1
00:00:02,720 --> 00:00:10,600
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:10,600 --> 00:00:14,560
Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

3
00:00:14,640 --> 00:00:18,560
Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

4
00:00:18,640 --> 00:00:21,920
Speaker 1: Listen on demand wherever you get your podcasts, or watch

5
00:00:21,960 --> 00:00:23,480
Speaker 1: us live on YouTube.

6
00:00:23,880 --> 00:00:25,680
Speaker 2: One of the stock stories in the news, folks, is

7
00:00:25,720 --> 00:00:30,000
Speaker 2: it is Amazon cutting fourteen thousand jobs. I was doing

8
00:00:30,120 --> 00:00:32,760
Speaker 2: from reading a Bloomberg news and they had like almost

9
00:00:33,000 --> 00:00:34,080
Speaker 2: doubled their.

10
00:00:33,960 --> 00:00:35,640
Speaker 3: Headcount pre pandemic.

11
00:00:35,880 --> 00:00:38,559
Speaker 2: So we're coming out of the pandemic, and so it

12
00:00:38,600 --> 00:00:41,080
Speaker 2: makes sense that they can should be shedding some jobs.

13
00:00:41,120 --> 00:00:41,920
Speaker 3: Perhaps let's check it.

14
00:00:41,920 --> 00:00:44,680
Speaker 2: With put them Boil, senior US e commerce and retail

15
00:00:44,720 --> 00:00:47,360
Speaker 2: analysts for Bloomberg Intelligence. Put them talk to us about

16
00:00:47,360 --> 00:00:49,839
Speaker 2: Amazon here at fourteen thousand jobs, It seems like a

17
00:00:49,840 --> 00:00:52,080
Speaker 2: big number, but I do know and for those effect

18
00:00:52,120 --> 00:00:54,200
Speaker 2: that it is a big number. But they have, you know,

19
00:00:54,280 --> 00:00:57,400
Speaker 2: over a million employees. So what's happening at Amazon?

20
00:00:58,440 --> 00:01:00,320
Speaker 4: Yeah, it sounds like a big number in the grand

21
00:01:00,320 --> 00:01:03,640
Speaker 4: scheme of things, than for Amazon, it's not needle moving right.

22
00:01:03,680 --> 00:01:07,680
Speaker 4: It's fourteen thousand is about four percent of its corporate workforce,

23
00:01:07,720 --> 00:01:09,440
Speaker 4: and even smaller when you look at it on a

24
00:01:09,480 --> 00:01:12,440
Speaker 4: base of one point five to five million employees worldwide,

25
00:01:12,680 --> 00:01:16,679
Speaker 4: so still very small. But they're cutting, right, and that's

26
00:01:16,720 --> 00:01:19,200
Speaker 4: the thing They've been cutting since after the pandemic, as

27
00:01:19,200 --> 00:01:22,240
Speaker 4: you mentioned, and we think this is just the beginning.

28
00:01:22,240 --> 00:01:25,400
Speaker 4: We're just scratching the surface. There will be more cuts

29
00:01:25,400 --> 00:01:29,199
Speaker 4: with Amazon, especially as automation and AI continue to fuel

30
00:01:29,200 --> 00:01:33,680
Speaker 4: efficiencies across the organization. We haven't even got to warehouses

31
00:01:33,760 --> 00:01:35,760
Speaker 4: yet right where there's a lot of automation going on.

32
00:01:36,319 --> 00:01:39,160
Speaker 5: So is AI the main reason behind the lanes I mean,

33
00:01:39,200 --> 00:01:41,520
Speaker 5: is the company's run to offset that rising AI capex.

34
00:01:41,800 --> 00:01:44,280
Speaker 4: I mean it helps right because they're continuing to invest

35
00:01:44,319 --> 00:01:48,760
Speaker 4: in AI and capex through AWS. But how do they

36
00:01:48,800 --> 00:01:52,040
Speaker 4: drive margin efficiencies. It's through using some of those efficiencies

37
00:01:52,080 --> 00:01:55,560
Speaker 4: and pairing back on the employee headcount. That and automation,

38
00:01:55,680 --> 00:01:57,640
Speaker 4: those are the I think two biggest things that are

39
00:01:57,640 --> 00:02:00,960
Speaker 4: going to drive the need for more efficient and then

40
00:02:01,080 --> 00:02:04,040
Speaker 4: give back to the company through fewer headcounts.

41
00:02:04,560 --> 00:02:06,639
Speaker 2: I don't know, Lisa, call me Seneco, but I believe

42
00:02:07,240 --> 00:02:08,920
Speaker 2: this is my opinion that AI is can be a

43
00:02:08,960 --> 00:02:10,280
Speaker 2: net job taker.

44
00:02:10,320 --> 00:02:12,920
Speaker 3: And I think in size too, for a lot of industries.

45
00:02:13,040 --> 00:02:14,839
Speaker 3: I think this is going to be a really We're

46
00:02:14,840 --> 00:02:16,520
Speaker 3: continuing to see it in die stories.

47
00:02:16,520 --> 00:02:19,000
Speaker 2: I think so when you know, some CEOs are trying

48
00:02:19,000 --> 00:02:22,320
Speaker 2: to paint a different picture. So all right, let's take

49
00:02:22,360 --> 00:02:24,760
Speaker 2: a look. You're you're the boss of all things retail?

50
00:02:25,080 --> 00:02:26,920
Speaker 2: How's this holiday season going to be?

51
00:02:27,160 --> 00:02:29,680
Speaker 3: Here? Is this is gonna be a good year?

52
00:02:30,080 --> 00:02:32,560
Speaker 4: I think so. I think the consumer has been holding

53
00:02:32,639 --> 00:02:37,200
Speaker 4: up relatively well. Spending is higher, and we think Amazon's

54
00:02:37,240 --> 00:02:40,680
Speaker 4: continuing to take share. They're going to be reporting this Thursday,

55
00:02:40,880 --> 00:02:44,800
Speaker 4: and we're expecting solid retail sales numbers high single digits,

56
00:02:45,120 --> 00:02:47,440
Speaker 4: and we do think that they're going to take share

57
00:02:47,560 --> 00:02:50,919
Speaker 4: once again this holiday season. Overall, I think the consumer

58
00:02:50,960 --> 00:02:51,680
Speaker 4: will show up.

59
00:02:52,000 --> 00:02:55,519
Speaker 5: Can you dig into go back to Amazon Andy Jase's

60
00:02:55,600 --> 00:02:57,720
Speaker 5: kind of role in the company. It seems to be

61
00:02:57,720 --> 00:03:02,080
Speaker 5: filled with job cuts, changing different. What's his focus right now?

62
00:03:03,000 --> 00:03:04,639
Speaker 4: I mean, he clearly said that he's going to be

63
00:03:04,680 --> 00:03:07,440
Speaker 4: cutting back on jobs earlier this year in the summer,

64
00:03:07,760 --> 00:03:09,880
Speaker 4: so we do see that rolling out. I think the

65
00:03:09,919 --> 00:03:12,760
Speaker 4: focus is to invest in long term growth. I mean,

66
00:03:12,760 --> 00:03:15,640
Speaker 4: he was very clear in his statements that you know,

67
00:03:15,680 --> 00:03:18,840
Speaker 4: we can't worry about the intra quarter the quarter to

68
00:03:18,960 --> 00:03:21,480
Speaker 4: quarter trends, and we really need to stay focused on

69
00:03:21,520 --> 00:03:25,280
Speaker 4: the longer run. How does Amazon continue to to remain

70
00:03:25,360 --> 00:03:28,600
Speaker 4: the leader that it has been, because, as you know,

71
00:03:28,840 --> 00:03:32,360
Speaker 4: it's very easy to now operate an online business, whether

72
00:03:32,400 --> 00:03:37,000
Speaker 4: it's through Shopify, everyone almost has the same playing ground

73
00:03:37,280 --> 00:03:40,200
Speaker 4: to compete in. So how does Amazon differentiate? And the

74
00:03:40,240 --> 00:03:42,160
Speaker 4: only way to do it is continue to invest in

75
00:03:42,200 --> 00:03:45,720
Speaker 4: the future, and right now that's Ai, whether it's jen Ai,

76
00:03:45,840 --> 00:03:49,680
Speaker 4: agentic Ai, wherever it may lead us, it is AI.

77
00:03:50,080 --> 00:03:53,120
Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

78
00:03:56,800 --> 00:04:01,160
Speaker 1: You're listening to the Bloomberg Intelligence podcast live weekdays at

79
00:04:01,200 --> 00:04:04,160
Speaker 1: ten am Eastern on applecar Play and Android Auto with

80
00:04:04,240 --> 00:04:07,360
Speaker 1: the Bloomberg Business App. Listen on demand wherever you get

81
00:04:07,360 --> 00:04:10,600
Speaker 1: your podcasts, or watch us live on YouTube.

82
00:04:10,240 --> 00:04:13,680
Speaker 2: Through ups is. In the news today, I've poorted some numbers,

83
00:04:14,080 --> 00:04:16,880
Speaker 2: cutting some headcount. The street likes it. The stocks up

84
00:04:16,920 --> 00:04:18,880
Speaker 2: seven and a half percent. It's down twenty four percent

85
00:04:18,920 --> 00:04:22,359
Speaker 2: year to date, but a good day for United Parcel Service.

86
00:04:22,400 --> 00:04:23,679
Speaker 3: Let's break it down with Lee Clasgow.

87
00:04:23,720 --> 00:04:27,640
Speaker 2: He's our senior logistics analyst for Bloomberg Intelligence. He covers

88
00:04:27,640 --> 00:04:30,640
Speaker 2: the rails the trucks, the shipping, the air fready covers

89
00:04:30,680 --> 00:04:30,960
Speaker 2: it all.

90
00:04:31,279 --> 00:04:32,320
Speaker 3: We didn't really talk.

91
00:04:32,200 --> 00:04:35,520
Speaker 2: To LEAD too much until the pandemic and then the logistics.

92
00:04:35,520 --> 00:04:38,360
Speaker 2: We all became experts on logistics and we're like, Lee,

93
00:04:38,440 --> 00:04:38,920
Speaker 2: help us out.

94
00:04:38,920 --> 00:04:40,839
Speaker 3: We don't know what's going on. So Lee, thanks for

95
00:04:40,920 --> 00:04:43,040
Speaker 3: joining us here talk to us about UPS. What's going

96
00:04:43,080 --> 00:04:43,400
Speaker 3: on there?

97
00:04:43,600 --> 00:04:47,280
Speaker 6: Yeah? Trust me, I enjoyableieve being a flavor of the month.

98
00:04:47,360 --> 00:04:50,040
Speaker 6: So I'm glad to be here and talk about transports.

99
00:04:51,680 --> 00:04:54,000
Speaker 6: You know, what's going on the UPS is they are

100
00:04:54,279 --> 00:04:57,560
Speaker 6: making progress and they're executing on their plan. And their

101
00:04:57,600 --> 00:05:02,040
Speaker 6: plan really is to create in a network that can

102
00:05:02,200 --> 00:05:06,359
Speaker 6: not only handle, but thrive in an ever changing environment.

103
00:05:06,520 --> 00:05:09,719
Speaker 6: And that change is being driven by e commerce. It's

104
00:05:09,760 --> 00:05:14,080
Speaker 6: being driven by the uncertainty around tariffs. And what they've

105
00:05:14,080 --> 00:05:19,280
Speaker 6: been able to do is increase productivity through technology, whether

106
00:05:19,279 --> 00:05:25,080
Speaker 6: it's automation or AI. And that also they were stepping

107
00:05:25,120 --> 00:05:28,000
Speaker 6: away from business from Amazon. You know, they noted an

108
00:05:28,000 --> 00:05:31,039
Speaker 6: on the morning call that there are three quarters into

109
00:05:31,080 --> 00:05:33,880
Speaker 6: a six quarter glide down of Amazon business and the

110
00:05:33,880 --> 00:05:36,559
Speaker 6: reason why they want to move away from Amazon business

111
00:05:36,600 --> 00:05:42,440
Speaker 6: that tends to be lower margin, lower yielding packages. But

112
00:05:42,480 --> 00:05:44,440
Speaker 6: that's not to say that they don't want to totally

113
00:05:44,480 --> 00:05:47,560
Speaker 6: walk away from Amazon, because their return business is a

114
00:05:47,560 --> 00:05:51,080
Speaker 6: good business for them, and we're seeing you know, the

115
00:05:51,160 --> 00:05:54,800
Speaker 6: success in the numbers, and you know, going into the quarter,

116
00:05:55,279 --> 00:05:59,760
Speaker 6: I think investors were cautious or had low expectations, and

117
00:06:00,240 --> 00:06:05,159
Speaker 6: management kind of exceeded those with the results. And their

118
00:06:05,160 --> 00:06:09,280
Speaker 6: outlook really shows us that, you know, expectations for the

119
00:06:09,320 --> 00:06:12,760
Speaker 6: fourth quarter in twenty twenty six, at least as it

120
00:06:12,760 --> 00:06:17,080
Speaker 6: relates to you know, sell side analyst consensus is probably

121
00:06:17,160 --> 00:06:18,920
Speaker 6: a bit low and it needs to move higher.

122
00:06:19,080 --> 00:06:20,920
Speaker 5: Welle, can you get more into the cuts that we

123
00:06:20,920 --> 00:06:24,200
Speaker 5: were talking about, thirty four thousand job cuts, Where were

124
00:06:24,240 --> 00:06:26,160
Speaker 5: they seen and what kind of let's say, year over

125
00:06:26,240 --> 00:06:28,600
Speaker 5: year cost savings does it expect in twenty twenty five

126
00:06:28,640 --> 00:06:29,120
Speaker 5: from all of this.

127
00:06:30,240 --> 00:06:33,560
Speaker 6: Yeah, so, you know, what they're trying to do their

128
00:06:33,640 --> 00:06:37,240
Speaker 6: overall cost savings, which includes you know, the headcount reductions.

129
00:06:37,480 --> 00:06:40,919
Speaker 6: You know, they're looking to get three point five billion

130
00:06:41,320 --> 00:06:44,080
Speaker 6: dollars in cost savings this year. They've done around two

131
00:06:44,120 --> 00:06:47,280
Speaker 6: point two billion of that so far, and some of

132
00:06:47,320 --> 00:06:50,799
Speaker 6: the reductions are driven by you know, they offered early

133
00:06:50,880 --> 00:06:53,200
Speaker 6: retirement for some of their drivers. They said they've had

134
00:06:53,240 --> 00:06:56,120
Speaker 6: pretty good pick up with that, and that payoff should

135
00:06:56,160 --> 00:06:59,839
Speaker 6: be about a year from what it costs costs something

136
00:07:00,160 --> 00:07:02,400
Speaker 6: one hundred and seventy five hundred and eighty million dollars,

137
00:07:02,400 --> 00:07:04,440
Speaker 6: and they mentioned on the call that it will take

138
00:07:04,480 --> 00:07:07,360
Speaker 6: about a year to get to make those costs back up,

139
00:07:07,600 --> 00:07:09,800
Speaker 6: so you know, it really should be paying for itself.

140
00:07:09,960 --> 00:07:13,480
Speaker 6: And they're closing a lot of facilities. So they've they've

141
00:07:13,600 --> 00:07:18,040
Speaker 6: closed you know, something like ninety ninety five facilities so far,

142
00:07:18,680 --> 00:07:21,120
Speaker 6: and that's being driven by they don't need the network

143
00:07:21,240 --> 00:07:24,360
Speaker 6: they had when they were, you know, really handling a

144
00:07:24,360 --> 00:07:26,720
Speaker 6: lot of Amazon business and now that you know, like

145
00:07:26,760 --> 00:07:29,440
Speaker 6: I mentioned earlier, they're walking away from that business. They're

146
00:07:29,480 --> 00:07:32,640
Speaker 6: kind of reconfiguring their network. And they're also you know,

147
00:07:32,680 --> 00:07:37,320
Speaker 6: as I mentioned, they're increasing overall automation. You know, they know,

148
00:07:37,360 --> 00:07:40,200
Speaker 6: they're on their call that they've added automations around thirty

149
00:07:40,200 --> 00:07:44,080
Speaker 6: five more facilities and about sixty six percent of their

150
00:07:44,120 --> 00:07:49,400
Speaker 6: packages of touch these automated facilities, which is around three

151
00:07:49,440 --> 00:07:52,040
Speaker 6: hundred basis points more than was last year, and that

152
00:07:52,040 --> 00:07:55,200
Speaker 6: that numbers is going to continue as management makes more

153
00:07:55,200 --> 00:07:58,000
Speaker 6: inroads at modernizing their facilities.

154
00:07:58,560 --> 00:08:00,880
Speaker 3: Lee, what is the ups and maybe effed extra that matter.

155
00:08:00,920 --> 00:08:03,119
Speaker 2: How are they kind of talking to you guys about

156
00:08:03,120 --> 00:08:05,320
Speaker 2: tariffs and how it might be impacting their business just

157
00:08:05,840 --> 00:08:07,720
Speaker 2: as a big, big part of supply chain.

158
00:08:07,920 --> 00:08:10,440
Speaker 6: Yeah, you know, it's interesting. So for like a UPS,

159
00:08:10,520 --> 00:08:12,520
Speaker 6: you know, there's good and bad when it comes to

160
00:08:12,560 --> 00:08:16,200
Speaker 6: the tariffs and the more protectionist policies in the US.

161
00:08:16,640 --> 00:08:20,760
Speaker 6: You know, we've ended the dominamus exemptions, which you know

162
00:08:20,960 --> 00:08:23,800
Speaker 6: stated that if a shipment came into the United States

163
00:08:23,800 --> 00:08:26,240
Speaker 6: and it was worth eight hundred dollars or less, it

164
00:08:26,280 --> 00:08:29,160
Speaker 6: didn't have to pay a duty or a tariff. You know,

165
00:08:30,280 --> 00:08:32,920
Speaker 6: the Biden administration was working towards getting rid of that.

166
00:08:33,240 --> 00:08:36,080
Speaker 6: That Trump brought that Trump administration brought that to the

167
00:08:36,080 --> 00:08:39,440
Speaker 6: finish line. You know, first it was it was just

168
00:08:40,000 --> 00:08:43,080
Speaker 6: packages that were coming in from China and Hong Kong.

169
00:08:43,120 --> 00:08:45,480
Speaker 6: And now that's been you know, all packages coming to

170
00:08:45,559 --> 00:08:48,360
Speaker 6: the United States and that's hurting volumes. They noted their

171
00:08:48,600 --> 00:08:51,040
Speaker 6: US or their China to US volumes were down around

172
00:08:51,080 --> 00:08:55,320
Speaker 6: twenty percent and that's having a negative impact. Now you

173
00:08:55,320 --> 00:08:58,719
Speaker 6: look at their forwarding business, you know, because of all

174
00:08:58,800 --> 00:09:01,200
Speaker 6: these packages are now if they are going to be

175
00:09:01,240 --> 00:09:04,200
Speaker 6: coming in a lower value packages have to pay duty,

176
00:09:04,679 --> 00:09:07,480
Speaker 6: they need to lean more heavily on their customs business.

177
00:09:07,480 --> 00:09:11,600
Speaker 6: So you've seen their supply chain business outperform this quarter,

178
00:09:11,640 --> 00:09:13,400
Speaker 6: and I suspect a lot of that had to do

179
00:09:13,880 --> 00:09:17,040
Speaker 6: with the additional fees that they generate from helping shippers

180
00:09:17,559 --> 00:09:19,480
Speaker 6: clear packages through customs.

181
00:09:20,040 --> 00:09:23,200
Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

182
00:09:26,880 --> 00:09:30,600
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

183
00:09:30,679 --> 00:09:33,720
Speaker 1: weekdays at ten am Eastern on Apple Coarcklay and Android

184
00:09:33,760 --> 00:09:37,079
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

185
00:09:37,120 --> 00:09:40,640
Speaker 1: you get your podcasts, or watch us live on YouTube.

186
00:09:41,160 --> 00:09:43,480
Speaker 2: Polish Manteo sitting in for Scarlet Fu and Paul Sweeney.

187
00:09:43,480 --> 00:09:47,240
Speaker 2: We're live at BAM Mutual headquarters down in Lower Manhattan.

188
00:09:47,240 --> 00:09:48,800
Speaker 3: This is what I call the Oppenheimer Building.

189
00:09:48,840 --> 00:09:50,840
Speaker 2: I call it World Financial Center, but the kids call

190
00:09:50,880 --> 00:09:51,720
Speaker 2: it Brookfield Place.

191
00:09:51,960 --> 00:09:53,360
Speaker 3: I don't know what's going on down here, but it

192
00:09:53,440 --> 00:09:53,760
Speaker 3: is a.

193
00:09:53,679 --> 00:09:56,160
Speaker 2: Great part of town. I worked down here pre nine

194
00:09:56,200 --> 00:09:58,520
Speaker 2: to eleven. And what they've done down here, Folks, if

195
00:09:58,559 --> 00:10:00,520
Speaker 2: you're not from New York area, if you to the city,

196
00:10:00,559 --> 00:10:02,599
Speaker 2: you have to come down to Lower Manhattan see what

197
00:10:02,640 --> 00:10:05,760
Speaker 2: they've done down here. It's just extraordinary. It's just really

198
00:10:05,800 --> 00:10:08,680
Speaker 2: really vibrant down here. We're joining right now by Sean McCarthy.

199
00:10:08,720 --> 00:10:11,280
Speaker 2: He's the CEO of BAM Mutual. Sean, thanks for having

200
00:10:11,320 --> 00:10:13,160
Speaker 2: us back to your offices. We appreciate it, sir, you.

201
00:10:13,120 --> 00:10:16,280
Speaker 7: Know, thank you Paul Lisa for coming. It's this is

202
00:10:16,320 --> 00:10:19,120
Speaker 7: an annual tradition and we really appreciate it absolutely.

203
00:10:19,320 --> 00:10:21,960
Speaker 2: I think when I was here last year at this time,

204
00:10:22,040 --> 00:10:24,000
Speaker 2: you said twenty twenty four was going to be a

205
00:10:24,040 --> 00:10:26,200
Speaker 2: record year in municipal bond issuance.

206
00:10:26,840 --> 00:10:29,840
Speaker 3: That was what happened. How about this year, this year.

207
00:10:29,720 --> 00:10:32,640
Speaker 7: Is going to be, in all probability another record.

208
00:10:32,679 --> 00:10:32,959
Speaker 3: Wow.

209
00:10:33,920 --> 00:10:37,840
Speaker 7: The growth of the business has been really robust. A

210
00:10:37,960 --> 00:10:44,040
Speaker 7: number of factors that make that happen. First, the state

211
00:10:44,040 --> 00:10:48,560
Speaker 7: and local government's the responsibility is being pushed down on

212
00:10:48,640 --> 00:10:51,840
Speaker 7: them to issue more infrastructure debt. So if you think

213
00:10:51,840 --> 00:10:55,880
Speaker 7: about infrastructure, eighty percent of what you think about is

214
00:10:55,880 --> 00:10:59,520
Speaker 7: just infrastructure is financed at the state and local government level,

215
00:10:59,559 --> 00:11:02,640
Speaker 7: not at the level. So this has been a year

216
00:11:02,679 --> 00:11:06,280
Speaker 7: where many many issuers have come to market and we

217
00:11:06,679 --> 00:11:09,600
Speaker 7: and that's a result of a lack of you know,

218
00:11:09,679 --> 00:11:14,240
Speaker 7: a change in the federal support from healthcare to other programs,

219
00:11:14,240 --> 00:11:16,160
Speaker 7: and so we think the stand local government is going

220
00:11:16,240 --> 00:11:20,520
Speaker 7: to pick up where the federal government is stepping back.

221
00:11:20,640 --> 00:11:22,840
Speaker 7: And so I think it's going to be a record

222
00:11:22,880 --> 00:11:25,440
Speaker 7: year this year and probably pretty robust next year.

223
00:11:25,520 --> 00:11:27,680
Speaker 5: Now, are there certain areas of many that have performed

224
00:11:27,760 --> 00:11:28,600
Speaker 5: better than others?

225
00:11:29,080 --> 00:11:31,040
Speaker 7: So well, I think from an activity standpoint, it's been

226
00:11:31,080 --> 00:11:33,440
Speaker 7: across the board. Okay, so you see a lot of

227
00:11:33,440 --> 00:11:38,000
Speaker 7: healthcare general obligations which are full faith from stan local

228
00:11:38,040 --> 00:11:41,640
Speaker 7: governments themselves, lots and lots of projects across the country.

229
00:11:42,480 --> 00:11:44,400
Speaker 7: I think that one of the areas that's going to

230
00:11:44,400 --> 00:11:48,920
Speaker 7: be most dynamic going forward is power. You know, if

231
00:11:48,920 --> 00:11:53,360
Speaker 7: you think about AI, the amount of power and data

232
00:11:53,440 --> 00:11:56,920
Speaker 7: centers that are in their demands. I was speaking to

233
00:11:56,960 --> 00:12:00,439
Speaker 7: one of the heads of one of the largest municipal

234
00:12:00,440 --> 00:12:03,320
Speaker 7: power agencies and he said that the demand that they're

235
00:12:03,360 --> 00:12:05,400
Speaker 7: being asked for now, let's assume that some of its

236
00:12:05,520 --> 00:12:08,760
Speaker 7: double counting is going to be four to ten times

237
00:12:08,800 --> 00:12:11,000
Speaker 7: with the produce right now, So.

238
00:12:10,880 --> 00:12:13,000
Speaker 2: Sean, just for the folks that don't know what you

239
00:12:13,000 --> 00:12:17,959
Speaker 2: guys do, BAM insures municipal bonds, giving another level of

240
00:12:18,040 --> 00:12:19,199
Speaker 2: certainty for investors.

241
00:12:19,360 --> 00:12:23,079
Speaker 7: That's correct. So we are a double A rated insurance

242
00:12:23,120 --> 00:12:26,680
Speaker 7: company by Standard and Poors. And really what we do

243
00:12:26,880 --> 00:12:30,320
Speaker 7: is guarantee different than other kinds of insurance. We guarantee

244
00:12:30,440 --> 00:12:33,280
Speaker 7: timely payment of principle and interest when due. So that

245
00:12:33,440 --> 00:12:37,000
Speaker 7: means if there is a credit event that would cause

246
00:12:37,800 --> 00:12:42,000
Speaker 7: a default, we pay first and then mitigate later. But

247
00:12:42,080 --> 00:12:44,600
Speaker 7: one of the unique things that we do and the

248
00:12:44,640 --> 00:12:48,840
Speaker 7: reason why at this point we've through our inception, which

249
00:12:48,880 --> 00:12:52,880
Speaker 7: is thirteen years, we've guaranteed one hundred and seventy billion

250
00:12:52,920 --> 00:12:57,680
Speaker 7: dollars worth of transactions and we have had no defaults

251
00:12:58,240 --> 00:13:02,720
Speaker 7: on these transactions. That's really because we focus on municipal

252
00:13:03,280 --> 00:13:09,640
Speaker 7: essential infrastructure, state local government obligations, and we work with municipalities.

253
00:13:09,720 --> 00:13:12,520
Speaker 7: If there are bumps in the road like what happened

254
00:13:12,679 --> 00:13:16,560
Speaker 7: during COVID, we're proactive and working with the municipalities to

255
00:13:16,559 --> 00:13:19,880
Speaker 7: make sure that they're in the best financial health that

256
00:13:19,920 --> 00:13:20,280
Speaker 7: could be.

257
00:13:20,640 --> 00:13:23,360
Speaker 5: And how have MUNI has been performing compared to treasuries?

258
00:13:24,600 --> 00:13:27,320
Speaker 7: You know, well, I mean I think that the way

259
00:13:27,360 --> 00:13:30,760
Speaker 7: we look at it, it's when issuers are coming to

260
00:13:30,800 --> 00:13:33,640
Speaker 7: market and what the performance of municipal bonds are, we're

261
00:13:33,679 --> 00:13:35,400
Speaker 7: going to have an investor come speak a little bit

262
00:13:35,480 --> 00:13:40,040
Speaker 7: later today, I think, and the relative performance has been

263
00:13:40,040 --> 00:13:42,800
Speaker 7: really quite quite robust, and I think that's going to

264
00:13:42,960 --> 00:13:45,840
Speaker 7: sort of all going into the next year.

265
00:13:46,000 --> 00:13:48,079
Speaker 2: Talk to us about this credit quality of the municipal

266
00:13:48,080 --> 00:13:51,680
Speaker 2: bond market. I haven't really heard or seen or read

267
00:13:51,720 --> 00:13:54,800
Speaker 2: about major blow ups, whether it was years ago Puerto

268
00:13:54,880 --> 00:13:58,000
Speaker 2: Rico or Chicago or just Illinois in general. Quite frankly,

269
00:13:58,440 --> 00:14:00,359
Speaker 2: we haven't really seen that too much.

270
00:14:00,760 --> 00:14:07,800
Speaker 7: So I think massive individual credit problems is not what's

271
00:14:07,840 --> 00:14:09,760
Speaker 7: happening at the moment. I think what you're going to

272
00:14:09,800 --> 00:14:13,240
Speaker 7: see happening, what we feel is happening, is a greater

273
00:14:13,400 --> 00:14:18,280
Speaker 7: differentiation among credits. So, for example, if you take healthcare,

274
00:14:20,160 --> 00:14:25,080
Speaker 7: there are lots of very big financial hospital systems, large

275
00:14:25,480 --> 00:14:29,280
Speaker 7: single hospital institutions, and a lot of small rural hospitals.

276
00:14:29,800 --> 00:14:31,960
Speaker 7: How they're going to be affected by what happens to

277
00:14:32,040 --> 00:14:37,160
Speaker 7: Medicare and Medicaid payments and how technology changes the way

278
00:14:37,200 --> 00:14:40,960
Speaker 7: healthcare is delivered is going to create a different sense

279
00:14:41,040 --> 00:14:43,240
Speaker 7: of who the winners are and who the losers are

280
00:14:43,280 --> 00:14:44,360
Speaker 7: would be a good example of that.

281
00:14:44,840 --> 00:14:47,560
Speaker 5: Are you expecting a slowdown by the end of the year,

282
00:14:47,600 --> 00:14:49,800
Speaker 5: maybe November? Do things tend to I think the end

283
00:14:49,840 --> 00:14:50,360
Speaker 5: of the year.

284
00:14:50,280 --> 00:14:53,240
Speaker 7: I think you're right. I think a volume will tail

285
00:14:53,280 --> 00:14:56,880
Speaker 7: off in the fourth quarter. Usually does unless there's a

286
00:14:56,960 --> 00:14:58,880
Speaker 7: change in the tax law. But one of the important

287
00:14:58,880 --> 00:15:01,880
Speaker 7: things that happened earlier this year was that when the

288
00:15:01,960 --> 00:15:06,040
Speaker 7: Big beautiful bill was passed, tax exemption I meannessial bonds

289
00:15:06,160 --> 00:15:09,920
Speaker 7: really was not affected. So that enabled at the beginning

290
00:15:09,960 --> 00:15:11,920
Speaker 7: of the year, if you think issuers were trying to

291
00:15:11,960 --> 00:15:14,360
Speaker 7: come to market, to try to because they weren't sure

292
00:15:14,360 --> 00:15:16,480
Speaker 7: what the outcome is going to be, and then later

293
00:15:16,560 --> 00:15:19,000
Speaker 7: the market environment was so favorable that they continued to

294
00:15:19,360 --> 00:15:23,320
Speaker 7: participate in the market to bring their new issues to market.

295
00:15:23,600 --> 00:15:27,920
Speaker 7: We'd see going forward if interest rates continue to decline,

296
00:15:28,200 --> 00:15:29,560
Speaker 7: you probably have a better idea of what's going to

297
00:15:29,640 --> 00:15:34,440
Speaker 7: happen tomorrow than I do. But if you think about

298
00:15:34,600 --> 00:15:37,920
Speaker 7: that effect, there'll be a greater number of refinancings as well.

299
00:15:38,320 --> 00:15:43,040
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

300
00:15:43,240 --> 00:15:46,680
Speaker 1: and anywhere else you get your podcasts. Listen live each

301
00:15:46,720 --> 00:15:50,440
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com,

302
00:15:50,600 --> 00:15:54,120
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

303
00:15:54,560 --> 00:15:57,480
Speaker 1: You can also watch us live every weekday on YouTube

304
00:15:57,880 --> 00:16:00,000
Speaker 1: and always on the Bloomberg terminal