February 25, 2025 • 48 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg News Global Autos Editor Craig Trudell explains why Tesla's sales plunged 45% last month across Europe, as rival carmakers saw a surge in electric-vehicle demand. Paul Eitelman, Chief Investment Strategist at Russell Investments NA, talks about the macro-outlook for global markets. Abby Roach, Portfolio Analyst for the Empiric LT Equity Team at Allspring Global Investments, breaks down Home Depot earnings and the state of the consumer. Utilidata COO Jess Melanson discusses how EVs impact the power grid and using AI to help utilities plan around those energy demands. And we Drive to the Close with Louis Navellier Founder and Chief Investment Officer at Navellier & Associates.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:08):
This is Bloomberg Business Week, Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 3 (00:26):
Well, a quick unwind the shares of Tesla, pushing the
ev maaker's market cap below the coveted one trillion.
Speaker 4 (00:32):
Dollar market mark.
Speaker 3 (00:34):
Today reports of a stark slowdown in car sales in Europe.
Speaker 4 (00:37):
Tesla shares by the way.
Speaker 3 (00:38):
Down nearly forty percent since mid December. So we've really
seen a slide, I should say, since the election.
Speaker 5 (00:44):
Well, let's go to London into Bloomberg News, where we
find our Global Autos editor Craig Trudell, who's standing by Craig.
Tesla's sales plunging forty five percent last month across the
Europe overall sales soaring thirty seven percent. Is this story
about Tesla? Is it story about Tesla's competitors?
Speaker 6 (01:04):
I think there's a little bit of both here, and
it's going to take us some time to kind of
sort through. Uh, you know, some of the factors at play.
It absolutely is the case that you know, Tesla's kind
of fighting with one hand tie behind its back when
you are changing over you know, all of your plants
that make your most important vehicle, You're you're going to
have some trouble with UH, with loss production and tighter inventory.
(01:27):
And so certainly that's UH, you know, coming in coming
into play earlier early this year they have a changeover
for the model. Why But I think you know, what's
what's really going to be interesting as the year progresses
is just how much does Tesla take it on the
chin as Musk becomes you know, all the more polarizing
over here in Europe. He's really asserted himself in you know,
(01:49):
political uh, you know, conversations to to an incredible degree.
Speaker 3 (01:54):
Well, that's what we want to dig into. But I
want to get into first of all, the CFO did
warn about these assembly line changeovers that it would happen.
How much of the slump that we're seeing in sales
can be attributed to that? And then we can also
kind of get into how much is folks pushing back
on Elon Musk.
Speaker 6 (02:14):
Yeah, I think that's part of the challenge is we
don't have a lot of particulars from the CFO. He
just said, you know, all the plants will change over,
that'll cost us some weeks of production. He didn't, you know,
specify you know, schedules. The company is pretty tight lipped
about those sorts of details. And I should say, you know,
that's not uncommon in the industry, right you do have
(02:35):
this happen where where car makers, you know, go from
one design to another and it results in some disruption
in manufacturing. But for the company, you know, they've only
you know, offered a little bit of detail, just that
every plant that makes the model why, which is is
for across the across the world.
Speaker 7 (02:55):
They make that.
Speaker 6 (02:56):
Vehicle in China, in Germany, and in a couple of
plants in the US, and so you know that absolutely
is coming into play here. I think, you know, the
the question, of course, is you know, just how much
brand damage again, you know, maybe occurring here because of Musk.
Speaker 5 (03:12):
Okay, so let's talk about that, because you brought numbers
to your story about how people in different parts of
the world view elon Musk. Certainly here in the United
States anecdotally speaking, you know, I've seen the stickers that
say anti elon Tesla club and we've talked about those
folks who are you know, sort of associating him with
the brand but not totally associating him with the brand
(03:32):
and still have the car. How has he looked at
in Europe?
Speaker 6 (03:36):
Yeah, I mean I think in Germany, you know, he
he just very emphatically supported the AfD right that the
far right party in Germany that we should say, you know,
place second in Sunday's election, but that is a hugely,
hugely controversial party even you know among Germans. Despite that support,
(03:56):
you know, that support was still in the twenties right
in terms of percentages, and a lot of people sort
of view that party as a sort of you know,
if if not Nazi outright Nazi sympathetic or sort of
flirting with that. Over Here in the UK, you know,
Tesla has you know, praised the Labor government for some
(04:19):
of it's you know, sort of more forward thinking policies
and efforts to you know, encourage ev adoption. But Musk meanwhile,
is is you know, really going after care Starmer and
some of the folks in his administration and really just
out their ways. And so you know the way that
Musk has asserted himself, has has really turned a lot
(04:41):
of heads over here, and I think, you know, any
to the extent that Trump is unpopular over over here,
of course, Musk has aligned himself with Trump and in
you know, pretty dramatic fashion.
Speaker 3 (04:51):
Well, and I do wonder, Craig, you know, we have
definitely seen people pushing back here, protests at Tesla dealers
and so on and so forth, And I'm just curious,
are you seeing that also play out throughout Europe.
Speaker 6 (05:06):
I think there's no doubt that there are still a
lot of people in this world who still hold you know,
Musk and high regard, who still sort of see him
as as you know, iron Man, as they saw him
in the past. You know, he had a cameo in
one of those films. Right that being said, you know,
I think he has gone from someone who has been
you know, a little bit out there, a little bit
(05:26):
sort of quirky online too, you know, on a day
to day basis, he is, you know, attacking political figures,
calling for people to be imprisoned. You know, we're not
talking about you know sort of you know, just just
sort of wrapping himself in the flag and raw ryeing,
you know, the party that he likes. He's really you know,
(05:49):
picking really pitch battles, and you have to wonder at
what point does Tesla's start to sort of bear the
brunt of that, you know, being something that people disagree with.
Speaker 2 (05:59):
Yeah.
Speaker 5 (06:00):
Well, there's the other part of the story too, which
is that even though shares are down close to forty
percent just since those December highs, there's still at more
than twenty percent since the election. I do wonder at
what point Tesla's shareholders say, you know what, we got
to get Elon out of Washington and back to Fremont, California,
or to Texas to make sure that this ship is in.
Speaker 7 (06:23):
The going in the right direction. Yeah.
Speaker 6 (06:25):
I mean, I think it's remarkable that a couple of
years ago, there was all this concern when he decided
to acquire then Twitter, now x right, and there you
know a lot of that concern was, you know, is
he stretching himself too thin? Is he doing you know,
is this one company too many for him to run?
He's added a couple of companies since then, right, And
he's also you know, spending an awful lot of time
(06:48):
in Washington. He's flying with the President, he is a
pretty absent tee CEO for Tesla, at least in terms of,
you know, physically where he's spending his time these days.
And I do think that people do have to sort
of you know, second guests. You know, I guess right
after the election, there was this view of, you know,
it's got to be good to have proximity to the
(07:08):
leader of the free world, right, and you know, maybe
not necessarily, maybe the fact that that president also, you know,
is very anti EV is going to have some ill
effects for you know, the biggest EV maker in the country, Carol.
Speaker 5 (07:24):
We should know too that the White House just in
the last hour or so said that Elon Musk will
attend a cabinet meeting tomorrow. We heard that from Press
Secretary Caroline Lovett.
Speaker 3 (07:32):
All right, so yeah, it'll be interesting to see what
kind of updates he might give at that meeting or
his participation in it. Hey, Craig, how important is the
European market? I mean, I'm looking at the FA page
on Tesla here on the Bloomberg the US market in
terms of revenues for twenty twenty four. Obviously it is
the big bulk of Tesla's shares. China is also another
(07:54):
big market. How important I mean how much Obviously you
never want to see sales go down.
Speaker 4 (08:00):
How important, though, is Europe really to Tesla?
Speaker 6 (08:03):
It is, It does play a sort of third fiddle
relative to the US and China in terms of, you know,
some of the biggest countries for for EV sales over here.
You know, I think Tesla was able to U, you know,
achieve quite a bit the last few years in terms
of uh, you know, putting a dent in in uh,
you know, the likes of you know, BMW and VW's position. Uh,
(08:27):
you know, uh, I think, you know, we we also,
though I did expect that it was going to be
difficult given the sort of you know, nationalism you see
in some of the markets over here. Yeah, and we
haven't seen Tesla dominate the EV markets in Europe nearly
to the extent that it has in the US.
Speaker 4 (08:44):
All Right, We're gonna leave it on that note.
Speaker 3 (08:46):
So appreciate it. Great to check in with you. Bloomberg
News Global Autos Editor Craig Trudell. Tesla share is still
down about nine percent in today's session. We are definitely
watching shares of Tesla. We're also watching the chip area
as semi stocks are lowered to it's a down market.
Intel has been down as much as six percent today,
Marvel Technology down as much as six percent at its lows,
(09:07):
AMD down nearly three percent at its lows, and Nvidia
tim down more than four percent at its worst level today.
Speaker 5 (09:12):
Interestingly enough, the sock's only down one point eight percent.
There are a few spots of green in the socks today.
This though, against the backdrop of President Trump's administration sketching
out tougher versions of US semiconductor curbs and pressuring key
allies to escalate their restrictions on China's chip industry, possibly
expanding efforts that began under Joe Biden to limit Beijing's
(09:33):
technological prowess.
Speaker 3 (09:34):
All right, so let's get to it a semi round up.
We've got Nvidia earnings tomorrow after the close, and don't forget,
we've also got some news from our ownie and King
about Nvidia extending a partnership with Cisco.
Speaker 4 (09:44):
So let's get to it.
Speaker 3 (09:45):
Ian's with us Ian King, Bloomberg News, US semiconductor and
networking reporter out there in our San Francisco bureau.
Speaker 2 (09:51):
You're listening to the Bloomberg Business Week Podcast. Catch US
live weekday afternoons from two to five pm Eastern Listen
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Speaker 5 (10:05):
Hey, let's take global the question what global market has
the best of macro fundamentals? We've been hammering it quite
a bit lately. This is Carol, How markets outside the
US are outperforming markets in the US. The MSCI World
Xus Index of Developed Markets up seven point six percent
so far this year, versus a gain of three percent
for all developed World markets and a gain of one
point five percent for the S and P five hundred.
Speaker 3 (10:27):
Great context, Tim, Let's find out where our next guest
is funding opportunities and what's kind of the macro play
here with us as Paul Eidelman, he is Senior Director
and chief Investment Strategies at Russell Investments.
Speaker 4 (10:36):
North America, joining us right here in studio. I'm Paul.
Good to have you here with us. How are you?
Speaker 8 (10:41):
Yeah, I'm doing great. Thanks for having a West Coaster
who today.
Speaker 4 (10:44):
We like West Coasters?
Speaker 3 (10:45):
Tell us well, you know, first of all, tell us,
you know we are obviously watching all the news that
comes out of DC on a regular basis, what the
FED says, what FED speakers.
Speaker 4 (10:54):
Say, What is top of mine?
Speaker 3 (10:56):
When you guys are, I don't know, meeting with clients,
meeting with investors, what's top of mind for them?
Speaker 8 (11:02):
Yeah, I think we're trying to separate fundamentals from policy
risk right now. I think the foundation for the US
right now looks solid and resilient from a fundamental perspective.
Certainly the data has slowed down a little bit, but
I know there's been a lot of focus on consumer
confidence over the last couple of trading sessions. I think
those indicators are honestly a little bit over overrated. When
(11:26):
I look at the fundamentals for the US consumer, real
income growth is still solid and positive, wealth effects are
solid and positive, and layoffs are still low. And so
I think for me that ability to spend is ultimately
the most important driver and still suggests the consumer could
grow at a sort of two percent plus real pace
(11:48):
and support a sustained economic expansion here in the US.
So that's on my starting point, and then policy risk
comes in to that, and it's like, oh gosh, there's
an awful lot of uncertainty. It's amost to fire hose
proposals every single day that we're having to grapple with
and try to quantify.
Speaker 5 (12:04):
What's the biggest policy risk to you? Because somebody listening
or watching Guy now might set themselves Wait a second,
that all sounds well and good, but if you have
mass firings by the federal government, we'll see some knock
on effects from that. If we see a crackdown on immigration,
we could see some sort of effect on spending and
GDP growth from that. What's the policy risk?
Speaker 8 (12:23):
Yeah, So I mean we're looking at the Doge angle
in terms of cutbacks as a risk factor. We're looking
at deportations as a risk factor, We're looking at trade
policy as a risk factor. I'd say right now the
mass deportations angle has not risen to the top of
the barrel in terms of observed risk in the near term.
Certainly there's some action there from ICE, but the figures
(12:47):
in aggregate are not tracking a run rate that looks
like it is massively disruptive onto US fundamental So I'd
say of heightened risk right now, at least in the
short term is Doze and trade policy. And I think
on the dose angle, certainly there's been some cost savings,
which incrementally are a headwind onto growth. There's also the
(13:08):
risk onto government employment. It seems like by our best
calculations here, we're tracking a shortfall on government employment over
twenty twenty five of something like two hundred thousand workers,
which is nothing to sneeze at, and the aggregate that
might slow down payrolls growth by something like twenty thousand
(13:28):
and push the non farm figures from call it the
mid hundreds to the lowe hundreds. And so that's certainly
a risk and a headwind into a labor market where
there's not a lot of private sector hiring right now.
So some of those individuals could be displaced for a
period of time and face some household distress. And so
I think there's certainly a risk there.
Speaker 4 (13:50):
What's a doze risk.
Speaker 8 (13:52):
It's the setback in government workers and then the pullback
in governments spending. Both of those are I think headwinds
onto the business cycle. I think they're survivable headwinds because
when you think about the impulse for what's happening here
is quite different from what usually leads into a sort
of standard business cycle recession, where those layoffs are revealing
(14:13):
a fundamental weakness or vulnerability in the private sector. We
don't really have that. This is more of a policy
choice of the new administration. So I think we can
get through it, but there's not a big sample size
to use a technical term to kind of have high conviction.
Speaker 7 (14:27):
In that view.
Speaker 5 (14:28):
Do you think we'll you know, we know that the
president loves looking at the markets as a barometer. The
stock market more so than the bond market, is the
sense that I get. But do you think we'll start
to see pushback? I mean, look the sell off that
we've had over the last week or so. Does the
President see that and say, wait a second, I got
to reconsider some of my policies here.
Speaker 7 (14:47):
I think so, But we don't know for sure.
Speaker 5 (14:49):
Right certainly, And I'm not saying that the sell off
is at all related to the policies. What I'm saying
is that he likes to look at it as a barometer.
Speaker 8 (14:55):
Yeah, And I think we got some flavor of that,
certainly in Trump's first term. He hasn't been quite as
vocal about it thus far in twenty twenty five, but
there is a lot of sensitivity in twenty eighteen twenty
nineteen to equity market sell offset approach in order of
magnitude of call it five percent around the trade war
escalations with China several years ago. And so I think,
(15:15):
like most presidents, you would expect Trump to want to
engineer a healthy economy and a healthy market, and I
suspect that'll create some sort of resilience or sensitivity to
how war he pushes some of these more growth or
market negative measures, But we'll have to see.
Speaker 3 (15:30):
Tim and I have spent a lot more time this
year already talking about markets outside the United States and
that finally, finally we're seeing some outperformance, you know, and
Tim kind of laid down the numbers as we got
into this introduction with you. When you look at global markets,
what global developed market do you think has the best
(15:50):
macro backdrop? Is it still the United States? Or do
you see some opportunity outside?
Speaker 8 (15:56):
Well, I think there's maybe some green shoots in Europe.
It's been a region that investors have not loved for
many years now, been talking.
Speaker 4 (16:04):
About it, promising it for a long time.
Speaker 8 (16:06):
But certainly the relative valuations are more attractive there, and
when we look at business cycle fundamentals, certainly the starting
point is weaker, particularly in countries like Germany. But we're
seeing at least some green shoes, particularly out of the
European banking sector after the ECB's cut rates here several times.
Now that bank credit at the increment is starting to
(16:27):
pick up, and Europe is a much more traditional banking
system driven economy, and so I think that pickup is
encouraging that maybe European fundamentals could turn less bad, and
that combination of cheap valuations and less bad fundamentals is
often a powerful recipe for investors. So I think that's
(16:47):
a market that has some potential here. We're trying to
be diversified globally though in our holdings, in where you overweight,
where you underweight. Yeah, I think we're pretty balanced right now,
just given how intense some of the policy risk and
uncertainty are. It's just a lot of those things are
hard to have, meaning very high in the US a
little bit. We're we're running a sort of balanced globally
(17:09):
diversified portfolios roughly close to capitalization weights i'd say, a
cross assets where we're kind of trying to find areas
of the market that have better or worse skew right
now into a backdrop of extremely tight credit spreads as
we're thinking about allocations in the growth portfolio, exposures to
(17:30):
equities in general in sort of a global sense, and
exposures to real assets look a little bit more attractive,
and things like that.
Speaker 7 (17:39):
That's right.
Speaker 4 (17:39):
Anything else beyond real.
Speaker 3 (17:40):
Estate or infrastructure and inequity in equity, No bigcoin in there,
no digital, It's not a big focus for us.
Speaker 4 (17:48):
I'm just kidding. What is the Trump risk factor overall? Well,
I think it's markets are variant.
Speaker 3 (17:54):
Thehus coming off of the election, but we've definitely seen
a pullback off of that.
Speaker 8 (17:59):
I think it's two side policy uncertainty. There's good initiatives
that could be very supportive for economic growth and earnings growth.
The deregulation side, we are seeing some traction there around
the CFPB and other factors where they're pushing to sort
of dampen the regulatory burden on businesses. I know some
people would like that to be faster, but I do
(18:20):
think that ball is moving in the right direction and
has supported a pretty notable pick up in business confidence,
at least ahead of this call it last week or so.
We see that in the CEO confidence numbers that came
out from the conference board last week. We see in
a lot of the regional fed manufacturing surveys that there
was this sort of step up in business confidence, and
(18:41):
the fundamentals for the corporate sector look pretty solid. Like
this fourth quarter earning season has been pretty darn good,
and not just for the megacaps. We're seeing a broadening
out in earnings growth that's showing some fundamental resilience here
from the corporate sector.
Speaker 7 (18:55):
So as long as.
Speaker 8 (18:58):
The policy risk doesn't get too intense, I think that
set up from the corpus sector should support an ongoing
sort of strength from the US Ken.
Speaker 3 (19:05):
Second, so that business confidence is more important than some
of the weaker consumer confidence numbers that we're seeing.
Speaker 4 (19:09):
Our consumer sentiment just quickly.
Speaker 8 (19:10):
Well, the nice thing about business confidence is we have
the fundamentals on earnings and the confidence. I think for
the consumer, we have the fundamentals, but we don't have
the confidence right now, so a little bit more of
a mixed bag there.
Speaker 4 (19:20):
Great thanks for coming in from the West Coast. Paul Eidelman.
He's Senior director, chief investment strategist at Russell Investments.
Speaker 1 (19:26):
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Speaker 5 (19:39):
Cheers Home Depot hire by three point two percent. The
company expects key sales metric of comp sales to return.
Speaker 7 (19:46):
To higher growth this year.
Speaker 5 (19:47):
The Home Depot caution that housing demand won't change significantly
in the near term. Aby Roach is portfolio analyst for
the Empiricalty Equity team at all Spring Global Investments. The
Impericalty Equity team manages about fourteen billion dollars across three
large cap portfolios. Abby joins us from Virginia. Abby good
to talk to you again. You're a consumer stock analyst.
(20:08):
We'll talk about Home Depot in just a minute. Overshadowing
that is consumer confidence. We saw stocks and bonds fall
after we learned that US consumer confidence fell this month
by the most since twenty twenty one, on concerns about
the outlook for the broader economy. It adds to evidence
that uncertainty over the Trump administration's policies is weighing on households.
Surprising to you, how in your view is the consumer doing?
Speaker 9 (20:31):
Thank you for having me, I think what I would say,
you know, listening through earning season this far, we've heard
really cautious commentary with respect to guidance for this year
from the different companies, So I wasn't too surprised to
see that weaker data this morning, just given I think
the commentary for management has been a bit more tepid,
and I think the consumer we've seen continues to face
(20:53):
some pressures. And while I think the key word throughout
earning season this far has been resiliency, I think we
continue to see inflation fatigue facing consumers, and we continue
to see just a bit of a tougher environment for
a consumer, and while they seem to be holding up well,
I think the fatigue persists in terms of the different
pressures that the consumers facing.
Speaker 4 (21:12):
Hey, Abby, as you know, not all consumer is the same.
Speaker 3 (21:15):
And I'm thinking about a last guest that we had
that one of the reasons that maybe the market, the
US market continues to potentially move higher is the wealth
effect and maybe or maybe how the US economy keeps
going because of the wealth effect for those who are
invested and have investments potentially in the public market. You know,
when it comes to consumers, spending are all do you
(21:37):
think about all consumers as equal, and you know, in
terms of what really is the engine to the US economy,
you know, I do think.
Speaker 9 (21:49):
What we have heard really that wealth effect the higher
income consumer. And we've heard this the last couple of years,
and it's been really consistent that that higher income consumer
has been faring better facing the different inflation headwinds, and
just as a result of the wealth effect we heard
from home Depot this morning, just appreciation and home values,
that consumer is hanging in there better relative to the
(22:12):
lower income consumers. But I think what i'd say is
what we've heard, the lower income consumer continues to face pressure,
but the commentary from different management teams hasn't worsened, and
at the start of the year it seemed to be
a bit better in terms of how the lower income
consumer has been hanging in there. I'd say the last
in the last month in February, I think the consumer
has been a bit more cautious just watching inflation. But
(22:34):
I think both are hanging in there, okay, But it
really is that higher income consumer that has been driving
the consumption.
Speaker 5 (22:40):
So if we're not necessarily hearing about it on earnings calls.
Is there concern that this turns into a self fulfilling
prophecy if consumers say themselves over and over again, Hey,
I'm hearing about tariffs. I'm concerned about tariffs.
Speaker 7 (22:52):
We're getting a.
Speaker 5 (22:52):
Lot of news about layoffs at the federal level. Depending
on how they feel about that, does it turn into
a fulfilling prophecy?
Speaker 9 (23:02):
I think it has the potential for that. I think,
you know, watching the consumer data being a bit weaker,
I think we're really watching the jobs data closely that
I think if we started to see some weakness in
terms of jobs related economic data, I think then it
would point to more concerns. But in terms of it
being a self fulfilling prophecy right now, I think it
really the jobs piece of it is.
Speaker 10 (23:21):
The most important part in watching that.
Speaker 3 (23:25):
So let's talk about two names. Certainly in the consumer space,
home depot. As we've been discussing this docs up about
three and a quarter percent, was up at its highs
almost five percent today, but nonetheless it is moving higher
following its earnings, and the company did come out and
talk as to mention that key sales metric of comp
sales returning to growth this year home Depot walk us
(23:47):
through this one in particular it's fundamentals and what it
does also more broadly say about the consumption economy.
Speaker 10 (23:55):
It does I think, you.
Speaker 9 (23:56):
Know, the first thing I'll say is expectations were low
coming into the quarter, and the results from the quarter
were good. They were solid and beat expectations for the
most part outside of gross margin. I was really encouraged
to see the positive COMP result for the company. Prior
to this, the last eight quarters have had negative COMP
results and really double clicking into the comp transactions were
(24:17):
positive this quarter, which was really encouraging.
Speaker 10 (24:20):
After more than three years of that being negative.
Speaker 9 (24:23):
And I think sort of double clicking a step further,
even when you back out the benefit that they had
from hurricanes about sixty five basis points, they still would
have had positive comps there.
Speaker 10 (24:32):
So encouraged to see the results.
Speaker 9 (24:35):
And then in terms of the guidance with the management
team not assuming improvement from a housing standpoint, to assume
a one percent positive COMP is encouraging for us, and
we think is a bit conservative. If we start to
see either some improving in the housing markets or even
just as consumers have continued to be patient around rates,
we think at some point there will be some movement
(24:56):
in terms of.
Speaker 10 (24:58):
Financing related product.
Speaker 9 (25:00):
The company did call out a bit sort of from
helocks and cash out refinancing, seeing a little bit of
improvement there. So we think, with a little bit of
time there, if we start to see some improvement, that
could be meaningful.
Speaker 5 (25:11):
Given where rates are, and given how many people have
rates below four percent. You know, I forget the stats,
but we hear it all the time. I'm surprised to
hear people taking helocks out right now at potentially higher rates.
Speaker 6 (25:23):
You know.
Speaker 10 (25:24):
And there's a little bit of improvement, I think.
Speaker 9 (25:25):
So we're not from a meaningful standpoint, but starting to
see maybe some green shoots in terms of improvement, which
is a positive sign.
Speaker 5 (25:32):
What about home improvement versus new construction and how that
contributes to Home Depot's top line. Which one's more important?
Speaker 9 (25:41):
We think both are important, certainly, and I think, you know,
the health of the consumer more broadly is certainly important.
I think, you know, they called out in sort of
some of the different segments they talk about the pro
versus DIY. Both of those segments were positive, which was encouraging.
Pro was stronger than DIY, but the companies also made
a lot of inrow in terms of improving that pro business,
(26:02):
whether it's the complex pro initiative that they have or
the SRS distribution. But a lot of positive commentary around
the pro segment despite the continued tough environment for the consumer.
Speaker 3 (26:13):
Hey, another name that you are looking at is Alta Beauty,
which is down almost sixteen percent so far this year.
It will report mid March after market. You know, the
beauty space we watch a lot, whether it Saphira, Sephora
or Alta Beauty, which just seems to be, you know,
(26:34):
have been on fire. But tell us about Alta Beauty
specifically and what you're watching here.
Speaker 9 (26:40):
We think certainly more interesting from evaluation standpoint. Here, there's
been a lot of news in terms of the mass
beauty players. Have been some disappointing news that have come
out from the mass beauty staples companies that have reported.
But the great thing about Alta is they have an
exposure to both mass and prestige, which is.
Speaker 10 (26:56):
A higher price point. Gives them a bit.
Speaker 9 (26:59):
Of a diversify cation from that standpoint, in addition to
selling across beauty, So we think it gives them a
little bit of a benefit there relative to some of
the other players in the space, in addition to the
company pre announcing after a strong holiday season in early January,
so we think some encouraging green shoots there for them.
Speaker 5 (27:19):
What about for the rest of the week when in
the next week too, when we hear from other consumer
focused companies, what are you watching for?
Speaker 11 (27:26):
You know?
Speaker 9 (27:26):
I think the biggest thing is just hearing sort of
the temperature check on the consumer, and especially as it
relates to you know, every day spend, but also some
of the higher dollars spend and just one one data point,
going back to Home Deep Book, they did call out
the big ticket spend. Those items more than one thousand
dollars were comped positively one percent. So I think really
(27:47):
listening to how is the consumer overall, how are they
doing in terms of some of those big purchases, and
just any any indicators around sentiment, and particularly as we
get into March with more companies reporting, being able to
see how consumers are holding up after some of the
challenges earlier in the year, and it's just getting a
(28:07):
temperature check into March.
Speaker 5 (28:08):
March fourth, mark your calendars. That's when Target reports results
before the bell will of course bring those to you
as we do, get them big. Thank you joining us, Abby,
do appreciate you taking the time.
Speaker 7 (28:19):
This is Bloomberg.
Speaker 2 (28:21):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and the Android Auto with the Bloomberg Business app,
or watch us live on YouTube if there is a.
Speaker 5 (28:35):
Time for another edition of Bloomberg Plugged in your weekly
look at evs. Today, we're talking about the grid. Jess
Mellinson as president and COO at Utili Data. It's a
company that uses AI to monitor grid conditions. Jess joins
us from New Jersey. Jess, welcome. The company has developed
the first distributed AI platform for the electric grid. It's
(28:56):
called Carmen. What is the problem that this is solving.
My head is not in the grid every single day,
so help me out a little bit.
Speaker 12 (29:04):
Yeah sure.
Speaker 13 (29:05):
So, you know, the grid doesn't have great visibility or
tools to manage powerflow at the local level. So when
you think about electric vehicles where they plug in, is
that previously sort of sleepy part of the grid you
see around your neighborhood with polls, transformers wires.
Speaker 12 (29:22):
Often pretty old infrastructure.
Speaker 13 (29:23):
Low data and so you know, evs when they show up,
they can create as much demand as a house or more.
But unlike a new house, the utility doesn't know it's there.
It behaves less consistently than a house, and so the
utility needs new tools down at that low voltage part
of the grid to see what's going on. And so
that's that's what Carmen does. We developed it, as you mentioned,
(29:46):
in conjunction with Nvidia. It allows, you know, in the
first applications inside an electric meter.
Speaker 12 (29:51):
So from that.
Speaker 13 (29:52):
Vantage point, the utility then is able to see where
the evs are, understand what they're doing to the infrastructure,
and take action to manage them better.
Speaker 3 (30:00):
So your biggest customers in are EV companies or what.
Speaker 13 (30:06):
No, they're electric utilities first, so the Karmen module will
work with anything that electricity runs through. We started with
the utility sector because they have the widest need for
this kind of AI capability. They're managing incredibly complex infrastructure
and they're trying to get ready for sort of unpredictable
penetration electric vehicles. So our first hardware partner for the
(30:30):
Karmen module is Hubble, they make all kinds of distribution
gride equipment. They're starting with the electric meters. So this
year Hubble will make available an AI meter that gives
the utility that kind of visibility and management tools that
they previously have not had.
Speaker 5 (30:45):
How often does somebody replace an electric meter. It doesn't
a utility replace an electric meter. I feel like these
things are the type of thing that you know, these
are on for decades.
Speaker 12 (30:54):
Yeah, they're supposed to last fifteen to twenty years.
Speaker 13 (30:56):
And fifteen or twenty years ago, you utilities made a
big wave of investments in smart meters, and the smart
technology back then was that you didn't need a meter
reader walking around your neighborhood. You could collect billing data remotely.
That was the evolution twenty years ago. Those meters are
coming due for replacement, and so what's the technology utility
(31:17):
needs now. What we've said with Nvidia is they need
to think way forward because if you do the math, now,
those meters are going to be out there in the
mid twenty forties, what is grid management going to look
like in the mid twenty forties, what's ev penetration going
to look like at that time? Scale utilies have to
think forward to what kind of software and AI capabilities
they're going to want running in that meter over the
(31:39):
next twenty years.
Speaker 3 (31:40):
You know, we recently talked with Zach Dell, son of
Michael Dell, who has created a company in terms of
batteries and storage and giving it back to the grid
and kind of helping to support it. And this is
in the state of Texas, but looking to expand. I
guess my question is that how does this help already
(32:00):
stressed grids, which is something that Achi is working on,
or you know, is it with stressed grids.
Speaker 4 (32:07):
What we really need.
Speaker 3 (32:08):
Is is it something that would really be useful with
updated grids or does it matter?
Speaker 12 (32:14):
Yeah, so evs can stress the grid.
Speaker 13 (32:17):
You know, they can overload transformers, they can introduce you.
Speaker 12 (32:22):
Know, power quality problems.
Speaker 13 (32:23):
All of that can either cause a local outage if
there's enough of an overload, or at minimum, it's degrading
the life of that equipment. So a transformer that's supposed
to be out there thirty plus years, it may only
last single digit years if it's consistently being overloaded by
an electric vehicle. So the first step is utilis need
awareness of what's going on with that equipment at the edge.
(32:44):
That's what this carmon platform. One of the first steps
is you can just run AI models and understand what's
plugging in whens, see the electric vehicles, See what they're
doing to power quality, See what they're doing to the
loading of that transformer. The next step is to manage
the utility infrastructure and potentially the charging patterns of the
car to reduce that wear and tear on equipment and
(33:07):
integrate evs in a more cost effective way. So even
if you shift charging for a few minutes, that could
alleviate a local problem. And so what we're trying to
do is provide utilities with the ability to actively manage
that infrastructure to keep costs down, to preserve their equipment
and keep rates low, much like you know, an Internet
service provider would manage internet traffic or we navigate the roadways.
(33:30):
That real time AI information can help you get more
out of existing infrastructure.
Speaker 5 (33:35):
But do the insights actually tell us anything more complicated
than you know, what we're already told by our utility,
which is, hey, plug this thing in late at night
when everybody's asleep, so it's ready for you in the morning.
And that's when the least stress is on the grid.
At least that's what they told my dad to do
in California.
Speaker 12 (33:51):
Yeah, so that's.
Speaker 13 (33:52):
Sort of like the first level of EV management, but
that's pretty simplistic. And then take that to its end
state everybody plugs in it seven pm and you've got
a new peak to worry about. The other point, the
effects really are really localized and they can be nuanced.
You know, we deployed Carmen with the University of Michigan
to study, you know, sub second impacts on the grid,
(34:13):
and they saw a lot of issues quick drops and voltage,
power quality problems, strange behavior from the charging software in
the vehicle. All that is not recorded if you're just
looking at a data point every fifteen.
Speaker 12 (34:25):
Minutes or hour.
Speaker 13 (34:26):
So the utilities need to get more granular with that visibility,
and then they need to figure out how to do
local management so that we can really smooth this out
because what you you know, the charging profile that is
best for the grid can certainly change from different times
a day and even different neighborhoods.
Speaker 12 (34:43):
And so eventually, when we get.
Speaker 13 (34:45):
To millions and millions of evs on the road, utilities
are going to need more active management tools.
Speaker 5 (34:50):
Do you think we get to millions and millions of
evs on the road. There's some serious concern. Look at
what Ford has done with its pullback GM as well.
Tesla sales down for the first time, Tesla sales growth
down for the first time.
Speaker 7 (35:03):
This year.
Speaker 5 (35:03):
We saw what happened outside of the US. We've been
reporting on that, and that's why Tesla's shares are down.
The Trump administration is not pushing evs. Do we get
to that point?
Speaker 12 (35:14):
Yeah? I think we do.
Speaker 13 (35:14):
I mean, obviously there's a short term impact of new
federal policies. There are in the states we operate in,
there are strong state policies. But more important than that,
the vehicles themselves, from a cost competitiveness standpoint and a
feature and quality standpoint have really gotten very competitive. And
so you know, we're not going to tell you what
(35:36):
the EV penetration rate is next year or five years.
But again, when utilities making investment choices that are going
to last to the twenty forties, they have to be
ready for millions of electric vehicles and a pretty wide
range of outcomes of where those vehicles show up, how
much they use, and how they might behave Jesse.
Speaker 3 (35:55):
Are you more worried though about data centers and the
like in terms of stress on on the grid? Tim
and I have spent a lot of time talking a
lot for a while, I feel like, but especially this year,
about data center needs, energy, the grid, the role of
nuclear power and helping to meet that demand. We've been
(36:16):
really kind of doing some deep dives into all of this.
So I'm wondering if the bigger stress point in terms
of understanding power flows are things like data centers versus
EV ramp up.
Speaker 13 (36:27):
Yeah, I mean, data centers, by the numbers are a
bigger demand draw than evs in sort of near term
expected growth, but they're very different in nature. Data centers
are a very large source of demand centralized in one place,
they have to work with to interconnect, they have to
worry about the availability of generation. Evs are again at
(36:48):
that low voltage level, coming online locally sporadically, driven by
customers without utility visibility.
Speaker 12 (36:55):
So yes, and the.
Speaker 13 (36:56):
Big picture demand is going up. You know, we've gone
from decade one percent or sub one percent load growth
to three percent year over year, which compounds really quickly
in the big picture. Obviously a great thing for utilities,
they've got to manage all this data. Centers are a
huge issue. Carmen also can benefit that type of application.
Evs are also a very big issue. Again, both are positives.
(37:20):
The utility industry is excited to serve this new demand,
but they just need to invest in the right technology
to get ready for it.
Speaker 5 (37:27):
So what's the opportunity then for your company? Is it
making sure that every single utility around the US buys
the smart technology for when it does go and replace those.
Speaker 7 (37:42):
Monitors.
Speaker 12 (37:44):
The means yeah, it you know for utilitydata.
Speaker 13 (37:48):
We have a very close partnership with Nvidio and Video
as an investor in our company. We've been experts in
the electric grid for over a decade and how to
use real.
Speaker 12 (37:56):
Time data to solve problems.
Speaker 13 (37:58):
Obviously, in Vidio makes incredibly scalable accelerated computing platforms. We
combine that expertise to develop a product for the electric industry.
The idea being utilities need to software define their infrastructure.
They need to be able to run AI models at
the source of the data. That is quicker, faster, it's
(38:19):
more resilient, saves utilities costs, and you get better performing
AI when you can again, think about navigating in your car, right,
you have a powerful computer on your car and in
your phone that's helping, in conjunction with.
Speaker 12 (38:31):
The cloud, execute some AI use cases.
Speaker 13 (38:33):
And so what we've been trying to do is bring
products to the utility sector that enable them to run
their infrastructure in a similar manner. And part of the
point of the carbon platform is that every utility hardware
company doesn't need to learn how to do this or
invent their own platform. They can just all embed an
Nvidia based module and create real benefits for the grid overall.
Speaker 3 (38:56):
Hey, Jess, just got about thirty seconds here. What's your
guys plan in terms of of your own company?
Speaker 7 (39:01):
I mean, is going to want to see your return?
Speaker 4 (39:04):
Are you profitable? Is the plan to stay private? And
again just quickly, just got about thirty seconds.
Speaker 13 (39:10):
Yeah, we're a private company and we're really focused on
making our initial utility customers like Consumers Energy in Michigan, Portland,
General and Oregon successful with this technology to demonstrate to
anybody replacing a meter or investing in grid hardware that
this is the platform to adopt.
Speaker 4 (39:26):
So no Plasco public at least not anytime.
Speaker 13 (39:29):
So now they're announcing today tomorrow.
Speaker 12 (39:34):
We'll let you know.
Speaker 3 (39:35):
Okay, sounds good deal, Jess. Good to get some time
with you. Thank you so much, Jess Millansen. He is
president and chief operating officer of Utela Data. It is
a company that uses AI to monitor grid conditions. We've
been talking a lot about the grid and energy and power.
Speaker 5 (39:48):
Yeah, it's remains to be seen if we can shore
up the grid in all the states where the grid
has been yeah, under pressure over the last few.
Speaker 4 (39:57):
Years, sometimes because of climate change, hot or cold. Yeah,
good for direction, Mac, I'll about you.
Speaker 14 (40:04):
Let me drive.
Speaker 7 (40:05):
Oh no, no, no, no, this is not a twenty he's going.
Speaker 2 (40:08):
To dub alright, please, I'll do the gravel.
Speaker 3 (40:12):
Great, I want to drive.
Speaker 5 (40:16):
It's a good question, drives.
Speaker 7 (40:20):
This is the drive to the clothes.
Speaker 12 (40:22):
Now, plunks to me a thing.
Speaker 13 (40:24):
We'll drive.
Speaker 2 (40:25):
Jonna Don on Bloomberg Radio.
Speaker 3 (40:27):
All right, everybody, just about just under eighteen minutes to
go until we wrap up this trading day on this Tuesday,
February twenty fifth, Carol Master Timstanovic live in our Bloomberg
Interactive Broker studio.
Speaker 4 (40:38):
Great to have back with us as we drive to
the clothes.
Speaker 3 (40:41):
Louis Navalier he's chairman, founder and chief investment officer at Navel.
Speaker 5 (40:45):
He's driving to the clothes. Fortunately he pulled over, so
he's not driving to the clothes.
Speaker 7 (40:51):
Literally.
Speaker 5 (40:51):
I find it funny he's not in Florida this time. No, no, Louie,
you're out there in California. What do you What are
you doing in California?
Speaker 14 (41:00):
I met Donner Summit. I was driving back from a
meeting in Scott's Valley, California.
Speaker 5 (41:05):
Amazing Donnor Summit. So a little bit of snow there
this time of year.
Speaker 12 (41:10):
Yeah, yeah, only about nine feet.
Speaker 5 (41:13):
Okay, all right, see we welcome into a whole history
of Donner Pass.
Speaker 3 (41:17):
You are literally driving to the clothes, which we kind
of love. Louis, by the way, also author of the
Sacred Truths of Investing, finding growth stocks that will make
you rich. All right, So Louis, first of all, this
market environment, I don't know. There's a lot of things
that keep coming at investors where it's economic news, news
out of d C. Do you feel like we are
(41:37):
setting up for maybe some kind of correction at some
point that just you know that investors are getting more
and more nervous.
Speaker 4 (41:42):
What are you seeing in your day job.
Speaker 14 (41:47):
I just think of normal consolidation towards annoventreen season. Obviously,
super Micro has to release their financials today, and then
na Video has to have some my good guidance tomorrow,
and then I think a lot of us will regroup.
But Bonios keep meandering lower, and that's gonna set the
foundation for a nice rally.
Speaker 12 (42:07):
Also, I've noticed we're rotating Moore.
Speaker 14 (42:10):
You know, things like Eli Lilly are so rallying and pressing,
So that's that's a good sign.
Speaker 11 (42:17):
Something most like that's smart.
Speaker 14 (42:20):
Sure that guy hit with prop taking that should take
them off too.
Speaker 5 (42:24):
Hey, Louis, we're having a little trouble with your connection.
I'm going to talk a little bit while they worked too,
get your connection a little better. We did hear earlier
from Bank of America CEO Brian moynihan Carol, who talked
about the fact that his analysts don't see rape cuts
happening this year, and you remind me, he said next year,
said well.
Speaker 4 (42:44):
Which I thought was kind of interesting.
Speaker 3 (42:45):
We talked about it with our own Michael McKee and the
amount of visibility. I think, you know, kudos in terms
of laying it out that way. I think he says
in terms of the FED mandate, inflation is a little
bit trickier, are Mike McKee saying? In order for that
to happen, you have to the Fed's got to make
sure that you know, certainly growth continues in the United States,
(43:07):
and this is where you know, if growth starts to
come undone, and God forbid, you know that we kind
of have growth coming undone and still we have inflationary pressures.
We're talking about a really difficult environment, and so we
will have to wait and see. Mike did remind us
that we did see markets starting to price in now
two rate cuts here in twenty twenty five, which we
(43:30):
know it really is very sensitive based on what is
coming out in terms of economic news, and again what's
coming out in terms of tariff policy, or tax policy,
or business policy, regulatory policy, all of these things will
come into play about maybe ultimately what happens to growth,
inflation and what the FED will do.
Speaker 5 (43:48):
I want to get back to Louis Novalier, he joins
us back on the phone from California. Louis, I mentioned
the FED rate cuts or lack thereof, at least thus far,
because you actually argue that we could see as many
as four rate cuts this year. Why do you think that.
Speaker 11 (44:04):
Well, because the European Central Bank and the Bank of
England probably have another four to five rate cuts coming.
You know, they're in recession over there. They're getting increasingly
economically desperate. We'll see if mister Mertz will do the
right thing for Germany. I suspect you may not. You know,
they really have to turn the nuclear power plants back
on nobody's They're going to continue to lose their manufacturing base.
(44:28):
So those global rate cuts will put downward pressure on
our treasuries, and then I FED will be forced to
follow treasure yields law.
Speaker 4 (44:36):
Where do you want to put money right now in
this environment?
Speaker 10 (44:40):
Oh?
Speaker 11 (44:40):
Anything that earns money?
Speaker 4 (44:42):
Okay, nice, very nice. Can you be more specific?
Speaker 11 (44:47):
Well, like that sprouts farmers market. I mean that's got
very strong sales earnings growth. You know, I own the
egg companies that are profiting from egg inflation, you know,
coalmine and vital farms. You know, we're picking up some
biotechs arning money, which is good. I still have lots
(45:07):
of the data center companies building out the grid, and
I'm going to help build out the data centers. Those
socks actually got hit harder than the navideos and things
during the deep seak news. But you know, deep Seat
keeps crashing, so that seems have been a false narrative.
So the AI story is alive and well and it
(45:29):
will continue.
Speaker 7 (45:30):
Yeah, so you're bullsh on Vidio tomorrow.
Speaker 11 (45:33):
Oh, it has to go on. It's my largest holding,
it's like twenty percent of some my accounts. And we
won't sell it because we're too cheap to day the taxes.
Speaker 7 (45:41):
When would when would you sell it?
Speaker 11 (45:44):
I'm on record that we probably should hold to the
end of the decade. I don't think they can compete
with the video on those chips. And then what will
happen at the end of the decade. It's hard to
make the chips faster because you're approaching the atomic level.
So they have to switch to cloud computing, and Nvidia
of course has a quantum cloud simulator. Now they're working
with Google to make the transition, but as Jensen has
(46:05):
pointed out, only they and Google are probably gonna make money.
Speaker 7 (46:10):
Well, loot, when did you When did you get into Nvidia?
Speaker 11 (46:15):
This is my second time, but I was in a
long time ago when it was just mostly Graphics, Chips,
Energy Fish and Chips, and then I got in it
again about five years ago.
Speaker 7 (46:24):
Wow, it's had quite a run over the last five years.
Speaker 5 (46:27):
So yeah, I can understand some hesitancy to sell on
a you know, dip as we're seeing right now.
Speaker 3 (46:32):
Well, you know, and Tim went there, and I'm going
to go there because I know sometimes like people get ticked.
Speaker 4 (46:36):
Off and we're like, are you buying the dip? But
are you?
Speaker 11 (46:39):
You should buy the dip in Navidia anytime you get
a dip just in video though, Yeah, well in the
video is a monopoly, that's a little easier. But right now,
I would say the Clouds Farmer's Market is a very
good buy in any dip. I think Walmart's a good
buy in any dip. Costco's gonna announce after Navidia phenomena
(47:00):
buying any dip. You know a lot of these stores,
the Walmarts of Costco's are going more and more upscale.
In Walmart's case, are also some a lot more groceries.
Okay two more admit income upber income people. But you
just go to any Costco. It's just wealthy people buying
a lot of stuff and loading up the SUVs.
Speaker 3 (47:18):
Hey, listen, just last thoughts and I know we've touched
upon this in the past. Just got about thirty seconds here, Louis,
in terms of stuff that comes out of d C,
do you just like what do you wait until something's
real policy, something having a real impact, or you know,
do you ignore most of what comes out of DC
just quickly?
Speaker 11 (47:35):
I'm ignoring most of it. I think the terrorists aren't
going to be that inflationary because you know, let's make
a deal with Trump and then we have a very
strong dollar that's going to keep important prices down. But
I'm mostly watching how it gets along with the international guys.
So I think the Macrome meeting was very interesting yesterday.
I think the kur Seimer meeting Thursday is going to
(47:56):
be a more tempt you know, those people don't get along.
Our special relationships Britain may be over.
Speaker 4 (48:03):
Interesting times.
Speaker 3 (48:05):
Louis, thanks for pulling over and spending some time with us.
Louis Navalier, who's chairman, founder and CIO at Navalier and Associates.
Speaker 2 (48:12):
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Speaker 2 (00:08):
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Speaker 3 (00:26):
Well, a quick unwind the shares of Tesla, pushing the
ev maaker's market cap below the coveted one trillion.
Speaker 4 (00:32):
Dollar market mark.
Speaker 3 (00:34):
Today reports of a stark slowdown in car sales in Europe.
Speaker 4 (00:37):
Tesla shares by the way.
Speaker 3 (00:38):
Down nearly forty percent since mid December. So we've really
seen a slide, I should say, since the election.
Speaker 5 (00:44):
Well, let's go to London into Bloomberg News, where we
find our Global Autos editor Craig Trudell, who's standing by Craig.
Tesla's sales plunging forty five percent last month across the
Europe overall sales soaring thirty seven percent. Is this story
about Tesla? Is it story about Tesla's competitors?
Speaker 6 (01:04):
I think there's a little bit of both here, and
it's going to take us some time to kind of
sort through. Uh, you know, some of the factors at play.
It absolutely is the case that you know, Tesla's kind
of fighting with one hand tie behind its back when
you are changing over you know, all of your plants
that make your most important vehicle, You're you're going to
have some trouble with UH, with loss production and tighter inventory.
(01:27):
And so certainly that's UH, you know, coming in coming
into play earlier early this year they have a changeover
for the model. Why But I think you know, what's
what's really going to be interesting as the year progresses
is just how much does Tesla take it on the
chin as Musk becomes you know, all the more polarizing
over here in Europe. He's really asserted himself in you know,
(01:49):
political uh, you know, conversations to to an incredible degree.
Speaker 3 (01:54):
Well, that's what we want to dig into. But I
want to get into first of all, the CFO did
warn about these assembly line changeovers that it would happen.
How much of the slump that we're seeing in sales
can be attributed to that? And then we can also
kind of get into how much is folks pushing back
on Elon Musk.
Speaker 6 (02:14):
Yeah, I think that's part of the challenge is we
don't have a lot of particulars from the CFO. He
just said, you know, all the plants will change over,
that'll cost us some weeks of production. He didn't, you know,
specify you know, schedules. The company is pretty tight lipped
about those sorts of details. And I should say, you know,
that's not uncommon in the industry, right you do have
(02:35):
this happen where where car makers, you know, go from
one design to another and it results in some disruption
in manufacturing. But for the company, you know, they've only
you know, offered a little bit of detail, just that
every plant that makes the model why, which is is
for across the across the world.
Speaker 7 (02:55):
They make that.
Speaker 6 (02:56):
Vehicle in China, in Germany, and in a couple of
plants in the US, and so you know that absolutely
is coming into play here. I think, you know, the
the question, of course, is you know, just how much
brand damage again, you know, maybe occurring here because of Musk.
Speaker 5 (03:12):
Okay, so let's talk about that, because you brought numbers
to your story about how people in different parts of
the world view elon Musk. Certainly here in the United
States anecdotally speaking, you know, I've seen the stickers that
say anti elon Tesla club and we've talked about those
folks who are you know, sort of associating him with
the brand but not totally associating him with the brand
(03:32):
and still have the car. How has he looked at
in Europe?
Speaker 6 (03:36):
Yeah, I mean I think in Germany, you know, he
he just very emphatically supported the AfD right that the
far right party in Germany that we should say, you know,
place second in Sunday's election, but that is a hugely,
hugely controversial party even you know among Germans. Despite that support,
(03:56):
you know, that support was still in the twenties right
in terms of percentages, and a lot of people sort
of view that party as a sort of you know,
if if not Nazi outright Nazi sympathetic or sort of
flirting with that. Over Here in the UK, you know,
Tesla has you know, praised the Labor government for some
(04:19):
of it's you know, sort of more forward thinking policies
and efforts to you know, encourage ev adoption. But Musk meanwhile,
is is you know, really going after care Starmer and
some of the folks in his administration and really just
out their ways. And so you know the way that
Musk has asserted himself, has has really turned a lot
(04:41):
of heads over here, and I think, you know, any
to the extent that Trump is unpopular over over here,
of course, Musk has aligned himself with Trump and in
you know, pretty dramatic fashion.
Speaker 3 (04:51):
Well, and I do wonder, Craig, you know, we have
definitely seen people pushing back here, protests at Tesla dealers
and so on and so forth, And I'm just curious,
are you seeing that also play out throughout Europe.
Speaker 6 (05:06):
I think there's no doubt that there are still a
lot of people in this world who still hold you know,
Musk and high regard, who still sort of see him
as as you know, iron Man, as they saw him
in the past. You know, he had a cameo in
one of those films. Right that being said, you know,
I think he has gone from someone who has been
you know, a little bit out there, a little bit
(05:26):
sort of quirky online too, you know, on a day
to day basis, he is, you know, attacking political figures,
calling for people to be imprisoned. You know, we're not
talking about you know sort of you know, just just
sort of wrapping himself in the flag and raw ryeing,
you know, the party that he likes. He's really you know,
(05:49):
picking really pitch battles, and you have to wonder at
what point does Tesla's start to sort of bear the
brunt of that, you know, being something that people disagree with.
Speaker 2 (05:59):
Yeah.
Speaker 5 (06:00):
Well, there's the other part of the story too, which
is that even though shares are down close to forty
percent just since those December highs, there's still at more
than twenty percent since the election. I do wonder at
what point Tesla's shareholders say, you know what, we got
to get Elon out of Washington and back to Fremont, California,
or to Texas to make sure that this ship is in.
Speaker 7 (06:23):
The going in the right direction. Yeah.
Speaker 6 (06:25):
I mean, I think it's remarkable that a couple of
years ago, there was all this concern when he decided
to acquire then Twitter, now x right, and there you
know a lot of that concern was, you know, is
he stretching himself too thin? Is he doing you know,
is this one company too many for him to run?
He's added a couple of companies since then, right, And
he's also you know, spending an awful lot of time
(06:48):
in Washington. He's flying with the President, he is a
pretty absent tee CEO for Tesla, at least in terms of,
you know, physically where he's spending his time these days.
And I do think that people do have to sort
of you know, second guests. You know, I guess right
after the election, there was this view of, you know,
it's got to be good to have proximity to the
(07:08):
leader of the free world, right, and you know, maybe
not necessarily, maybe the fact that that president also, you know,
is very anti EV is going to have some ill
effects for you know, the biggest EV maker in the country, Carol.
Speaker 5 (07:24):
We should know too that the White House just in
the last hour or so said that Elon Musk will
attend a cabinet meeting tomorrow. We heard that from Press
Secretary Caroline Lovett.
Speaker 3 (07:32):
All right, so yeah, it'll be interesting to see what
kind of updates he might give at that meeting or
his participation in it. Hey, Craig, how important is the
European market? I mean, I'm looking at the FA page
on Tesla here on the Bloomberg the US market in
terms of revenues for twenty twenty four. Obviously it is
the big bulk of Tesla's shares. China is also another
(07:54):
big market. How important I mean how much Obviously you
never want to see sales go down.
Speaker 4 (08:00):
How important, though, is Europe really to Tesla?
Speaker 6 (08:03):
It is, It does play a sort of third fiddle
relative to the US and China in terms of, you know,
some of the biggest countries for for EV sales over here.
You know, I think Tesla was able to U, you know,
achieve quite a bit the last few years in terms
of uh, you know, putting a dent in in uh,
you know, the likes of you know, BMW and VW's position. Uh,
(08:27):
you know, uh, I think, you know, we we also,
though I did expect that it was going to be
difficult given the sort of you know, nationalism you see
in some of the markets over here. Yeah, and we
haven't seen Tesla dominate the EV markets in Europe nearly
to the extent that it has in the US.
Speaker 4 (08:44):
All Right, We're gonna leave it on that note.
Speaker 3 (08:46):
So appreciate it. Great to check in with you. Bloomberg
News Global Autos Editor Craig Trudell. Tesla share is still
down about nine percent in today's session. We are definitely
watching shares of Tesla. We're also watching the chip area
as semi stocks are lowered to it's a down market.
Intel has been down as much as six percent today,
Marvel Technology down as much as six percent at its lows,
(09:07):
AMD down nearly three percent at its lows, and Nvidia
tim down more than four percent at its worst level today.
Speaker 5 (09:12):
Interestingly enough, the sock's only down one point eight percent.
There are a few spots of green in the socks today.
This though, against the backdrop of President Trump's administration sketching
out tougher versions of US semiconductor curbs and pressuring key
allies to escalate their restrictions on China's chip industry, possibly
expanding efforts that began under Joe Biden to limit Beijing's
(09:33):
technological prowess.
Speaker 3 (09:34):
All right, so let's get to it a semi round up.
We've got Nvidia earnings tomorrow after the close, and don't forget,
we've also got some news from our ownie and King
about Nvidia extending a partnership with Cisco.
Speaker 4 (09:44):
So let's get to it.
Speaker 3 (09:45):
Ian's with us Ian King, Bloomberg News, US semiconductor and
networking reporter out there in our San Francisco bureau.
Speaker 2 (09:51):
You're listening to the Bloomberg Business Week Podcast. Catch US
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch US live on YouTube.
Speaker 5 (10:05):
Hey, let's take global the question what global market has
the best of macro fundamentals? We've been hammering it quite
a bit lately. This is Carol, How markets outside the
US are outperforming markets in the US. The MSCI World
Xus Index of Developed Markets up seven point six percent
so far this year, versus a gain of three percent
for all developed World markets and a gain of one
point five percent for the S and P five hundred.
Speaker 3 (10:27):
Great context, Tim, Let's find out where our next guest
is funding opportunities and what's kind of the macro play
here with us as Paul Eidelman, he is Senior Director
and chief Investment Strategies at Russell Investments.
Speaker 4 (10:36):
North America, joining us right here in studio. I'm Paul.
Good to have you here with us. How are you?
Speaker 8 (10:41):
Yeah, I'm doing great. Thanks for having a West Coaster
who today.
Speaker 4 (10:44):
We like West Coasters?
Speaker 3 (10:45):
Tell us well, you know, first of all, tell us,
you know we are obviously watching all the news that
comes out of DC on a regular basis, what the
FED says, what FED speakers.
Speaker 4 (10:54):
Say, What is top of mine?
Speaker 3 (10:56):
When you guys are, I don't know, meeting with clients,
meeting with investors, what's top of mind for them?
Speaker 8 (11:02):
Yeah, I think we're trying to separate fundamentals from policy
risk right now. I think the foundation for the US
right now looks solid and resilient from a fundamental perspective.
Certainly the data has slowed down a little bit, but
I know there's been a lot of focus on consumer
confidence over the last couple of trading sessions. I think
those indicators are honestly a little bit over overrated. When
(11:26):
I look at the fundamentals for the US consumer, real
income growth is still solid and positive, wealth effects are
solid and positive, and layoffs are still low. And so
I think for me that ability to spend is ultimately
the most important driver and still suggests the consumer could
grow at a sort of two percent plus real pace
(11:48):
and support a sustained economic expansion here in the US.
So that's on my starting point, and then policy risk
comes in to that, and it's like, oh gosh, there's
an awful lot of uncertainty. It's amost to fire hose
proposals every single day that we're having to grapple with
and try to quantify.
Speaker 5 (12:04):
What's the biggest policy risk to you? Because somebody listening
or watching Guy now might set themselves Wait a second,
that all sounds well and good, but if you have
mass firings by the federal government, we'll see some knock
on effects from that. If we see a crackdown on immigration,
we could see some sort of effect on spending and
GDP growth from that. What's the policy risk?
Speaker 8 (12:23):
Yeah, So I mean we're looking at the Doge angle
in terms of cutbacks as a risk factor. We're looking
at deportations as a risk factor, We're looking at trade
policy as a risk factor. I'd say right now the
mass deportations angle has not risen to the top of
the barrel in terms of observed risk in the near term.
Certainly there's some action there from ICE, but the figures
(12:47):
in aggregate are not tracking a run rate that looks
like it is massively disruptive onto US fundamental So I'd
say of heightened risk right now, at least in the
short term is Doze and trade policy. And I think
on the dose angle, certainly there's been some cost savings,
which incrementally are a headwind onto growth. There's also the
(13:08):
risk onto government employment. It seems like by our best
calculations here, we're tracking a shortfall on government employment over
twenty twenty five of something like two hundred thousand workers,
which is nothing to sneeze at, and the aggregate that
might slow down payrolls growth by something like twenty thousand
(13:28):
and push the non farm figures from call it the
mid hundreds to the lowe hundreds. And so that's certainly
a risk and a headwind into a labor market where
there's not a lot of private sector hiring right now.
So some of those individuals could be displaced for a
period of time and face some household distress. And so
I think there's certainly a risk there.
Speaker 4 (13:50):
What's a doze risk.
Speaker 8 (13:52):
It's the setback in government workers and then the pullback
in governments spending. Both of those are I think headwinds
onto the business cycle. I think they're survivable headwinds because
when you think about the impulse for what's happening here
is quite different from what usually leads into a sort
of standard business cycle recession, where those layoffs are revealing
(14:13):
a fundamental weakness or vulnerability in the private sector. We
don't really have that. This is more of a policy
choice of the new administration. So I think we can
get through it, but there's not a big sample size
to use a technical term to kind of have high conviction.
Speaker 7 (14:27):
In that view.
Speaker 5 (14:28):
Do you think we'll you know, we know that the
president loves looking at the markets as a barometer. The
stock market more so than the bond market, is the
sense that I get. But do you think we'll start
to see pushback? I mean, look the sell off that
we've had over the last week or so. Does the
President see that and say, wait a second, I got
to reconsider some of my policies here.
Speaker 7 (14:47):
I think so, But we don't know for sure.
Speaker 5 (14:49):
Right certainly, And I'm not saying that the sell off
is at all related to the policies. What I'm saying
is that he likes to look at it as a barometer.
Speaker 8 (14:55):
Yeah, And I think we got some flavor of that,
certainly in Trump's first term. He hasn't been quite as
vocal about it thus far in twenty twenty five, but
there is a lot of sensitivity in twenty eighteen twenty
nineteen to equity market sell offset approach in order of
magnitude of call it five percent around the trade war
escalations with China several years ago. And so I think,
(15:15):
like most presidents, you would expect Trump to want to
engineer a healthy economy and a healthy market, and I
suspect that'll create some sort of resilience or sensitivity to
how war he pushes some of these more growth or
market negative measures, But we'll have to see.
Speaker 3 (15:30):
Tim and I have spent a lot more time this
year already talking about markets outside the United States and
that finally, finally we're seeing some outperformance, you know, and
Tim kind of laid down the numbers as we got
into this introduction with you. When you look at global markets,
what global developed market do you think has the best
(15:50):
macro backdrop? Is it still the United States? Or do
you see some opportunity outside?
Speaker 8 (15:56):
Well, I think there's maybe some green shoots in Europe.
It's been a region that investors have not loved for
many years now, been talking.
Speaker 4 (16:04):
About it, promising it for a long time.
Speaker 8 (16:06):
But certainly the relative valuations are more attractive there, and
when we look at business cycle fundamentals, certainly the starting
point is weaker, particularly in countries like Germany. But we're
seeing at least some green shoes, particularly out of the
European banking sector after the ECB's cut rates here several times.
Now that bank credit at the increment is starting to
(16:27):
pick up, and Europe is a much more traditional banking
system driven economy, and so I think that pickup is
encouraging that maybe European fundamentals could turn less bad, and
that combination of cheap valuations and less bad fundamentals is
often a powerful recipe for investors. So I think that's
(16:47):
a market that has some potential here. We're trying to
be diversified globally though in our holdings, in where you overweight,
where you underweight. Yeah, I think we're pretty balanced right now,
just given how intense some of the policy risk and
uncertainty are. It's just a lot of those things are
hard to have, meaning very high in the US a
little bit. We're we're running a sort of balanced globally
(17:09):
diversified portfolios roughly close to capitalization weights i'd say, a
cross assets where we're kind of trying to find areas
of the market that have better or worse skew right
now into a backdrop of extremely tight credit spreads as
we're thinking about allocations in the growth portfolio, exposures to
(17:30):
equities in general in sort of a global sense, and
exposures to real assets look a little bit more attractive,
and things like that.
Speaker 7 (17:39):
That's right.
Speaker 4 (17:39):
Anything else beyond real.
Speaker 3 (17:40):
Estate or infrastructure and inequity in equity, No bigcoin in there,
no digital, It's not a big focus for us.
Speaker 4 (17:48):
I'm just kidding. What is the Trump risk factor overall? Well,
I think it's markets are variant.
Speaker 3 (17:54):
Thehus coming off of the election, but we've definitely seen
a pullback off of that.
Speaker 8 (17:59):
I think it's two side policy uncertainty. There's good initiatives
that could be very supportive for economic growth and earnings growth.
The deregulation side, we are seeing some traction there around
the CFPB and other factors where they're pushing to sort
of dampen the regulatory burden on businesses. I know some
people would like that to be faster, but I do
(18:20):
think that ball is moving in the right direction and
has supported a pretty notable pick up in business confidence,
at least ahead of this call it last week or so.
We see that in the CEO confidence numbers that came
out from the conference board last week. We see in
a lot of the regional fed manufacturing surveys that there
was this sort of step up in business confidence, and
(18:41):
the fundamentals for the corporate sector look pretty solid. Like
this fourth quarter earning season has been pretty darn good,
and not just for the megacaps. We're seeing a broadening
out in earnings growth that's showing some fundamental resilience here
from the corporate sector.
Speaker 7 (18:55):
So as long as.
Speaker 8 (18:58):
The policy risk doesn't get too intense, I think that
set up from the corpus sector should support an ongoing
sort of strength from the US Ken.
Speaker 3 (19:05):
Second, so that business confidence is more important than some
of the weaker consumer confidence numbers that we're seeing.
Speaker 4 (19:09):
Our consumer sentiment just quickly.
Speaker 8 (19:10):
Well, the nice thing about business confidence is we have
the fundamentals on earnings and the confidence. I think for
the consumer, we have the fundamentals, but we don't have
the confidence right now, so a little bit more of
a mixed bag there.
Speaker 4 (19:20):
Great thanks for coming in from the West Coast. Paul Eidelman.
He's Senior director, chief investment strategist at Russell Investments.
Speaker 1 (19:26):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five These during listen
on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 5 (19:39):
Cheers Home Depot hire by three point two percent. The
company expects key sales metric of comp sales to return.
Speaker 7 (19:46):
To higher growth this year.
Speaker 5 (19:47):
The Home Depot caution that housing demand won't change significantly
in the near term. Aby Roach is portfolio analyst for
the Empiricalty Equity team at all Spring Global Investments. The
Impericalty Equity team manages about fourteen billion dollars across three
large cap portfolios. Abby joins us from Virginia. Abby good
to talk to you again. You're a consumer stock analyst.
(20:08):
We'll talk about Home Depot in just a minute. Overshadowing
that is consumer confidence. We saw stocks and bonds fall
after we learned that US consumer confidence fell this month
by the most since twenty twenty one, on concerns about
the outlook for the broader economy. It adds to evidence
that uncertainty over the Trump administration's policies is weighing on households.
Surprising to you, how in your view is the consumer doing?
Speaker 9 (20:31):
Thank you for having me, I think what I would say,
you know, listening through earning season this far, we've heard
really cautious commentary with respect to guidance for this year
from the different companies, So I wasn't too surprised to
see that weaker data this morning, just given I think
the commentary for management has been a bit more tepid,
and I think the consumer we've seen continues to face
(20:53):
some pressures. And while I think the key word throughout
earning season this far has been resiliency, I think we
continue to see inflation fatigue facing consumers, and we continue
to see just a bit of a tougher environment for
a consumer, and while they seem to be holding up well,
I think the fatigue persists in terms of the different
pressures that the consumers facing.
Speaker 4 (21:12):
Hey, Abby, as you know, not all consumer is the same.
Speaker 3 (21:15):
And I'm thinking about a last guest that we had
that one of the reasons that maybe the market, the
US market continues to potentially move higher is the wealth
effect and maybe or maybe how the US economy keeps
going because of the wealth effect for those who are
invested and have investments potentially in the public market. You know,
when it comes to consumers, spending are all do you
(21:37):
think about all consumers as equal, and you know, in
terms of what really is the engine to the US economy,
you know, I do think.
Speaker 9 (21:49):
What we have heard really that wealth effect the higher
income consumer. And we've heard this the last couple of years,
and it's been really consistent that that higher income consumer
has been faring better facing the different inflation headwinds, and
just as a result of the wealth effect we heard
from home Depot this morning, just appreciation and home values,
that consumer is hanging in there better relative to the
(22:12):
lower income consumers. But I think what i'd say is
what we've heard, the lower income consumer continues to face pressure,
but the commentary from different management teams hasn't worsened, and
at the start of the year it seemed to be
a bit better in terms of how the lower income
consumer has been hanging in there. I'd say the last
in the last month in February, I think the consumer
has been a bit more cautious just watching inflation. But
(22:34):
I think both are hanging in there, okay, But it
really is that higher income consumer that has been driving
the consumption.
Speaker 5 (22:40):
So if we're not necessarily hearing about it on earnings calls.
Is there concern that this turns into a self fulfilling
prophecy if consumers say themselves over and over again, Hey,
I'm hearing about tariffs. I'm concerned about tariffs.
Speaker 7 (22:52):
We're getting a.
Speaker 5 (22:52):
Lot of news about layoffs at the federal level. Depending
on how they feel about that, does it turn into
a fulfilling prophecy?
Speaker 9 (23:02):
I think it has the potential for that. I think,
you know, watching the consumer data being a bit weaker,
I think we're really watching the jobs data closely that
I think if we started to see some weakness in
terms of jobs related economic data, I think then it
would point to more concerns. But in terms of it
being a self fulfilling prophecy right now, I think it
really the jobs piece of it is.
Speaker 10 (23:21):
The most important part in watching that.
Speaker 3 (23:25):
So let's talk about two names. Certainly in the consumer space,
home depot. As we've been discussing this docs up about
three and a quarter percent, was up at its highs
almost five percent today, but nonetheless it is moving higher
following its earnings, and the company did come out and
talk as to mention that key sales metric of comp
sales returning to growth this year home Depot walk us
(23:47):
through this one in particular it's fundamentals and what it
does also more broadly say about the consumption economy.
Speaker 10 (23:55):
It does I think, you.
Speaker 9 (23:56):
Know, the first thing I'll say is expectations were low
coming into the quarter, and the results from the quarter
were good. They were solid and beat expectations for the
most part outside of gross margin. I was really encouraged
to see the positive COMP result for the company. Prior
to this, the last eight quarters have had negative COMP
results and really double clicking into the comp transactions were
(24:17):
positive this quarter, which was really encouraging.
Speaker 10 (24:20):
After more than three years of that being negative.
Speaker 9 (24:23):
And I think sort of double clicking a step further,
even when you back out the benefit that they had
from hurricanes about sixty five basis points, they still would
have had positive comps there.
Speaker 10 (24:32):
So encouraged to see the results.
Speaker 9 (24:35):
And then in terms of the guidance with the management
team not assuming improvement from a housing standpoint, to assume
a one percent positive COMP is encouraging for us, and
we think is a bit conservative. If we start to
see either some improving in the housing markets or even
just as consumers have continued to be patient around rates,
we think at some point there will be some movement
(24:56):
in terms of.
Speaker 10 (24:58):
Financing related product.
Speaker 9 (25:00):
The company did call out a bit sort of from
helocks and cash out refinancing, seeing a little bit of
improvement there. So we think, with a little bit of
time there, if we start to see some improvement, that
could be meaningful.
Speaker 5 (25:11):
Given where rates are, and given how many people have
rates below four percent. You know, I forget the stats,
but we hear it all the time. I'm surprised to
hear people taking helocks out right now at potentially higher rates.
Speaker 6 (25:23):
You know.
Speaker 10 (25:24):
And there's a little bit of improvement, I think.
Speaker 9 (25:25):
So we're not from a meaningful standpoint, but starting to
see maybe some green shoots in terms of improvement, which
is a positive sign.
Speaker 5 (25:32):
What about home improvement versus new construction and how that
contributes to Home Depot's top line. Which one's more important?
Speaker 9 (25:41):
We think both are important, certainly, and I think, you know,
the health of the consumer more broadly is certainly important.
I think, you know, they called out in sort of
some of the different segments they talk about the pro
versus DIY. Both of those segments were positive, which was encouraging.
Pro was stronger than DIY, but the companies also made
a lot of inrow in terms of improving that pro business,
(26:02):
whether it's the complex pro initiative that they have or
the SRS distribution. But a lot of positive commentary around
the pro segment despite the continued tough environment for the consumer.
Speaker 3 (26:13):
Hey, another name that you are looking at is Alta Beauty,
which is down almost sixteen percent so far this year.
It will report mid March after market. You know, the
beauty space we watch a lot, whether it Saphira, Sephora
or Alta Beauty, which just seems to be, you know,
(26:34):
have been on fire. But tell us about Alta Beauty
specifically and what you're watching here.
Speaker 9 (26:40):
We think certainly more interesting from evaluation standpoint. Here, there's
been a lot of news in terms of the mass
beauty players. Have been some disappointing news that have come
out from the mass beauty staples companies that have reported.
But the great thing about Alta is they have an
exposure to both mass and prestige, which is.
Speaker 10 (26:56):
A higher price point. Gives them a bit.
Speaker 9 (26:59):
Of a diversify cation from that standpoint, in addition to
selling across beauty, So we think it gives them a
little bit of a benefit there relative to some of
the other players in the space, in addition to the
company pre announcing after a strong holiday season in early January,
so we think some encouraging green shoots there for them.
Speaker 5 (27:19):
What about for the rest of the week when in
the next week too, when we hear from other consumer
focused companies, what are you watching for?
Speaker 11 (27:26):
You know?
Speaker 9 (27:26):
I think the biggest thing is just hearing sort of
the temperature check on the consumer, and especially as it
relates to you know, every day spend, but also some
of the higher dollars spend and just one one data point,
going back to Home Deep Book, they did call out
the big ticket spend. Those items more than one thousand
dollars were comped positively one percent. So I think really
(27:47):
listening to how is the consumer overall, how are they
doing in terms of some of those big purchases, and
just any any indicators around sentiment, and particularly as we
get into March with more companies reporting, being able to
see how consumers are holding up after some of the
challenges earlier in the year, and it's just getting a
(28:07):
temperature check into March.
Speaker 5 (28:08):
March fourth, mark your calendars. That's when Target reports results
before the bell will of course bring those to you
as we do, get them big. Thank you joining us, Abby,
do appreciate you taking the time.
Speaker 7 (28:19):
This is Bloomberg.
Speaker 2 (28:21):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
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or watch us live on YouTube if there is a.
Speaker 5 (28:35):
Time for another edition of Bloomberg Plugged in your weekly
look at evs. Today, we're talking about the grid. Jess
Mellinson as president and COO at Utili Data. It's a
company that uses AI to monitor grid conditions. Jess joins
us from New Jersey. Jess, welcome. The company has developed
the first distributed AI platform for the electric grid. It's
(28:56):
called Carmen. What is the problem that this is solving.
My head is not in the grid every single day,
so help me out a little bit.
Speaker 12 (29:04):
Yeah sure.
Speaker 13 (29:05):
So, you know, the grid doesn't have great visibility or
tools to manage powerflow at the local level. So when
you think about electric vehicles where they plug in, is
that previously sort of sleepy part of the grid you
see around your neighborhood with polls, transformers wires.
Speaker 12 (29:22):
Often pretty old infrastructure.
Speaker 13 (29:23):
Low data and so you know, evs when they show up,
they can create as much demand as a house or more.
But unlike a new house, the utility doesn't know it's there.
It behaves less consistently than a house, and so the
utility needs new tools down at that low voltage part
of the grid to see what's going on. And so
that's that's what Carmen does. We developed it, as you mentioned,
(29:46):
in conjunction with Nvidia. It allows, you know, in the
first applications inside an electric meter.
Speaker 12 (29:51):
So from that.
Speaker 13 (29:52):
Vantage point, the utility then is able to see where
the evs are, understand what they're doing to the infrastructure,
and take action to manage them better.
Speaker 3 (30:00):
So your biggest customers in are EV companies or what.
Speaker 13 (30:06):
No, they're electric utilities first, so the Karmen module will
work with anything that electricity runs through. We started with
the utility sector because they have the widest need for
this kind of AI capability. They're managing incredibly complex infrastructure
and they're trying to get ready for sort of unpredictable
penetration electric vehicles. So our first hardware partner for the
(30:30):
Karmen module is Hubble, they make all kinds of distribution
gride equipment. They're starting with the electric meters. So this
year Hubble will make available an AI meter that gives
the utility that kind of visibility and management tools that
they previously have not had.
Speaker 5 (30:45):
How often does somebody replace an electric meter. It doesn't
a utility replace an electric meter. I feel like these
things are the type of thing that you know, these
are on for decades.
Speaker 12 (30:54):
Yeah, they're supposed to last fifteen to twenty years.
Speaker 13 (30:56):
And fifteen or twenty years ago, you utilities made a
big wave of investments in smart meters, and the smart
technology back then was that you didn't need a meter
reader walking around your neighborhood. You could collect billing data remotely.
That was the evolution twenty years ago. Those meters are
coming due for replacement, and so what's the technology utility
(31:17):
needs now. What we've said with Nvidia is they need
to think way forward because if you do the math, now,
those meters are going to be out there in the
mid twenty forties, what is grid management going to look
like in the mid twenty forties, what's ev penetration going
to look like at that time? Scale utilies have to
think forward to what kind of software and AI capabilities
they're going to want running in that meter over the
(31:39):
next twenty years.
Speaker 3 (31:40):
You know, we recently talked with Zach Dell, son of
Michael Dell, who has created a company in terms of
batteries and storage and giving it back to the grid
and kind of helping to support it. And this is
in the state of Texas, but looking to expand. I
guess my question is that how does this help already
(32:00):
stressed grids, which is something that Achi is working on,
or you know, is it with stressed grids.
Speaker 4 (32:07):
What we really need.
Speaker 3 (32:08):
Is is it something that would really be useful with
updated grids or does it matter?
Speaker 12 (32:14):
Yeah, so evs can stress the grid.
Speaker 13 (32:17):
You know, they can overload transformers, they can introduce you.
Speaker 12 (32:22):
Know, power quality problems.
Speaker 13 (32:23):
All of that can either cause a local outage if
there's enough of an overload, or at minimum, it's degrading
the life of that equipment. So a transformer that's supposed
to be out there thirty plus years, it may only
last single digit years if it's consistently being overloaded by
an electric vehicle. So the first step is utilis need
awareness of what's going on with that equipment at the edge.
(32:44):
That's what this carmon platform. One of the first steps
is you can just run AI models and understand what's
plugging in whens, see the electric vehicles, See what they're
doing to power quality, See what they're doing to the
loading of that transformer. The next step is to manage
the utility infrastructure and potentially the charging patterns of the
car to reduce that wear and tear on equipment and
(33:07):
integrate evs in a more cost effective way. So even
if you shift charging for a few minutes, that could
alleviate a local problem. And so what we're trying to
do is provide utilities with the ability to actively manage
that infrastructure to keep costs down, to preserve their equipment
and keep rates low, much like you know, an Internet
service provider would manage internet traffic or we navigate the roadways.
(33:30):
That real time AI information can help you get more
out of existing infrastructure.
Speaker 5 (33:35):
But do the insights actually tell us anything more complicated
than you know, what we're already told by our utility,
which is, hey, plug this thing in late at night
when everybody's asleep, so it's ready for you in the morning.
And that's when the least stress is on the grid.
At least that's what they told my dad to do
in California.
Speaker 12 (33:51):
Yeah, so that's.
Speaker 13 (33:52):
Sort of like the first level of EV management, but
that's pretty simplistic. And then take that to its end
state everybody plugs in it seven pm and you've got
a new peak to worry about. The other point, the
effects really are really localized and they can be nuanced.
You know, we deployed Carmen with the University of Michigan
to study, you know, sub second impacts on the grid,
(34:13):
and they saw a lot of issues quick drops and voltage,
power quality problems, strange behavior from the charging software in
the vehicle. All that is not recorded if you're just
looking at a data point every fifteen.
Speaker 12 (34:25):
Minutes or hour.
Speaker 13 (34:26):
So the utilities need to get more granular with that visibility,
and then they need to figure out how to do
local management so that we can really smooth this out
because what you you know, the charging profile that is
best for the grid can certainly change from different times
a day and even different neighborhoods.
Speaker 12 (34:43):
And so eventually, when we get.
Speaker 13 (34:45):
To millions and millions of evs on the road, utilities
are going to need more active management tools.
Speaker 5 (34:50):
Do you think we get to millions and millions of
evs on the road. There's some serious concern. Look at
what Ford has done with its pullback GM as well.
Tesla sales down for the first time, Tesla sales growth
down for the first time.
Speaker 7 (35:03):
This year.
Speaker 5 (35:03):
We saw what happened outside of the US. We've been
reporting on that, and that's why Tesla's shares are down.
The Trump administration is not pushing evs. Do we get
to that point?
Speaker 12 (35:14):
Yeah? I think we do.
Speaker 13 (35:14):
I mean, obviously there's a short term impact of new
federal policies. There are in the states we operate in,
there are strong state policies. But more important than that,
the vehicles themselves, from a cost competitiveness standpoint and a
feature and quality standpoint have really gotten very competitive. And
so you know, we're not going to tell you what
(35:36):
the EV penetration rate is next year or five years.
But again, when utilities making investment choices that are going
to last to the twenty forties, they have to be
ready for millions of electric vehicles and a pretty wide
range of outcomes of where those vehicles show up, how
much they use, and how they might behave Jesse.
Speaker 3 (35:55):
Are you more worried though about data centers and the
like in terms of stress on on the grid? Tim
and I have spent a lot of time talking a
lot for a while, I feel like, but especially this year,
about data center needs, energy, the grid, the role of
nuclear power and helping to meet that demand. We've been
(36:16):
really kind of doing some deep dives into all of this.
So I'm wondering if the bigger stress point in terms
of understanding power flows are things like data centers versus
EV ramp up.
Speaker 13 (36:27):
Yeah, I mean, data centers, by the numbers are a
bigger demand draw than evs in sort of near term
expected growth, but they're very different in nature. Data centers
are a very large source of demand centralized in one place,
they have to work with to interconnect, they have to
worry about the availability of generation. Evs are again at
(36:48):
that low voltage level, coming online locally sporadically, driven by
customers without utility visibility.
Speaker 12 (36:55):
So yes, and the.
Speaker 13 (36:56):
Big picture demand is going up. You know, we've gone
from decade one percent or sub one percent load growth
to three percent year over year, which compounds really quickly
in the big picture. Obviously a great thing for utilities,
they've got to manage all this data. Centers are a
huge issue. Carmen also can benefit that type of application.
Evs are also a very big issue. Again, both are positives.
(37:20):
The utility industry is excited to serve this new demand,
but they just need to invest in the right technology
to get ready for it.
Speaker 5 (37:27):
So what's the opportunity then for your company? Is it
making sure that every single utility around the US buys
the smart technology for when it does go and replace those.
Speaker 7 (37:42):
Monitors.
Speaker 12 (37:44):
The means yeah, it you know for utilitydata.
Speaker 13 (37:48):
We have a very close partnership with Nvidio and Video
as an investor in our company. We've been experts in
the electric grid for over a decade and how to
use real.
Speaker 12 (37:56):
Time data to solve problems.
Speaker 13 (37:58):
Obviously, in Vidio makes incredibly scalable accelerated computing platforms. We
combine that expertise to develop a product for the electric industry.
The idea being utilities need to software define their infrastructure.
They need to be able to run AI models at
the source of the data. That is quicker, faster, it's
(38:19):
more resilient, saves utilities costs, and you get better performing
AI when you can again, think about navigating in your car, right,
you have a powerful computer on your car and in
your phone that's helping, in conjunction with.
Speaker 12 (38:31):
The cloud, execute some AI use cases.
Speaker 13 (38:33):
And so what we've been trying to do is bring
products to the utility sector that enable them to run
their infrastructure in a similar manner. And part of the
point of the carbon platform is that every utility hardware
company doesn't need to learn how to do this or
invent their own platform. They can just all embed an
Nvidia based module and create real benefits for the grid overall.
Speaker 3 (38:56):
Hey, Jess, just got about thirty seconds here. What's your
guys plan in terms of of your own company?
Speaker 7 (39:01):
I mean, is going to want to see your return?
Speaker 4 (39:04):
Are you profitable? Is the plan to stay private? And
again just quickly, just got about thirty seconds.
Speaker 13 (39:10):
Yeah, we're a private company and we're really focused on
making our initial utility customers like Consumers Energy in Michigan, Portland,
General and Oregon successful with this technology to demonstrate to
anybody replacing a meter or investing in grid hardware that
this is the platform to adopt.
Speaker 4 (39:26):
So no Plasco public at least not anytime.
Speaker 13 (39:29):
So now they're announcing today tomorrow.
Speaker 12 (39:34):
We'll let you know.
Speaker 3 (39:35):
Okay, sounds good deal, Jess. Good to get some time
with you. Thank you so much, Jess Millansen. He is
president and chief operating officer of Utela Data. It is
a company that uses AI to monitor grid conditions. We've
been talking a lot about the grid and energy and power.
Speaker 5 (39:48):
Yeah, it's remains to be seen if we can shore
up the grid in all the states where the grid
has been yeah, under pressure over the last few.
Speaker 4 (39:57):
Years, sometimes because of climate change, hot or cold. Yeah,
good for direction, Mac, I'll about you.
Speaker 14 (40:04):
Let me drive.
Speaker 7 (40:05):
Oh no, no, no, no, this is not a twenty he's going.
Speaker 2 (40:08):
To dub alright, please, I'll do the gravel.
Speaker 3 (40:12):
Great, I want to drive.
Speaker 5 (40:16):
It's a good question, drives.
Speaker 7 (40:20):
This is the drive to the clothes.
Speaker 12 (40:22):
Now, plunks to me a thing.
Speaker 13 (40:24):
We'll drive.
Speaker 2 (40:25):
Jonna Don on Bloomberg Radio.
Speaker 3 (40:27):
All right, everybody, just about just under eighteen minutes to
go until we wrap up this trading day on this Tuesday,
February twenty fifth, Carol Master Timstanovic live in our Bloomberg
Interactive Broker studio.
Speaker 4 (40:38):
Great to have back with us as we drive to
the clothes.
Speaker 3 (40:41):
Louis Navalier he's chairman, founder and chief investment officer at Navel.
Speaker 5 (40:45):
He's driving to the clothes. Fortunately he pulled over, so
he's not driving to the clothes.
Speaker 7 (40:51):
Literally.
Speaker 5 (40:51):
I find it funny he's not in Florida this time. No, no, Louie,
you're out there in California. What do you What are
you doing in California?
Speaker 14 (41:00):
I met Donner Summit. I was driving back from a
meeting in Scott's Valley, California.
Speaker 5 (41:05):
Amazing Donnor Summit. So a little bit of snow there
this time of year.
Speaker 12 (41:10):
Yeah, yeah, only about nine feet.
Speaker 5 (41:13):
Okay, all right, see we welcome into a whole history
of Donner Pass.
Speaker 3 (41:17):
You are literally driving to the clothes, which we kind
of love. Louis, by the way, also author of the
Sacred Truths of Investing, finding growth stocks that will make
you rich. All right, So Louis, first of all, this
market environment, I don't know. There's a lot of things
that keep coming at investors where it's economic news, news
out of d C. Do you feel like we are
(41:37):
setting up for maybe some kind of correction at some
point that just you know that investors are getting more
and more nervous.
Speaker 4 (41:42):
What are you seeing in your day job.
Speaker 14 (41:47):
I just think of normal consolidation towards annoventreen season. Obviously,
super Micro has to release their financials today, and then
na Video has to have some my good guidance tomorrow,
and then I think a lot of us will regroup.
But Bonios keep meandering lower, and that's gonna set the
foundation for a nice rally.
Speaker 12 (42:07):
Also, I've noticed we're rotating Moore.
Speaker 14 (42:10):
You know, things like Eli Lilly are so rallying and pressing,
So that's that's a good sign.
Speaker 11 (42:17):
Something most like that's smart.
Speaker 14 (42:20):
Sure that guy hit with prop taking that should take
them off too.
Speaker 5 (42:24):
Hey, Louis, we're having a little trouble with your connection.
I'm going to talk a little bit while they worked too,
get your connection a little better. We did hear earlier
from Bank of America CEO Brian moynihan Carol, who talked
about the fact that his analysts don't see rape cuts
happening this year, and you remind me, he said next year,
said well.
Speaker 4 (42:44):
Which I thought was kind of interesting.
Speaker 3 (42:45):
We talked about it with our own Michael McKee and the
amount of visibility. I think, you know, kudos in terms
of laying it out that way. I think he says
in terms of the FED mandate, inflation is a little
bit trickier, are Mike McKee saying? In order for that
to happen, you have to the Fed's got to make
sure that you know, certainly growth continues in the United States,
(43:07):
and this is where you know, if growth starts to
come undone, and God forbid, you know that we kind
of have growth coming undone and still we have inflationary pressures.
We're talking about a really difficult environment, and so we
will have to wait and see. Mike did remind us
that we did see markets starting to price in now
two rate cuts here in twenty twenty five, which we
(43:30):
know it really is very sensitive based on what is
coming out in terms of economic news, and again what's
coming out in terms of tariff policy, or tax policy,
or business policy, regulatory policy, all of these things will
come into play about maybe ultimately what happens to growth,
inflation and what the FED will do.
Speaker 5 (43:48):
I want to get back to Louis Novalier, he joins
us back on the phone from California. Louis, I mentioned
the FED rate cuts or lack thereof, at least thus far,
because you actually argue that we could see as many
as four rate cuts this year. Why do you think that.
Speaker 11 (44:04):
Well, because the European Central Bank and the Bank of
England probably have another four to five rate cuts coming.
You know, they're in recession over there. They're getting increasingly
economically desperate. We'll see if mister Mertz will do the
right thing for Germany. I suspect you may not. You know,
they really have to turn the nuclear power plants back
on nobody's They're going to continue to lose their manufacturing base.
(44:28):
So those global rate cuts will put downward pressure on
our treasuries, and then I FED will be forced to
follow treasure yields law.
Speaker 4 (44:36):
Where do you want to put money right now in
this environment?
Speaker 10 (44:40):
Oh?
Speaker 11 (44:40):
Anything that earns money?
Speaker 4 (44:42):
Okay, nice, very nice. Can you be more specific?
Speaker 11 (44:47):
Well, like that sprouts farmers market. I mean that's got
very strong sales earnings growth. You know, I own the
egg companies that are profiting from egg inflation, you know,
coalmine and vital farms. You know, we're picking up some
biotechs arning money, which is good. I still have lots
(45:07):
of the data center companies building out the grid, and
I'm going to help build out the data centers. Those
socks actually got hit harder than the navideos and things
during the deep seak news. But you know, deep Seat
keeps crashing, so that seems have been a false narrative.
So the AI story is alive and well and it
(45:29):
will continue.
Speaker 7 (45:30):
Yeah, so you're bullsh on Vidio tomorrow.
Speaker 11 (45:33):
Oh, it has to go on. It's my largest holding,
it's like twenty percent of some my accounts. And we
won't sell it because we're too cheap to day the taxes.
Speaker 7 (45:41):
When would when would you sell it?
Speaker 11 (45:44):
I'm on record that we probably should hold to the
end of the decade. I don't think they can compete
with the video on those chips. And then what will
happen at the end of the decade. It's hard to
make the chips faster because you're approaching the atomic level.
So they have to switch to cloud computing, and Nvidia
of course has a quantum cloud simulator. Now they're working
with Google to make the transition, but as Jensen has
(46:05):
pointed out, only they and Google are probably gonna make money.
Speaker 7 (46:10):
Well, loot, when did you When did you get into Nvidia?
Speaker 11 (46:15):
This is my second time, but I was in a
long time ago when it was just mostly Graphics, Chips,
Energy Fish and Chips, and then I got in it
again about five years ago.
Speaker 7 (46:24):
Wow, it's had quite a run over the last five years.
Speaker 5 (46:27):
So yeah, I can understand some hesitancy to sell on
a you know, dip as we're seeing right now.
Speaker 3 (46:32):
Well, you know, and Tim went there, and I'm going
to go there because I know sometimes like people get ticked.
Speaker 4 (46:36):
Off and we're like, are you buying the dip? But
are you?
Speaker 11 (46:39):
You should buy the dip in Navidia anytime you get
a dip just in video though, Yeah, well in the
video is a monopoly, that's a little easier. But right now,
I would say the Clouds Farmer's Market is a very
good buy in any dip. I think Walmart's a good
buy in any dip. Costco's gonna announce after Navidia phenomena
(47:00):
buying any dip. You know a lot of these stores,
the Walmarts of Costco's are going more and more upscale.
In Walmart's case, are also some a lot more groceries.
Okay two more admit income upber income people. But you
just go to any Costco. It's just wealthy people buying
a lot of stuff and loading up the SUVs.
Speaker 3 (47:18):
Hey, listen, just last thoughts and I know we've touched
upon this in the past. Just got about thirty seconds here, Louis,
in terms of stuff that comes out of d C,
do you just like what do you wait until something's
real policy, something having a real impact, or you know,
do you ignore most of what comes out of DC
just quickly?
Speaker 11 (47:35):
I'm ignoring most of it. I think the terrorists aren't
going to be that inflationary because you know, let's make
a deal with Trump and then we have a very
strong dollar that's going to keep important prices down. But
I'm mostly watching how it gets along with the international guys.
So I think the Macrome meeting was very interesting yesterday.
I think the kur Seimer meeting Thursday is going to
(47:56):
be a more tempt you know, those people don't get along.
Our special relationships Britain may be over.
Speaker 4 (48:03):
Interesting times.
Speaker 3 (48:05):
Louis, thanks for pulling over and spending some time with us.
Louis Navalier, who's chairman, founder and CIO at Navalier and Associates.
Speaker 2 (48:12):
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