go out there and talk with folks, I mean, gas prices are really sort of one of the dominant issues on voters minds, and the Biden administration is aware that kind of the higher the prices are around November, the more difficult it could be for Democrats to hold on to

control of Congress. So, Scott, how much oil do we have in there? I mean, um, can administration keep giving away gas for votes or are we're gonna run out soon? Well, according to the traditional laws of supply and demand, they're running out of capacity on the on the cuts that they announced in the spring, which we're just alluded to there. And the problem here, I think, Paul, is they're trying to implement UH an upstream or crude oil solution to

a downstream or refining problem. At the end of the day, the big issue in the bottleneck here and the challenges on the refining side. So in introducing more reserves UH and UH cutting the support UH the spr really isn't going to help them solve the issue of high prices at the pump. That's more a function of rising refining crack spreads and tightness on the refining side, uh than it is on the crude oil side. That's my opinion.

So what I guess in that case President Biden has to go down to Oklahoma, He's got to go down to Texas. Never been sweet talking those uh oil guys. It's unlikely, isn't it. Emily. I mean, to certain extent, you have seen the Biden administration UM give into sort of a bit of a sort of tent back and forth with some of these oil companies and saying, hey, we need you guys to really sort of consider the American consumer. We need you guys to sort of keep

them in mind. Um. And of course there's a lot of questions right now because there is uh, you know, a lot of need for oil in Europe. A lot of these companies are trying to meet part of that need. And so you definitely have seen the Biden administration kind of try and put pressure on folks where they can in terms of companies and to you're seeing candidates out on the campaign trail go ahead and just blame companies for the high gas prices, trying to tell voters no, no, no,

you shouldn't be blaming the Biden administration. You should be blaming these major corporations for having prices as high as they are. So and Scott on the refining side, is you raised earlier? There really isn't any incentive for these refining companies to go and build new refineries, is there? I mean, the political environment is just it's not supportive

at all. No, there really isn't. And I think got Ultimately the the problem here is that the thing that will encourage them to produce more are higher our higher diesel prices and higher gasoline prices, and that's something that the administration obviously doesn't want to see, particularly ahead of ahead of the mid terms. And so ultimately this problem would be resolved naturally through supply and demand. I guess the issue really is, Uh, the government doesn't really have

the time to Scott. What about a friendlier regulatory environment. I mean, every time these CEOs go to Capitol Hill or bank CEOs who financed them, Um, they're made to look like the true criminals of the modern age. Is that going to change? Well, you know, I think that's a function of who's in in office and what their m O is At the present time. The reality is I wouldn't expect it to change much or too quickly.

I think the oil and gas companies have been more vocal h and the fact that the government should stop blaming the industry for problems that are macroeconomic in nature. But I wouldn't expect the monstra to change anytime. All right, Scott, thank you very much for joining us. Scott Levine analysts with Bloomberg Intelligence covering all things energy, and Emily Wilkins, congressional reporter with Bloomberg Government down in d C, giving

us the political angle there. But uh oil pulling back again springing Stephen Lee right now, he's a brand manager over at Ford Motor Company the FOMO code to talk about what's going on with UM. I guess the move to electrification is the sort of mid to longer term story. But Stephen, right now, I guess, UH, chips are the number one kind of question facing the auto industry. How are you doing in terms of getting the chips you need for the cars that we want? He Paul and

Matte thanks for having me on UM. You know, it's certainly a lot of change in the world over the course of the past four months. And ships and semiconductors has certainly been on the forefront UM with us forward. We've got dedicated teams working around the clock too with each of our suppliers and then their suppliers even to help try and get the parts that we need to help sep the plants operating, and get customers the vehicles that there UM and sometimes patiently been waiting for. Yeah,

some people for a year or two. Right. I have a buddy who waited about two years to get his Bronco full disclosure. He loves it now, He's very happy with it, and I guess he wasn't that bothered about the weight. But are we still seeing UM waits that long? How long until I can get a Bronco if I if I want one, or or if Paul can get

an F one fifty Lightning if he wants one. So I mean we're looking at reducing that time overall between when a customer can go in place their orders and then when that that vehicle is built and then ultimately UM shipped to the lear and the customer can take delivery. I can I can speak to specifically three Super Duty,

which we're very excited to introduce. The all new Super Duty and UH customers will be able to place orders for the all new Super Duty UM later this fall, and UM we aim to begin production early next year and customers begin taking delivery in the first quarter. So Stephen, you know, since the beginning of time, it seems like you'd walk onto a lot, there's just hundreds of vehicles

on the lot. You'd find when you like, you go haggle with a salesperson and you see how much blow M s r P you can get this thing for what kind of incentives there might be. Now it seems like they're carrying a lot less inventory coming out of this pandemic? Is that the new norm? I mean, do I just walk on and take whatever I can get

and pay m srps? With how high Yeah, with how high demand has been recently, certainly inventory levels are much lower than historical barms, especially for us here at Ford and and on vehicles like super Duty UH. Demand continues to be very strong. And I mean most of our our trucks as soon as they're arriving on dealers a lot UM. You know, the dealers already have a name assigned to that specific truck coming in and customers show up and take delivery. It's uh, demand continues to be

very strong. So what are the hottest UM? I guess trims right now? If I'm looking at a n F two fifty, I want the Lariat package and a crew cab. I'm gonna put a Tremor package on it, probably the uh if I can afford it, drop in the six point seven leader Um power stroke diesel. What do you But the thing is I'm getting up to like eighty five thousand dollars with that? What what do you? What do you like? Stephen so? Uh? The Lariat Trum model is certainly one of our most popular rims in the

individual retail customer space. UH. Certainly the off road capability amongst these heavy duty trucks that's grown in popularity immensely. And we offer the Tremor off Road Package, which which provides during five inch off road tires and and ray suspension to help navigate some of that off road terrain. That is certainly one of our more popular configurations that

customers are opting for. And the great part is they can they can get that configuration, they can get that off road capability, but but they're not really sacrificing towing capability, which when we're talking with our customers, even though the off road space is increasing in popularity far and away, towing is the number one usage for heavy duty trucks. In our engineers, they take that to heart. They think they seek out to create, you know what, what we

call a best in class towing experience. They really focus on those pain points that customers have with towing and trying to trying to deliver some utians to reduce those pain points. One of them being visibility, especially with some of these trailers, how big they're getting, the fifth wheel campers that the big horse trailers you name it. Um. Visibility is always, uh, you know, top of mind for customers.

And with the new super duties, we offer up to twenty eight available camera views, including what's really cool, a three six degree trailer camera system. So not only do you get a bird's eye view above the truck, you can now get a bird's eye view above the trailer as well, so you can see around your trailer on all sides, right on the built in six screen. And uh, you know, you won't be free entertainment for those neighbors at the camp side as you back that this wheel

into that type space. That's right, all right, Steven Lee, thank you so much for joining us there. Stephen Lee, barrant manager for Ford Motor Company, got the Super pick up trucks. 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 nineteen seventy three. Pet On false Sweeney I'm on Twitter at p T Sweeney. Before

the podcast. You can always catch us worldwide at Bloomberg Radio