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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moven News.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: David Welch, Detroit bureau chief for Bloomberg News, and Jordan Fabian,

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Speaker 1: white House reporter for Bloomberg News.

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Speaker 3: They join us. We're going to round table this thing

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Speaker 3: a little bit.

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Speaker 1: So, David, I want to get the latest reporting out

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Speaker 1: of Detroit.

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Speaker 3: What's the expectation.

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Speaker 1: Will there be a strike and if so, is there

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Speaker 1: any expectation of how long it may last?

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Speaker 4: I think there certainly will be. All of the the

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Speaker 4: vibe coming out of the union right now is the

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Speaker 4: president is itching destroyed. He says he's not, but he's

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Speaker 4: making plans. The writer has still really strong against the

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Speaker 4: car companies, against rich executives, all of that, so he's

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Speaker 4: getting people riled up. He says they're far apart. Sound

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Speaker 4: like they are if you look at the numbers. So

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Speaker 4: I think they will and look, it could go on

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Speaker 4: for a while. I don't think it'll be something like

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Speaker 4: three months, but I could see strike going on for weeks,

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Speaker 4: and it could vary by car company too. It doesn't

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Speaker 4: necessarily two days at one and three weeks at another, right,

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Speaker 4: I mean, if he gets the deal he wants from

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Speaker 4: specific companies.

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Speaker 3: So, David, how far apart are they?

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Speaker 2: Because I've read now that the union has lowered its

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Speaker 2: demand for pay increases slightly, and the last I saw

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Speaker 2: from automakers was about double what I had seen a

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Speaker 2: week ago. So how far apart are they right now?

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Speaker 5: Yeah?

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Speaker 4: So look, Forward is up to twenty percent and GM

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Speaker 4: is at eighteen percent pay raises over four years, which

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Speaker 4: is I think better than they've ever gotten, so, you know,

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Speaker 4: I think, and it's not the thirty six percent they

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Speaker 4: asked for, but I think that was sort of a

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Speaker 4: high ball offer from the union to begin with.

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Speaker 2: But they asked for that because the chief executives have

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Speaker 2: gotten those kinds of pay increases over the past four

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Speaker 2: years as well, haven't they.

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Speaker 6: That's right?

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Speaker 4: And look, you know, CEO's got to kind of be

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Speaker 4: careful what they wish for it, right, because you know,

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Speaker 4: suddenly they might have a union saying you got forty

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Speaker 4: percent and why didn't I? And didn't get great raises

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Speaker 4: over the last contract. And I'm sure some labor negotiators

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Speaker 4: that the company's got bonuses for negotiating a pretty low

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Speaker 4: cost contract last time. And they used to be careful

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Speaker 4: what they wish for, because now they've got an extremely

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Speaker 4: angry union. But they do, and they and with a

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Speaker 4: president who wants to make a statement about labour's role

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Speaker 4: in America. This isn't just about this contract with him,

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Speaker 4: he wants to bring the labor movement back to prominence

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Speaker 4: in America.

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Speaker 3: All right, and all.

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Speaker 4: Right, so that's where we are.

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Speaker 1: Yep, Jordan Fabian, let's bring you in. You covered the

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Speaker 1: White House for Bloomberg News in Washington, DC. The President Biden,

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Speaker 1: he has said twice that there won't be a strike here.

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Speaker 1: What are you hearing out of the White House.

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Speaker 7: I think that's the President being his usual optimistic self.

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Speaker 7: Other people I've talked to aren't so optimistic. And you know,

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Speaker 7: they see what we're all seeing, which is a union

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Speaker 7: and management still.

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Speaker 5: A part on a contract.

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Speaker 7: And you know, they have encouraged the side to stay

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Speaker 7: at the table. But you know, some people I've talked

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Speaker 7: to have said, look, we don't know how this is

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Speaker 7: going to end. It's all we can do is kind

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Speaker 7: of encourage them to keep talking. But there's really not

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Speaker 7: much we can do to force them to get a contract.

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Speaker 7: So they're crossing their fingers and hoping there's not a strike,

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Speaker 7: and if there is, that's not a long one.

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Speaker 2: You So, Jordan David points out that this president wants

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Speaker 2: to bring unions back to prominence. At the same time

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Speaker 2: he has backed up truckloads of subsidies and dumped them

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Speaker 2: on the automaker's doorsteps to try and encourage them to

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Speaker 2: build more electric vehicles for which, by the way, we

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Speaker 2: don't even know how much demand there is that is

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Speaker 2: going to require far fewer workers. So is he working

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Speaker 2: at cross purposes?

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Speaker 7: This is the central dilemma for Joe Biden is this

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Speaker 7: clean energy transition is one of his biggest domestic priorities.

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Speaker 7: But guess what, so it is empowering the US labor movement,

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Speaker 7: and in this negotiation he's found himself caught in the

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Speaker 7: middle of those two priorities and they're really.

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Speaker 5: No easy answers.

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Speaker 7: They've done the administration has done something recently, they've released

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Speaker 7: this fifteen billion dollar tranch of money from the Energy

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Speaker 7: Department to incentivize factory retooling, and they've, you know, they've

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Speaker 7: put some strings attached there. They're encouraging car companies to

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Speaker 7: use that money on unionized plants and make sure the

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Speaker 7: benefits go to union workers, but they're not forced to.

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Speaker 7: And this has been the bane for Sean Fain, which

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Speaker 7: is he doesn't think the administration imposed enough conditions on

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Speaker 7: all this money that's going to the car companies. And

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Speaker 7: so in addition to the pay and benefits, this ev

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Speaker 7: transition issue has been at the backdrop of this negotiation

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Speaker 7: and it's really, you know, causing political problems for Joe

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Speaker 7: Biden because he needs all the units support he get

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Speaker 7: going too twenty twenty four, and here you have this

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Speaker 7: major union on the side saying, not so.

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Speaker 1: Fast, Hey, David, do we know how this union will strike?

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Speaker 1: Will they strike one automaker all three? Do we know

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Speaker 1: kind of their strategy?

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Speaker 4: I think they'll they will strike all three. And what

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Speaker 4: they're what they said they're going to do is they

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Speaker 4: will strike individual plants. They're not going to walk out

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Speaker 4: on the entire company. That's one way of minimizing the

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Speaker 4: payouts from the strike fund, which pays workers some money

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Speaker 4: while they're striking. And if they strike all three at

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Speaker 4: every plant, they'd run out of money in about seven weeks.

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Speaker 4: They don't want to do that, so they'll they'll strike

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Speaker 4: individual plants. And what I think they'll do is they'll

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Speaker 4: strike the plants that make the most profitable vehicles, which

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Speaker 4: would be the large pickup truck and suv plants, because

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Speaker 4: that you know, if you were to take down Ford

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Speaker 4: and GM's large suv and pickup plants and it's something

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Speaker 4: like seventy or eighty percent of their profits comes from

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Speaker 4: those vehicles, you do a lot of damage and put

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Speaker 4: a lot of pressure on the companies very quickly while

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Speaker 4: paying minimally out to your strike fund. And then if

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Speaker 4: they don't get a deal, they can kind of keep,

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Speaker 4: you know, adding another plant here and there. They could

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Speaker 4: strike parts plants that supply the dealers with replacement parts

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Speaker 4: for customers. That could create a lot of chaos. There

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Speaker 4: are a lot of ways they could with individual plant strikes.

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Speaker 4: They could apply a lot of pressure.

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Speaker 3: Hey, David, just person on the street in Detroit, which

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Speaker 3: way are they leaning?

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Speaker 4: I mean, like that kind of runs the gamut. But

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Speaker 4: I think, you know, it's it's a union city, so

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Speaker 4: there's going to be a lot of sympathy for them.

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Speaker 4: It's also the Detroit city proper. There's a lot of

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Speaker 4: poverty there, so you know, strikers trying to get what

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Speaker 4: they think is their fair share would probably have a

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Speaker 4: lot of sympathy. You move further out in the state

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Speaker 4: and you start to see comments on social media like

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Speaker 4: thirty to our work. You guys are on crack up bread,

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Speaker 4: stuff like that. So Michigans, Michigans are a very biver

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Speaker 4: hated place in that.

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Speaker 2: I mean, forty seemed like a lot to me at first,

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Speaker 2: also until I read that the chief executives were getting that.

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Speaker 2: You know, and this is an industry that was bailed

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Speaker 2: out by the US government. There you go during the

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Speaker 2: Great Financial Crisis and a union that gave a lot

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Speaker 2: of help frankly that that accepted a worse contract in

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Speaker 2: order to help the automakers stay alive. Now, the automakers

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Speaker 2: have made a ton of money over the past ten years,

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Speaker 2: and Jordan, does you know from that perspective, doesn't the

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Speaker 2: president from Scranton, Pennsylvania, who cares about the scrappy workers.

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Speaker 2: Doesn't he go march with the with the union when

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Speaker 2: they strike.

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Speaker 7: That would be quite the image, wouldn't it, Joe Biden

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Speaker 7: holding a picket sign.

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Speaker 2: But that's what he wants us to think of him, right.

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Speaker 5: No, he absolutely does.

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Speaker 7: He's repeatedly called himself the most pro union president in

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Speaker 7: US history. He did put out a statement about a

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Speaker 7: month ago that did voice support generally for some of

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Speaker 7: the union demands, like I better pay and betterfit's making

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Speaker 7: sure if there's a factory tooling or closing down, that

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Speaker 7: the members are taken care of and that they keep jobs.

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Speaker 6: In union communities.

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Speaker 7: But look, he also needs these corporations like he needs

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Speaker 7: them for the clean energy transition, not to mention, he

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Speaker 7: needs to Corporate America on side to give him campaign

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Speaker 7: donations for his re election campaign. So that's why you're

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Speaker 7: not going to see him wearing that red shirt that

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Speaker 7: Sean Fame was wearing in that image.

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Speaker 1: All right, fellows, thank you so much for joining both

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Speaker 1: of you. Jordan Fabian he covers the White House for

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Speaker 1: Bloomberg News, and David Welch, Detroit bureau chief, out there

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Speaker 1: giving us kind of the feel for the two sides

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Speaker 1: here again. Midnight tonight Eastern time is the deadline.

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Speaker 8: You're listening to the Team Ken's Arline program Bloomberg Markets

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Speaker 8: weekdays at ten am Eastern on Bloomberg dot Com, the

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Speaker 8: iHeartRadio app, and the Bloomberg Business app, or listen on

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Speaker 8: demand wherever you get your podcast.

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Speaker 1: We had the European Central Bank hike interest rates for

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Speaker 1: the tenth time to quash inflation at the posit rate

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Speaker 1: now four percent, up from three point seven three point

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Speaker 1: seventy five percent.

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Speaker 3: Where do we go from here? They've done?

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Speaker 1: Let's check in with doctor Richard Portis, professor at the

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Speaker 1: London Business School. Professor, thanks so much for joining us here. A.

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Speaker 3: What do you make of the ECB move? ECB's move

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Speaker 3: today and then B are they done?

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Speaker 9: I'm disappointed. I don't think they should have hiked today.

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Speaker 9: The pressures on the European economy are very great now

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Speaker 9: and growth forecasts are just falling and falling. The latest

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Speaker 9: European Commission forecast, independently of the ECB, has cut back

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Speaker 9: their forecasts considerably so that I think they're pushing us

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Speaker 9: into a recession, pushing the Eurozone into a recession, and

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Speaker 9: that seems to be unwise. What they should have done

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Speaker 9: is wait. In my view, the data are mixed. Otherwise,

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Speaker 9: the inflation data are mixed, and it would have been

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Speaker 9: better to hold on.

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Speaker 2: They only have one mandate, though the European Central Bank,

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Speaker 2: unlike the FED, doesn't worry or isn't supposed to be

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Speaker 2: focused on the labor market and I guess economic growth altogether.

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Speaker 2: Their only job is to keep inflation at a steady level.

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Speaker 9: Excuse me, they're talking about their big into climate and

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Speaker 9: all that. They're criticizing the Italian government for their windfall

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Speaker 9: profit tanks on banks. Their single mandate has a very

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Speaker 9: broad scope and actually, if you look at it, they

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Speaker 9: are required to take account of their actions on the

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Speaker 9: overall level of economic activity in the Eurozone.

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Speaker 2: All right, So you're worried that they essentially push the

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Speaker 2: Eurozone into a recession. We're already seeing, you know, we're

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Speaker 2: already seeing that in some of the biggest economies in

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Speaker 2: Germany for example. But they have said this is their

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Speaker 2: final rate hike. Does that, well, they haven't said it. Actually,

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Speaker 2: let me let me. In fact, in fact, Christine leguards

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Speaker 2: that she can't say that, which she can't obviously, but

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Speaker 2: we kind of you can read between the lines and

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Speaker 2: see that this is their final rate hike. So does

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Speaker 2: that kind of blunt the does that kind of reduce

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Speaker 2: the damage effectively?

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Speaker 9: Well, if it's if it ready is final, yes, that's

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Speaker 9: that reduces the prospects of damage. But still I think

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Speaker 9: they've gone too far and we'll just we'll see what happens.

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Speaker 6: The inflation data are not.

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Speaker 9: Particularly good, that's for sure, but you know it's turning around.

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Speaker 9: It has been turning around for a while, and I

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Speaker 9: think the wisest churus is to wait. But there are people,

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Speaker 9: several people with strong views in the Council Governing Council

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Speaker 9: of the ECB who think, no, we must stamp on

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Speaker 9: inflation dramatically, and that's what they're doing.

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Speaker 3: Professor.

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Speaker 1: Here in the US, the talk has been about a

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Speaker 1: soft landing. That is not the case in Europe. Can

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Speaker 1: you give us your view of kind of where the

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Speaker 1: European economy is, how we should think about it.

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Speaker 3: Maybe on this side of the pond.

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Speaker 9: It's certainly not a soft landing here in Europe, and

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Speaker 9: I include the UK and that of course as well.

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Speaker 9: But I think that's where we've got to the labor

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Speaker 9: market is holding up fairly well as in the US

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Speaker 9: for that matter, but economic activity is slowing down very considerably.

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Speaker 9: And how long you can how they can take that? Uh,

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Speaker 9: the politicians are coming European elections are coming up, not

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Speaker 9: in just in individual countries, but also the European Parliament

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Speaker 9: elections are coming up, and there's gonna be a lot

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Speaker 9: of criticism of the ECB if indeed we find the

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Speaker 9: Arizona going into a full scale recession.

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Speaker 5: I wonder.

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Speaker 2: You know how hesitant you are to include the UK

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Speaker 2: when you talk about Europe, because aren't there very big differences?

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Speaker 2: And to some extent, the UK has you know, kind

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Speaker 2: of repeatedly shot itself in the foot.

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Speaker 9: Well, I mean depends which which gun you're talking about.

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Speaker 6: Was that the left foot or the right foot or

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Speaker 6: both the same time?

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Speaker 9: Yes, I'm afraid we have done, and right now there

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Speaker 9: seems no prospect of that reversing. But but here too,

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Speaker 9: I believe we should not be raising rates any further.

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Speaker 9: The data are turning around. They're turning around for inflation.

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Speaker 9: They're turning around slower than one would like, for sure,

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Speaker 9: But the cost of the restrictive policies is high.

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Speaker 6: And that I think is unwise.

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Speaker 9: The the otherwise, you know, the banking sector is in

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Speaker 9: pretty good shape, both in the Eurozone and in the UK.

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Speaker 9: How long that will last we don't know. But the

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Speaker 9: rise and interest rates as of course widened that interest

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Speaker 9: margins for a while. They will they will come down

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Speaker 9: as as banks have to pass on some of the

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Speaker 9: interest rate rises to the depositors. But the financial sector

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Speaker 9: is in pretty good shape in general, and it's just

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Speaker 9: the main suffering is in manufacturing and to some extented services,

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Speaker 9: and that's that's serious.

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Speaker 5: Yep.

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Speaker 1: And Professor, when you talk about manufacturing, European manufacturing, I

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Speaker 1: think most US investors think Germany. Can you tell us

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Speaker 1: about how we should be thinking about the German economy here?

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Speaker 3: And maybe the outlook it's not.

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Speaker 6: A pretty picture.

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Speaker 9: The problem is partly a slow down in external demand

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Speaker 9: from China in particular, and that is very substantial and

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Speaker 9: very severe and has a big impact across a wide

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Speaker 9: range of German engineering firms.

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Speaker 6: So that's a big deal.

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Speaker 9: The unions have push wages up and German manufacturing is

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Speaker 9: there's not a sector I can think of right now

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Speaker 9: that is balancing this trend downwards and If you look

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Speaker 9: at the data, they're pretty they're pretty depressing, so uh so, and.

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Speaker 6: It's it's not it's not easy to see how that's

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Speaker 6: going to turn around.

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Speaker 9: Actually, the the finance minister is a very uh conservative

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Speaker 9: shall we say, uh uh minister, and he certainly has

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Speaker 9: no intention of any fiscal expansion. Indeed, just the other

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Speaker 9: way around, the prospect for next year for Germany is

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Speaker 9: fiscal contraction. Uh in the face of this uh, in

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Speaker 9: the face of this gathering recession.

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Speaker 6: That seems to me very foolish.

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Speaker 2: What do you think the solution? The solution is to

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Speaker 2: the problems that the European Union faces in terms of

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Speaker 2: monetary policy. You have got this one uh you know,

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Speaker 2: organization setting monetary policy for so many different and diverse economies.

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Speaker 2: Does that you think work? Has it worked out so far?

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Speaker 2: Does it need to change?

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Speaker 9: It's always Look if you look at the United States,

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Speaker 9: you have a single monetary authority setting policies for states

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Speaker 9: as diverse as Mississippi and California, not to mention Illinois,

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Speaker 9: where I grew up a long time ago. So it's

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Speaker 9: this one size fits all problem is a problem you

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Speaker 9: have in any large, single economy. And to the extent

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Speaker 9: that the European Eurozone is a single economy, it is.

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Speaker 6: Diverse, and you're going to have.

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Speaker 9: Areas where even in the UK we've had this conflict

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Speaker 9: in part with monetary policy having different impacts on London

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Speaker 9: and say the Northeast, and there's nothing you can do

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Speaker 9: about that. You have to have a single monetary policy.

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Speaker 9: You can't have different interest rates for different zones. So

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Speaker 9: the one size fits all problem is there. It's no

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Speaker 9: more acute in my view, in the Eurozone than it

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Speaker 9: is in any large, geographically diverse economy. But it's true

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Speaker 9: that you have very different, for example, in the Eurozone,

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Speaker 9: very different rates of inflation. In the Baltic countries it's

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Speaker 9: been much higher.

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Speaker 6: Than the rate in.

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Speaker 9: France, say, or Spain and Spain where Spain has been

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Speaker 9: very low.

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Speaker 6: So you know, that's something they can't they can't do

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Speaker 6: much about it.

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Speaker 9: They can't do anything about But it's not it's not

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Speaker 9: special to the Eurozone.

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Speaker 1: Okay, doctor Richard Porters, thank you so much for your time.

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Speaker 1: You really appreciate getting your thoughts and analysis, Doctor Richard Porters.

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Speaker 3: He's a professor at the London Business School.

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Speaker 8: You're listening to the tape Can's are live program Bloomberg

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Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio. To

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00:18:59,160 --> 00:19:01,120
Speaker 8: tune it Upoomberg dot Com and.

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00:19:01,080 --> 00:19:02,400
Speaker 5: The Bloomberg Business App.

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Speaker 6: All right.

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Speaker 1: When I first learned about this whole reek thing years

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Speaker 1: and years ago, fun flows from operation. That's the profitability

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Speaker 1: metric that these people focus on FFO.

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Speaker 2: I thought this, you're talking about a real estate investment.

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Speaker 3: Trust.

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Speaker 1: I know, it's kind of the thing. I thought it

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Speaker 1: at the time was a scam, but now I understand

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Speaker 1: how it works.

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Speaker 2: That's free cash flow.

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Speaker 1: No, it's like their ebitda oh, I think, I don't know.

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Speaker 1: Our next guest can help us out, Christine Mostandria.

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Speaker 3: She is the COO of white.

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Speaker 1: Stone Rate that trades on the New York Stock Exchange

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Speaker 1: ws R. Christine Whitestone read tell us about your company.

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Speaker 3: What kind of real estate do you guys own or

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Speaker 3: do you guys focus on?

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Speaker 10: So primarily we focus on neighborhood retail. So this would

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Speaker 10: be your high visit great corners with traffic and pretty

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Speaker 10: much based on convenience versus soft goods.

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Speaker 1: So I think about the pandemic in my home, in

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Speaker 1: my town in Jersey, lots of and we have a

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Speaker 1: very vibrant downtown in New Jersey. Lots of businesses went

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Speaker 1: out of UH one went out of business, so a

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Speaker 1: lot of you know, for sale for rent signs. What

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Speaker 1: is the short Hills Summit Summit and better town than

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Speaker 1: Short Hills, Better train Station. So which is why I

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Speaker 1: chose somewhat over Short Hills Better train Station. Some people

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Speaker 1: choose the name.

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Speaker 2: I just wanted to make it clear because I can

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Speaker 2: imagine properties like that in Short Hills or Summit. I

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Speaker 2: can imagine property in Scarsdale and Bronxville.

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Speaker 4: You know this is where?

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Speaker 3: So what happened to your properties then? And kind of

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Speaker 3: where are you now?

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Speaker 10: So we have the fortune of being into very strong markets.

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Speaker 10: So we're in Texas and Arizona.

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Speaker 3: Oh nice.

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Speaker 10: So our rebound from COVID which was much much quicker,

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Speaker 10: In fact it probably I think we're affected maybe for

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Speaker 10: six months really, So yeah, we had very few tenants

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Speaker 10: to fall.

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Speaker 3: Because you guys didn't shut down do the mess. Things

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Speaker 3: just partied right, well, I mean on the Ozar.

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Speaker 10: Yeah, there was a little bit of that going on,

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Speaker 10: I'd have to say, and our restaurants for a while,

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Speaker 10: there was a little bit of spacing, but you know,

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Speaker 10: they rebounded really quickly and then quickly after that same

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Speaker 10: thing with Fitness and all of other operators.

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Speaker 3: So what is this.

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Speaker 2: You're not just the CEO of Whitestone, reed, you're also

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Speaker 2: a professor of commercial real estate and strategic management at

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Speaker 2: Rice Business School. What does this fun flow from operations?

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Speaker 2: What's the significance of that for a rate?

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Speaker 10: So it's a little bit different than even up right,

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Speaker 10: I mean as far as profitability. So what you have

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Speaker 10: to take into context is where an asset have you

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Speaker 10: business and so that means you have to reinvest capital

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Speaker 10: into the business, and so that takes that into account.

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Speaker 10: So it's a little bit different as far as getting

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Speaker 10: to a bottom line.

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Speaker 2: I was thinking maybe it's somewhere in the middle.

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Speaker 3: Maybe somewhere in the middle, but anyway, they buy off

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Speaker 3: on it.

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Speaker 1: All right, So at Whitestone Rerate, your Texas, your Arizona,

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Speaker 1: what's the growth story for your company?

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Speaker 6: Is it?

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Speaker 1: Is it acquisition? Is it just increasing the the you know,

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Speaker 1: the numbers, the vacancies and all that kind of stuff.

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Speaker 3: I mean not to make it the occupancy.

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Speaker 10: So I think there's a couple of different components of

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Speaker 10: our business. So first of all, occupancy, and the big

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Speaker 10: part about occupancy is is you don't just want to

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Speaker 10: fill the space. You really want to serve successfully serve

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Speaker 10: the neighborhood. So making sure that you are the right

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Speaker 10: merchandise mix is very important to what we do. That's

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Speaker 10: number one. Number two, we also take a number of centers.

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Speaker 10: We have a number of our centers in our portfolio

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Speaker 10: that we redevelop so that's improved the look, the feel,

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Speaker 10: the customer convenience for that center. It may also be

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Speaker 10: taking out some parking because now you don't need as

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Speaker 10: much parking, you don't need that same in building in

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Speaker 10: some density as well. And then along with that we

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Speaker 10: do acquire and so there's always that opportunity for our acquisition.

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Speaker 10: It's been a little challenging right now because the pricing

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Speaker 10: for product hasn't quite adjusted yet with cap rates. But

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Speaker 10: we're starting to see that loosen out.

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Speaker 2: You're the tiny house people of real estate of commercial

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Speaker 2: real estate, right you're looking in smaller spaces, less parking

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Speaker 2: and what and I guess or are closer to each other.

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Speaker 2: What's the benefit of that over big?

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Speaker 10: So I think small is beautiful And one of the

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Speaker 10: reasons why is because if you look at so our

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Speaker 10: our space size is about twenty five hundred to three

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Speaker 10: thousand square feet and our centers are around fifty to

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Speaker 10: one hundred and fifty thousand square feet in size, So

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Speaker 10: that to you know, twenty five hundred and three thousand

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Speaker 10: square feet has the widest range of uses out there,

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Speaker 10: So it's the most flexible real estate. So when you

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Speaker 10: think about them all, it's not really that flexible, right,

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Speaker 10: it's large, it's big box, There's not a lot of

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Speaker 10: users that can go in and out of some of

443
00:23:32,760 --> 00:23:35,800
Speaker 10: those spaces, especially a power center. But in our case,

444
00:23:36,040 --> 00:23:39,359
Speaker 10: we primarily are service based and necessity based, so this

445
00:23:39,480 --> 00:23:42,119
Speaker 10: gives us the most flexibility to meet the neighborhood needs

446
00:23:42,119 --> 00:23:43,040
Speaker 10: with that size space.

447
00:23:43,320 --> 00:23:45,440
Speaker 1: So what are some of the typical tenants or maybe

448
00:23:45,440 --> 00:23:47,000
Speaker 1: an anchor ten or what are some of the areas

449
00:23:47,000 --> 00:23:48,400
Speaker 1: of growth in terms of tenants?

450
00:23:48,440 --> 00:23:52,880
Speaker 10: Now we've sounded really so I found that what has

451
00:23:52,960 --> 00:23:56,240
Speaker 10: transitioned the most going in twenty years in this business

452
00:23:56,680 --> 00:24:00,760
Speaker 10: is that number one grocery anchored used to be where

453
00:24:00,760 --> 00:24:03,160
Speaker 10: things are, but if you think about where the competition

454
00:24:03,240 --> 00:24:06,280
Speaker 10: is for grocery, it's really restaurants and that has everything

455
00:24:06,280 --> 00:24:09,040
Speaker 10: to do with convenience in the experience. So we've seen

456
00:24:09,080 --> 00:24:12,080
Speaker 10: this real explosion in the restaurant uses in most of

457
00:24:12,080 --> 00:24:15,600
Speaker 10: our centers, and so that's been the primary driver.

458
00:24:15,760 --> 00:24:17,760
Speaker 1: Is that like a Chili's or something like that as

459
00:24:17,800 --> 00:24:19,639
Speaker 1: an anchor or more local.

460
00:24:19,680 --> 00:24:22,720
Speaker 10: More local in fact, so many people that that's part

461
00:24:22,720 --> 00:24:25,200
Speaker 10: of the experiences that people are looking for right now,

462
00:24:25,320 --> 00:24:28,080
Speaker 10: is the taste of food and chef inspired and so

463
00:24:28,160 --> 00:24:30,919
Speaker 10: on and so forth. So especially in Texas, we have

464
00:24:30,960 --> 00:24:33,600
Speaker 10: a very, very broad range of restaurant uses all the way.

465
00:24:34,200 --> 00:24:35,960
Speaker 10: Houston in particular is very international.

466
00:24:36,160 --> 00:24:39,000
Speaker 1: Texas is I mean, it's a country in and of itself.

467
00:24:39,040 --> 00:24:40,159
Speaker 1: I mean, I know you guys like to think of

468
00:24:40,200 --> 00:24:42,959
Speaker 1: yourself as not even part of the country, but in Texas,

469
00:24:43,320 --> 00:24:46,000
Speaker 1: I mean, it's it's so big. Is there certain parts

470
00:24:46,000 --> 00:24:48,320
Speaker 1: of Texas that you guys focus on more urban airs or.

471
00:24:48,320 --> 00:24:50,160
Speaker 10: More world So Texas was its own country.

472
00:24:51,720 --> 00:24:54,440
Speaker 3: The team proud of that.

473
00:24:55,200 --> 00:24:58,480
Speaker 10: So primarily we stay in the fastest largest growing cities,

474
00:24:58,520 --> 00:25:01,600
Speaker 10: So we're in Dallas, San Antonio, Austin, Houston, and then

475
00:25:01,720 --> 00:25:04,720
Speaker 10: we're in Phoenix and you know the Phoenix East Valley

476
00:25:04,760 --> 00:25:06,400
Speaker 10: as well, so which is also FASc.

477
00:25:06,359 --> 00:25:08,399
Speaker 2: You want to have a neighborhoody neighborhood.

478
00:25:08,440 --> 00:25:11,159
Speaker 3: Everybody's moving, I mean, what's the what's it like in

479
00:25:11,200 --> 00:25:12,760
Speaker 3: your market? Everybody's moving there.

480
00:25:13,320 --> 00:25:15,919
Speaker 10: That's it is very very exciting. So I think we

481
00:25:16,040 --> 00:25:20,760
Speaker 10: jokingly call Phoenix Chicago West to California East so because

482
00:25:20,800 --> 00:25:23,200
Speaker 10: that and that's really changed. So finally in Phoenix you

483
00:25:23,280 --> 00:25:26,320
Speaker 10: have really good Italian food, thank you for Chaga. But

484
00:25:26,440 --> 00:25:28,359
Speaker 10: on the other side of that, I think that in

485
00:25:28,400 --> 00:25:32,520
Speaker 10: particular Dallas has had such such a gross strength because

486
00:25:32,560 --> 00:25:36,680
Speaker 10: they've really focused on the job market and Fortune five

487
00:25:36,760 --> 00:25:39,560
Speaker 10: hundred to one hundred companies, so they've gone after that

488
00:25:39,720 --> 00:25:43,400
Speaker 10: group of that job market. Austin has done extremely well,

489
00:25:43,440 --> 00:25:45,680
Speaker 10: and because of that, San Antonio is people are starting

490
00:25:45,680 --> 00:25:47,840
Speaker 10: to move to San Antonio. So you have, of course

491
00:25:48,080 --> 00:25:50,600
Speaker 10: the educational system that really pushes that. And you have

492
00:25:50,680 --> 00:25:53,159
Speaker 10: high tech there. I mean with Michael Delhi has you know,

493
00:25:53,200 --> 00:25:54,960
Speaker 10: created his own ecosystem.

494
00:25:54,400 --> 00:25:54,960
Speaker 3: There of tech.

495
00:25:55,040 --> 00:25:55,200
Speaker 1: Yeah.

496
00:25:55,320 --> 00:25:58,920
Speaker 10: So, and then Houston has been you know viewed primarily

497
00:25:58,920 --> 00:26:02,159
Speaker 10: as willing gas but it's really changed with Houston is

498
00:26:02,200 --> 00:26:04,879
Speaker 10: that they've gotten heavily. It's the largest medical district in

499
00:26:04,920 --> 00:26:08,000
Speaker 10: the world, so that shifted as well. So you know

500
00:26:08,040 --> 00:26:10,040
Speaker 10: a lot of people are moving there because it's a

501
00:26:10,080 --> 00:26:13,200
Speaker 10: business friendly state, but it also is the job drivers

502
00:26:13,280 --> 00:26:16,080
Speaker 10: that just the job growth has been tremendous. And then

503
00:26:16,119 --> 00:26:18,440
Speaker 10: we're seeing the same in Phoenix and especially there it's

504
00:26:18,440 --> 00:26:21,280
Speaker 10: getting younger. Used to be a retirement community, but you

505
00:26:21,320 --> 00:26:24,440
Speaker 10: have ASU which has been a huge, you know, proponent

506
00:26:24,480 --> 00:26:25,440
Speaker 10: of change there as well.

507
00:26:25,600 --> 00:26:27,760
Speaker 1: It's a little hot in your markets though, but it's

508
00:26:27,760 --> 00:26:28,760
Speaker 1: a dry heat.

509
00:26:28,840 --> 00:26:34,040
Speaker 3: Yeah, their entire summer was like one hundred and twenty degrees.

510
00:26:35,600 --> 00:26:38,800
Speaker 10: It's been a little steamy in Houston and then Arizona

511
00:26:38,840 --> 00:26:39,880
Speaker 10: it's just it's very hot.

512
00:26:40,119 --> 00:26:42,560
Speaker 1: So wow, all right, but the great market's great growth markets.

513
00:26:42,800 --> 00:26:45,639
Speaker 1: Christine messt Andre, thank you so much for joining us.

514
00:26:45,720 --> 00:26:49,159
Speaker 1: Christine is the CEO of white Stone Reit the New

515
00:26:49,200 --> 00:26:51,320
Speaker 1: York Sock Exchange. Take her to put into your Bloomberg

516
00:26:51,400 --> 00:26:53,840
Speaker 1: terminals w s R.

517
00:26:54,680 --> 00:26:58,119
Speaker 8: You're listening to the team Ken's are Live program Bloomberg

518
00:26:58,160 --> 00:27:01,560
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot Com,

519
00:27:01,600 --> 00:27:04,720
Speaker 8: the iHeartRadio app, and the Bloomberg Business app or listen

520
00:27:04,800 --> 00:27:06,879
Speaker 8: on demand wherever you get your podcast.

521
00:27:09,119 --> 00:27:12,480
Speaker 1: Andrew Silverman, government analysts caring tax policy for Bloomberg Intelligence

522
00:27:12,600 --> 00:27:15,480
Speaker 1: Joints is Andrew, how are you looking at this arm

523
00:27:15,560 --> 00:27:18,760
Speaker 1: IPO in the context of just the IPO bus in general.

524
00:27:20,480 --> 00:27:23,439
Speaker 11: Yeah, thanks, Paul. I actually I wanted to respond to

525
00:27:23,480 --> 00:27:27,480
Speaker 11: your comment about companies going public at all. I think

526
00:27:27,480 --> 00:27:30,439
Speaker 11: you're onto something. I mean, the number of companies that

527
00:27:30,640 --> 00:27:33,560
Speaker 11: are public in the United States has is almost half

528
00:27:33,560 --> 00:27:37,040
Speaker 11: of what it was in nineteen ninety six. It's dropped

529
00:27:37,080 --> 00:27:40,560
Speaker 11: down to something like forty three hundred. And you know,

530
00:27:40,960 --> 00:27:43,560
Speaker 11: companies can get cash in lots of lots of ways.

531
00:27:43,600 --> 00:27:45,280
Speaker 11: They don't have to go public to get their cash.

532
00:27:45,320 --> 00:27:50,240
Speaker 11: I mean, there's about what six point three trillion in

533
00:27:50,320 --> 00:27:54,439
Speaker 11: assets that the private equity funds have. Compliance costs are

534
00:27:54,480 --> 00:27:57,600
Speaker 11: really high right now, it's about an average of four

535
00:27:57,640 --> 00:28:00,679
Speaker 11: percent of a company's market cap. There are more regulations

536
00:28:00,720 --> 00:28:03,200
Speaker 11: than ever, not just the thirty three and thirty four Acts,

537
00:28:03,200 --> 00:28:08,080
Speaker 11: but Sarbanes Oxley and DoD Frank and companies have to

538
00:28:08,119 --> 00:28:12,159
Speaker 11: take a short term view in the sense that they

539
00:28:12,200 --> 00:28:17,320
Speaker 11: have to put out quarterly filings and make distributions to

540
00:28:17,320 --> 00:28:19,640
Speaker 11: their shareholders, and so they have to take the short

541
00:28:19,720 --> 00:28:22,439
Speaker 11: term view over long term priorities. And a company like

542
00:28:22,600 --> 00:28:25,679
Speaker 11: ARM really has to prioritize a long term view. It

543
00:28:25,720 --> 00:28:29,320
Speaker 11: has to invest in R and D, so thinking short

544
00:28:29,400 --> 00:28:32,399
Speaker 11: term not the greatest. And one other thing that I

545
00:28:32,400 --> 00:28:35,200
Speaker 11: would bring up, there's going to be this new standard

546
00:28:35,200 --> 00:28:38,680
Speaker 11: which comes out pretty soon from from fasby the Accounting

547
00:28:38,680 --> 00:28:44,400
Speaker 11: Standards Board called Noklar, which experts believe will double or

548
00:28:44,400 --> 00:28:47,960
Speaker 11: even triple the fees that companies have to pay to

549
00:28:48,000 --> 00:28:51,160
Speaker 11: their auditors. And what it does is it essentially says

550
00:28:51,200 --> 00:28:54,640
Speaker 11: to the auditors, if there's any regulation, law, anything around

551
00:28:54,680 --> 00:28:57,240
Speaker 11: the world that's going to have a material impact on

552
00:28:57,280 --> 00:29:00,440
Speaker 11: a company's filings, it has to be included. And so

553
00:29:00,880 --> 00:29:04,480
Speaker 11: that means that others are responsible for checking everything everywhere

554
00:29:04,480 --> 00:29:07,240
Speaker 11: in any country that the company operates in order to

555
00:29:07,280 --> 00:29:11,600
Speaker 11: make sure that all material risks are covered. So it's

556
00:29:11,640 --> 00:29:13,440
Speaker 11: not a great time to be a public company.

557
00:29:13,440 --> 00:29:16,040
Speaker 2: Those are all the reasons you wouldn't want to go public.

558
00:29:16,240 --> 00:29:19,800
Speaker 2: And I mean clearly, if you're a billionaire and you

559
00:29:19,800 --> 00:29:22,840
Speaker 2: don't have a fantastic valuation, you take your company private.

560
00:29:22,960 --> 00:29:28,000
Speaker 2: That's the smart move. Andrew Silverman, hang tight for a second,

561
00:29:28,000 --> 00:29:31,000
Speaker 2: because I want to bring Kunjon Sabani leads semiconductor analysts

562
00:29:31,000 --> 00:29:34,560
Speaker 2: for Bloomberg Intelligence cou John. Having said all that, and

563
00:29:34,560 --> 00:29:37,160
Speaker 2: I'm sure you know all the reasons why you wouldn't

564
00:29:37,160 --> 00:29:39,600
Speaker 2: necessarily want to go public. Why is massa son? Why

565
00:29:39,640 --> 00:29:42,960
Speaker 2: is SoftBank taking arm public right now rather than any

566
00:29:43,000 --> 00:29:45,880
Speaker 2: other exit exit strategy?

567
00:29:46,280 --> 00:29:48,480
Speaker 12: Yeah, I mean, simple reason is they just need liquidity

568
00:29:48,640 --> 00:29:51,960
Speaker 12: right now given what's happening in their parent business, Softmak.

569
00:29:52,040 --> 00:29:54,040
Speaker 12: So they're just in need of some cash and this

570
00:29:54,200 --> 00:29:57,960
Speaker 12: is one of their biggest assets, which might not be

571
00:29:58,000 --> 00:30:00,520
Speaker 12: the perfect time, but still relatively in the pass, it's

572
00:30:00,520 --> 00:30:02,960
Speaker 12: a better time today to go public with this. The

573
00:30:03,000 --> 00:30:05,280
Speaker 12: other thing to keep in account, they're limiting their flow

574
00:30:05,400 --> 00:30:08,520
Speaker 12: to really like only five billion dollars, less than ten percent,

575
00:30:08,640 --> 00:30:12,040
Speaker 12: so they are holding on to get a higher price

576
00:30:12,160 --> 00:30:13,040
Speaker 12: later in the future.

577
00:30:14,240 --> 00:30:17,120
Speaker 1: Hey, Kun John, you know, as I looked at this perspectives,

578
00:30:17,120 --> 00:30:19,240
Speaker 1: it looks like this is a company that designs chips

579
00:30:19,240 --> 00:30:24,000
Speaker 1: for telephones. Great, but they are pitching this company now

580
00:30:24,120 --> 00:30:28,000
Speaker 1: as hey, we're going to be an AI company going forward.

581
00:30:28,360 --> 00:30:29,520
Speaker 3: So they're asking me.

582
00:30:29,520 --> 00:30:33,360
Speaker 1: To pay an AI ish type multiple for a phone

583
00:30:33,440 --> 00:30:36,320
Speaker 1: chip manufacturer. Is that kind of what they're asking the

584
00:30:36,320 --> 00:30:37,560
Speaker 1: market to buy off on.

585
00:30:39,400 --> 00:30:42,760
Speaker 12: Yes, that's exactly right. I mean, look, they're pitching, they're

586
00:30:42,800 --> 00:30:45,720
Speaker 12: asking the market to underwrite the future, sort of the

587
00:30:45,760 --> 00:30:49,520
Speaker 12: next in media moment, and their current business is primarily,

588
00:30:49,560 --> 00:30:52,120
Speaker 12: like you said, smartphones and consumer electronics and to some

589
00:30:52,160 --> 00:30:55,920
Speaker 12: degree IoT, but the AI server and the automotive market

590
00:30:56,000 --> 00:30:59,880
Speaker 12: is where they've had recent designments which they expect to

591
00:31:00,080 --> 00:31:02,120
Speaker 12: or they share there, and that is what they're selling

592
00:31:02,160 --> 00:31:04,160
Speaker 12: to the investors, like, hey, you can bet on us

593
00:31:04,200 --> 00:31:06,600
Speaker 12: for this coming in the future, so you don't miss out.

594
00:31:07,160 --> 00:31:09,080
Speaker 1: Hey, Andrew, back in today, you know, I could take

595
00:31:09,080 --> 00:31:11,680
Speaker 1: a company public with not much more than a business plan,

596
00:31:11,880 --> 00:31:15,040
Speaker 1: But today it seems like the market once not only

597
00:31:15,240 --> 00:31:19,440
Speaker 1: revenues but profits. I mean that also maybe thins out

598
00:31:19,480 --> 00:31:22,000
Speaker 1: the herd for potential IPO candidates.

599
00:31:23,960 --> 00:31:29,480
Speaker 11: Yeah, that's exactly right. And in this case, I mean, well, so,

600
00:31:30,280 --> 00:31:32,440
Speaker 11: I mean why to invest in a company. I mean,

601
00:31:32,480 --> 00:31:34,000
Speaker 11: on the one hand, you want to get your returns.

602
00:31:34,160 --> 00:31:37,719
Speaker 11: On the other hand, you have an expectation you're going

603
00:31:37,760 --> 00:31:40,240
Speaker 11: to have some sort of control over over the company

604
00:31:40,240 --> 00:31:41,880
Speaker 11: that you're investing in, and this is not one of

605
00:31:41,920 --> 00:31:44,680
Speaker 11: those cases because soft Bank is going to keep controlling

606
00:31:44,720 --> 00:31:47,520
Speaker 11: it after the IPO, and it's going to be what's

607
00:31:47,560 --> 00:31:50,240
Speaker 11: called a foreign private issuer, and so the shareholders won't

608
00:31:50,240 --> 00:31:53,760
Speaker 11: even know as much about it as a typical US company,

609
00:31:53,800 --> 00:31:56,200
Speaker 11: won't have to make quarterly filings, won't have to have

610
00:31:56,320 --> 00:32:00,760
Speaker 11: quarterly shareholder calls, and not subject to reg AfD, so

611
00:32:00,840 --> 00:32:04,680
Speaker 11: it can share material non public information selectively, not just

612
00:32:04,880 --> 00:32:10,560
Speaker 11: to a select group of shareholders, not all shareholders. So yeah,

613
00:32:10,600 --> 00:32:13,640
Speaker 11: I mean, if the only thing that people are investing

614
00:32:13,640 --> 00:32:16,160
Speaker 11: in ARMED for is a shareholders distribution, I think they're

615
00:32:16,160 --> 00:32:18,080
Speaker 11: also going to be disappointed in the fact that this

616
00:32:18,120 --> 00:32:20,680
Speaker 11: company has to invest so much and it's R and D,

617
00:32:20,920 --> 00:32:23,320
Speaker 11: and it also has such high operating expenses.

618
00:32:24,080 --> 00:32:26,560
Speaker 2: So and it's a good point that this is all

619
00:32:26,680 --> 00:32:31,160
Speaker 2: about soft Bank, Kunjohn. ARM isn't reaping any of the

620
00:32:31,200 --> 00:32:34,440
Speaker 2: proceeds from this IPO, right, It's not like they're going

621
00:32:34,520 --> 00:32:36,600
Speaker 2: to be able to reinvest and build their business. This

622
00:32:36,720 --> 00:32:38,960
Speaker 2: is just cashing out from Masa Sun.

623
00:32:39,800 --> 00:32:40,680
Speaker 4: That's exactly right.

624
00:32:40,800 --> 00:32:42,520
Speaker 12: None of the proceeds are going to ARM to be

625
00:32:42,520 --> 00:32:43,760
Speaker 12: invested in the business.

626
00:32:44,400 --> 00:32:47,320
Speaker 1: Kunjun, Just real quick thirty seconds of the chip makers

627
00:32:47,320 --> 00:32:49,400
Speaker 1: out there which ones do you think are best positioned

628
00:32:49,440 --> 00:32:50,760
Speaker 1: for this AI move?

629
00:32:52,120 --> 00:32:54,360
Speaker 12: I mean in Nvidia, of course we all are aware

630
00:32:54,400 --> 00:32:58,920
Speaker 12: of this second closes as AMD, they are also betting

631
00:32:58,960 --> 00:33:02,520
Speaker 12: big on AI, and I would go broad common Intell

632
00:33:02,560 --> 00:33:04,440
Speaker 12: also have significant air exposure.

633
00:33:04,800 --> 00:33:09,560
Speaker 1: And do you expect can a company like arm make

634
00:33:09,600 --> 00:33:10,080
Speaker 1: that pivot?

635
00:33:10,120 --> 00:33:12,040
Speaker 3: Do you think? How do you view that opportunity?

636
00:33:13,360 --> 00:33:13,720
Speaker 6: They could?

637
00:33:13,720 --> 00:33:16,520
Speaker 12: I mean, look, they currently they have low single digit share,

638
00:33:16,720 --> 00:33:22,040
Speaker 12: but they have had recent massive wins Amazon, Google, startups

639
00:33:22,040 --> 00:33:26,280
Speaker 12: like mpere adopting ARMED technology Apple, so there's room to

640
00:33:27,520 --> 00:33:30,680
Speaker 12: leverage and build on those wins, and they can. I mean, look,

641
00:33:30,720 --> 00:33:32,800
Speaker 12: they don't need to beat the dominant player even if

642
00:33:32,840 --> 00:33:35,760
Speaker 12: they grow their market share. But another five percent, that's

643
00:33:35,920 --> 00:33:38,600
Speaker 12: talking about billions of dollars adding to a company which

644
00:33:38,640 --> 00:33:41,680
Speaker 12: is a low three billion in revenue, So significant growth

645
00:33:41,680 --> 00:33:43,920
Speaker 12: from just a little bit of an increment share games.

646
00:33:44,080 --> 00:33:45,600
Speaker 3: All right, thanks so much for joining us.

647
00:33:45,640 --> 00:33:49,080
Speaker 1: Conjoen Sapani he is the technology analys for Bloomberg Intelligence

648
00:33:49,120 --> 00:33:52,320
Speaker 1: based in San Francisco. And Andrew Silverman government analys covering

649
00:33:52,320 --> 00:33:55,479
Speaker 1: a tax policy, looking at the IPO market in general.

650
00:33:55,520 --> 00:33:58,720
Speaker 1: He does all that stuff for Bloomberg Intelligence based down

651
00:33:58,800 --> 00:34:02,560
Speaker 1: in Washington, DC. We've got bi analysts basically everywhere.

652
00:34:02,120 --> 00:34:02,720
Speaker 3: They need to be.

653
00:34:02,800 --> 00:34:05,160
Speaker 1: If you need tech, we got folks in San Francisco.

654
00:34:05,200 --> 00:34:08,239
Speaker 1: If you need the policy stuff, we got folks down

655
00:34:08,239 --> 00:34:10,480
Speaker 1: in DC, right where it all happens. So this bifolks

656
00:34:10,520 --> 00:34:11,520
Speaker 1: know what they're doing down there.

657
00:34:11,920 --> 00:34:13,160
Speaker 5: You're listening to the tape.

658
00:34:13,320 --> 00:34:16,680
Speaker 8: Cat's are live program Bloomberg Markets weekdays at ten am

659
00:34:16,719 --> 00:34:20,839
Speaker 8: Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.

660
00:34:20,560 --> 00:34:21,959
Speaker 5: And the Bloomberg Business app.

661
00:34:22,040 --> 00:34:24,839
Speaker 8: You can also listen live on Amazon Alexa from our

662
00:34:24,840 --> 00:34:30,040
Speaker 8: flagship New York station. Just say Alexa, play Bloomberg eleven thirty.

663
00:34:31,280 --> 00:34:32,080
Speaker 3: It's called gaming.

664
00:34:32,280 --> 00:34:34,960
Speaker 1: My favorite sectors to cover the casinos. But we're not

665
00:34:34,960 --> 00:34:37,200
Speaker 1: gonna be talking craps or blackjack.

666
00:34:36,760 --> 00:34:38,760
Speaker 3: Or any of that kind of stuff. We're talking hacking.

667
00:34:39,080 --> 00:34:40,799
Speaker 1: I think some of these casino companies have been hacked

668
00:34:40,840 --> 00:34:42,399
Speaker 1: over the past couple of days. I'm talking to big

669
00:34:42,440 --> 00:34:45,960
Speaker 1: ones like MGM and Caesars. Let's break this down, see

670
00:34:46,000 --> 00:34:49,040
Speaker 1: what the risk is here to these companies. Brian Egger,

671
00:34:49,360 --> 00:34:52,160
Speaker 1: Senior Gaming Analysts and Lodging Animals, Bloomberg Intelligence, joins Us

672
00:34:52,160 --> 00:34:56,399
Speaker 1: and Jody Lori credit analysts with Bloomberg Intelligence. She joins

673
00:34:56,480 --> 00:35:00,200
Speaker 1: us on via zoom both via Zoom here and in

674
00:35:00,200 --> 00:35:02,520
Speaker 1: our Princeton office. Brian, let's just start with you what's

675
00:35:02,560 --> 00:35:05,560
Speaker 1: going on with these big casino companies and some hacking.

676
00:35:07,880 --> 00:35:09,840
Speaker 13: So it came about we found out a couple of

677
00:35:09,920 --> 00:35:13,440
Speaker 13: days ago that MGM has been the target of an

678
00:35:13,440 --> 00:35:18,520
Speaker 13: ongoing cyber attack TEMP that has resulted in systems shutdowns

679
00:35:18,520 --> 00:35:23,319
Speaker 13: across a wide range of services. That's casino, hotel, other

680
00:35:23,440 --> 00:35:26,920
Speaker 13: systems that have had to revert to manual operations. Obviously,

681
00:35:26,920 --> 00:35:30,840
Speaker 13: it's been significantly disruptive, so there's an ongoing effort to

682
00:35:30,880 --> 00:35:35,720
Speaker 13: remediate this, but it has certainly been an ongoing topic

683
00:35:35,760 --> 00:35:37,480
Speaker 13: of interest to anyone following the industry.

684
00:35:38,280 --> 00:35:42,359
Speaker 1: Hey, Jody, from the balance sheet perspective, from the talk

685
00:35:42,400 --> 00:35:45,000
Speaker 1: to us about these two companies or the industry in general,

686
00:35:45,360 --> 00:35:47,120
Speaker 1: about kind of where we are in terms of the

687
00:35:47,120 --> 00:35:49,520
Speaker 1: capital structure and the debt loads and the leverage. Are

688
00:35:49,520 --> 00:35:51,240
Speaker 1: these balance sheets in decent shape?

689
00:35:52,120 --> 00:35:54,440
Speaker 14: Yeah, so, I think I think that's definitely a great question.

690
00:35:54,880 --> 00:35:57,839
Speaker 14: These companies have been very much improving their balance sheets

691
00:35:57,880 --> 00:35:59,960
Speaker 14: since the pandemic. But it's a little bit more complic

692
00:36:00,400 --> 00:36:02,319
Speaker 14: that and a little bit more nuanced. If you take

693
00:36:02,320 --> 00:36:06,759
Speaker 14: someone like Caesar's, they've been directly deleveraging proactively MGM. It's

694
00:36:06,800 --> 00:36:11,120
Speaker 14: a little bit touch and go because they opted to

695
00:36:11,160 --> 00:36:13,319
Speaker 14: sell out of their assets through a sale lease back,

696
00:36:13,760 --> 00:36:16,160
Speaker 14: and so a substantial portion of their of their quote

697
00:36:16,239 --> 00:36:19,680
Speaker 14: unquote debt or if you consider adjusted lease back debt

698
00:36:19,960 --> 00:36:22,799
Speaker 14: is leasebacks. I mean, that's about half of their debt

699
00:36:22,840 --> 00:36:25,520
Speaker 14: load outstanding. So from a debt perspective, you say, all right, look,

700
00:36:25,560 --> 00:36:28,560
Speaker 14: these companies are actually pretty good shape. But if you

701
00:36:28,600 --> 00:36:32,960
Speaker 14: add leases, it makes MGM look less favorable than Caesar's.

702
00:36:33,640 --> 00:36:34,520
Speaker 3: But there's no issue here.

703
00:36:34,600 --> 00:36:36,759
Speaker 1: Jody just kind of like, if there's gonna be a

704
00:36:36,800 --> 00:36:39,480
Speaker 1: material hit to their profitability or the cash loads for

705
00:36:40,360 --> 00:36:42,680
Speaker 1: either of these companies, do you think yeah?

706
00:36:42,760 --> 00:36:45,400
Speaker 14: So, I think that's the key is that you know,

707
00:36:45,400 --> 00:36:47,360
Speaker 14: and Brian and I have been talking about it all week,

708
00:36:47,680 --> 00:36:51,960
Speaker 14: is at least for now, the expected effects for their

709
00:36:51,960 --> 00:36:54,600
Speaker 14: cashlows from a long term perspective might not be so grand.

710
00:36:54,920 --> 00:36:56,640
Speaker 14: It's really a question of what is the sort of

711
00:36:56,719 --> 00:36:59,720
Speaker 14: echo effects for these companies over time that could impact

712
00:36:59,719 --> 00:37:02,440
Speaker 14: March and therefore cash flows. And I think you know,

713
00:37:02,800 --> 00:37:06,239
Speaker 14: the issue is you know, if if insurance is going

714
00:37:06,320 --> 00:37:08,800
Speaker 14: to cover a good portion of it, what sort of

715
00:37:08,880 --> 00:37:14,800
Speaker 14: knock on effects to things like reservations might might be affected.

716
00:37:14,840 --> 00:37:17,239
Speaker 14: You know, if MGM site is down all week and

717
00:37:17,280 --> 00:37:20,239
Speaker 14: it's right during their peak season of bookings, because we

718
00:37:20,280 --> 00:37:21,920
Speaker 14: have a lot of events going on that Brian has

719
00:37:21,920 --> 00:37:25,239
Speaker 14: talked dead nauseum about, does this mean that MGM is

720
00:37:25,239 --> 00:37:28,360
Speaker 14: going to lose out to competitors when people are starting

721
00:37:28,360 --> 00:37:30,799
Speaker 14: to book for things like Formula one and things going

722
00:37:30,840 --> 00:37:32,080
Speaker 14: on in the in the fourth quarter.

723
00:37:32,280 --> 00:37:36,000
Speaker 2: Brian, Jody is sick of hearing you talk about the events.

724
00:37:36,680 --> 00:37:44,719
Speaker 2: Come on, man, thats absolutely so. But in terms of

725
00:37:45,080 --> 00:37:48,480
Speaker 2: I just just to wrap up the the hacking side

726
00:37:48,480 --> 00:37:53,359
Speaker 2: of this, are MGM or any of the other casinos

727
00:37:53,600 --> 00:37:58,880
Speaker 2: more at risk of hacking than other you know, I

728
00:37:58,880 --> 00:38:00,400
Speaker 2: guess financial companies.

729
00:38:01,400 --> 00:38:03,040
Speaker 13: I mean, we've begun to view this as at very

730
00:38:03,160 --> 00:38:06,040
Speaker 13: least an industry wide risk. Caesars had an AK report

731
00:38:06,040 --> 00:38:09,279
Speaker 13: out this morning indicating that they were the target of

732
00:38:09,360 --> 00:38:13,879
Speaker 13: another effort to hack into their systems. Along with that

733
00:38:14,000 --> 00:38:18,600
Speaker 13: some of their loyalty program members information was tapped. So

734
00:38:18,680 --> 00:38:21,680
Speaker 13: this is an ongoing where Caesars managed to whether that

735
00:38:21,760 --> 00:38:25,680
Speaker 13: particular or incident without the very visible systems wide outage

736
00:38:25,719 --> 00:38:26,680
Speaker 13: that MGM.

737
00:38:26,400 --> 00:38:27,280
Speaker 6: Is still undergoing.

738
00:38:27,920 --> 00:38:30,520
Speaker 13: But I think it's fair to assume this is going

739
00:38:30,560 --> 00:38:34,319
Speaker 13: to be an industry wide risk required and really coordinating

740
00:38:35,200 --> 00:38:38,560
Speaker 13: remediation and containment efforts, and you will get some offset

741
00:38:38,920 --> 00:38:42,480
Speaker 13: presumably from MGM, from cyber insurance. We just do not

742
00:38:42,640 --> 00:38:47,400
Speaker 13: know the degree to which we'll get those offsetting streams.

743
00:38:47,560 --> 00:38:49,719
Speaker 1: All right, let's step back and look at this just

744
00:38:49,840 --> 00:38:52,840
Speaker 1: this industry in general, Jody. When you talk to creditors

745
00:38:52,920 --> 00:38:56,200
Speaker 1: out there, credit investors, how did they view the gaming business?

746
00:38:56,239 --> 00:38:59,480
Speaker 1: Is this something that is a really solid credit out

747
00:38:59,520 --> 00:39:02,080
Speaker 1: there for a lot of investors? Do they buy the industry?

748
00:39:02,280 --> 00:39:04,160
Speaker 1: Do they buy individual names? How do they approach it?

749
00:39:05,520 --> 00:39:07,920
Speaker 14: I think if you like gaming, you're in gaming. You're

750
00:39:07,960 --> 00:39:10,560
Speaker 14: full fledged in gaming, and then you're just picking names.

751
00:39:10,640 --> 00:39:13,080
Speaker 14: I think there's a lot of creditors who say, I

752
00:39:13,120 --> 00:39:15,400
Speaker 14: don't even want to touch the space because it's too cyclical.

753
00:39:15,760 --> 00:39:18,000
Speaker 14: I mean, let's remember that back in two thousand and eight,

754
00:39:18,080 --> 00:39:22,560
Speaker 14: MGM got a little bit over over levered with City Center.

755
00:39:22,600 --> 00:39:24,040
Speaker 14: They were able to get themselves out of it. But

756
00:39:24,160 --> 00:39:27,320
Speaker 14: comparison to that, Caesar's and we're not talking to Caesars

757
00:39:27,360 --> 00:39:29,440
Speaker 14: of today, because the Caesars of today is El Dorado,

758
00:39:29,680 --> 00:39:33,279
Speaker 14: But historically Caesar's was lbo'ed taken private and then they

759
00:39:33,400 --> 00:39:38,160
Speaker 14: ended up going through restructuring. So it's definitely an industry

760
00:39:38,200 --> 00:39:39,719
Speaker 14: that if you like it, you really like it and

761
00:39:39,760 --> 00:39:41,560
Speaker 14: you're involved in it. If you don't like it, you

762
00:39:41,560 --> 00:39:42,480
Speaker 14: don't really go near it.

763
00:39:43,200 --> 00:39:45,520
Speaker 2: But to be clear, I mean Paul was talking about

764
00:39:45,520 --> 00:39:51,279
Speaker 2: craps and blackjack, and I mean that's not is that

765
00:39:51,320 --> 00:39:53,799
Speaker 2: still the lion's share of their revenue or is their

766
00:39:53,880 --> 00:39:58,239
Speaker 2: revenue more like you know, Banker's booking conferences.

767
00:39:57,480 --> 00:39:58,360
Speaker 3: At the resort.

768
00:39:59,360 --> 00:40:02,799
Speaker 14: They're definitely shifting, shifting their mix, and we're seeing that

769
00:40:02,880 --> 00:40:05,880
Speaker 14: with with Sands over in Macau. I mean, they're focusing

770
00:40:05,960 --> 00:40:08,520
Speaker 14: so much on their non gaming portion of their business,

771
00:40:08,800 --> 00:40:10,880
Speaker 14: and I think you're seeing that in Vegas as well.

772
00:40:10,960 --> 00:40:14,000
Speaker 14: And they would hope for the regional casinos that obviously

773
00:40:14,160 --> 00:40:16,640
Speaker 14: gaming is the bread and butter of the business, but

774
00:40:16,719 --> 00:40:19,040
Speaker 14: they want to give people the other element. They want

775
00:40:19,040 --> 00:40:20,880
Speaker 14: to give people the shows and the shopping and the

776
00:40:20,960 --> 00:40:23,919
Speaker 14: experiences because that's what's going to keep people. That's also

777
00:40:23,960 --> 00:40:26,919
Speaker 14: going to bring other types of individuals than just your

778
00:40:26,920 --> 00:40:36,040
Speaker 14: dedicated slot users or craps tables players.

779
00:40:31,440 --> 00:40:36,279
Speaker 1: Vegas of course, But Brian, I understand and reading your

780
00:40:36,280 --> 00:40:38,920
Speaker 1: research and talking to you, that the regional gaming business

781
00:40:39,000 --> 00:40:40,640
Speaker 1: is a big, big part of it. Talk to us

782
00:40:40,640 --> 00:40:43,520
Speaker 1: about some of those kind of like non Vegas aspect

783
00:40:43,600 --> 00:40:46,680
Speaker 1: to the US gaming business. How's that performing? Because gas

784
00:40:46,760 --> 00:40:48,600
Speaker 1: is expensive, It's going to cost me a lot to

785
00:40:48,600 --> 00:40:51,920
Speaker 1: get to my Mississippi River kind of casino.

786
00:40:52,719 --> 00:40:55,000
Speaker 13: Yeah, the regional gaming trends that performed well, we've probably

787
00:40:55,040 --> 00:40:58,480
Speaker 13: webbled off certainly above prevend netic levels, but compared to

788
00:40:58,520 --> 00:41:01,680
Speaker 13: last year, things that become or perhaps flatten. I think

789
00:41:01,719 --> 00:41:04,560
Speaker 13: the bigger challenge, not only for Vegas but for regional

790
00:41:04,600 --> 00:41:07,560
Speaker 13: properties is on the cost side. As the companies are

791
00:41:07,600 --> 00:41:11,759
Speaker 13: reinstated full pre pandemic service levels, they may find it

792
00:41:11,840 --> 00:41:15,399
Speaker 13: trperts to sustain the very significant margin gains to get

793
00:41:15,480 --> 00:41:18,839
Speaker 13: relative through pre pandemic experience. I will point out that

794
00:41:18,880 --> 00:41:24,040
Speaker 13: this cyber incident is affecting MGM's regional properties as well

795
00:41:24,080 --> 00:41:26,800
Speaker 13: as its Vegas properties. So this is really kind of

796
00:41:26,840 --> 00:41:29,400
Speaker 13: a national issue for MGM.

797
00:41:31,000 --> 00:41:35,520
Speaker 2: In terms of, you know, where they're getting their revenue.

798
00:41:35,600 --> 00:41:43,200
Speaker 2: You mentioned Jody mcau is Las Vegas dwindling as a

799
00:41:43,239 --> 00:41:46,200
Speaker 2: you know, revenue source. Are they getting more revenue overseas

800
00:41:46,200 --> 00:41:47,720
Speaker 2: now the bigger companies.

801
00:41:48,440 --> 00:41:50,680
Speaker 14: So if you look at it from more than revenue,

802
00:41:50,719 --> 00:41:53,279
Speaker 14: we care more on Ebadah, especially from a debt perspective,

803
00:41:53,320 --> 00:41:57,080
Speaker 14: and from an Ebadah perspective, MACAW is still coming back.

804
00:41:57,239 --> 00:42:02,919
Speaker 14: So MCAW was roughly twenty two percent of mgmbadar which

805
00:42:02,960 --> 00:42:07,359
Speaker 14: includes rent in before the pandemic, So twenty nineteen they're

806
00:42:07,400 --> 00:42:11,080
Speaker 14: not quite there yet. They have seen a significant uptick,

807
00:42:11,440 --> 00:42:15,400
Speaker 14: but Vegas and regionals are still certainly the lion's share

808
00:42:15,640 --> 00:42:17,840
Speaker 14: of what's going on in their business. No pun intended

809
00:42:17,920 --> 00:42:21,759
Speaker 14: on the line because that's MGM's logo. But I think

810
00:42:21,800 --> 00:42:24,680
Speaker 14: that's the key, is that MCAW is this source of

811
00:42:25,400 --> 00:42:29,920
Speaker 14: momentum that's happening, but it's not quite two pre pandemic levels,

812
00:42:29,920 --> 00:42:31,520
Speaker 14: and that's a function of the fact that it's only

813
00:42:31,520 --> 00:42:33,680
Speaker 14: been open since the beginning of the year. I think

814
00:42:33,680 --> 00:42:36,359
Speaker 14: that that provides some nice tailwes for MGM to make

815
00:42:36,440 --> 00:42:38,120
Speaker 14: up for the fact that the US business is having

816
00:42:38,120 --> 00:42:42,319
Speaker 14: this little blip of an issue. And even if things

817
00:42:42,360 --> 00:42:44,760
Speaker 14: start to slow down in the US and people aren't

818
00:42:45,120 --> 00:42:47,920
Speaker 14: doing this revenge spending that we saw over the past

819
00:42:47,960 --> 00:42:50,480
Speaker 14: year and a half, two years, we might see mcau

820
00:42:50,640 --> 00:42:52,040
Speaker 14: helped to sort of offset that.

821
00:42:52,040 --> 00:42:52,480
Speaker 15: A little bit.

822
00:42:53,840 --> 00:42:56,600
Speaker 1: Hey Brian, is there any new property coming online in Vegas?

823
00:43:00,040 --> 00:43:04,400
Speaker 13: There's a public things that are underway for future developments,

824
00:43:04,800 --> 00:43:06,120
Speaker 13: nothing like really.

825
00:43:06,120 --> 00:43:08,799
Speaker 3: Imminence the right.

826
00:43:09,200 --> 00:43:11,680
Speaker 2: There's that very cool orb where like you two apparently

827
00:43:12,480 --> 00:43:13,200
Speaker 2: the Spears.

828
00:43:13,239 --> 00:43:17,839
Speaker 13: The Sphere is interesting a non gaming attraction, but it's

829
00:43:18,040 --> 00:43:21,200
Speaker 13: highly significant. A lot of the recent additions to Vegas

830
00:43:21,200 --> 00:43:24,440
Speaker 13: have been not to diminish the importance of large term

831
00:43:24,440 --> 00:43:26,880
Speaker 13: resort development, but a lot of the additions to Vegas

832
00:43:26,920 --> 00:43:29,120
Speaker 13: have been in the form of non gaming entertainment. So

833
00:43:29,160 --> 00:43:32,600
Speaker 13: you've got the Sphere entertainment venue. Jody earlier mentioned the

834
00:43:32,600 --> 00:43:35,239
Speaker 13: Formula one Grand Prix, which I'll mention again. But also

835
00:43:35,280 --> 00:43:40,720
Speaker 13: you've got sports teams significantly, you have the the Golden

836
00:43:40,800 --> 00:43:45,320
Speaker 13: Knights playing at the T Mobile Center. You've got a

837
00:43:45,400 --> 00:43:48,319
Speaker 13: Legion stadium hosting the Raiders, and of course you have

838
00:43:48,400 --> 00:43:51,279
Speaker 13: the A's moving to Vegas at a site that will

839
00:43:51,280 --> 00:43:55,880
Speaker 13: be on the stadium, uh buddying the current Tropicano. So

840
00:43:56,120 --> 00:43:59,239
Speaker 13: not to diminish the importance of potential long term resort developments.

841
00:43:59,239 --> 00:44:05,120
Speaker 13: But these non gaming developments related to entertainment sports conferences,

842
00:44:05,680 --> 00:44:09,080
Speaker 13: those are all rather significant additions to draw tourism that

843
00:44:09,120 --> 00:44:11,320
Speaker 13: don't necessarily a room capacity.

844
00:44:11,480 --> 00:44:14,080
Speaker 3: All right, great stuff as always, Brian Nagger, Jody Lori.

845
00:44:14,239 --> 00:44:17,840
Speaker 1: There. You're analyst at Bloomberg Intelligence covering the gaming biz

846
00:44:17,840 --> 00:44:19,879
Speaker 1: from the equity side and the credit side. It does

847
00:44:19,920 --> 00:44:22,680
Speaker 1: not get any better than that. We got full equity

848
00:44:22,719 --> 00:44:23,640
Speaker 1: and credit coverage.

849
00:44:23,800 --> 00:44:26,920
Speaker 8: You're listening to the tape catch are live program Bloomberg

850
00:44:27,000 --> 00:44:30,560
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

851
00:44:30,640 --> 00:44:32,600
Speaker 8: tune in app, Bloomberg dot Com, and.

852
00:44:32,560 --> 00:44:33,879
Speaker 5: The Bloomberg Business App.

853
00:44:33,920 --> 00:44:36,719
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854
00:44:36,719 --> 00:44:40,360
Speaker 8: flagship New York station. Just say Alexa play Bloomberg.

855
00:44:40,400 --> 00:44:43,680
Speaker 16: Eleven thirty high school friends I have not talked to

856
00:44:43,680 --> 00:44:45,560
Speaker 16: in a long time, who are saying you never told me?

857
00:44:46,320 --> 00:44:49,640
Speaker 16: I think as we're watching this on TV. But most

858
00:44:49,640 --> 00:44:51,839
Speaker 16: of all, I'm so thrilled for the employees of ARM

859
00:44:52,560 --> 00:44:56,640
Speaker 16: thirty three year old company. Great heritage, but watching all

860
00:44:56,680 --> 00:45:00,319
Speaker 16: the employees in Cambridge celebrate simultaneously, that was magical.

861
00:45:00,280 --> 00:45:02,480
Speaker 17: And they might continue to celebrate as we see what

862
00:45:02,600 --> 00:45:07,160
Speaker 17: seventeen eighteen percent increase. How has that journey of going

863
00:45:07,160 --> 00:45:09,839
Speaker 17: out to investors the road show, the story that you've

864
00:45:09,880 --> 00:45:12,480
Speaker 17: been able seemingly to successfully sell the fact that you're

865
00:45:12,480 --> 00:45:13,560
Speaker 17: trading well on this day.

866
00:45:14,040 --> 00:45:16,360
Speaker 15: What was the vision? They wanted to hear revenue growth?

867
00:45:16,400 --> 00:45:18,439
Speaker 17: I hear of eleven percent up to twenty five percent

868
00:45:18,440 --> 00:45:19,279
Speaker 17: in the next couple of years.

869
00:45:19,280 --> 00:45:19,799
Speaker 15: What drives you?

870
00:45:20,160 --> 00:45:23,319
Speaker 16: I think it was a great process. Investors really wanted

871
00:45:23,320 --> 00:45:25,440
Speaker 16: to understand the opportunity we had in front of us,

872
00:45:25,640 --> 00:45:27,800
Speaker 16: and of course AI, which you can't really talk about

873
00:45:27,800 --> 00:45:30,800
Speaker 16: our industry without talking about AI. And I think helping

874
00:45:30,800 --> 00:45:34,600
Speaker 16: them understand that you can't really run AI without ARM,

875
00:45:34,680 --> 00:45:37,040
Speaker 16: without a CPU, and just pointing out to them that

876
00:45:37,080 --> 00:45:39,719
Speaker 16: it's in everywhere, in every device that people touch was

877
00:45:39,719 --> 00:45:40,839
Speaker 16: a big part of the process for.

878
00:45:40,880 --> 00:45:44,160
Speaker 17: Us because everyone has made the equivalent of you're a smartphone,

879
00:45:44,160 --> 00:45:47,120
Speaker 17: it's completely absorbed more than ninety percent of phones is

880
00:45:47,120 --> 00:45:50,000
Speaker 17: where your CPUs are. But the design, the fact that

881
00:45:50,040 --> 00:45:51,960
Speaker 17: you now want to be integral to data centers, and

882
00:45:52,000 --> 00:45:56,360
Speaker 17: they're like, how certain are you on the revenue vision,

883
00:45:56,360 --> 00:45:59,799
Speaker 17: on the profitability vision, even though we see concerns about

884
00:46:00,000 --> 00:46:02,200
Speaker 17: our environment still and whether or not we're in an

885
00:46:02,239 --> 00:46:03,160
Speaker 17: AI hype cycle.

886
00:46:03,440 --> 00:46:07,439
Speaker 16: Yeah, so AI is everywhere, and if it's your edge

887
00:46:07,440 --> 00:46:11,480
Speaker 16: device like the Assistant or the Alexa, or your autonomous vehicle,

888
00:46:11,520 --> 00:46:14,040
Speaker 16: that's all AI. And now we're seeing it in the

889
00:46:14,080 --> 00:46:15,640
Speaker 16: cloud in the data center with all the growth of

890
00:46:15,920 --> 00:46:18,640
Speaker 16: d in Vidia announcing one of their newest products, grace Hopper,

891
00:46:19,000 --> 00:46:21,440
Speaker 16: that is based on ARM. So ARM is everywhere relative

892
00:46:21,440 --> 00:46:24,120
Speaker 16: to AI, we also have a very unique business model

893
00:46:24,400 --> 00:46:26,319
Speaker 16: that gives us the ability to have a very very

894
00:46:26,360 --> 00:46:28,719
Speaker 16: good vision in the future in terms of when people

895
00:46:28,800 --> 00:46:32,040
Speaker 16: use our products. So relative to our confidence in the outlook,

896
00:46:32,760 --> 00:46:34,799
Speaker 16: we have a very very high confidence that the growth

897
00:46:34,880 --> 00:46:36,600
Speaker 16: rate that we have talked about will be sustained.

898
00:46:37,080 --> 00:46:39,600
Speaker 17: How word were invested about China and your exposure.

899
00:46:39,760 --> 00:46:41,080
Speaker 16: I think there were a lot of questions, as you

900
00:46:41,080 --> 00:46:44,920
Speaker 16: can imagine about China in general, given all the geopolitics,

901
00:46:45,040 --> 00:46:46,920
Speaker 16: Our business there looks a lot like the rest of

902
00:46:46,960 --> 00:46:49,120
Speaker 16: the world. We have great growth in the data center,

903
00:46:49,160 --> 00:46:52,560
Speaker 16: we have great growth and automotive China's huge on electric vehicles,

904
00:46:52,600 --> 00:46:55,120
Speaker 16: so it's been terrific there for us. I have the

905
00:46:55,160 --> 00:46:57,919
Speaker 16: same kind of headaches that every other tech CEO has

906
00:46:58,000 --> 00:47:00,680
Speaker 16: regarding how to navigate through this, but no different.

907
00:47:01,680 --> 00:47:03,759
Speaker 17: Do you think there will be more pressure now that

908
00:47:03,800 --> 00:47:04,800
Speaker 17: you're public again?

909
00:47:04,960 --> 00:47:05,440
Speaker 15: Ultimately?

910
00:47:05,480 --> 00:47:08,520
Speaker 17: I mean you came to ARM in twenty thirteen, you

911
00:47:08,560 --> 00:47:10,319
Speaker 17: were listed at that point, but it's not been since

912
00:47:10,440 --> 00:47:12,359
Speaker 17: twenty sixteen that you have been How does the game

913
00:47:12,480 --> 00:47:14,279
Speaker 17: change as a leader of that business now?

914
00:47:14,520 --> 00:47:16,160
Speaker 16: Yeah, I think there's some things that we were able

915
00:47:16,160 --> 00:47:18,440
Speaker 16: to do as a private company that will just be different. Right,

916
00:47:18,600 --> 00:47:21,400
Speaker 16: quarterly earnings, making sure that we hit all our commitments.

917
00:47:21,880 --> 00:47:23,879
Speaker 16: But ARM is not a business you measure from quarter

918
00:47:23,920 --> 00:47:27,359
Speaker 16: to quarter. You measure us over years and decades, and

919
00:47:27,600 --> 00:47:29,680
Speaker 16: the long term vision is something that I am very,

920
00:47:29,800 --> 00:47:31,760
Speaker 16: very passionate about and will continue to drive the company

921
00:47:31,840 --> 00:47:33,520
Speaker 16: the same way, private or public.

922
00:47:33,960 --> 00:47:36,759
Speaker 17: You have a lot of key vested interests, whether they

923
00:47:37,000 --> 00:47:40,360
Speaker 17: be your clients, APPLETSMC and TEIL taking big stakes in

924
00:47:40,400 --> 00:47:44,600
Speaker 17: the company today. How important are those voices? Visa v Masses,

925
00:47:44,960 --> 00:47:46,759
Speaker 17: the head of soft Bank. I'm sure you're on the

926
00:47:46,760 --> 00:47:47,440
Speaker 17: phone too daily.

927
00:47:47,680 --> 00:47:47,879
Speaker 4: Yeah.

928
00:47:47,920 --> 00:47:50,520
Speaker 16: So one of the challenges of our industry, and prely

929
00:47:50,680 --> 00:47:53,560
Speaker 16: with ARM, is that the fact that we're everywhere, none

930
00:47:53,600 --> 00:47:55,879
Speaker 16: of this works unless we play nice with others. So

931
00:47:56,000 --> 00:47:58,719
Speaker 16: we have to have a lot of engagements with strategic

932
00:47:58,760 --> 00:48:02,200
Speaker 16: partners and making sure that we're managing that balance, including Masa,

933
00:48:02,280 --> 00:48:03,320
Speaker 16: our chief shareholder.

934
00:48:04,040 --> 00:48:06,840
Speaker 17: Do you think he lets more of ARM become public?

935
00:48:06,960 --> 00:48:08,320
Speaker 17: Is that something you'd like to see?

936
00:48:08,520 --> 00:48:08,680
Speaker 5: Now?

937
00:48:08,920 --> 00:48:11,640
Speaker 16: Massa and I talk quite frequently, but it's really not

938
00:48:11,680 --> 00:48:14,000
Speaker 16: about the day to day. It's about the long term vision,

939
00:48:14,040 --> 00:48:16,720
Speaker 16: the passion that he and I have about the future,

940
00:48:16,760 --> 00:48:19,120
Speaker 16: and really about what this company can be long term.

941
00:48:19,239 --> 00:48:21,880
Speaker 16: So I don't expect that to change being a public company.

942
00:48:22,000 --> 00:48:23,359
Speaker 15: Do you think you go public in the UK?

943
00:48:23,480 --> 00:48:24,919
Speaker 17: I'm sure it's been a bitter sweet for the London

944
00:48:24,960 --> 00:48:25,759
Speaker 17: Stock Exchange today.

945
00:48:25,840 --> 00:48:28,280
Speaker 16: Yeah, so today obviously we're in New York, but we're

946
00:48:28,280 --> 00:48:31,040
Speaker 16: incredibly proud of our UK heritage and we are opening

947
00:48:31,080 --> 00:48:32,359
Speaker 16: to considering that down the road.

948
00:48:32,640 --> 00:48:34,440
Speaker 15: Okay, any sort of timeframe for that.

949
00:48:34,840 --> 00:48:36,440
Speaker 16: None that we can talk about today. I'm trying to

950
00:48:36,440 --> 00:48:36,839
Speaker 16: get through.

951
00:48:36,719 --> 00:48:39,160
Speaker 17: Today a little bit well before you get through today.

952
00:48:39,200 --> 00:48:45,160
Speaker 17: In that respect, Investors do love all things regarding artificial intelligence.

953
00:48:45,200 --> 00:48:47,960
Speaker 17: But how have you managed to land that your story

954
00:48:48,080 --> 00:48:50,680
Speaker 17: is different? People have been so exuberant about in Nvidia,

955
00:48:50,719 --> 00:48:55,640
Speaker 17: where you used to work, but they're really exuberant about GPUs.

956
00:48:56,280 --> 00:48:58,920
Speaker 17: How have you said that you are able to claim

957
00:48:59,239 --> 00:49:02,879
Speaker 17: a larger rule share of how AI continues to be said.

958
00:49:02,960 --> 00:49:05,040
Speaker 16: Yeah, So one of the benefits of the roadshow was

959
00:49:05,080 --> 00:49:07,319
Speaker 16: spending a lot of time with the investors talking about

960
00:49:07,320 --> 00:49:09,239
Speaker 16: AI and where we fit. And I think one of

961
00:49:09,280 --> 00:49:12,560
Speaker 16: the misconceptions is that a GPU can run without a CPU,

962
00:49:13,080 --> 00:49:15,480
Speaker 16: which is just not the case. The CPU is central

963
00:49:15,520 --> 00:49:18,480
Speaker 16: to every electronics device and there are devices that ship

964
00:49:18,520 --> 00:49:22,239
Speaker 16: with a CPU and a GPU. So once investors kind

965
00:49:22,239 --> 00:49:25,120
Speaker 16: of got that, then explaining where the puck was going

966
00:49:25,160 --> 00:49:28,760
Speaker 16: relative to gosh, and Vidia's next generation host advanced product,

967
00:49:28,800 --> 00:49:32,120
Speaker 16: Grace Hopper, is using ARM CPUs instead of the competition,

968
00:49:32,480 --> 00:49:34,600
Speaker 16: the light bulb went on that, oh my gosh, you

969
00:49:34,680 --> 00:49:36,879
Speaker 16: need the CPU. And at the same time, in Vidia

970
00:49:36,880 --> 00:49:38,560
Speaker 16: has made a big bet on ARM in their most

971
00:49:38,560 --> 00:49:41,799
Speaker 16: sophisticated product, And once that message kind of sunk through,

972
00:49:42,719 --> 00:49:44,640
Speaker 16: the light bulb went on as, oh my gosh, I

973
00:49:44,680 --> 00:49:45,000
Speaker 16: get it.

974
00:49:46,160 --> 00:49:49,920
Speaker 17: There has been this moment though, at which we're trying

975
00:49:49,960 --> 00:49:54,120
Speaker 17: to understand how the landscape works with global demand and

976
00:49:54,120 --> 00:49:56,919
Speaker 17: that translating into revenue. When you think of Oracle's numbers

977
00:49:56,960 --> 00:49:59,400
Speaker 17: that came in and look, they delivered thirty percent increase,

978
00:49:59,440 --> 00:50:02,080
Speaker 17: and it comes to their cloud provision and their AI bet,

979
00:50:02,120 --> 00:50:04,600
Speaker 17: but it doesn't always immediately turn into revenue in the

980
00:50:04,640 --> 00:50:07,440
Speaker 17: here and the now. How convinced are you that it

981
00:50:07,520 --> 00:50:09,880
Speaker 17: is going to be in the bottom line evident in

982
00:50:09,920 --> 00:50:10,920
Speaker 17: the next coming quarters.

983
00:50:10,920 --> 00:50:15,160
Speaker 16: As far as AI, oh, I think it's a questionable

984
00:50:15,160 --> 00:50:17,960
Speaker 16: that AI, which has already been here right for a

985
00:50:18,040 --> 00:50:21,960
Speaker 16: number of years. The chat cheap D moment taught us that,

986
00:50:22,000 --> 00:50:24,040
Speaker 16: oh my gosh, the capability of what this can do

987
00:50:24,120 --> 00:50:26,879
Speaker 16: going forward has gone up a level. And I think

988
00:50:26,920 --> 00:50:29,279
Speaker 16: we've seen that over and over in our industry. There

989
00:50:29,320 --> 00:50:32,360
Speaker 16: tends to be lightning bolt moments that greatly accelerate the

990
00:50:32,360 --> 00:50:34,960
Speaker 16: adoption of technology. And I think with AI, as you

991
00:50:35,000 --> 00:50:38,480
Speaker 16: move towards AGI computers that can think, I think we

992
00:50:38,560 --> 00:50:41,360
Speaker 16: now have seen an accelerant for that. Ultimately down the

993
00:50:41,440 --> 00:50:43,919
Speaker 16: road how people make money off that. It'll get figured out.

994
00:50:44,680 --> 00:50:47,480
Speaker 16: But AI is here to stay. That's unquestionable.

995
00:50:47,760 --> 00:50:50,760
Speaker 17: And it seems as though you're integral to soft banks

996
00:50:50,840 --> 00:50:55,719
Speaker 17: vision of AI and Massa's vision of AI. How can

997
00:50:55,760 --> 00:50:57,319
Speaker 17: you announce it a little bit? You say, he's talking

998
00:50:57,320 --> 00:51:00,680
Speaker 17: to him daily, what his vision of ARM within ecosystem

999
00:51:00,719 --> 00:51:01,640
Speaker 17: going forward really is?

1000
00:51:02,800 --> 00:51:05,759
Speaker 16: He and I share a very same view that ARM

1001
00:51:05,840 --> 00:51:09,080
Speaker 16: is one of the most important technology companies in our industry.

1002
00:51:09,320 --> 00:51:12,120
Speaker 16: Foundational if you will, and I would like to see

1003
00:51:12,200 --> 00:51:14,120
Speaker 16: us over the next five to ten years really be

1004
00:51:14,200 --> 00:51:16,920
Speaker 16: recognized that way, and he and I are very aligned

1005
00:51:16,960 --> 00:51:18,879
Speaker 16: on that. As you can imagine when you think about

1006
00:51:18,920 --> 00:51:20,960
Speaker 16: five to ten years out, there's a lot of things

1007
00:51:20,960 --> 00:51:22,640
Speaker 16: to talk about in terms of the art of the possible,

1008
00:51:22,800 --> 00:51:25,200
Speaker 16: but that's really where he's focused on when his conversations

1009
00:51:25,239 --> 00:51:25,520
Speaker 16: with me.

1010
00:51:26,280 --> 00:51:29,080
Speaker 17: Long term thinking but then near term action. We understand

1011
00:51:29,160 --> 00:51:33,320
Speaker 17: he was pretty integral to calling the shots on price

1012
00:51:33,360 --> 00:51:37,239
Speaker 17: points for today's listing. How was that as just an

1013
00:51:37,239 --> 00:51:39,600
Speaker 17: IPO experience? Did he end up being like, no, we

1014
00:51:39,640 --> 00:51:41,080
Speaker 17: need to leave a little bit of money on the table.

1015
00:51:41,120 --> 00:51:42,440
Speaker 17: This needs to be a successful trade.

1016
00:51:42,560 --> 00:51:44,560
Speaker 16: But all I can say is this is my first

1017
00:51:44,680 --> 00:51:47,600
Speaker 16: road show, so everything was a leterning experience. We wanted

1018
00:51:47,600 --> 00:51:48,719
Speaker 16: to be at the high end of the range that

1019
00:51:48,719 --> 00:51:50,719
Speaker 16: we set forty seven to fifty one, and that's where

1020
00:51:50,719 --> 00:51:52,479
Speaker 16: it ended up. So we're happy.

1021
00:51:52,560 --> 00:51:53,680
Speaker 5: We're very thrilled with today.

1022
00:51:54,160 --> 00:51:56,680
Speaker 15: You said that school friends are going to in touch.

1023
00:51:56,800 --> 00:51:58,880
Speaker 15: Can why have you been hiding this from them?

1024
00:51:59,560 --> 00:52:02,560
Speaker 17: How do you feel differently now as a CEO of

1025
00:52:02,640 --> 00:52:03,920
Speaker 17: a publicly traded company.

1026
00:52:03,960 --> 00:52:05,680
Speaker 15: Do you feel differently today?

1027
00:52:06,800 --> 00:52:08,719
Speaker 16: I feel a little bit differently, and looking ahead at

1028
00:52:08,719 --> 00:52:10,560
Speaker 16: this number than what the share price is, that wasn't

1029
00:52:10,560 --> 00:52:14,399
Speaker 16: something we looked at before. But you know again when

1030
00:52:14,600 --> 00:52:17,239
Speaker 16: and I told this to employees. While the IPO is

1031
00:52:17,239 --> 00:52:19,359
Speaker 16: amazing and I could not be more proud of it,

1032
00:52:19,719 --> 00:52:21,360
Speaker 16: I am far more excited about the next five to

1033
00:52:21,400 --> 00:52:23,960
Speaker 16: ten years. And that's where my head is focused. Obviously

1034
00:52:24,040 --> 00:52:27,640
Speaker 16: we needed things as a public company CEO, but I

1035
00:52:27,640 --> 00:52:28,760
Speaker 16: don't feel too much different.

1036
00:52:29,080 --> 00:52:32,960
Speaker 17: And sometimes these are marketing exercises. Arm is B to B,

1037
00:52:33,760 --> 00:52:36,520
Speaker 17: but do you think you've become more relevant? B to

1038
00:52:36,600 --> 00:52:39,080
Speaker 17: see Now you're saying how people had no idea all this,

1039
00:52:39,160 --> 00:52:41,839
Speaker 17: because largely people don't realize that every day they are

1040
00:52:41,840 --> 00:52:45,040
Speaker 17: interacting with your designs, with your blueprints.

1041
00:52:45,440 --> 00:52:48,280
Speaker 16: The people who need to know what we do do know. Obviously,

1042
00:52:48,360 --> 00:52:50,080
Speaker 16: just giving the fact that all the global partners that

1043
00:52:50,120 --> 00:52:52,759
Speaker 16: we work with going forward, how to market ourselves as

1044
00:52:52,760 --> 00:52:54,360
Speaker 16: a public company. That's one of the things as a

1045
00:52:54,360 --> 00:52:57,880
Speaker 16: public company CEO, I'll spend some time thinking about. But

1046
00:52:58,000 --> 00:53:00,440
Speaker 16: right now we're just kind of focused on today and

1047
00:53:00,440 --> 00:53:01,040
Speaker 16: what that means.

1048
00:53:01,360 --> 00:53:05,319
Speaker 17: And meanwhile, within there's exuberance of today. Yesterday we saw

1049
00:53:05,400 --> 00:53:09,240
Speaker 17: basically every key chief executive of an AI company, AI

1050
00:53:09,280 --> 00:53:14,400
Speaker 17: related company, indoors and a closed hearing with Senate Majority

1051
00:53:14,480 --> 00:53:17,279
Speaker 17: Leader Chuck Tchuma. Can you tell us about regulation? How

1052
00:53:17,320 --> 00:53:20,160
Speaker 17: do you see the landscape evolving to ensure that you

1053
00:53:20,200 --> 00:53:21,640
Speaker 17: can harness that AI moment.

1054
00:53:22,120 --> 00:53:25,080
Speaker 16: I think it is one of those areas that is

1055
00:53:25,120 --> 00:53:27,880
Speaker 16: an unknown moment. And I remember talking to an executive

1056
00:53:27,920 --> 00:53:30,680
Speaker 16: about the analogy or metaphor we used was when cars

1057
00:53:30,680 --> 00:53:33,960
Speaker 16: were invented, you didn't have driver's licenses, you didn't have lanes,

1058
00:53:34,000 --> 00:53:35,880
Speaker 16: you didn't have rules of the road. There was a

1059
00:53:35,920 --> 00:53:37,440
Speaker 16: lot of things that people had to figure out in

1060
00:53:37,520 --> 00:53:39,960
Speaker 16: terms of taking a device that was going to be

1061
00:53:40,080 --> 00:53:42,440
Speaker 16: very very productive but could be very dangerous in terms

1062
00:53:42,440 --> 00:53:45,400
Speaker 16: of automobile accidents. AI is a little bit of the

1063
00:53:45,400 --> 00:53:48,040
Speaker 16: same in the sense that we're now in a new paradigm.

1064
00:53:48,320 --> 00:53:51,399
Speaker 16: Were some rules and regulations and need to be figured out.

1065
00:53:51,440 --> 00:53:53,160
Speaker 16: And that's why I think you're seeing all this activity

1066
00:53:53,200 --> 00:53:55,239
Speaker 16: around that area.

1067
00:53:55,440 --> 00:53:59,400
Speaker 17: Is the US leading the charge and regulation is Europe?

1068
00:53:59,480 --> 00:54:00,960
Speaker 17: Is the UK was getting it right?

1069
00:54:01,000 --> 00:54:03,279
Speaker 16: From your perspective, I think all the governments are trying

1070
00:54:03,280 --> 00:54:05,319
Speaker 16: to figure it out. I know the EU has spent

1071
00:54:05,360 --> 00:54:07,040
Speaker 16: a lot of energy on this, as said the UK,

1072
00:54:07,239 --> 00:54:09,279
Speaker 16: so in terms of who's getting it right, I think

1073
00:54:09,320 --> 00:54:12,400
Speaker 16: it's still early days and everyone's really just trying to

1074
00:54:12,480 --> 00:54:16,640
Speaker 16: learn how technology and this new powerful algorithm will work together.

1075
00:54:17,120 --> 00:54:19,319
Speaker 15: Keep teaching us. Great to have some time with you.

1076
00:54:19,440 --> 00:54:20,040
Speaker 6: Thank you so much.

1077
00:54:20,080 --> 00:54:22,560
Speaker 17: Cool's the CEO of ARM the day they're listening.

1078
00:54:23,800 --> 00:54:26,880
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can

1079
00:54:26,920 --> 00:54:30,720
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1080
00:54:30,800 --> 00:54:34,520
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1081
00:54:34,719 --> 00:54:36,640
Speaker 2: at Matt Miller nineteen seventy three.

1082
00:54:37,120 --> 00:54:39,480
Speaker 3: And I'm Faull Sweeney. I'm on Twitter at pt Sweeney.

1083
00:54:39,600 --> 00:54:42,279
Speaker 1: Before the podcast, you can always catch us worldwide at

1084
00:54:42,280 --> 00:54:44,000
Speaker 1: Bloomberg Radio