This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio,
the Bloomberg Terminal, and the Bloomberg Business App. For this introduction, I need to go to a note which was codified in market economics long ago at CJ. Lawrence. You had a headline, and then you had a subhead, and then you had a chart. And it was of course the discussion around the chart that led to the invention of modern market economics and many people. This began with Eddheimen at CJ. Lawrence just a few years ago. Ed, let
me get to your most recent note, coveted on Wall Street. Remember, folks, we protect the copyright of all of our guests. Get the Edheimen note through Evercore Isi Edheimen. We're back in the old normal inflation range. Is it all clear on the Edheimen front for Jerome Powell?
I wouldn't say it's all clear, but it's pretty dark clear.
It's clear enough for them to continue to pursue the pause. Whether they cut in March, it's a little early. It might you'll want to wait another meeting or two. But my strongest conviction is that inflation is slowing and we'll continue to slow. You have rents, wages, but I don't want to overlook that there are some prices that are going up like crazy. But in general I think that inflation is coming down.
And tell that know.
I have a warm spot of a warm spot in my heart for Milton Friedman, and money growth has slowed down. So I'm sort of following his right and his footsteps, and.
I'm looking at shelter inflation as a part and parcel the goofiness of a you've always ignored that you've gone out for granular data and you feature mortgage rates coming down? Is the mortgage rates coming down from eight percent? Say? Is it a linear function or is there a tip point where home building becomes normal again?
It seems to be a tip point somewhere, a little bit above seven. Boys race War eight, maybe a little over eight, and now they're around seven. And all the information that we have shows that housing has bounced back pretty nicely. Even Tom, we're getting a little bit of an improvement in rents, which surprises me.
For three weeks.
We survey, the survey we've done of apartment companies has picked up a little bit.
Right, excuse excuse me, it's okay.
We a love gasping on the show at Heimen. I'm gasping when it's okay, you know, just have some tang and move on.
Paul, Hey, save us ed talk to us about the labor market. I have been so amazed and surprised, pleasantly so by the strength the resilience of the US labor market. How do you put that into context with everything else that's going on out there?
Economy is still pretty good. But I'm just I'm just telling you what you just told me. It's pretty good because the labor market is still pretty good.
YEP.
In about twenty five minutes, we'll get another reading for unemplomba claims. But uneplomba claims are the government's best economic indicator, and last week they fell below two hundred thousand and was just incredible how low they are. And so until the lever market eases up a little bit, the Fed is going to be reluctant to cut rates. I think they'd be happy to be pausing because inflation is coming down.
Now there are I thought you were going.
To say that you've been surprised at how much wages have slowed given how strong labor markets are. But there are some signs that the laver markets are easing up. For example, the Basebook came out last week and like some others, it showed some easing in the labor markets.
And we survey employment agencies every week like a Manpower Inc. And they and they have reported a clear easing up in the labor market and in wages, and a measured by Indeed Lever Market company has showed a way h tracker has come from five and a half down to three and a half. There's a lot of signs that labor has eased, but not enough. I'm not I guess I guess I've been I'm not sure shocked, but I've been surprised. But whatever it is, it's the key. You've
got to get labor to ease up. Some to get the economy to slow down more than it has. If you're plumbing, increases have slowed. From about five hundred thousand a month, they were increasing five hundred thousand a month. In the past three months they've been about one seventy. So you know, it's like, you know, watching a frog.
Cook in a path. They don't notice it, but I noticed it.
Wonderful. We're going to continue. We are commercial free. Don't don't go away. We are commercial free across this entire hour. Lukashaw to join us on the side of the economic data here but on YouTube and on card play. We're thrilled bring you Ed Hyman this morning, Paul Sweeney.
So, Ed, can we officially take I don't know, for the remainder of twenty twenty four, can we take the recession talk off the table? I've had enough of this. How about you?
Well, I probably have been giving you a problem in this, but I don't think so. I appreciate the question, and let me give you my best shot. So, the yell curve has worked seven times, six times in a row. Every time you've had a recession, your curves been inverted. So I'm just saying that we've had extreme monetary titan. Now it's taken eighteen months for that to work, so long that by the time you get to like month fourteen, all you and I want to say is like, get
out of here. It's not going to happen. It's different this time. But the Yell curve inverted, for example, in the summurb of six, and the recession didn't start until eight eighteen months later. So we still have another four months and if we can stand it. But I guess the main thing I'm trying to say from a practical point of view is that I think the economy is at a slowing pattern.
I mentioned the plummet increases slowing, and so I.
Could continue to be part of Tom's thought process.
Our company surveys have slowed.
They were we survey companies and zero to one hundred and fifty is in the middle.
And the surveys two years ago were sixty one and last week there were forty nine.
And I want to digress over to your wonderful page and your research note on China and what ed Heymen does, folks, and this is textbook at Hymen is he looks at the equity market and all the media overwhelm of the hangsing in, the indecks, the Hong Kong Index, and the Shanghi composite, and you bring it right over ed hein to the decline and interest rates in China. Are they going to export a new low yield? Are they going to export disinflation? Wow? In deflation to the United States?
Well, I was you got me there. I was going in a different direction. But let me explain.
Their yields, like you point out, have been making new lows, and that helps explain why US yields have been pretty quiet. And also the weakness in China has helped explain why commodity prices have been weak. And it's been pretty clear to me that China has been exporting at least disinflation
or slower inflation and in some cases deflation. There's a lot of news in the papers a day about lithium prices which are down eighty percent, and so there's you're right, they're exporting either disinflation or deflation.
But also.
You go back to the George Soros reflexivity, which is that when something can't go on forever, it doesn't, And there's a chance that we've reached that point in China this week with their cut in the triple R and so the stock market there has rallied almost ten percent. And this morning the price of oil the WTI in the US is up to about forty six dollars. It was in the low forties.
So so anyway, so, Ed, I mean, you know, that kind of brings up a good point. I want to follow on Tom's question here. If we've got China slower than people anticipated, if we've got Europe weaker than people would like to see, particularly Germany, I mean, boy, you see that the challenge is there, can the US be that decoupled from the rest of the world in being a growth marketplace when so much of the rest of the world is, you know, if not in recession, darned close to it.
No to Alan Greenspan, who enjoyed being inscrutable, but he also coined some pretty good dogs, one of which in the late nineties was that the US cannot be an oasis of prosperity. And that's what we have now. I think you're correctly pointing that out. And the data of this morning out of Europe is week we also survey companies that have sales week in Europe and that survey is about thirty two. The US comparable survey is forty nine,
to put it in perspective. And then over in China, our survey there is about thirty two, and so that gives the world economy, you know.
A soft inclination.
But like I mentioned this morning, because I live up right on the edge, the news out of China is a little bit better.
I mentioned, all prices have bounced.
Up a little bit, and there's not market has bounced up a little bit. So I can't tell if if this triple R cut this week is the beginning of a.
Real serious effort.
They've had some false starts before, but it's a move in the right direction and we'll see if it bears fruit.
And Man, I want you to talk about one of the great fears you harken back the nineties, and I'd even take it back to mister Isaacs in the eighties as well. In the zeitgeist of American global Wall Street, there is a real fear of our small banks linked in to bad real estate loans. Is it a legitimate fear? Is this something that we need to study or is it noise?
It's not noise. So every week.
On Friday afternoon, I get the GUMMA data on bank deposits and they are going down. They're down about two or three percent, which is the biggest drop since the nineteen.
Thirties, which is a sobering point by itself.
So I guess back, the bank deposits are essentially the money supply. It's eighty five percent of the money supply. So it's if you've got to watch it. This is my thirteenth bed tightening cycle, so I'm not this is I'm a I'm a gnarl veteran of these cycles, and right every single one of them has had financial shocks or crises.
And so the one we had earlier this year, earlier last year.
Excuse me, with SBB and the small banks having a deposit running their deposits, that was a shock crisis.
And I think we're probably gonna get another one before this is over.
And I got one last thought here before I let you go, And this is a great respect for what folks. I can't say enough. And I understand Sweeney and McKee and Lisa are too young for this, but we used to actually get printed research reports and you would wait on Tuesday to get the CJ. Lawrence Green Book, and it would come out. It was Edjimen, and then a guy named Ed yard Denny picked it up. Edjimen, do
you have the yard Denny optimism? The corporations will adapt that we will see a ten fifteen to twenty percent lift in the Yard Denny duration of stock prosperity in America getting out to what now forty thousand dow forty five thousand. Do you share that optimism with the gentleman from Yale University?
I don't, but I like Ed Yardini a lot, and I follow his work, I follow his thanking, I respect him. When I left CJLR he replaced me.
I'm happy. So you know, the world goes around, But.
I really do think about what he's thinking about, and it goes back to, you know, some thoughts about the nineteen thirties.
As I mentioned, I think monetary tightening.
Is extremely strong right now, monetary tightening, and that keeps me away.
At the moment.
My view and our house view is that the market's going up, and that's because inflation's coming down.
The fence ont pause, and economy is still fine. But I would guess, and Paul, you.
Are needling me a little bit there on the recession of the story, but I think the economy can get weaker, arnies will go down, and then it'll be a fight between declining earnings and the FED cutting interest rates.
Edheimen, thank you so much with Evercore. I can't say enough about how he changed modern market economics. I put him and Alan green Span together. They simply changed how we digest the game day by day. And I'm in thank you on YouTube on card Player, this is a joy and Paul like, I gotta I just did this on LinkedIn and Twitter, which is it's borderline entertainment about entertainment. Lucas Shaw pulls out the typewriter Saturday evening, eight pm. And you don't know this, but he's doing this at
the bar of the Sunset Tower Ill. I mean it's exclusive. I've sat there with a number of fancy people. I mean the owner, Jeff Klein, knows that Lucas Shaw is a player. I love what Jeff Clein says about the Sunset Tower Grill. He says it's where a duchess can be a devil. A celebrity like Lucas Shaw can dine with his family one night and this mistress the next and that's the la that Lucas Shaw covers here. Have you ever been in the Sunset grill with fancy people
having fancy drinks? I was there. What happens two weeks ago? Okay, you didn't fall in the swimming pool, right.
I did not follow the simmer.
Okay, what happens now with Paul Sweeney and Lucashaw's Hollywood blown up? What are the conversation at Jeff Klein's grill?
The conversation depending on what company you work for, but at a lot of them, is will my company still be around, or at least still be independent in six to twelve months, I'd say so. You've got Paramount, which has been the subject of near constant deal speculation for several months, and it's now starting to feel pretty real.
You've got Warner Brothers Discovery, led by David Zaslev, who seems like he realizes his company is still not big enough, or feels his company still not big enough and wants to merge with something else. You've got Comcast sitting on the sidelines figuring if it wants to do something. You've got Disney and Bob Eyer making cuts and also talking about different deals. So there's a lot going on.
I got eight questions. They've got to resell those folks. We're commercial free this entire hour. We go from Edward Hyman and then step it up to Lucas Shaw. I mean, it's pretty good here and we're on car play on YouTube as well. Paul Swingey with fourteen questions for Lucashaw.
And Lucashaw covers all a media entertainment for Bloomberg News out of our stylish LA office. I will mention Lucas. Let's start with Paramount Global. We have to go to Sherry Redstone, the daughter of one of the greatest media mobiles. I think over the last fifty years, Sumner Redstone, she's the controlled shareholder. What do you think she's thinking here? Why would she consider now after all these years, maybe thinking about selling the company.
I think there are two primary reasons. I mean, there's been a lot of talk about Paramount over the years, most of it not real. There weren't she did not seem open to selling. But I think now she's looking at her business and it is more challenged than it's ever been, and it doesn't seem like there's an obvious or even a particularly difficult solution. You know, they own all these cable networks that are shrinking by the day. Their streaming service is the sixth best, fifth, sixth best
streaming service, and it loses a bunch of money. So that's one issue. You know, they've had to cut the dividend that gets paid to the holding company of her family, which is sort of like it's piggybank. The other one that I've been told by people close to her was that she was pretty seriously She's Jewish, and she was very affected by what happened in October and is starting to devote more of her time and attention to matters
related to that and education. And so you combine the fact that the family empire is sort of crumbling and she now has something else that she figured she could spend her time and money on, and I think that combination means that she's now ready to part with it.
Well, the reporting today David Ellison, the son of Larry Elson of Oracle, Maybe he's considered what do we know about David Ellison and how legit he might be as a potential buyer.
Look, he is is very impressive. I will say he entered. You had these two Elison kids, David Ellison and Megan Ellison, enter Hollywood ten fifteen years ago, and I think a lot of people looked at them with suspicion. You know, you trust fund kids. Their dad's one of the richest guys in the world. They just want to play with daddy's money and make movies. Megan Ellison went one direction. She made all these art house movies with high end directors.
The product creatively was great. Commercially it was a disaster. David Ellison basically went in the opposite direction. He decided he liked making big, blockbuster movies, and so he went and had a deal with Paramount where he co financed, co produced their biggest movies, Star Trek and Mission Impossible, and has done pretty well and continues to expand his business. Now, if he is he the person who's going to have a solution for Paramount, that's hard for me to say,
because I'm not sure anyone does. But it would be foolish to bet against him because he's proven to be a pretty good operator in the last fifteen years.
Down Sunset Boulevard is my favorite leather chairs in America. It's a Cuban Seed cigar company, which has literally been there in the middle of World War Two. It's a great story of families that rolls their own cigars. It's just a glorious Glories family. Every time I sit there, Lucas, somebody fancy walks in. So two guys are sitting there
right now, what are they saying about David Zavslov. We've seen New York media right that this guy, after everything with Warner Brothers Discovery, is still an outsider with a stock performance. Is mister Zavslov ever more an outsider?
I have to start by asking what is your favorite or preferred type of cigar?
Well, what I go for is not treated. I mean, you know, like Lisa's trying to get me on the fancy cherry oaked ones and all that. No, So my favorite run of the mill cigar is a Padrona nineteen sixty four. It's a little lighter than the nineteen twenty six. So I go with that. But you're a Cuban Seed. I mean, one day on their cy stalone walks in. I mean, what is that about? You know I didn't say, mister Stallone. You know, all that Lisa would have gone mental?
Is the Rock walked in there? Once? We were here yesterday. Lisa's going nuts about the Rock. Let's rip up the script right, Yes, how big is the Rock in LA right now? With this deal with Netflix?
His deal with Endeavor? Or does he have a deal with Netflix that I missed?
Help me here, Lisa.
He's now part of the board for TKO.
Yes, which is sorry affiliated with Endeavor. Yeah, he's one of the Well, I'll do the Rock briefly and then we can go to Zaslav. The Rock is one of the biggest movie stars in the world. His dependability I think in the last couple of years has actually been a little shakier than it was before. But he's he's a huge star, huge following, and then obviously because of his his history with the WWB, joining the board at TKO makes lots and.
Things X I do over there, there's a Kleenex full lease. Okay, go to Zavizlov. Now this is serious. I mean he was CNN and all that. Where does mister Zazlov fit in for twenty twenty four?
Look, he's had his bumps as the CEO of that company. A lot of them, I think have been about how he's executed, and the selling of those strategies have just they have pissed off a lot of people in Hollywood because of the way that he's treated certain filmmakers and certain ideas. But his company faces basically the same challenges as Sherry Redstone in Paramount. They're just maybe twice as big.
And the two things that I do think they have going for them are their TV studio is much larger and more productive and so they can keep selling stuff, and they have a streaming service that is better than Paramount Plus.
Mike just emailed and I said, my headphones. Mike says, forget the Hollywood talk to the market, So hold on, Lucas. Paul Sweety's got a bunch of questions. Is Ira Jersey told you the GDB price indext really something in yields come in. Thank you Rich Truman for that to two year yield in a solid two basis points ten You're in a big, big three basis points. So there is a yield move off the data, and you see it
in the equity markets with a lift here. We'll get to the entertainment stocks in a moment, but it's it's ugly on car play on YouTube. Lucas Shaw with this, I can't say enough about screen time. Paul.
Hey, Lucas, you and your team, you're in Hollywood, you're based in LA you really got your finger on the pulse of what's happening in that town. I got to believe, as you mentioned earlier, people got to be just really scared about the future of their business. You know, as an investor, I don't think I can invest in that business right now. And I've been investing in media for thirty five years. I can't do it right now because
I have no idea where the business is going. What's the feeling in Los Angeles when you talk to the writers, the directors, the people that are really involved in this business, are they really scared about the future of media?
Well, I'd say the feelings are mixed, because you have to remember that when you're talking about writers and actors and directors, a lot of them spent twenty twenty three out of work, right They were two prolonged labor stoppages. The writers went on strike, followed by the actors, and so I think some people entered this year are slightly hopeful because they at least could get back to work now.
I think those paying attention to the macro story, to kind of to what you said, are a little more concerned because they're seeing almost every company, if not cutting back, kind of leveling off to spend. And you have to, you know, think about the fact that over the last eight ten years, there's been this sort of unprecedented surge in the amount of stuff being made. Yep, just you know, the number of TV shows from like two hundred to six hundred, and that's leveling off. I think people think
that's going to go down. This business is not collapsing, you know, you talk about investing the you know, people who've invested in Netflix have done pretty well over the last couple of years, certainly over the last ten. But what we don't know is which companies are going to
benefit or kind of survive the shakeout. And there's a little bit of market distortion because you've got a couple of players in Apple and Amazon who are who can spend a lot of money without really worrying about how profitable their entertainment businesses are.
That's true, That's that's really tough. How about our good friends at Disney. That's one of the stories that I think people have a lot of interest in Bob Iger coming back. What's the call there on Disney there? What's the feeling in Los Angeles about the future of this company, maybe the future of Bob Byger and the management team there.
Well, Disney provokes a lot of uncertainty.
You know.
Iiger comes back and he had been one of the great media CEO is really one of the great CEOs of the twenty first century, and they thought that he was going to study the company. Then he goes about and fires a bunch of people and starts talking about what he's going to sell, what he's not going to sell, sort of almost seems to be flirting with potential suitors through the press to figure out what's possible. But the real problem for Iiger and Disney is that they had
been the most dependable studio in the town. You know, their every movie they made seemed to become a big hit. When they launched their streaming service, they did it perfectly with The Mandalorian, the Right, Star Wars Show, and yet all at the same time Lucasfilm which makes Star Wars, Pixar Disney Animation, and the Disney Live Action movie seem to have hit a wall. And it's hard to know what to do about that, and it takes a few years to turn it around.
I want to we got to be positive here, Lucas and all swing and Lucas here. It's like the world's coming doing at Hollywood. I showed Afterthought the other day Greg Peck in twelve o'clock High, and it's just she was she fell apart. I mean, come on, it's real war footage nineteen fifties, Hank's and Spielberg. In two days, folks, Apple TV, you're going to see Masters of the Air Lucas. This is a bet by the old school on the new technology through Apple TV and a ten year soap
opera of getting this thing made. I've been looking at the British reviews, The Guardian, BBC in that which are massively rave. What's the buzz on Screen Time about the Hank Spielberg vehicle on World War Two? Why?
In general the buzz around Apple original programming is strong. You know, they have come in and invested in really high caliber filmmakers and movie stars to make their TV shows pop and stand out. Because you have to remember, there's nothing else to watch on Apple TV plus but
their original programming now not to go negative. The challenge for Apple is that nobody watches their stuff outside of like Lai York because the audio well, partially because they don't have that library, and so it's harder for people to People don't make it a habit of going into that.
Shy by paramount and put them out of their.
Misery because Apple doesn't like to do things like that. They don't do big m and A. They don't seem interested in a library. But the shows that they make are really good. That's why you know. They just got the I don't know, second third most Oscar nominations of any studio, largely because of the Scarsesing movie, but also the Ridley Scott movie. They've got a really impressive lineup
of movies coming out later this year. And the thing to remember, I mean, all of these companies are still making great products.
I'm going to bring this over to Paul Sweeney's world. What did Masters the Year cost?
I haven't seen what the estimates are, but I would imagine a heck of a lot of money.
A lot of money. See they just see right there? Well, come on, it costs one hundred million dollars plus more. Money than God finance for low rates. Spielberg and Hanks, Ye, Paul Sweeney, they're doing that on what nine to ninety nine a month?
Yeah, they got Apple's got ten million dollars a free cash flow. So to Lucas's point, they can invest whatever they want. Let's go to one of the really positive stories coming out of Hollywood or just entertainment business, that a being Netflix. They've obviously revolutionized the television business, disrupted it like no other business. They said, forever and ever and ever, We're not gonna do live events, We're not gonna do sports. Who needs that kind of stuff? Then
they do this deal with WWE. Did that change the minds in Hollywood? Are people kind of saying, hmm, maybe there will consider live events, maybe make a move for live sports, that kind of thing.
I did a poll of some top entertainment industry executives at the end of last year, and I asked them how many years they thought it would be before Netflix got into live sports live events, And the first of all, I'd say eighty to ninety percent of people said that they would as opposed to never, And of those, most people thought it would be in the next three years. I think there was this. Netflix has said they wouldn't do a lot of things. They said they wouldn't do advertising,
now they're doing advertising. They said they wouldn't abandon binge viewing or binge releases, which they haven't, but they now space out some of their seasons, drop them in two parts. And so I think over time, Netflix has embraced certain traditional behaviors because it turns out that you don't have to reinvent everything in the playbook, and once you go into an advertising supported service, having a live event that can command a lot of years, like wrestling is good.
Now whether they're going to go in and bid a couple billion dollars a year for NBA rights that I'm still a little skeptical of, but I'm less skeptical of it than I was before one minute.
Thank you so much for joining us. Off of Tokyo and Sundance and the rest of it. The glory we's got, the rock star life of it was Lucas Shaw. It was screen time, the death of the Los Angeles times. I get.
I wasn't sure where you're going.
Yeah, nobody ever knows, Lucas Lisa never knows where I'm going. I mean, come on, I grew up where the Los Angeles Times mattered times. Is it dying?
Look, my dad worked there for almost forty years. It's one of the saddest things I could see. I don't know that it's dying, but it's in really, really, really really bad shape.
You know.
It was one of these newspapers that got bought by a billionaire who seemed to want to do the right thing, and his and his daughter had certain ideas about it, but they've just never figured out what the editorial and business strategy is to make it a sustainable paper, which is insane to me because it's the it's the only real newspaper in the second biggest city in the country. It's becoming kind of the only real newspaper in California,
which is home so many people. And you'd think you could figure it out, and I'd it baffles me.
This is great. Lucas and I Paul, you can join us here. We can bring Lisa as well, you know, I mean, I just I can see us at the Sunset grill where the Dutchess can be a devil and a celebrity like Lucas Shack and dine with his family one night and his mistress the next. Lisa, this is inappropriate. That's why Lucas Shaw's here exactly. Thank you so much with screen time. I put it out on Twitter and LinkedIn. Can't say enough. This guy works on all the entertainment
that we consume. Joining us now in the train wreck is Garrett Nelson, CFIA Research, senior equity analyst, Garrett, help me here on Tesla? How bad was the conference call?
Well, our point is that this is a stock that more than doubled last year, so we think what you're seeing in terms of this profit taking is healthy price action.
We didn't think the call was that bad. We think the stock is selling off because investors are alarmed about the guidance for slowing auto shipment growth in twenty twenty four, but that was already baked into everyone's estimates, so it was understood that they were not going to continue to grow their auto deliveries by thirty eight percent this year like they did last year.
Is only there are people only buying Tesla's the cliche out there, and we go to Lisa Matteo on this because she's like EV Queen. But the basic idea I have is EV's are a failure in America except Tesla, and so the units are pretty good because that's the only car people are buying. Is that right?
That's pretty much accurate. If you look, Tesla's market share in the US was fifty five percent of the of the US EV market last year. Where the real oversaturation is is the other forty five percent. All the non Tesla evs are just not selling well. They're sitting on dealer lots. Inventories in December were one hundred and seventeen days supply for EV's overall, which is way above the historic average for automobiles of sixty days. So there's a huge inventory glut of non Tesla evs.
So, Garrett, if I'm a bull, if I have a buy rating and I think it's a fifty pe is based upon my target, I have to be bullish about EV's in general, don't I. It's not just a Tesla call. I have to be a bull on EV's in North America, don't I?
Not necessarily you have to be bullish, I think on Tesla. We're actually fairly bullish on the EV fairly bearish on the EV market overall in terms of adoption rates are much slower than we thought we would see a few years ago. If you look, seven point six percent of all new vehicle sales last year, we're eves. We think a lot of automakers were hoping that those percentages would be above ten percent at that point. So, but there's no question there's a lot of demand for Tesla EV's.
We know the cyber truck reservation count is somewhere north of two million units, far and away the highest of any vehicle model in the US. And then last night they confirmed these rumors of this next gen mass market EV where first production could come as soon as mid next year.
So, I mean, Garrett, I just bought a new car, and I did at the car, I was looking at the automobile I was looking at. I did look at the EV version, But the premium to go EV over ICE was so big, and me I could care less about EV's in the environment. I'll do it another way. But I mean, what do you do here? I mean, do you have to bring the price down? Don't you? Is that even viable for this industry over the next several years.
So if you look over the last year, the price has come down. You look at the EV price premium. In December it was only four percent. A year earlier was over thirty percent. So twenty twenty three was a year in which the EV price premium really collapsed. And we think that we're getting near an inflection point where evs are are gonna well, they're already very close to price parody with internal combustion engine vehicles, and that's gonna be a big positive. That's going to stimulate demand.
Garrett, Let's talk about mister Musk, and I do this with great respect, folks, for his technological innovation and all that he's done. You know, forget about the notoriety and all the idiocy. Garrett, Is he devoting chairman or CEO energy to Tesla?
Good question?
Yeah, that's a good question. There's nearly good in the day, So go with it, Garrett.
That's it. He has all the good ones.
He's spread very thin across SpaceX, Tesla and all his other businesses now X formerly Twitter, So there's no question he's spread thin. But what's become clear if you look back, you know, the investor days over the last two or three years, there's a very deep bench at Tesla. While he is the face of the company, the face of the brand. Behind him is a very strong capable team of brilliant engineers.
Bloomber Business Flash. This is from our European travel correspondent, Charles Pellett Europe on five dollars a day Paris. Garrett Nelson bans big, ugly American cars and they lead with a cyber truck. How's the cyber truck doing? Besides I'm not going to see it on Rudolphine in Paris.
Well, the Tesla faces a high class problem with the cyber truck. We know the reservation count is off the charts. The problem with this is the manufacturing methods are much more difficult than the Model Y or the Model three. So and Musk himself has admitted this. It's going to be very difficult to ramp production of the cyber truck. It's not going to look anything like the ramp up of the Model three or the Model Y that we've
seen in the past years. So, you know, the challenge for them is really how quickly can they ramp up and get that vehicle in the hands of reservation holders.
So Garrett I looked at the Ford. I actually drove the Ford F one fifty Lightning, which is an awesome vehicle, but I was actually surprised at Ford cut back the production there. So what does that tell you about the EV space or is that a Ford specific issue?
Yeah?
We think again that goes back to the issue with non Tesla EV's. The demand just isn't there, and so you're seeing automakers, you're seeing GM Ford and others start to cut back on those models in favor of gas powered models which are selling much better. In Ford's case, the Bronco.
Oh, I gotta leave it there, Garrett Nelson, Thanks for the brief there in Tesla Worring is good for Rabobank. Let's get right to it. Jane Foley joins us at robobank in London. When is this quiet? Jane? The shop does well right because people are hedging commercial transactions. You're taking in a fee. I mean it must be glorious now that foreign exchange is so boring.
Well not necessarily, I mean I've met clients before. He said, oh, you know what, we didn't bother hedge in last year because the phoney change was flat, and now this year we wish we had because it's really eaten into our profits. And sometimes they come to us when the door is already you know, the horse has already bolted. But so not necessarily good. But you know, I would say that
there's still lots to be considering in the foreign exchange. Well, we've seen the euro move a little bit this afternoon on the back of the Laguard press conference, and of course this week we've seen the yen moving too, as the market begins to get a bit more excited about an earlier possible interest rate hike. Well maybe soon as much.
Let me go there, so we're gonna make some money, folks. For those of you global wall streets that don't look at euro yen, Euro yen is my litmus paper a week. Yen is a bigger number one fifty five, one sixty hit one sixty one last week. What is the tension for the institution two shoes of Japan with euro yen ever, weaker yen stronger Euro.
Well, again, it depends who you are in Japan. So you know the big exporters, the toyotas, etc. Of this world, Well, they tend to do pretty well when the yen is pretty weak, you know, and then they see demands picking up, and that's pretty good for them because even if inflation is high in Japan and has been relatively high in the last couple of years, they can just export that
through their pric scenes. But it's the domestic companies who, or at least the companies with the domestic audience, domestic
consumer facing consumer. They're the ones that in the last couple of years who've been a little bit uncomfortable because they've seen, you know, higher commodity prices, which of course have calm off those peaks right now, but they cannot or they find it much more difficult to pass on the pricing into a country where people have to until very recently been reluctant to accept that prices ever go up.
Hey, Jane, we did hear from the European Central Bank today, Christine the guards standing by comments on a quote likely summer rate cut. How does that kind of inform your view of some of the European currencies.
You know that that that speech when she talked about the likely summer rake cut was made last week to you know, one of your colleagues in Davos, and I think there was a little bit of you know, the headlines, you know, take away some of the context of that. I don't think you know, she was saying, yes, we you know, we'll be cutting into interest rates in June. I just think she was being a little bit more
vague really about that, about that timing. But you know, I think what's interesting today, particularly from today's comments, at least in the market reaction, because the market reaction has seen this has been fairly darvas. And I think the reason for that is that there wasn't a forceful pushback against market pricing, and market pricing, as we know it has been pricing in you know, a couple of interest rate cuts to say in a six month few many economists
are more doubtful of that. But if she could have used that opportunity to push back on that, and she didn't, and I think therefore the market thought, well, you know, she's not pushing back on us, maybe maybe the UCB could go, could go earlier. So I think that's been the takeaway today. But what she did say is that they are data focused and I don't think any decision yet has been made by them.
Jane the British pound sterling here, you've got a no doubt saying hey, politics matter here and the debt of the UK Matters talked to us about kind of your views on the pound Sterling.
Well, you know, this comes on the back of some data we had earlier in the week that said actually, in December public financing figures were better than expected, which they were. And because that feeds into Jeremy Hunt, the Chancellor, who's already indicated in fact he was at to have us last week saying this that he will be cutting taxes. Now, obviously that is designed to help the Tory parties into the election which is expected at the end of the year.
But the toy Party are so far behind Labor, you know, good twenty points or so behind Labor, that it probably won't make too much difference. But the the issue with the fiscal situation, and we had you know, another thing teach this morning saying that the new government, whoever wins election, will be faced the worst fiscal position that a new government has taken in seventy years. And that I think is quite interesting because you recall a couple of years
ago we had the Liz trus Fiesco. The market basically said no, you know, we're not going to tolerate unfunded spending. And with that memory, I think whoever takes over the chancellorship after this election, you know we'll have to take upon fiscal discipline, which actually might mean that from the markets, this is a boring election.
Jane. Thank you. Jane Fowley with an FX update. I've been remiss and not doing enough on foreign exchange. You will promise to do more of that. This is the Bloomberg Surveillance Podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube. The show weekday mornings from seven to ten am Eastern from
our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.