1 00:00:00,280 --> 00:00:11,600 Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,680 --> 00:00:13,760 Speaker 1: with Scarletfoo and Paul Sweeney. 3 00:00:13,880 --> 00:00:16,000 Speaker 2: How do you think the FED is looking at tariffs? 4 00:00:16,120 --> 00:00:17,360 Speaker 2: The uncertainty of teriffs. 5 00:00:17,400 --> 00:00:19,400 Speaker 3: Let's take a look at the sectors and how. 6 00:00:19,239 --> 00:00:21,520 Speaker 2: They performed a lot of investors getting whip saled every 7 00:00:21,560 --> 00:00:23,880 Speaker 2: day by news events, breaking market. 8 00:00:23,560 --> 00:00:26,400 Speaker 1: Headlines and corporate news from across the globe. 9 00:00:26,400 --> 00:00:29,000 Speaker 3: Could we see a market disruption of market events? 10 00:00:29,080 --> 00:00:31,120 Speaker 2: So people just too exuberant out there? 11 00:00:31,240 --> 00:00:33,839 Speaker 3: You see some so called low quality stocks driving this 12 00:00:33,880 --> 00:00:34,680 Speaker 3: short term rally. 13 00:00:34,720 --> 00:00:40,120 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, YouTube, 14 00:00:40,240 --> 00:00:41,560 Speaker 1: and Bloomberg Originals. 15 00:00:42,600 --> 00:00:44,839 Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big 16 00:00:44,840 --> 00:00:47,120 Speaker 2: business stories impacting Wall Street and the global markets. 17 00:00:47,159 --> 00:00:49,240 Speaker 3: Each and every week, we provide in depth research and 18 00:00:49,320 --> 00:00:51,199 Speaker 3: data on some of the two thousand companies and one 19 00:00:51,280 --> 00:00:53,920 Speaker 3: hundred and thirty industries are analysts cover worldwide. 20 00:00:54,040 --> 00:00:56,400 Speaker 2: Today, we'll look at how Pfizer won a bidding war 21 00:00:56,440 --> 00:00:59,960 Speaker 2: against the Danish drugmaker Novo Nordisk for an obesity startup. 22 00:01:00,080 --> 00:01:02,480 Speaker 3: Plus, we'll break down how Visa and MasterCard reached a 23 00:01:02,520 --> 00:01:05,040 Speaker 3: deal with retailers after twenty years of litigation. 24 00:01:05,400 --> 00:01:07,120 Speaker 2: But first we begin with earnings from the media and 25 00:01:07,200 --> 00:01:08,520 Speaker 2: entertainment giant Walt Disney. 26 00:01:08,840 --> 00:01:11,680 Speaker 3: This week, Disney reported fourth quarter sales that fell short 27 00:01:11,680 --> 00:01:14,800 Speaker 3: of Wall Street estimates. The company also said expenses from 28 00:01:14,800 --> 00:01:17,600 Speaker 3: a slate of big budget movies, including a new Avatar picture, 29 00:01:17,720 --> 00:01:19,400 Speaker 3: will weigh on results for the coming quarter. 30 00:01:19,680 --> 00:01:21,840 Speaker 2: For more, we were joined by Githa rang Anathan, Bloomberg 31 00:01:21,840 --> 00:01:23,280 Speaker 2: Intelligence Senior media analyst. 32 00:01:23,520 --> 00:01:25,640 Speaker 3: We first asked Etha for her take on Disney's most 33 00:01:25,640 --> 00:01:26,800 Speaker 3: recent earnings report. 34 00:01:27,080 --> 00:01:30,000 Speaker 4: It came off as a little bit of a lackluster report. 35 00:01:30,120 --> 00:01:32,520 Speaker 4: I mean everything. If you look at the fundamental drivers 36 00:01:32,560 --> 00:01:35,800 Speaker 4: of the company, which is really the parks business brings 37 00:01:35,800 --> 00:01:38,520 Speaker 4: in about sixty percent of profits, things seem to be 38 00:01:38,560 --> 00:01:41,720 Speaker 4: going pretty strong there. We saw a thirteen percent jump 39 00:01:41,720 --> 00:01:44,600 Speaker 4: in operating profit for the fiscal fourth quarter. Again, the 40 00:01:44,640 --> 00:01:48,080 Speaker 4: guidance for twenty twenty six seems pretty good as well. 41 00:01:48,720 --> 00:01:51,360 Speaker 4: But really, you know, Disney really has this very very 42 00:01:51,360 --> 00:01:53,160 Speaker 4: tough balancing act. So on the one hand, they have 43 00:01:53,240 --> 00:01:55,160 Speaker 4: the parks business, they have the streaming business, which is 44 00:01:55,160 --> 00:01:58,240 Speaker 4: doing really well from a profitability standpoint, but to drag 45 00:01:58,280 --> 00:02:00,600 Speaker 4: it down, you have the linear TV networks, and then 46 00:02:00,640 --> 00:02:03,520 Speaker 4: you have the hit and misnature of you know, the 47 00:02:03,600 --> 00:02:07,000 Speaker 4: boy in the Hollywood studio business. So you know, they 48 00:02:07,040 --> 00:02:09,120 Speaker 4: have to contend with all of those different moving parts, 49 00:02:09,120 --> 00:02:11,040 Speaker 4: and I think that the dragged down from the TV 50 00:02:11,120 --> 00:02:14,000 Speaker 4: networks and the studios is kind of weighing a lot 51 00:02:14,040 --> 00:02:14,680 Speaker 4: on the narrative. 52 00:02:14,800 --> 00:02:17,240 Speaker 2: He can talk to us about some of their bundling 53 00:02:17,240 --> 00:02:20,600 Speaker 2: of all their streaming services, particularly that ESPN app, that 54 00:02:20,960 --> 00:02:23,040 Speaker 2: really they put a lot of their real valuable sports 55 00:02:23,040 --> 00:02:26,000 Speaker 2: programming on that ESPN app. How are the early results 56 00:02:26,000 --> 00:02:27,760 Speaker 2: from in terms of subscriber growth? 57 00:02:28,760 --> 00:02:31,600 Speaker 4: So they didn't give us any hard number there, Paul, 58 00:02:31,680 --> 00:02:33,800 Speaker 4: in terms of the number of subscribers that they got 59 00:02:33,919 --> 00:02:37,600 Speaker 4: on the ESPN Ultimate product, which is priced at you know, 60 00:02:37,639 --> 00:02:40,040 Speaker 4: twenty nine to ninety nine a month. But they did 61 00:02:40,080 --> 00:02:42,560 Speaker 4: talk about, you know, in general, that the traction has 62 00:02:42,600 --> 00:02:45,080 Speaker 4: been pretty good. They talked about the whole bundling strategy 63 00:02:45,080 --> 00:02:47,080 Speaker 4: because that is where Disney really wins. I mean, if 64 00:02:47,080 --> 00:02:50,000 Speaker 4: we've seen some of the numbers, you know, from Disney, 65 00:02:49,840 --> 00:02:53,040 Speaker 4: we know that forty percent of new subscribers actually take 66 00:02:53,120 --> 00:02:55,400 Speaker 4: the Disney bundle, and this is really going to be 67 00:02:55,480 --> 00:02:58,480 Speaker 4: the strategy for them going forward. Right. You get people 68 00:02:58,560 --> 00:03:01,040 Speaker 4: in with the bundle, and that's how you kind of 69 00:03:01,080 --> 00:03:05,040 Speaker 4: stem chin you're able to take price increases. So it's 70 00:03:05,080 --> 00:03:08,000 Speaker 4: really going to be the main driver for earnings growth 71 00:03:08,000 --> 00:03:11,079 Speaker 4: for them going forward. And that's exactly what they indicated, Paul. 72 00:03:11,080 --> 00:03:13,480 Speaker 3: I can't remember who said this, but it's so true 73 00:03:13,520 --> 00:03:16,400 Speaker 3: that the history of media is about bundling and unbundling. 74 00:03:16,639 --> 00:03:18,480 Speaker 3: We went through this period where everyone cut the cord 75 00:03:18,720 --> 00:03:21,079 Speaker 3: and everyone unbundled, and now we're back to bundling again. 76 00:03:21,120 --> 00:03:24,359 Speaker 3: Although it's you know, in these discrete groups where Disney 77 00:03:24,440 --> 00:03:26,960 Speaker 3: might bundle Disney Plus an ESPN Plus together and then 78 00:03:26,960 --> 00:03:29,160 Speaker 3: if you are a T mobile subscriber, you might get 79 00:03:29,160 --> 00:03:30,320 Speaker 3: some other options. 80 00:03:29,919 --> 00:03:32,400 Speaker 2: And here, but here's my point. That's fine. Is the 81 00:03:32,440 --> 00:03:35,320 Speaker 2: consumer better off? And my answer is absolutely not. 82 00:03:35,440 --> 00:03:40,120 Speaker 3: It's too confusing. It's way too confusing, Gita when it 83 00:03:40,120 --> 00:03:42,320 Speaker 3: comes to bundling. How much more can they do? Though, 84 00:03:42,360 --> 00:03:44,000 Speaker 3: I mean, I see what you're saying about how it's 85 00:03:44,040 --> 00:03:46,440 Speaker 3: paying off right now, but I mean, can they continue 86 00:03:46,480 --> 00:03:49,120 Speaker 3: to innovate on their bundling or is have we reached 87 00:03:49,120 --> 00:03:49,760 Speaker 3: the limits of it? 88 00:03:50,960 --> 00:03:53,080 Speaker 4: I don't think we've reached the limits at all. Scarletts. 89 00:03:53,080 --> 00:03:55,880 Speaker 4: So I think what they're ultimately what they're ultimately aiming 90 00:03:55,920 --> 00:03:58,520 Speaker 4: for with their ESPN product, and you know, they just 91 00:03:58,600 --> 00:04:01,800 Speaker 4: introduced the streaming product of months ago. I think ultimately 92 00:04:01,840 --> 00:04:05,360 Speaker 4: they wanted to kind of become the premier sports destinations. 93 00:04:05,400 --> 00:04:07,800 Speaker 4: So you know, ultimately, I wouldn't be surprised if you 94 00:04:07,880 --> 00:04:10,680 Speaker 4: see a Fox or an NBC or you know, even 95 00:04:10,720 --> 00:04:13,600 Speaker 4: maybe an Amazon kind of feeding in all of their 96 00:04:13,640 --> 00:04:15,600 Speaker 4: apps so that you go to this one stop shop 97 00:04:15,720 --> 00:04:17,920 Speaker 4: for you know, ESPN and you're able to see all 98 00:04:17,960 --> 00:04:20,840 Speaker 4: different kinds of sports content. Because you're absolutely right, there's 99 00:04:20,880 --> 00:04:24,160 Speaker 4: way too much of fragmentation becoming a great source of 100 00:04:24,160 --> 00:04:27,320 Speaker 4: friction for you know, the average consumer. And so I 101 00:04:27,320 --> 00:04:29,440 Speaker 4: think they're going to seek out a lot more different 102 00:04:29,440 --> 00:04:32,400 Speaker 4: bundling opportunities. We're already seeing them kind of do something 103 00:04:32,480 --> 00:04:36,000 Speaker 4: with ESPN Ultimate and Fox One, which is Fox's streaming 104 00:04:36,040 --> 00:04:38,000 Speaker 4: product that they also just introduced a few months ago. 105 00:04:38,160 --> 00:04:40,719 Speaker 4: So they're going to look to partner with different media 106 00:04:40,800 --> 00:04:44,719 Speaker 4: platforms across the ecosystem, and I think that is going 107 00:04:44,760 --> 00:04:47,520 Speaker 4: to be a source of, you know, a great upside 108 00:04:47,560 --> 00:04:49,040 Speaker 4: opportunity for them. Eventually. 109 00:04:49,240 --> 00:04:51,839 Speaker 3: Is everyone willing to play ball on something like that, Kita. 110 00:04:51,960 --> 00:04:53,480 Speaker 3: Or is there someone who's going to say, you know what, 111 00:04:53,560 --> 00:04:55,520 Speaker 3: you can't get me in here, and I own or 112 00:04:55,600 --> 00:04:58,120 Speaker 3: I have the rights over X number of NFL games. 113 00:04:59,560 --> 00:05:01,560 Speaker 4: Actually that that's what we're seeing right now. There is 114 00:05:01,600 --> 00:05:05,239 Speaker 4: the standoff going going on between Disney and YouTube TV, 115 00:05:05,720 --> 00:05:08,080 Speaker 4: and it's really all again, it's just a you know, 116 00:05:08,240 --> 00:05:12,080 Speaker 4: game of chicken here. So you know, when it comes 117 00:05:12,120 --> 00:05:14,600 Speaker 4: to sports content, I have to say Disney has the 118 00:05:14,680 --> 00:05:17,000 Speaker 4: upper hand a little bit. So if you just kind 119 00:05:17,040 --> 00:05:20,039 Speaker 4: of look at sports viewing in the United States, Disney 120 00:05:20,040 --> 00:05:22,800 Speaker 4: has about forty percent of sports viewing just with you know, 121 00:05:22,920 --> 00:05:28,000 Speaker 4: Markie rights tied to all major leagues, you know, college football, NFL, NBA, MLB, 122 00:05:28,120 --> 00:05:30,479 Speaker 4: they have it all. So I think it becomes a 123 00:05:30,480 --> 00:05:33,640 Speaker 4: little harder to say no to them. But again, never 124 00:05:33,680 --> 00:05:34,320 Speaker 4: say never. 125 00:05:34,440 --> 00:05:36,520 Speaker 2: All right, Keith, I'm reluctant to ask this question, but 126 00:05:36,560 --> 00:05:38,400 Speaker 2: I feel like I have to. What's the latest on 127 00:05:38,600 --> 00:05:40,000 Speaker 2: Bob Iger's succession plan. 128 00:05:41,839 --> 00:05:44,560 Speaker 4: Yeah, this is the big thing that we're all looking 129 00:05:44,680 --> 00:05:47,880 Speaker 4: at in fiscal twenty twenty six. So James Gorman, who's 130 00:05:47,960 --> 00:05:50,280 Speaker 4: kind of heading up this whole succession planning committee Paul 131 00:05:50,560 --> 00:05:52,279 Speaker 4: has said that you know the board will be out 132 00:05:52,320 --> 00:05:56,599 Speaker 4: with the decision by the end of March, so Bob 133 00:05:56,680 --> 00:06:00,520 Speaker 4: Eiger's contract comes to an end by the end of 134 00:06:00,760 --> 00:06:03,680 Speaker 4: twenty twenty six, so hopefully we do have some kind 135 00:06:03,680 --> 00:06:06,039 Speaker 4: of clarity on that. Right now, it's really looking like 136 00:06:06,080 --> 00:06:08,040 Speaker 4: it's going to be internal candidates. I mean, there was 137 00:06:08,080 --> 00:06:11,200 Speaker 4: some rumors and buzz about whether they were looking externally, 138 00:06:11,240 --> 00:06:12,680 Speaker 4: but I think they're going to kind of keep it 139 00:06:12,760 --> 00:06:13,960 Speaker 4: internal our. 140 00:06:13,880 --> 00:06:17,240 Speaker 2: Thanks to GEITHA. Rongorath and Bloomberg Intelligence Senior Media analyst. 141 00:06:17,160 --> 00:06:19,159 Speaker 3: We move next to the retail space, and with the 142 00:06:19,200 --> 00:06:21,640 Speaker 3: holiday shopping season now upon us, it is the most 143 00:06:21,640 --> 00:06:23,360 Speaker 3: important time of the year for these retailers. 144 00:06:23,520 --> 00:06:25,440 Speaker 2: For more on what we can expect in this sector, 145 00:06:25,600 --> 00:06:28,400 Speaker 2: I was joined by Mary Ross Gilbert Bloomberg Intelligence senior 146 00:06:28,440 --> 00:06:31,880 Speaker 2: equity anamals covering retail. First, ask Mary how the holiday 147 00:06:31,920 --> 00:06:34,159 Speaker 2: season is shaping up and what companies are saying. 148 00:06:34,520 --> 00:06:38,760 Speaker 5: If you look at how the holiday shopping is shaping up, 149 00:06:38,960 --> 00:06:41,839 Speaker 5: I think it looks I think it looks very positive. 150 00:06:41,960 --> 00:06:44,640 Speaker 5: So I think we are going to see an increase 151 00:06:44,680 --> 00:06:48,719 Speaker 5: and particularly for apparel retailers, that's usually like the largest 152 00:06:48,760 --> 00:06:51,159 Speaker 5: category that consumers. If you look at those that have 153 00:06:51,240 --> 00:06:54,640 Speaker 5: been pulled by all the holiday service surveys that have 154 00:06:54,680 --> 00:06:58,159 Speaker 5: been conducted, including the National Retail Federation, then they have 155 00:06:58,240 --> 00:07:03,960 Speaker 5: over eight hundred over eight eighty two hundred respondents in 156 00:07:04,000 --> 00:07:07,960 Speaker 5: their surveys, and the other ones are pretty sizable, you know, 157 00:07:08,040 --> 00:07:12,800 Speaker 5: relatively speaking, around five thousand. So they're showing that there's 158 00:07:12,840 --> 00:07:16,520 Speaker 5: definitely a higher percentage of shoppers wanting at peril and 159 00:07:16,600 --> 00:07:19,720 Speaker 5: accessories for gifts. So that should be good news for apparel. 160 00:07:19,920 --> 00:07:24,120 Speaker 5: But gen Z is planning to cut back on their 161 00:07:24,240 --> 00:07:29,520 Speaker 5: overall holidays spending by that, you know, by twenty three percent. 162 00:07:30,080 --> 00:07:31,800 Speaker 5: Millennials just one percent. 163 00:07:32,240 --> 00:07:35,520 Speaker 2: Wow, So the gen Z these are the younger folks, 164 00:07:36,240 --> 00:07:40,560 Speaker 2: maybe tougher time finding a job maybe, you know, student 165 00:07:40,640 --> 00:07:42,040 Speaker 2: debt is that kind of the driver there. 166 00:07:42,520 --> 00:07:44,360 Speaker 5: I think that could be part of it. Yeah, it 167 00:07:44,400 --> 00:07:48,240 Speaker 5: could be the job market situation that might be happening 168 00:07:48,240 --> 00:07:51,000 Speaker 5: there because these are really like the seventeen to twenty 169 00:07:51,040 --> 00:07:55,040 Speaker 5: eight year olds. So we have been hearing some you know, 170 00:07:55,640 --> 00:07:59,520 Speaker 5: talk about some of these latest graduates, you know, having 171 00:07:59,520 --> 00:08:01,960 Speaker 5: it finding a job. I think it's just probably going 172 00:08:02,040 --> 00:08:05,880 Speaker 5: to take longer because generally unemployment is still very low. 173 00:08:06,120 --> 00:08:09,239 Speaker 5: But we're seeing resilience. If you look at the data 174 00:08:09,400 --> 00:08:13,800 Speaker 5: so far with Bloomberg Second measure for apparel retailers and 175 00:08:13,920 --> 00:08:17,800 Speaker 5: department stores and off Price, we're seeing good sales coming 176 00:08:17,800 --> 00:08:20,640 Speaker 5: in for the third quarter, and they'll start reporting their 177 00:08:20,720 --> 00:08:23,800 Speaker 5: numbers in the next few weeks. So I think we're 178 00:08:23,800 --> 00:08:26,280 Speaker 5: off to a good start, and I think Black Friday 179 00:08:26,320 --> 00:08:30,440 Speaker 5: sales are already happening. Macy's US out with fifty percent 180 00:08:30,520 --> 00:08:33,600 Speaker 5: off on their private label brand product and they expect 181 00:08:33,600 --> 00:08:37,360 Speaker 5: to have other drops every week. Wow, So everyone's focused 182 00:08:37,440 --> 00:08:41,320 Speaker 5: on starting now yep, with promotions. 183 00:08:41,679 --> 00:08:45,200 Speaker 2: So Mary, you know, economists talk about a K shaped 184 00:08:45,200 --> 00:08:48,240 Speaker 2: economy out there, some consumers, maybe the ones that own 185 00:08:48,520 --> 00:08:51,880 Speaker 2: assets like stocks and bonds in real estate doing more 186 00:08:51,960 --> 00:08:55,840 Speaker 2: than good and kind of everybody else struggling a little bit, 187 00:08:55,840 --> 00:08:59,679 Speaker 2: particularly with inflation. How does that get reflected in retail sales? 188 00:08:59,720 --> 00:09:02,520 Speaker 2: Does it mean you just kind of if you're an investor, 189 00:09:02,559 --> 00:09:05,160 Speaker 2: look at on Amazon Target where I can get some 190 00:09:05,160 --> 00:09:05,920 Speaker 2: some some deals. 191 00:09:07,160 --> 00:09:09,520 Speaker 5: Yeah, and that's actually what's happening, and that's why you 192 00:09:09,559 --> 00:09:14,679 Speaker 5: see let's say, pretty robust sales overall coming out of 193 00:09:14,679 --> 00:09:18,520 Speaker 5: off Price, you know, so think of TJ Max, Ross 194 00:09:18,559 --> 00:09:22,000 Speaker 5: stores and Burlington stores, and Burlington's at the very low end. 195 00:09:22,240 --> 00:09:25,640 Speaker 5: If you look at credit card delinquencies or you know, 196 00:09:25,800 --> 00:09:28,760 Speaker 5: those rates, and a lot of these companies that we're 197 00:09:28,800 --> 00:09:33,000 Speaker 5: tracking represent the credit cardholders for like department stores and 198 00:09:33,120 --> 00:09:37,320 Speaker 5: for some select apparel brands such as Gap et cetera. 199 00:09:37,400 --> 00:09:40,480 Speaker 5: And when you look at that data, delinquencies are actually 200 00:09:40,640 --> 00:09:45,000 Speaker 5: lower this year versus a year ago, but not for 201 00:09:45,080 --> 00:09:47,920 Speaker 5: the very low income, which kind of speaks to what 202 00:09:47,960 --> 00:09:52,800 Speaker 5: you're talking about and inflation. Actually those are up in 203 00:09:52,880 --> 00:09:56,400 Speaker 5: the teams, you know, for the very low income consumer, 204 00:09:56,520 --> 00:09:58,080 Speaker 5: So think like under fifty K. 205 00:09:58,840 --> 00:10:02,280 Speaker 2: How about e commerce, Mary, I know the pandemic folks 206 00:10:02,320 --> 00:10:04,760 Speaker 2: are saying kind of pulled forward maybe four or five 207 00:10:04,840 --> 00:10:08,640 Speaker 2: years of share shift from bricks and mortar to a 208 00:10:08,800 --> 00:10:12,600 Speaker 2: digital what's the e commerce growth story look like these days? 209 00:10:13,440 --> 00:10:16,439 Speaker 5: You know, econ growth is looking strong when we look 210 00:10:16,440 --> 00:10:18,840 Speaker 5: at the data, like I said, for the third quarter 211 00:10:19,320 --> 00:10:22,880 Speaker 5: that we're seeing from Bloomberg second measure, it's showing actually 212 00:10:23,000 --> 00:10:27,400 Speaker 5: online sales were stronger at the department stores except for 213 00:10:27,480 --> 00:10:31,880 Speaker 5: Coals Coals online businesses, I mean not their online business, 214 00:10:31,880 --> 00:10:37,000 Speaker 5: but actually their credit customer is shopping less, like in 215 00:10:37,040 --> 00:10:39,240 Speaker 5: the double digits less, so that's kind of an issue 216 00:10:39,240 --> 00:10:43,120 Speaker 5: for them, but generally we're seeing stronger pool with online 217 00:10:43,160 --> 00:10:47,840 Speaker 5: sales there. Now, there is also a delineation between the 218 00:10:47,920 --> 00:10:51,800 Speaker 5: type of consumer. If it's gen Z, they tend to 219 00:10:51,880 --> 00:10:55,560 Speaker 5: prefer shopping more in store, and we see that with 220 00:10:56,080 --> 00:11:00,600 Speaker 5: Abercrombie and Fitch's Hollister brand, so they are about seventy 221 00:11:00,640 --> 00:11:03,760 Speaker 5: percent of their sales are generated online. And then it's 222 00:11:03,920 --> 00:11:08,839 Speaker 5: the inverse when you look at their namesake brand, Abercrombie, 223 00:11:08,920 --> 00:11:13,640 Speaker 5: because that consumer is those are millennials, and millennials prefer 224 00:11:13,720 --> 00:11:16,959 Speaker 5: to shop online, so sixty percent of their sales are 225 00:11:17,000 --> 00:11:19,360 Speaker 5: being generated online versus in store. 226 00:11:19,679 --> 00:11:22,760 Speaker 3: That was Mary Ross Gilbert Bloomberg Intelligence, senior equity analyst 227 00:11:22,760 --> 00:11:25,120 Speaker 3: who covers retail. Coming up, we'll take a look at 228 00:11:25,120 --> 00:11:28,120 Speaker 3: why Tyson Foods says it expects flat profits for twenty 229 00:11:28,160 --> 00:11:28,640 Speaker 3: twenty six. 230 00:11:28,720 --> 00:11:31,400 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 231 00:11:31,440 --> 00:11:33,560 Speaker 2: depth research and data on two thousand companies in one 232 00:11:33,600 --> 00:11:34,640 Speaker 2: hundred and thirty industries. 233 00:11:35,000 --> 00:11:38,120 Speaker 3: You can access Bloomberg Intelligence via Bigo on the terminal. 234 00:11:38,200 --> 00:11:39,360 Speaker 3: I'm Scarlet Foo. 235 00:11:39,200 --> 00:11:41,400 Speaker 2: And I'm Paul Sweeney. This is Bloomberg. 236 00:11:46,120 --> 00:11:51,040 Speaker 1: This is Bloomberg Intelligence with Scarletfoo and Paul Sweeney on 237 00:11:51,200 --> 00:11:52,280 Speaker 1: Bloomberg Radio. 238 00:11:53,040 --> 00:11:55,360 Speaker 2: We move now to some news in the pharmaceutical space. 239 00:11:55,440 --> 00:11:57,760 Speaker 3: This week, Pfizer won the bidding war against the Danish 240 00:11:57,800 --> 00:12:00,160 Speaker 3: drugmaker Novo Nordisk for the obesity start up. 241 00:12:00,200 --> 00:12:00,640 Speaker 2: Met Sarah. 242 00:12:00,960 --> 00:12:03,000 Speaker 3: It's a bid to catch up to rival drug makers 243 00:12:03,000 --> 00:12:06,080 Speaker 3: after failing to compete with its own weight loss medications 244 00:12:06,120 --> 00:12:07,199 Speaker 3: for moret We were joined. 245 00:12:07,000 --> 00:12:10,000 Speaker 2: By Sam Fazelli, Bloomberg Intelligence, director of Research for Global 246 00:12:10,000 --> 00:12:12,000 Speaker 2: Industries and senior pharmaceuticals analyst. 247 00:12:12,240 --> 00:12:14,680 Speaker 3: We began by asking Sam to tell us why Fiser 248 00:12:14,760 --> 00:12:15,360 Speaker 3: one this deal. 249 00:12:16,080 --> 00:12:18,720 Speaker 6: Nova's deal had the risk of not being able to 250 00:12:18,800 --> 00:12:22,880 Speaker 6: pass due to competition competition issues FTC issues, and it 251 00:12:22,960 --> 00:12:25,880 Speaker 6: sounds like the FTC had had given metzera call saying look, 252 00:12:26,240 --> 00:12:28,400 Speaker 6: if you go with that, there is a risky won't close. 253 00:12:29,000 --> 00:12:31,240 Speaker 6: So do whatever you think is the right thing for 254 00:12:31,280 --> 00:12:33,200 Speaker 6: your shareholders. And they did. In the end, the files 255 00:12:33,240 --> 00:12:34,160 Speaker 6: it did a bit spit. 256 00:12:34,520 --> 00:12:37,400 Speaker 3: Right, So Novo Nordisk one in a way in that 257 00:12:37,480 --> 00:12:39,920 Speaker 3: Pfizer is paying up more. Does that actually work in 258 00:12:40,000 --> 00:12:43,439 Speaker 3: Nova Nordisks favor or does it? Is it still as 259 00:12:44,120 --> 00:12:46,520 Speaker 3: desperate as it was before to look for some new 260 00:12:46,600 --> 00:12:49,400 Speaker 3: catalysts in the obesity market. 261 00:12:50,080 --> 00:12:53,400 Speaker 6: I mean, I'm not going to call Novo desperate. I 262 00:12:53,400 --> 00:12:55,480 Speaker 6: think they have assets in there. I think they wanted 263 00:12:55,480 --> 00:13:01,160 Speaker 6: to add some more options to the their their sales 264 00:13:01,240 --> 00:13:05,560 Speaker 6: reps bags over time, So I wouldn't call them desperate. 265 00:13:05,640 --> 00:13:08,680 Speaker 6: But they're obviously by going after this, they did say 266 00:13:08,720 --> 00:13:11,120 Speaker 6: that we need more assets in our bag. So and 267 00:13:11,200 --> 00:13:13,560 Speaker 6: Lily wasn't in the game. So it just gives them. 268 00:13:13,679 --> 00:13:17,920 Speaker 6: That gives you that flavor that they are and I 269 00:13:17,920 --> 00:13:20,319 Speaker 6: think the market's telling you that. Look at the divergence 270 00:13:20,320 --> 00:13:22,720 Speaker 6: of the share price performance of Lily versus never noticed 271 00:13:23,640 --> 00:13:28,439 Speaker 6: that there's the market favoring the drugs that Lily's got 272 00:13:28,440 --> 00:13:30,920 Speaker 6: on the market, and to compete they needed to get 273 00:13:30,920 --> 00:13:33,079 Speaker 6: some more. So I think this is not the end 274 00:13:33,160 --> 00:13:35,640 Speaker 6: for Novo at all in this place. There's lots of 275 00:13:35,720 --> 00:13:40,239 Speaker 6: other interesting Obviously, the assets coming up with different mechanisms. 276 00:13:40,240 --> 00:13:42,120 Speaker 6: That's the thing that I think the company is now 277 00:13:42,160 --> 00:13:43,959 Speaker 6: going to have to think about rather than trying to 278 00:13:44,000 --> 00:13:46,080 Speaker 6: go after the same mechanism all the time. 279 00:13:46,720 --> 00:13:50,880 Speaker 2: So, Sam, all these big big cap pharmaceutical companies that 280 00:13:50,880 --> 00:13:53,280 Speaker 2: you've covered for decades, I kind of always thought they 281 00:13:53,320 --> 00:13:57,200 Speaker 2: were big, diversified portfolios of lots of different drugs and therapeutics. 282 00:13:57,200 --> 00:13:59,240 Speaker 2: And you know, but wait, when I look at your 283 00:13:59,440 --> 00:14:02,559 Speaker 2: stocks year, it seems like there's halves and have nots. 284 00:14:02,559 --> 00:14:06,520 Speaker 2: If you have obesity exposure, the stocks are up, and 285 00:14:06,520 --> 00:14:09,079 Speaker 2: if you don't, they're down. Is that kind of how 286 00:14:09,120 --> 00:14:11,760 Speaker 2: your world's evolved into over the last several years. 287 00:14:12,520 --> 00:14:14,439 Speaker 6: I would just give you one little caveat to the 288 00:14:14,600 --> 00:14:18,280 Speaker 6: Astrosenica Sosenica. I think it's doing fine. And then they 289 00:14:18,320 --> 00:14:20,880 Speaker 6: have an obesity asset, but it's not their major game. 290 00:14:21,120 --> 00:14:25,840 Speaker 6: Their big plays in oncology. Cardiovascular is coming is there 291 00:14:25,920 --> 00:14:30,600 Speaker 6: and they're adding it to it. So, yes, obesity has 292 00:14:30,640 --> 00:14:34,000 Speaker 6: been the talk of this past twenty twenty five. I 293 00:14:34,000 --> 00:14:35,920 Speaker 6: think you will still be the talk of twenty twenty six. 294 00:14:36,200 --> 00:14:38,800 Speaker 6: But there's a lot more going on in fharma, neuroscience, 295 00:14:39,280 --> 00:14:42,720 Speaker 6: diseases of the brain, diseases of mental health are getting 296 00:14:42,800 --> 00:14:49,080 Speaker 6: much more attention. Cardiovascular aside from obesity, is getting quite 297 00:14:49,120 --> 00:14:51,080 Speaker 6: a lot of attention in heart to treat hype atension, 298 00:14:51,120 --> 00:14:53,360 Speaker 6: et cetera. I have to tell you, I don't think 299 00:14:53,360 --> 00:14:57,760 Speaker 6: there's an area, perhaps antibiotics set aside that is not 300 00:14:57,840 --> 00:15:02,200 Speaker 6: getting a significant amount of progress across some former company 301 00:15:02,280 --> 00:15:03,200 Speaker 6: somewhere is. 302 00:15:03,200 --> 00:15:07,400 Speaker 3: What happened with Metsarah, Novo, Nordisk Andfiser, an unabashed victory 303 00:15:07,440 --> 00:15:09,200 Speaker 3: for Eli Lilly. I mean, does it just kind of 304 00:15:09,480 --> 00:15:12,080 Speaker 3: keep on moving forward or does any of this kind 305 00:15:12,160 --> 00:15:14,160 Speaker 3: of hurt Eli Lilly's market position? 306 00:15:14,640 --> 00:15:16,200 Speaker 6: No. I mean, at the end of the day, there'll 307 00:15:16,240 --> 00:15:19,000 Speaker 6: be multiple players in this space as that are now 308 00:15:19,080 --> 00:15:22,640 Speaker 6: too at least, and I think Eli Lily is currently 309 00:15:22,760 --> 00:15:25,880 Speaker 6: very well placed with the assets that they have to compete, 310 00:15:25,920 --> 00:15:29,200 Speaker 6: and they're showing that they're competing very very effectively and 311 00:15:29,360 --> 00:15:32,640 Speaker 6: in some cases winning market share from Nova not disc our. 312 00:15:32,560 --> 00:15:35,320 Speaker 2: Thanks to Sam Fazelli, Bloomberg Intelligence Director of Research for 313 00:15:35,320 --> 00:15:38,080 Speaker 2: Global Industries and senior pharmaceuticals. 314 00:15:37,400 --> 00:15:40,280 Speaker 3: Analyst, we moved to news from the multinational food company 315 00:15:40,280 --> 00:15:41,040 Speaker 3: Tyson Foods. 316 00:15:41,160 --> 00:15:41,520 Speaker 6: This week. 317 00:15:41,520 --> 00:15:44,280 Speaker 2: Tyson said it expects flat profits for twenty twenty six. 318 00:15:44,600 --> 00:15:47,440 Speaker 2: This comes as a company's chicken segment continues to help 319 00:15:47,480 --> 00:15:48,840 Speaker 2: offset its beef losses. 320 00:15:48,920 --> 00:15:51,080 Speaker 3: So we had to check in with Jen Bartashi's Bloomberg 321 00:15:51,120 --> 00:15:53,840 Speaker 3: Intelligence senior analysts for retail, staples and packaged food. 322 00:15:54,200 --> 00:15:56,280 Speaker 2: First, they asked Jen for her take on Tyson foods 323 00:15:56,320 --> 00:15:57,680 Speaker 2: guidance for twenty twenty six. 324 00:15:58,280 --> 00:16:00,920 Speaker 6: Nova's deal had the risk of not being able to 325 00:16:01,000 --> 00:16:05,000 Speaker 6: pass due to competition competition issue with FTC issues, and 326 00:16:05,040 --> 00:16:08,080 Speaker 6: it sounds like the FTC had had given Metzera call saying, look, 327 00:16:08,480 --> 00:16:10,640 Speaker 6: if you go with that, there is a risky won't close, 328 00:16:11,200 --> 00:16:13,480 Speaker 6: So do whatever you think is the right thing for 329 00:16:13,520 --> 00:16:15,440 Speaker 6: your shareholders. And they did in the end, and fires 330 00:16:15,440 --> 00:16:16,360 Speaker 6: it did up its bit. 331 00:16:16,760 --> 00:16:19,600 Speaker 3: Right, So Novo Nordisk one in a way in that 332 00:16:19,720 --> 00:16:22,160 Speaker 3: Pfizer is paying up more. Does that actually work in 333 00:16:22,200 --> 00:16:25,680 Speaker 3: Nova nordisks favor or does it? Is it still as 334 00:16:26,320 --> 00:16:28,760 Speaker 3: desperate as it was before to look for some new 335 00:16:28,800 --> 00:16:30,800 Speaker 3: catalysts in the obesity marketing. 336 00:16:31,240 --> 00:16:34,560 Speaker 6: I mean, I'm not going to call Novo desperate. I 337 00:16:34,560 --> 00:16:36,600 Speaker 6: think they have assets in there. I think they wanted 338 00:16:36,640 --> 00:16:41,320 Speaker 6: to add some more options to the their sales reps 339 00:16:41,480 --> 00:16:45,400 Speaker 6: bags over time, So I wouldn't call them desperate. But 340 00:16:45,480 --> 00:16:48,480 Speaker 6: they're obviously by going after this, they did say that 341 00:16:48,520 --> 00:16:51,160 Speaker 6: we need more assets in our bag. So and Lily 342 00:16:51,240 --> 00:16:53,520 Speaker 6: wasn't in the game. So it just gives them. That 343 00:16:53,880 --> 00:16:57,560 Speaker 6: gives you that flavor that they are and I think 344 00:16:57,600 --> 00:16:59,800 Speaker 6: the market's telling you that. Look at the divergence of 345 00:16:59,800 --> 00:17:04,480 Speaker 6: the press performance of Lily Versus never noticed that there's 346 00:17:05,080 --> 00:17:07,960 Speaker 6: the market favoring the drugs that Lily has got on 347 00:17:07,960 --> 00:17:10,760 Speaker 6: the market, and to compete they needed to get some more. 348 00:17:10,920 --> 00:17:13,119 Speaker 6: So I think this is not the end for Novo 349 00:17:13,240 --> 00:17:15,800 Speaker 6: at all. In this place. There's lots of other interesting 350 00:17:15,840 --> 00:17:20,320 Speaker 6: OBCD acids coming up with different mechanisms. That's the thing 351 00:17:20,359 --> 00:17:22,000 Speaker 6: that I think the company is now going to have 352 00:17:22,080 --> 00:17:23,800 Speaker 6: to think about rather than trying to go after the 353 00:17:23,840 --> 00:17:25,520 Speaker 6: same mechanism all the time. 354 00:17:25,800 --> 00:17:29,040 Speaker 2: Sam, all these big cap pharmaceutical companies that you've covered 355 00:17:29,040 --> 00:17:31,360 Speaker 2: for decades, I kind of always thought they were big 356 00:17:31,400 --> 00:17:35,000 Speaker 2: diversified portfolios of lots of different drugs and therapeutics and 357 00:17:35,560 --> 00:17:37,600 Speaker 2: you know, but boy, when I look at your stocks 358 00:17:37,600 --> 00:17:40,280 Speaker 2: this year, it seems like there's halves and have nots. 359 00:17:40,280 --> 00:17:44,000 Speaker 2: If you have obesity exposure, the stocks are up, and 360 00:17:44,040 --> 00:17:46,560 Speaker 2: if you don't, they're down. Is that kind of how 361 00:17:46,600 --> 00:17:49,280 Speaker 2: your world's evolved into over the last several years. 362 00:17:49,840 --> 00:17:53,600 Speaker 6: I would just give you one little caveat to that. ASA. So, Senica, 363 00:17:53,640 --> 00:17:55,919 Speaker 6: I think it's doing fine. And then they have an 364 00:17:55,960 --> 00:17:58,880 Speaker 6: OBCD asset, but it's not their major game. They're they're 365 00:17:58,920 --> 00:18:03,560 Speaker 6: they're big plays in oncology. Cardiovascular is there and they're 366 00:18:03,600 --> 00:18:08,280 Speaker 6: adding it to it. So, yes, obesity has been the 367 00:18:08,359 --> 00:18:11,640 Speaker 6: talk of this past twenty twenty five. I think you'll 368 00:18:11,680 --> 00:18:13,880 Speaker 6: still be the talk of twenty twenty six. But there's 369 00:18:13,920 --> 00:18:17,240 Speaker 6: a lot more going on in pharma, neuroscience. Diseases of 370 00:18:17,280 --> 00:18:21,000 Speaker 6: the brain, diseases of mental health are getting much more attention. 371 00:18:21,480 --> 00:18:26,680 Speaker 6: Cardiovascular aside from obesity, is getting quite a lot of 372 00:18:26,720 --> 00:18:29,520 Speaker 6: attention in heart to treat hype potension, et cetera. I 373 00:18:29,560 --> 00:18:31,439 Speaker 6: have to tell you, I don't think there's an area, 374 00:18:31,720 --> 00:18:37,000 Speaker 6: perhaps antibiotics set aside, that is not getting a significant 375 00:18:37,040 --> 00:18:40,080 Speaker 6: amount of progress across some farmer company somewhere. 376 00:18:40,680 --> 00:18:44,520 Speaker 3: Is what happened with Matsarah, noad, Artisk Andfiser an unabashed 377 00:18:44,560 --> 00:18:46,600 Speaker 3: victory for Eli Lilly. I mean, does it just kind 378 00:18:46,600 --> 00:18:49,040 Speaker 3: of keep on moving forward or does any of this 379 00:18:49,480 --> 00:18:51,719 Speaker 3: kind of hurt Eli Lilly's market position. 380 00:18:52,160 --> 00:18:53,720 Speaker 6: No. I mean, at the end of the day, there'll 381 00:18:53,760 --> 00:18:56,520 Speaker 6: be multiple players in this space as that are now 382 00:18:56,600 --> 00:18:59,959 Speaker 6: too at least, and I think Eli Lily is currently 383 00:19:00,320 --> 00:19:03,400 Speaker 6: very well placed with the assets that they have to compete, 384 00:19:03,440 --> 00:19:06,720 Speaker 6: and they're showing that they're competing very very effectively and 385 00:19:06,880 --> 00:19:09,000 Speaker 6: in some cases winning market share from Romer. 386 00:19:09,040 --> 00:19:12,880 Speaker 3: Notice our thanks to Jen Bartashis Bloomberg Intelligence senior analysts 387 00:19:12,960 --> 00:19:14,920 Speaker 3: covering retail staples and packaged foods. 388 00:19:15,160 --> 00:19:17,600 Speaker 2: We move now to quarterly earnings from the global fintech 389 00:19:17,600 --> 00:19:19,280 Speaker 2: company Circle Internet Group. 390 00:19:19,440 --> 00:19:21,679 Speaker 3: This week, shares of the company fell on concern that 391 00:19:21,760 --> 00:19:24,680 Speaker 3: declining interest rates will weigh on future returns, and this 392 00:19:25,080 --> 00:19:28,080 Speaker 3: overshadowed better than expected third quarter sales and earnings. 393 00:19:28,240 --> 00:19:30,719 Speaker 2: For more. We were joined by Emily Mason, Bloomberg Fintech 394 00:19:30,760 --> 00:19:31,600 Speaker 2: and crypto reporter. 395 00:19:31,840 --> 00:19:34,359 Speaker 3: We began by asking Emily why lower interest rates from 396 00:19:34,359 --> 00:19:36,520 Speaker 3: the Federal Reserve would be a concern for a company 397 00:19:36,600 --> 00:19:37,080 Speaker 3: like Circle. 398 00:19:37,480 --> 00:19:41,080 Speaker 7: So Circle issues USDC and that's a stable quin peg 399 00:19:41,119 --> 00:19:43,280 Speaker 7: to the US dollar and they maintain that peg by 400 00:19:43,280 --> 00:19:47,359 Speaker 7: holding reserves in cash and short term treasuries. They keep 401 00:19:47,480 --> 00:19:49,960 Speaker 7: the yield from the treasuries and that's kind of how 402 00:19:49,960 --> 00:19:52,639 Speaker 7: they make money and that's where most of their revenue 403 00:19:52,680 --> 00:19:55,239 Speaker 7: comes from. So if interest rates go down, you know, 404 00:19:55,280 --> 00:19:57,600 Speaker 7: that shows up in earnings and that causes some concern 405 00:19:58,000 --> 00:20:00,000 Speaker 7: for investors and analysts. 406 00:20:00,000 --> 00:20:01,520 Speaker 2: What have their recent results been like. 407 00:20:01,760 --> 00:20:04,479 Speaker 7: I mean, this is their second time reporting since going public. 408 00:20:04,560 --> 00:20:08,600 Speaker 7: They benefited heavily from all the hype around stable coin, 409 00:20:08,680 --> 00:20:10,800 Speaker 7: especially before the Genius Act was passed, and their stock 410 00:20:10,840 --> 00:20:14,600 Speaker 7: performed really well. It's kind of been down since their 411 00:20:14,720 --> 00:20:17,399 Speaker 7: summer highs, and that's kind of because of the concern 412 00:20:17,440 --> 00:20:20,359 Speaker 7: from the interest revenue, but also because of some of 413 00:20:20,359 --> 00:20:23,119 Speaker 7: the distribution partners that they have they pay. They have 414 00:20:23,160 --> 00:20:26,920 Speaker 7: revenue sharing agreements with coinbase, for example, who helps distribute 415 00:20:26,920 --> 00:20:27,320 Speaker 7: their coin. 416 00:20:28,280 --> 00:20:31,280 Speaker 3: So if this company for now is kind of a 417 00:20:31,320 --> 00:20:34,000 Speaker 3: proxy for a money market fund because it's earning's track 418 00:20:34,080 --> 00:20:37,760 Speaker 3: short term treasury yields, it must need to do more 419 00:20:37,800 --> 00:20:40,600 Speaker 3: to diversify its revenue streams. What is it looking at? 420 00:20:41,119 --> 00:20:43,080 Speaker 7: Yeah, that's what they're doing. And then if you talk 421 00:20:43,119 --> 00:20:45,480 Speaker 7: to Jeremy Alaiir, who's the CEO, he'll kind of say 422 00:20:45,480 --> 00:20:47,560 Speaker 7: that lower interest rates are actually good for the company 423 00:20:47,600 --> 00:20:50,520 Speaker 7: because it means that there's higher velocity of money, there's 424 00:20:50,560 --> 00:20:53,679 Speaker 7: more investment, and then people want faster moving money like 425 00:20:53,680 --> 00:20:55,800 Speaker 7: stable coins, and they also might want to use products 426 00:20:55,840 --> 00:20:59,720 Speaker 7: like their Circle Payments network, which recently is experimenting with 427 00:20:59,720 --> 00:21:02,639 Speaker 7: like a staplecoin payouts product, which like helps people can 428 00:21:03,200 --> 00:21:06,120 Speaker 7: helps people to pay out globally with USDC, and they're 429 00:21:06,160 --> 00:21:09,600 Speaker 7: trying to move more USDC volume onto their own platform 430 00:21:09,680 --> 00:21:12,879 Speaker 7: instead of working with distribution partners like coinbase, and that 431 00:21:12,960 --> 00:21:15,320 Speaker 7: kind of could help them as well. But they see 432 00:21:15,320 --> 00:21:17,960 Speaker 7: the lower interest rates as a positive thing. And also 433 00:21:18,000 --> 00:21:22,119 Speaker 7: the USD circulating supply is increasing very heavily as they 434 00:21:22,119 --> 00:21:24,840 Speaker 7: add new partners, so that also kind of could potentially 435 00:21:24,840 --> 00:21:26,160 Speaker 7: offset the lower interest rates. 436 00:21:26,680 --> 00:21:31,840 Speaker 2: Emily, your beat is fintech and crypto reporter, two things 437 00:21:31,960 --> 00:21:35,760 Speaker 2: that didn't exist even just a handfull of years ago. 438 00:21:36,400 --> 00:21:39,080 Speaker 2: Talk to us about broadly the kind of the intersection 439 00:21:39,240 --> 00:21:43,240 Speaker 2: of the growing crypto market and applications like fintech. 440 00:21:44,040 --> 00:21:46,600 Speaker 7: Yeah, I mean, I think what's kind of the most 441 00:21:46,600 --> 00:21:49,240 Speaker 7: interesting right now is like fintech when it came onto 442 00:21:49,240 --> 00:21:53,160 Speaker 7: the scene was sort of like building very sleek interfaces 443 00:21:53,200 --> 00:21:56,840 Speaker 7: on top of his existing financial infrastructure, and then crypto's 444 00:21:56,880 --> 00:21:59,960 Speaker 7: pitch is much more sort of like rebuilding the financial 445 00:22:00,040 --> 00:22:03,879 Speaker 7: infrastructure with things like blockchains, and now the conversation is 446 00:22:03,960 --> 00:22:06,640 Speaker 7: kind of about bringing the traditional world and the traditional 447 00:22:06,720 --> 00:22:11,160 Speaker 7: financial institute infrastructure together with crypto rails and circles. Really 448 00:22:11,200 --> 00:22:13,399 Speaker 7: kind of sitting at the center of that and trying 449 00:22:13,440 --> 00:22:16,919 Speaker 7: to bring stave a coin and like integrate that with 450 00:22:17,119 --> 00:22:21,240 Speaker 7: how traditional markets work, and that involves the coming together 451 00:22:21,280 --> 00:22:23,680 Speaker 7: on both sides, Like traditional firms kind of have to 452 00:22:23,800 --> 00:22:27,720 Speaker 7: upgrade and make their systems interoperable with cryptotechnology, and then 453 00:22:27,760 --> 00:22:30,159 Speaker 7: crypto firms also have to kind of move into a 454 00:22:30,200 --> 00:22:32,760 Speaker 7: regulated environment. And that's been something that Jeremy Alaier has 455 00:22:32,760 --> 00:22:34,400 Speaker 7: talked about for a long time, like he really thinks 456 00:22:34,400 --> 00:22:37,040 Speaker 7: that crypto needs to be regulated and Circle that's been 457 00:22:37,080 --> 00:22:38,639 Speaker 7: a big part of their narrative is like we are 458 00:22:38,720 --> 00:22:40,360 Speaker 7: kind of like the suits in the room, and we're 459 00:22:40,359 --> 00:22:42,119 Speaker 7: going to be regulated and that's how we're going to 460 00:22:42,280 --> 00:22:43,399 Speaker 7: go about doing business. 461 00:22:43,720 --> 00:22:46,520 Speaker 3: You're kind of the most tradify of the DeFi world. 462 00:22:46,640 --> 00:22:49,880 Speaker 3: In other words, if we want to get technical, this 463 00:22:49,920 --> 00:22:51,960 Speaker 3: is going to be a dumb question, Emily, But we've 464 00:22:51,960 --> 00:22:54,439 Speaker 3: seen how bigcoin and the rest of the cryptocurrencies had 465 00:22:54,440 --> 00:22:58,199 Speaker 3: a pretty rough October. They're struggling to regain momentum. All 466 00:22:58,240 --> 00:23:00,480 Speaker 3: these digital coins are not the same as stupid coins. 467 00:23:00,480 --> 00:23:05,000 Speaker 3: But is that shift in sentiment and conviction on Bitcoin 468 00:23:05,160 --> 00:23:08,320 Speaker 3: and all coins, especially from institutions, affecting demand it off 469 00:23:08,320 --> 00:23:11,040 Speaker 3: for stable coins or are those two just not linked. 470 00:23:11,440 --> 00:23:13,280 Speaker 7: I mean, stable coin is used a lot of the times, 471 00:23:13,280 --> 00:23:16,120 Speaker 7: like anytime there's a lot of trading happening in crypto 472 00:23:16,240 --> 00:23:18,359 Speaker 7: like and in crypto tokens like stable coin's kind of 473 00:23:18,440 --> 00:23:21,040 Speaker 7: benefit because they're used to like move in and out 474 00:23:21,080 --> 00:23:23,960 Speaker 7: of those markets. The stable coin the whole point is 475 00:23:23,960 --> 00:23:26,359 Speaker 7: that it's like a stable currency. It's pegged to the dollar, 476 00:23:26,400 --> 00:23:29,240 Speaker 7: it's one for one, so the price of it really 477 00:23:29,280 --> 00:23:32,280 Speaker 7: shouldn't be impacted at all by like crypto market movements. 478 00:23:32,320 --> 00:23:32,880 Speaker 8: But it does. 479 00:23:32,920 --> 00:23:36,240 Speaker 3: It does demand affect it or does sorry, does the 480 00:23:36,280 --> 00:23:40,200 Speaker 3: spillover involve like demand waning for stable corn or increasing 481 00:23:40,200 --> 00:23:40,800 Speaker 3: for stable coin. 482 00:23:41,200 --> 00:23:43,480 Speaker 7: I think where like the demand growth for stable coin 483 00:23:43,560 --> 00:23:45,879 Speaker 7: is going to come from is like it moving out 484 00:23:45,920 --> 00:23:48,480 Speaker 7: of a tool just for crypto trading. It's going to 485 00:23:48,520 --> 00:23:51,040 Speaker 7: be like people in countries where the local currency is 486 00:23:51,119 --> 00:23:53,520 Speaker 7: volatile wanting to hold stable coin, or people wanting to 487 00:23:53,560 --> 00:23:56,400 Speaker 7: actually use it for payments or like stable coin payouts. 488 00:23:56,440 --> 00:23:59,000 Speaker 7: Like if you're a US based company and you're employing 489 00:23:59,040 --> 00:24:01,040 Speaker 7: a bunch of people around the word world who want 490 00:24:01,040 --> 00:24:03,800 Speaker 7: to hold a stable currency like the dollar, the stablecoin 491 00:24:03,880 --> 00:24:05,320 Speaker 7: is the best way to access it, then you can 492 00:24:05,320 --> 00:24:09,280 Speaker 7: pay them that way. Like that's where growth from. That's 493 00:24:09,280 --> 00:24:11,200 Speaker 7: where demand for stable coin is going to come from. 494 00:24:11,480 --> 00:24:14,680 Speaker 7: I don't think it's like super tied to the trading necessarily, 495 00:24:14,840 --> 00:24:17,040 Speaker 7: Like people use staplecoin to get in and out of 496 00:24:17,080 --> 00:24:19,840 Speaker 7: crypto market, so you know they might see more volume 497 00:24:19,880 --> 00:24:23,720 Speaker 7: of trading activity is high, but their journeys are kind 498 00:24:23,720 --> 00:24:25,960 Speaker 7: of becoming less linked o. 499 00:24:26,000 --> 00:24:28,760 Speaker 2: Right thanks to Emily Mason, Bloomberg Fintech and Crypto. 500 00:24:28,440 --> 00:24:30,919 Speaker 3: Reporter coming up, It's the end of an era at 501 00:24:30,960 --> 00:24:33,840 Speaker 3: Berkshire Hathway, we'll break down why. CEO and billionaire investor 502 00:24:33,880 --> 00:24:36,160 Speaker 3: Warren Buffett says he is quote going quiet. 503 00:24:36,280 --> 00:24:39,320 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 504 00:24:39,400 --> 00:24:41,720 Speaker 2: depth research and data on two thousand companies in one 505 00:24:41,840 --> 00:24:42,800 Speaker 2: hundred and thirty industries. 506 00:24:42,840 --> 00:24:45,760 Speaker 3: You can access Bloomberg Intelligence via big on the terminal. 507 00:24:45,800 --> 00:24:48,879 Speaker 2: I'm Scarlet Foo and I'm Paul Sweeney, and this is Bloomberg. 508 00:24:56,560 --> 00:25:00,560 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and to Paul 509 00:25:00,600 --> 00:25:02,680 Speaker 1: Sweeney on Bloomberg Radio. 510 00:25:03,359 --> 00:25:05,200 Speaker 2: The move next to news at Berkshire Hathaway. 511 00:25:05,320 --> 00:25:08,480 Speaker 3: Berkshire Hathaway CEO and billionaire investor Warren Buffett said he 512 00:25:08,560 --> 00:25:11,120 Speaker 3: is quote going quiet, marking the end of an era. 513 00:25:11,359 --> 00:25:13,760 Speaker 3: Buffett also announced his plan to donate more than one 514 00:25:13,760 --> 00:25:17,200 Speaker 3: point three billion dollars to four family foundations, with plans 515 00:25:17,240 --> 00:25:18,480 Speaker 3: to quote step up. 516 00:25:18,400 --> 00:25:20,720 Speaker 2: The pace for more. I was joined by Matthew Palozola, 517 00:25:20,760 --> 00:25:24,320 Speaker 2: Bloomberg Intelligence senior analyst covering the insurance business. I first 518 00:25:24,400 --> 00:25:27,440 Speaker 2: asked Matthew his thoughts on Buffett's latest announcement. 519 00:25:27,840 --> 00:25:29,520 Speaker 9: We've known it, I mean this, so we knew this 520 00:25:29,640 --> 00:25:32,120 Speaker 9: letter was coming out. He does this every year around Thanksgiving. 521 00:25:32,359 --> 00:25:35,399 Speaker 9: We also knew he was stepping down as CEO, so 522 00:25:36,400 --> 00:25:40,320 Speaker 9: not huge surprise in this letter. I think the going 523 00:25:40,400 --> 00:25:43,280 Speaker 9: quiet thing was kind of to everyone a little bit 524 00:25:43,280 --> 00:25:47,200 Speaker 9: by surprise. I think maybe the thought was, hey, he's 525 00:25:47,640 --> 00:25:49,920 Speaker 9: going to he's stepping back a CEO, but maybe he'll 526 00:25:50,000 --> 00:25:52,280 Speaker 9: kind of be out there in the public and he's 527 00:25:52,280 --> 00:25:55,000 Speaker 9: still chairman, so maybe we'd still hear more from him. 528 00:25:55,320 --> 00:25:56,760 Speaker 9: A little while ago he said he wasn't going to 529 00:25:56,800 --> 00:25:58,840 Speaker 9: speak at the meeting, and now he's going to kind 530 00:25:58,840 --> 00:26:02,200 Speaker 9: of focus on his philanthropic work. And he's also a 531 00:26:02,280 --> 00:26:04,160 Speaker 9: ninety five years old, he's maybe a little tired. 532 00:26:03,960 --> 00:26:06,639 Speaker 2: Yeah, exactly. And he's going to donate more than one 533 00:26:06,640 --> 00:26:10,280 Speaker 2: point three billion dollars to four family foundations and plans 534 00:26:10,320 --> 00:26:12,600 Speaker 2: to quote step up the pace of his Childable giving 535 00:26:12,800 --> 00:26:15,040 Speaker 2: to his kids' foundations while he's still alive. So that 536 00:26:15,160 --> 00:26:17,200 Speaker 2: seems to be the point of life. He is any 537 00:26:17,240 --> 00:26:21,960 Speaker 2: reason to think that the business strategies the operations of 538 00:26:22,440 --> 00:26:25,000 Speaker 2: Hathaway may change now that he has kind of stepped 539 00:26:25,000 --> 00:26:26,720 Speaker 2: back on another step, I guess, so, I don't. 540 00:26:26,520 --> 00:26:30,879 Speaker 9: Think so right away. So he is always praising his successor, 541 00:26:30,960 --> 00:26:34,480 Speaker 9: greg Abel, talking about how he maintains the ethos of Berkshire, 542 00:26:34,520 --> 00:26:36,520 Speaker 9: and they'll be doing the same thing. I think Abel 543 00:26:36,680 --> 00:26:39,920 Speaker 9: walks a fine line now where I think over the 544 00:26:40,000 --> 00:26:42,240 Speaker 9: next couple of years he will want to put his 545 00:26:42,280 --> 00:26:44,840 Speaker 9: own stamp and make a name for himself, but also 546 00:26:45,800 --> 00:26:50,359 Speaker 9: not stray too far from what has led to this 547 00:26:50,480 --> 00:26:53,400 Speaker 9: massive value creation of Berkshire. So I don't think anything 548 00:26:53,520 --> 00:26:57,160 Speaker 9: dramatic happens in the near term. You know, we talked 549 00:26:57,200 --> 00:26:59,639 Speaker 9: about this. I think in the past the amount of 550 00:26:59,680 --> 00:27:03,160 Speaker 9: capital they're sitting on and Able is a good capital allocator, 551 00:27:03,160 --> 00:27:06,040 Speaker 9: at least according to Buffett. Ye, maybe something happens there 552 00:27:06,160 --> 00:27:08,840 Speaker 9: special dividend or something like that. You know, no guarantees 553 00:27:08,880 --> 00:27:11,280 Speaker 9: on any of that stuff, but I could see able 554 00:27:11,320 --> 00:27:13,359 Speaker 9: wanting to put that kind of stamp on the company. 555 00:27:13,119 --> 00:27:14,800 Speaker 2: Because again what we learned I guess from the last 556 00:27:14,840 --> 00:27:17,200 Speaker 2: quarterly released was the cash is now three hundred and 557 00:27:17,240 --> 00:27:20,800 Speaker 2: eighty two billion dollars. You know, it's a number that's 558 00:27:20,960 --> 00:27:23,840 Speaker 2: you know, most portfolio matters. What would know where to 559 00:27:23,840 --> 00:27:26,000 Speaker 2: start get boggles of mine. I think even in the 560 00:27:26,160 --> 00:27:29,120 Speaker 2: letter he had mentioned, uh, there's just not a lot 561 00:27:29,119 --> 00:27:31,280 Speaker 2: of things that move the needle for them. So they 562 00:27:31,320 --> 00:27:34,560 Speaker 2: bought a twelve billion dollar company in Alleghany a couple 563 00:27:34,560 --> 00:27:36,679 Speaker 2: of years ago, doesn't really move the needle that much. 564 00:27:36,800 --> 00:27:40,040 Speaker 2: Help the insurance businesses grow a little bit, but overall 565 00:27:40,080 --> 00:27:43,000 Speaker 2: for the company, not dramatic. They bought this eleven billion 566 00:27:43,040 --> 00:27:46,399 Speaker 2: dollar chemical business from Occidental. You know these are these 567 00:27:46,440 --> 00:27:49,199 Speaker 2: are ten and twelve billion dollar deals, but they're just 568 00:27:49,280 --> 00:27:51,720 Speaker 2: not moving the needle for the company. So there's not 569 00:27:51,720 --> 00:27:55,200 Speaker 2: not a ton they can do too dramatically. Historically, why 570 00:27:55,320 --> 00:27:59,080 Speaker 2: is Warren and the company what's been their thought about 571 00:27:59,119 --> 00:28:00,600 Speaker 2: returning cash this sh shareholders? 572 00:28:00,680 --> 00:28:02,240 Speaker 9: The thought has been, we don't want to do that, 573 00:28:02,400 --> 00:28:07,399 Speaker 9: right even said, you know, Berkshire shareholders have foregone dividends 574 00:28:07,440 --> 00:28:09,800 Speaker 9: for a reinvestment in America. Something that I forgot the 575 00:28:09,800 --> 00:28:12,760 Speaker 9: exact line, and that was Buffets. 576 00:28:12,960 --> 00:28:13,120 Speaker 4: Uh. 577 00:28:13,160 --> 00:28:15,359 Speaker 9: He likes collecting dividends, he doesn't like paying them. I 578 00:28:15,400 --> 00:28:18,919 Speaker 9: think he always thought we are the best allocators of this. 579 00:28:19,000 --> 00:28:21,919 Speaker 9: So if you're if you're a owner of Berkshire shares, 580 00:28:22,320 --> 00:28:24,199 Speaker 9: would you rather have some money or would you rather 581 00:28:24,240 --> 00:28:27,160 Speaker 9: have warm Buffett invest that money for you? I think 582 00:28:27,240 --> 00:28:29,159 Speaker 9: over the past couple of years, again, they've had so 583 00:28:29,240 --> 00:28:31,600 Speaker 9: much money that it's been tough for them to invest 584 00:28:31,640 --> 00:28:34,679 Speaker 9: it in effective ways. But that's that's been the philosophy. 585 00:28:34,840 --> 00:28:37,640 Speaker 2: Yeah, because I mean it's I guess my response would 586 00:28:37,640 --> 00:28:40,480 Speaker 2: be I can put it in cash too and get 587 00:28:40,480 --> 00:28:44,360 Speaker 2: similar rates of return to you. And I guess that 588 00:28:44,920 --> 00:28:47,320 Speaker 2: when it's ten twenty fifty hundred million dollars line around, 589 00:28:47,520 --> 00:28:48,760 Speaker 2: not that big of account argument. 590 00:28:48,840 --> 00:28:51,360 Speaker 9: Now, it's you know, you know, it's significant, and it 591 00:28:51,480 --> 00:28:53,400 Speaker 9: helped their earnings over the past couple of years. Just 592 00:28:53,880 --> 00:28:57,720 Speaker 9: getting four percent on that was a dramatic tailwind to 593 00:28:57,800 --> 00:29:01,560 Speaker 9: their earnings. So you know, it didn't do much for 594 00:29:01,600 --> 00:29:04,320 Speaker 9: the stock. After Buffett said he was leaving, that's been 595 00:29:04,400 --> 00:29:06,560 Speaker 9: the thing that's weighed on it more than anything else. 596 00:29:06,640 --> 00:29:10,240 Speaker 9: But an you'll see short term rates going down, so 597 00:29:11,280 --> 00:29:13,760 Speaker 9: that tail wind diminishing. I mean, I think there is 598 00:29:13,800 --> 00:29:17,560 Speaker 9: a school of thought that Berkshire, you know, not the 599 00:29:17,600 --> 00:29:21,280 Speaker 9: same without Buffett, but just maybe not as good at 600 00:29:21,600 --> 00:29:24,520 Speaker 9: almost all of their things. That's one school of thought. 601 00:29:25,600 --> 00:29:29,280 Speaker 9: I could see other ones where you know, still able, 602 00:29:29,320 --> 00:29:31,960 Speaker 9: maybe takes a different direction. So that's another maybe catalyst 603 00:29:32,000 --> 00:29:34,280 Speaker 9: for the shares. But you know, it's it's a kind 604 00:29:34,280 --> 00:29:36,760 Speaker 9: of darker time for Burshure. 605 00:29:36,880 --> 00:29:39,640 Speaker 2: And what's Warren's ownership stake in the company. 606 00:29:40,200 --> 00:29:41,640 Speaker 6: So I don't know this of my head. 607 00:29:41,680 --> 00:29:43,720 Speaker 9: I don't remember controlling, Yeah, oh for sure. 608 00:29:44,440 --> 00:29:46,640 Speaker 2: And you're not gonna have an activist investor come in 609 00:29:46,640 --> 00:29:48,960 Speaker 2: here and say this is just a poor allocation. 610 00:29:48,840 --> 00:29:51,840 Speaker 9: Though it would be impossible. He owns too much in 611 00:29:51,880 --> 00:29:55,040 Speaker 9: the The A shares I believe are ten thousand votes 612 00:29:55,080 --> 00:29:58,360 Speaker 9: to a B share, he owns most of them. He 613 00:29:58,440 --> 00:30:01,320 Speaker 9: will he's going to step up the amount he's giving away, 614 00:30:01,320 --> 00:30:03,320 Speaker 9: but he still owns too much for anyone else to 615 00:30:03,320 --> 00:30:08,680 Speaker 9: step in. And should he die in his will, he 616 00:30:08,760 --> 00:30:12,360 Speaker 9: would I think it's over ten years. His ownership goes 617 00:30:12,400 --> 00:30:16,200 Speaker 9: to these foundations run by his children, who I can't 618 00:30:16,280 --> 00:30:20,040 Speaker 9: imagine would you let them kind of immediately fall into 619 00:30:20,320 --> 00:30:22,400 Speaker 9: the hands of some sort of actives investor. I think 620 00:30:22,520 --> 00:30:24,560 Speaker 9: he'd set a time frame of over ten years that 621 00:30:24,600 --> 00:30:26,880 Speaker 9: he'd want that stuff divested. But he does want to 622 00:30:26,920 --> 00:30:28,520 Speaker 9: divest it. He doesn't want them to just hold on 623 00:30:28,560 --> 00:30:28,840 Speaker 9: to it. 624 00:30:29,240 --> 00:30:33,360 Speaker 3: Our thanks to Matthew Polozola, Bloomberg Intelligence Senior analyst covering insurance. 625 00:30:33,080 --> 00:30:35,160 Speaker 2: We move next to the credit card space. 626 00:30:35,080 --> 00:30:37,920 Speaker 3: This week Visa MasterCard. We should deal with retailers after 627 00:30:38,000 --> 00:30:40,560 Speaker 3: twenty years of litigation, so for more we'd brought in 628 00:30:40,800 --> 00:30:44,600 Speaker 3: Justin Teresi, Bloomberg Intelligence antitrust litigation and policy analyst. 629 00:30:44,680 --> 00:30:47,800 Speaker 2: We first asked Justin to break down Visa MasterCard case. 630 00:30:48,440 --> 00:30:51,360 Speaker 8: This case has been going on for about twenty years now. 631 00:30:51,640 --> 00:30:53,560 Speaker 8: I started before I went to law school, which was 632 00:30:53,600 --> 00:30:55,480 Speaker 8: a long time ago. There are salt and pepper in 633 00:30:55,520 --> 00:30:58,120 Speaker 8: my hair, so we're talking about a really, really ancient case. 634 00:30:58,200 --> 00:31:01,200 Speaker 8: But basically with a lot of folks don't know is 635 00:31:01,200 --> 00:31:03,880 Speaker 8: when you have those really valuable premium cards, right the 636 00:31:03,920 --> 00:31:06,840 Speaker 8: airline miles cards or the cash back cards, there's a 637 00:31:06,880 --> 00:31:09,320 Speaker 8: fee associated with those, and it's the merchants who are 638 00:31:09,360 --> 00:31:12,520 Speaker 8: eating that fee, typically around three or four percent, depending 639 00:31:12,600 --> 00:31:14,400 Speaker 8: on the varying swipe fee when you use it at 640 00:31:14,440 --> 00:31:18,200 Speaker 8: a register. So merchants, no surprise, they're upset about that, right. 641 00:31:18,280 --> 00:31:21,880 Speaker 8: So Visa, you know, big litigation here, the accusation being 642 00:31:21,880 --> 00:31:23,760 Speaker 8: that they fix those fees and that you know, the 643 00:31:23,800 --> 00:31:26,080 Speaker 8: merchants are basically the ones eating the costs there. So 644 00:31:26,720 --> 00:31:29,920 Speaker 8: big deal announced between Visa, master Card and merchants would 645 00:31:29,960 --> 00:31:32,160 Speaker 8: make a little bit more flexibility on the part of 646 00:31:32,240 --> 00:31:34,920 Speaker 8: merchants here. They could basically say, hey, we're going to 647 00:31:35,000 --> 00:31:37,320 Speaker 8: take the lower tier version of a Visa or a 648 00:31:37,360 --> 00:31:40,120 Speaker 8: master Card, but we're maybe not going to accept airline 649 00:31:40,160 --> 00:31:43,719 Speaker 8: miles cards or cash back cards. And then alternatively, they 650 00:31:43,760 --> 00:31:46,200 Speaker 8: also might have the option of passing those fees onto you, 651 00:31:46,320 --> 00:31:48,800 Speaker 8: the consumer at the register if they do take them. 652 00:31:48,840 --> 00:31:51,560 Speaker 8: So some big changes here and how things are shaping up. 653 00:31:51,600 --> 00:31:53,640 Speaker 2: Well, I've noticed in the last couple of three years 654 00:31:53,800 --> 00:31:56,120 Speaker 2: they are doing that. Yeah, I mean almost every merchant 655 00:31:56,160 --> 00:31:57,680 Speaker 2: I go to now, I don't know if it's just 656 00:31:57,680 --> 00:31:59,880 Speaker 2: a state of New Jersey thing, but they're saying, hey, 657 00:31:59,880 --> 00:32:01,880 Speaker 2: here's a cash price, here's the credit card price. 658 00:32:01,960 --> 00:32:04,800 Speaker 8: Yeah, Paul, this is actually a really interesting issue here 659 00:32:04,840 --> 00:32:07,360 Speaker 8: because state by state there's a lot of differences in 660 00:32:07,480 --> 00:32:09,600 Speaker 8: how this actually plays out in New York, and I 661 00:32:09,640 --> 00:32:11,360 Speaker 8: see this too when I go to my dry cleaner. 662 00:32:11,360 --> 00:32:13,760 Speaker 8: It's like, oh, maybe that's four percent more if I'm 663 00:32:13,800 --> 00:32:16,320 Speaker 8: going to use my credit card here. That's actually illegal 664 00:32:16,360 --> 00:32:18,360 Speaker 8: in New York right now to do that, But the 665 00:32:18,440 --> 00:32:20,440 Speaker 8: enforcement seems to be lacking that this is a new 666 00:32:20,480 --> 00:32:22,600 Speaker 8: law pass in twenty twenty four. There has to be 667 00:32:22,600 --> 00:32:25,240 Speaker 8: an upfront kind of price on a tag if they're 668 00:32:25,240 --> 00:32:27,200 Speaker 8: going to pass a surch charge onto the consumer. In 669 00:32:27,240 --> 00:32:30,400 Speaker 8: New York, Massachusetts, Connecticut, you can't serve charge at all. 670 00:32:30,520 --> 00:32:33,480 Speaker 8: So if this settlement goes through, you know, that's a 671 00:32:33,480 --> 00:32:34,240 Speaker 8: big question mark. 672 00:32:34,280 --> 00:32:36,920 Speaker 3: Too interesting that you say that the surcharge is illegal 673 00:32:36,960 --> 00:32:39,000 Speaker 3: in New York, because what I've seen is the dry 674 00:32:39,000 --> 00:32:40,880 Speaker 3: cleaner will say, we'll give you a discount if you 675 00:32:40,960 --> 00:32:43,600 Speaker 3: pay in cash. Here's the regular price, but you get 676 00:32:43,600 --> 00:32:45,440 Speaker 3: the discount if you pay cash. So it's no longer 677 00:32:45,440 --> 00:32:48,000 Speaker 3: a surcharge. Justin You said that this has been a 678 00:32:48,040 --> 00:32:51,800 Speaker 3: case that's been you know, around for twenty some odd years. Yes, 679 00:32:51,960 --> 00:32:53,560 Speaker 3: this settlement, is it just going to get caught up 680 00:32:53,560 --> 00:32:55,040 Speaker 3: a more legal lightmire. 681 00:32:55,240 --> 00:32:57,400 Speaker 8: You know, it really could. So. Last year there was 682 00:32:57,400 --> 00:32:59,760 Speaker 8: a first attempt to this This is the second try now, right, 683 00:32:59,800 --> 00:33:02,080 Speaker 8: And the big issue that blew up the deal last 684 00:33:02,160 --> 00:33:04,720 Speaker 8: year is that the smaller merchants kind of pushed for 685 00:33:04,760 --> 00:33:06,640 Speaker 8: the terms that they set in the first place, and 686 00:33:06,680 --> 00:33:09,240 Speaker 8: big folks like Walmart, et cetera kind of got ice 687 00:33:09,320 --> 00:33:11,920 Speaker 8: out from the discussions on that. It seems like that 688 00:33:12,000 --> 00:33:15,160 Speaker 8: might have happened again here. The National Retail Federation was 689 00:33:15,200 --> 00:33:17,800 Speaker 8: out saying, wait a minute, what kind of business practice 690 00:33:17,800 --> 00:33:20,160 Speaker 8: would this be for us to say, hey, we're going 691 00:33:20,240 --> 00:33:22,040 Speaker 8: to take these cards and not those cards. And they're 692 00:33:22,040 --> 00:33:24,960 Speaker 8: also criticizing the feed concessions that were part of this 693 00:33:25,040 --> 00:33:27,080 Speaker 8: deal too for the next five years or so. So 694 00:33:27,520 --> 00:33:29,320 Speaker 8: I think there's still a lot of questions here. There's 695 00:33:29,360 --> 00:33:32,000 Speaker 8: probably enough changes from last year's deal to get it 696 00:33:32,080 --> 00:33:35,360 Speaker 8: over the finish line, but there's a big period here 697 00:33:35,400 --> 00:33:37,240 Speaker 8: with objectors who are going to be weighing, you know, 698 00:33:37,320 --> 00:33:39,680 Speaker 8: what they think of the deal. And honestly, the judge 699 00:33:39,760 --> 00:33:41,440 Speaker 8: last year she said, look, you guys can do a 700 00:33:41,480 --> 00:33:44,000 Speaker 8: lot more than you're offering to do in this deal. 701 00:33:44,040 --> 00:33:46,040 Speaker 8: So is this enough? That's going to be a huge 702 00:33:46,120 --> 00:33:47,720 Speaker 8: question moving into an approval hearing. 703 00:33:48,120 --> 00:33:50,840 Speaker 2: What are the dollars dollar amounts we're talking about here. 704 00:33:51,120 --> 00:33:53,560 Speaker 8: Yeah, you know, so it's quadrupled according to the National 705 00:33:53,600 --> 00:33:56,360 Speaker 8: Retail Federation since two thousand and nine. But if you 706 00:33:56,360 --> 00:33:59,120 Speaker 8: said MasterCard, they've got eighty percent of this market for 707 00:33:59,440 --> 00:34:03,440 Speaker 8: the card fees, right, One hundred eleven billion dollars last 708 00:34:03,480 --> 00:34:06,600 Speaker 8: year alone collected in these wipe fees according to the NRF, 709 00:34:06,720 --> 00:34:09,799 Speaker 8: So really massive, massive. But you know, these companies are 710 00:34:09,800 --> 00:34:13,240 Speaker 8: also diversifying their streams, right, They're looking into digital wallets 711 00:34:13,239 --> 00:34:16,120 Speaker 8: and other payment platforms too. So there's a lot more 712 00:34:16,120 --> 00:34:17,799 Speaker 8: on the table now than there was when this was 713 00:34:17,800 --> 00:34:19,560 Speaker 8: first brought back in two thousand and five. 714 00:34:19,760 --> 00:34:23,280 Speaker 3: And to be clear, this is Visa and MasterCard and merchants. 715 00:34:23,320 --> 00:34:25,359 Speaker 3: What about American Express? Where does it sit here? 716 00:34:25,480 --> 00:34:29,040 Speaker 8: Yeah, so that's another great question. American Express basically settled 717 00:34:29,040 --> 00:34:31,520 Speaker 8: a version of this lassit or one a version of 718 00:34:31,560 --> 00:34:34,520 Speaker 8: this lawsuit years ago. Their card acceptance terms are a 719 00:34:34,560 --> 00:34:37,279 Speaker 8: little bit different. Search charging doesn't really allowed with those 720 00:34:37,320 --> 00:34:39,840 Speaker 8: when it's not applied to all card types, right, But 721 00:34:40,280 --> 00:34:43,319 Speaker 8: that begs the question if you start allowing surcharging through 722 00:34:43,400 --> 00:34:47,320 Speaker 8: card holder through acceptance agreements for Visa MasterCard, does AMEX 723 00:34:47,400 --> 00:34:49,279 Speaker 8: now have to allow us for charging on its card. 724 00:34:49,320 --> 00:34:51,839 Speaker 8: So that's another big question mark. If this deal goes through, 725 00:34:52,040 --> 00:34:54,520 Speaker 8: it really has the potential to impact everything, not just 726 00:34:54,600 --> 00:34:56,080 Speaker 8: Visa MasterCard, Paul. 727 00:34:56,120 --> 00:34:59,080 Speaker 3: I remember when MX used to be accepted everywhere, and 728 00:34:59,080 --> 00:35:00,680 Speaker 3: then after a while it was like, oh, we'll take 729 00:35:00,719 --> 00:35:03,440 Speaker 3: Visa master Card, but not American Express yes, because it 730 00:35:03,480 --> 00:35:04,560 Speaker 3: was always for the merchants. 731 00:35:04,640 --> 00:35:07,759 Speaker 2: Too expensive, too expensive. Okay, yeah, I haven't. I can't 732 00:35:07,760 --> 00:35:10,080 Speaker 2: remember the last time I used my AMEX card, literally can't. 733 00:35:10,239 --> 00:35:11,920 Speaker 2: It's there in your pocket, though it's in my pocket. 734 00:35:11,960 --> 00:35:12,160 Speaker 4: Okay. 735 00:35:12,239 --> 00:35:14,399 Speaker 3: See that's the thing. I mean, what does this mean 736 00:35:14,440 --> 00:35:18,040 Speaker 3: for companies that have corporate cards justin. 737 00:35:17,960 --> 00:35:20,080 Speaker 8: So that's one of the different brackets here too. So 738 00:35:20,120 --> 00:35:21,920 Speaker 8: the way the settlement works is that it's going to 739 00:35:21,920 --> 00:35:24,840 Speaker 8: divide cards into three different types, so it be commercial cards, 740 00:35:25,160 --> 00:35:28,680 Speaker 8: standard customer cards, and then premium customer cards. I think 741 00:35:28,840 --> 00:35:31,040 Speaker 8: the commercial and standard cards you know you want that 742 00:35:31,440 --> 00:35:33,759 Speaker 8: corporate business. I think those two really are of the 743 00:35:33,840 --> 00:35:37,040 Speaker 8: less concerned. It's those premium cards I think, with the 744 00:35:37,120 --> 00:35:39,480 Speaker 8: rewards that really are on the line here in terms 745 00:35:39,520 --> 00:35:41,719 Speaker 8: of whether or not they continue to have that universal 746 00:35:41,760 --> 00:35:42,720 Speaker 8: acceptance everywhere. 747 00:35:43,440 --> 00:35:44,239 Speaker 2: So there's so. 748 00:35:44,200 --> 00:35:47,360 Speaker 3: Many businesses built around how to gamify your points. 749 00:35:47,600 --> 00:35:50,640 Speaker 2: Oh yeah, I love it. You do that question. 750 00:35:50,760 --> 00:35:53,359 Speaker 8: I absolutely love it. I mean every day it's like, oh, 751 00:35:53,400 --> 00:35:55,279 Speaker 8: these ANX offers, you know, what can I get here 752 00:35:55,280 --> 00:35:56,360 Speaker 8: for this discount. 753 00:35:56,120 --> 00:35:57,840 Speaker 3: Paper and redsheet tracking? 754 00:35:57,880 --> 00:36:00,279 Speaker 8: But I really should, honestly, I mean it's that good, 755 00:36:00,320 --> 00:36:00,680 Speaker 8: I think. 756 00:36:00,719 --> 00:36:04,480 Speaker 3: So Paul's like, I cannot get into this, but the kids. 757 00:36:04,200 --> 00:36:07,719 Speaker 2: Are because I mean I've noticed it that they really 758 00:36:07,719 --> 00:36:10,560 Speaker 2: are good at gaming the system and to the point where, 759 00:36:10,880 --> 00:36:12,880 Speaker 2: you know, I'm going to Barcelona for the weekend on points, 760 00:36:13,160 --> 00:36:14,440 Speaker 2: you know, right exactly. 761 00:36:14,480 --> 00:36:17,520 Speaker 3: And these premium credit cards are almost like coupon books 762 00:36:17,520 --> 00:36:19,920 Speaker 3: in any ways, right, because they offer you know, like 763 00:36:20,280 --> 00:36:23,319 Speaker 3: fifty dollars a quarter at well, actually it's seventy five 764 00:36:23,360 --> 00:36:25,760 Speaker 3: dollars a quarter at Lululemon for instance, right, the Cammic's 765 00:36:25,760 --> 00:36:28,279 Speaker 3: Platinum card, and then people try to buy gift card 766 00:36:28,320 --> 00:36:30,399 Speaker 3: and stack them and use them like a year later. 767 00:36:30,560 --> 00:36:31,160 Speaker 6: Pall's laughing. 768 00:36:31,239 --> 00:36:33,279 Speaker 8: I mean, that'solutely true. And they carry those really high 769 00:36:33,280 --> 00:36:36,000 Speaker 8: annual fees. But I always think to myself, look how 770 00:36:36,080 --> 00:36:37,960 Speaker 8: much I'm getting back for this, and that waghs the 771 00:36:37,960 --> 00:36:39,520 Speaker 8: fees sometimes at least in my mind. 772 00:36:39,600 --> 00:36:43,160 Speaker 3: So there you go, what are what are Visa MasterCards 773 00:36:43,160 --> 00:36:43,719 Speaker 3: saying about this? 774 00:36:44,000 --> 00:36:46,879 Speaker 8: So they are they signed onto this deal, they reach 775 00:36:46,960 --> 00:36:49,560 Speaker 8: this agreement. I think they're pretty happy with the terms 776 00:36:49,560 --> 00:36:51,000 Speaker 8: of it because you know, they kind of lets them 777 00:36:51,040 --> 00:36:54,280 Speaker 8: walk away. The issuing banks like JP, Morgan, Bank of America, 778 00:36:54,320 --> 00:36:56,239 Speaker 8: all of them are also defendants. They get to walk 779 00:36:56,239 --> 00:36:59,000 Speaker 8: away from this litigation. The overhang would be removed, right, 780 00:36:59,080 --> 00:37:01,640 Speaker 8: So it's really the merchants. Are all of the merchants 781 00:37:01,680 --> 00:37:04,040 Speaker 8: going to sign on and what do those objections look 782 00:37:04,120 --> 00:37:06,280 Speaker 8: like in the coming months to the court? 783 00:37:06,520 --> 00:37:09,799 Speaker 3: Our thanks to Justin Teresa, Bloomberg Intelligence, antitrust litigation and 784 00:37:09,880 --> 00:37:10,760 Speaker 3: policy analyst. 785 00:37:10,960 --> 00:37:13,680 Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 786 00:37:13,719 --> 00:37:16,160 Speaker 2: providing in depth research and data on two thousand companies 787 00:37:16,160 --> 00:37:17,440 Speaker 2: in one hundred and thirty industries. 788 00:37:17,600 --> 00:37:20,320 Speaker 3: And remember you can access Bloomberg Intelligence via Bigo on 789 00:37:20,440 --> 00:37:21,000 Speaker 3: the terminal. 790 00:37:21,040 --> 00:37:23,319 Speaker 2: I'm Scarlett Foo and I'm Paul Sweeney. Stay with us. 791 00:37:23,360 --> 00:37:25,759 Speaker 2: Today's top stories and global business headlines are coming up 792 00:37:26,000 --> 00:37:27,640 Speaker 2: right now.