Bloomberg Audio Studios, podcasts, radio news from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlowe.
Good morning, everybody. I'm Tim Steneveeg and.
I'm Katie Greifeld, both in New York. This is Bloomberg Technology.
Coming on at Tesla's annual eb sales dropped for the first time in over a decade.
And speaking of Tesla, the company also in focus following a cybertruck explosion outside the Trump Las Vegas Hotel yesterday. We'll have the latest.
Man TikTok is feeling the heat as its potential ban draws near. We'll discuss a little later this hour. First, though, a check on markets on this first trading day of twenty twenty five KT. I don't know about you, but I'm still writing twenty twenty four on all my checks.
That's terrible. I think we can still safely say happy New.
Year, though, thanks Happy New Year.
I think a lot of investors are happy we turned the page.
I think they are too. Although the Nasdaq had great years back to back in twenty twenty four and twenty twenty three, up today the Nasdaq one hundred by three tenths of one percent. We do have about seventy percent of the stocks in the Nasdaq one hundred higher today five of the seven mag seven higher, with only Tesla and Apple lower weighing on today's trade. KT. I know you're gonna have more on Tesla in just a minute.
I mentioned back to back years of gains twenty twenty four and Nasdaq one hundred is up nearly twenty five percent twenty twenty three, up by more than fifty percent. Speaking of back to back years of gains, Bitcoin higher today for a third day in a row, one point seven percent to the upside, up by about sixteen hundred dollars.
It did fall about three percent in December, up more than one hundred twenty percent, and twenty twenty four k of more than one hundred and fifty percent in twenty twenty three.
That's the thing you mentioned, some of those stats, those yearly stats, especially for the NASAQ one hundred. That's even with the big benchmarks puking in the final week of the year. So clearly a bit of relief today, even with Tesla doing its darnedness to try to drag this index down. Let's take a look at shares right now.
You can see down about five point six percent. Of course, we got their fourth quarter deliveries this morning, coming in at four hundred and ninety five thousand vehicles that missed analyst projections. They had been penciling in about five hundred and twelve thousand vehicles delivered, and you can see that disappointment in the shares right now. Tesla also had a fantastic year in twenty twenty four, but it came with a ton of volatility ends a lot of political cross currents as well.
Yeah, that's certainly something we'll be talking about in just a few minutes. But how about this last few months of twenty twenty four for Tesla? I know, probably remarkable.
Well remarkable too because Elon Musk some have them calling him the co president President elect Donald Trump doesn't of that, and President elected Donald Trump absolutely dominating all of the year ahead outlooks. Let's talk a little bit more about that, because Wall Street has its eyes laser focused on Trump's return to the White House and trying to gauge what to expect this year from his anticipated pro business policies, but also his tough talk on global trade and general unpredictability.
You can call it that. Bloomberg News has collated over seven hundred key calls from more than fifty leading financial institutions, and Bloomberg's needs to say. COVID is here to break it all down. It's the subject of today's big Take, Denitza. It's great to have you with us since I made this point, of course on open interest, so I'll make it again. It's really hard to talk about twenty twenty five without talking about Donald Trump.
Yeah, it's clearly the biggest word this year. Everything is Donald Trump, Tariff's American exceptionalism. These are the worst we sow through all those outlooks, which were compiled by Sam Palter. Of course, and last year, the year before, we were talking about hardline. We're talking so much about monetary policy. We're talking about the economy, which is still an important factor here, but definitely Donald Trump has taken center stage.
What we have seen is a lot of people are betting on American companies and are not pretty warming up towards international companies despite the fact that they obviously are a lot cheaper, but US assets are taking central stage. JP Morgan says, US exceptionalism is getting reinforced. We're talking about AI. We have a big call from bn Y saying that AIS role in the world will surpass that of other technologies that propel earlier periods of such growth.
So we're seeing a lot of AI optimism. That comes also with conscious calls of broading of the rally of people saying that more and more companies use AI, hence they will join that.
AI for Keral, It's a great piece. Check it out by Bloomberg Sam Potter, Janisa Sikoba also working on that along with many other folks of the Bloomberg News team. You can check it out now at Bloomberg dot com slash Big Take. Well, let's now bring in Keith Buchanan, senior portfolio manager at Globalt Investments and has about three billion dollars in assets under management. For more Keith, you heard me mention the back to back years of gains
on the Nasdaq one hundred remarkable couple of years. Do you think there's still room to run for megacap tech?
Hi, and thanks again for having me.
We actually have been moving into more balanced stants over the last couple of months, and we're really focused on the growth versus value collision course, if you will, that's set up for twenty twenty five among other actually you know, carryous collision courses across our American economy and also for markets.
So we've moved into a more balance stamps because we look at growth as this dominant really over the marketplace for WILLI says a pronuncial crisis minus a few years, most recently in twenty twenty.
Two, and at last phase.
Of course, I've been moved by AI spending the story, but you questioning at what cost does that come at?
It?
Are we looking at valuation that grows into infinity and what point does that price end the scenario that we're now also the growth that's over to come over the next couple of years. Also at what cost does this AI spending and this productivity come.
Of course that's a boon to earnings, but does it come in.
Wage gains and workers That could cause a little more consternation among the consumer and consumer spending. So we're balancing all of those right now, and it led us to a more balanced approach. Is how we look at the US markets and not preferring growth over value any longer.
We actually have been in that stands for several years frior.
Well when it comes to big tech and when it comes to the Magnificent seven. I think a lot of people would agree with you on these stretched valuations. But the pushback I keep hearing to that point is that you have the earnings growth to back it up. That basically the fund of mentals are justifying these eyewatering valuations. And if you expect to see some of the momentum behind big tech fade, are you saying that you'd expect earnings to disappoint a bit in twenty twenty five.
Not necessarily, And that's why we haven't gone underweight and growth.
We actually just in a neutral stance, if you will.
We don't see the case for that disappointment to come in twenty twenty five, even twenty twenty six. As we grow into like you mentioned, are grown into multiples that seem lofty, you know a year and a half ago, don't seem as lofty anymore today. But that maturation of this growth phase and investment has to come at some point where the market price is in fully the bowlt suspending this flooding this marketplace.
Agree again, we don't feel like.
These stocks are broken or any the part of the story is is amiss at all. But we think that growth actually could come more and sync with the value as far as the performance over the next couple of years as the market digests those valuations and time.
Well, let's talk a little bit more about value, because of course value has broken a lot of hearts over the past couple of years, and many expect that to continue. So you have the valuation piece looking good when it comes to a lot of these value names, a lot of these value indexes. But are you expecting to see actually that earnings growth broadened out, especially if we are in a higher for longer sort of environment where the FED can't cut as much as maybe some have been open.
Okay, almost has to. And we've looked at this closely.
From a bottom of standpoint, the market expects earnings per share growth of thirteen percent of the twenty twenty five that's not as concentrated in the max seven as it was in twenty twenty two and twenty twenty three, and especially in twenty twenty four as well, So that broadening has to occur and evaluations just don't show that that broadening is expected. If you look at names like financials that start to appreciate some of that, and those stocks
have performed over the past twelve months. We look at other spaces like that offer the opportunity for the valuations to grow into a broadening of earnings that the marketing spect from a bottom up standpoint, but from a top down standpoint and also from an index standpoint, it really hasn't really materialized in a lot of those value names and those industries that traditionally are are categorized as value orient and so we're really excited about just a balance
that that Arnie's growth could lead to performance and value sectors, and we feel like growth doesn't necessarily have to bleed out in order for that to happen.
Keith.
Over the last couple of years, really since the public introduction of chat GPT, we've seen a lot of the AI gains go to just a handful of companies, including the megacaps, you know, hyperscalers and whatnot. I'm wondering when we're starting to see those AI gains go to other types of companies, like when is AI going to allow Procter and gamble to sell more tied and toilet paper with fewer people.
We're starting to see actually some implementation of AI that could benefit sectors and names and industries outside of the Max seven already.
You see that in healthcare started talking about how some.
Development of drugs has accelerated and they feel like they can be more efficient in how they allocate resources because of artificial intelligence. They've implement it within those platforms. So again that's the spending comes first, productivity games come next, and we should see that materialize across the board.
Again, that's the case.
For the spending, of course will grow to those names that put this technology and implement this within economy. But as all industries start to implement some level of higher productivity that benefits names across the board, and those with lower evaluations and theory should have a quicker move when those earnings start to accelerate it and it.
Will be fascinating to see when the investing timeline sort of turns to more of those applications versus just the hardware and the chip makers. But keys, we got to leave it there. Great to kick off twenty twenty five with you. That is Buchanan. He is senior portfolio manager over at Global Investments. Now coming up, Tesla disappoints more on the carmakers delivery miss Next, This is Bloomberg.
Tesla fourth quarter sales out today, the electric carmaker disappointing investors, posting an annual vehicle sales drop for the first time in more than a decade. Joining US now is Bloomberg's Detroit bureau chief David at Welch. David one point seventy nine million vehicles sold in twenty twenty four fourth quarter deliveries for to ninety five thousand, five hundred and seventy Tesla stock taking a hit as the result. To what can we attribute this decline to? I think it's just
purely greater competition. Whether it's in China where Bid and the domestic EV players are doing very well with competitive product, helped buy a lot of Chinese government subsidies. It's tougher sledding there, and there's more competition in the US. You've got a lot of new EV's out there from Hyundai, Kia, General Motors. They're all pushing pretty hard here. GM's got a pretty cheap one with the Equinox sales throw under thirty five thousand. That's going to put pressure on the market.
And also, you know EV sales generally still some growth there, but slower growth, So you have slower growth for the total total industry and more players fighting for that piece of the pie, and Tesla's not immune to that either. The other thing, look, Tesla's got this lineup of four vehicles that can sell in pretty decent numbers, a niche cyber truck, which has not set the world on fire
in terms of growth. Unless they get this cheaper model to type of vehicle out there, they're probably not going to see a lot of electric vehicle growth from them in the US market, and they're going to have really tough competition in Europe and China going forward, So it's not a growth story on the EV side of their business right now.
Maybe the hope is then that, of course Tesla, which already is the market leader, would take share from some of its competitors because Elon Musk on the latest earnings call said that he sees twenty to thirty percent growth this year, which seems optimistic. Are we hearing anywhere close to those figures When you take a look at what the cell side is actually.
Expecting the sale side's not expecting that. There isn't a lot of credibility. We've seen a lot of skepticism over the twenty to thirty percent growth. Now what we don't know. Tesla's supposed to have this cheaper EV coming out this year. They famously missed their their targets for production and sales all the time. But if it does come out it is cheaper, that's where they would presumably get some growth.
It's going to be really hard to steal that much market share and less Tesla res or it's just some really deep discounting. I mean, look, there's a wild card here too, which is if Tesla's not reliant on government subsidies the seventy five hundred tower tax break for evs and the other companies are, maybe they can gain share
that way. But there's just not that much growth in the EV market where I think they're going to see twenty to thirty percent growth based off its US sales, And again, the Chinese competition is just too tough for them to get huge numbers there either.
David a little closer to home here in the US, is there a political risk given Elon Musk's close alliance with President elect Donald Trump, and that it could alienate potential folks who would say, you know, in another world, I would have gone for a Tesla, but these days, no thanks.
Look, that phenomenon I think is real. I also think it's kind of baked in already because Elon kind of went to the right side of the political aisle some time ago with the things he's been saying on X and he's been working with Donald Trump for months now. There may be more of that coming. People who were predisposed of buying avs, many of them are interested in climate change and they buy them for that reason. Others are not. But look, I think Elon has probably alienated
a certain kind of consumer. How big of an impact that's having to quantify, but I think that does have an effect for sure.
Well let's talk about the flip side of that, David, because Okay, maybe the left leaning customer base of Tesla doesn't want to buy more Tesla's, but there's a lot of expectations and you can see that in the stock price that a Donald Trump administration, the second Donald Trump administration, is going to be good news for Tesla. I mean, what are some of the actual policies that are potentially on the table here that would benefit Tesla.
The big one, I think is the Trump administration's priority of setting up a federal framework for autonomous vehicles. What's really pushing this stock, I think to a large degree, is this idea that Tesla's not just an automaker in the way that general motors are, dime where or BMW or Toyota are. It's an AI company. It's a tech play, right, and you can only do that if you do have robots,
you do have self driving cars. And without a federal framework that enables somebody like Tesla to put a vehicle on the road with no steering wheel and no braking, accelerator pedals, totally robot driven, that's not going to happen. Trump's the Trump administration will make it a priority. Elon is camped out at Maro Lago trying to help write that, I would assume. But anyway, he's going to have influence that will help Tesla certainly, depending on how the rules
are done. And then with the other thing, Elon has said, we don't need federal subsidies to sell our evs. It would affect other companies more and he's probably right about that, But how much getting rid of those would help Tesla sell more evs that it remains to be seen. I think it's tough on them to get rid of those incentives as well, because one that's free money to consumers that they don't get anymore, and to Tesla might have
to discount more. So, even if they do steal market share, it might be less profitable share if they have to have big discounts in order to sell those vehicles. So the bottom line is any kind of tax policy on evs could benefit Elon if he has an outsized voice in crafting it to help his company. So, you know, we don't know what that looks like, but that certainly could happen.
Well.
Tesla sharre is currently down almost six percent. David Welts, thank you for that. Let's turn to the other major Tesla news that we're following this morning, and that is Elon Musk saying that the explosion of a Tesla cybertruck outside of the Trump Las Vegas hotel was probably an act of terrorism. The driver was killed and seven people suffered minor injuries. For more, let's break it down with Wloomberg's Mike Sheppard joining us now. And this is a
developing situation, of course, Mike. But what do we know so far?
Well, what we know is that this vehicle, like the vehicle used in the New Orleans terror attack, was rented via the Touro app. But the company itself maintains that there is no connection whatsoever between them that they can see. Neither the suspect in New Orleans nor the man who rented the cyber truck that exploded in Las Vegas had any kind of a criminal background that would have shown
up in the checks that the company run. What we know about the man he has been identified in Las Vegas is that he is identified as an Army reservist his on leave from the service temporarily. He was from Colorado Springs. And we don't know yet what exactly the
cause was of this explosion in Las Vegas. Elon Musk has said on x he posted last night that he thought it looked more like and the company had concluded, but did not offer more evidence of an explosion related to either what he said were fireworks or perhaps a bomb in the bed or back of the truck, rather than a malfunction by the batteries. We've seen in some other Tesla vehicles.
Mike, As Katie said, this is a developing story. We don't know much yet, but I'm curious what has come out at this point. Do we know how, if any the ignition actually happened, how whatever was in the back of the truck ignited, And do we know if the vehicle's battery earned or if fire officials were able to put out the fire before that happened.
Those are really good and still very open questions, Tim that we're waiting for authorities to shed more light on.
We have heard, of course from Elon mus the world's richest man and one of the co founders of Tesla and now the owner of x laying this out for us on social media, but the detailed account from authorities, including the Las Vegas Fire Department and FBI, which is also investigating this incident, we still do not have a full accounting of what had happened, including the kind of forensic questions that you're asking now, So we'll be eager
to hear from law enforcement and safety authorities there as we get more.
Answers, again, more questions than answers that we have right now, Mike, But I'm curious about potential similarities between what happened in New Orleans and what happened in Las Vegas. The tech angle here with vehicles rented on the app turo, the connection of both being members or former members of used armed forces. What are similarities we have right now?
You know, those are similarities, but authorities would be quick to caution that they are all coincidental. Many people use this Touro app to rent vehicles. Conversing with a friend this morning, they happened to note that, Hey, you know, I have an acquaintance who rented a cyber truck in Las Vegas about the same time. So it is not an uncommon thing for people to be using something like this. If it were Avis or Hertz, I don't know if we'd be asking sort of the same kinds of questions.
And again, when it comes to prior military service, we have seen this again and again that sometimes actors in these mass casualty events, and we can think all the way back to nineteen ninety five, the bomb that took out the Edward R. Murrah building in Oklahoma City that was perpetrated by two men who had previously served in the US Army so again coincidence, but we don't know whether there is any connection valid or viable whatsoever, or even if what happened in Las Vegas was an accident
or a deliberate and malicious act.
All right, Mike, really appreciate your reporting here. That is Bloomberg's Mike Sheppard. Of course, we'll bring you more details as we have them, but let's switch skars here and discuss the future of H one B VISUS under the new administration and the impact on the America's tech industry. Of course, this was a firestorm over social media over the holiday.
Well, coming up much more on Bloomberg Technology. This is Bloomberg.
Well.
Twenty twenty four was deemed the year of Artificial intelligence. But why you're waiting to see if Wall Street will grow impatient with the AI movement Bloomberg Opinions Davely wrote about it in his latest column. He joins, us, now tie this into what you call the brain rot economy, all this enthusiasm that we're seeing over AI and what's actually happening on a lot.
Of these apps.
Yeah, well, I mean we're seeing investors being extremely excited that AI is going to come good this year earn them lots of money. The revenue is going to start pouring in and that's going to offset the worries about capital expenditure going through the roof for just about all
major tech companies in twenty twenty four. Where that links is the brain rot side of things, is that one of the early uses of AI has been to fill things like Facebook with just nonsense, really like pictures that don't make any sense or text has been generated it isn't really fun to read. And I think and in my column there I wrote that there's going to be this sort of awakening I hope from people saying, well,
why am I looking at this? And as soon as people stop looking at this, that could spell trouble for companies like Meta that rely on that.
Well, maybe they move away from that. Go to TikTok. Your prediction about TikTok this year at least here in the US will it be banned?
Well, the question is, you know what the Supreme Court's going to do. They're going to hear arguments on January tenth, and many legal observers say it's unlikely that the Supreme Court is going to overturn the lower courts ruling which was that the ban was constitutional. The next wildcard is going to be what's Donald Trump going to do?
Now?
He's already asked for the band to be paused. He's asked the Supreme Court for that. Whether or not they grant him that, it's not it's not clear yet. But I think it's going to take some overturning for this for this ban on TikTok to stop. So I think if you're on TikTok, you should be getting ready to perhaps sort of move somewhere else.
Well, Dave Lee from Bloomberg Opinion, That is the perfect segue into our next guest. Let's keep this discussion going now with Godam Hans. He is a law professor at Cornell and founding director of the university's Civil Rights and Civil Liberties Clinic. Great to have you with us, of course, so the Supreme Court will hear TikTok's argument on January tenth. Of course, the ban would kick in on January nineteenth. If it goes through. That is a very very quick
possible turnaround. And then you add President Donald president elect rather Donald Trump into the equation. How are you thinking that things will shake out from where it stands right now.
Yes, so thank you for having me. I am.
Similarly skeptical that the Supreme Court will overturn the lower court's ruling. I think the schedule of the argument means that we may hear something quickly before the effective date of the ban, but I am not optimistic that the court will make a different finding.
Ultimately.
Whether or not President lect Trump is able to change that through urging Congress to override or rescind the law, or some other kind of executive action, I think we'll have to wait and see. I also don't think the Supreme Court itself will take up President elect Trump's call for a stay, given the sort of lack of precedent for that kind of move.
You have been supportive of TikTok from a legal perspective, Why is that? What's the case?
I think that this law is targeted pretty explicitly at the company the Commeress. People who talked about it at the time of its anactment earlier in twenty twenty four said that there were major national security concerns that they had been briefed onne privately, but that evidence has not been made public. And while I agree that national security.
Is an important governmental interest.
I also think that when it comes to banning a social media platform where millions of people exchange content and ideas, that evans should be public. I did filend sign on to an amicus brief both in the DC Circuit and in the Supreme Court. We and that amicus brief argued that the law really creates some fundamental First Amendment problem is that I don't think are supported by the Supreme Court President here. But of course we'll have to see what the Court itself says in the coming weeks.
Cornell Law Professor Godham Hans, thanks so much for joining us. Do appreciate it now. Potential TikTok ben would also pave the way for metas reels or YouTube shorts to fill in entertainment void for one hundred and seventy million Americans, entertainment and the online advertising that comes with it. Let's bring in Rachel Tipograph, founder and the CEO of Mickmac. It's an e commerce marketing platform for multi channel brands.
Good to have you with us, Rachel, you have some incredible data on the micmac platform about where the advertising money is leaving to go to TikTok Let's start there for context. Yeah, who's losing money as a result of TikTok's growing popularity.
Absolutely.
My company, Mick Mac works with over two thousand of the biggest brands in the world, and what we've seen this year is a two hundred percent year over year growth in TikTok. At the same time, we've seen a sixty five percent decline in Alphabet. Alphabet for US is paid search, it's YouTube, it's DV three sixty everyone else is menual compared to this, So if a TikTok ban were to occur, you can believe that Alphabet is going to see big regains in brand advertising traffic.
It's interesting. I mean, I'm speaking from personal experience when I talk about TikTok shop. I actually used it for holiday shopping, which I wasn't expecting to. Do you think about TikTok potentially being banned. That would, theoretically, as to mention, be a benefit for YouTube shorts for of course metas reels as well. But when it comes to the actual e commerce spit do they have the same infrastructure and ease of use as you have on a TikTok shop.
It's interesting about TikTok TikTok has the power of television with the backbone of direct response advertising, so you can build brand and drive conversion all at once. That being said, when it comes to bottom of the funnel, I want to drive sales advertising. The two best places to do it today still are alphabet meaning paid search, and meta. And so if this were to happen, I still believe you're gonna see a massive shift back to alphabet, a
little bit back to meta. But in terms of TikTok, it has become the fourth biggest marketplace in the US. So who's gonna gain from marketplace sales. It's gonna be Amazon, it's gonna be Walmart, it's gonna be eBay, it's gonna be Temu. So there's gonna be a lot of companies to gain in this disruptive shift. If a TikTok band were.
To occur, Rachel, who do you think or what should the companies that our clients of yours be doing to prepare for a possible ban? How should they be changing the way they're looking at things.
I believe first of all that a band is going to be delayed. I think that this is a hot opportunity for the Supreme Court and Trump. That's my hot take as Rachel. But in terms of my customers, I'm working with the biggest brands in the world. They're used to this. When Elon Musk took ownership of Twitter now X, we saw x traffic go to zero. What did they do? They just reallocated spend overnight. It's not the big brands to be worried about. It's the small medium businesses that
are heavily dependent on TikTok and the creators. Some people rely one hundred percent on TikTok for their income. The big brands will be resilient. The small businesses are the ones who are going to experience tough times.
And Rachel, we only have about thirty seconds, but you mentioned some of the beneficiaries here. Of course, the Amazon's, the alphabets of the world. What about Ets? What about eBay? Some of these marketplaces that have been kind of left behind.
Yeah, there's going to be a shift back to seeing sales in places like eBay and ets and Tamu. But Walmart and Amazon are huge players now in three P marketplaces. All of these players will see gains.
All right, Rachel, really appreciate you taking the trip to New York. Of course, that is Nick mac founder and CEO Rachel Tipograph, And that does it for this edition of Bloomberg Technology. I believe we'll both be back tomorrow.
Hez a treat. If they'll have us, we'll be back. Don't forget to check out our podcast though. In the meantime, you can find her on the terminal as well as online at Apple, Spotify, and iHeart this is Bloomberg.
Then Quick, then rectal, Quick and
Quick