WEBVTT - MGM's Tricky Recovery Path; Miners' Carbon Transition 0:00:01.960 --> 0:00:05.520 This is Bloomberg Intelligence. We're really getting into that the 0:00:05.600 --> 0:00:08.960 streaming's arm three additions, looking at that and saying we 0:00:09.039 --> 0:00:11.880 can really build a nice niche for ourselves in depth 0:00:11.880 --> 0:00:16.320 research and data on two thousand companies and dirty industry. 0:00:16.800 --> 0:00:19.480 The dollar is the dominant concept in the planet. I 0:00:19.520 --> 0:00:22.520 think the opposition is not turning progression of what Microsoft 0:00:22.560 --> 0:00:26.040 can do with this technology. Going forward, Bloomberg Intelligence with 0:00:26.200 --> 0:00:31.120 Alex Steel and Paul Sweeney on Bloomberg Radio. Over the 0:00:31.160 --> 0:00:33.160 next hour, we're going to dig inside the big business 0:00:33.200 --> 0:00:35.960 stories impacting Wall Street and the global markets. Each and 0:00:36.000 --> 0:00:38.360 every week we provide in depth research and data on 0:00:38.400 --> 0:00:41.559 some of the two thousand companies and industries are analysts 0:00:41.560 --> 0:00:43.720 cover worldwide. Today, we're going to take a look at 0:00:43.720 --> 0:00:47.800 the revenue recovery for MGM resorts, plus the UK residential 0:00:47.800 --> 0:00:50.960 renovation gets a boost from the housing hot streak. But first, 0:00:51.040 --> 0:00:53.920 let's talk about travel. Are you going anywhere for the 0:00:53.920 --> 0:00:55.880 rest of the summer, Are you making any plans for 0:00:55.920 --> 0:00:58.600 the winter, and what does that mean for the airline stocks, 0:00:58.640 --> 0:01:00.640 hotel stocks, the whole thing to any us now. Bloomberg 0:01:00.640 --> 0:01:04.840 Intelligence Senior Airlines analyst George Ferguson George this past week, 0:01:04.880 --> 0:01:08.360 in a surprise move, the EU didn't stop US citizens 0:01:08.600 --> 0:01:10.840 from coming into the EU and be able to vacation 0:01:10.840 --> 0:01:13.760 that they're going to reevaluate in the next two weeks. 0:01:13.760 --> 0:01:17.640 What's intercontinental travel like right now? So I think that 0:01:17.720 --> 0:01:20.000 was one of the few good news points on trans 0:01:20.040 --> 0:01:24.360 atlantic travel. So trans atlantic travel is I would say, 0:01:24.360 --> 0:01:30.040 a hodgepodge of requirements and regulations right now. The most 0:01:30.080 --> 0:01:32.520 besuttling to me, I think, is that the US has 0:01:32.560 --> 0:01:37.600 excluded a lot of our key partners from Europe, the Germans, 0:01:37.720 --> 0:01:41.000 the you know, the English and such, from even coming 0:01:41.040 --> 0:01:44.560 here quarantine or not, um, you know, But we can 0:01:44.560 --> 0:01:47.880 go there to some of the countries and some of 0:01:47.880 --> 0:01:50.440 them we have to quarantine. Some not usual in the 0:01:50.480 --> 0:01:53.800 southern hemisphere, the ones that like and need travel the 0:01:53.840 --> 0:01:57.040 most have the least restrictions. But we're starting to see, 0:01:57.520 --> 0:02:00.560 you know, a major spike in some of the some 0:02:00.640 --> 0:02:02.960 of the virus activity down there. So it makes me 0:02:03.040 --> 0:02:07.120 wonder how long that's gonna last, or how long US 0:02:07.560 --> 0:02:08.919 travel is going to want to go there. So I 0:02:09.000 --> 0:02:11.440 just call it a ridiculous hodgepod right now, really hard 0:02:11.480 --> 0:02:13.960 to figure out, very country dependent. Where are we just 0:02:14.080 --> 0:02:18.200 in U S domestic uh capacity right now Georgia, it 0:02:18.200 --> 0:02:20.400 seems like there's more planes on the ground and in 0:02:20.480 --> 0:02:23.200 the air. Where are we in terms of that capacity? Yeah, 0:02:23.240 --> 0:02:25.640 so US capacity as you know, as we sort of 0:02:25.760 --> 0:02:29.160 near the end of the summer travel season. Uh, you know, 0:02:29.200 --> 0:02:31.480 some of the low cost carriers are even flying more 0:02:31.520 --> 0:02:35.200 than they did in twenty Lots of carriers are I 0:02:35.240 --> 0:02:41.440 would say, within ten or fifteen percent of of levels UM. 0:02:41.560 --> 0:02:43.520 And this is just on leisure travel. So I'd say 0:02:43.600 --> 0:02:46.160 from a leisure travel perspective, from what we've heard from 0:02:46.200 --> 0:02:49.359 a lot of them is that they're back to level. 0:02:49.400 --> 0:02:51.400 So it's been quite a nice bounce back on leisure 0:02:51.520 --> 0:02:54.720 in the US and the domestic market. Does that hold 0:02:54.760 --> 0:02:57.799 up with Delta so well? I think there's a couple 0:02:57.800 --> 0:03:00.560 of problems. I think Delta is a bit of a problem. UM. 0:03:00.720 --> 0:03:02.520 I seem to think we're not going to ever go 0:03:02.639 --> 0:03:06.120 back to the lockdowns that we saw. I think we 0:03:06.160 --> 0:03:08.160 understand the virus too much. There's some people that just 0:03:08.200 --> 0:03:11.400 won't I think, you know, refrain as much as they 0:03:11.560 --> 0:03:13.920 would maybe last March when they didn't understand what was 0:03:13.960 --> 0:03:17.040 at risk. UM. So I think Delta does take some 0:03:17.080 --> 0:03:20.640 demand off the table. But I think more importantly is 0:03:20.680 --> 0:03:23.840 the business travel right. I think the leisures closing, by 0:03:23.840 --> 0:03:26.520 the heavy leisure seasons closing, kids are going back to school. 0:03:27.000 --> 0:03:28.560 It's going to make it harder for mom and dad 0:03:28.600 --> 0:03:30.200 to get away with the kids. If you don't have kids, 0:03:30.240 --> 0:03:33.240 that just you know, it's it's it's easier. And companies 0:03:33.240 --> 0:03:36.760 though starting to push back that return to office. I 0:03:36.760 --> 0:03:40.120 think employees need to be back in the office before 0:03:40.120 --> 0:03:43.240 the companies really flesh out what travel policies are going 0:03:43.280 --> 0:03:46.040 to be. And so I think without that sort of 0:03:46.040 --> 0:03:48.640 return to office or pushing it back, I think we're 0:03:48.640 --> 0:03:51.520 not going to see that business travel for longer. And 0:03:51.520 --> 0:03:54.840 I think that really hurts the fall season and winter 0:03:54.920 --> 0:03:56.800 season this year because of that. And I think and 0:03:56.920 --> 0:03:59.560 Delta has an effect on that. And we're talking about 0:03:59.560 --> 0:04:04.200 the Delta variant, not Delta airline point airline conversation. I'm 0:04:04.200 --> 0:04:07.880 sure that folks Delta appreciate clarifying that. George, all right, 0:04:07.960 --> 0:04:11.680 So it's it's interesting people were hoping by this time 0:04:11.720 --> 0:04:14.520 we'd have, you know, more vibrant trans atlantic I'm more 0:04:14.600 --> 0:04:18.840 vibrant maybe intercontinental European travel, but this delta variant has 0:04:18.920 --> 0:04:22.640 really put a wrinkle in that. Are the airlines Are 0:04:22.680 --> 0:04:27.800 they preparing for a slower than expected kind of third 0:04:27.800 --> 0:04:31.880 and fourth quarter? Are they guiding down? So uh, as 0:04:31.920 --> 0:04:34.159 of right now, we don't see that. We've just finished 0:04:34.520 --> 0:04:38.520 earning season. Um you know, most of them were pretty 0:04:38.680 --> 0:04:42.520 upbeat on booking trends. They were, I mean, there were 0:04:42.560 --> 0:04:46.719 some of them that would readily admit that business travel 0:04:46.880 --> 0:04:49.960 is a is a short booking window, um you know, 0:04:50.000 --> 0:04:52.360 meaning business travels usually book within a couple of weeks. 0:04:52.760 --> 0:04:54.440 And so they said they look at we don't we 0:04:54.480 --> 0:04:57.159 don't have a sense for where businesses going, and we 0:04:57.240 --> 0:05:00.000 do see a taper in leisure. But most of them, 0:05:00.279 --> 0:05:04.160 we're pretty upbeat. So I don't see them guiding yet, 0:05:04.279 --> 0:05:06.719 but we'll be. We're watching closely. Right now. There are 0:05:06.800 --> 0:05:10.479 enough flight attendants and pilots to do stuff. There are 0:05:10.640 --> 0:05:14.240 challenges with labor Like everywhere else in the economy, pilots 0:05:14.279 --> 0:05:18.280 are pilots are very I don't know what the right 0:05:18.279 --> 0:05:20.320 there may be sticky, you know sort of labor force 0:05:20.400 --> 0:05:23.320 because they've got such a specialized skill set, and the 0:05:23.440 --> 0:05:26.520 challenge there is more getting them trained and having them 0:05:26.600 --> 0:05:28.800 current to fly the equipment that you've got at the 0:05:28.839 --> 0:05:31.520 airline at this point, right, And some airlines cut part 0:05:31.520 --> 0:05:33.720 of the fleet, so they might not need pilots that 0:05:33.800 --> 0:05:36.640 fly X y Z, but they need flots pilots of 0:05:36.680 --> 0:05:39.400 fly pdqes and so they got to get them trained 0:05:39.440 --> 0:05:41.039 and move them to move them to what they have 0:05:41.080 --> 0:05:43.159 in the fleet. Others haven't been flying for a while. 0:05:43.800 --> 0:05:46.000 That's a little bit of a challenge. That's a challenge 0:05:46.040 --> 0:05:49.400 for the for the full service carriers, you know, the 0:05:49.480 --> 0:05:53.479 United the Deltas, the American um. The low cost guys, 0:05:53.520 --> 0:05:55.159 they're having a problem because I think they're trying to 0:05:55.520 --> 0:05:57.599 take a lot of market share here and we're seeing 0:05:57.640 --> 0:06:01.719 companies like Spirit, I think, really push the amount of 0:06:01.720 --> 0:06:04.279 capacity they put in the marketplace without having the appropriate 0:06:04.360 --> 0:06:07.520 levels of reserve airplanes and other um, you know, on 0:06:07.640 --> 0:06:11.040 pilots that aren't that are in reserve ready to meet 0:06:11.240 --> 0:06:13.360 you know, the need if they have a weather event 0:06:13.440 --> 0:06:16.159 or something like that. And that's hurt that we've seen 0:06:16.160 --> 0:06:18.640 that recently. So I think the low cost guys are 0:06:18.680 --> 0:06:20.640 pushing it. The full service guys do have a genuine 0:06:20.680 --> 0:06:23.440 sort of training problem. Okay, George, thank you very much. 0:06:23.440 --> 0:06:27.400 George ferguson Bloomberg Intelligence, senior Airlines analyst. All right, coming 0:06:27.440 --> 0:06:29.440 up on the program, we look at which mining and 0:06:29.480 --> 0:06:32.440 metals companies are best positioned for the transition to a 0:06:32.480 --> 0:06:36.039 low carbon world. You're listening to Bloomberg Intelligence on Bloomberg Radio, 0:06:36.120 --> 0:06:38.760 providing in depth research and data on two thousand companies 0:06:38.760 --> 0:06:41.560 and a hundred and thirty industries. You can access Bloomberg 0:06:41.600 --> 0:06:43.960 Intelligence through the I go on the terminal, I'm Alex 0:06:43.960 --> 0:06:46.839 Steel and on Paul Sweeney. It's thirteen minutes past the hour, 0:06:47.000 --> 0:06:56.120 and this is Bloomberg. This is Bloomberg Intelligence with Alex 0:06:56.120 --> 0:07:00.679 Steel and Paul Sweeney on Bloomberg Radio. Well, we spend 0:07:00.680 --> 0:07:02.839 a lot of time on this program talking about the 0:07:03.080 --> 0:07:07.960 s G investing environmental social governance. It's growing in popularity. 0:07:08.040 --> 0:07:10.080 This time we want to take a look at how 0:07:10.160 --> 0:07:13.360 the metals and mining industry fairs under this analysis. For 0:07:13.400 --> 0:07:16.160 that we welcome Bloomberg Intelligence E s G analysts, Shaheen 0:07:16.280 --> 0:07:20.000 contractor just at first blush Shine. It would seem to 0:07:20.040 --> 0:07:23.240 me the medals of mining companies might not score very 0:07:23.240 --> 0:07:24.920 well on E s G. Is that a is that 0:07:24.960 --> 0:07:27.440 a poor bias on my part? So I think medals 0:07:27.440 --> 0:07:30.920 and minings have always been sort of the traditional discycling 0:07:30.960 --> 0:07:34.800 in gas, but the traditional folk surface not flat. But 0:07:35.280 --> 0:07:37.440 I think the benefit of that is they picked up 0:07:37.440 --> 0:07:41.640 the game fairly early on in the process. And I 0:07:41.640 --> 0:07:45.240 think we're seeing a number of minors that have ramp up. 0:07:45.320 --> 0:07:48.680 A number of them have set these gobbon reduction goals 0:07:48.720 --> 0:07:51.760 of the last euros, so I would say, probably something 0:07:52.040 --> 0:07:56.440 I haven't seen before. So you kind of ranked them light, right, 0:07:56.520 --> 0:07:59.640 So you go over forty six metal and mining companies 0:08:00.200 --> 0:08:02.360 before we get into like who scored well and who didn't. 0:08:02.600 --> 0:08:05.320 What were your criteria, because a lot of times you 0:08:05.480 --> 0:08:08.080 I feel like companies say one thing and do another. 0:08:08.120 --> 0:08:12.840 But even more importantly they say like carbon intensity versus 0:08:13.040 --> 0:08:17.120 you know, versus my own operations, and and those make 0:08:17.200 --> 0:08:21.520 a difference and how you measure it absolutely, And so 0:08:21.680 --> 0:08:25.440 our ranking is really looking at these carbon reduction goals. 0:08:25.480 --> 0:08:29.000 So these are bi common schools, And what we're really 0:08:29.040 --> 0:08:32.560 doing is we're starting companies on two pillars. So one 0:08:32.600 --> 0:08:35.439 is a historic pillar which looks that sort of reduction 0:08:35.480 --> 0:08:38.640 trend over five years and along with the current intensity, 0:08:39.360 --> 0:08:42.160 and the second is more sort of forward looking at 0:08:42.280 --> 0:08:46.120 we're here we're quantifying these forward looking reduction goals and 0:08:46.440 --> 0:08:49.800 really comparing it to a temperature aligned benchmark. So the 0:08:49.880 --> 0:08:51.520 end of the day, we're just saying, you know, who's 0:08:51.520 --> 0:08:55.320 aligned with the Paris goals, who's ambitious enough. UM to 0:08:55.440 --> 0:08:57.959 your point, of course, they're They're tricky, which is why 0:08:58.000 --> 0:09:00.520 we've come up with this standardized way of the things. 0:09:00.520 --> 0:09:03.360 So there's three ways to kind of measure stuff. Like 0:09:03.400 --> 0:09:06.840 one is Scope one and two, which are basically the 0:09:06.920 --> 0:09:11.160 carbon reduction using your own power, so you're using less. Uh. 0:09:11.320 --> 0:09:15.720 The other is the types of energy that you're using, 0:09:15.720 --> 0:09:17.800 so instead of using coal, maybe you use solar. And 0:09:17.840 --> 0:09:20.560 then the other is the products that you produce and 0:09:20.679 --> 0:09:23.040 cutting that or any of these guys tackling Scope three 0:09:23.080 --> 0:09:26.480 because in the oil community, Scope three is so hard 0:09:26.559 --> 0:09:28.719 to do because it's basically trying to tackle emissions and 0:09:28.800 --> 0:09:30.719 like jet fuel and what you're driving in your car. 0:09:31.000 --> 0:09:34.560 Yeah yeah, UM. I think Scope three for things like 0:09:34.600 --> 0:09:36.720 oil and gas is the elephant in the room. I 0:09:36.760 --> 0:09:39.559 think if you go beyond that to other sectors, it 0:09:39.640 --> 0:09:42.240 isn't so much of a focus. I think the one 0:09:42.280 --> 0:09:45.400 company that comes to my mind that is tackling scope 0:09:45.400 --> 0:09:49.120 three is UM if I remember right, it's mim um. 0:09:49.160 --> 0:09:52.959 But again other than that, it's largely just operation emissions 0:09:52.960 --> 0:09:56.079 because I think if you you know, you have transportation 0:09:56.080 --> 0:09:58.040 will in gas. That's really were Scope three is the 0:09:58.080 --> 0:10:01.040 elephant in the room. Well it comes to metals and mining, 0:10:01.080 --> 0:10:04.760 but not that yet, so shooking for metals and mining company, 0:10:04.800 --> 0:10:08.880 what do they actually do to improve their E s 0:10:08.920 --> 0:10:12.320 G kind of footprint if you will? Sure so you 0:10:12.360 --> 0:10:15.520 know for for it really depends on the metal produced, 0:10:15.520 --> 0:10:20.160 and it's just so diversified. Giving the example of aluminium, 0:10:20.600 --> 0:10:23.840 so aluminium is again just one of the most common 0:10:23.880 --> 0:10:29.000 intensive industries, and over there it's things like increasing scrap 0:10:29.040 --> 0:10:33.200 based production, which is much less common intensive, and also 0:10:33.520 --> 0:10:37.560 decomganizing the power sector for example, because aluminium just uses 0:10:37.600 --> 0:10:41.880 a lot of electricity. But it varies very different metals. 0:10:41.880 --> 0:10:44.560 But where he is literally from company to company, mind 0:10:44.559 --> 0:10:47.160 to mind. But to that point, and take a look 0:10:47.160 --> 0:10:48.719 at the carbon scores that are the worst and that's 0:10:48.720 --> 0:10:53.400 gonna Rio and Glencore is that is a thing u 0:10:53.760 --> 0:10:57.760 so real Dento has a fair amount of operations and 0:10:57.840 --> 0:11:01.640 aluminum and just the way the score is design aluminum 0:11:01.679 --> 0:11:04.760 being so common intensive has to reduce submissions by a 0:11:04.840 --> 0:11:08.679 lot more than other diversified minors. So by before they 0:11:08.720 --> 0:11:11.920 automatically tend to tend towards the lower end of their 0:11:11.960 --> 0:11:15.200 score of our score card. Again, just because there's so 0:11:15.280 --> 0:11:18.880 much more carbon intensive than any other metal and tend 0:11:18.920 --> 0:11:21.800 to having sort of phenom in that UM would weigh 0:11:21.840 --> 0:11:23.760 down on them just like any other company. Like you 0:11:23.800 --> 0:11:27.240 will see Hinda Core, you'd see rustles towards the bottom. 0:11:27.280 --> 0:11:30.720 So shehan, is there any regionality to this? Are our 0:11:30.800 --> 0:11:34.160 European damasile companies do they do better? Because it seems 0:11:34.200 --> 0:11:37.000 to me I have s G concerns or G s 0:11:37.080 --> 0:11:39.000 E s G issues are more pronounced in Europe than 0:11:39.120 --> 0:11:41.720 perhaps or more advanced than they are in the US. 0:11:41.800 --> 0:11:44.080 So do we see that in some of the results, 0:11:44.080 --> 0:11:47.080 in some of the performance of these companies. Suppose you're right, 0:11:47.120 --> 0:11:49.319 I think for most sectors we do see the street 0:11:49.400 --> 0:11:52.520 nudisms where Europe is leading. I think the metics and 0:11:52.600 --> 0:11:55.480 minings I didn't see it just because everything is so 0:11:55.720 --> 0:12:00.440 globally spread like Africa, South South America or theations are 0:12:00.520 --> 0:12:03.800 just diversified. I think the medicine minings, it was more 0:12:03.880 --> 0:12:06.880 by sub industry and what I mean by that is 0:12:07.520 --> 0:12:12.520 base metal companies had far more goals and precious metals again, 0:12:12.600 --> 0:12:16.400 base metal example, aluminum, it's much more common intensive, which 0:12:16.440 --> 0:12:19.199 is why it's more metal for operations again, which is 0:12:19.240 --> 0:12:22.640 why companies are setting these goals. Precious metals not so 0:12:22.760 --> 0:12:26.400 cognit intensive, yes, and a focus less of a priority. Yeah, 0:12:26.400 --> 0:12:28.240 it feels like copper goal kind of get a little 0:12:28.280 --> 0:12:31.360 bit of a easier paths that. Um, they do, and 0:12:31.679 --> 0:12:34.360 they should because it's not that govern intensive. It comes 0:12:34.360 --> 0:12:36.720 down to sort of cause some things like that. Are 0:12:36.840 --> 0:12:42.439 the our investors rewarding these companies for that? So you know, 0:12:42.600 --> 0:12:44.720 that's a great question, and I still have to do 0:12:44.840 --> 0:12:47.640 the analysis for metals, but I can give you what 0:12:47.720 --> 0:12:51.120 I did as an exampt for utilities, where we saw 0:12:51.200 --> 0:12:54.880 that you know, companies with higher bi common scores were 0:12:54.920 --> 0:12:57.920 more likely to be held in any sc fund. So 0:12:58.000 --> 0:13:02.280 clearly e SG investors our prioritizing these I would say 0:13:02.360 --> 0:13:06.520 these issues now, I would wait to see what kind 0:13:06.559 --> 0:13:09.800 of analysis at least to medalsine mining, but um, that's 0:13:09.800 --> 0:13:13.319 what we had for utility, So definitely something prioritized for 0:13:13.440 --> 0:13:17.240 at least the resource in times to enviolently heavy sectors Yeah, 0:13:17.280 --> 0:13:20.080 like metals and mining, I'm just wondering at you know, 0:13:20.120 --> 0:13:22.800 I know this is becoming a bigger and bigger issue 0:13:22.920 --> 0:13:27.360 for managers, for board members, for shareholders, this focus on 0:13:27.440 --> 0:13:30.440 e s g S in addition to you know, the 0:13:30.440 --> 0:13:32.480 income statement and the balance sheet and things like that. 0:13:32.840 --> 0:13:36.080 In the metals and mining space. What's what's the sense 0:13:36.120 --> 0:13:39.319 you get from from management in terms of their commitment UM. 0:13:39.360 --> 0:13:42.640 I think medals and minings is again like an industry 0:13:42.679 --> 0:13:46.600 that's just being early exposed to just because it's amongst 0:13:46.600 --> 0:13:50.160 the resource intensive sectors. I think the one thing I've 0:13:50.160 --> 0:13:53.599 been seeing from metals and mining companies is an increasing 0:13:53.679 --> 0:13:58.000 focus on safety, so things texicality rates, incident rates, and 0:13:58.480 --> 0:14:01.360 I'm seeing an increasing number of companies that sort of 0:14:01.440 --> 0:14:05.400 executive compensation and dial this back to things like safety 0:14:05.440 --> 0:14:08.600 and to some extend also emission. So you know that 0:14:09.080 --> 0:14:13.439 compensation and center gives you a dijected sort of monetary 0:14:13.480 --> 0:14:16.679 bush to do these things. So definitely more of a 0:14:16.760 --> 0:14:19.160 focus from that. Yeah, it's sort of like they had 0:14:19.200 --> 0:14:21.320 to have the right to operate for so long in 0:14:21.320 --> 0:14:24.320 different countries that they couldn't mess it up. UM that 0:14:24.360 --> 0:14:27.840 they already have in some ways better practices um or conditioned. 0:14:27.840 --> 0:14:29.240 I guess all right, she hean thinks a lot, she 0:14:29.280 --> 0:14:32.720 can contractor joining us Bloomberg Intelligence E s G analysts. 0:14:32.960 --> 0:14:34.880 Coming up on the program, we look at the revenue 0:14:34.880 --> 0:14:38.080 recovery for MGM Resorts. You're listening to Bloomberg Intelligence on 0:14:38.160 --> 0:14:40.920 Bloomberg Radio, providing in depth research and data on two 0:14:40.960 --> 0:14:43.480 thousand companies and a hundred and thirty industries. You can 0:14:43.480 --> 0:14:46.280 access Bloomberg Intelligence through b I go, I'm a terminal, 0:14:46.360 --> 0:14:48.960 I'm Alex Steel and Paul Sweeney. It's twenty five minutes 0:14:48.960 --> 0:14:56.920 past the hour, and this is Bloomberg. This is Bloomberg 0:14:56.960 --> 0:15:01.840 Intelligence with Alex Steel and Paul Sweeney on Bloomberg Brady. 0:15:02.720 --> 0:15:04.120 We'll be here each and every week at this time 0:15:04.160 --> 0:15:07.240 tapping into our Bloomberg Intelligence analysts covering some two thousand 0:15:07.240 --> 0:15:10.800 companies and industries worldwide. Well as you wind up having 0:15:10.840 --> 0:15:12.760 a delta variant, we can have it pretty much all 0:15:12.800 --> 0:15:15.760 across the world. How does that affect different sectors? That's 0:15:15.760 --> 0:15:18.840 what we've been working on throughout Bloomberg Intelligence. One particular 0:15:18.840 --> 0:15:21.560 area want to focus on now is the gaming stocks 0:15:21.600 --> 0:15:25.480 like MGM, Las Vegas sands. What's the implication there. So 0:15:25.560 --> 0:15:29.000 let's welcome Bloomberg Intelligence senior Gaming and Lodging analyst Brian Edgar. 0:15:29.080 --> 0:15:31.720 All Right, so delta varians running rampant here, who's getting 0:15:31.760 --> 0:15:35.000 hurt the most? So I think if you look at 0:15:35.120 --> 0:15:36.720 you know, they look at MGM as kind of a 0:15:36.720 --> 0:15:40.480 proxy for the industry, certainly like in the second quarter, 0:15:40.600 --> 0:15:43.200 and thinking about what that means, I would say, you know, 0:15:43.280 --> 0:15:46.200 the cow market in Asia got hit particularly hard where 0:15:46.200 --> 0:15:48.600 we're still at a half of twenty nine teams pre 0:15:48.680 --> 0:15:52.080 pandemic level of gaming activity. Part of that is because 0:15:52.120 --> 0:15:56.080 there was an outbreak in Guangdong Province, which is a 0:15:56.120 --> 0:15:59.440 major feeder market for Macau, and that definitely affected some 0:15:59.480 --> 0:16:01.360 of the traffic in for it. That's been an ongoing 0:16:01.400 --> 0:16:04.920 issue for McCallan could be uh for a while. So 0:16:05.080 --> 0:16:08.400 that resolves when moved to the US. Las Vegas actually 0:16:08.440 --> 0:16:10.920 has been on a bit of an upswing and close 0:16:11.000 --> 0:16:14.320 to her back to pre pandemic levels UH, and it 0:16:14.440 --> 0:16:18.440 benefited when the market went back to full resort documency 0:16:18.600 --> 0:16:21.440 back in June. And yes, the question going forward is 0:16:21.440 --> 0:16:25.080 whether or not um the arrival of the delta variant 0:16:25.080 --> 0:16:28.200 will affect what we expected to happen, which is, you know, 0:16:28.240 --> 0:16:31.640 a big uptick in convention activity as we get to 0:16:31.680 --> 0:16:33.520 the fall months, and that we really have to watch 0:16:33.520 --> 0:16:37.560 and see carefully. So what are the gaming companies in 0:16:37.560 --> 0:16:41.360 the big hotels telling the street about that convention business? 0:16:41.400 --> 0:16:44.040 Because when I think of Vegas again, pretty much every 0:16:44.040 --> 0:16:46.320 time I've been to Vegas, it's been with a convention. 0:16:46.880 --> 0:16:49.200 Um is that business going to come back in this 0:16:49.280 --> 0:16:51.600 year or or is it delta pushing out next year? 0:16:52.640 --> 0:16:54.880 So the bookings and again a lot of this is 0:16:54.880 --> 0:16:57.120 happening as you can understand in real time, but the 0:16:57.160 --> 0:17:00.840 bookings business on the books for a fall and going 0:17:00.840 --> 0:17:04.880 into twenty two have been actually quite strong. The real 0:17:04.960 --> 0:17:07.720 question is as we approached the actual dates, depending on 0:17:07.800 --> 0:17:13.080 how companies adjust their travel UH policies, etcetera, whether or 0:17:13.080 --> 0:17:15.439 not that by the resulting cancelations, but at least the 0:17:15.440 --> 0:17:18.360 book of business going into this period, as of the 0:17:18.400 --> 0:17:22.080 company's most recent comments during the earning season, we're actually 0:17:22.160 --> 0:17:25.280 quite favorable. So that leads to my next question, how 0:17:25.280 --> 0:17:28.280 many how much cancelation can these guys stand given the 0:17:28.280 --> 0:17:29.879 fact that you know that I think the industry has 0:17:29.960 --> 0:17:34.040 weathered being with all casino was shut back in uh 0:17:34.320 --> 0:17:39.400 last March through June and has endured pretty significant capacity invitations. 0:17:39.440 --> 0:17:42.199 Now that the markets back to fulcumancy, I guess you 0:17:42.200 --> 0:17:46.080 could argue that they've been stress tested quite well, notwithstanding 0:17:46.080 --> 0:17:49.280 what might happen with the delta variants. So you know, 0:17:49.359 --> 0:17:51.520 it is an issue. What has happened during the downturn 0:17:51.640 --> 0:17:54.720 is that of laws vecas from knights at a company 0:17:54.760 --> 0:17:58.480 like MGM that we that we would normally be occupied 0:17:59.520 --> 0:18:04.200 by goers has since taken up by casino customers, which 0:18:04.280 --> 0:18:06.960 is the less attractive business. It's lower price, and the 0:18:07.040 --> 0:18:09.160 question is whether or not they have to go back 0:18:09.160 --> 0:18:13.040 to depending on that lower price casino customer, that leisure customer, 0:18:13.440 --> 0:18:16.920 if the convention activity is somehow disrupted. All right, so 0:18:17.200 --> 0:18:19.880 we've done Macaumy, we'll go back there in Vegas. Now, 0:18:19.880 --> 0:18:23.520 how about the regional markets around the country. Um, you 0:18:23.520 --> 0:18:25.440 know they I think they did a little bit better. 0:18:25.440 --> 0:18:29.159 They're less dependent upon that convention business. What's the outlook 0:18:29.160 --> 0:18:31.520 for some of the regional gaming? Regional give me out 0:18:31.760 --> 0:18:34.280 is actually quite strong. I mean when we look at 0:18:34.840 --> 0:18:37.320 MGM in the second quarter and we compare all these 0:18:37.359 --> 0:18:41.000 results to the second quarter of because most of these 0:18:41.000 --> 0:18:44.439 casinos were closed during the second quarter of When we 0:18:44.480 --> 0:18:47.520 look at that, the regional gaming revenue is actually up 0:18:48.000 --> 0:18:51.760 about six percent versus the second quarter of nineteen, which 0:18:51.800 --> 0:18:54.399 is pretty impressive. And not only that, because the companies 0:18:54.440 --> 0:18:59.159 are still operating with significantly scaled back wayburn marketing UH, 0:18:59.200 --> 0:19:01.960 they seem some at least significant margin improvement. So we're 0:19:01.960 --> 0:19:05.200 not only seeing a return to pre pandemic levels of 0:19:05.320 --> 0:19:09.040 revenue in the regional markets, but also very strong margin 0:19:09.080 --> 0:19:12.240 games and even flow through because of the fact that 0:19:12.280 --> 0:19:15.840 the cost base has been um uh paired down so 0:19:15.880 --> 0:19:19.399 significantly during the pandemic. Most other industries are dealing with 0:19:19.560 --> 0:19:23.840 worker shortages, all have input cost increases, wage increases, et cetera. Um, 0:19:23.840 --> 0:19:27.280 how about these guys. Let's I mean, you can go abroad, 0:19:27.320 --> 0:19:29.520 but I was thinking more specifically of the US and like, 0:19:29.560 --> 0:19:31.480 who how what do they do to margins? Like how 0:19:31.480 --> 0:19:34.800 do they pass that on, et cetera. So I think 0:19:34.960 --> 0:19:37.439 what could happen And it's something that companies have mentioned 0:19:37.480 --> 0:19:41.000 is an expense um category that they're watching carefully. Is 0:19:41.600 --> 0:19:44.199 although most of the hotel companies, for example, we follow 0:19:44.480 --> 0:19:48.439 manage and receive revenue or profit based fees as a 0:19:48.520 --> 0:19:52.639 form of compensation uh for managing or franchising those at 0:19:52.640 --> 0:19:54.920 heels UM, you know there is a chance that's the 0:19:55.000 --> 0:19:58.360 so called house profit margins, the margins at the hotel 0:19:58.440 --> 0:20:01.680 owner level could be under some pressure to the extent 0:20:01.760 --> 0:20:04.720 that we see rising waiver costs. Of course, they're going 0:20:04.760 --> 0:20:07.600 into this period just as we said for the CASEDO 0:20:07.680 --> 0:20:11.840 company is having significantly reduced and uh right size their 0:20:11.880 --> 0:20:15.439 their cost structure and the labor structure to accommodate a 0:20:15.800 --> 0:20:17.960 what in many cases has been a smaller audience. So 0:20:18.320 --> 0:20:21.760 as Awkwudcity begins to return UM and as you see 0:20:21.960 --> 0:20:25.199 waiver and staffing levels returned to pre pandemic levels, you 0:20:25.240 --> 0:20:26.760 know this could be a cost issue. We're going to 0:20:26.800 --> 0:20:29.919 have to watch to the extent that waiver accounts for 0:20:30.000 --> 0:20:33.880 such a significant portion of the expense space of both 0:20:33.920 --> 0:20:37.520 hotel companies and casino companies. Great stuff, Brian super appreciate. 0:20:37.600 --> 0:20:40.960 Brian Egger Bloomberg Intelligence, a senior gaming and ladging analyst. 0:20:41.200 --> 0:20:43.119 Coming up on the program, we check in on the 0:20:43.160 --> 0:20:46.160 buoyant UK housing market and look at how hybrid working 0:20:46.200 --> 0:20:49.720 model is impacting European real estate investment trust. You are 0:20:49.800 --> 0:20:53.000 listening to Bloomberg Intelligence on a Bloomberg Radio providing in 0:20:53.040 --> 0:20:55.280 depth research and data on two thousand companies and a 0:20:55.359 --> 0:20:58.600 hundred and thirty industries. You can access Bloomberg Intelligence through 0:20:58.640 --> 0:21:00.840 b I go on the terminal and Alex Steele and 0:21:00.880 --> 0:21:03.120 I'm Paul Sweeney. It's thirty nine minutes past the hour, 0:21:03.280 --> 0:21:11.560 and this is Bloomberg. This is Bloomberg Intelligence with Alex 0:21:11.560 --> 0:21:15.560 Steel and Paul Sweeney on Bloomberg Radio. Mention the health 0:21:15.600 --> 0:21:18.560 of an economy in that it's critical to understand the 0:21:18.600 --> 0:21:20.920 health of its housing market. Let's do that for the UK. 0:21:21.800 --> 0:21:25.359 At one point, housing market was on fire, The rental 0:21:25.440 --> 0:21:29.120 market was on fire, the stocks related to housing building 0:21:29.160 --> 0:21:32.720 construction were on fire. Are they still well? As Shantara Bali, 0:21:33.200 --> 0:21:37.440 senior analyst from Bloomberg Intelligence for Business Services that joins us. Now, 0:21:37.840 --> 0:21:39.919 so just broad stroke, real quick, where's the state of 0:21:39.920 --> 0:21:43.760 the housing market within the UK? Hi? There? Um? Yes, 0:21:43.840 --> 0:21:47.240