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Speaker 2: It is a battle among I feel like the old
Speaker 2: and new media titans.
Speaker 3: A deal we thought was.
Speaker 2: Agreed right, yeah, very much so, and Adela thought was
Speaker 2: agreed to. And then we've got a hostel off for
Speaker 2: coming in today, and we've got the White House's Commander
Speaker 2: in chief, Matt definitely watching.
Speaker 3: I mean the target is Warner Brothers Discovery.
Speaker 4: That's interesting that President Trump said there may be too
Speaker 4: much market share here with which by itself, you know,
Speaker 4: between Netflix and HBO Max isn't a surprise. But then
Speaker 4: he said he's going to be personally involved in whether
Speaker 4: or not this gets through regulation. So I think that
Speaker 4: should be a bit of a concern for Ted Ted Sarandos,
Speaker 4: who has tried to do everything right I guess of late,
Speaker 4: but really Netflix is viewed as this globalist, kind of
Speaker 4: left leaning.
Speaker 5: Dare I say woke?
Speaker 4: You know, company and entity, and it wants to take
Speaker 4: over this asset that Donald Trump sued to block a
Speaker 4: time warner at and T. You know this deal in
Speaker 4: twenty seventeen, so.
Speaker 3: Way back when, right, I remember that?
Speaker 2: All right, So let's get to it, because we've got
Speaker 2: our own Felix to Let, Bloomberg News Media and Entertainment editor.
Speaker 2: You know, he's the author of It's Not TV, The
Speaker 2: Spectacular Rise Revolution in Future of HBO.
Speaker 3: He's right here in our New York studio.
Speaker 2: And then out there at our Bloomberg Intelligence headquarters in Princeton,
Speaker 2: New Jersey, Bloomberg Intelligence Senior Media Alice get to ringing
Speaker 2: off on. This is such a cool roundtable. So let's
Speaker 2: start Felix with you. The detail we got the hostile
Speaker 2: takeover a bit from Paramount. It does top Netflix's offer.
Speaker 2: I thought this was a done deal.
Speaker 4: It's not necessarily Actually, it does not top the tectives
Speaker 4: offer because in the Netflix offer, they're spinning off the
Speaker 4: cable astet, right, so they're not getting the CNN that.
Speaker 5: Probably wouldn't want them too. Half.
Speaker 6: Yeah, they're both saying that they have the higher offer,
Speaker 6: and it depends on how you value those cable networks.
Speaker 2: Is there a deal that's better, that's preferred Felix, Let's
Speaker 2: start with you and one more likely to get regulatory clearance.
Speaker 6: I mean they're both saying that they both you know,
Speaker 6: they're pointed to the finger at the other saying, oh,
Speaker 6: that will.
Speaker 5: Never get regulatory approval.
Speaker 7: You know.
Speaker 6: The paramount is saying essentially that, yeah, Netflix has over
Speaker 6: three hundred million paying subscribers. If you combine them with
Speaker 6: HBO Max, you're going to have over four hundred million.
Speaker 6: That's too much concentrated power to streaming competition.
Speaker 5: They have a lot more.
Speaker 6: So that's Netflix's argument is that it's not just the
Speaker 6: competition isn't just between streaming networks at this point, it's
Speaker 6: competing for people's attention in the living room, which includes
Speaker 6: things like YouTube, tick talk and then that world. They
Speaker 6: don't control that much attention share.
Speaker 4: Which is a fun argument, but I mean, if this
Speaker 4: were just a technocratic DOJ decision, they try to take
Speaker 4: the narrowest view possible, so they're not going to include
Speaker 4: YouTube and TikTok. Even if Carol, you spent a lot
Speaker 4: of time consuming content on those two on those things.
Speaker 5: Yeah, but and so do I.
Speaker 4: In fact, I often choose it over Netflix Prime and HBL.
Speaker 4: But that's not how the DJ traditionally views these kind
Speaker 4: of things.
Speaker 2: So, Gita, how do they view it and what's more
Speaker 2: likely to get done? What makes more sense or listen,
Speaker 2: we're going to be talking about this in the new year.
Speaker 8: Yeah, it's it's really anybody's guests right now, Carol. So traditionally, yes,
Speaker 8: they have taken the most narrowest definition possible. But I
Speaker 8: think the government also realizes that this whole video marketplace
Speaker 8: is rapidly changing. I mean Netflix has been the biggest
Speaker 8: disruptor of the video marketplace to begin with. You know,
Speaker 8: it's streaming disruptive traditional TV. Now what Netflix is worried
Speaker 8: about this is how a lot of you investors are
Speaker 8: kind of viewing this deal is does Netflix actually think
Speaker 8: that they can be disrupted by short form entertainment? And
Speaker 8: that's exactly the point that you know, Felix was bringing up,
Speaker 8: do we have to broaden the market? And you know,
Speaker 8: people will argue, yes, we do, because if you kind
Speaker 8: of look at just share of online video viewing, Netflix
Speaker 8: and HBO Max combined actually have a lower viewing share
Speaker 8: than the dominant force, which is YouTube.
Speaker 5: I got my math, by the way from you this morning, Etha.
Speaker 4: So Gita pointed out that the Netflix bid is twenty
Speaker 4: seven to seventy five. Plus you had about four dollars
Speaker 4: which you'll get for the spinoff of the cable assets.
Speaker 4: It gets you to basically thirty two. That's a little
Speaker 4: bit above paramount. But Geita, if Warner Brothers Discovery, because
Speaker 4: David Zaslov wants to get as much money as he can, right,
Speaker 4: if they somehow get broken up with by you know,
Speaker 4: the FTC or the DOJ or whatever, and they get
Speaker 4: the five point eight billion from from Netflix and then
Speaker 4: do the paramount deal, which seems like President Trump will
Speaker 4: be much more in favor of.
Speaker 5: Does that end up giving them more money than anything else?
Speaker 9: It absolutely does.
Speaker 8: And you know, this whole bidding war, I mean, the
Speaker 8: one person who's really enjoying this I think should be
Speaker 8: David Zaslav and you know, the Warner Brothers Discovery board.
Speaker 8: I mean we started we started matt at twelve dollars,
Speaker 8: you know, that was you know, on September twelfth, and
Speaker 8: this is where we've ended up. I think The big
Speaker 8: worry today, and especially as you kind of see the
Speaker 8: Netflix stock trading, is that is Netflix really going to
Speaker 8: be forced to come in with thirty dollars a share
Speaker 8: because you just kind of look at the optics of
Speaker 8: the deal paramount seemingly having the better offer, although the
Speaker 8: deals are different, but you know, just for a first look,
Speaker 8: it looks like they do have the better offer. So
Speaker 8: I think investors really concerned right now about whether Netflix
Speaker 8: will have to bid up. And that's an even better
Speaker 8: situation for David Zaslav. So he's laughing all the way
Speaker 8: to the bank here.
Speaker 4: Well, at the screen Time event, Carol, you and Tim
Speaker 4: were out in California right.
Speaker 3: Wanting to go there.
Speaker 4: Yeah, because I thought you guys did great coverage and
Speaker 4: Lucas had a fantastic event, and David Ellison, yes, gave
Speaker 4: an answer to the question about his family's closeness to
Speaker 4: President Trump.
Speaker 10: We have a good relationship with the administration. And look,
Speaker 10: I think if you look to that, I do believe
Speaker 10: other things that have been rumored about right are very
Speaker 10: large scale players that would effect that could potentially create
Speaker 10: monopolies obviously in the ecosystem. And again, I think when
Speaker 10: you look at the lens of consolidation for us, keep
Speaker 10: going back to it. It's always how do you create
Speaker 10: long term value creation? How do you put yourself in
Speaker 10: a position to produce more content, not less, and how
Speaker 10: do you ultimately build something that is better for the consumer.
Speaker 2: All right, So that is Paramounts Guide and CEO David Ellison,
Speaker 2: he talked about at Bloomberg screen Time that was back
Speaker 2: in October. So, Felix, come on back in here. I
Speaker 2: mean is we also have Affinity Partners Equity firm led
Speaker 2: behind Jared Kushner, who is of course the son in
Speaker 2: law of the president. You know, part of paraments hostile
Speaker 2: takeover a bit for Warner Brothers. So do they have
Speaker 2: an advantage?
Speaker 3: It seems like a lot of things merging that they might.
Speaker 6: They haven't set they have an advantage, and having the
Speaker 6: president's son in law as part of his bid is
Speaker 6: usually a pretty good sign. But at the same time
Speaker 6: we see that you know, today Trump came out on
Speaker 6: Truth Social and you know, complained about the Ellison's management
Speaker 6: of CBS News in sixty minutes because of the interview
Speaker 6: where he was criticized in the most recent episodes. So
Speaker 6: these things can be somewhat fickle, and let's not forget
Speaker 6: that Paramount has, you know, sort of anti trust issues.
Speaker 6: Also these you know, the deal went through with Paramount,
Speaker 6: that's two Hollywood studios that would be combined to streaming
Speaker 6: services not as big as Netflix. Granted you'd have multiple
Speaker 6: news outlets CNN and CBS, so they have their plenty
Speaker 6: of overlap and in some ways have more overlap than
Speaker 6: Netflix and Brothers Felix.
Speaker 4: Can I ask you though about I mean, you cover
Speaker 4: the entertainment industry right. I was talking today to Michael Wolfe,
Speaker 4: he of MTV previously and now Activate, and he says
Speaker 4: that the content creators, or the creative community, let's say,
Speaker 4: is much more in favor of the Paramount bid because
Speaker 4: when you listen to David Ellison's full interview with Lucas Shaw,
Speaker 4: they seem really focused on creating good original, you know,
Speaker 4: solid content, like not having AI make sequels of marketing products.
Speaker 4: So is that true that the you know that Hollywood
Speaker 4: wants Paramount to buy it.
Speaker 6: I think David Elson has been out there making that pitch.
Speaker 6: We really support the creative community.
Speaker 5: Look at all these.
Speaker 4: Concerns already, mister, have grown up watching all the movies
Speaker 4: and mister.
Speaker 6: Top Gun he loves the movie's.
Speaker 3: Expensive though, unless it does really well.
Speaker 5: You're so rich though, And you.
Speaker 6: Know, you have people like James Cameron coming out recently
Speaker 6: and expressing concern about Netflix, you know, saying that basically,
Speaker 6: if you look at Netflix's history, they've been very you know,
Speaker 6: hostile to the notion of long theatrical releases, that this
Speaker 6: would be kind of the deathbed for Hollywood.
Speaker 5: Move and movie theaters. So yeah, Ellison's Ellison.
Speaker 3: Man who brought us Avatar that uses a lot of technology.
Speaker 3: I'm just saying, but go ahead.
Speaker 6: Well, you know, saying, hey, we want to see this
Speaker 6: on the big screen. You need one hundred days in
Speaker 6: theaters exclusivity for this to be worthwhile. And you know,
Speaker 6: you're kind of a soccer if you believe Netflix is
Speaker 6: really going to do that in the long term. Their
Speaker 6: business is providing entertainment for people, and it's a.
Speaker 5: Pretty convincing argument.
Speaker 9: It's interesting stuff.
Speaker 3: Hey gee, to save forty seconds for you to wrap up?
Speaker 2: So I don't know, does this go to I don't
Speaker 2: even are we in a third round? I mean, Comcast
Speaker 2: is out right, so like Womdcast is out yet, So
Speaker 2: what's the timeline we're looking at here?
Speaker 8: Ten days, so the tender offer expires in twenty days.
Speaker 8: The Warner Brothers Discovery Board has ten days to respond
Speaker 8: to paramounts to see how they want to proceed with
Speaker 8: this whole tender offer. But they have confirmed receipt of
Speaker 8: this unsolicited tender from the paramount sky Dance people.
Speaker 3: Am I remiss to ask? Does David zoos Love have
Speaker 3: a job after it with a really good pay package?
Speaker 8: He doesn't need one.
Speaker 11: He's gonna be so right.
Speaker 5: All right?
Speaker 3: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 3: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
Speaker 1: us live weekday afternoons from two to five y's during it.
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Speaker 2: The other thing top of mind, no doubt about it, Matt,
Speaker 2: is a FED decision, and that may already be factored
Speaker 2: in when it comes to you if you look at
Speaker 2: kind of the equity trade today.
Speaker 5: So I want to see what I say. It's at
Speaker 5: the bottom of my mind. It is the FED decisions
Speaker 5: at the top of your mind. They're going to I
Speaker 5: do I see three days? Oh my god.
Speaker 3: All right, but we're going to get all right. Just
Speaker 3: put him aside for a second. Let's bring Kevin Gordon.
Speaker 2: He's head of macro Research and Strategy SCHWABZT for Financial Research.
Speaker 3: It's like, I don't know, keeping cats in control here,
Speaker 3: Kevin is here right in studio. Kevin, though, is the
Speaker 3: cut already priced in?
Speaker 2: And is it all about kind of what we get
Speaker 2: in terms of the summary of economic projections and whatever
Speaker 2: commentary we might get for the new year?
Speaker 12: Well, yes, I think if you look at the word
Speaker 12: function on the terminal and then compare that to.
Speaker 3: You love that function.
Speaker 12: Yes, pricing you know, for December actually relative to the
Speaker 12: equity market, if you look at it over the past
Speaker 12: couple past month, both of those have been neck and neck.
Speaker 12: So you know, I would say it's fully priced in
Speaker 12: the sense that you know, every time the probability of
Speaker 12: a cut is increased sharply, the market's done well, and
Speaker 12: vice versa. I think beyond that, you know, one of
Speaker 12: the one of the reasons I think that we're probably
Speaker 12: not going to see as many cuts next year is
Speaker 12: because the inflation backdrop and we're putting out our outlook
Speaker 12: at some point later today. But I think that the
Speaker 12: inflation backdrop is going to be a little bit tree
Speaker 12: in the sense that there's probably some upside inflation risk
Speaker 12: from tariffs that are expected to stay high, which have
Speaker 12: already put upper pressure on goods prices, but also fiscal
Speaker 12: stimulus coming from the big Beautiful Bill.
Speaker 5: And I think still a even if.
Speaker 12: It's a wobbly but still relatively resilient labor market that
Speaker 12: keeps people spending on a month to month basis, if
Speaker 12: you add all of that together and put it into
Speaker 12: an equation, I still think you have upside inflation risk
Speaker 12: plus from a personnel standpoint for the FED. If to
Speaker 12: keep in mind that two voting members rolling onto the committee,
Speaker 12: onto the voting committee are the heads of the Cleveland
Speaker 12: and the Dallas FEDS, and they've been leading much more
Speaker 12: hawkish recently. It's Beth Hammick and it's Lori Logan, So
Speaker 12: I think that needs to be taken into consideration when
Speaker 12: you think about, especially the emphasis that has been now
Speaker 12: pushed on individual member commentary. That hasn't been the case
Speaker 12: up until maybe the past couple of months, where we've
Speaker 12: been paying so much attention to what each individual member
Speaker 12: has been saying. Now there's much more focus on that.
Speaker 12: So I think for those reasons, you probably don't get
Speaker 12: as many cuts next years as maybe some people they're expecting.
Speaker 3: A narrative around that. What do you think that.
Speaker 4: I mean, it's we're looking at with the work function
Speaker 4: getting down to a terminal rate of three percent even basically, yeah,
Speaker 4: right between three and three and a quarter right now.
Speaker 5: So that's moved up a little bit.
Speaker 4: And as we hear so much about the economic growth
Speaker 4: that we're expecting next year, as we hear so much
Speaker 4: about the stimulus we're going to get from one big,
Speaker 4: beautiful bill, I just wonder if it's going to be
Speaker 4: hard to even go that low because inflation, if you
Speaker 4: look at CPI, it's going the wrong direction, and it's
Speaker 4: fifty percent over the Fed's target.
Speaker 12: Yeah, we're averaging closer to three percent. That seems to
Speaker 12: be more like the floor even if you don't go
Speaker 12: because it's not our expectation that you go back to
Speaker 12: anything akin to twenty twenty two or twenty twenty three.
Speaker 12: I mean, getting close to you know, eight nine percent
Speaker 12: on CPI barring some major shock is just really not
Speaker 12: in the car, so we've been there, so this only
Speaker 12: three percent still hurts well, but exactly so, I think
Speaker 12: it's seven't gone down right, and you're now four and
Speaker 12: a half years of the FED being above its target.
Speaker 12: I think at some point that has to come into
Speaker 12: the equation and it'll matter in terms of how they
Speaker 12: set policy.
Speaker 5: So really, I mean, this is just.
Speaker 12: Them getting closer to neutral what they think of as neutral.
Speaker 12: If it happens to be the case that inflation pressure
Speaker 12: is reaccelerating and they're maybe too close to neutral, then
Speaker 12: you can maybe start talking about a hike. I think
Speaker 12: it's still a little early for that, but you just
Speaker 12: have to keep in mind that they've been now so
Speaker 12: far above their inflation target for so long, and labor
Speaker 12: has essentially been at target almost the entire time. I
Speaker 12: mean four point four percent for unemployment rate. Yes, it's
Speaker 12: risen over the past year, but it's been number one
Speaker 12: gradual and number two consistent with a fully employed labor.
Speaker 5: Market thirty seconds.
Speaker 3: So what does this mean for the equity markets?
Speaker 2: I mean, if there's earnings, if there's an economy that's growing,
Speaker 2: if the labor market doesn't fall apart.
Speaker 12: Well, the earnings picture just by itself. I mean, if
Speaker 12: you look at every sector so far, there's expectations that
Speaker 12: you're going to get pretty solid earnings growth. For all
Speaker 12: eleven gift sectors in the S and P, only three
Speaker 12: are expected to have earnings growth that is slower in
Speaker 12: twenty twenty six relative to twenty five. So that in
Speaker 12: and of itself just shows you that it's not just
Speaker 12: a couple of sectors or even a couple of industries
Speaker 12: that are carrying the market higher from an earning standpoint.
Speaker 5: It really has broadened out.
Speaker 12: So we think that from an index perspective, maybe it's
Speaker 12: not as great because if you don't have the megacaps
Speaker 12: contributing mostly to the gains, then the index performance might not.
Speaker 5: Look great, but you could have relatively.
Speaker 12: Healthy breadth under the surface and participation that could mean
Speaker 12: for maybe a better year for equal weighted relative to cap.
Speaker 3: Waight, thanks for coming by, Thanks for having me.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 2: Well, change is a foot at Berkshire at JP Morgan Chase,
Speaker 2: there's kind of a connection.
Speaker 3: Between the two.
Speaker 2: We want to get to what you need to know
Speaker 2: and with us is Shrinatarajan, Bloomberg News Chief Wall Street correspondent,
Speaker 2: right here in studio along with Bloomberg News US insurance
Speaker 2: reporter Alex raj Bandari. First up, I want to talk
Speaker 2: about Berkshire Hathaway. So Alex talk to us about these
Speaker 2: leadership changes that are going on. It is like the
Speaker 2: company getting itself ready for what happens post Warren Buffett.
Speaker 3: I mean, he's already.
Speaker 2: Announced his retirement right but once he's kind of officially
Speaker 2: off the leadership at the company.
Speaker 13: So what we know is Greg Able is taking over
Speaker 13: our next year in January, and this morning they announced
Speaker 13: this view of new appointments and some departures as well.
Speaker 13: The big one and the one that everybody's talking about
Speaker 13: it we're going to talk about today is Toddcombs, who
Speaker 13: was one of the two stock pickers for Buffett along
Speaker 13: with Ted Weschler, and they were managing with Buffett this
Speaker 13: mammoth two hundred and eighty billion stock portfolio.
Speaker 5: So he's gone.
Speaker 3: He was also the CEO of Geico.
Speaker 13: He's been doing a good job there, and then analysts
Speaker 13: have been praising the turnaround at Geico that's been struggling
Speaker 13: in recent years but gaining grounds in the past quarters.
Speaker 13: But that leaves a question mark as to what's going
Speaker 13: to happen to the stock portfolio and who's going to
Speaker 13: manage it Because Buffett no longer in the picture, still
Speaker 13: less chairman, but not at the helm. That means Able's
Speaker 13: going to do it with Weschler. But it's just two
Speaker 13: people for a big portfolio, and that's a big topic
Speaker 13: for you know, Buffet watchers and Berkshire fans and investors
Speaker 13: because they look at what where the investments are going.
Speaker 4: Is it fair to use the term exodus or even worse,
Speaker 4: brain drain right if Warren Buffett's leaving and I didn't
Speaker 4: get the top job, like I'm out.
Speaker 13: So this morning hasn't been only about departures. There's only
Speaker 13: been some appointments of people that were not in the
Speaker 13: lights so far but have been elevated to bigger roles.
Speaker 13: So that's important to point out. But yes, what you say,
Speaker 13: this raised the question as to how many people we
Speaker 13: want to work with Able going forward? And there was
Speaker 13: an analyst this morning who put out a note right
Speaker 13: after the appointments to say that he expected more to
Speaker 13: and over going forward, because it doesn't have the same
Speaker 13: cachet to work for Able than to work for Buffett.
Speaker 2: Before we get to the JP Morgan, why did comes
Speaker 2: leave Berkshire? How long was he there a while?
Speaker 5: He had been there for more than a decade.
Speaker 13: It's not been said exactly why he's leaving, but he
Speaker 13: had deep ties with JP Morgan, so that might be
Speaker 13: an explanation.
Speaker 4: Also, I'm sure they wanted him. I mean, as you say,
Speaker 4: he was in charge of a massive portfolio. That guy
Speaker 4: must have been sought after on Wall Street. But just
Speaker 4: to touch on what's happened at Berkshire, it's so weird.
Speaker 4: If you put up the shares versus the S and
Speaker 4: P from April, the S and P takes back off again,
Speaker 4: right obviously we had the Liberation Day dip from April.
Speaker 5: Berkshire Hathaway shares.
Speaker 4: Just come down like they've done. It's a mirror image
Speaker 4: of what the S and P has done. What is
Speaker 4: the concern about Berkshire Hathaway? Is it that Warren Buffet's
Speaker 4: finally leaving, is this key man risk?
Speaker 13: Well, there was talk when he announced he was retiring
Speaker 13: that they could be a buffet premium that would evaporate,
Speaker 13: that could be supporting that thesis. There's also a lot
Speaker 13: of other questions. You know, I've reported on the earnings
Speaker 13: in recent quarters and the softening of the economy in general.
Speaker 2: Say they play big time into the economy, right exactly,
Speaker 2: and so not to say that the concerns for the
Speaker 2: economy are translating directly into the concerns for Berkshire, but
Speaker 2: there's been some softening of the top line growth and
Speaker 2: analysts have been, you know, voicing some concerns about that
Speaker 2: for the future.
Speaker 13: The company has had a very rare sale rating from
Speaker 13: an analyst recently.
Speaker 9: Because of all the headways coming the way.
Speaker 2: So, yeah, it's a big change, yeah for copy so
Speaker 2: identified obviously with its founder. All right, so Todd Cooms
Speaker 2: leaving Berkshire after a decade, let's bring in Streat not
Speaker 2: a raj on because JP Morgan has hired him Tatus
Speaker 2: there was a relationship there already.
Speaker 3: There were ties tell us about what this news is about,
Speaker 3: what does this do for JP Morgan? Why is it happening.
Speaker 14: Well, Jamie Diamond has been spending a lot of time
Speaker 14: talking about this national security initiative.
Speaker 9: You know of having heard JM.
Speaker 14: Diamond over the years, especially in the last twelve to
Speaker 14: eighteen months, he has been talking about the geopolitical risk.
Speaker 14: He's been talking about the need to be independent and
Speaker 14: not dependent on other countries, and he has been putting
Speaker 14: money where his mouth is. They've talked up this one
Speaker 14: point five trillion dollar financing commitment in this space that
Speaker 14: is in any industry where you know, critical supply chain,
Speaker 14: in electric grade, anything where you would look at it
Speaker 14: and say this is important and crucial for America. He's saying,
Speaker 14: we have to make sure that we're not reliant on
Speaker 14: any other country. So, in addition to that financing commitment,
Speaker 14: which is about a fifty percent increase over what they
Speaker 14: would have anyway done, is what JP Morgan says, they're
Speaker 14: also putting about ten billion dollars of their own balance
Speaker 14: sheet capital as direct equity investments, and that's where dot
Speaker 14: Com comes in, and he will be in charge of
Speaker 14: overseeing that investment. He's not an alien to JP Morgan.
Speaker 14: For nearly nine years up until this announcement, he was
Speaker 14: on the board of JP Morgan. When he joined the
Speaker 14: board as the forty something, he was the youngest member
Speaker 14: of the board, and I checked this morning. As of
Speaker 14: the time of his departure, he was still the youngest
Speaker 14: member on the JP Morgan.
Speaker 5: Board, which is why I know.
Speaker 2: I teased, like, could it have something to do with
Speaker 2: succession planning? Does it possibly? I mean, this is a
Speaker 2: guy who's going to have a direct line to Jamie
Speaker 2: Diamond on not just this but other strategic industry.
Speaker 3: Issues, if you will at the firm.
Speaker 9: It just I don't know. Look, it's a fair question,
Speaker 9: and I know I rolled when you asked that question.
Speaker 14: I imagine me and my daughters will I will give
Speaker 14: you a reasoning for that is, at this late stage,
Speaker 14: if Jamie Diamond had to turn to someone outside of
Speaker 14: the JP Morgan stable to find a successor, in some ways,
Speaker 14: that would be considered a failure for Jamie Diamond. Right,
Speaker 14: he's been there for twenty years at the top. You
Speaker 14: assume that he's built a strong enough bench that he can.
Speaker 5: Pick from anything.
Speaker 3: Did he left city or was kind of pushed out
Speaker 3: came to another.
Speaker 14: Firm, Which is why we don't remember much about who
Speaker 14: was the predecessor to Jamie Diamond. Jamie Diamond certainly does
Speaker 14: not want to be forgotten. So again, if he were
Speaker 14: to go this start, it would be completely out of
Speaker 14: left field, which is why it's not the number one
Speaker 14: predicted scenario, even though because you asked the question, we
Speaker 14: will put it in the list of possibilities.
Speaker 5: Oh nice, you got seeing the list.
Speaker 9: I got the job.
Speaker 4: Speaking of big names, the advisors to Todd Coms on
Speaker 4: this strategic SMI group are I mean masters of the universe,
Speaker 4: Paul Ryan, Right, Condoleeza, Rice, Robert Gates. Those are just
Speaker 4: the Washington names. Jim Farley, Michael Dell, who just gave
Speaker 4: one of the biggest gifts in world history. I mean,
Speaker 4: these are and Dunwoody huge huge names, isn't Jeff Bezos?
Speaker 5: Jeff Bezos good point? Also an important guy?
Speaker 9: You miss the most important name of the list.
Speaker 5: Well, for me, Jim Farley is the most important guy.
Speaker 9: Fit fair enough?
Speaker 8: Better not.
Speaker 14: But I will also tell you why I'm talking about
Speaker 14: Jeff Bezos because there's another dot Coms connection here, Because
Speaker 14: you will remember a few years back Berkshire, JP Morgan
Speaker 14: and Amazon set out to, shall we say, solve the
Speaker 14: healthcare problem in the United States, and the connecting factor
Speaker 14: in those discussions in that venture was dot Coms.
Speaker 9: He was critical to that mission.
Speaker 14: Of course, about two to three years in they disbanded
Speaker 14: and they realized that healthcare is a harder problem to
Speaker 14: solve than just three successful corporations taking a swing at it.
Speaker 14: But they did make a go of it. And if
Speaker 14: you consider the top of the house of those three films,
Speaker 14: Warren Buffett, Jeff Bezos, Jamie Diamond, and tot Coms in
Speaker 14: the mix, he clearly knew these people well. And that
Speaker 14: also is another reason you have to assume he has
Speaker 14: Jamie Diamond's respect.
Speaker 4: So in these guys, Alex, just to bring you back in,
Speaker 4: you cover Berkshire Hathaway, you cover insurance. It's not, you know,
Speaker 4: operating in a vacuum. They work with the biggest banks
Speaker 4: in the world on a regular basis, and particularly JP
Speaker 4: Morgan and Berkshire Hathaway have had a pretty close relationship.
Speaker 5: Ye Sweeter said.
Speaker 13: Tot Coms was an incremental part of the discussion around
Speaker 13: the healthcare venture, and insurance and banks are two critical
Speaker 13: elements of the financial system and they work together to
Speaker 13: get financing to the economy in different ways, but they
Speaker 13: do work hand in hand a law.
Speaker 5: Hey, that healthcare thing didn't really work out.
Speaker 13: Didn't know they had to shut it down after a
Speaker 13: couple of years.
Speaker 5: Well, why is it such a tough nut to crack?
Speaker 5: It's pretty easy because health care.
Speaker 2: Is massive, and it's complicated, and it's political, and it's.
Speaker 5: A lot of things. I mean, it seems like it
Speaker 5: would be pretty simple to solve.
Speaker 9: Wow, someone dig mat Miller to Washington. It's pretty easy.
Speaker 14: That health care for all the mad Miller twenty twenty
Speaker 14: eight clds for everyone.
Speaker 2: One thing I want to ask you what does Todd
Speaker 2: Coms bring to JP Morgan?
Speaker 13: Well, I mean this investment acumen that has been developing,
Speaker 13: developing over the years at Berkshire has a stock pick here.
Speaker 13: He's going to be part of the deployment you know,
Speaker 13: of the billions of dollars in the economy. That's definitely
Speaker 13: a big asset for for JP Morgan in that venture.
Speaker 8: All Right.
Speaker 2: One thing I also want to do shot while we've
Speaker 2: got you and mcin continue talking about this. But Jamie Diamond,
Speaker 2: you know, when he speaks anywhere, we're all like woo,
Speaker 2: you know, kind of awake. He spoke in a panel
Speaker 2: at Reagan National Defense Form. It was hosted by Bloomberg
Speaker 2: Caroline High and he's he got into I mean, the
Speaker 2: whole conversation was talking about defense globally and so on
Speaker 2: and so forth, but his point bottom line was about
Speaker 2: Europe and its problem.
Speaker 3: So I want to bring that to everybody.
Speaker 9: Listen up.
Speaker 5: Europe has a problem.
Speaker 11: If we ever write a book about how the West
Speaker 11: was lost, it will be because of the following will
Speaker 11: because of we didn't get act together here and we
Speaker 11: go through all the policies here that we didn't have
Speaker 11: the strongest military in the world and we allowed Europe
Speaker 11: to fall apart. They have some wonderful things, but they've
Speaker 11: gone from ninety percent of the GDP of America to
Speaker 11: sixty five. That's not because America did anything bad to them.
Speaker 11: It's their own bureaucracy, their own costs, their own They
Speaker 11: do some wonderful things on their safety nets, but they've
Speaker 11: driven business out, they've driven investment out, they've driven innovation out.
Speaker 11: It's kind of coming back. If they fragment, you know,
Speaker 11: then you could say that you know that America first
Speaker 11: will not be around anymore. We it will hurt us
Speaker 11: more than anybody else because they are a major ally
Speaker 11: in every single way, including common values, which are really important.
Speaker 2: All right, That, of course, was JP Morgan's Jamie Diamond
Speaker 2: at the Reagan National Defense Form stre I feel like
Speaker 2: when Jamie talks, we all listen. This was obviously a
Speaker 2: discussion about defense connections between the US and Europe. Whether
Speaker 2: it's cockroaches, whether it's stormy sees, whatever, what Jamie says,
Speaker 2: we take note. How should investors read what he had
Speaker 2: to say, or what do you think is important there?
Speaker 14: Look, at least from the business side of things, he's
Speaker 14: pointing out what any business executive will point out, that
Speaker 14: Europe is going through a bit of a challenge and
Speaker 14: the economic numbers show that. But his broader, bigger point
Speaker 14: about fragmentation in Europe somehow disbanding the soul America first idea.
Speaker 14: That's a hard one to follow, but more interestingly, it
Speaker 14: potentially goes against the kernel in terms of how the
Speaker 14: Trump administration perceives Europe. Right now, if you have followed
Speaker 14: all the commentary and the discourse over the weekend of
Speaker 14: the last week, in fact, going back to the start
Speaker 14: of the year, when JD. Vance was at that Munich
Speaker 14: Security conference and that diet tribe against Europe. It's very
Speaker 14: clear that the Trump administration wants to take a tough
Speaker 14: stance on Europe. And you know, Elon Musk was one
Speaker 14: of those who said Europe probably has to disband the
Speaker 14: European Union and it's much easier to deal with every
Speaker 14: country on their own and they will care for the sovereignity.
Speaker 14: But it seems to be a very interesting viewpoint that
Speaker 14: the Trump addmanistician has taken. That's counter to the worldview
Speaker 14: that has been adopted by the United States since the
Speaker 14: end of the Second World War.
Speaker 3: A real change. Stay with us. More from Bloomberg Business
Speaker 3: Week Daily coming up after this.
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Speaker 3: That brought up Rare Earth.
Speaker 2: So that is something that we are talking about a
Speaker 2: lot this year. It's kind of the land graph I
Speaker 2: feel of the last year or so. We're talking about
Speaker 2: the world in a war of sorts to show up
Speaker 2: their critical mineral assets and just today we saw the
Speaker 2: German Foreign Minister claiming progress and efforts to secure supplies
Speaker 2: of rare earths from China, saying the government in Beijing
Speaker 2: had indicated it would be constructive in handling your p
Speaker 2: and orders for the materials and the metals. The New
Speaker 2: York Times out with a story in how Japan built
Speaker 2: a rare earth supply chain without China, and then are
Speaker 2: of course they're all Matt, those public private partnerships and
Speaker 2: investments that we've seen the US government has been doing
Speaker 2: to build up its exposure.
Speaker 4: Yeah, exactly, investing in companies like John Paulson's company too.
Speaker 5: There's a lot of mind.
Speaker 3: Ar yeah exactly.
Speaker 2: All right, So we want to talk to someone that
Speaker 2: we've leaned on big time when it comes to this space.
Speaker 3: Graceland Baskern.
Speaker 2: She's director of Critical Mineral Security Program at the Center
Speaker 2: for Strategic and International Studies. She's with us from I believe,
Speaker 2: from washing Middleburg, Virginia.
Speaker 3: Oops. I need to read our chat every once in
Speaker 3: a while.
Speaker 5: Yes, you do.
Speaker 3: She's from Middleburg, Virginia.
Speaker 2: Hey, good to have you back with us, Graceland, And
Speaker 2: here with Matt and myself, there is a lot going
Speaker 2: on this land grab. I don't know where are we
Speaker 2: in this process? And how do you make sense of
Speaker 2: some of the headlines that are going on. Our country's
Speaker 2: just kind of figuring out deals and is I don't know,
Speaker 2: extra production, extra exploration underway.
Speaker 15: What a year it has been.
Speaker 7: If you had told me at the start of twenty
Speaker 7: twenty five that rare earth would become the most powerful
Speaker 7: currency in negotiation in reforming our geopolitical alliances, I wouldn't
Speaker 7: have believed it.
Speaker 15: You know what we've really seen this year.
Speaker 7: And remember ahead around the APEC summit there were the
Speaker 7: third round of negotiations to restore access to rare eers.
Speaker 7: So we saw them in London, we saw them in Geneva,
Speaker 7: and then we saw them in South Korea. Since then,
Speaker 7: the US government has really done two things. You've seen
Speaker 7: both that acceleration of domestic efforts with the Vulcan deal
Speaker 7: for rare earths to mine and process those rare earths
Speaker 7: and get some permanent magnets. But you've also seen upproliferation
Speaker 7: of the continued international efforts. So most recently you saw
Speaker 7: during mbs' state visit from Saudi Arabia that the US
Speaker 7: Department of War agreed to become a forty nine percent
Speaker 7: shareholder in a refinery there.
Speaker 15: And what's really.
Speaker 7: Important is when you look at the spectrum of rareers,
Speaker 7: we are continuing to drill into two things. Those heavy rarers,
Speaker 7: right because here in the US we have the second
Speaker 7: biggest producing rarers mine in the world.
Speaker 15: However, they are.
Speaker 7: Pretty lightly in doubt on the heavy rarers, and we
Speaker 7: know that Saudi has bigger deposits of those. This second
Speaker 7: thing is we're really trying to build our permanent magnet
Speaker 7: manufacturing capabilities. We do not want to be held hostage
Speaker 7: any longer than we have to.
Speaker 5: Ye, I was going to say, too late.
Speaker 4: I talked to Gracelann automotive executives a lot in my
Speaker 4: side gig here, and they have expressed real concern with
Speaker 4: the idea that we would ever process rare earth materials,
Speaker 4: that we would ever refine rarest materials in the US,
Speaker 4: because a lot of these men and women who work
Speaker 4: for carmakers have toured the plants in China and say like,
Speaker 4: I never want to go back there again.
Speaker 5: I wouldn't let my family anywhere near there.
Speaker 4: It's such a dirty and dangerous job that we simply
Speaker 4: cannot do that in the United States of America.
Speaker 5: What do you think about that.
Speaker 7: I don't think we have a choice, quite frankly. And
Speaker 7: I you know, I'm originally from Detroit. I love our
Speaker 7: auto manufacturers. But the end of the day, it was
Speaker 7: the auto manufacturers that stopped manufacturing in May when they
Speaker 7: had a supply chain disruption. So what we know is that,
Speaker 7: you know, having a close to home or at home
Speaker 7: supply chain is no longer an option.
Speaker 15: What I would also say to you is challenge the news.
Speaker 5: So what is the process?
Speaker 2: Like?
Speaker 5: Walk us through the process? What makes it so dangerous?
Speaker 5: So dirty?
Speaker 4: And by the way, if I have a vote, they're
Speaker 4: not doing it in New York, not in my backyard,
Speaker 4: so I don't know where it's going to be.
Speaker 7: Certainly not in your backyard. I would probably agree with
Speaker 7: that in New York.
Speaker 15: Now here's the thing. You've got to mind those rare eers.
Speaker 7: And then the process of separation is very pollutions intensive.
Speaker 7: You're talking about air pollution, waste water, waste gases, et cetera.
Speaker 15: It is messy.
Speaker 7: But what we also know is that the Chinese way
Speaker 7: of doing it is not the cleanest way of doing it.
Speaker 7: Mining and processing today is much cleaner than it was
Speaker 7: twenty years ago. So when we look at like I
Speaker 7: was out at MPY Materials Mountain Pass Mind, one of
Speaker 7: really fascinating things is obviously this mine is in a desert.
Speaker 7: You have a lot of tension, particularly with the frequency
Speaker 7: of you know, droughts and wild fires on water. They
Speaker 7: have a completely closed loop water system that actually keeps
Speaker 7: all of that water within the mine. And again that's
Speaker 7: not a common that's not commonplace in China. So we're
Speaker 7: actually learning how to innovate and do it cleaner and
Speaker 7: better than the Chinese have ever been able to.
Speaker 2: So in the land grab, if you will, when it
Speaker 2: comes to critical minerals, I mean, where is everybody at
Speaker 2: this point? I thought I recently saw a story about
Speaker 2: just how much the US has progressed in this area
Speaker 2: in terms of lining up deals.
Speaker 7: Absolutely, the US has made a lot of progress. So
Speaker 7: I want to point to the fact that when we
Speaker 7: look at some of the bilateral agreements and deals that
Speaker 7: we've signed this year, you've seen these agreements being made
Speaker 7: and signed in the context of Japan, Australia, Saudi Arabia,
Speaker 7: You've seen you're seeing DFC financing our US government financing
Speaker 7: going to Brazil.
Speaker 5: Now.
Speaker 7: We're also accelerating our mining production and processing here at home.
Speaker 15: So these are all really big steps that we're doing. It.
Speaker 7: Are we going to be self sufficient? Secretary bustiness that
Speaker 7: will be self sufficient? And in two years that's pretty unlikely.
Speaker 7: We have to remember we're activating a very long term industry.
Speaker 7: You know, ten years from now will look very different.
Speaker 7: We're also not talking about a huge market. This is
Speaker 7: a small market, so two years is a bit over
Speaker 7: ambitious given how long the timeline to developing these capabilities is.
Speaker 15: But we are you know, this year is way ahead
Speaker 15: of where we were last year.
Speaker 4: Gracely and as someone from Detroit, you know how important
Speaker 4: rare earths are in our automotive production chain.
Speaker 5: Is it possible to engineer them out somehow?
Speaker 3: And just got thirty seconds?
Speaker 15: Yeah, and we're starting to.
Speaker 7: I mean, if you look at BMW, they've produced the
Speaker 7: first engine that doesn't use rareers, right. But the difference is,
Speaker 7: you know, we're kind of getting to that nascent level
Speaker 7: of innovation, but to the point that we don't need
Speaker 7: them seatbelts, steering wheels, door panels. That's still quite a
Speaker 7: ways away.
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