저자: GaryBlack · 외국인
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연준이 5월 25bp 인상 후 사실상 멈출 것이라 보며, 경기침체는 얕고 짧게(6개월, GDP -1~-2%) 올 것으로 본다. 물가는 6개월 연율 약 3%로 둔화했고, 연준이 하반기 인하로 전환할 가능성을 본다. 주식은 이익수익률 대비 국채금리 스프레드가 커서 여전히 저평가로 보며 전액 투자 기조를 유지한다. 테슬라는 가격인하로 마진이 낮아져 이익 추정치가 하향됐고, 마진 바닥 신호가 확인되기 전까지 비중을 줄였다고 설명한다.
다듬은 글
hey everyone being here with Gary black in Gary Black's office the future fund ETF thank you so much for inviting me into your office thanks for coming out so we have to start with uh the elephant in the room when are we getting stimulus checks again hopefully not a lot of people are talking about that and I do want to start about the recession and we'll get into Tesla of course uh but a lot of people have this mindset that if the Federal Reserve stays higher for longer that there will end up being not only no worries about the debt ceiling but actually potentially bipartisan support for supporting maybe lower income individuals or uh you know uh benefits for unemployment extended benefits again what do you think about that yeah I guess I'm more of the camp that we're not going to have a deep recession I think it's going to be you know six months and it'll be over I think the FED is smart enough to know that they already broke something you've seen a couple banks already go under you might see First Republic go under which would inspires me and at this point I think they're going to do one one more one and done one until we raise rates in May by 25 that's next week and then I think they're just going to sit here for a while and see what what the impact is and as you've seen with the economy today GDP was up 1-1 not not a big number um fourth quarter was revised down to two six you still see claims coming down so there's still strength and inflation has has really retreated if you look at don't look at a year Rolling numbers but look at say six month numbers yeah you're down to about three percent annualized inflation wow and so I don't think that the FED really needs to keep pushing rates up so my bet is we're going to get to next week they'll do 25 they'll probably signal that they're going to want to pause and I don't know how explicit they'll be yeah and then I think that'll be enough that the economy can kind of and I don't want to be Goldilocks about it or pollyanish about it but I think we can float down to about a zero Maybe minus 1 for the second half and then it'll be over because at some point the fed's going to start cutting rates if we're in a recession right so so maybe we get in other words a quarter where we've towed the line at I think what the next quarter's estimate for Q3 is maybe a point uh 0.2 I think uh and then you think maybe negative for Q4 but you're not seeing a signal that with certainty will be negative for two quarters in a row or more huh I don't see it and look I talked to business owners just like you do I'm a business owner nobody can get any help if you go out to any restaurant here in Chicago everybody says this is there's not a recession unemployment is the lowest it's ever been they can't get help and so at this point we clearly are not in a recession now okay the question is is the Fed going to be smart enough to stop before it breaks something else and I think yeah look they're they're they're smart people they've got a lot of research they've got a lot of data I think they're going to basically say you know things are slowing we the banks are not in a great situation right now because you still have deposits being disintermediate because you know people can put money into a treasury bond or money market fund and earn you know 200 basis points more than they're earning in their savings accounts right and I think the FED is going to be smart enough to say we can't keep pushing rates especially if inflation is is really coming down which to me I think the bigger risk is deflation and inflation right now from where we are but some people though they talk about well what if we have a wage price spiral I mean if Walmart's raising wages or Starbucks or Chipotle if they they keep having these margins and they're able to pass on these prices like we saw in the Chipotle earnings or the Nestle uh earnings isn't that a risk that if the FED pauses too soon people try to see through this tighter Period start spending even more again and just reignite inflation it's a risk it's a risk and look we follow all the consumer names we own Chipotle it's our third largest position and nice they pass through nine percent pricing last year yes and you look at Coke Pepsi McDonald's Starbucks you know they're Nestle they're all pushing through pricing so that is the risk but I still believe at the end of the day if the economy starts slowing dramatically and I don't I'm not smart enough nobody's smart enough to know how bad it's going to be in a second or third quarter but we did have as you've pointed out before we had two quarters last year of negative growth you know small numbers well like minus one or so yeah but I do think that that's going to cause the FED to say you know what let's hold off let's wait because they have a Fed meeting next week and then they have another one in June and the big question is what are they going to do in June are they going to raise rates again are they going to say let's hold and see what the impact is and if the economy is truly slowing which again first quarter slowed to 1-1 down from 2 6 in the fourth quarter will the FED say you know what it doesn't make sense for us to to to raise again let us just sit let's assess the impact and can they navigate this the so-called soft Landing where GDP doesn't you know go that negative I think everybody's which is scary everybody's kind of agreement will have some sort of recession right I just don't think it's gonna be that deep and I don't think it's going to be that long because I do think the FED will start cutting rates later this year ah okay so you are in fed cut Camp yeah yeah okay because the economy is going to slow and and it will go negative at some point this year I believe so you do think we are going to Trend towards negative it's coming right so when I look at you can look at CPI um X food and energy you can look at the pce which the FED likes we'll get a March number um tomorrow um but the PC if you just look at the last six months it's about three you know it's not it's not a huge number it's not that's why I don't like this look back of let's look back a whole year sure because you're basically dealing with the the the ratification of what happened in covet where the Fed was stimulating so much and the money supply was growing so much and there was all this stimulus going on you couldn't help but have inflation but but since that time you know you you see a lot of people looking at M uh M2 M2 is is for the first time in I guess it's 90 years it's declining but if you average it as you've pointed out and others have pointed out you average what happened the last you know year with today yeah it's not really it's normalization it's not really that bad when you think about it that way now would you say that when we look at inflation there's potentially this risk that we'll see that Goods deflation inventories have built up so heavily Freight is supposed to be in a recession already that if the FED senses stickiness in in Services Hotel well stickiness in other words prices um businesses like restaurants the Chipotles hotels being able to continue to raise prices do you think they would hike us further into a recession just for that part the the travel and the hotel and the food that seems to be so sticky right now you know I don't think so because you know rents and home prices which are still the biggest part of CPI yeah are coming down and we don't know you know how quickly they're going to come down in the next six months so yeah you could see the consumer package Goods maker others raising prices because you know their costs are going up but I mean you know this better than me you you're you're you you buy homes oh you know you see home prices coming down you know pretty sharply and rents are starting to come down so I think that's going to be the bigger Factor yeah there's a big debate about you know our investors being dumb here or are they smart and you know it's it's I don't have a crystal ball like Elon says he doesn't have a crystal ball but I do believe that the FED will cut rates and I do believe while we're not in recession today if the FED keeps pushing rates up because you have some companies as you say they're being sticky about prices they keep praising them we will have a recession but I don't think the fed's that dumb I think so we'll stop if we have that even shallow recession why not wait until then I mean won't stocks bottom closer to the recession usually and so you know when I look at stocks today you know I see a three and a half percent 10-year treasury you know the PE uh on the s p is about let's call it you know 17 18 on next year's earnings so if you look at the what I call the E over p ratio versus 10-year treasury yeah stocks are still offering about 200 basis points of extra and if you look at that historically that's a big spread so to me stocks are more downside then well I look at his stocks are pretty cheap oh really okay relative to the 10-year term the earnings risk premium so small though or you still think the 200 is yes okay okay so risk premium still high right now doesn't that signal though if we go into a recession I think that should spread down and tighten if we go into a recession you can see earnings come down a lot and so that's that's the risk but I go back to I just don't see a high risk of a deep recession if you have a you know one let's call it a one to two percent GDP decline yeah and it lasts for six months you're not going to see earnings revisions that are that dramatic so I still think that the Market's still relatively cheap okay but if you're trying to time the market and you're getting in and you're getting out based on you know what the physical it's hard to do that it's just you and I know that's why you have to stay you know fully invested unless you think there's a Calamity coming where we're going to have like a really deep recession like you know 19 uh you know 78 79 or you know we I wouldn't call the coveted recession deeper said it was over in 30 days yeah 30 days literally yeah but if you if you believe we're going into a you know 1930s type depression yeah you're pulling your money out but I don't see that it's interesting 30 days to slow the spread was really 30 days to slow the declining stock market uh but so okay so then what percentage of a downside do you see I mean if you had a diversified portfolio now where you were in the Spy or the NASDAQ um you know Technologies would you be thinking okay maybe if you invest now for the long term you got a 10 20 downside or are we facing potentially a 50 to 80 because you're not going to have a deep recession the FED is going to stop before things get too bad so I could see another 10 to 15 percent downside from here okay um remember the markets are up this year so we've had a good year so you get a buffer yeah last year wasn't great as you and I know but but you know this year I could see a 10 to 15 decline going into recession but what you've normally found is once the FED pauses and people conclude that there's no more rate hikes that people start discounting that the fed's going to cut and so the question is if they signal they're going to wait they're going to raise rates in May and then they signal we're gonna you know we're not gonna one and done we're gonna wait a while and see what the impact of this is and then people will start anticipating they're going to cut the next move is a cut and that's usually the time you want to be in the equity boot you know you want to be in equities when the FED is cutting and back to expanding money supply because they're signaling that the next move is no more going to be an increase it's going to be declined and I don't think they're going to signal that I think they're just going to Signal they're going to pause next week oh so you wouldn't wait for that sort of pivot so to speak you would want to be in before that because of their signaling to that and we're all in right now I mean we we keep our ETF you know pretty much you know maybe 96 invested you know always keep a buffer of cash just to have it so we could buy something if it's down a lot and we really like the name um but we're we're not we're not bearish about the economy and we're not that bearish about stocks because again when I look at e over P relative to the risk-free rate yeah I still have a big spread meaning Equity is still cheap to make relative to the history no Kevin O'Leary I spoke with him yesterday he's at 30 cash right now do you think that's wild is that a big opportunity cost it's probably because he believes we're going to have a deeper recession than I do I just I don't I don't know if the FED is as stupid as everybody thinks that they have been stupid sure but they were printing in March of 2022.
they were printing cash like there was no tomorrow because of covid and then you know they've been fighting this this Boogeyman of inflation which was caused by all this money printing from 2020 and all this excess stimulus from the government yeah but when you average it you say okay I've got inflation of let's call it six and now you know the marginal inflation as I call to take the monthly and then multiply it by 12.
sure of one or two you're kind of back to the norm of two to three and so I don't know if that's something the FED thinks about but I do believe they're going to stop doing what they've been doing which is hiking links every month yeah I find it fascinating the in the after the 82 Paul volckering the the rugging it seems like the FED took this path they even said it of opportunistic disinflation where they would just let inflation run a little hotter they'd just be at nine and eight and just slowly wait over time as it went they took 20 30 years to get it down to two percent why doesn't your own Powell just do that I mean why not just be okay with three to four for a little bit let things keep expanding unless he doesn't want inflation expectations to get into people's you know psyche whether to your point from before you know they're going to their employer and saying I want a you know three and a half or four percent raise yeah um I think he he doesn't want that inflation expectation which right now let's call it two and a half to three to you know gravitate up into the mid threes because then people are gonna then you do have a wage price type spiral risk right where you know employees which again you know there's no unemployment right now they can say hey you want to keep me uh you know you got to pay me more you got to pay me three and a half four percent Peter Schiff had this idea that everybody uh like economists and analysts and I do as well we look at these inflation expectations whether it's the five year or break evens or the University of Michigan surveys Peter Schiff had this response to me he said Kevin nobody when they go out and actually buy stuff thinks about inflation expectations they're like can I buy this or not it's in your psyche it's just meant deep in there you don't even know it's there no it's there you're just thinking about it and I see it here you know our rent you know this where our offices are it's about about 90 percent full you know it used to be when we first started running it was like 30 full oh wow it's like you know are you early our lease is up and they wanted a a seven percent bump in a rent I said you're out of your freaking Minds I mean there's there's vacancies all over the city yeah and office real estate you know they try but then you know people have got to say in my mind I'm not paying that but again if I'm if I'm an employee and I know that you know everybody's begging for me to come work for them because nobody nobody can get help right you might be in this mindset because your inflation expectation whether whether you quantify it or not uh is is higher now you might say you want a higher increase in order to stay put yeah I just I don't know I don't I don't I don't see that that that's happened yet okay but we'll see the next six months I guess so so you have um I guess now would be perfect time to bring up then Tesla if the economy isn't normally I know do we have if if the economy is uh not going to do so horribly uh you did just cut a little bit of your Tesla position after a price drop right before earnings good job um your thought I mean is this something you would look at increasing your position or exposure to again in the future or is this you know why we're going to keep it here and see if it grows look when I look at positions and especially at the top of the portfolio because as you know that's what drives your performance sure we always look at probability weighted upside downside and so before I could calculate the downside because I thought you know the odds of them bringing their gross margins below 20 percent were very very low yeah they even said that in their first or their Q4 earnings column but I don't know because and it's not like Elon is saying that we're going to bring margins in a zero he's saying you know technically we could and we're the only company in the industry that could do that and he's got a lot of margin to play with but they've already brought their margins down from where they were leading the industry to now they're the average oh really yeah they're average now and you know there's reports out there's one from Bernstein that posted and I actually posted this table on Twitter where you know they're they're at 19 gross margin in the first quarter we're looking at it bottoming it out about 16.
oh wow I think it'll get close to that 15 here because they took prices down again yeah well that's true so I'm using 16 for second quarter and you know earnings estimates have come down um since they took this last price hike which was right before earnings uh earnings estimates have come down about 11 for this year about 10 for next year 2024.
and so that's why the stock has fallen Falls with earnings and people haven't really um taking the multiple times there's not been a re-rating of the multiples although they could have said well now that margins are going down and you interestingly enough you haven't seen volume estimates go up we haven't taken our volume estimates up right which in theory if there's a good elasticity of demand sure price down volume up but nobody's taking estimates of volume up yeah so yeah which is kind of an interesting phenomena which I I would you know love to ask Elon that question why why people aren't and why they didn't take up their volume forecast that's true they kept it at about 180.
yeah so you know back to why we took it down we just look at upside downside and we just thought there was a lot more downside than before because you know margins could be sick gross margins could be 16 but they could be 10 they could be five yeah we just don't know and what I'm interested to see is what are competitors going to do with their gross margins over the next three to six months are they going to follow Tesla down and Does Elon want them because that makes especially on EVS that makes EVS more affordable and Moss right in the whole industry you're staying down so EV adoption in theory should go higher or do they as most of them seem to be indicating say we're gonna we're gonna try to hold the line on prices and keep our margins where they are and I think they'll probably do the latter and then the question is will Tesla gain market share when everybody else is holding their prices where they are and elon's down you know 15 to 25 prices since the beginning of the year and so for what I've seen is you get this and I call it a sugar high you get some volume increase when you first announce a price site because everybody who's looking at a test as well and and I see it you know because I always pretend I'm looking to buy a Tesla I have the Tesla store here on Rush Street hopefully they're not watching this they always call me up say we just took prices down okay you know and the question is are you getting people new who are not going to buy a Tesla but they were thinking about buying Tesla and then they pulled the trigger because now the price is lower it's on sale and of course you got the media screaming Tesla has taken six price declines even though they've taken three right um and so I don't see volumes really responding that much to the the price hikes because I think you get the short-term Sugar High you accelerate people who are going to buy a Tesla anyway as opposed to what you want are the people who are driving ice Vehicles you know transitioning traditional and saying you know what I I want to buy an EV now whether it be a Tesla or a Maki or a ID for whatever it is because Tesla's going to get its fair share and the us are going to get 60 globally they're going to get 20 and so I wish what they would do is rather than use pricing which is a short-term tool it you know does drive volume in a very short term but then you know and you heard Elon on the first Court he said well uh orders are coming at twice the rate of production right well that didn't happen by the end of the quarter so some something changed sure and I think you're going to see the same thing in this quarter because when you announce a price cut you get a lot of news people go into the store they buy but then you are for some people you're pulling you're pulling volume forward and there still is this effect where people are still waiting for a further price cut because they've heard the media say the sixth price cut that Tesla has taken this year well let's just wait for the seventh one or the eighth one or whatever it is I wonder is it possible that you could have people who say well if prices are trending down I'll wait what you're actually creating is are negative inflation expectations for Tesla vehicle prices right and in theory when the time comes that the Federal Reserve begins to cut and we start seeing interest rates Trend down perhaps people might have this impression that oh it's the bottom and we've now pent up a lot of that demand could we go back to weightless or would that be unimaginable we could and so the biggest question I get from people you know and I talk to a lot of Institutions and I talk to retail people on Twitter but you know the institutional Community probably the single biggest question is why is the elasticity of demand for Tesla solo why is it is it can you give us a reason and I've tried to list you know four or five reasons that I think it is one is just you know the early adopters who wanted to be climate friendly Green whatever you want to call it make a statement to their neighbor's head or self-driving whatever maybe I'm favoring the environment they've bought and you know now what you got to do is get the people who they have the money but they're afraid they're going to run out of charge and I hear that all the time so that when you see these surveys about why why don't you buy an EV number one is cost which is a perception issue because operating costs are lower because yeah very low you don't have to you know fill it up with gas or oil and your maintenance is lower I don't think people will rescue once once they're in V I can't imagine no you don't go back once you go either you stay easy but the number two reason is because of fear of range anxiety they're afraid they're going to run out yeah and I think what what this is my view and I know it's controversial but rather than cut model Y which is the best it's going to be the best selling car in the world this year rather than cut that by another thousand dollars so the bottom price now is 46.9 that's the standard range the long range is 49.9 rather than cut that by another thousand dollars that costs tests of 500 million dollars spend 50 million and educate the non-ev users of why EVS are better advertising we'll call education I know advertising is a dirty word it's a bad word but but let's call it education and again I think what what they could do is they could talk about lower operating costs they could talk about well we'll call it near autonomy because FSD doesn't allow you to just curl up in the back seat and read a book or play a video game we'll call it near autonomy the idea of not having to go to a guest station which stinks and smelly it's dirty you know in most States including this one you have to pump your own gas yeah yeah sure and to be able to just go to your garage and plug it in like you plug your iPhone in that's like a huge selling point resale values are much much higher on AVS than they are traditionally and you're helping to save the planet yeah and you know to me if they just did that and when after they they can show Tesla because Tesla's the hero of the ad so you show Tesla's accelerating and the beauty of the Tesla yeah you're going to get your fair share of anybody who decides to go EV as you said once you go Evie you don't go back so they'll get 60 share in the U.S and 20 around the world and to me that would be a worthwhile expenditure of 50 million dollars as opposed to let's just use a blunt instrument called price cut and slash 500 million dollars at the p l which to me it's like why you're not going to get much out of it is it possible that the model 3 will be the 25 000 car it's possible with these price Cuts it's interesting when you look at there's a lot of people who track inventories out there and now Tesla actually has it on their website you can go in and you can actually you know build a model for tracking inventories model 3 is the one that seems to be model X is struggling the most they have the most inventory Model S second model three is is is if you if you just look at what model 3 inventories are doing it's gone up pretty dramatically yeah um in fact you know Troy tests like Kauai have a lot of respect for he's great he's on Twitter you know he will say that the inventories now and tests are the highest they've been even before the January 12th price Cuts but and it's not model y model Y is actually kind of rolled over a little bit it's model three it's Model S model X the model 3 is the interesting thing to me because to your point you know the starting price is 39.9 you get 7 500 EV credits you're down to 32 and yet it's not selling yeah and so the question is why and so one reason is because that 399 is for a rear-wheel drive model 3 and half the country not you but here at the country it still snows so you don't want a rear wheel drive car you want an all-wheel drive car and then there is no model 3 long range and enters the performance now what's interesting about the performance and I pointed this out the other day model 3 Performance is now priced at 52.99 and then you get a y and model y's at 53.95 so you've got a thousand dollar differential for something that's clearly much bigger oh my gosh much more powerful why would you just spend a thousand dollars and get a model y so I can understand why model X is not selling because model X you don't get um the 7500 EV credit price is about forty thousand dollars more and you know all the effort to to cut price has been in model y oh yeah whereas model X I mean they actually increase price I guess a Week Ago by twenty five hundred dollars yeah so I understand why model Y is not selling model three I don't know why Tesla is being so called stingy on cutting price on model 3 Performance I don't know why there's no model 3 long range yeah people say it's because because they're revamping into model 3 there's going to be a you know there's this highland project and they're going to introduce them maybe that's why and the model 3 rear wheel drive really should be an all-wheel drive vehicle because again half the country it still snows in yeah then again that would be throwing in uh well unless you moved it to the front that'd be throwing in another engine to make it all wheel essentially or another motor people get mad when I say engine electric motors but you have the technology obviously the standard Range model Y is all-wheel drive yeah yeah and look most cars today are all-wheel drive so you got to be competitive if you know you're going to spend 40 000 on a car sure I think you would probably expect that it's going to be all-wheel drive it's going to function it's by view yeah yeah exactly huh uh okay so uh what about um I mean cyber truck coming up this project Highland are those just hoax for test lines yeah and is that why potentially you've cut some of your position or are you going getting frustrated with Elon musk's leadership or maybe lack thereof no I think Elon is brilliant he's a great CEO he's a Visionary and he's brought the company to where it is and there's always been naysayers with Elon Elon is going to um continue to drive the company forward with his great leadership and I I you know sometimes I come across as a complainer which I do but but we still own five and a half percent of our portfolio is in Tesla it's our number two position Chipotle actually passed a little bit yesterday because it was up so much but yeah but you know we're we're we're still comfortable owning it at you know five to six percent weight in fact your original question would we take it back up maybe if the price goes down a little bit more I mean it continues to drift down today is having a nice day but um what's the floor what's the the worst case floor you see I think it's 150 and I've told people I think we're in a 150 to 200 trading range okay and not back to 100 or 69 unless they bring margins down to zero which again he has not said they're going to do that he said technically we could yeah and I don't know if he was trying to send a signal to the rest of the industry that it's coming or but but he's I don't think he's going to do that and so back to your question we hold Tesla to the five and a half percent position because of what you just said before cyber truck to me is the most important Catalyst I have a cyber truck tri-motor on order I can't wait to drive it around here in Chicago and valet as I told people in front of Nobu and I'll watch it from outside you'll have all these crazy kids taking pictures of the damn thing because it's going to be different it's going to be spectacular it's going to be one of these things that when people it's going to be a walking billboard is people see the Cyber truck in cities all over the country and hopefully they get it out at the end of the third quarter you know start deliveries it becomes a draw to go to the Tesla website and go to the test store you may not buy a cyber truck but it's going to be a way to bring people to your website and be bringing people to your store that's an apple with model white it's an ad exactly and it's different and it's Unique oh yeah so so well I'll drive mine because to me that's like the best truck best car truck in the world and I've I've always been an SUV person I went through my phase probably when I was you know my early 30s where I had 911s and sports cars but you know as you get older you know it's not that you don't like speed anymore but you like room yeah I like having an SUV or a pickup and I love just driving that thing around my biggest worry is will it you know fit in the garage across the street where I live I don't know I hope I hope it does but I think that's a huge Catalyst for the whole franchise not just the you know we're assuming you know there's a million three pre-orders we're assuming I think three or four hundred thousand of cyber trucks delivered next year 2024 which may be high but that's our assumption and then the other big callus is the 25 000 EV back to your question I wouldn't be bringing model 3 down to 25 Grand I would really try to step up uh bringing out we always used to call the model too we've been talking about this for a couple years because you expand the Tam you know you you you increase the the the the the pie of people who can afford a Tesla so at twenty five thousand dollars you're expanding the pie by at least 40 or 50 percent from where you are today and I wouldn't wait for Mexico a agent a okay Mexico they're saying you know it won't be ready and cranking out these 25 000 Vehicles till the end of next year I would build something right now in China and you know because that's where it's the most competitive reviews maybe share China is up to 22 percent get a model two over there in other words yeah and get it out so you can compete with byd which is super aggressive at bringing out you know these 20 to 25 000 cars and I'm not sure what the reason is that they can't do that I mean China they got that whole plant up and running in about nine months yeah why can't you get a you know uh we'll call it an M2 Factory a dedicated M2 Factory up in China you know in nine to 12 months and so at least you can compete and get an affordable car out to the masses in China which is the most competitive market in the world what's your price Target going forward 24 25 long term yeah so longer maybe you know and we've taken our numbers down but we didn't take our out your numbers down because it's cyber truck because of the 25 000 vehicle because we think Tesla will be able to solve FSD at some point we don't we don't add Robo taxes and we think that's foolish but having a we'll call it level four autonomy um FSD will sell more Teslas you know it's it's a reason to buy a Tesla and you know the question that I always says why are you charging fifteen thousand dollars for FSD which is adding you know 250 a month to your car payment if you roll it into the price or you can lease it for one 99 if you want so to answer your question we're using 320 dollars as a price Target which we use we serve in the next 12 months and the way we it's a theoretical number and when when an analyst gives you a price Target no it's not where they think the Stock's going to go in 12 months it's based on some discounted earnings or discounted cash flow we go out to 2030 so we take a long-term view which is what seven years from now we have earnings of about twenty four dollars a share um you know this year earnings estimates are down to 350 yeah down 11 12 next year you know the streets at about 510 so we're 24 we're 24 in 2030 because we have 10 million Teslas being sold in 2030 which again the way I do this I look at SAR I look at EV adoption and I look at that dreaded Tesla EV share which you know that he talking about but that's the way people model yeah of course of course you try to find a 24 bucks though in 2030 at even a 20 multiple volumes 30.
so you're at 600-ish bucks 720 right and then I discounted back I use a three and a half percent 10-year treasury there's a you know a six percent equity risk premium versus bonds that's a 60-year average and then we we risk adjusted Tesla still got a 1.6 beta might even be higher now but it's up there so you know you basically have to risk it just so if I'm trying to figure out what the discount rate on Chipotle is it's a much lower number because you don't have a 1.6 beta you got like a one one beta or apple or you know any any of the picture pulley is going to keep up this pricing that they have I mean I mean when you look at being able to raise prices and still sell yeah but I mean that's impressive I mean how do you why would you are you I mean you're now more heavily weighted into Chipotle than Tesla no not intentionally yeah we we we've kept Tesla as our number two position and we actually after yesterday I mean you'll see this in our the nice thing about ETFs every night you can see what we do transparent um you know we you know when when a stock is up as much as Chipotle was yesterday and it was up again today we took our position down by about 50 basis points but but I do believe that chipotle has great pricing power and they continue to you know if that's let's call it you know six percent a year yeah um I think the uh the comps Were Ten and a half for first quarter I think they're guiding to mid to high single digits the rest are so let's call that seven that's great if you can get six percent pricing and one percent more transactions they can do seven yeah and if you can do seven in in comps you can do 15 earnings growth and then the question is what do you pay for a 15 earnings grow or long term yeah and so one of the jokes I made yesterday and I posted this was that chipotle now has a higher PE than Tesla yeah for earnings yeah no kidding and you know is it deserved probably not because unlike Chipotle um which is getting a lot of its growth through pricing Tesla is getting all of its growth through volume so do the math I just said I'm using uh 10 million is my forecast for 20 30 units I take SAR which is about 85 million in 2030.
I take a sixty percent EV adoption and I give it what a CV shares now which is 20 percent so you take 85 times 60 times 20 you get about 10 million units okay and you can do it by country you could do it U.S Europe China rest of the world which is the right way to do it but I think you're going to come up with a number that's close to that and one of the challenges is that you know Elon and his team are telling people 20 million units by 2030.
but I don't know how they get to that number to be honest with you right it's EV share growth and they don't like TV show they like total share but you know to me you take the you know the most the smallest most measurable metric that you can find and do the research on it to figure out what and it's got to be something you can monitor every quarter and I can monitor review share every single quarter so if I have 10 million units and then you have to make some assumptions about your average selling price which I have mine coming down although cyber truck's going to bring it up but model uh 25 000 vehicle is going to bring it down and then the real question is gross margins yeah do you want to take gross margins up from if it bottoms at 16 in the second quarter where do you want to have it be by 2030 and I'm going back to you know low 20s and in energy which we haven't talked about energy is going through the roof because of Mega packs I can get to 24 in earnings so the question is how quick is the growth rate going to be from 20 30 on right and so at this point you're at 60 percent EV adoption you only have 40 left to go so law of large numbers the growth has to come down it's not like going from 10 to 60.
where if you figure out the math on that over seven years that's about 30 percent growth rate going from 60 to 100 you're not going to get 30 volume growth anymore right so I bring my uh earnings estimate you know now I'm doing back of the envelope uh from 2030 on to about 15 to 20. so putting a two times growth rate which is kind of what a big cap company like you know a an apple or Microsoft Trader two times growth put 30 on it that's how I get my 720 discounted back that's how I get to answer your question from 10 minutes ago that's how I get 320 Chipotle you know it shouldn't trade it the same multiple as Tesla because they're getting a lot of growth in pricing you're not getting you know thirty percent volume but that's high quality growth when you're doing it through volume right so to me Tesla should trade at a much higher multiple the reason it doesn't is because people are afraid that Elon is going to keep taking gross margin down right and that's why I go back to it you read what he actually said um on the conference call he didn't and a lot of people give me grief about this and I but I know this he didn't say he was going to take the margins down and I fight with PMS about this all day long he said technically we could do it we're the only ones who could do it technically he's right the question is will he do it and this this is the heart of the investment question if volumes don't respond which I don't think they will right because what we talked about low elasticity of demand people may be worrying about a future recession lots of competitors out there you know ubiquity when everybody's driving a Tesla you know and you're driving through the neighborhood and dropping off your kids and everybody's doing the same thing and they have a Tesla you know you may not be as likely to own a Tesla because Tesla's still an expression of how well you're doing and if you're just doing as well as everybody else you may not drive a Tesla you may go back to your Porsche especially if they're electric or something that's a sort of flip on this side of oh I see so many Teslas that company must be doing well you're actually suggesting there's this level of it could be doing too well think about it if you had a I don't know a special watch Texas this is still a luxury good do you want to be wearing the same watch as everybody else do you want to be driving the same cars there but did you want your house to look like everybody else's and you know people say what about iPhone iPhone is not you're not you're not expressing how you're doing in life by using an iPhone you're using an iPhone because it's functional it's easy you know you can use it quickly I think a Tesla is still an expression of how you see yourself doing with life and that's why you know the ubiquity factor I haven't yet figured out is it good or bad yeah yeah it's to me when everybody owns it yeah and it's the most popular corner and you've only got four models that's why you need some more models maybe you need six or seven or eight I just worry that without um you know more models your cars look too different that's why I like the Cyber trucks so much yeah that's why yeah even when cyber truck came out there are a lot of people saying shouldn't you make it look more like a model y or a model 3 and I don't think that's true I think having the Cyber truck look very different is the right strategy and then you know maybe for all the you know we'll call them baby boomers who want a pickup truck that looks like a normal pickup truck you bring out a more traditional looking truck one cyber trucks out there but I don't want them getting distracted again yeah I want that cyber truck out and I want the 25 000 vehicle out and if you know they want to bring out a traditional looking pickup truck for you know people my age let them do it then what about this this mention that you made about quality growth being volume versus just price is that a way of saying hey just because you can raise price like a Nestle or maybe a Chipotle that's not a way of actually growing your your market share and therefore it's not as as quality or or you can clarify that as an analyst yeah you know when you look at elements of growth you've got to decompose into volume pricing margin and then I look at cash you know what do you do with the cash sure okay sure build more factories or dividends or whatever so you look at some marginal return on invested capital and you know those are the components of your growth rate the most high quality and most correlating with stock price performance is growth that comes from volume people prize unit growth when you see a company that's growing units that and units can be you know Subs units can be um you know traffic for instance like Disney subscriptions or Google searches Subs is a normal one for you know like um you know Google or uh you know some tech company um but but unit growth is the most prized because you can do that year after year after year if you've got a really good position with a good moat High entry barriers not that much competitive intensity all the you know strategic stuff that they teach you that you're supposed to look at pricing is the most fragile because if you raise prices too high at some point the consumer says no I'm not going to do it sure there's another option there's a substitute and I learned this because I used to cover the the cigarette industry back in the day in the 1992 and you're not old enough to remember this but there was a time called Marlboro Friday very famous in consumer lore it was April 2nd of 1993.
this is I'm dating myself and Philip Morris after taking prices up eight nine percent a year in the stock price would go up they finally decided they would have to cut price because the consumer finally said no it was during a recession but it was also once the price of a pack of cigarettes got above is way back when two dollars a pack versus the cheap generic cigarettes were like 80 cents a pack so it's two versus one and Philip Morris took prices down and I think everybody learned a lesson that time you can't just raise prices at eight or nine percent a year because at some point the consumer is going to say no and I don't know where that price point is on Chipotle if you go into Chipotle today your average check is above ten dollars and so well above ten dollars now is like 17 bucks for a burrito I don't know right avocado oh my gosh or the guac so they get you so so I believe and you know back to your question about quality of earnings growth you want to find unit growth that's why Tesla is still very compelling to me but you got to be willing to put your neck out and say no margins aren't going to you know have a downside of 10 gross margins or you could look at operating margins too you know you've got to be able with great confidence if it's going to be your number two position say here's the bottom of what I can see on margins and I don't have that confidence right now I'm not so sure what elon's going to do yeah yeah I believe he will keep margins kind of where they are now and this then becomes a catalyst because I think he's going to realize that he's pushing a little bit on a string that when you take model y low price is now 46 9 in the U.S to say 45.9 he's not gonna that doesn't drive affordability the people who are driving model wise are not going to say oh wow maybe I should go get one or the ones who wanted to buy one that doesn't really do it that much especially if they're saying I'm going to wait for one what drives affordability is the 25 000 RPM and you've got to differentiate between the two and even if you read master plan one two and now three when when he talks about um you know driving affordability it's always about new products yeah called flanker products sure okay so you know Netflix understands this Netflix now has a tier if you don't want to pay you know 15.99 or you don't even want to pay 9.99 you could pay 6.99 that's supported them and that's that's a flanker product and you've seen through the history of you know luxury goods and you've seen a new automotive industry oh yeah you have you know Mercedes and BMW have practiced it for years where you bring the a new product out and to me that's consistent with master plan one master plan one was Roadster to Model S model S to model three yeah and now we're going to bring out model two well it's like BMW they go they have the five and seven series first then they bring the three then they bring the one series now exactly yeah yeah so okay well now you mentioned you don't want to include any kind of Robo taxi Revenue uh Brett Winton from arkhamvest was a little upset the other day on Twitter because he called it dumb not to include at least some Revenue because his argument is you have to assign some probability to the fact that there will be Robo taxis and if that probability is 25 then you should give 25 of the revenue to your number what do you think I mean is Robo taxi if it happens great it's icing on the cake or or should you look at it that way I can't I can't I can't model it Kevin I can't I can't put a number on it and if I can't put a number and I can't put it into my evaluation model how do they do it they make it up let's just assume it's like you said they just assume it's going to happen but you know look we've had Elon promising Robo taxi since 2019.
it's next year it's actually and they did it again on the first quarter coins as well by the end of the year yeah and it may happen and if we can get to the point where where and let's define what it is you can sit in the back seat and from a liability standpoint you're willing to put your neck on the line and say we're going to be a level four autonomy product where we're going to we're going to assume the liability if the car crashes which I don't think Tesla's willing to do that no no they won't do that so if you're if you're willing to put your neck out and say we're level four autonomy where it drives itself and and they do that then I would be willing to put it into my model but then you got to say okay who else is going to get there yeah and you know what the we'll call them the Uber Bowls the Uber bowls will say well Tesla's the only one who can do it because they have a general solution that works anywhere Vision versus mapping right yeah as opposed to you know if you look at Queens you look at waymo they're geofenced and I get it I get it you know and they're trying to connect their geofenced areas but in China That's not how it works and you've got you know three or four competitors that are all spending as much as Tesla on trying to solve autonomy with vision then with anything I mean with anything yeah some useless a combination of vision and lidar some use as Tesla's doing vision and radar you know they all have HD mapping and they're all spending a lot of money on this to try to get there sure a lot of using Nvidia as well yeah like I think uh Neo that's why that's why Nvidia it's one of these besides IA AI yeah the Nvidia has done so well but I'm not smart enough to know who's going to be the winner in three to five years when Tesla's willing to put their you know live their liability neck on the line and say okay we're willing to assume the liability if this thing crashes right what about that's what that's what's protected them so that's a good point what about positioning though is it possible that today people are just very bearish on Tesla like maybe they were about uh Facebook at eighty dollars uh is and and now everybody says well the food ones uh the Staples are doing well like McDonald's I think they're flat out here every year yeah so say so you got McDonald's chipotle Nestle Ulta these some of these companies are doing s just a partly or a lot cyclical War people are moving into the Staples because they're worried about recession when the worry about recession goes away they go back into Tech and growth and and then these look really undervalued like Tesla looks underground right now investors are pricing pricing power if you can show you've got PP yeah you're paying extra in multiple points for that to me that's also a sugar high because you can't and I say remember Marlboro Friday and if you want to look at Philip Morris ticker ammo back in the 90s it was great every year they took eight or nine percent pricing every year they made their numbers and then every quarter or at the end of every year they would buy down the inventory and you know it was all a mirage sure and they finally had to pay the piper on April 2nd 1993.
that's going to happen with all these companies taking this access person you can't take eight or nine percent pricing every single year and expect the consumers just going to stay with you so so so I would say about Tesla Tesla's definitely you know on its butt right the the sentiment on Tesla very low I I've not seen it this low in a long time Gordon Johnson's very happy yeah his and he's he's out there I see him tomorrow by the way of good luck with you I hope I hope he doesn't you know like you know go crazy on you if you're bullish because he's a little bit out there and I'm not gonna say I'm bad about court I've done Gordon a long time but I would just think that if Tesla can come to the realization that hey we've got to edu if we want to grow our volume what we need to do is convert more of the 90 who don't drive EVS right in the world to to choose EVS how do we do that we can either keep taking pricing down until the 25 000 vehicle comes out in 24 25 or we could try educating on why they should want an EV versus a traditional car right and I don't think that's that hard so challenge question then who in the short term if let's say Chipotle has more pricing power today who would you say has more pricing power in 10 years Tesla versus Chipotle I would say Tesla does because I think what's going to happen is Elon is going to discover how great advertise and funny and you know intelligent and educational and he's gonna he's gonna get into it right I mean I've done advertising you know what he should do he would just love doing it if you tried it Ryan Reynolds mint mobile ads Ryan Reynolds did all of his own in front of a green screen or what a super low-cost production ads but because it was Ryan Reynolds and he had some wittiness to it people loved it and he just sold mint mobile for I want to say about half a billion no it might have been over a billion dollars somewhere between 500 ml to a billion bucks to T-Mobile I mean remarkable he did all his own ads for it see I I had an idea where I would let the Tesla Twitter Community which you know it's you and I both belong to it we both have a lot of followers just come up with a 30 second order we'll say 60 second commercial maybe you come up with both and whoever comes up with the best commercial by the Twitter you know is judged by the Twitter Community gets a Tesla plan you know Tesla S plan has exports it's good motivation and I'm telling you you first of all you get great PR because everybody'd be fascinated by it sure you get these intense competitive juices flowing and then Elon and his team could pick the best one and then you know they could shoot it professionally instead of you know we're doing it in you know some makeshift Studio I just think I've seen CEOs and I bet Tim Cook is like this when they put an ad out and then you know the Ad Agency comes in and they show them their you know their their their work you know everybody gets excited and they all you know say well this is what this is going to accomplish is what that's I think it would be really exciting for Elon to do that and it's a very different side of him than what you know the engineering side yeah he worries about today well I thought he would really get into it what about the side of Twitter what's been your take about uh the Twitter uh ownership is this a distraction for Elon is I mean obviously we know he overpaid for Twitter he knows that himself it's not a secret we knew it at the time too that's why he wanted to back out but I think the biggest question that looking forward now is is he distracted is I don't know I and look it's it's it's hard to know because he's always had boring gnarling SpaceX and he's got CEOs who run those firms so to me he invented those he put the management teams a place they are made after his like this with the lack of a better word Twitter is different he is in Linda yaccarino coined a phrase at this event this advertising event I went to Miami two weeks ago and she asked Elon this your other companies you invented something Twitter you're Reinventing it ah and you're you're dealing with the cards that may not be so good and you have to fix them as opposed to build it from scratch and I think there's an element of Truth to that Twitter you know he's gotten rid of I don't know 70 to 80 percent of the staff but he's got a woo the advertisers back for this to make money from and to your point you know if you paid 44 billion he just put a valuation of 20 on it is because a lot of the advertisers have not come back and he should look to Apple and Disney who's he's mentioned have basically stayed with them through it so yeah and he brings up good points is they must find it working or they wouldn't keep advertising so you know to me and this is the number one question I got because I wandered around this conference there were 800 advertisers there and I talked to people at dinner and talk to people during the conference number one question I get is why does Elon think we should be advertising on Twitter when Tesla doesn't even believe in advertising nobody knows that everybody knows they don't advertise sure yeah and so the question is if you don't if you can't tell people why advertising is great if you don't do it yourself you don't do it yourself how are you going to convince these people to come back funny so so here's here's here's what I believe yeah I believe he'll figure out an answer for that and I do believe and this becomes a catalyst for me he will realize that the the price cuts are sugar high they're not getting a much and he will try advertising my my prediction by the end of the year wow I don't know if it'll be 5 million 10 million 50 million but it won't be 500 million which is what it cost them he cuts prices by a thousand dollars oh wow and if it's three thousand dollars it's a billion and a half wow and so I believe he will try it and then I think he's going to get Twitter people to come back to him because he's going to discover what you and I both know that the power of advertising is immense especially as you go into an election year and you go into Olympics here that's true and I mean he's got the platform Twitter so I think you know and it's funny because you know Linda yecker you know where we're talking about this he loves Twitter I mean you can tell he's just it's like his baby and as much as he complains about it he loves the CEO of it so so back to your question is he distracted I think with Twitter you know he he spends maybe a third of his day maybe on Twitter and maybe spends two-thirds of his day on Tesla and the other companies but he really doesn't have to spend that much time in the other companies he spends a lot of time on SpaceX because they're run by CEOs that he's put in place that's a good point so he's distracted a little bit but look the guy is a machine he works 24 7 and I don't know when he you know goes on vacation or eats or sleeps or yeah you know has time for a relationship I I don't I don't know what he does but he seems to have time for his kids you know so what do you say about uh AI then you know a lot of people have linked Tesla with the dojo supercomputer and thought okay maybe there's an AI future are people just looking for too many places to try to make some money out of Tesla or is is this whole AI thing just a fad and a bubble uh what's your thing is a fad I think metaverse is a fad and I think you know Zuckerberg is learning that and you know you if you watch his tone he's talking more about AI than he is the metaverse now oh yeah in the conference call uh I guess it was last night yeah I think with Tesla you know they've always gotten the best engine they can hire great Engineers they can hire great uh you know people who think you know about autonomy and think about AI because it's Elon Musk and everybody wants to work for Elon Musk and you know it helps that they can put them in San Francisco which is where a lot of people are in Palo Alto which is where a lot of people want to be so they can attract good talent yeah I don't want to build like bot though into my evaluations because I again I can't model it because I don't know what it's going to look like and I don't know who's going to be competing with them in four or five years well I think that's such a big question too even for companies like Google or Microsoft is who's actually going to profit off of AI is it the companies that are providing the bot or is it every business that is using it to make their employees 20 more ingredient AI is an ingredient so if you think about Google and Bing and know anybody who uses Bing as a search engine I mean I just don't I mean maybe it's there maybe recently a little more maybe and look what's interesting is Microsoft said under conference call that their market share went up but they didn't give any details no they didn't they were very optimistic about AI but I think that I mean their company though almost all of their segments except for Windows OS was up substantially and the clouds up like 28 they're doing very well they're doing well and I give them a lot of credit for taking a business that was kind of sleepy and nobody was that excited about and now you know people are putting a pretty high multiple on it relative to its growth like almost three times which is where Apple trades yeah yeah that's true um where Google you know Google has a same PE as as uh meta which I guess so I still 12.
no 17. seven okay uh but it's only growing it you know 14 15 years so it's PE to G which I like to look at PEG ratio exactly ratio it's only about 1.1 which by the way is about what Tesla's is it is uh no MPS is still pretty high but but they've come down after it's 25 percent again but with Google I don't think you should write them off I don't think you know they could still uh attract great talent they've been working on AA for years yeah and they don't talk about it as much as Microsoft yeah but you know I still use Google all the time for search yeah and I don't use Bing and so getting me to switch to Bing just because you know maybe I'm going to be able to ask the uh bot you know well the AI driver of it something and I may get an answer that I like I have found when I use um chat GPT now it's not that it's that fulfilling it's interesting I mean I'm sure it makes people's lives easier who are authors or songwriters or whatever because they don't you know they give them a head start for somebody like me as an analyst it doesn't help me yeah that much so I don't necessarily believe that Google is now suddenly dead just because Microsoft has I think they'll be able to figure it out and they'll be able to catch up and they'll be able to build it into their you know their Google search engine which still has 85 share and I don't think people are going to just suddenly just you know drop Google and go to Bing I just don't believe that the banking crisis your take I mean you had mentioned early on that maybe First Republic maybe not is this systemic or is this just The Fringe it's hard to know I think if the FED stops and says we're going to break something more if we keep raising rates then it can become systemic so far it looks like a couple banks let's call it the handful I'll put FRC in there you know that just had way too much leverage and too much risk relative to their uncertain deposits and look the challenge is if on your deposits you're paying two or three percent and a mar and a money market funds rate is four to five percent you're gonna have this this risk of the outflows not being sticky or the deposits not being sticky that said you know I I don't I don't see a lot of these big Banks whether it be Wells or city or Bank of America or JP Morgan running into trouble because they don't they don't take the big risks that these other Banks were Silicon Valley Bank you know had way way too much um we'll call it you know both long-term deposits that were in you know treasuries and mortgages and and in loans especially with FRC they just they didn't they didn't balance their risk very well right and the question is do all banks do that do all banks have this issue yeah I don't think so I think you would have seen more Carnage out there so so you would have already seen it in other words I think so and again if I believe the Fed was just going to say you know take rates up to six percent yeah right now the federal funds rates four seven five to five if they're going to go to six or five and a half yeah you could you could have more issues but I don't think the fed's that stupid I think the fact that we've broken a couple banks yeah and I'm going to put FRC in the broken Bank you know what whatever it's 550.
here today yeah it's it's probably going to be the same as Silicon Valley Bank and somebody's going to take it over when it hits a dollar and buy up the assets and it'll be a great buy for them yeah as long as they can keep some of the deposits you know it'll be a great franchise they have to figure what to do with it so I don't I don't see it as being systemic as long as the FED stops it's so see we stop say it's hiking main go away Marshall really I wanted a commercial real estate I mean it's not supposed to be the big next to Gary bubble or or de-dollarization I mean aren't there things to be concerned about sure are those mostly uh so yeah commercial loans are still not great the growth rate is negative and you know but but the question is once the FED starts cutting rates and the economy you know I suppose it gets to negative one in a fourth quarter let's call it and then once the FED starts cutting rates and maybe the um you know the QE starts up again because right now it's you know the QE doesn't is not there right now it's negative right um I think you can start stimulating the economy again and look you've got an election next year which is the other thing we haven't talked about stimulus checks well I don't think Biden's going to resort to that but but there's a good chance that if if it's Trump versus Biden Biden wins again not the santis I don't think the Santa's is going to get in I don't know do you oh wow it just seems like he recently fell on his face a little bit with Disney's it was like some people on both sides are a little upset about that and I mean after the Trump indictment it seems like he just shot up in the polls I mean polls are what polls are but anyway during the 24 election you know you don't usually see restrictive fiscal policy it's just it's not good for getting your candidate the elected I don't think Biden's going to do it you know you do have a split Congress now so it's gonna be hard to get anything done between now and then but I don't I don't think you're going to have you know restrictive fiscal policy I think if anything you'll have some sort of Promise of stimulative economy uh I don't I don't I'm not a trump fan I mean I think what he did on you know January 6th is he's going to get indicted for that somewhere somehow yeah but I don't I don't know who's going to come out of the woodwork and and challenge him it's just sure it's just odd that he's still leading in the polls and I know most Republicans don't trust him it was interesting you just mentioned that it might come down to what somebody decides fiscally for the 2024 election in other words the promises that they make to the electorate what what are we willing to spend is it possible then we see this 2024 election cycle turn into one about who's going to do more stimulative effects maybe wouldn't that be bizarre it would be bizarre now if we're in recession yeah when November 24 rolls around that is a good scenario that could happen but again Republicans hate the idea of you know helicopter money yeah helicopter what if it gets in the election yeah maybe I mean think about it it's so interesting I think back to uh Biden had won uh uh November 2020 and then we got to 2021 you're coming out of covid coming out of covid Biden promises hey I'll give you that Roundup that 2400 stimulus check just elect my guy in Georgia because they needed control of the Senate to do it right and they got it it was the night before the maybe two nights before the election Biden makes that promise we're going to do the 20 or 1400 vote yeah yeah you can see it and I'm not I'm not gonna deny what you're saying there's going to be games played in 2024 so you may see a lot of stimulative you know promises made oh yeah 24 campaigns and it'll be interesting to see who's really Republican because again the old adage is you run to the right you run to the left to get the nomination and you head toward the middle yeah you know if we're in the middle of a recession are you going to see some Republicans run to the middle why because they want to promise that they can be summative I don't believe that I think it's going to be hard to get the nomination unless you're running to the right as a as a republican ah okay so further away but Trump trump you know all bets are off he could do whatever he wants I mean and he will say he could promise you know dropping bit you know all kinds of bundles of money from the helicopters they could Tucker Carlson is VP yeah I don't even want to go with the Tucker Carlson because he's he's look I used to watch him he's entertaining I know he probably made you know more money on Fox than any other you know um any other host but I don't know enough about like why he got fired there's got to be something more than what fox is telling us because you don't fire a guy who mints money like that unless unless he wasn't unless there was something else that we didn't know about and maybe there was a lawsuit maybe there was you know something that just makes me wonder imagine if you had a a company like a Disney come in and say hey we'll sign this tens of millions of dollar advertising campaign with you if you ask so and so and then that potentially softens some of that Revenue loss look advertisers by their nature or a more liberal bunch and again when I went to this Miami thing I I guess I I know that advertisers are liberal I just didn't realize how liberal and when you hear people talking about brand safety that's a big thing big concept and it's why they don't trust Elon on Twitter they want to make sure if they're going to advertise their product it's not going to be adjacent to some sort of hateful language from somebody and so you know back to what you just said it's possible you know we all watch succession you know and it's it's possible that you know some advertisers said hey look if you get rid of this guy who we worry about you know we'd be much more willing to give you some advertisement maybe it's possible oh well it will ink this contract or whatever it's possible interesting um what about this uh this Bud Light advertising debacle since he just went to an advertising conference what what's what is the advertising Community say about uh like how do Brands position here do you just stay away from these sort of issues or that's a tough one I mean I I think you you what we've all learned over in this woke you know Society we're in you can't go near you know race you can't go near um you know being gay you can't go near um advocating violence of any sort and you know the the whole what's called you know transgender movement yeah um you know you stay away from that you don't you don't you don't you don't get in the middle of it because it's just it causes and with Bud Light you know it's a macho brand it's it's for guys you know who are trying to you know not consume as many calories it's it's it's somebody should have known better than to do what they did it's an inconsistent um using a transgender person is inconsistent with the brand that's not the audience and somebody should have realized or somebody should have questioned it and look I've worked in big companies before you know and and look this is one of the challenges I have about Tesla you know do you surround yourself with people who tell you what you want to hear and you would hope that somebody at Anheuser-Busch raised their hand and said are we sure we want to be doing this right you know and look I've I've always had a big mouth I've got in trouble and I used to work at J you know the most you know the the Tylenol the brand that hospitals favor most and you know they have babies and you know and baby powder all kinds of stuff and so when you raise your hand and you bring up a question like that people don't like it you know and and I remember you know vividly we had uh we had a we were trying to go younger on infants because if you could have a six-month-old screaming but not being able to talk about their and you knew they had a fever that to the people higher up I was a junior person at that point that would get people's attention and yes I said do you really want to be having a six-month-old who can't talk screaming and getting everybody you know upset right because then people feel bad yeah and they're helpless the point of the order the the ad was when your baby is is is screaming like you don't want to be Taking Chances with a generic acetaminophen that was that was it was a oh it was that was that was the ad but isn't it all the same anyway yeah of course it is and so but I remember bringing up the question and people looked at me like you know what are you talking about you don't you don't have a right to bring that question up and unfortunately I think a lot of companies have this issue where you know the people get to the top want loyalty first and if somebody brings up a question that doesn't alive yeah align with your strategy and I hope this isn't true of Tesla do those people get bounced out and I don't know I've not worked at that so I've talked a lot of people used to work there and you know there might be an element of truth that I don't know I've never worked there well Gary what did I miss I mean this has been really insightful and make sure of course I want you to shout out your socials but what did we miss nothing um one thing about us is we have a long only product future fund ffnd trades on a New York Stock Exchange um it's it's an active ETF it's very active meaning it's highly concentrated 30 names um you know and we do on the ground research as you can tell we don't we use the street but we try to do our own work we talk to customers we talk to the company we talk to suppliers we talk to competitors and it's that's my upbringing as a research analyst and we're going to be launching a long short ETF it's ffls 30 shorts 30 Longs and in this choppy Market that we're probably gonna be in over the next 18 months we think it's going to do really well wow when's that uh expected to hit June 1st June 1st wow so we're getting excited about that and you know I love spending time trying to figure out you know business models that are going to be disrupted or they just you know aren't going to work and I was watching mobile eye today I've never liked mobileye you know stock was down like 20 um you know I hated Nikola and it was at 60 a share Bed Bath Beyond I'm thinking of all the stocks I posted on Twitter yeah that I hated at the time and you could assured it and no but and people gave me there's a there's such a loyal following there's such a loyal following to Bed Bath Beyond because they brought a new CEO in and people were you know yelling at me and you know that's the challenge with a short that you got to have balls to you know to do it to short a stock it's unpopularly shorted and I remember Bed Bath Beyond was you know a meme type stock and you know people loved it and look taking our Tesla position down to 5.6 or whatever it is it's not been popular I've seen it I mean your the amount of tweets that I've seen you respond to just trying to defend that decision it it was a lot there's a lot a lot of hit but but again when you're running a fund it's not about looking short term everybody says well you're short-term not short-term I look at things very long term pricing is a short-term tool advertising has a long-term Roi when we when we Advocate BuyBacks you know if you do the math on a buyback you got to look at the E over p ratio versus you know what they're doing with the cash yeah and right now it would be negative if they did a buyback from an earnings standpoint sure so you're looking at it long term you're looking at irr so when when we make a decision like that we're looking at upside downside and we just couldn't in good conscience for our our investors keep Tesla at a nine or ten percent what is our biggest position when I didn't know what the downside was on gross margin now if I could get comfortable that you know 16 is it in the second quarter and it's not going to below that I'm going up from there maybe we would probably buy some okay we need to see some signal from management that you know there is a floor and management is going to stick with the floor instead of what did in the first course said well the floor is kind of 20 and then well it's 19 and here's how you define the floor and it's you know and it might be zero yeah it might be zero but but but I need to get some confidence or I it shouldn't be my large position you know a three or four percent look your top positions have to be the ones you have the most conviction about yeah or the ones you have the most upside versus downside and if Tesla took its gross margin down to zero and I'm saying they will but if they did it's got a lot more downside than what I'm using is 150 today yeah yeah sure so yeah but yeah that's uh so look for that and if you know if folks feel that we've done a decent job trying to help them understand Tesla and look we try to say the positives and say the negatives we've been mostly bullish you know but there are times that we're bearish like when they bought Bitcoin and when they brought out the Yoke steering wheel we thought that was bad because you're taking the choice out of consumers and there's a couple other things that you know even FSD we never believed that it was going to come out a year later right so he's been dead they brought the choice back on the steering wheel though and so if you think we've added some value um you know check it out good ffnd and and help us out and and the ticker so people can look this up and to be clear it's actively managed which you get the actively managed tax benefits of as well and all the others it's ticker ffnd right yeah we have a website you can go to the FF and ffnd website future fun website and every night you can see the positions we have and the changes we've made today you'll see that we bought some um um what do we buy there we've got some Lily because we're talking about Manjaro and you sold little Chipotle Chipotle and um you know we we like the idea that every night people can see what we do and you respond on Twitter we try we try can't get to everybody but we try to let people know what we're doing and we try to let people know what we're doing even before we do it sure so you know people could tell that we were getting frustrated with Tesla before we took the position down and you know hopefully it'll do the right thing going forward Gary this has been a blast thank you so much for inviting me out here to Chicago so hello from Chicago I should have mentioned that at the beginning but either way thank you so much it was a pleasure good to see you thanks on Twitter I love it when you interact with day Traders squawk Square oh yeah you have any thoughts on yeah um look uh there's all types on Twitter there's people who are long-term investors who will never trade a single share and there's people at squawk Square he could be long and short on the same day and you know I can having been a a hedge fund manager before I can appreciate both sides of it you know I'm more long-term I don't like to trade we don't trade that much in our ETF but I can appreciate there are people who think in squox square I think is pretty good at figuring out like what the Stock's going to do on any given day so I like to have a close relate so I like to know what's going on yeah sure and you know if it's going down I want to know why it's going down and I try to figure it out and sometimes you can make money on that because if the market is wrong and you know blasting a stock you want to be buying it and so that's why I try to Citadel rigging the market I don't know our hedge funds are the suits running everything it's gme going back to the Moon a GM he's definitely not going back to the Moon I'll leave it at that one that death Beyond is bankrupt and um look I hope Tesla doesn't go back to 100 I hope it goes close to 200 you know but it could well we're at 156 last night it was up three or four bucks today so it's probably 159 but it's still closer to my 150 than 200.
what do you think uh yeah yeah I don't think we'll see another 102 but we'll see fingers crossed that was too low yeah that was too low exactly
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