The argument for imminent rate cuts just
got infinitely more difficult to make. Live from Studio two here at bloomberg
headquarters in New york, I'm Romaine Bostick.
I'm Alix Steel. Is this a sell off we've been waiting
for? It's a modest I know.
I put that in quotes. I hear you 100% with the sarcasm.
That's what we bring you here on the close.
The sarcasm. All right.
S&P is down by about 9/10 of 1%. Not to make light.
We were down about 1%. Is this sort of the beginning of a sell
off that every
one's been waiting for? I have some doubts.
But Tesla dragging down the Nasdaq 100 and the Nasdaq, for example, down by
about 5%. We'll get to this later on in the show
and their deliveries and productions. I missed estimates.
On the flip side, though, S&P energy stocks are outperforming because crude
is outperforming the highest level that we've seen since November of last year.
An interesting if you chart from oil and the equity market how the inverse
correlation has happened last year. This y
ear, though, they're both
basically moving higher in tandem and the ten year yield giving you a run for
your money. The yields are up by about five basis
points, sell off more concentrated in the back end, although we did see some
buying come in, we were well off the lows of the session remain.
Yeah, what's happening in the Treasury space are really having a lot of
ramifications right now. We continue to see the unraveling of the
rate cut trade. It's been going on for weeks now and in
just two m
onths, think about this. The swaps market that split from
expectations of six Fed rate cuts for 2024 to fewer than three and the start
of that easing cycle, no conviction at all any more for that to kick off prior
to September. Remember, two months ago, interest rate
probabilities on the Bloomberg terminal showed a near 100% chance the Fed would
pivot at its meeting in May. Those odds are now down to 10%, and that
June meeting now priced as a coin flip. This is a big issue, folks.
US Treasuries
for weeks have been readjusting to this new reality and
today a further push higher for bond yields that is effectively erase the
equity risk premium. That's the difference between the S&P
earnings yield and the benchmark ten year Treasury now the most negative
since 2002. Even compared to corporate bonds, the
S&P is 4%. Earnings yield is still about 1.44
percentage points below the Bloomberg U.S.
corporate bond index's yield to was a 5.4%.
That implies stocks right now are at their least attrac
tive valuations
relative to corporate bonds since 2008. And maybe that's why we are seeing what
could be a big sell off. Technically right now, it's still the
fourth largest sell off of the year, at least here in the U.S.
And JPMorgan strategists say equity investors have been way too complacent
about downside risk That includes recession odds, which are priced
extremely low, according to them, and the ratio of cyclical stock buying
versus defensive. Alex, by their calculations, the highest
sinc
e oh nine, 2010. I love that stat.
It's quite interesting. Now just put it all together in
different asset classes and this is this chart.
So the blue line is what the Fed 2024 policy rate on a percentage basis is
expected to be inverted. So the lower it goes, actually the
higher the policy rate will be. Now the same goes for the yellow line,
which is the generic US ten year lower, the line goes the higher the rate is.
And then you have the S&P is that white line, the higher it goes, the higher
it
is. Now, back in October where we saw the
low for the S&P here, you saw policy rates in the ten year yield quite high.
That seems to make some sense. That is most definitely not happening,
though. So far this year, you have higher ten
year yields, you have a higher Fed policy rate and yet you continually have
higher S&P. Does this gap continue or you actually
have to see the S&P kind of roll over here as rates stay high?
We've been waiting for remain we're asking the question.
But as economic
data comes in and it's still really good, it's hard to make the
argument to sell stocks in a meaningful way.
Absolutely. Here and particularly when you have the
Fed members really sort of banging the drum now here, that you're not really
going to get much more than what they've already telegraphed.
Cleveland Fed President Loretta Mester spoke a little bit earlier, and she says
that while she needs to see more inflation data before becoming
comfortable cutting interest rates, I continue to think
the most likely
scenario is that inflation will continue on a downward trajectory to 2% over
time. But I need to see more data to raise my
confidence. Some further monthly readings will give
us a better sense of whether the disinflation process is stalling out or
whether this start of the year readings reflect a temporary detour on the
downward path back to price stability. Loretta mester there, who heads the
Cleveland Fed. Joining us right now is Michael McKee,
who heads our economics and poli
cy coverage here at Bloomberg Television.
And Mike, I mean, we heard from Loretta mester and a couple of other Fed members
today, and they all kind of were singing from the same hymnal, weren't they?
They do seem to have sort of changed their minds about the timing.
At least they haven't officially gone on record and changed their dot plot.
That wouldn't come until June. But it's kind of funny because for so
long we were talking about the chart Alex was just showing.
We were talking about how th
e market just keeps going up.
Even if the Fed in the market are far apart, fed it, the market are now far
apart again, but in the other direction and the market still keeps going up.
I can't explain it. Mary Dailey can't explain it.
But she did agree with Loretta mester today.
The San Francisco Fed Bank president saying that growth is growing strong, so
there is no real urgency to adjust the rate.
She's on board with Loretta mester and Jay Powell and Chris Waller and all of
the rest of them. We
got some strong data today that
backed all that up. The JOLTS numbers come in the job
Opening and Labor Turnover survey. In the month of February, we had
8,756,000 job openings, and that is more than last month because last month was
revised lower. But here's the important thing.
You look at that and you look at the quits rate and you can see down below
the dotted lines are what the averages were for the ten years before the
pandemic. So at this point, you're looking at 3
million or more extra j
obs, be openings, be besides what they were before the
pandemic. So we still have a fairly strong labor
market tomorrow. I guess we've got a number of numbers
that are going to affect people because we have ADP employment, which a lot of
people say doesn't mean anything, but we trade on it ISM services and they have
an employment component. And Jay Powell is back once again
tomorrow. He's doing another speech and Q&A.
Austan Goolsbee, Michael Barr and Anita Kugler are also speaking now.
So I wis
h I would just say, yeah, the market only sees two rate cuts
right now, but give us till the week, right?
And then we let's see what happens. Either way, financing conditions have
been looser and horses, Lock says over at Apollo that that is the wealth
effect. That's why you can then see the economy
hold up because people are getting richer, at least when it comes to the
stock market, even home prices. Mike, thanks a lot.
Super appreciate it. Want to bring in Kevin Nicholson and
global fixed inc
ome CIO and partner over at Riverfront Investment Group.
He joins us now. Hey, Kevin, what do you think of the
thesis economy strong doing well? Why is the sell off in the long end?
Well, Alex, I think that the economy is doing well and you're having a sell off
on the long end, largely because people are now realizing that rates will be
higher for longer. This has been our thesis for about the
last nine months that rates were going to be higher for longer and it's finally
coming to fruition. Oka
y.
Coming to fruition, then why aren't stocks selling off in a more meaningful
way? Like, okay, yeah, we're down 9/10 of 1%.
But let's be honest, unless we see follow through selling over the next
couple of days, it's not going to be anything much.
That's right. I think that, you know, the stock market
has really been operating on a sugar high.
The rally that we've seen has come largely due to the investors thinking
that there were going to be multiple cuts.
I think, as you pointed out at the to
p of the hour, that, you know, coming into
this year, there were the market was expecting six rate cuts.
Now they're looking at about two. And the stock market knows that at the
end of the day, the Fed is no longer raising rates.
And I think that that has given the equity markets some semblance of
momentum going forward. And also they've been in companies have
been able to continue to grow their profits because we've had so much demand
from the consumer. And that is one reason that we're
continu
ing to see stocks go up because people are willing to pay for those
future earnings growth. But there's been a lot of discussion
here as to, Kevin why we haven't seen more of the Wall Street strategists and
analysts actually raise their earnings targets for this year and more
importantly, out into 2025. If that is the case, if investors are
buying into the earnings growth story, why aren't we seeing that really
reflected in the actual forecasts? Well, I think that the biggest issue has
been that
the earnings that the investors are paying for have all come
in Megacap tech. And that's why I think that there have
been this reluctance by analysts to raise earnings estimates going forward
because they think that, you know, too much has transpired with a high and that
that has been a sugar high that will eventually the bubble will pop there as
well. And I think that that's why you have
noticed that with analysts, a lot of times we kind of move in waves.
And right now I feel like that we are
potentially behind the curve as far as
taking earnings estimates up for the year, because as long as consumers have
jobs, they're going to continue to spend
because we're a consumption based economy.
Absolutely. Here.
I mean, from an investment perspective and particularly from a portfolio
allocation perspective, Kevin, there's a lot of talk right now about the
differential in potential returns that you can get in the bond market,
particularly the corporate bond market versus equities.
If we're
talking about a negative equity risk premium, something that we haven't
really seen on a sustained basis for decades, does it raise the question as
to whether that rotation that we started to see coming out of fixed income, that
that might have been premature? Yes, I think that part of it was
premature coming out of fixed income. I think that a lot of folks thought
that, you know, with the rally that we saw at the end of last year, that they
had that that that rally was over with. And I think th
at what we're getting now
is we're getting a bit of a reversal in because the higher for longer is kicking
in. And so I think that with fixed income,
fixed income now has the ability to be able to take some of the pressure off
the equity part of your portfolio. So when I think of fixed income right
now, I think of it as kind of being a hedge to your portfolio.
Now, obviously, over the last couple of months, fixed income has been selling
off, so it hasn't been hedging the portfolio.
But overall,
because yields are higher, it's making that return, that total
return that clients are looking for in a year.
It's making the equity piece have to do a lot less work.
All right, Kevin, always great to catch up with you.
Kevin Nicholson, global fixed income CIO and partner over at Riverfront
Investment Group. With stocks on the back foot, some
bright spots in the commodity space, crude oil up here in New York for a
third straight day. Crude futures right now piercing $85 a
barrel for the first ti
me since October. A discussion up ahead on what's fueling
the rally. Piercing, such a good word.
All right. Plus, lights, camera, buy out.
Endeavour shares higher as the company agrees to be acquired by Silver Lake in
a blockbuster deal. We're going to have the details in stock
of the hour. Absolutely.
And one of the biggest movers in the stock market right now is Tesla.
A brutal blow for the EV sector after disappointing delivery numbers coming
out of the leading EV maker. Analysts now pulling
the plug as well.
We'll discuss a little bit deeper during our top Call segment coming up in just a
bit right here on the close on Bloomberg.
And. U.S.
crude futures. And I like the word piercing, $85 for
the first time since October. So the question is, how much higher can
you go? Energy stocks really outperform here.
Rob Thermal is senior portfolio manager for Tortoise Capital Advisors and he
joins us now. All right, Rob, how much higher oil go?
Yes. Well, I think it's, like I said, a good
spo
t right now. If you look at when we looked at it at
the beginning to start the year, we thought oil, oil, really inventories
were probably going to fall. We thought the oil market would probably
undersupplied in the first quarter, which as you know more than anybody, it
doesn't happen very often. So now the market's starting to see that
prices are rising. And so 80 to 90 is probably a good spot.
We don't really want to see oil go to 100, but start to see a little bit of
mad disruption there. Whe
n when oil prices exceeded 100.
So 89 is a good spot and I think it probably stays there, especially with
the increased geopolitical risk that we're experiencing in the world right
now. All right.
80, 90, is that make oil stocks a good bet and kind of which ones like what has
been their their beta to oil. Yeah, well such stocks, you know as you
know, the energy sector is fairly diverse and there are a lot of different
ways to play oil. And what oil prices rise, Typically the
oil producers do the
best that so and those are the companies that generate a
lot of free cash flow, turn around, pay back that free cash flow to shareholders
in the form of higher dividends or buybacks.
So companies like Pioneer Natural Resources, Devon Energy, Diamondback
Energy, those are those are really Permian Basin based producers that
experience higher cash flow when oil prices rise.
Of course, the majors than Exxon and Chevron also benefit as well from higher
oil prices as well. Hey, Rob, as we're trying t
o sort of
track the trajectory of these prices, where they go next, should we be looking
a little bit closer at, I guess, the economic cycles, the cyclicality of that
and the potential resurgence of some of those manufacturing economies?
Or are these price moves going to be driven much more by some of the
geopolitical issues we've been talking about the last couple of years?
Yeah, I mean, I think we've had, you know, geopolitical risk has been out
there for a while now, unfortunately, around the
world.
And, you know, you saw oil prices back in the seventies
at the end of last year and even just to start this year.
So I don't think geopolitical risk has really been dropped.
The driver of oil price, I think you're spot on.
Big things driving oil prices right now. You're just seeing significant demand.
You look at the two largest consumers of oil in the world, the US and China.
And obviously the US economy seems to be humming along pretty well.
You just saw the China, the PMI from China.
That seems to be improving. So it's anticipated that oil demand from
China will be pretty strong as well. And so it's like the oil driven
economies like China and the US and other economies around the world are
really the thing that is driving and the fundamental factor driving these oil
prices higher. Any policy changes that you anticipate,
particularly out of the U.S., as we know we have a president or an administration
here that's been very cognizant about inflation and and how higher oil pri
ces
trickle down into gas prices, etc.. Any concern there?
No, I don't think U.S. policy changes.
I think you've seen, you know, companies at the at the at the private company
level and publicly traded operators have made changes.
And that's been talked about pretty extensively.
What I'm talking about is lower capital expenditures that have led to higher
cash flow. And that is not going to change.
Even this lower price of our products actually going to probably have less oil
production growth in
the US in 2024 than what we had in 2023.
So that that that constrains, you know, obviously the supply side of the
equation more this year in 2024 and could could ultimately result in a bit
of higher prices. Rob, great to catch up with you.
Rob them all, their senior portfolio manager at Tortoise Capital Advisors.
A lot more coming up on the big show, including a deeper dive into Tesla and
those deliveries that came in short of expectations.
This is Bloomberg. All right.
Let's get a view from th
e sell side with our top calls.
The big movers on the back of analyst recommendations are going to start with
homebuilders D.R. Horton, Lennar and some of its
competitors all cut to underperform. Over at Wedbush, the analyst says this
is the most, quote, normal year that these homebuilders have seen since
before the pandemic. And that means demand will rise in the
spring and steadily decline in the summer months.
And he expects stock prices to follow a similar path as well.
That means to the dow
nside, the shares moving to the downside, Lennar
indicative of that lower by 3%. Next up, let's take a look at Petco, a
double downgrade today over at Bank of America to underperform from buy the
analysts displeased with the drop in the retailer's market share, saying
customers are switching to online competitors with better convenience and
value. She also calls Petco slow down on
opening new vet hospitals. Another worrisome sign, though, shares
down about 7% here on the day back below $2.
And f
inally, let's take a look at NIO, the Chinese EV maker getting a downgrade
today to underweight over at Barclays. The price target knocked down a peg to
four bucks a share march sales for 2024 models, missing estimates in a big way.
And the analyst says this poses a significant risk for Neo's ability to
meet consensus estimates for the remainder of the year, though, shares
down about two and a half percent. And those are some of our top calls.
Now, we should point out what's ailing NIO isn't rea
lly just confined to NIO
U.S. EV company Tesla in a similar boat,
reporting its first year over year sales drop since the early days of the COVID
pandemic. They handed over about 386,000 cars in
the quarter, lower than the 449,000 that Wall Street had anticipated.
Joining us right now is Seth Goldstein. He's equity strategist covering energy
resources over at Morningstar. He's got a hold rating on Tesla shares.
Seth, you know, I think everyone kind of came into this quarter knowing we were
going
to see some softness in these numbers.
But the disparity, the magnitude of that difference between what analysts were
expecting and what Tesla delivered, did that surprise you?
It did to see a year over year quarterly decline was very surprising to Tesla.
During the fourth quarter earnings call, management had hinted that this wasn't
going to be the double digit growth that we have seen at Tesla in past years.
They didn't guide like they did in 2023 to to when they get to 1.82 million
vehicles
last year. And so we were kind of left guessing
what is management mean when they say it's going to be a phase of slower
growth. And it turned out to be a Q1 decline.
You know, we think Tesla will still finish the year about flat versus 2023,
but clearly a big surprise with a decline versus the modest growth that
was in consensus expectations. A lot of speculation is how we ended up
in the 300,000 range instead of the 400,000 range.
Seth And I do wonder if what's ailing Tesla is specific to Tesl
a or is that
part more of just kind of a broader EV industry slump?
Well, we are starting to see a little slowdown in the luxury EV space.
I think that that's for Tesla operates and we're starting to see some
saturation for Tesla's vehicles, the Model three and the Model Y.
Tesla is hoping that a model three and Tesla model Y refresh will help to
re-engage some consumers. But in general, in the US and Europe,
which are two of Tesla's key markets, we're seeing EVs.
The charging networks are still
not there like they are in China.
The the EV affordable space where consumers mostly want EVs.
We're not seeing vehicles offered there. So we are seeing a EV growth slowdown in
2024 globally. But, you know, I think this is part of
EVs maturing and becoming a mass market vehicle and eventually we'll get there.
But we are going to have periods of slower growth like we're likely to see
this year. So it's a simplistic question, but how
low can the stock go on this reason or momentum?
We're like rea
lly close to breaching that level that we saw about a month
ago. And then it's kind of like nothing
supporting the stock until 153, which is that October low.
Yeah. You know, we we think that the market
can after reprice its expectations Tesla is a high growth stock and so typically
we see the market react based on near-term growth expectations.
So with a decline in volumes for for the auto business, I think the market might
turn a little bearish on the stock. We've seen downgrades from analysts
in
recent weeks that may likely to continue.
You know, we'll see how the profit numbers come in with the lower
deliveries and when they report Q1 earnings later this month.
But, you know, it'll it's it's not going to be the high growth that's priced into
the stock. And we've seen the stock sell off this
year as the markets readjusted expectations.
I should point out that 183 level is actually the April low.
And to go back all the way to April to get that number said, bear with me on
this one fo
r a second. But what I was so interested in today
was actually Tesla's energy storage numbers.
Yes, the production delivery numbers weren't great, and that's what the
market focused on, but the energy storage numbers weren't quite good.
Does the stock get any credit for that type of growth at all?
I think it will once we see the energy business continue to grow.
And when that that turned profitable just a couple of years ago, when that
continues to grow profits and becomes a larger, more importa
nt profit growth
driver for Tesla overall, then I think we'll start to get credit for that
business priced into the stock. But right now, autos is still primarily
the major profit driver. And so I think we still need to see the
energy business show growth and continued growth before the market
starts to give that business maybe a higher valuation in Tesla overall.
You know, that's a fair point. Fair point.
All right. So thanks a lot.
Seth Goldstein over at Morningstar. Appreciate it.
But, you kn
ow, to be fair, its energy storage business has never been better.
So there is that. There is something.
Yeah, it's still something. There is There's still a small, small
component. But I'm just so focused here, too, about
whether it's sort of the bloom has come off the rose of the EV space.
I mean, we talk about Tesla, but we saw the numbers with Neil and we've seen
that, of course, with the legacy, automakers have really started to pull
back their own production and delivery estimates, whether
it's F-150 or the
lightning and those types of products as well.
Yeah, but that's why the energy storage part is important, like it is a small
part of its business. But if you can get the energy storage
stuff going, then then you've got it yourself a game like then you can start
charging stuff and you become your own little mini powerplant at home, charging
EVs and then using electric. I mean, that's, that's the goal.
Yeah. But I mean, there are like 12 other
public companies to do the exact sa
me thing.
So yeah, we're not there yet. I think that that's that that's my
point. All right.
Coming up, writing a check on the real economy after the jobs data today as we
head into ADP tomorrow and ISM services later on the week in Jobs Day as well.
Robin Gandy is founder and CEO of GM Non-Stick Coatings.
He joins us on the close. This is Bloomberg. Just about 3:30 p.m.
here in New York City. This is the countdown to the close.
I'm Romaine Bostick and I'm Alix Steel. I got to say, those Joel's
numbers come
in, boom, 10:00, boom, higher yields on the long end and stocks continue their
sell off. Yeah, and you overlay that with the
manufacturing data we got not only here in the U.S., but relatively strong data
out of China. And you get a sense here why all those
rate cut bets are now being dialed back. Yeah, And even for the smaller
establishments, like with 1 to 9 employees, like those openings are still
staying strong as well. So let's get the read on the real
economy. We like to do th
is with CEOs right now.
We're going to be joined by the CEO of GM nonstick coatings, which manufactures
coating on products in more than 40 million American homes.
A great read on inflation and demand as well as hiring.
Ravi Gandhi joins us now. Hey, Rabin, it's great to get your
perspective. Let's just start with the hiring
situation. We got very strong labor data.
We keep getting strong labor data. Tell us what you're noticing from your
customers and how you're hiring right now.
I would say th
e key thing when it comes to hiring is just this notion of
confidence and like animal spirits. And what I mean by that is for the last
18 months, people have been very reticent to hire if they see a good
person. And I think at this point across the
board, people are feeling, you know, pretty, pretty strong about it.
So it, of course, has to be the right person.
And one of the things that we've learned in the last few years is you have to
optimize for product, right? I mean, that's what really ma
tters.
And so I think for the companies that are winning, you know, hiring is is
something that they're not worried about right now.
So based on that. So if that feels relatively strong,
what's the end demand like? Jobs are good, then demand is good.
Is it that simple so far?
I mean, right now it's that simple. I mean, my company beat our numbers in
Q1. Here.
We're sitting at the beginning of Q2. I feel pretty good.
Of course, like you said, you know, we have 40 million customers here in the
USA
. So if they start weakening, well, then
the whole story changes. But I mean, I have been, I think, too
negative over the last few years. And I have to always remember, you know
what Buffett says, America is always in a bull market and there's going to be
these dips. But it's sort of like when you're a CEO,
an operator like me, you just you have to have that faith.
And the U.S. consumer continually comes through, you
know, strong. And it's been it's been great for a lot
of us that sell into that
. Yeah.
And that's certainly the zoom out on any chart you want to pick, whether it's in
financial markets or economic conditions are certainly true as to Warren Buffett
statement. But let's zoom in a little bit now on
the here and now ravine and get to this idea of whether the buying that we have
seen in the past. I mean, you know, physical goods and
particularly the goods that you sell specifically, have you seen any sort of
shift or any sort of change in that volume?
Are people still buying t
he same amount? Are they putting off orders?
What? No, I would say that we're getting far
better visibility. About 12 months ago, you know, we had
gone from about six month of visibility from our multibillion dollar U.S.
clients to like 30 days. And it's super hard to run a business
with that opacity. And right now we're getting about 3 to 4
months of visibility. So we have a good amount of our of our
data baked in through early summer. For us, the key period is going to be
that mid-summer perio
d because that's when we're doing production for the the
Christmas holiday. So that's interesting.
I mean, to on the issue of visibility, because I mean, you know, talking to
CEOs like yourself, even just a year ago, everyone was talking about the lack
of visibility. Nobody was giving forecast because no
one really seemed to know how 2023 was going to end or what 2024 would hold.
So as you look deeper into this year and maybe even past that into 20, 25 year,
you think yet you're in a better posi
tion in terms of business planning
and just structuring your business in a way where you have the confidence that
the decision you make today is going to be relevant, I guess, down the road
for sure. For sure.
And kind of dovetailing back to what I was saying before, you know, there was
true doom and gloom in 2022. Right.
And going into 2023, people thought that, you know, the party's over.
The punchbowl has been taken away because we've had low interest rates for
so long and we had all those ra
te hikes getting up to 5%.
And, you know, people like me were losing sleep at night going what?
You know, what kind of historic recession are we going to get?
We didn't get it. And the fact that that now in the face
of these high rates, you still have consumer demand so strong.
It's just like, you know, I do a lot of business all over the world.
And I mean, America is just killing it, I think, relative to all of the other
countries in the world. So the U.S.
consumer, you know, I'm just glad that
I picked this market as opposed to, you
know, any number of other, you know, foreign foreign markets like China.
So. Okay, fair enough.
So we're just crushing it here. I dig that.
What about inflation? Where is inflation here sticky and where
are you seeing disinflation? I'm well, we're not seeing too much
disinflation. I would say We're constantly getting
barraged by our large clients to cut prices.
Okay. But that's an existential thing that
I've been used to dealing with for for 20 years.
We'
re seeing about 4 to 6% raw material increases from our key vendors, which is
a little bit lower than it was 12 months ago.
So in some cases, we can pass that through to clients.
In some cases we can't. In some cases my clients pass it through
to, you know, the Wal-Marts and the Targets and the Amazons.
And in some cases, they can't. It's all about, you know, where you're
positioned in the market. So, Ravina, I want to get your thoughts,
though, on, I guess, something that's a little bit more lo
cal and your thoughts
really on the idea of having support. I mean, we talk about America being in
kind of this always being in a bull market, so to speak, if you will, to
bastardize what Buffet actually said. But it gets to this idea of also making
sure that people don't get in the way. You're sitting right now in Chicago, a
city that's seen a lot of businesses leave.
There have been a lot of policies coming out of the current administration, in
the previous administration that have caused a lo
t of businesses concern.
And it's not just Chicago. A lot of other cities around America are
dealing with similar things here. I guess what gives you the confidence to
stay where you are? And more importantly, are you able to
sort of work with the local politicians and the state politicians in order to
make sure that the business environment is not only going to support GM, but
it's going to support whoever the next entrepreneur who comes after you with
some big, great idea. Look, I mean, I didn
't know we're going
to be talking about Chicago, but I could talk all day about Chicago.
I was a huge fan of Mayor Emanuel. I raised money for him, you know, when
he was in office. Then we had Mayor Lightfoot come in, and
I was not a fan of that. And just when you think it couldn't have
gotten any worse, you have Brandon Johnson, who I think is maybe marking
the lowest point ever from a mayor perspective in Chicago.
So me and so many of my business leader friends are just horrified that a city
l
ike Chicago has had the type of leadership that it has had.
So I have very little confidence in the local politics.
Have you have you have you had any have you had any ability to engage either
with Johnson himself or at least anyone high in that administration?
Did they reach out to you? I was able to engage with Lightfoot.
With Johnson, no. And I can tell you I have a quite a few
people who should be connected to the mayor because they're super, super big
business people in Chicago. And almost
universally people say this
guy doesn't like business, he doesn't care about it.
And I mean, we just heard I mean, the point is that he is a very, very
negative anti business establishment. And and I'm not trying to be partisan
here at all. It's just that like so many Americans,
you know, I'm horrified by the state of politics on both sides.
And I just think that that whether you're red or blue, if you can find a
candidate that is actually, you know, willing to help business and not be an
extrem
ist on either side, I think that that that's what has made America great.
And I just think that's what I hope happens.
All right. Well, nothing partisan about that.
And it's always great to get perspectives on these issues from
business leaders because ultimately you guys end up being the ones who end up
driving a lot of policy changes. Ravine Really appreciate you taking time
for us. Rivian Gandy is the founder and CEO of
GM Non-Stick Coatings. And as you point out, Alex, I have
reached out to
several times to the Johnson administration for comments like
Rivian just made their he's not the only one to make harsh comments about this
administration and the previous administration, but it gets to this idea
that you do need mayors and governors and for that matter, presidents who are
supportive of the business backdrop to get to what Rivian talks about, which is
the Buffett quote, which is us being in that sort of always in a bull market.
Right. And how hard it is to actually start a
busi
ness and get it going, etc.. But I mean, I do wonder I'm sure the
politicians will say that they're pro-business, so there's clearly an
enormous disconnect. Yeah, but you've got to do it.
And I mean, Chicago was kind of a good test case because you just look at the
number that have left, number of large companies that left, you know, this was
something that was workable. You wouldn't see those companies just
completely pick up shop and leave where they go in Texas.
Florida. Yeah.
I mean, Citadel
moved off. Obviously, that's probably one of the
biggest that we've had in recent years. But Texas, Florida, and also don't
forget that we're going to places or out west, no doubt, Arizona, Utah, a lot of
places like that as well. All right.
Coming up here, we're going to talk about another big move, and that
involves Endeavour, a relatively new public company now going to go private.
We're learned that Silver Lake has agreed to a $13 billion buyout for the
company. That's our stock of the hour
.
That's coming up next. This is the close. Time now for our Stock of the Hour and a
closer look at Endeavour Group. That's, of course, the controlling
investor in the WWE and UFC leagues. Silver Lake Management making good on
its vow to take over the company and make it private, though shares higher by
about 2% here. Abigail Doolittle Joining us right now
for a little bit more on this. And we had heard a lot of rumors that
this was going to happen. And I guess now we know it's happening.
It has
happened. And it's an interesting one because
there's a lot of news and flash involved in it, in part because in Silver Lake.
So obviously, that's one of the bigger firms out there.
They typically invest in technology, but this is clearly not a technology
company. It's a sports and entertainment company,
But they have lots of other subsidiary companies beneath.
And then, of course, Ari Emanuel, so much fascination around him, Hollywood.
So they have the entertainment business with the talent ag
encies.
The old William Morris is now the WME and then IMG, which was acquired.
So lots of lots of different businesses. Also PBR, Bull Riding, Open BAT, the
marketing firm won 60 over 90. I'm afraid you said bull riding like
with this Now, you're not a bull riding fan.
You know, I am not like riding. I don't want to be vegan.
I'm definitely not. Bull riding could do it.
I mean, we're not eating the bulls. We're not eating the bulls.
But for the poor bulls to get gored, yeah, that's definitely n
ot my thing.
But in any case, in terms of this deal would also makes it interesting is I
believe what you mentioned, this company just went public not so long ago.
So yeah, I just put this up. They went public in 2021.
Yeah. And then when they started yapping, I
don't know, it was like I felt like I was like a year or so ago about going
private. I was like, Why?
Like, why? Well, I mean, really gives you a sense
in terms of value. I don't think that they've been able to
extract the shareholder va
lue that they wanted.
It was first supposed to go public in 2019.
The market slowed a little bit and then there was the pandemic.
So it took a little bit longer. But now they're saying that this is
pretty good exit value. They, of course, last October talked
about the idea that they were exploring alternative strategic alternatives.
At that time, the stock was a little bit more than $17.
Now it's a bit higher. So they have unlocked some of that.
So it is. It is.
But this was a stock I just looke
d at. So the IPO price was 24 bucks.
Exactly. Basically roundtrip.
Right. And it's trading right now at 26.
It it's basically it's yeah, it's basically so to that point is this like
an idiosyncratic thing guys or is this like we learn anything more macro about
the market with the news. I think this is more idiosyncratic.
I don't think that this has so much to do with the market.
And it's interesting because, of course you were talking about WWE and UFC and
they spun that out in that merger into
Tokyo.
So that company still stays public. That's the stock that's actually doing
much better today than Endeavor itself. It's up about 5%.
Maybe some hopes that at some point that maybe they take Tokyo public.
I'm not sure. It could just be the Tokyo's boxing.
Is it boxing? I'm a little bit out of my league here.
I watch UFC on occasion. Yeah, I love you.
If say, actually, okay, my family's a UFC family.
I mean, it's been learning so much about this war, it's now trying to fight a
mixed mountai
n, mixed martial arts. But we say that sports, it's definitely
a sport that sometimes those are like gladiators, bunch of people getting
kicked in the face for 2 minutes. I didn't think that would be like
American thing. That was the stereotype.
But I Krav Maga, I am actually, I would love to actually graduate to UFC.
So yeah, the things you learned here on Stock of the Hour amazing is what we do
in things like really not nothing. And again, do a little joining us there.
We're about 15 minutes a
way from the closing bell on this Tuesday.
This is Bloomberg. This is the countdown to the close
Romaine Bostick alongside Alix Steel. 10 minutes to go until the end of this
trading session. Alex.
I was taking a look at the s&p. I mean, we open lower, but the low of
the day actually came in just about, I don't know, 44 minutes into the session.
We've kind of been creeping higher. We're still in the red, but well off the
lows of the day. Yeah, that low really came in.
I forgot that JOLTS number.
And then we cannot seem to get a
sustained real sell off. It's totally crazy.
S&P health care might disagree with me. That's pretty much up by about 1.6%.
That's led lower by Humana and some of the insurers that are close to a
medicaid advantage. But energy holding up really nicely as
oil rallies as well. The Nasdaq a little softer, but that's a
Tesla story, somewhat idiosyncratic. I just we just cannot get a sustained
sell off. Yeah, interesting, too.
I mean, interesting you put the health care
stocks out there because that had
been kind of the haven for a long time and obviously some troubles there.
We should also point out PVH and a lot of the apparel makers really getting
hurt today after those awful numbers by PVH last night.
All right, let's get you down and closer to those bells.
Tracy McMillan joining us right now, head of Global Asset Allocation Strategy
at Wells Fargo Investment Institute. And Tracy, there's been a lot of talk
right now about kind of the pivot of the pivot, i
f you will, in the markets.
This idea that we came into this year with the expectations, we're going to
see significant cuts in rates that, of course, drove a big rally.
And now as you kind of start the second quarter, people have really started to
reassess what the Fed is going to do, a more importantly, where the stocks have
gone too far. What's your take?
Yeah, So if you think about what's been supporting the market so far this year,
it's been the theory that we're going to experience a soft
landing.
It's been lower inflation expectations, solid growth in earnings so far and a
good labour market. And what what really came into question
today yesterday is whether or not we're going to see that lower inflation and
whether or not the Fed is going to be able to actually cut rates three times
like they forecast just two weeks ago. And the risk, we think, is probably that
they will have to cut fewer times and that they may need to postpone their
cuts. And that's really what's adding to th
is
choppiness today, we think. Well, talk to me about market
valuations, because when people start to talk about the move in rates, the idea
that rates will start to creep up a little bit, meaning in the Treasury
market, this idea that you then have to sort of re rate the valuation in the
equity space, I was just kind of looking at overall valuations.
I think we're trading right now at 23 times,
23 times earnings on the S&P and I think something close to 20 on the even on the
equal weight here,
I don't know. I mean, if you ask ten different people
whether that's expensive, you'll probably get ten different answers as to
whether that's true. You're right.
You will. And it depends on the benchmark that
you're using. And if you look back to the late 1990s,
what you see is that that P's were even higher at that point.
I think that the average p e was up to 27 at one point and now we're at 23.
So are we high by that standard? Not necessarily.
And can he's content in you to increase even tho
ugh we think valuations are
high? They certainly can.
But if you look at historically where P's tend to trade, we are high at 23
times. And if you look at equity risk premiums,
which is another measure that we use, and I think you brought that up a little
earlier, Romain, equity risk premiums are negative relative to bonds.
And so, you know, that tells us that maybe equities are a little overvalued
relative to bonds. And so that could mean potentially a
pullback. Where should you be tightening u
p then,
Tracy? Yeah.
So we'd be lining up in the sectors that have done well over the last 12 months.
So that's things like communication services and consumer discretionary.
And we'd be moving into areas of the market that are a little bit better
valuations, more cyclical things like energy and materials and industrials.
And we do like health care as well, especially on some of the the new drugs
and the valuations in the health care sector.
What would you be then putting your money into?
Is it
time for value? Right.
Although I feel like for value, we need to create it.
We were joking about this yesterday. A different word for value because it
has such a bad connotation now, but you need to go to quality instead.
Yeah, we like quality. We like companies that have good cash
flow that aren't dependent on the credit markets at high rates.
And so while that might in some instances be value companies, it can
also be growth companies that are those high quality companies.
In fact, some of th
e highest quality companies by those standards are
technology companies. So you do want the growth companies are
technology companies, but you do want to be selling sort of the winners here at
the same time. That's tricky balance, right?
Yeah. So what what we would say there is to
sell some of the the the winners or take some gains there and invest in the more
cyclical sectors. But we are even we technology right now
because technology really has been the growth driver in this market.
And to und
erweight technology at this point probably is not the most
appropriate thing to do if we want to continue to see growth in the overall
portfolio. I am curious, again, looking for quality
and anything that that appears overvalued is where we'd be taking it.
But when we talk about kind of the defensive nature of some of those tech
stocks, if you will, those larger cap names that at least on paper look
expensive. But again, as you know, Tracey,
everything's relative. So if I overlay that with, you
know, the
other, you know, 400 plus stocks in the S&P here, is there a real value to be
found there? So there there can be.
And of course, that depends on what your earnings estimates are.
And one of the things that we are seeing is that that CapEx spending has been
increasing and CapEx dollars are increasing, but they're only increasing
in certain areas so that the that air companies, the technology companies are
where a lot of that spend is going, but it's cannibalizing some of the other
more
traditional type technology companies.
So even within technology, we think you need to be selective.
Again, look at those companies that have the best cash flow.
All right, Tracey, always great to talk to you.
Tracey Mcmillion, head of Global Asset allocation Strategy at the Wells Fargo
Investment Institute. With just about 3 minutes until we get
to those closing bells, Alex And we were kind of going through the beginning
today, and I was just going through this list here and this is like the Al
ix
Steel Hall of Fame list, Phillips Marathon, Valero, Exxon, EOG down.
Yeah, yeah. This is these are the leaders energy and
chemical stocks Yep I mean that's you're going to do I mean am McCormick which
makes spices the chemical stock is interesting though because they have
inputs but that's a whole different story there.
But yeah I mean you have 85 WTI but you had Robert them all talking about 80 to
90. We're almost at the 90 mark.
So it's really the top that we're going to see for a bit.
Yeah
, but it kind of makes you wonder what got us to 80, 85, right?
And if that continues, then you maybe have to have some worry, at least for
the equity space here as we count you down through these closing bells on this
Tuesday afternoon. Stick with us.
We're going to the bell and beyond. The bill.
Bloomberg's comprehensive cross-border. Coverage of the U.S.
market. Close starts right now.
And right now, we are 2 minutes away from the end of the trading day Romaine
Bostick alongside Alix Steel. W
e're counting it down to the closing
bell and here they'll take us beyond the bell.
It's a global simulcast. We're joined right now by Scarlet Fu, by
Carol Massar, and by Tim Cernovich. And we welcome our audiences across all
of our Bloomberg platforms, television and radio, and our partnership with
YouTube. Yeah.
Hey, guys, very much a different tone here.
It feels like today as we continue to watch, you know, pressure on yields.
I mean, I do feel like we've talked about this a lot, kind of thi
s new
narrative of kind of the expectations in terms of Fed rate cuts, maybe not as
many as many investors have been expecting.
Having said that, on the equity side of things, it feels like some really broad
based selling here. If you look at both the S&P 500, the
NASDAQ 100, yeah, off our lows of the day, but still down on the S&P 500, down
by 7/10 of 1%. Scarlett Carol mentioned the idea of
sort of figuring out rate cuts for the year.
It's what Liz Young just talked about with us over so far.
She said we're in a period where we're not going to get the cuts that we
thought we'd get. And the market has not fully digested
that. It has not fully digested that.
That's showing up in volatility measures the VIX up for a third day, although
it's at 14 and a half. So we're not talking about elevated
levels yet, but the MOVE index, which tracks volatility in the U.S.
Treasury market, up 9% on Monday. Right.
But you would expect even more maybe. We do see rates going to be sticky.
Now, people a
re starting to talk about what happens if maybe we need to price
in no cuts at all and maybe even a hike if you look at.
So for us, positioning looks about 20% positioning for no cut at all or a hike.
Totally different. Yeah, I was curious.
I mean, everyone's making a big deal about sort of the total number of rate
cuts priced into this market right now. But when you look at the starting point
and how that's move, I mean, even 2 to 3 years out seems a little bit
implausible, particularly if you
think the election might actually interfere
with the Fed's decision making. We get the closing bell here in New
York, and I think the quote like great Alix Steel, it could have been worse.
The S&P 500 was down as much as 1% on the day.
The green, it's going to finish down by about 38 points.
They're only about 7/10 of a percent holding right around that 5200 level.
The Dow Jones industrial average down about 400 points or 1% on the day.
A similar percent move lower for the Nasdaq composite, down
to 16000 to 40.
And your relative laggard on the day that is the Russell 2000, a loss of
about 38 points or 1.8%. All right, quick check.
S&P 500 folks, most names, Laura Scarlett, 400 names to the downside, 103
to the upside. So as we said, largely a risk off trade
for many names today. Yeah, very much a lot of red across the
map pie. In terms of the worst performers, you've
got health care off by 1.6%. A lot of health insurers like Humana,
CVS, which owns Aetna and Centene, you've got consume
r discretionary and
real estate investment trusts, consumer discretionary.
That's of course, Tesla. And on the upside, energy stocks, 1.4%
gain today, now up 15% so far this year. Utilities and communication services
also moving up just a notch higher. All right, guys, a little tricky for me
to find gainers. I had a little assist from my buddy over
here, Tim Sandvik. So let's go to it.
Some of the individual gainers seem normally to work for you.
We actually help each other. That might be a good
thing to do as a
partnership. First of all.
Just kidding. Just kidding.
All right. So let's get to some of the individual
gainers. Another oil deal with some M&A activity.
Actually, on this Tuesday, we had SLB, formerly Schlumberger, agreeing to
acquire rival oilfield service provider Champion ex.
I feel like this is like in your wheelhouse.
Alex It is so like, I'll just do it quickly and feel too free to add to it
anyway. So buying champion ex for 7.8 billion,
it was an all stock deal. What do
you think too, Alex, of all the
energy deals that continue up in this space?
Well, in this particular world, this is about SLB trying to control the well
from beginning to end, from beginning and drilling to the end and retirement.
So that's kind of interesting. That's the well light they talk a lot
about. But hey, if you get oil that still stays
at 85, is it actually bring in the sellers because they're like, cool, I
get a better premium and the buyers are like, hey, if we go to 185, deal make
s
actually things look really good could see more of it potentially right.
All has to do with the price this is why we love you are just one of the many
reasons that color around all things in the energy space.
All right so champion X up about 10.4% in today's session.
I'm sure you guys talked about this, another deal and this had to do with
Endeavor Group holding the talent agency.
We know what they're the controlling investor in WWE, also Ultimate Fighting
championship. They were agreed to be
acquired in a $13
billion buyout by the private equity group Silver Lake Management, which
already owned a controlling stake, we should point out Endeavor.
So interesting deal. But they did offer minority investors
2750 a share for their holdings. And then just to layer on that and
endeavor, let me just bring it up here. What it was up about 2% here.
That stock closing at 25 and change just under 26 share.
Also higher in the news Endeavor, which owns a 51% stake in T.K.
O, the parent of Ultimate
Fighting and World Wrestling, They also moved.
Higher. In today's session, they were up just
about 5.2% on the news that Dell news between Endeavour and Silver Lake was
noted that Tyco isn't party to the transaction and will remain a publicly
traded company, at least for now. Okay.
I had the easy job today for the decliners.
It was an embarrassment of riches. Tesla finishing their day down by 4.9%.
It fell as much as 6.7% just after the company reported first quarter
deliveries. That missed the
average analyst
estimate. Tesla delivered 286,810 vehicles in the
first three months of the year. It missed the Bloomberg average estimate
by the biggest margin ever, going all the way back seven years.
The average estimate was for about 450,000 vehicles.
Scarlett, you mentioned health care. I want to talk about a couple of these.
UnitedHealth Group falling by 6.44%. This after the the US regulators decided
against boosting payments for private Medicare plans.
It's a break with recent practice
and it means that health insurers are now
facing lower payments than they'd anticipated for the year 2025.
Humana, which brings us to Humana, down 13.4%.
It was the worst performer in the S&P 500.
It gets most of its revenue from Medicare fell to its lowest point in
four years. Today's move was its biggest move lower
since 2022 PVH Corp. down by more than 22% today.
The company owns Calvin Klein, Tommy Hilfiger and others.
It plunged the most, going all the way back to Black.
Monday, October 19t
h, 1987, more than 35 years ago.
This after it said it expects revenue this year to decrease by 6 to 7%,
compared with the 2% increase last year. The company has been working
to on this transformation. It's focused on strengthening Calvin
Klein and Tommy Hilfiger, which I don't know if I have to tell you guys.
It's lost momentum among shoppers in recent years.
I don't see a lot of it out there. A little bit, yeah.
Is my turn. Am I going to heels?
You can, yeah. Get all I did for decliners today.
I hope that's okay. Okay.
Let me stop you there. All right, Jenny, it's going to be easy.
You're seeing a sell off, particularly in the back end.
We were up, though, by about ten, 12 basis points, but now we're only up by
about four. I was talking to Ira Jersey of Bloomberg
Intelligence earlier, and he thinks a lot of what we're seeing is actually
repositioning because if you're looking for higher for longer, it really would
be the front end that would be moving more.
So sort of wait a couple o
f weeks, just let everything settle out and then maybe
we'll get a cleaner read on where the bond market is positioned.
Hey, guys, I just want to bring our attention to some headlines crossing the
wire right now. This involving Intel shares down about a
percent here in after hours trading. They're giving some type of guidance
here, though it seems to be very specific to its foundry business here.
They're basically saying the 2023 foundry revenue came in well below where
it was in the year prior.
But it says that it now sees a framework
for that business going forward that does provide some degree of margin
expansion, says it has a new structure that is designed to drive up cost
discipline and it will recast its operating segment financial results for
2021 through 2023. So just based on this, I think we need
to need to dive a little bit deeper into this, guys, because now that I look a
little deeper into this, this does appear to be a restatement of past
results specifically related to
that foundry business.
I think we need to get some more details and we'll get you an update here on
what's going on. We also have some numbers on the data
center and I revenue as well for 2023. So this has already gone past $12.64
billion versus $16.86 billion. So that is a decline on an annual basis,
but we don't really know what the estimate is.
So I can't give you a read on whether that's better or worse than expected.
But we go back to that idea that perhaps it's foundry business is in flux
a
little bit here, as it has also named a new CFO of Intel Foundry.
Lorenzo Flores will be the new CFO of this part of its business.
Yeah. Again, just reading from their press
release, there are some comments by Pat Gelsinger, the CEO, obviously vintage,
but they are just kind of focusing that, talking about this new structure
designed to drive increased cost discipline, higher returns, also by
providing greater transparency, accountability and incentives across the
business. So yeah, I think we
need a bit more to
know exactly what it means. And let me just clarify to now, I had a
chance to read through this. So it does look like they are
effectively breaking out this business as a separate segment with a separate
leader and going back and providing segment results for the past year.
So not a restatement, more of a disclosure of how the business had been
performing over those previous years. Yeah, shares of Intel right now, they
were down just about 3/10 of 1% in the change from the cl
ose.
Still, we're still getting earnings, guys.
Right now, other companies are reporting, do you see Dave and Busters
is reporting fourth quarter earnings per share missing estimates.
Shares falling just about 7% after that earnings.
Miss. Hey, 10% now.
Excuse me. Yeah, that's not getting hit.
But just one more quick one from Intel targeting a 40% adjusted gross margins
at the foundry business and targeting 30% adjusted operating margins at the
foundry business. So, yeah, so we'll look for some
more
analysis on it. But we are seeing Intel continuing to
trend a little bit. Lower.
I'm sure that there will be more commentary, certainly from the analyst
community around this and from the company.
All right, guys, that's a wrap across platform radio, TV, YouTube, Bloomberg
Originals, We call it Beyond the Bell. We will see you again, same time, same
place tomorrow. All right.
Coming up after the break right here on Bloomberg Television, our coverage
continues with a deeper dive into, well,
what's ailing the automotive sector.
We did get results out of the major automakers.
We got results out of Neal and we got them out of Tesla.
And there were disappointments all around.
That conversation coming up next on the Close on Bloomberg.
And. Welcome back to the close.
I'm Scarlet Fu and I'm Romaine Bostick. We did get a bit of a sell off of
Scarlet Fu today here, but maybe not quite as bad as it could have been.
We did see a meaningful sort of rerating take place today in the equity mark
et
here. A break to the downside for the S&P 500,
only 7/10 of a percent and holding the line right now at 5200.
But there was a lot of drama going on with commodities and more importantly,
going on in the yield space that really took a chunk out, a lot of the
speculative assets out there. Bitcoin falling for the 12th time in the
past 20 sessions. And of course, we talk about this idea
here of what investors are really looking for and whether they're going to
find it. Take this.
When you look at
all of the sectors that move lower today and you think about how
broad based it was, in fact, this was the fifth broadest sell off that we've
had this year. That may not seem like much, but these
types of moves, they've become a rarity as of late here.
So it was chipmakers down on the day. It was automakers also down on the day.
Even consumer staples and food stocks also moving lower.
Now, does that mean that while the rally is over?
Well, not quite here. There were a lot of bright spots out
th
ere, Scarlet. And as you see at the top of the screen,
at 5200, you had a retest of some of those technical levels.
But Scarlet, they held. And that's going to be important for a
lot of folks. That's a good point.
Also to see that you have crude oil up 1.7%.
Energy stocks as a group were the best performers in the S&P 500 on the day.
And within that space, you have Champion X.
This is an oilfield services company. It is surging after it agreed to be sold
to its competitor, SLB, for $7.8 billion.
The price tag was $40.50 a share. That is about a 15% premium to the last
close. Exact Sciences, another gainer on the
day, up almost 5%. After its diagnostic testing.
Rival Free GNOME released data from its colorectal cancer screening trial that
trailed Wall Street's expectations. So analysts over at Citi say that that
underwhelming data really removes an overhang on the shares of Exact Sciences
and another one of its competitors, Guardant.
Now, in terms of decliners, PVH, which is the company
that owns the Tommy
Hilfiger and the Calvin Klein brands falling the most since Black Monday in
1987 after a full year sales guidance that trailed analysts estimates.
In particular, it says revenue will drop at least 6%, compared with a 2% increase
last year. So that's a big, big change.
And the reason here is a difficult macro backdrop, particularly in Europe, as was
the sale of its women's intimate business and Tesla down almost 5% on the
day. The worst performer in the Nasdaq 100,
also the l
aggard in the Magnificent Seven so far this year and for the past
12 months as well, its first quarter vehicle deliveries fell eight and a half
percent. That missed the average estimate by the
widest margin ever going back seven years.
And our top story this hour is the Disney showdown.
Shareholders still casting their votes on whether to support the CEO, Bob Iger,
or side with activist investor Nelson Peltz, who's been critical of Disney's
streaming and succession strategies. One thing that no
one's complaining
about right now is Disney Stock of Late. It's actually up almost 35% this year
for the biggest gain in the Dow Industrials.
I mean. All right, Scarlett.
Well, let's talk a little bit more about what's been going on in the automotive
sector. We actually did get a slew of numbers
out of several companies, including Honda, Toyota, and you mentioned Tesla.
And the most interesting nugget to come out of those numbers is demand for lower
price models, really helping some of those aut
omakers defy expectations for a
broad slowdown. Bloomberg Automotive reporter Gabriela
Coppola joining us right now from Detroit.
And Gaby, we talk about this idea of sort of a all the focus on luxury, on
EVs and everything else. But kind of interesting to see that, you
know, apparently a lot of folks have gravitated back to just good old
fashioned, affordable, compact cars. Yeah, that's exactly right, Romain.
I mean, I look at these sales results as like a cry for help from the US
consumer. You
know, give me a car that I can
actually afford. You know, average new car prices are
still hovering, you know, I think 47,000 around there.
That's just not affordable for the average person.
And we saw that in the results for the quarter.
I mean, cars like the Honda Civic, Civic, the Honda CRV, the Toyota
Corolla, even GM, you know, we think of them as ruling, you know, pickup trucks
and big bulky SUVs, which didn't do as well.
But they have this new Chevy Trax, which is around $20,000.
It did
great. So it's like this is not something only
the Asian carmakers can do. I mean, well, I mean.
Well, more than doing great, Scarlett. I mean, we talk I think it was something
like a six fold jump in sales of the Chevy Track.
Meanwhile, those big gigantic vehicles that, you know, the biggest those
tumbled. Yeah.
Yeah. Those didn't do so well.
So, Gabby, the pandemic is long over. Production has normalized, which means
inventories are, for the most part, replenished.
What kind of incentives did
carmakers offer?
I know that people were going to affordable cars, but they loved their
incentives. Yes, I think we are really seeing a
shift from those pandemic times. As you mentioned, when incentives were
hitting, you know, they're almost nonexistent.
There were no sales to rental car companies.
You know, now, like you said, production is normalizing.
I guess, incentives as a percentage of the sticker price that you get are
inching up there. I think the automakers are still being
fairly disci
plined about it. They're not going crazy.
But we are seeing some of those deals, you know, trying to lower the helping to
lower the financing cost. Right.
Because interest rates are really pinching people's wallets.
So there are and I would say also, you know, after we saw so much
price cutting on electric vehicles, you know, Tesla slashed their prices on
their cars last year. Ford did it with the Mustang Mach-e.
So if there are deals to be had, especially if you want to lease an EV
right now, t
hat's probably one of the more affordable payments you can get.
Yeah, interesting numbers here, Toyota. 20% increase in deliveries.
Honda, 17% increase in deliveries. And even some of the other companies
like that didn't quite perform as well. Still kind of holding the line.
Gabby Capella out there in Detroit and you heard her just talking about the EV
space. Of course, that caught everyone's
attention this morning when Tesla did report its numbers, really feeling the
slowdown in demand there wi
th the EV giants deliveries missing estimates by
the biggest ever, down about 9% Bloomberg Technology coast.
Ed Ludlow joining us right now for a little bit more on this.
And I think everyone knew these numbers were going to be soft.
I don't think they knew they were going to be terrible, If you can say, okay.
All right. I think there are probably sell side
analysts, at least across the country, scrambling to rethink their models.
We knew. The fact is, though, higher rates are
impacting the cons
umer. You know, Gabby talks about leasing.
Leasing is one option, but the financing costs in the Tesla were incredibly high
in the statement test to try to position this as a supply side issue.
Yeah, right. Which nobody believes, which nobody
bought. Their argument was that like many, they
were impacted by the situation in the Red Sea, diverting both parts and
finished goods that the pause in Germany because of the fire incident and in
Fremont in California they they refreshed the model three an
d that
impacted ramp. But it's interesting because like Elon
Musk telegraphed this was coming, he told us we are between two waves where
the Model three and Y growth has been and gone.
Gabby explained just then why a 40 to $50000 EV is not resonating,
particularly with the US consumer. It's just that the next wave is so far
away, the next wave being a much lower price point.
A $25,000 is what Tesla is targeting. So my question here is that Tesla still
managed to reclaim its title as the world's
top seller of EVs.
Yes, whatever Elon Musk is telegraphing, he's doing so in kind of a conflicting
way. Yeah, well, that point puts China front
and center right, because BYD, I think, did 300,000 battery electric in the
quarter gone, but in aggregate they did more than 600,000 vehicles.
Why they're in the hybrid market which which Tesla is not of course it's a pure
play. And it's interesting though, the reason
I bring China front and center is that Tesla did exactly what it told us it
would do.
It discounted heavily at the end of the
quarter and on April 1st raised prices in all markets in China.
Everyone else is doing the opposite. I say they continue to incentivize, even
if if it's not working, they continue to incentivize.
So I would say watch Tesla and what it does next.
Does it use the lever of price cuts again, or is it just a low price?
Because we talk about why we've seen this is not just a Tesla, but across the
board that obviously some of it is a high price of the car, but so
me of it is
still issues with charging infrastructure.
It is you live in a place like New York City and always tried to buy a car here
like EV knows, you know, it's a difficult proposition, much more
difficult than for you folks out there in California.
So I do wonder whether that can be addressed.
I mean, I know that's not going to address by Tesla alone, but I mean,
overall, the industry can address that. There are multiple other factors.
One very real one was Elon Musk. In the quarter gone, A
number of
analysts are saying that he probably impacted the brand negatively.
They haven't really got fully into marketing yet, so the word of mouth is
starting to fade out. They probably need to reach a new
audience. And then there is the reality too, that
he's impacting it negatively. In what way?
Can we be more specific? Yes, we can.
According to the opinions of sell side analysts, his comments on social media
Platform X, There we go. And alienating would be buyers.
As he said, something con
troversial. He weighs in on lots of topics.
Most recently the border is one that some have cited.
What I would also say is we need to start talking about the reality of
ownership. Yes, in New York, but also in
California. There's loads of public money available,
but there is an income cap on those eligible.
And as we learned with the I.R.A. and companies, it's actually really hard
for consumers to get hold of some of the money that's available if it's not
included within a lease. Yeah.
Can I jus
t add one other question, though?
Yes. On this, because the idea I mean, I
think you have to get to the idea of what a consumer is looking for.
Right. And Gabby kind of alluded to this, and
we saw this in the Bloomberg reporting how hybrids have really sort of kind of
started to bubble back up again. They kind of seem to fall out of favor.
And you've seen a lot of people gravitate to that.
And least anecdotally, the narrative seems to be people want to go shop for a
TV or scared away by either t
he sticker price or the lack of charging.
They realize, oh, there's still hybrids out there and I don't have to worry
about. Hybrids still have a role to play in
this market. Toyota, the world's biggest maker of
cars, seems to think so. And you would think they have some
evidence that that's true. And a lot of people that I've spoken to
today believe that's true. But it comes down to economics.
You know, the benefit of a hybrid is that is the mileage.
You know, I've just as you guys know, I leas
ed to model Y last week and the
economics me world, it's 10 to $20 to charge my if it was $80 to fill up my
SUV with gas. But for many, how long are you at the
charging station? Time is money is the old adage, but also
there is still range anxiety. And I think all of these factors are
still present. The hybrid solves the economics issue
for many median income households, but it also doesn't give you anxiety.
If anything, it allows you to drive for longer without having to fill up.
If anything, y
ou're happy when you go to the gas station because you're thinking,
Oh, I only had to pay $20 as opposed to 60.
Exactly. So.
All right. Ed Ludlow, thank you so much.
Really appreciate it. And of course, Ed Ludlow is here for the
week. We'll hope to see him back later on.
Coming up, we've got the top three where we focus in on the top three movers and
shakers at the center of the day's most talked about stories.
This is the clothes on Bloomberg and. It's jobs day and Bloomberg has the
report. Und
er service, jobs numbers have
exceeded expectations consistently. The US is just exceptional.
Look around the world these Friday, Jonathan, Lisa and Marie and Mike will
bring you crucial data and expert analysis at terminal speed.
When you see numbers like this, is that no longer a reason to be hawkish at the
Federal Reserve? It's a reason to be cautious, maybe not
hawkish. The March jobs report Friday only on
Bloomberg. Time now for the top three, where we
namedrop the people driving some of th
e day's most talked about stories.
And first up remain is Jon Stewart. The comedian said Apple told him not to
interview FTC chair Lina Khan when he hosted his Apple TV Plus show.
Apple, by the way, declined to comment on this.
Yeah, this is interesting because we saw all the drama when he left and they kind
of alluded to the fact that Apple had basically said he couldn't do certain
things. It seemed to be related to China.
At least that was a narrative around the story.
But now he's saying publ
icly, at least in this one, incidents, it had to do
with his discussions with the with Elena Con and FTC.
Absolutely. Although it should be noted that Stewart
returned to The Daily Show and Comedy Central, and he did get to interview
Lina Khan this week. So she got to share all of that
information. Yeah, absolutely.
And he also said that basically Apple also raised some concerns about his
coverage of AEI and a few other things. So interesting, a partnership there.
Jon Stewart in the news today.
And so was a man named Stephen Gilmore,
not familiar to a whole lot of folks outside New Zealand, but he is now going
to become the chief investment officer here in the U.S.
for the California Public Employees Retirement System.
Of course, CalPERS has been going through a lot.
They've lost two CEOs and less than two years here.
He this guy apparently has a good track record.
He managed the sovereign wealth fund over in New Zealand, roughly about 12%
returns over the years. We should point out, t
hough, he's going
to be managing about ten times the amount of money at CalPERS and what he
was in New Zealand. So a much bigger animal here.
But at least on paper he seems to have the pedigree.
Absolutely. CalPERS, of course, manages money for
more than 2 million firemen, policemen and public service employees, and it's
underfunded. So that's another challenge she has to
deal with, not just underfunded, But do you see the performance?
I mean, in 2002, they had a loss. Yeah, most markets were up
and even last
fiscal year they were only up like 5% when the rest of the market was up like
three times that. All right.
So he's coming in and hopefully righting the ship over at CalPERS.
The last person I'm watching is Jeff Bezos.
He is expanding his real estate empire with a third mansion on South Florida's
exclusive Indian Creek Island. He shelled out $90 million for a six
bedroom home on the island and has played us to live there because he
bought two other Indian Creek homes last year for
$147 million that he's tearing
down. All right.
Well, good for Jeff Bezos. I do want to bring some breaking news.
And Scarlett, you've been following this story for a while.
There's a big Disney meeting up ahead tomorrow as a lot of folks really vying
for board seats. We're now learning that Disney has more
than 60% of the votes in that proxy fight against billionaire Nelson Peltz
here. That is the headline Crossing the Wire.
Stick with us. We're going to have full coverage of
everything that's
going on with Disney right after the break, including a
conversation with Brad Lander. He's the New York City comptroller, and
he's actually supporting CEO Bob Iger. That conversation coming up next on the
close. This is Bloomberg. Disney hoping to wrap up a bitter
showdown over the composition of its board of directors.
Bloomberg has just learned that Disney is leading in its proxy battle against
the billionaire activist investor Nelson Peltz.
With more than 60% of the votes counted. Joining us
now for more is geetha wrong?
Nothin. Bloomberg intelligence, US media
analyst. This shareholder meeting starts at 10
a.m. Pacific time tomorrow.
Is this the only item on the agenda tomorrow?
This is definitely the main item on the agenda, Scarlett.
I mean, this battle now has been ongoing since October of 2023.
And Disney has obviously launched a very, very aggressive campaign, as has
Nelson Peltz. But I think, you know, and as you just
reported, I think Disney definitely will have the edge to
morrow.
And this has been a pretty expensive proxy battle.
I know that when I listen to podcasts, for instance, I constantly hear Disney
ads urging me to vote for their candidates.
We've also seen the activist investor Nelson Peltz, profiled in international
newspapers. I mean, no expense is being spared here.
Absolutely not. In fact, this is the costliest ever
proxy battle fought in corporate history.
So Disney has spent upwards of $40 million for that for this, you know,
very expensive campaig
n. You have Nelson Bowers, who is estimated
to spend upwards of about 25 million, and then Blackwells, which is the other
activist investor that wants its own candidates on the board, has spent
around 6 million or so. So, yes, turning into a very, very
expensive fight. And in part, that's because Disney is
unusual in that it has a very wide retail investor base, different from a
lot of big companies. Can you tell us a little bit about how
that plays into the strategy of these activist investors?
Well, absolutely. So Disney is you know, they have over
1.8 billion shares outstanding, 35 to 40% off that shareholder base, as you
just pointed out, are individual mom and pop shareholders.
Now, that's pretty unlike some of the other big companies.
And then, of course, you have the big institutional investors, you know,
obviously Vanguard, BlackRock, State Street, Morgan Stanley and then Tryon,
you know, owned by Nelson Peltz, which also has, you know, kind of a
significant stake. But yes, the
y are able they've run
multiple campaigns, right? They are, you know, using a bit of all
their animated characters. They're adding a bit of comedy.
They're also being, you know, you have Bob Iger, who's spoken on multiple
conference calls at, you know, at earnings calls, saying constantly that
this is a distraction, that he has really kind of got the company back on
track. So they've really used, you know, all
different ways to kind of appeal to their investor base.
Yeah. Very quickly here, you
mentioned
Vanguard, BlackRock, State Street. They own a combined 19% of Disney in
many cases through their passive funds, which is not unusual for a U.S.
large cap. But how did they tend to vote in these
very controversial battles, or do they just kind of take the path of least
resistance and go with the company, or do they actually pick a side?
It seems like here that most of them are actually supporting, you know, Disney's
management and Bob Iger's kind of vision here.
We know that there have
been some supporters of Nelson Pao's as well.
You know, ISS came out in support of him, Neuberger Berman, CalPERS also
actually gave their support to to Nelson Peltz.
But I think in the most care in most cases, Scarlet, as you pointed out, if
they like what the management team is doing and what they're seeing, then I
think they do tend to kind of go in that path.
All right. A really appreciate it.
Get the rung instead of Bloomberg intelligence.
And let's just remind everyone that the vote starts
at 11 a.m.
Eastern tomorrow, Eastern time tomorrow. That would be 1 p.m.
California time Pacific Time when that shareholder vote takes place.
Again, Bloomberg reporting that 60% of the votes is going the direction of team
Bob Iger, the CEO of Walt Disney Company.
Nelson Potts, of course, pushing for his own candidates on the board of directors
at the Walt Disney Company. Let's move on here because shareholders,
shareholders are siding with Disney, say that they're focused on the long term
healt
h of the company. The New York City pension fund is
telling Dateline that Peltz has troubling performance on other boards,
raise concerns about the value that he would bring to the table.
We do not believe this would be beneficial to preserving shareholder
value. For more on this, we want to bring in
Brad Lander. He is New York City comptroller.
He represents the New York City Retirement Systems, which holds $2.6
million worth of shares of Disney, valued 2.6 million shares excuse me, of
Disney s
hares valued at more than $290 million.
Brad, thank you so much for joining us today.
Great to be with you. It's an exciting proxy battle.
So as city controller, you are an investment adviser and custodian for the
city's public pension funds. I'm curious as to whether institutional
investors like yourself tend to vote early or later.
I'm just trying to gauge how much we can read into our reporting that 60% of the
votes have been cast for the Disney Company as opposed to Nelson Peltz.
Well, our v
otes have already been cast. So, you know, we're amongst that 60.
Percent. And we did vote for the slate, supported
by Disney management, by Bob Iger, as that quote says that you put know, we
are not enthusiastic about Leonard Peltz, 15 of the 22 times he's taken a
position on a company's board. 68% of the time it's underperformed the
S&P 500. And look, it's a short term oriented
hedge fund strategy, and we're long term investors looking to put in $90 million.
That's the retirement security of t
eachers, firefighters, cops, proxy
guards. And we want to make sure it's there for
the long run. So try and has raised a number of
grievances. He's pointed out succession issues, how
the board has fumbled that, the unprofitable streaming business and of
course, about a bunch of box office duds as well.
Do you share any of his specific concerns?
Well, look, the succession issue was really we were not pleased with Chief
Beck's time as CEO, and we want to see the transition to the new CEO handled
b
etter. But we like the transformation plan that
the company has put forward. And look, there's some does when you run
a studio, there are some successes as well, like Taylor Swift and Marvel and
Star Wars. And look, I just you know, Leonard Peltz
has never been on the board of or led a media company.
So I don't know what he's going to bring to solving streaming problems or making
sure that the next stream of films are successes.
I like his track record is good during from 2005 to 2023, 579%, and
even in
this more recent tenure, better than Paramount and Fox.
You know, we think it needs to improve like they all do, but one that is has
done well by us. You mentioned the long term return of
Disney under Bob Iger. The board battle has been like, let's be
honest, pretty good for the stock as well, because since Paul says publicized
his stake in Disney, the stock has done fairly well, up almost 50%, outpacing
the S&P 500 return over that period. Do you think it's been good for the
company in
terms of sharpening focus? Well, look, there's two different
questions. One, does this push people to do their
best to try to make sure they're coming up with good ideas?
And probably it does. On the other hand, activist interest
pushes up share price, but that doesn't do anything for a long term value.
It's probably why it's not a strategy that we are generally supportive,
whatever the outcome of tomorrow's vote will be.
Do you think this will mark the end of the proxy fight at Disney, or is i
t just
end of stage one? Well, you know, I know that Mr.
Peltz has tried to get on the Disney board 24 times already.
I think this is the 24th time. So I wonder if he's just looking for a
fast, fast so he can move through the Disney parks more quickly with his
grandkids. I say give them a fastpass instead of a
seat on the board. Let's see what happens tomorrow.
Obviously, there are those CEO succession issues and those are
important over the next few years. Has he or Blackwells reached out to yo
u?
Has their side reached out to you to try to convince you of their argument to get
on their side? We have talked with the company.
I don't we have not talked with Pelsor. Okay.
Got it. Investors like to compare Disney to
Netflix. And if you just look at the
fundamentals, for instance, Disney trades at 24 times forward earnings,
Netflix at 33 times. Netflix, of course, is profitable with
its streaming. Do you think this is a fair comparison?
Well, you know, Disney has got four businesses.
They'
ve got a film studio, they've got streaming, they've got ESPN and they've
got the parks. So for the streaming service, Netflix is
the right comparison. But obviously you have to
look at other comparisons for the sports network.
Where is the underutilized value, unrealized value in Disney?
Well, you know, that's what this transformation plan is designed to find,
figuring out how to make sure that you film production and you're streaming
aren't eating into each other, that you're really getting th
at value.
That's something that the company and really many of these companies are still
working on. Look, the Disney brand, there's nothing
like it and how you take that into the next generation.
I think the Taylor Swift concert is a great example of that, you know, and you
know how many Marvel films you could put out that are keeping successful.
That's not my expertise. But to your point, it's not Nelson Peltz
expertise either. So.
Exactly right. I just don't see anything to indicate
that he w
ill add long term value. So I want to also ask you, given that
your role here as the CFO of New York City about congestion pricing,
the MTA board basically gave it its green light to the city's congestion
pricing plan. Is this pretty much a done deal or are
we still in the eighth inning given the outstanding lawsuit from New Jersey?
I think eighth inning is right. I'm really hoping to get to the to the
closer, we'll bring in our relief pitcher and get across the finish line
because, look, we nee
d that investment in the subway.
That's to me like, all right, look, we want to reduce congestion and partly we
need to invest in a modern signal system, inaccessible subway trains like
the mass transit that is the future of New York City.
That's what our economy relies on. These are the resources to make the
investment. To really modernize it and make it run
as effectively as it can. So the MTA anticipates collecting about
$1,000,000,000 annually from the new toll.
Is this what you would expect
as well? Is that what you've penciled in?
That is what's projected, though. Obviously, we have to see where it
lands. Got to get through the lawsuits, have to
see how implementation goes. But, yes, about $1,000,000,000 a year,
which they're going to write about, a $50 billion bond investment against
that. Those are the resources that we need to
modernize the signal system. We're still operating on decades old
technology. Our particular cities are way ahead of
us here. Safe, fast, reliable mass
transit is the
key to New York's thriving. And this is a big piece of the
investment. Don't make that work.
Yes, but it will definitely put a lot of strain on certain businesses located in
areas right near where the tolling is. Congestion pricing.
Critics will say that small businesses will have to take on this new expense.
They'll have to pass it on to their customers, for instance.
How do you see this affecting small businesses in midtown as well as
downtown? Well, don't forget, we already hav
e
tolling on the Hudson River Bridge as we don't on the East River Bridge.
So probably there's just sort of a whole set of quirks that right now truck
routing is already taking into account. So I think this will actually even this
out a little bit, there will be a period of adjustment and there are many fewer
people. Most people just do not drive their
personal cars into Manhattan. So, look, there's going to be some
resetting and adjusting. And look, I'm sympathetic to small
business owners for
whom this is going to be an additional expense.
But you've just got to think about the city as a whole.
Everyone will thrive better if customers can get to you faster.
If the city itself can keep its mass transit strong, if congestion is
reduced. That was a fair process to consider
exemptions. People want more of them.
I totally understand. But from the point of view of long term
investment in the city, this makes sense.
Friedlander, really appreciate your joining us today.
Look forward to speak
ing with you again. New York City Comptroller Brad Lander
there talking to us about how he's voting in the Disney proxy battle
tomorrow, as well as New York City's congestion pricing plan.
In the meantime, let's take a look at how markets closed on the day.
It was a down day for equities with the S&P 500 losing three quarters of 1%.
Some pretty solid economic data really driving concerns that perhaps the
Federal Reserve won't cut interest rates by as much as they had anticipated or as
much as in
vestors had anticipated. And you saw that certainly with bond
yields moving higher as well, the ten year yield moving up four basis points,
actually paring some of its advance from earlier.
We're also looking at a weaker dollar. They're down 1/10 of 1%.
And crude oil continues to move north now, 2.1% ahead of tomorrow's Opec+
meeting. This is the close on Bloomberg. And. President Joe Biden spoke with China's
leader, Xi Jinping, over the phone earlier today.
It was actually their first one on on
e communication since meeting in
California last November. Joining us now with more details is
Bloomberg Balance of Power cohost Kelly Lyons.
Kelly. What did they talk about?
And perhaps more importantly, what did they not talk about?
Well, very good question, Scarlett. Of course, these talks, the fact that
they were happening at all is kind of a reflection of the meeting that they had
back in November when they promised to continue more regular communication.
So you could consider this conversa
tion that lasted about an hour and 45 minutes
this morning, part of that. It was pretty wide ranging, everything
from A.I. to climate change to Biden, raising
concerns about China and its support of Russia, specifically in its war against
Ukraine. All of that was in the readout, the
statement that came from the White House.
What wasn't in the statement but did come up in the White House press
briefing with spokesman John Kirby was the question of tick tock, and he
confirmed that tick tock did in
deed come up on this phone call.
He said the president raised concerns around Chinese ownership of that app, as
well as concerns about the protection of data security for American people.
So, of course, that's interesting given the legislative effort that is still
sitting in Congress that could see tick tock banned if it's not divested by
bytedance. Now, a lot of this scarlet is really
just talking. Concerns are being raised about whether
anything actionable or tangible comes out of those these
kind of
conversations. Definitely an open question.
What I will say is that it's not just happening like today at the presidential
level. It is also happening at the cabinet
level, as we've seen kind of a rotation of cabinet secretaries actually making
trips to China to visit their counterparts.
And later on this week, Treasury Secretary Janet Yellen will be making
her second trip to China in nine months. We expect that she will especially be
focusing on the issue of industrial overcapacity and
the impact that has on
other economies throughout the world, including the economy of the United
States. Yeah, that's going to be a fascinating
trip, especially since she's made so many comments of late about China and
their policies. So fascinating.
Also an hour and 45 minute phone call. That's a long time.
I want to turn now to the primaries that a bunch of states are holding today.
You've pointed out that there's an interesting one in Wisconsin right now,
and former President Donald Trump is
there as well.
Yeah, Trump visiting not just Wisconsin, but also Michigan today, two really key
battleground states where he is talking specifically about the issue of the
border and crime, trying to paint a contrast between how he views that issue
and how Biden views that issue. And on the subject of Biden and
Wisconsin in particular, Scarlet, which is one of the four states holding
primaries to get today together with New York, Connecticut and Rhode Island,
there is a movement there for Democr
atic voters to not vote for President Biden,
but instead to vote for an instructed. This is essentially another protest
movement meant to express displeasure with how the Biden administration is
handling the Israel relationship. Given what we're seeing happening in
Gaza, this movement, which is being led by listen to Wisconsin, is hoping to
gather two or 20,000 voters to vote on instructed.
And it's worth noting that that 20,000 number is roughly the margin of victory
that Biden had over Trump i
n 2020. So that is something to watch what that
kind of vote count may look like today, knowing we have seen something similar
in other states, including Michigan, where over 100,000 people in that
primary voted for uncommitted, which is essentially the equivalent of
uninterrupted in Wisconsin and Wisconsin.
And that's something we're going to watch to gauge the strength of this
incumbent president as he moves forward through this primary cycle, Keeping in
mind that both Biden and Trump already
have the nominations effectively locked
up. So it's not like any of these primary
outcomes are going to change that fact. It may just give us details as to what's
to come throughout this general election cycle.
Is the thinking that the protest vote is something that critics of Biden would do
also in the general election. Well, this is the interesting thing,
Scarlett. A lot of what we hear from strategists
we talk to is that they are making the decision to vote this way, knowing that
Biden alread
y is the Democratic nominee. So the primary vote is not as
consequential, was actually the general election vote.
It's also going to be a question not as to whether or not these people decide to
vote for Trump. It really is more of a turnout question.
If people are dissatisfied with Biden, are they just not going to show up to
vote for anyone at all? Well said.
All right, Kelly Lyons, thank you so much.
And of course, you can catch Kelly on balance of power coming up at the top of
the next hour.
Still ahead on the close, we've got a
set up for you on what you need to watch for tomorrow.
This is the clothes on Bloomberg. On a day when oil prices rose.
Another thing that investors will be watching for tomorrow is OPEC Plus,
which is holding discussions to review current oil production output policy.
Joining us now from Calgary is Bloomberg's Kevin Orland.
He is the Calgary bureau chief. Kevin, great to speak with you.
What is expected to do and how much of it has already telegraphed to t
he
public? Well, OPEC is really expected to stick
with its current policy of production cuts at this meeting tomorrow.
This is they would be maintaining a cut of about 2 million barrels a day of
production, and that would be through June.
This is a policy they recently decided on.
So they're not expected to make any changes with that yet.
And actually, Bloomberg had a story just recently where we had spoken to
ministers for some of the countries, and they said that that that was, in fact,
the ca
se, that most of the member countries were looking forward to
keeping the cuts in place as they are. They see these cuts already working and
starting to tighten the market. Oil has been on a very steady climb for
the last two or three months. And so they are seeing those starting to
take effect. They're seeing the global market
starting to tighten. So it doesn't look like there'll be any
change of course tomorrow. But of course, we're obviously be
looking for any changes to language or anything
like that to see what what the
future might hold. Got it.
Okay. You mentioned oil prices and how it's
been steadily rising. And of course, this is on the back of
those production output cuts. But to what extent has the recent
escalation in the Middle East contributed to that rise, or is it a
case of more just the fundamentals dictating everything?
Well, the production cuts from OPEC and steady global demand have definitely
been the backdrop, but we have seen those geopolitical risks really start
to
come to the foreground in a way that they haven't in a long time.
You know, if you look back to October 7th when the Israel-Gaza war started,
we're actually down about one or 2%, pretty much flat with where oil prices
were in that time. There was a big flare up when that
conflict started. And then it sort of faded as it didn't
look like that conflict would spread. But over the past couple of weeks, we've
seen the Red Sea attacks that show that there might be some threat to oil flows.
We've s
een Ukraine getting aggressive in attacking Russia's oil infrastructure.
And then just recently this week, we saw Iran I'm sorry, Israel attack that
Iranian facility in Syria. So we're starting to see those come back
to the fore against the backdrop of that already tight market and raising the
risks for for further disruptions to flows.
So it'll be interesting to see how all of these play out in the weeks ahead.
All right, Kevin, really appreciate your joining us.
Kevin Orland is our bureau chie
f in Calgary, giving us the outlook on the
Opec+ meeting that's taking place tomorrow.
Let's also take a look at what else is on the calendar you've got in Brussels.
The NATO's foreign ministers will be meeting.
So that will be taking place all day. We'll, of course, bring you headlines as
they come out. And then the economic data flow
continues Here in the US, you have ADP employment on the heels of what had been
a pretty strong JOLTS report. The Jobs Job Openings Labor Turnover
survey definite
ly gave investors a perception that perhaps the Federal
Reserve will not necessarily move forward with the three rate cuts it had
pencilled in for this year. We also have ADP, another job read ICM,
U.S. Services, of course, another big one
with sources accounting for the bulk of the US economy and another read on PMI
as well. In terms of Fed speak, we've got Jay
Powell, Austan Goolsbee, Michael Barr and Kugler all speaking tomorrow.
So lots of different ways for investors to pass through just ex
actly how the
Federal Reserve is going to move forward with rate cuts.
And on the corporate front, we've got the CEO of Google, Sundar Pichai,
speaking at Stanford. Stanford that's taking place at 1 p.m..
So look for that Bloomberg Technology. We'll have all those headlines for you.
And after the closing bell, we've got Levi's reporting earnings, but earnings
has really trickled to a halt and it won't really be until April 12th when Jp
morgan kicks it off once again. That does it for us.
Balance
of power is up next. Have a great evening.
This is the close on Bloomberg.
Comments
I be watching the news like its the playoffs.
It’s hilarious that CNN has a “Fact Checker” to follow the interview as if Daniel Dale is the arbiter of truth. If that’s not enough, they follow it up with the old odd number (3) panel trick where you can overweight one side of the issue (this takes advantage of the bandwagon effect, a cognitive bias). Two critics (who speak first, because they’re using anchoring bias) and one supporter (who speaks last) for the illusion of balanced discussion. These are all tactics to frame thought for the viewer. It’s so sad, obvious, and repulsive. I feel so sorry for those caught in the CNN grip. Erin Burnett gave him a fair interview. But the format and cognitive bias trickery undoes all the credit earned.