Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

While Ukrainian forces carried out their first strike on a border region in Russia using Western supplied missiles as President Vladimir Putin approved an updated nuclear doctrine expressing expanding the conditions for using atomic weapons. It was the first known attack following the decision by Joe Biden's administration to approve Keev's limited use of the weapons to hit targets inside Russia, and it was two months before Donald Trump takes over, promising to quickly end the war.

While Ukrainian forces carried out their first strike on a border region in Russia using Western supplied missiles as President Vladimir Putin approved an updated nuclear doctrine expressing expanding the conditions for using atomic weapons. It was the first known attack following the decision by Joe Biden's administration to approve Keev's limited use of the weapons to hit targets inside Russia, and it was two months before Donald Trump takes over, promising to quickly end the war.

Yeah, we talked about this a little bit earlier. I got to say, for the past week or so, we've been dying to talk with her, and she always finds time for us. She's a go to for all things Russia, Kraine and Vladimir Putin back with us as Doctor Angela Stent, Senior Fellow at the Brookings Institution, a member of the Council on Foreigner Relations, former National Intelligence officer for Russia and eur Asia the National Intelligence Council, And I got to say, she's also done policy planning at the US Department of State, so much more. She's also the author Putin's World, Russia against the West and with the rest. I'm still waiting for her next book. She joins us from Washington, DC. ANGELA, good to check in with you once again. Why is all of this happening right now? Feels kind of urgent. Read the tea leaves between the nuclear doctrines and what we're hearing and what is going on? Help us out here?

Yeah, we talked about this a little bit earlier. I got to say, for the past week or so, we've been dying to talk with her, and she always finds time for us. She's a go to for all things Russia, Kraine and Vladimir Putin back with us as Doctor Angela Stent, Senior Fellow at the Brookings Institution, a member of the Council on Foreigner Relations, former National Intelligence officer for Russia and eur Asia the National Intelligence Council, And I got to say, she's also done policy planning at the US Department of State, so much more. She's also the author Putin's World, Russia against the West and with the rest. I'm still waiting for her next book. She joins us from Washington, DC. ANGELA, good to check in with you once again. Why is all of this happening right now? Feels kind of urgent. Read the tea leaves between the nuclear doctrines and what we're hearing and what is going on? Help us out here?

Well, things are not going that well for the Ukrainians on the battlefield, and Zelensky has been pleading with the US to allow Ukraine to use these long range Africa missiles to strike inside Russia. The Russians now have ten thousand North Korean troops fighting in the Krisk region in Russia, part of which Ukraine occupies, but now they're saying that could have as many as one hundred thousand there. So Ukraine wants to survive. It understands that when President Electrunk comes into office, he's going to you know, push Ukraine to negotiate with Vladimir Putin with Russia, and that Ukraine wants to be really in the strongest position that it can be if it's going to have to make concessions to Russia.

Well, things are not going that well for the Ukrainians on the battlefield, and Zelensky has been pleading with the US to allow Ukraine to use these long range Africa missiles to strike inside Russia. The Russians now have ten thousand North Korean troops fighting in the Krisk region in Russia, part of which Ukraine occupies, but now they're saying that could have as many as one hundred thousand there. So Ukraine wants to survive. It understands that when President Electrunk comes into office, he's going to you know, push Ukraine to negotiate with Vladimir Putin with Russia, and that Ukraine wants to be really in the strongest position that it can be if it's going to have to make concessions to Russia.

And Russia.

And Russia.

On the other hand, Putin feels that he's in the driver's seat. They're doing well on the battlefield. He knows that President elect Trump wants to make a deal, and he wants to make a deal more than Putin does, because that's what he promised his supporters, the people who voted for him to end the war. So we're now, you know, we have two months more of than Biden administration, and so from the Ukrainian point of view, they would like the Biden administration to do as much as it can to help them be in the strongest position they can be in if they're forced to negotiate.

On the other hand, Putin feels that he's in the driver's seat. They're doing well on the battlefield. He knows that President elect Trump wants to make a deal, and he wants to make a deal more than Putin does, because that's what he promised his supporters, the people who voted for him to end the war. So we're now, you know, we have two months more of than Biden administration, and so from the Ukrainian point of view, they would like the Biden administration to do as much as it can to help them be in the strongest position they can be in if they're forced to negotiate.

Is that how you explain the US missiles that were used recently?

Is that how you explain the US missiles that were used recently?

Yeah, I do, and I think it's again, this has been on the table for a long time. The Ukraine's have been asking for this, and now that the US has given them permission to use these missiles, the French and the British have also been supplying the Ukraine now with some longer range missiles. So that explains the time of that. I think a number of US believe it would have been better if they would have had permission to do this earlier.

Yeah, I do, and I think it's again, this has been on the table for a long time. The Ukraine's have been asking for this, and now that the US has given them permission to use these missiles, the French and the British have also been supplying the Ukraine now with some longer range missiles. So that explains the time of that. I think a number of US believe it would have been better if they would have had permission to do this earlier.

Why didn't we do it earlier?

Why didn't we do it earlier?

Because the Biden administration has always been very concerned about escalation. I mean, you saw with Putin's new nuclear doctrine. This is intent to intimidate, to threaten US. You see some Trump supporters tweeting that we now risk World War III because the Biden administration has allowed the Ukrainians to do this. So Putin revises a nuclear doctrine, says, I'm lowering the threshold for using these weapons. He's trying to stop the US and its allies from helping Ukraine.

Because the Biden administration has always been very concerned about escalation. I mean, you saw with Putin's new nuclear doctrine. This is intent to intimidate, to threaten US. You see some Trump supporters tweeting that we now risk World War III because the Biden administration has allowed the Ukrainians to do this. So Putin revises a nuclear doctrine, says, I'm lowering the threshold for using these weapons. He's trying to stop the US and its allies from helping Ukraine.

Intimidation are the first step to a possible reality. I'm trying to understand. I hear nuclear doctrine or changes or lower threshold, and yeah, my spider sense goes up. So I'm just trying to understand what it really means.

Intimidation are the first step to a possible reality. I'm trying to understand. I hear nuclear doctrine or changes or lower threshold, and yeah, my spider sense goes up. So I'm just trying to understand what it really means.

So he would like us to believe that this is a real threat and that if these weapons keep coming, he might actually either detonate a tactical nuclear weapon or the Russians have been undertaking a lot of acts of sabotage, particularly in Europe, against industrial installations. They try to assassinate the head of one of the main factories that supply in Ukraine's cyber intrusions. So it's all of that. Does he really mean it? Of course we don't know the one hundred percent answer to that, but I think that what the Vibe administration is finally concluded is if you're too worried about escalation, but then Russia keeps escalating anyway, why not that Let the Ukrainians do this?

So he would like us to believe that this is a real threat and that if these weapons keep coming, he might actually either detonate a tactical nuclear weapon or the Russians have been undertaking a lot of acts of sabotage, particularly in Europe, against industrial installations. They try to assassinate the head of one of the main factories that supply in Ukraine's cyber intrusions. So it's all of that. Does he really mean it? Of course we don't know the one hundred percent answer to that, but I think that what the Vibe administration is finally concluded is if you're too worried about escalation, but then Russia keeps escalating anyway, why not that Let the Ukrainians do this?

Hey, Angela, what's a win for Vladimir Putin? Does it have to mean that they get access to territory that they want.

Hey, Angela, what's a win for Vladimir Putin? Does it have to mean that they get access to territory that they want.

So the minimum from their point of view is to get the Ukrainians to recognize the annexation of these four territories that Russia claims to have annexed but it doesn't fully control. And they want Ukraine to promise that it will never seek to join NATO. And they're calling for the demilitarization of Ukraine because Ukraine now has a very strong military.

So the minimum from their point of view is to get the Ukrainians to recognize the annexation of these four territories that Russia claims to have annexed but it doesn't fully control. And they want Ukraine to promise that it will never seek to join NATO. And they're calling for the demilitarization of Ukraine because Ukraine now has a very strong military.

That's what the Russians want. And if you look at.

That's what the Russians want. And if you look at.

The plan that you know Vice president, like JD Vance put out, it's rather similar to that.

The plan that you know Vice president, like JD Vance put out, it's rather similar to that.

So let's talk a little bit about where this goes and how it ends. Because it has been a thousand days and every time we get a chance to speak to you, I ask you the question how does it end? But a lot has changed since last time I asked you that question, including President elect Donald Trump along with JD Vance, the promises that they made on the campaign trail, and also what Putin has threatened and what Ukraine has been able to do. So now, given all that, how does it end?

So let's talk a little bit about where this goes and how it ends. Because it has been a thousand days and every time we get a chance to speak to you, I ask you the question how does it end? But a lot has changed since last time I asked you that question, including President elect Donald Trump along with JD Vance, the promises that they made on the campaign trail, and also what Putin has threatened and what Ukraine has been able to do. So now, given all that, how does it end?

So it probably does end with negotiations. I mean the Russians may be willing to sit down and negotiate. That doesn't mean mean they actually want to conclude negotiations because they keep hoping. They keep hoping that Ukraine will become weaker. And of course, if the Trump administration stops supporting Ukraine, either financially or also with weapons, then you know, the Russians could get their wish fulfilled. So I think it ends probably with a negotiation and with Ukraine having to make some territorial concessions. But the question is what will the Ukrainians get in return for that? And they really need to have very robust security guarantees that they will be able to withstand and deter another Russian attack on them, which will certainly come if they don't have these security guarantees. And this is where you know, it becomes very complicated because the only security guarantee that for them to ensure that Russia can invade again would be NATO membership. But clearly this is not something they're going to get with the incoming Trump administration.

So it probably does end with negotiations. I mean the Russians may be willing to sit down and negotiate. That doesn't mean mean they actually want to conclude negotiations because they keep hoping. They keep hoping that Ukraine will become weaker. And of course, if the Trump administration stops supporting Ukraine, either financially or also with weapons, then you know, the Russians could get their wish fulfilled. So I think it ends probably with a negotiation and with Ukraine having to make some territorial concessions. But the question is what will the Ukrainians get in return for that? And they really need to have very robust security guarantees that they will be able to withstand and deter another Russian attack on them, which will certainly come if they don't have these security guarantees. And this is where you know, it becomes very complicated because the only security guarantee that for them to ensure that Russia can invade again would be NATO membership. But clearly this is not something they're going to get with the incoming Trump administration.

I mean, all of Europe has got to be watching, all the world has to be watching in terms of what Vladimir Putin's in pensions are, and that is kind of right, putting back together what the Soviet Union used to be. So having said that, is there any real guarantee can you trust the word of Vladimir Putin that if he says undone? But he really is probably not in terms of future invasions right.

I mean, all of Europe has got to be watching, all the world has to be watching in terms of what Vladimir Putin's in pensions are, and that is kind of right, putting back together what the Soviet Union used to be. So having said that, is there any real guarantee can you trust the word of Vladimir Putin that if he says undone? But he really is probably not in terms of future invasions right.

When you can't because you know that his goal still remains to change the government in Ukraine, to have a pro Russian government and not to occupy Ukraine, but to really subdue Ukraine. That's been his goal since February twenty fourth, twenty twenty two, and as long as he's in power. With someone like him is in power, it's Russia probably won't stop unless it's properly deterred. And that's the real challenge.

When you can't because you know that his goal still remains to change the government in Ukraine, to have a pro Russian government and not to occupy Ukraine, but to really subdue Ukraine. That's been his goal since February twenty fourth, twenty twenty two, and as long as he's in power. With someone like him is in power, it's Russia probably won't stop unless it's properly deterred. And that's the real challenge.

How do you think about, you know, a Donald Trump in the White House potentially having to still deal with this situation. I mean, are you assuming that he's going to have to figure this out? It's not going to end before he gets to the White House? And if so, how do you kind of game out it seems to be a like relationship between Donald Trump and Vladimir Putin. I'm not quite sure how much is what we see or what we hear versus what the reality is. But how are you kind of gaming that aspect out?

How do you think about, you know, a Donald Trump in the White House potentially having to still deal with this situation. I mean, are you assuming that he's going to have to figure this out? It's not going to end before he gets to the White House? And if so, how do you kind of game out it seems to be a like relationship between Donald Trump and Vladimir Putin. I'm not quite sure how much is what we see or what we hear versus what the reality is. But how are you kind of gaming that aspect out?

Well, we know that the war isn't going to end before he gets into office, and I'm watching Putin very closely because on the one hand, he congratulated Trump a few days after his election. He said he was brave to the way that he survived and dealt with his assassination attempt. On the other hand, you know, if the Trump people said that there was a phone call between Trump and Putin, the crumb then denies it. The Trump people say that Trump ask him not to escalate well, he's escalated, and the very weak that they had that he congratulated Trump one of his favorite TV propagandas a woman on her nightly talk show, they had a very derogatory, installationous report about Milannia Trump. So how do you figure that that's almost true him before he comes into office. So I'm watching for these signals and seeing how the Russians play this out.

Well, we know that the war isn't going to end before he gets into office, and I'm watching Putin very closely because on the one hand, he congratulated Trump a few days after his election. He said he was brave to the way that he survived and dealt with his assassination attempt. On the other hand, you know, if the Trump people said that there was a phone call between Trump and Putin, the crumb then denies it. The Trump people say that Trump ask him not to escalate well, he's escalated, and the very weak that they had that he congratulated Trump one of his favorite TV propagandas a woman on her nightly talk show, they had a very derogatory, installationous report about Milannia Trump. So how do you figure that that's almost true him before he comes into office. So I'm watching for these signals and seeing how the Russians play this out.

We only have about a minute left, doctor Stent, But I'm wondering what all of this means for Eastern Europe and for the continent in general.

We only have about a minute left, doctor Stent, But I'm wondering what all of this means for Eastern Europe and for the continent in general.

Well, I think that the Eastern Europeans realize that they may be on their own, and you know, they may face if Russia thinks that it's winning, they can face war threats from Russia. I think Europe as a whole understands that it's going to have to do more for its own defense. But the problem is they're not completely united on all of this. For instance, the Germans won't supply the Ukrainians with the long range weapons, and of course the German government's collapsed and we don't know what the next German government will do. So it would be better if there were European unity. But certainly those countries polland the Baltic States, the Brits as well, but those countries on the front line are really gearing up to do as much as they can to prevent Russia from moving further west.

Well, I think that the Eastern Europeans realize that they may be on their own, and you know, they may face if Russia thinks that it's winning, they can face war threats from Russia. I think Europe as a whole understands that it's going to have to do more for its own defense. But the problem is they're not completely united on all of this. For instance, the Germans won't supply the Ukrainians with the long range weapons, and of course the German government's collapsed and we don't know what the next German government will do. So it would be better if there were European unity. But certainly those countries polland the Baltic States, the Brits as well, but those countries on the front line are really gearing up to do as much as they can to prevent Russia from moving further west.

Ten seconds this war. Does it end next year?

Ten seconds this war. Does it end next year?

I don't know, but it's probable. Liveryble and next year.

I don't know, but it's probable. Liveryble and next year.

All right. Thank you as always. We know you're busy, but you always find time for us. If we don't talk to you before the end of the year, have a good holiday season. Doctor Angela Stent, Senior fellow at Brookings, member of the Council on Foreign Relations. Perfect person to talk to you about this.

All right. Thank you as always. We know you're busy, but you always find time for us. If we don't talk to you before the end of the year, have a good holiday season. Doctor Angela Stent, Senior fellow at Brookings, member of the Council on Foreign Relations. Perfect person to talk to you about this.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Apple car Play and then brought auto with a Bloomberg Business app or watch us live on YouTube.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Apple car Play and then brought auto with a Bloomberg Business app or watch us live on YouTube.

All right, folks, Ukrainian forces carried out their first strike on a border region in Russia using Western supplied missiles as President Vladimir Putin approved and updated a nuclear doctrine expanding the conditions for using atomic weapons. It was the first known attack following that decision by President Biden's administration, the US administration to approve Kiev's limited use of the weapons to targets inside Russia coming too much, as you know, before President like Donald Trump takes over, promising to I guess quickly end the war, although I keep hearing about escalation.

All right, folks, Ukrainian forces carried out their first strike on a border region in Russia using Western supplied missiles as President Vladimir Putin approved and updated a nuclear doctrine expanding the conditions for using atomic weapons. It was the first known attack following that decision by President Biden's administration, the US administration to approve Kiev's limited use of the weapons to targets inside Russia coming too much, as you know, before President like Donald Trump takes over, promising to I guess quickly end the war, although I keep hearing about escalation.

Tim The crisis continues, perhaps escalating as the G twenty summit of World leaders gets ready to wrap up today in Rio de Janio, and another crisis averted as the family photo has been redone watching it all from the sidelines and front and center, Bloomberg News correspondent and host of The Big Take podcast, David Gera on the ground of the G twenty summit in Rio de Janio, David, four pm in Rio. Top of mind for US has been the war between Russia and Ukraine. Moscow's new nuclear doctrines, Russians Foreign minister seeing the attacks by Ukraine using US made missiles to strike Russia overnight signal that the US wants escalation. What are you hearing from the front on the ground.

Tim The crisis continues, perhaps escalating as the G twenty summit of World leaders gets ready to wrap up today in Rio de Janio, and another crisis averted as the family photo has been redone watching it all from the sidelines and front and center, Bloomberg News correspondent and host of The Big Take podcast, David Gera on the ground of the G twenty summit in Rio de Janio, David, four pm in Rio. Top of mind for US has been the war between Russia and Ukraine. Moscow's new nuclear doctrines, Russians Foreign minister seeing the attacks by Ukraine using US made missiles to strike Russia overnight signal that the US wants escalation. What are you hearing from the front on the ground.

Does it feel stressful out there?

Does it feel stressful out there?

Yeah, we'll get to that.

Yeah, we'll get to that.

It does.

It does.

We'll get to that family photo in just a little bit. But let's start with how this news sort of reverberated throughout the summit and began very early this morning. So, as he mentioned, the Foreign Minister, Sergey Lavrov of the Russian Federation came out early and did a press availability to reporters. Most of that was in the Russian language, but he reserved the final few minutes to speak in English. And the audience here were the leaders of Western countries, and so he delivered that assessment. This was an escalation of the war in Ukraine, this move for the US allowing those weapons to be used on Russian territory. He also had a very stern warning to those Western leaders as well. He urged them to read that new nuclear doctrine, and this is basically the way that Russia thinks about when it might use nuclear weapons. So the change that they've made, that that country has made is if a non nuclear power which Ukraine has won, were to use weapons to attack Russia in concert with a nuclear power here that would be the United States, Russia would have grounds to retaliate. So that's a pretty extraordinary move and pretty heated rhetoric from the Russian foreign minister. Now we waited to see how that would play out, what kind of response we would get from the Americans, and we had a National Security Council official telling Bloomberg News that the US plans to make no changes to its own nuclear doctrine. So as all of this is unfolded over these last few days, you see the US trying to infuse a bit of calm into the But it's certainly something that's occupied a lot of time and attention and interest from these world leaders here on the final day of this summit, and there I said a lot of these bilateral meetings, a big one was between the German Chancellor, Olaf Schultz and President sheichhen Ping. Olaf Schultz had spoken with Vladimir Putin, the President of Russia in recent days, so President she like so many world leaders here eager to sit down with the German Chancellor to get a better sense of what he heard from the Russian president. What might be an off ramp in this crisis in Ukraine at a time what it seems like things might be speeding kind of full speed ahead in a different direction.

We'll get to that family photo in just a little bit. But let's start with how this news sort of reverberated throughout the summit and began very early this morning. So, as he mentioned, the Foreign Minister, Sergey Lavrov of the Russian Federation came out early and did a press availability to reporters. Most of that was in the Russian language, but he reserved the final few minutes to speak in English. And the audience here were the leaders of Western countries, and so he delivered that assessment. This was an escalation of the war in Ukraine, this move for the US allowing those weapons to be used on Russian territory. He also had a very stern warning to those Western leaders as well. He urged them to read that new nuclear doctrine, and this is basically the way that Russia thinks about when it might use nuclear weapons. So the change that they've made, that that country has made is if a non nuclear power which Ukraine has won, were to use weapons to attack Russia in concert with a nuclear power here that would be the United States, Russia would have grounds to retaliate. So that's a pretty extraordinary move and pretty heated rhetoric from the Russian foreign minister. Now we waited to see how that would play out, what kind of response we would get from the Americans, and we had a National Security Council official telling Bloomberg News that the US plans to make no changes to its own nuclear doctrine. So as all of this is unfolded over these last few days, you see the US trying to infuse a bit of calm into the But it's certainly something that's occupied a lot of time and attention and interest from these world leaders here on the final day of this summit, and there I said a lot of these bilateral meetings, a big one was between the German Chancellor, Olaf Schultz and President sheichhen Ping. Olaf Schultz had spoken with Vladimir Putin, the President of Russia in recent days, so President she like so many world leaders here eager to sit down with the German Chancellor to get a better sense of what he heard from the Russian president. What might be an off ramp in this crisis in Ukraine at a time what it seems like things might be speeding kind of full speed ahead in a different direction.

David, these nuclear doctrines changes, no changes, escalation not escalation. Is it just verbal jockeying, Is it just verbal threats? Or is it something that the world to kind of sit up a little bit straighter and take notice.

David, these nuclear doctrines changes, no changes, escalation not escalation. Is it just verbal jockeying, Is it just verbal threats? Or is it something that the world to kind of sit up a little bit straighter and take notice.

I think it's the latter. But if you listen to the Americans and how they view this, what they're saying is, but this is to be expected. There has been this conversation swirling around the war in Ukraine for a long time. Kiev has been adamant that other Western countries supply them with better, more sophistic cicated weaponry, and because of that, Russia was likely to make this kind of change to its nuclear doctrine. So I wouldn't say that it's business as usual here, but it's something that I think the US is telegraphing is kind of expected. They expected this to happen, And what's happening is it's in the crucible of what we've seen over these last few days, which is this escalation of rhetoric. We saw the big attack from Russia on Ukraine just a couple of days ago. Obviously, this announcement by the US, rather, this announcement the US has allowed those weapons to be used as one that sort of ratchet things up even more. But the US again playing this as though this is something that was kind of preordained or destined to happen here in light of what's been going on over these last few months.

I think it's the latter. But if you listen to the Americans and how they view this, what they're saying is, but this is to be expected. There has been this conversation swirling around the war in Ukraine for a long time. Kiev has been adamant that other Western countries supply them with better, more sophistic cicated weaponry, and because of that, Russia was likely to make this kind of change to its nuclear doctrine. So I wouldn't say that it's business as usual here, but it's something that I think the US is telegraphing is kind of expected. They expected this to happen, And what's happening is it's in the crucible of what we've seen over these last few days, which is this escalation of rhetoric. We saw the big attack from Russia on Ukraine just a couple of days ago. Obviously, this announcement by the US, rather, this announcement the US has allowed those weapons to be used as one that sort of ratchet things up even more. But the US again playing this as though this is something that was kind of preordained or destined to happen here in light of what's been going on over these last few months.

Carol, all right, so my understanding, I think I heard you earlier on Bloomberg Television, or maybe it was on Balance of Power that Joe Biden headed home or has left. Where are we in these meetings?

Carol, all right, so my understanding, I think I heard you earlier on Bloomberg Television, or maybe it was on Balance of Power that Joe Biden headed home or has left. Where are we in these meetings?

Right?

Right?

They're wrapping up, and I guess is there kind of a net narrative net takeaway from all of this.

They're wrapping up, and I guess is there kind of a net narrative net takeaway from all of this.

They are wrapping up, Joe Biden is making his way back to the United States stuff for the conclusion of this summit. There are still some press availabilities and meetings that were taking place, I should say President She is traveling to Brazilia after this for a day of meetings with President Lulah here of Brazil. So there are leaders who are staying in this continent and having meetings and conversations about trade relationships and other deals going forward. I think the broad takeaway from this is is that we've seen kind of a traditional G twenty unfolding here, at least on paper. You know, we hit all the agenda items that you'd expect to see at a big multilateral meeting like this on issues of trade and climate and development and development financing. But we've seen this big event kind of overarching it, and I think this concern about sort of where things are headed, particularly with the conflict in Ukraine to an extent, with the conflict in the Middle East as well, and this massive variable Carol that's just looming large here, which is what's going to change in a couple months time. Joe Biden had this diminished role here at this summit, tried to make the most of it, tried to sort of spell out the contours of his legacy, convince a lot of these global partners that there's some policy foundation in place here that could stabilize the global systems going into this next president. But he's aware, all the people here are aware that come January twenty a lot of that's likely to go out the window.

They are wrapping up, Joe Biden is making his way back to the United States stuff for the conclusion of this summit. There are still some press availabilities and meetings that were taking place, I should say President She is traveling to Brazilia after this for a day of meetings with President Lulah here of Brazil. So there are leaders who are staying in this continent and having meetings and conversations about trade relationships and other deals going forward. I think the broad takeaway from this is is that we've seen kind of a traditional G twenty unfolding here, at least on paper. You know, we hit all the agenda items that you'd expect to see at a big multilateral meeting like this on issues of trade and climate and development and development financing. But we've seen this big event kind of overarching it, and I think this concern about sort of where things are headed, particularly with the conflict in Ukraine to an extent, with the conflict in the Middle East as well, and this massive variable Carol that's just looming large here, which is what's going to change in a couple months time. Joe Biden had this diminished role here at this summit, tried to make the most of it, tried to sort of spell out the contours of his legacy, convince a lot of these global partners that there's some policy foundation in place here that could stabilize the global systems going into this next president. But he's aware, all the people here are aware that come January twenty a lot of that's likely to go out the window.

And I should point out that a little bit later on in our next hour, we're going to check in with Angela's Stent, someone who's been also another go to us on the Russia Ukraine War. She was a national intelligence officer for Russian Eurasia at the National Intelligence Council, and he has done a deep, deep study into Vladimir Putin so a little bit more coming up in our three PM.

And I should point out that a little bit later on in our next hour, we're going to check in with Angela's Stent, someone who's been also another go to us on the Russia Ukraine War. She was a national intelligence officer for Russian Eurasia at the National Intelligence Council, and he has done a deep, deep study into Vladimir Putin so a little bit more coming up in our three PM.

Yeah, that happening right at the top of the hour, David, Perhaps that's a good place to good segue to get to the family photo, which we talked about earlier, and we talked a little bit about yesterday, and it's sort of a lighthearted thing, but also at the same time, it's very symbolic and there's a lot of meaning that happens, especially with the transition that's happening right now.

Yeah, that happening right at the top of the hour, David, Perhaps that's a good place to good segue to get to the family photo, which we talked about earlier, and we talked a little bit about yesterday, and it's sort of a lighthearted thing, but also at the same time, it's very symbolic and there's a lot of meaning that happens, especially with the transition that's happening right now.

What's an update there.

What's an update there.

Yeah, it is a huge.

Yeah, it is a huge.

Part of these events. And so there was some embarrassment on the Brazilian's part that this happened, at least publicly, And what we heard from President Lula is, this is Joe Biden's last G twenty. You would not be fitting for him to go home without that momento, without that formal photograph of him with these other leaders here at the G twenty. So after lunchtime here in Rio, they brought everybody back they took that photograph. It's funny you can see President Biden their flank by Prime Minister Justin Trudeau, prime Minister Jojo Maloney, who were also absent from that photograph yesterday. They kind of looked like chasing school children in the class photo. They're there now the photograph does exist. There was some speculation yesterday was something amiss. Was there something greater than President bind just being laid for that photograph? Did he not want to be depicted with Sergei Lavrov, the Russian foreign Minister. Both sides trying to put those rumors to rest. Seems like it was just a scheduling snapfoo here, but one they definitely wanted to rectify before Joe Biden made his way back to Washington.

Part of these events. And so there was some embarrassment on the Brazilian's part that this happened, at least publicly, And what we heard from President Lula is, this is Joe Biden's last G twenty. You would not be fitting for him to go home without that momento, without that formal photograph of him with these other leaders here at the G twenty. So after lunchtime here in Rio, they brought everybody back they took that photograph. It's funny you can see President Biden their flank by Prime Minister Justin Trudeau, prime Minister Jojo Maloney, who were also absent from that photograph yesterday. They kind of looked like chasing school children in the class photo. They're there now the photograph does exist. There was some speculation yesterday was something amiss. Was there something greater than President bind just being laid for that photograph? Did he not want to be depicted with Sergei Lavrov, the Russian foreign Minister. Both sides trying to put those rumors to rest. Seems like it was just a scheduling snapfoo here, but one they definitely wanted to rectify before Joe Biden made his way back to Washington.

We all definitely have our family photo stories to tell. Hey, just one last question. Is this a new era for the G twenty David?

We all definitely have our family photo stories to tell. Hey, just one last question. Is this a new era for the G twenty David?

I think that that's likely to be the case. I mean, something we were watching here are the way that these countries are interacting with one another. This is an alliance group that was born out of a US and Canadian desire to get these countries together. The US has always had this kind of marquee role at the vanguard of this gathering, getting folks together. I think that it's likely going forward in light of what we've heard from former President now future President Trump, who really doesn't prefer these multilateral gatherings like things to be done on a by lab basis that the shape the contours of the G twenty are going to be different going forward. Be interesting to see sort of how this shakes out when they meet again next year in South Africa.

I think that that's likely to be the case. I mean, something we were watching here are the way that these countries are interacting with one another. This is an alliance group that was born out of a US and Canadian desire to get these countries together. The US has always had this kind of marquee role at the vanguard of this gathering, getting folks together. I think that it's likely going forward in light of what we've heard from former President now future President Trump, who really doesn't prefer these multilateral gatherings like things to be done on a by lab basis that the shape the contours of the G twenty are going to be different going forward. Be interesting to see sort of how this shakes out when they meet again next year in South Africa.

David, I'm just going to say, great work. Great checking in with you are. I've guess almost done that beach. I've been on it. It's a really nice place to hang for a little while and read a book.

David, I'm just going to say, great work. Great checking in with you are. I've guess almost done that beach. I've been on it. It's a really nice place to hang for a little while and read a book.

So just a lot more work to do, just so you know.

So just a lot more work to do, just so you know.

I'm sure he does.

I'm sure he does.

I'm sure he does.

I'm sure he does.

Bloomberg News Correspondent David Gora there in Rio de Janio at the G twenty.

Bloomberg News Correspondent David Gora there in Rio de Janio at the G twenty.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.

I gotta say it's safe to say it feels like there's a new narrative going on, man, because lots of folks are coming on to talk small caps and how now.

I gotta say it's safe to say it feels like there's a new narrative going on, man, because lots of folks are coming on to talk small caps and how now.

Is their time I feel like this week, we've already had three people talking small caps Tuesday.

Is their time I feel like this week, we've already had three people talking small caps Tuesday.

Makes me a little nervous. But then it does because when everybody's kind of piling in, I'm like, a.

Makes me a little nervous. But then it does because when everybody's kind of piling in, I'm like, a.

Minute, But look at what's happened over the last ten years. I mean, small caps have underperformed megacaps.

Minute, But look at what's happened over the last ten years. I mean, small caps have underperformed megacaps.

And this next guest, large caps, likes midcaps like small caps and has an impressive long term track record to go.

And this next guest, large caps, likes midcaps like small caps and has an impressive long term track record to go.

Yeah, we got with us.

Yeah, we got with us.

Ryan Kelly, chief investment officer and portfolio manager at Hennessy Funds. Ryan co manages the Hennessy Cornerstone MidCap thirty fund. It's return on averageing only twenty four percent annually, Carol, it puts the fund in the ninety eighth percentile, so beating pretty much just about everyone in the sector. That's according to Bloomberg Data.

Ryan Kelly, chief investment officer and portfolio manager at Hennessy Funds. Ryan co manages the Hennessy Cornerstone MidCap thirty fund. It's return on averageing only twenty four percent annually, Carol, it puts the fund in the ninety eighth percentile, so beating pretty much just about everyone in the sector. That's according to Bloomberg Data.

That's a flick. You can do that, all right, Ryan, joining us here in studio. Hey, so good to have you back with us. How are you I'm doing great?

That's a flick. You can do that, all right, Ryan, joining us here in studio. Hey, so good to have you back with us. How are you I'm doing great?

Thanks for having me again.

Thanks for having me again.

Well, it's great to have you here. We do want to talk about what's in the fun. You just recently finished up a rebalancing. You do it once a year, but I want to ask you, is there anything in the macro environment, the outcome of the elections that has shaped maybe where you wanted to invest for the coming year.

Well, it's great to have you here. We do want to talk about what's in the fun. You just recently finished up a rebalancing. You do it once a year, but I want to ask you, is there anything in the macro environment, the outcome of the elections that has shaped maybe where you wanted to invest for the coming year.

Yeah, I mean, I think a couple of things going on here. Just getting back to the small versus small and large small and mid versus versus large. Yeah, you know, there's so much that debate out there. So much of the large cap stocks are just dominated by the Magnificent seven still and in Vidia, you know, reporting tomorrow. You know, so far this year, twenty five percent of the S and p's returns have been from in Vidia. So one stock doing that much good and maybe some sometimes that much damage to one particular index is a lot. So we like the small and MidCap space because it's not as susceptible to a lot of you know, there's not megacaps that'll take over the index. It's traded in a great better valuation. Certainly some changes that are supposedly upcoming with less regulation, better corporate tax rate, that's going to benefit some of these companies as well.

Yeah, I mean, I think a couple of things going on here. Just getting back to the small versus small and large small and mid versus versus large. Yeah, you know, there's so much that debate out there. So much of the large cap stocks are just dominated by the Magnificent seven still and in Vidia, you know, reporting tomorrow. You know, so far this year, twenty five percent of the S and p's returns have been from in Vidia. So one stock doing that much good and maybe some sometimes that much damage to one particular index is a lot. So we like the small and MidCap space because it's not as susceptible to a lot of you know, there's not megacaps that'll take over the index. It's traded in a great better valuation. Certainly some changes that are supposedly upcoming with less regulation, better corporate tax rate, that's going to benefit some of these companies as well.

Tariff policy.

Tariff policy.

Tariff policy could actually eat into some of their earnings for some of these mid cap Stocks's.

Tariff policy could actually eat into some of their earnings for some of these mid cap Stocks's.

What's of those things you mentioned what's actually priced in right now in your view? And we'll talk about some of these individual names soon. But the administration is in transition, yes, so, but we know the makeup of Congress pretty much. What do you think they'll be able to get done? So, therefore, what is priced now?

What's of those things you mentioned what's actually priced in right now in your view? And we'll talk about some of these individual names soon. But the administration is in transition, yes, so, but we know the makeup of Congress pretty much. What do you think they'll be able to get done? So, therefore, what is priced now?

It's a very tough question. I would say that tariffs are not completely priced in because I think there's still a disbelief that we can get to some of the levels that have been talked about. I think that personally it would be a very detrimental to the economy overall, and I hope that sort of more level heads come up with maybe a better plan. But if that is the case, that we're getting the kind of tarifs we're talking about, that really could hurt I think some of the longer term earnings of some of these companies.

It's a very tough question. I would say that tariffs are not completely priced in because I think there's still a disbelief that we can get to some of the levels that have been talked about. I think that personally it would be a very detrimental to the economy overall, and I hope that sort of more level heads come up with maybe a better plan. But if that is the case, that we're getting the kind of tarifs we're talking about, that really could hurt I think some of the longer term earnings of some of these companies.

All right, let's get to it, because I want to talk names. Your fund is up thirty seven percent here today ninety eight percent, dile, You've had a great five years for the fund as well. You pretty much are beating your peers, so kudos, kudos. We like to talk to people who perform your strategy. It's a one year rebalance you reminded me when you sat down here in our studio you just finished a rebalance. Tell us about that rebalance. There's thirty names and you said only two have stayed in the portfolio from the past two year. Yeah.

All right, let's get to it, because I want to talk names. Your fund is up thirty seven percent here today ninety eight percent, dile, You've had a great five years for the fund as well. You pretty much are beating your peers, so kudos, kudos. We like to talk to people who perform your strategy. It's a one year rebalance you reminded me when you sat down here in our studio you just finished a rebalance. Tell us about that rebalance. There's thirty names and you said only two have stayed in the portfolio from the past two year. Yeah.

So what we do is we really want to make sure that we're just going to continue to follow the same formula year in and year out. So this fund is twenty one years old. It has been done the exact same way since inception. We use a very disciplined process. That's actually on our website. You guys could go look at it. Yeah, every viewer could go look at it. It's the formula is listed there on how we do it. But the idea is that once a year we'll look at all the portfolio and we'll look at the universe of stocks.

So what we do is we really want to make sure that we're just going to continue to follow the same formula year in and year out. So this fund is twenty one years old. It has been done the exact same way since inception. We use a very disciplined process. That's actually on our website. You guys could go look at it. Yeah, every viewer could go look at it. It's the formula is listed there on how we do it. But the idea is that once a year we'll look at all the portfolio and we'll look at the universe of stocks.

Out there, and we really lot to look at it. It's a lot.

Out there, and we really lot to look at it. It's a lot.

And so it's it's a quantitative based, it's a formula based fund, but it's based on fundamentals going back for many, many, many decades. When this was first put together. They look back at three four decades worth of data to see what really works on Wall Street. And so what we've what we do is we look for companies in the one to ten billion market cap range, we look for a low price to sales, which is an interesting metric because most people use PE or to EBITDA or whatever. We look for a low price to sales of less than one point five.

And so it's it's a quantitative based, it's a formula based fund, but it's based on fundamentals going back for many, many, many decades. When this was first put together. They look back at three four decades worth of data to see what really works on Wall Street. And so what we've what we do is we look for companies in the one to ten billion market cap range, we look for a low price to sales, which is an interesting metric because most people use PE or to EBITDA or whatever. We look for a low price to sales of less than one point five.

Times about some valuation that hasn't been recognized right. As a result, a lot of times of the top.

Times about some valuation that hasn't been recognized right. As a result, a lot of times of the top.

Line, you'll get companies that are are in a bad part of the cycle or that are underperforming that are about to turn. And the reason why we're okay doing that is that another important part of the metrics is we're looking for momentum, so we already want stocks that have turned. We don't want to buy a undervalued company that has a lot more to go on the downside, but rather buy a company that's a good company that's out of favor that's on its way up.

Line, you'll get companies that are are in a bad part of the cycle or that are underperforming that are about to turn. And the reason why we're okay doing that is that another important part of the metrics is we're looking for momentum, so we already want stocks that have turned. We don't want to buy a undervalued company that has a lot more to go on the downside, but rather buy a company that's a good company that's out of favor that's on its way up.

So you're one of your old holdings, that was one of your biggest holdings with sprouts, Farmer's market uptically two hundred percent year to date, it's trading, you're an all time high. You said bye bye.

So you're one of your old holdings, that was one of your biggest holdings with sprouts, Farmer's market uptically two hundred percent year to date, it's trading, you're an all time high. You said bye bye.

Yes, so that in this most recent rebalance, it then moved way above our price to sales of one point five times. Only about a third of companies out there that are publicly traded trade below one point five times, so it's a pretty restrictive number, and that one way above it. It performed very well for us, but now it's gone.

Yes, so that in this most recent rebalance, it then moved way above our price to sales of one point five times. Only about a third of companies out there that are publicly traded trade below one point five times, so it's a pretty restrictive number, and that one way above it. It performed very well for us, but now it's gone.

Okay, let's talk about some of the names that you're adding. One name that I think lot of people would be surprised to hear would be Peloton. Yes, this is a company that has faced incredible pressure since the pandemic. Why are you optimistic? Why are you bullish?

Okay, let's talk about some of the names that you're adding. One name that I think lot of people would be surprised to hear would be Peloton. Yes, this is a company that has faced incredible pressure since the pandemic. Why are you optimistic? Why are you bullish?

It comes down to the formula first and foremost.

It comes down to the formula first and foremost.

It fits.

It fits.

It trades at zero point seven times price of sales. We bought it around, we're buying it around the five to six dollars mark. It's now approaching eight. So it has had to bounce back. You know, they're starting to improve on their cost side. They you know, a new CEO is always an important and potentially beneficial It's certainly challenging, but we've seen that type of turnaround before, believe it or not. Crocs. We owned Crocs when nobody wanted Crocs, and now all my children wear them. You know, we owned uh, we owned restorators and hardware when people were not going nobody's going to go to a store and then they became you know, it was an incredible turnaround story. So there's a lot of It may not come down to this particular name working the best, but it's just the representative holding of what we'll own.

It trades at zero point seven times price of sales. We bought it around, we're buying it around the five to six dollars mark. It's now approaching eight. So it has had to bounce back. You know, they're starting to improve on their cost side. They you know, a new CEO is always an important and potentially beneficial It's certainly challenging, but we've seen that type of turnaround before, believe it or not. Crocs. We owned Crocs when nobody wanted Crocs, and now all my children wear them. You know, we owned uh, we owned restorators and hardware when people were not going nobody's going to go to a store and then they became you know, it was an incredible turnaround story. So there's a lot of It may not come down to this particular name working the best, but it's just the representative holding of what we'll own.

And the idea is.

And the idea is.

You'll get something that's completely out of favor, that's beat down, that maybe has.

You'll get something that's completely out of favor, that's beat down, that maybe has.

A second life.

A second life.

Tell us about HERK.

Tell us about HERK.

So HERK holdings is this is so when we did the rebalance this year, we did find that there was a whole lot of consumer discretionary and a whole lot of industrials. And HERK is an equipment rental company.

So HERK holdings is this is so when we did the rebalance this year, we did find that there was a whole lot of consumer discretionary and a whole lot of industrials. And HERK is an equipment rental company.

Essentially, So take as h R I and it's up about forty this year.

Essentially, So take as h R I and it's up about forty this year.

So that you know, this is typically what we do. We catch something as it's already gone up. We don't want to try to buy it on its way down.

So that you know, this is typically what we do. We catch something as it's already gone up. We don't want to try to buy it on its way down.

Yeah, and with the you're.

Yeah, and with the you're.

Okay that you've lost some of the momentum.

Okay that you've lost some of the momentum.

We're okay, we'd rather not try to time the bottom but participate once it turns.

We're okay, we'd rather not try to time the bottom but participate once it turns.

Are you using AI at all now in your analysis?

Are you using AI at all now in your analysis?

No?

No?

AI, we this is wait or not. I have to say this is so simple that it's almost almost too so, you know, and I come from a I come from an analyst background, where.

AI, we this is wait or not. I have to say this is so simple that it's almost almost too so, you know, and I come from a I come from an analyst background, where.

I know for the last year and a half that's all we talk about is AI. But go ahead.

I know for the last year and a half that's all we talk about is AI. But go ahead.

I came from background where I covered banks. I hadn't know how old the CEO was, where he went to you know, where they went to play golf, all these kind of intricate pieces of data. But this is really it's it's fundamental quant is what it's called in the idea is you really just want to boil it down to very simple metrics and just stay with it year in and year out.

I came from background where I covered banks. I hadn't know how old the CEO was, where he went to you know, where they went to play golf, all these kind of intricate pieces of data. But this is really it's it's fundamental quant is what it's called in the idea is you really just want to boil it down to very simple metrics and just stay with it year in and year out.

And it's it's worked.

And it's it's worked.

Tim.

Tim.

If you don't know loves to eat a lot, he just finished a sandwich. It will come up. Brinker International is another name that you like. Eat is a tick er. Love that it's up one hundred and eighty three percent, but you've got in the portfolio for the coming year, so there's more momentum to the upside. Got about thirty seconds.

If you don't know loves to eat a lot, he just finished a sandwich. It will come up. Brinker International is another name that you like. Eat is a tick er. Love that it's up one hundred and eighty three percent, but you've got in the portfolio for the coming year, so there's more momentum to the upside. Got about thirty seconds.

Yeah, so Eat Chili's is the name brand. Also Cake Cheesecake Factory. Both of those are two restaurants that are now in the portfolio. Again, it's it's the same sort of situation. We've looked for all these companies.

Yeah, so Eat Chili's is the name brand. Also Cake Cheesecake Factory. Both of those are two restaurants that are now in the portfolio. Again, it's it's the same sort of situation. We've looked for all these companies.

Cake is up thirty three percent.

Cake is up thirty three percent.

Yeah, and you know, you look at these names that we add in and an example worked with well as super micro Computers. We owned and we owned it as it went completely up until it didn't and we actually got rid of it because it was too expensive.

Yeah, and you know, you look at these names that we add in and an example worked with well as super micro Computers. We owned and we owned it as it went completely up until it didn't and we actually got rid of it because it was too expensive.

So who needs AI. We just need Ryan Kelly Rian good to see with. You have a great holiday season. He is the chief investment officer at Hennessy Funds.

So who needs AI. We just need Ryan Kelly Rian good to see with. You have a great holiday season. He is the chief investment officer at Hennessy Funds.

You're listening to the Bloomberg Business Week podcast. Can'tch us Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brought auto with a Bloomberg Business act or wants us live on YouTube?

You're listening to the Bloomberg Business Week podcast. Can'tch us Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brought auto with a Bloomberg Business act or wants us live on YouTube?

All right, everybody, time for another edition Bloomberg Plugged in your weekly look at EV's President elect Donald Trump's in coming administration looking to slash fuelish efficiency requirements for new cars and light trucks, all as part of plans to unwiden President Biden's policies that he is blasted as an EV mandate. This is according to people familiar with the matter.

All right, everybody, time for another edition Bloomberg Plugged in your weekly look at EV's President elect Donald Trump's in coming administration looking to slash fuelish efficiency requirements for new cars and light trucks, all as part of plans to unwiden President Biden's policies that he is blasted as an EV mandate. This is according to people familiar with the matter.

Okay, so the policies don't explicitly order EV's oh critics argue the rules are so strict though, that they act as this de facto requirement to sell evs in large numbers for later years. So lots of stuff to talk about with Garrett Nelson, vice president and senior equity analyst at CFI Research. He joins us from Richmond, Virginia. Garrett, we're gonna get to some of your picks in just a minute, or your views, I should say, on these stocks. But big picture, we haven't had a chance to check in with you since the election. Big picture, how does a Trump administration change your view of evs.

Okay, so the policies don't explicitly order EV's oh critics argue the rules are so strict though, that they act as this de facto requirement to sell evs in large numbers for later years. So lots of stuff to talk about with Garrett Nelson, vice president and senior equity analyst at CFI Research. He joins us from Richmond, Virginia. Garrett, we're gonna get to some of your picks in just a minute, or your views, I should say, on these stocks. But big picture, we haven't had a chance to check in with you since the election. Big picture, how does a Trump administration change your view of evs.

Well, one thing we think that's changed is that we can say with almost complete certainty that the federal EV tax credit will be going away when new tax legislation is passed, likely next year. You know, all you have to do is look at the twenty agenda items listed in the twenty twenty four GOP platform, and one of them was canceling the EV mandate and cutting costly and burdening some regulations. And we think, you know, given the Republican elections sweep, we think that means an elimination of the federal EV tax credit program and to the surprise of some. Tesla, of course, the largest EV manufacturer and seller by far, has actually been advocating for the elimination of the EV tax credit. We think it's because they think it will hurt the EV sales of their competitors more than it will hurt their own sales, and so it will widen their competitive advantage over other automakers.

Well, one thing we think that's changed is that we can say with almost complete certainty that the federal EV tax credit will be going away when new tax legislation is passed, likely next year. You know, all you have to do is look at the twenty agenda items listed in the twenty twenty four GOP platform, and one of them was canceling the EV mandate and cutting costly and burdening some regulations. And we think, you know, given the Republican elections sweep, we think that means an elimination of the federal EV tax credit program and to the surprise of some. Tesla, of course, the largest EV manufacturer and seller by far, has actually been advocating for the elimination of the EV tax credit. We think it's because they think it will hurt the EV sales of their competitors more than it will hurt their own sales, and so it will widen their competitive advantage over other automakers.

Huh.

Huh.

Okay, so not that big of a deal for other for Tesla, but a bigger deal for other companies, That's.

Okay, so not that big of a deal for other for Tesla, but a bigger deal for other companies, That's.

Right, and you know we agree with that. We think you know, consumers really factor the EV tax credit into their buying decision more for other EV models than for Tesla's. The Tesla just has a you know, more established brand and customers that really aren't as because they generally sell luxury EV models. We don't think buyers are really dependent on that EV tax credit to make their.

Right, and you know we agree with that. We think you know, consumers really factor the EV tax credit into their buying decision more for other EV models than for Tesla's. The Tesla just has a you know, more established brand and customers that really aren't as because they generally sell luxury EV models. We don't think buyers are really dependent on that EV tax credit to make their.

Purchase interesting interesting. I mean, what take a step back. You know, we know that the EV story people are still buying evs, but they're also now buying hybrids in a big way, and so you know the market hasn't disappeared, but the growth we've numbers have certainly pulled back. So when you look at the move transition to evs still going to happen. I mean, how do you see it? Kind of bigger picture here, I mean, China is all in and they're producing some really less expensive models, which I would I think it's safe to say there are a lot of Americans would like to have a lot more choices that are less expensive.

Purchase interesting interesting. I mean, what take a step back. You know, we know that the EV story people are still buying evs, but they're also now buying hybrids in a big way, and so you know the market hasn't disappeared, but the growth we've numbers have certainly pulled back. So when you look at the move transition to evs still going to happen. I mean, how do you see it? Kind of bigger picture here, I mean, China is all in and they're producing some really less expensive models, which I would I think it's safe to say there are a lot of Americans would like to have a lot more choices that are less expensive.

Yeah, we think it might be a surprise to a lot of your listeners to know that the hybrid market is both larger and growing faster than the pure battery EV market in the United States. And so we think what's going to happen is that traditional automakers are going to invest more in hybrid development than EV's and really pull back on their EV growth plans. So, but you know, it really varies by automaker. You know, you look back three or four years, and each automaker really took a different strategy. A lot of the Japanese automakers, such as Toyota and Honda, were never big believers in electric vehicles, and so they invested a lot more in developing hybrid models, and we think they're going to really reap the benefit over the next few years in terms of market share gains compared to companies such as General Motors who really made an all in bet on evs as the future of the of the US auto market.

Yeah, we think it might be a surprise to a lot of your listeners to know that the hybrid market is both larger and growing faster than the pure battery EV market in the United States. And so we think what's going to happen is that traditional automakers are going to invest more in hybrid development than EV's and really pull back on their EV growth plans. So, but you know, it really varies by automaker. You know, you look back three or four years, and each automaker really took a different strategy. A lot of the Japanese automakers, such as Toyota and Honda, were never big believers in electric vehicles, and so they invested a lot more in developing hybrid models, and we think they're going to really reap the benefit over the next few years in terms of market share gains compared to companies such as General Motors who really made an all in bet on evs as the future of the of the US auto market.

Okay, speaking of folks who are going to be beneficiaries here, let's talk about Tesla, because you guys recently raised your opinion on shares of Tesla to buy from Hold.

Okay, speaking of folks who are going to be beneficiaries here, let's talk about Tesla, because you guys recently raised your opinion on shares of Tesla to buy from Hold.

Is this a Trump trade?

Is this a Trump trade?

That's what I'm wondering.

That's what I'm wondering.

It is, so much of Tesla's future depends on getting approval for autonomous driving. And when it became clear the election result, and given how much Elon Musk had invested in uh, you know, not only President Trump, but but other other candidates, you know, he really has uh uh you know, major influence on on the regulatory framework for autonomous driving going forward. Of course, they had the robo Taxi day last month. They said all their future vehicles will neither have steering wheels nor pedals. And instead of a very lengthy state by state process in terms of getting approval for autonomous driving, you're looking at a single framework run by the Department of Transportation, which could supersede that. So it really we think, you know, moved the time frame up by by perhaps a matter of years. Uh you know, just the fact that of of what happened with the election.

It is, so much of Tesla's future depends on getting approval for autonomous driving. And when it became clear the election result, and given how much Elon Musk had invested in uh, you know, not only President Trump, but but other other candidates, you know, he really has uh uh you know, major influence on on the regulatory framework for autonomous driving going forward. Of course, they had the robo Taxi day last month. They said all their future vehicles will neither have steering wheels nor pedals. And instead of a very lengthy state by state process in terms of getting approval for autonomous driving, you're looking at a single framework run by the Department of Transportation, which could supersede that. So it really we think, you know, moved the time frame up by by perhaps a matter of years. Uh you know, just the fact that of of what happened with the election.

Are there other No, I mean you've got to sell on Rivian, So going in the other direction, tell us about that one. You've got a twelve month price target of five bucks a share. Let me just pull it up on the Bloomberg. We've talked about it a lot here. It's down about fifty six percent. You're to date trading right now at ten and change. So you're talking about, you know, a fifty percent haircut here. What's the future of Rivian in your view? Doesn't sound pretty bright? Doesn't sound no?

Are there other No, I mean you've got to sell on Rivian, So going in the other direction, tell us about that one. You've got a twelve month price target of five bucks a share. Let me just pull it up on the Bloomberg. We've talked about it a lot here. It's down about fifty six percent. You're to date trading right now at ten and change. So you're talking about, you know, a fifty percent haircut here. What's the future of Rivian in your view? Doesn't sound pretty bright? Doesn't sound no?

Rivian is one of a handful of smaller EV manufacturers that just doesn't have the size or scale to compete a longer term. You look, the company will probably produce and sell less than fifty thousand vehicles this year. You compare that to a company of like GM or Ford or Tesla, all of whose sales will likely exceed one point eight million units this year. So they're just a fraction of the size in a very competitive global industry. And the auto industry historically has had a very high failure rate. Because capital costs are extremely high, it's difficult to achieve scale and it's very competitive and already we've seen a number of bankruptcies recently in the EV space, looking at Lordstown more recently, Fisker and you know, ribbans burning cash at a rate of about a billion dollars a quarter, so you know, you look, this company has still had a little more cash than debt on the balance sheet, you know, but given that cash burn rate, and really what they have to do to achieve scale is build a new factory. They want to do that in Georgia. The cost of that new factory are going to be about five billion dollars, So they're in a very tough position.

Rivian is one of a handful of smaller EV manufacturers that just doesn't have the size or scale to compete a longer term. You look, the company will probably produce and sell less than fifty thousand vehicles this year. You compare that to a company of like GM or Ford or Tesla, all of whose sales will likely exceed one point eight million units this year. So they're just a fraction of the size in a very competitive global industry. And the auto industry historically has had a very high failure rate. Because capital costs are extremely high, it's difficult to achieve scale and it's very competitive and already we've seen a number of bankruptcies recently in the EV space, looking at Lordstown more recently, Fisker and you know, ribbans burning cash at a rate of about a billion dollars a quarter, so you know, you look, this company has still had a little more cash than debt on the balance sheet, you know, but given that cash burn rate, and really what they have to do to achieve scale is build a new factory. They want to do that in Georgia. The cost of that new factory are going to be about five billion dollars, So they're in a very tough position.

Is this a company that is at risk of.

Is this a company that is at risk of.

The worst?

The worst?

Are you gonna say the B word?

Are you gonna say the B word?

Yeah?

Yeah?

I mean, I mean Elon Musk talked about this for years, Garrett. He's talked about how difficult it is to create a car company in America, how very few car companies in the last fifty years in the US have actually succeeded. I think the number is only Tesla at this point, he says, I mean, you have Rivian out now too, and a few other but it's a really tough market.

I mean, I mean Elon Musk talked about this for years, Garrett. He's talked about how difficult it is to create a car company in America, how very few car companies in the last fifty years in the US have actually succeeded. I think the number is only Tesla at this point, he says, I mean, you have Rivian out now too, and a few other but it's a really tough market.

Yeah.

Yeah.

In fact, Tesla is the last company since Chrysler and that was back in nineteen twenty.

In fact, Tesla is the last company since Chrysler and that was back in nineteen twenty.

That's the staff, thank you.

That's the staff, thank you.

Yeah. So that shows how difficult it is to survive in this industry. And so we've seen the number of bankruptcies I mentioned the two companies. I think you're going to see more, you know, over the next couple of years. So you know, they're at a very difficult spot. They did reach an agreement, a JV agreement with Volkswagen that gave him, you know, a nice lifeline five point eight billion dollar cash infusion. The stock had a little bit of a rally on that, but fundamentally, we don't think it changes a whole lot.

Yeah. So that shows how difficult it is to survive in this industry. And so we've seen the number of bankruptcies I mentioned the two companies. I think you're going to see more, you know, over the next couple of years. So you know, they're at a very difficult spot. They did reach an agreement, a JV agreement with Volkswagen that gave him, you know, a nice lifeline five point eight billion dollar cash infusion. The stock had a little bit of a rally on that, but fundamentally, we don't think it changes a whole lot.

Where do you think the EV space is And I'm not quite sure even what the timeframe the smart timeframe is to be thinking about. Is it three years, is it five years? When is there another kind of significant narrative around EV's in your in your view.

Where do you think the EV space is And I'm not quite sure even what the timeframe the smart timeframe is to be thinking about. Is it three years, is it five years? When is there another kind of significant narrative around EV's in your in your view.

We think it's when EV's really come down and they're close to to price parity with internal combustion engine vehicles as it stands today. Last month, the average EV was seventeen percent more expensive than the average of all vehicles in the United States. And so you look a year ago that premium was only about eight percent, so that gap is widening. It's not going to help with the EV tax credit going away. And also oil prices expected to fall. You look at the EIA forecast where they expect oil prices to go. EV's really benefit from when oil prices are higher. So, you know, there's a lot of headwinds, you know, facing evs as well as increasing competition. Traditional automakers are still planning on bringing a lot of EV models to market.