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Speaker 1: Bloomberg Audio, Studios, Podcasts, radio news.

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Speaker 2: This is Bloomberg Intelligence with Alex Steel and Paul'sweenye.

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Speaker 3: The real app performance has been the US corporate high yield.

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Speaker 4: Are the companies lean enough? Have they trimmed all the fats?

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Speaker 3: The semiconductor business is a really cyclical business.

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Speaker 2: Breaking market headlines and corporate news from across the globe.

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Speaker 4: Do investors like the M and A that we've seen?

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Speaker 3: These are two big time blue chip companies.

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Speaker 4: The window between the peak and cut changing super fast.

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Speaker 2: Bloomberg Intelligence with Alex Steel and Paul'sweeny on Bloomberg Radio.

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Speaker 3: On Today's Bloomberg Intelligence Show, we dig inside the big

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Speaker 3: business story is impacting Wall Street and the global markets.

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Speaker 4: Each and every week we provide in depth research and

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Speaker 4: data on some of the two thousand companies and one

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Speaker 4: hundred and thirty industries our analysts cover worldwide.

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Speaker 3: Today, we'll look at why US Vacation has planned to

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Speaker 3: increase travel spending in twenty twenty five.

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Speaker 4: Plus, we'll break down my Micron Technologies revenue forecast missed

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Speaker 4: analyst projections.

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Speaker 3: First, we begin with earnings from the biopharmaceutical company Pfiser.

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Speaker 4: This week, viser forecasted twenty twenty five sales and earnings

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Speaker 4: in line with analyst projections.

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Speaker 3: It's a step towards offering relief to weary investors that

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Speaker 3: feel the drugmaker is being mismanaged.

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Speaker 4: For more, we are joined by Zam Fazelli, Bloomberg Intelligence,

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Speaker 4: Director of Research for Global Industries and Senior Pharmaceuticals, and

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Speaker 4: we first asked Sam about Pfizer's guidance for investors.

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Speaker 5: Look, this is the story about a company that didn't disappoint.

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Speaker 5: I think, having seen what happened during twenty twenty four,

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Speaker 5: this is the company that people were a bit worried about.

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Speaker 5: You know, is it going to come out and give

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Speaker 5: us a whole bunch of guidance that is actually below consensus?

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Speaker 5: And here we are with something that's in line with

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Speaker 5: consensus pretty much mostly. There are some moving parts that's

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Speaker 5: you know, to think about it if you want to

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Speaker 5: get into the nitty gritty, but at the end of

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Speaker 5: the day, it's pretty much in line with consensus. And

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Speaker 5: that's a sigh of relief for a stock that's pretty

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Speaker 5: much close to I don't know if it's an all

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Speaker 5: time lobe, because this company has been around for a

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Speaker 5: long long, long time. But it certainly is a very

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Speaker 5: weak share price compared to where it's been before, especially

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Speaker 5: in the heights of the pandemic with COVID sales and

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Speaker 5: everybody think it's going to be one hundred billion dollar market

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Speaker 5: a year. So U that's where we are.

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Speaker 4: Speaking of vaccines for a second. We were watching the

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Speaker 4: Patrick Stewart Scrooge movie. We like to do Christmas movies,

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Speaker 4: and my daughter goes, when was this set like in

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Speaker 4: the eighties? Right, so to the point we're like, no, honey,

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Speaker 4: like it was, it was a long time ago, and

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Speaker 4: we will I'll be dead at this point if we

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Speaker 4: learnt that time. Okay, But I guess my question is,

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Speaker 4: how do we have conviction on what these docks are

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Speaker 4: going to do next year? We have no idea what

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Speaker 4: the administration is going to be like or what their

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Speaker 4: relationship with drug companies is going to be.

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Speaker 5: Like, Yeah, but Alex, you know the government can't change

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Speaker 5: things overnight, right, so by the time they take off

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Speaker 5: is by the time they start putting new laws into play, which,

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Speaker 5: of course one of them is possibly going to be

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Speaker 5: some way of trying to rain in the PBMs. The

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Speaker 5: pharmacy benefit managers, the middlemen who take the big fat

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Speaker 5: chunk of a profit out of these high drug prices.

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Speaker 5: By the time that happens, it will be twenty twenty

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Speaker 5: six or something like that. The reality is that it's

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Speaker 5: all going to be about rhetoric. Right, So are we

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Speaker 5: going to have a health and human services run by

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Speaker 5: RFK anti vaccine? Is you're going to tone down his

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Speaker 5: anti vaccine? Is he going to get confirmed? So it's

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Speaker 5: going to be all about the optic optics of it,

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Speaker 5: and it's also all about the rhetoric no real impact.

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Speaker 5: But investors don't look at what's happening next year. They

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Speaker 5: always look at two or three years down the road.

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Speaker 5: Now here we have a company and that's dealing with IRA.

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Speaker 5: I think it's the first farmer company has put out

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Speaker 5: their guidance and they're saying that the changes in the IRA,

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Speaker 5: which are good for patients. By the way, I have

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Speaker 5: to say that right up front, is going to hit

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Speaker 5: them about one to one and a half billion dollars.

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Speaker 5: I think the number or a billion dollars, so one

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Speaker 5: and a half percent hit right. So that's because they're

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Speaker 5: going to be having to cover the catastrophic.

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Speaker 2: Pay that.

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Speaker 5: In terms of the part the medicare coverage, and of

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Speaker 5: course they've got drugs that are high priced, so that

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Speaker 5: sort of thing I do expect. And of course, you know,

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Speaker 5: sentiment is all in our world, so it just tells

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Speaker 5: you where we are in some of these names.

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Speaker 3: One of the great new functions on the Bloomberg terminals

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Speaker 3: MODL for financial models, and this is where Bloomberg Intelligence

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Speaker 3: and Bloomberg have compiled a lot of the earning estimate

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Speaker 3: models from a lot of the leading Wall Street and analysts.

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Speaker 3: And what you see there is for a company like Pfiser,

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Speaker 3: they got a lot of drugs, and investors really focus

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Speaker 3: on the various drugs and how they're growing. What do

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Speaker 3: you focus on for Pfizer, Sam.

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Speaker 5: Yeah, Sozer's twenty twenty five is about execution and getting

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Speaker 5: this new company that they bought Sea Gun. It's now

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Speaker 5: that new anymore. It's a while ago they bought it

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Speaker 5: fully integrated, and managing those if you think about it,

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Speaker 5: a lot of what they've said today with regards to

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Speaker 5: the growth on the EPs line is due to managing costs.

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Speaker 5: So they've come below some Wall Street expectations in terms

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Speaker 5: of sales and marketing costs and you know with within

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Speaker 5: even R and D costs. So but that's been the case.

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Speaker 5: This is a company that's trying to find its new world,

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Speaker 5: in the new world of COVID. How much vaccine am

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Speaker 5: I going to sell? How much black Slovia that I'm

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Speaker 5: going to say? I remember, that's a nine billion dollar

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Speaker 5: line or so, right, that's not a you know for

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Speaker 5: a company that's guiding into six sixty one to sixty

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Speaker 5: whatever the number is here, sixty one sixty four billion

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Speaker 5: dollars sales range. So that's where there is. There was

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Speaker 5: a lot of sensitivity here and worry and of course

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Speaker 5: they've said, I think we're on a straight line from

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Speaker 5: last year to twenty twenty four to twenty twenty five,

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Speaker 5: so that's where they worry was. And frankly, new drugs

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Speaker 5: and stuff. It's always important, but we need City Day

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Speaker 5: to come through.

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Speaker 3: Our Thanks to Sam Fazzelli, Bloomberg Intelligence, Director of Research

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Speaker 3: for Global Industries and senior pharmaceutical scentalists, we.

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Speaker 4: Move next to commercial real estate. This week, we focus

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Speaker 4: on a story titled office real Estate is facing a

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Speaker 4: year of reckoning in twenty twenty five.

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Speaker 3: You can find the story on Bloomberg dot Com and

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Speaker 3: The Terminal. It discusses how commercial real estate is bracing

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Speaker 3: for losses in twenty twenty five as lenders run out

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Speaker 3: of patients and borrowers struggle to refinance loans for more.

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Speaker 4: We were joining by Patrick Clark, Bloomberg real estate reporter.

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Speaker 4: We first asked him why commercial real estate may suffer

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Speaker 4: next year.

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Speaker 6: These things take time. It's like a slow grind down,

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Speaker 6: just in the way that post GFC. You know, the

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Speaker 6: delinquencies in default really didn't spike until or didn't peak

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Speaker 6: untill twenty twelve. It takes time for the stuff to

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Speaker 6: work its way through the system. Everyone's running out of

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Speaker 6: patients a bit like on the lender side, you know,

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Speaker 6: the extensions no longer come free, and they might not

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Speaker 6: come at all at this point. So part of it

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Speaker 6: is that I think the one thing that's changed is

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Speaker 6: a year ago people might have expected we were going

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Speaker 6: to get six or seven rate cuts this year, and

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Speaker 6: now that's you know those Not only the does not happen,

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Speaker 6: but we don't expect them next year later. So you

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Speaker 6: can no longer sit there hoping and expecting that interest

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Speaker 6: rates are going to save you. So you kind of

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Speaker 6: got to make a decision.

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Speaker 3: So how does this come about? Is it in terms of, oh,

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Speaker 3: my goodness, the equity folks have to write down the

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Speaker 3: value of the building. That only or usually happens when

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Speaker 3: I've got a loan coming due and I've got to

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Speaker 3: renegotiate it, and then I've got to get a determination

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Speaker 3: of the value the building or the lender will put

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Speaker 3: evaluation of the building. Is that typically the precipitating factor.

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Speaker 6: Yeah, I think it's you know, it's the maturity wall.

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Speaker 6: As you're you know, it comes time you have to

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Speaker 6: pay off that there's a big Almost all these loans

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Speaker 6: have big balloon payments at the end of them, and

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Speaker 6: you got to pay them off. That means you've got

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Speaker 6: to get a new loan. And the new loans have

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Speaker 6: not really been available, and we're certainly not available at

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Speaker 6: pricing that would be tolerable. And so that's where that's

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Speaker 6: where the negotiations come in. And I think the again,

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Speaker 6: the way those negotiations have played out over the last

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Speaker 6: eighteen months have been the can down the road, extend

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Speaker 6: and pretend, or sometimes the cleaned up version of that

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Speaker 6: is amend and pretend, which means you actually have to

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Speaker 6: put something in to get the extension. But again, it's

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Speaker 6: like the extensions are a little they become harder and

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Speaker 6: harder to get over time, particularly as this hope that

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Speaker 6: there's going to be an event which makes all the

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Speaker 6: problems go away and dissipates.

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Speaker 4: When is the maturity wall sort of coming up? And

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Speaker 4: I appreciate it's probably property by property and who takes.

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Speaker 6: The hit the maturity wall is you know, it's permeable, right,

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Speaker 6: things pass through it. They in some ways, you know,

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Speaker 6: there's there. The one thing that happens when you extend

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Speaker 6: loans is that you add them to next year's maturity wall,

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Speaker 6: and so the more the more loans don't pay off.

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Speaker 6: And I saw stat I don't think we got into

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Speaker 6: the story, but something like, you know, it's only like

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Speaker 6: a quarter of Central Business District office buildings that are

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Speaker 6: financed in the CNBS market have paid off at maturity

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Speaker 6: over the last three or four So it's like a

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Speaker 6: lot of them are pushing out. They're pushing out, and

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Speaker 6: that just makes the maturity wall go higher. Now they

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Speaker 6: can continue to be pushed out until they can't. And

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Speaker 6: we don't know exactly when that moment will hit or

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Speaker 6: with what force or with with what volume?

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Speaker 3: Right, a sprinkle of companies are coming sing we're getting

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Speaker 3: people back five days a week. And I wonder if

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Speaker 3: that's being perceived by the commercial real estate market is

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Speaker 3: all right, maybe the worst is behind us in terms

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Speaker 3: of vacancies and that kind of thing. Is there any

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Speaker 3: any discussion of real estate business that maybe just the

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Speaker 3: business fundamentals have bottomed.

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Speaker 6: I think yeah, sure, yes, and I but in some

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Speaker 6: ways I think that is more of a catalyst for

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Speaker 6: resolution of these situations. It's sort of like, we know

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Speaker 6: what it is now. It's not great. It's it's great

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Speaker 6: if you own one Vanderbilt or you know, a brand

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Speaker 6: new high tech office building seven thirty one les. But

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Speaker 6: you know if you own commodity office and in you know,

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Speaker 6: in the garment district or something, and that's you know

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Speaker 6: what it is now, and it's not great.

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Speaker 7: Right.

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Speaker 4: I'm just wondering, is it big banks that have a

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Speaker 4: lot of these loans? Is it small guys, Like where

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Speaker 4: do we see the ripples?

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Speaker 8: Well?

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Speaker 6: I think that one of the things that I think

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Speaker 6: we've seen happen is that the bigger banks that are

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Speaker 6: in you know, better situations across their business have been

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Speaker 6: able to and have been reserving at a you know,

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Speaker 6: at a faster at a higher rate. So they are

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Speaker 6: you know, they've been quicker to acknowledge the issues and

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Speaker 6: to prepare themselves to ultimately realize losses, whereas smaller banks

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Speaker 6: we've seen much less of that. You know, we're starting

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Speaker 6: to see smaller regional banks modify loans at a greater pace,

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Speaker 6: which again I think we see as like they're pretending less.

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Speaker 4: They're still they're extending and pretending less.

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Speaker 6: No, no, well they're pretending less anyway, like they're acknowledging. Yes, okay,

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Speaker 6: like more stuff is still yet to happen. We can't

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Speaker 6: just push these things out. We have to get ourselves

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Speaker 6: in position. But nobody wants this all to happen at once, right,

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Speaker 6: I mean, it's in everyone's interests for these problems to

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Speaker 6: be realized, you know, gradually and at a pace where

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Speaker 6: they can kind of be controlled our Thanks to Patrick Clark,

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Speaker 6: Bloomberg Real Estate.

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Speaker 4: Reporter, coming up, we're going to dig deeper into a

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Speaker 4: retirement crunch that's haunting Americans nearing sixty years old.

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Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing into

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Speaker 3: research and data on two thousand companies in one hundred

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Speaker 3: and thirty industries. You can access Bloomberg Intelligence via Bigo

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Speaker 3: on the terminal.

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Speaker 4: I'll Paul Sweeney and I'm Alex Steele, and this is Bloomberg.

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Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecar Playing and broud

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Speaker 2: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 4: We move next to the travel and leisure sector. According

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Speaker 4: to a Bloomberg Intelligence survey, US vacationers plan to increase

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Speaker 4: travel spending in twenty twenty five from last year.

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Speaker 3: And for more on this research, we were joined by

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Speaker 3: Jody Lourie, Bloomberg Intelligence Credit Analysts.

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Speaker 4: We first asked Jody to walk us through some of

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Speaker 4: these findings from her survey.

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Speaker 9: I have to say, as a credit analyst, and I've

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Speaker 9: mentioned this a few times on your show, we get

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Speaker 9: uncomfortable with the amount of optimism, and we got on.

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Speaker 9: I was uncomfortable personally because we did our credit outlook

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Speaker 9: and it was a bit too optimistic for my liking.

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Speaker 9: That said the data doesn't lie. And when we surveyed vacationers,

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Speaker 9: seventy two percent said that they're willing to spend more

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Speaker 9: in twenty five versus twenty four. Now you compare that

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Speaker 9: to last year, where it was only sixty seven percent

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Speaker 9: said they were planning to spend more in twenty four

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Speaker 9: over twenty three. So it's a pretty big bumb.

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Speaker 3: Where are they spending? How are they spending?

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Speaker 9: Sure, so, Paul, I mean, I think if you think

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Speaker 9: of the average person, going on vacation is.

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Speaker 10: A big thing.

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Speaker 9: We zeroed in on people who are planning vacation as

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Speaker 9: a priority for next year, and for those people, they

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Speaker 9: are actually saying seventy nine per center saying that they're

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Speaker 9: spending more on travel overclothing, and that was compared to

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Speaker 9: seventy percent last year. Now, where they're going is also

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Speaker 9: interesting because we saw a big spike in vacationers who

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Speaker 9: are planning on going on cruises that's thirty seven percent,

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Speaker 9: as well as on all inclusive vacations. And we did

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Speaker 9: see a pullback in theme parks, We saw a pullback

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Speaker 9: in casinos and race tracks, and so what we're seeing

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Speaker 9: is a lot of I guess set in and forget

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Speaker 9: it type vacations, vacations where people can do these big,

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Speaker 9: luxurious things, and also in hot places like the Caribbean,

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Speaker 9: Italy or Mexico.

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Speaker 4: Oh, that's interesting. And also then in terms of budget,

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Speaker 4: like you said, set it and forget it, like you

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Speaker 4: get the budget, it's done, like you know exactly how

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Speaker 4: much you're gonna pay, you don't have to think about it.

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Speaker 4: That's quite interesting. Is there what's taken a hit like

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Speaker 4: you mentioned, maybe where they're not spending money as much?

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Speaker 9: Right so, I think what we're a little bit concerned about,

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Speaker 9: Alex and we've been expressing this for quite a few

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Speaker 9: months now, is in theme parks. You know, theme parks

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Speaker 9: had a very good run in twenty twenty two, and

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Speaker 9: the question is are they going to see that same

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Speaker 9: run in twenty and twenty five, And so far the

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Speaker 9: data is saying no. It's it's a little bit hard

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Speaker 9: to say, but I would suspect that a lot of

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Speaker 9: people are getting sticker shop for the destination theme parks

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Speaker 9: and then the regional theme parks. Of course, you know

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Speaker 9: we had the big merger between six Flags and Cedar Fair.

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Speaker 9: We of course have United Parks formerly SeaWorld, and I

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Speaker 9: don't know if people aren't necessarily either counting that as

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Speaker 9: a vacation because their one day trip, or if they're

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Speaker 9: choosing instead of doing these one day trips to do

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Speaker 9: these big lavish vacations and that's where their budget is going.

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Speaker 4: That's interesting.

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Speaker 3: How about Europe because you know, you hear stories about

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Speaker 3: how Europe was just overrun by American tourists over the

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Speaker 3: last several years, and after September is my Europe. That's

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Speaker 3: our new thing. So we do in Europe in September

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Speaker 3: last year, we did Ireland. This year, I think we're

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Speaker 3: going to do Italy. Confirming that to tomorrow with Kelly

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Speaker 3: with Hawaii talk to us about Europe Americans still going

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Speaker 3: to Europe because I mean, I get the euroed almost parody.

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Speaker 9: Oh yeah, Paul, you are going to be one of

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Speaker 9: many people going to Italy next year. It seems we

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Speaker 9: had a big bump from last year, so people who

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Speaker 9: are going to Italy. Last year was only about eighteen

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Speaker 9: percent and now it's twenty five percent of our vacationers.

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Speaker 9: So that's pretty big spike. Now putting it into context,

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Speaker 9: Italy isn't quite back to where it was pre pandemic

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Speaker 9: in terms of vacationers or travelers into Italy, but they

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Speaker 9: are getting there. What we are seeing is, you know, Mexico,

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Speaker 9: the Caribbean, it's it's very, very high, and it's going

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Speaker 9: to get higher. Places like Italy, Portugal, Spain, those are

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Speaker 9: going to do very well next year too. Whether or

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Speaker 9: not we get back to pre pandemic levels for some

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Speaker 9: of those countries remains to be seen. But you might

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Speaker 9: see that you're a little bit crowded. Paul, and perhaps

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Speaker 9: the government of those countries they've been talking about limiting

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Speaker 9: cruise lines, for example, in terms of docking and so interesting.

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Speaker 9: You know, it might be a little bit harder to

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Speaker 9: get there. You might have to be a little bit

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Speaker 9: more creative.

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Speaker 4: Going to September. Yeah, he's going in September. He doesn't

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Speaker 4: have kids like he's septembery.

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Speaker 9: You'll be fine.

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Speaker 4: I'm the one with the problem. I'm planning a Scotland

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Speaker 4: trip in July. That's going to be something. So yeah, okay, yeah,

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Speaker 4: So let's talk about individual companies. So your credit analyst,

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Speaker 4: which kind of companies are going to win from this.

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Speaker 9: We're suspecting that Royal Caribbean and Carnival in particular, are

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Speaker 9: going to do quite well from this. You could also

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Speaker 9: say a Viking would do well because the smaller vessel

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Speaker 9: cruise ships are going to be able to access these

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Speaker 9: small islands and you know in the Mediterranean. But companies

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Speaker 9: that that also could potentially do well, we think is

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Speaker 9: something like a Marriott or a Hyatt in terms of

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Speaker 9: you know, publicly traded companies, I should say, and the

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Speaker 9: reason being is, you know, Hyatt, for example, they bought

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Speaker 9: Apple Leisure in twenty twenty one and that gave them

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Speaker 9: a bigger footprint into Mexico, into the Caribbean. These companies

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Speaker 9: folk have been focusing a lot of their dollars on

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Speaker 9: the Caribbean. But also something interesting is Marriott announced an

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Speaker 9: acquisition of a company that focuses on wilderness and sort

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Speaker 9: of these natural cabin type places. So really really getting

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Speaker 9: a big kind of mix of things competition with I

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Speaker 9: guess you could say the Airbnb or the outpost airbnbs.

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Speaker 9: And we are seeing that a lot of people are

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Speaker 9: preferring domestic vacations next year, you know, it's spiking to

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Speaker 9: ninety eight percent or planning or going on domestic vacation

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Speaker 9: versus ninety six I believe it was last year, and

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Speaker 9: international is staying flat at about seventy eight percent, so

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Speaker 9: people are looking domestic. We might see more national park

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Speaker 9: spending or national park visits than we saw, and Marriotte's

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Speaker 9: taking advantage of that.

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Speaker 3: Our thanks to Jody Lorie Bloomberg Intelligence Credit Analysts.

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Speaker 4: We move next to a Bloomberg Big Take story we

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Speaker 4: focused on this week, titled need to Grind Retirement crunch

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Speaker 4: haunts Americans nearing sixty. You can find it on Bloomberg

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Speaker 4: dot Com and The Terminal.

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Speaker 3: The story looks at how Generation X face's significant financial

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Speaker 3: stress as they approach retirement age, with many feeling they

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Speaker 3: won't be able to afford to retire comfortably.

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Speaker 4: For more, we are joined by one of the story's authors,

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Speaker 4: Suzanne Woolley, Bloomberg Personal Finance reporter. We first asked Suzanne

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Speaker 4: to break down what she found in her reporting.

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Speaker 10: Yeah, there's a lot of stress about it because, you know,

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Speaker 10: as the oldest exers become sixty, I mean they were

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Speaker 10: sort of the guinea pigs for four one k's. The

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Speaker 10: boomers had pensions, you know, and the four one k

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Speaker 10: on top of that, and now the exers are sort

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Speaker 10: of looking at their balances and looking at the news

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Speaker 10: about maybe Social Security having to be reformed within the

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Speaker 10: next decade, and looking at the money that they're spending

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Speaker 10: supporting their adult children and possibly also their parents aging parents,

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Speaker 10: and it's just leading to a lot of concern about

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Speaker 10: how the heck are you going to be able to

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Speaker 10: retire in comfort anytime soon?

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Speaker 5: Right?

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Speaker 4: So, I was struck by it, was it forty three

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Speaker 4: percent say they can't afford to retire at sixty five.

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Speaker 4: That is staggering.

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Speaker 10: It is staggering, you know. It's it's just a combination

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Speaker 10: of a lot of things. I mean, housing affordability has

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Speaker 10: been an issue, you know, the high cost of living

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Speaker 10: is an issue. These are sort of the peak earning

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Speaker 10: years for a lot of exers, and they're hit with

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Speaker 10: the pandemic, which a lot of them say was a

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Speaker 10: big blow to their savings, you know, and then just

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Speaker 10: the cost of groceries, the cost of housing. Everything has

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Speaker 10: been going up and up and up, and it's harder

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Speaker 10: to save and it's harder to see, you know, how

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Speaker 10: you eke more out of an already stretched budget to

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Speaker 10: put away more for retirement.

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Speaker 3: So is the expectation that since we're living longer, we're

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Speaker 3: just going to have to work longer.

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Speaker 10: I think that's part of it, yes, because exers are

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Speaker 10: obviously going to live longer.

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Speaker 2: You know.

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Speaker 10: The truth is really that a lot of people, at

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Speaker 10: least boomers, have a lot of challenges when they retire.

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Speaker 10: You know, they feel sort of rootless. So in a way,

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Speaker 10: maybe it's not so bad if we can work longer.

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Speaker 10: There's this epidemic of loneliness in America. It gives people

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Speaker 10: a sense of purpose. But the fact is, you want

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Speaker 10: to have the option to retire when you want to, or.

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Speaker 4: To work differently. Right, so maybe you're working part time,

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Speaker 4: or maybe you're working at a job that you work

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Speaker 4: maybe eight hours a day versus like fourteen hours, you know,

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Speaker 4: like it's a different kind of environment and pace. Like

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Speaker 4: Paul wants to be a Walmart greeter in his third career.

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Speaker 4: Like I'm not entirely kidding about that, but we don't

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Speaker 4: support that part.

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Speaker 10: No, no, I mean, but that is, you know, that

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Speaker 10: is sort of the reality. You know, in your later years,

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Speaker 10: you may not want to grind away at the same

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Speaker 10: job you've been doing for you know, the past couple

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Speaker 10: of decades, but you might do consulting in your area,

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Speaker 10: or you know, at least you'll make some money later

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Speaker 10: in life. It's not just like you'll turn the switch

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Speaker 10: a sixty two or sixty five and then all income

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Speaker 10: coming into you is over. But I mean social security

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Speaker 10: makes people a lot of nervous because that's something it's

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Speaker 10: sort of the one thing in our so we can

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Speaker 10: sort of depend on, and something's going to have to happen.

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Speaker 2: What is it?

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Speaker 3: What is the feeling in with your reporting here about

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Speaker 3: social Security? I mean, do we I'm not.

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Speaker 10: Yeah, it's not good. It's not good, Paul. People are

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Speaker 10: really not feeling that social Security is gonna be there

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Speaker 10: for them in the way they need it, and you know,

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Speaker 10: unsurprisingly they place a lot of flame on that in politicians.

437
00:21:28,000 --> 00:21:30,280
Speaker 4: I mean, I'm gen X and I'm assuming I'm not

438
00:21:30,320 --> 00:21:34,000
Speaker 4: getting Social Security. If I do, that's super like benefit

439
00:21:34,080 --> 00:21:37,159
Speaker 4: go me. But that would be like extra stuff. So like,

440
00:21:37,240 --> 00:21:39,360
Speaker 4: my whole life is revolved around how do I put

441
00:21:39,359 --> 00:21:41,160
Speaker 4: my money in a way that will make me money

442
00:21:41,240 --> 00:21:44,320
Speaker 4: later in some kind of tax free way, because that

443
00:21:44,440 --> 00:21:47,040
Speaker 4: I've seen with my parents how difficult it is to

444
00:21:47,080 --> 00:21:49,560
Speaker 4: pay taxes when you don't have any income. Except for

445
00:21:49,640 --> 00:21:51,400
Speaker 4: like attentionional or social Security.

446
00:21:51,760 --> 00:21:54,440
Speaker 10: Yes, and for most people, you know, eighty five percent

447
00:21:54,480 --> 00:21:59,040
Speaker 10: of the social Security benefits are taxed, which is bananas exactly. Yeah,

448
00:21:59,080 --> 00:22:02,440
Speaker 10: that's my personal fing Yes, yeah, I like that formal

449
00:22:02,480 --> 00:22:03,640
Speaker 10: assessment the bananas.

450
00:22:03,760 --> 00:22:05,919
Speaker 4: Yeah. So what what's a solution?

451
00:22:06,119 --> 00:22:07,320
Speaker 10: I mean, there are a lot of ways you can

452
00:22:07,359 --> 00:22:11,320
Speaker 10: sort of, I mean, obviously you can. If you're over fifty,

453
00:22:11,640 --> 00:22:13,800
Speaker 10: you can contribute more to your four one K. You

454
00:22:13,840 --> 00:22:16,239
Speaker 10: can contribute next to seventy five hundred dollars a year

455
00:22:16,280 --> 00:22:19,920
Speaker 10: if you have it this this coming year. There are

456
00:22:19,920 --> 00:22:24,160
Speaker 10: ways to you know, increase your savings. They're you know,

457
00:22:24,480 --> 00:22:26,760
Speaker 10: side hustles. It's really hard to come up with an

458
00:22:26,840 --> 00:22:30,439
Speaker 10: answer to that question because it's different for every person.

459
00:22:30,520 --> 00:22:33,879
Speaker 10: You know, what they can do. I guess just like

460
00:22:34,080 --> 00:22:38,760
Speaker 10: smarter savings and making sure you're doing everything you can

461
00:22:38,920 --> 00:22:41,879
Speaker 10: to optimize your tax advantage savings if your four one

462
00:22:41,960 --> 00:22:44,320
Speaker 10: K and maybe I mean roths are something I think

463
00:22:44,359 --> 00:22:46,200
Speaker 10: younger people should really look into.

464
00:22:46,720 --> 00:22:49,440
Speaker 3: Our thanks to Susanne Willie Bloomberg Personal finance reporter.

465
00:22:49,640 --> 00:22:50,960
Speaker 4: Coming up, we're going to break down some of the

466
00:22:51,040 --> 00:22:53,760
Speaker 4: challenges that could be faced by President ELEC. Donald Trump's

467
00:22:53,760 --> 00:22:55,280
Speaker 4: nominee for Treasury Secretary.

468
00:22:55,480 --> 00:22:58,240
Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in

469
00:22:58,320 --> 00:23:00,760
Speaker 3: depth research and data on two thousand companies in one

470
00:23:00,840 --> 00:23:03,760
Speaker 3: hundred and thirty industries. You can access Bloomberg Intelligence via

471
00:23:03,800 --> 00:23:04,800
Speaker 3: Big on the terminal.

472
00:23:04,840 --> 00:23:07,720
Speaker 4: I'll Paul Sweeney and I'm Alex Deel, and this is Bloomberg.

473
00:23:12,560 --> 00:23:16,440
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

474
00:23:16,520 --> 00:23:20,080
Speaker 2: weekdays at ten am Eastern on applecar Play and Android

475
00:23:20,080 --> 00:23:22,840
Speaker 2: Auto with the Bloomberg Business app. You can also listen

476
00:23:22,960 --> 00:23:26,080
Speaker 2: live on Amazon Alexa from our flagship New York station.

477
00:23:26,440 --> 00:23:29,200
Speaker 2: Just say Alexa Play Bloomberg eleven thirty.

478
00:23:30,240 --> 00:23:33,000
Speaker 4: We move next to the semiconductor company Micron Technology.

479
00:23:33,200 --> 00:23:35,680
Speaker 3: This week, the largest US maker of computer memory chips,

480
00:23:35,720 --> 00:23:38,480
Speaker 3: game a revenue forecast that missed Anamal's projections by about

481
00:23:38,480 --> 00:23:39,399
Speaker 3: one billion dollars.

482
00:23:39,440 --> 00:23:41,840
Speaker 4: The company was hurt by sluggish demand for smartphones and

483
00:23:41,880 --> 00:23:44,760
Speaker 4: personal computers. So for more, we were joined by Jake Silverman,

484
00:23:44,800 --> 00:23:46,800
Speaker 4: Bloomberg Intelligence semiconductor analyst.

485
00:23:46,960 --> 00:23:49,640
Speaker 3: We first asked Jake for his take on Micron's earnings results.

486
00:23:49,960 --> 00:23:51,879
Speaker 1: Yeah, it seems like there might be a trough in

487
00:23:51,920 --> 00:23:54,680
Speaker 1: fiscal two q which is next quarter. It will kind

488
00:23:54,720 --> 00:23:57,919
Speaker 1: of depend there was an inventory build up, so it

489
00:23:58,000 --> 00:24:01,280
Speaker 1: kind of depends on how fast those tories deplete. Because

490
00:24:01,560 --> 00:24:04,560
Speaker 1: while demand isn't particularly strong, it might be kind of weak.

491
00:24:04,600 --> 00:24:07,240
Speaker 1: It is somewhat stable for the most part, So in

492
00:24:07,320 --> 00:24:09,600
Speaker 1: terms of unit demand, when we think about end markets,

493
00:24:09,640 --> 00:24:12,840
Speaker 1: smartphones doing a little bit better, PCs definitely doing a

494
00:24:12,880 --> 00:24:16,000
Speaker 1: little bit weaker. But you know, on the other hand,

495
00:24:16,040 --> 00:24:18,760
Speaker 1: as we think about the second half of the calendar year,

496
00:24:18,880 --> 00:24:22,000
Speaker 1: we might see seasonal demand pick up. We might also

497
00:24:22,080 --> 00:24:25,440
Speaker 1: see some content expansion opportunities for Micron. When we think

498
00:24:25,440 --> 00:24:29,040
Speaker 1: about AI smartphones and aipcs, we're not exactly sure what

499
00:24:29,080 --> 00:24:31,600
Speaker 1: the demand will look like yet there is you know,

500
00:24:31,760 --> 00:24:34,480
Speaker 1: we do believe that there will be some uplift from that.

501
00:24:35,520 --> 00:24:38,840
Speaker 3: So as Micron is a company that does have an AI,

502
00:24:38,920 --> 00:24:41,280
Speaker 3: angle doesn't have what would like to develop one, how

503
00:24:41,280 --> 00:24:42,760
Speaker 3: do you guys think that has the stree think.

504
00:24:42,640 --> 00:24:44,600
Speaker 1: Actually, if you look at their data center revenue, a

505
00:24:44,680 --> 00:24:46,600
Speaker 1: lot of that is coming from AI right now. So

506
00:24:46,640 --> 00:24:48,680
Speaker 1: they have a number of different products that are actually

507
00:24:48,720 --> 00:24:51,119
Speaker 1: benefiting from AI. I think the one talked about the

508
00:24:51,160 --> 00:24:54,479
Speaker 1: most is high bandwidth memory, but that's still very nascent.

509
00:24:54,800 --> 00:24:56,480
Speaker 1: We think it's only going to be about ten or

510
00:24:56,520 --> 00:24:58,680
Speaker 1: so percent of sales, maybe a little bit more now

511
00:24:58,720 --> 00:25:02,760
Speaker 1: after the recent guidance for next year, so it's pretty early.

512
00:25:02,760 --> 00:25:05,360
Speaker 1: It's growing off of a low base. But you take

513
00:25:05,359 --> 00:25:07,000
Speaker 1: a look at some of the other products. They also

514
00:25:07,040 --> 00:25:09,840
Speaker 1: have high capacity dims with your DRAM modules that go

515
00:25:09,880 --> 00:25:14,080
Speaker 1: into servers. They have lpdd R five similar style product,

516
00:25:14,640 --> 00:25:18,200
Speaker 1: and then they have data center SSDs, which a slightly

517
00:25:18,240 --> 00:25:20,199
Speaker 1: different story. We're seeing a little bit of a demand

518
00:25:20,240 --> 00:25:22,919
Speaker 1: moderation right now, so things are maybe cooling off, but

519
00:25:22,960 --> 00:25:24,159
Speaker 1: could re energize.

520
00:25:23,800 --> 00:25:25,399
Speaker 4: Later in the year. So that's what I'm wondering. Do

521
00:25:25,440 --> 00:25:28,040
Speaker 4: you feel like the stock reaction then is overdone based

522
00:25:28,080 --> 00:25:29,840
Speaker 4: on their AI of potential.

523
00:25:30,640 --> 00:25:34,600
Speaker 1: It's I think right now. It's just expectations were pretty high.

524
00:25:34,880 --> 00:25:36,960
Speaker 1: A lot of it was based on AI. I don't

525
00:25:36,960 --> 00:25:42,000
Speaker 1: think there was a particularly strong expectation for traditional markets.

526
00:25:42,000 --> 00:25:44,320
Speaker 1: But at the same time, the weakness in those markets

527
00:25:44,400 --> 00:25:47,440
Speaker 1: was more pronounced than expected, and so you're starting to see.

528
00:25:47,240 --> 00:25:47,719
Speaker 2: The sell off.

529
00:25:47,760 --> 00:25:50,919
Speaker 1: High band with memory really hasn't quite inflected yet, so

530
00:25:50,960 --> 00:25:54,000
Speaker 1: we're not really seeing those results when I was seeing

531
00:25:54,040 --> 00:25:55,520
Speaker 1: that in their results yet.

532
00:25:55,720 --> 00:25:59,920
Speaker 3: How much of this is a sector issue PCs no

533
00:26:00,680 --> 00:26:04,600
Speaker 3: handsets versus a Micron issue, because I like this story

534
00:26:04,640 --> 00:26:06,000
Speaker 3: and it's like back in the day when I was

535
00:26:06,400 --> 00:26:08,480
Speaker 3: actually running some money there, I'd be like, I take

536
00:26:08,520 --> 00:26:10,800
Speaker 3: a look at this name here in this pullback Today?

537
00:26:11,080 --> 00:26:14,200
Speaker 1: Yeah, look, I mean again, I think it'll come down

538
00:26:14,280 --> 00:26:18,960
Speaker 1: to how much traditional demand sort of re emerges in

539
00:26:18,960 --> 00:26:21,840
Speaker 1: the second half of the how much seasonality really exists.

540
00:26:21,840 --> 00:26:24,520
Speaker 1: I think there are a few catalysts to re energize that,

541
00:26:24,680 --> 00:26:28,600
Speaker 1: one of those being PC refresh cycle. There's also been

542
00:26:28,760 --> 00:26:32,680
Speaker 1: a push towards a more premium tier mix of smartphones,

543
00:26:33,200 --> 00:26:35,960
Speaker 1: people upgrading say from just the iPhone fifteen to the

544
00:26:35,960 --> 00:26:38,000
Speaker 1: iPhone sixteen pro.

545
00:26:38,000 --> 00:26:40,639
Speaker 4: Or iPhone twelve. But whatever, that's not me, not me,

546
00:26:40,760 --> 00:26:42,040
Speaker 4: I'm not that actually.

547
00:26:41,680 --> 00:26:43,359
Speaker 1: Six I do ever iPhone twelve, so.

548
00:26:44,760 --> 00:26:48,760
Speaker 4: I can throw shade. Where does this is a supremely

549
00:26:48,800 --> 00:26:52,200
Speaker 4: silly question, but where does Microns sit in the AI world?

550
00:26:52,440 --> 00:26:55,120
Speaker 4: Like their customers are who they get product from? Whom?

551
00:26:55,359 --> 00:26:58,040
Speaker 1: Yeah, so some of their customers, including video. They now

552
00:26:58,080 --> 00:27:01,600
Speaker 1: have three high band memory customers. I think one of

553
00:27:01,640 --> 00:27:04,679
Speaker 1: them is a MD and another one might be Google.

554
00:27:04,840 --> 00:27:07,920
Speaker 1: Given that they have such high demand for their TPU

555
00:27:08,480 --> 00:27:12,520
Speaker 1: and that's partially internally, but they also you know, that's

556
00:27:12,560 --> 00:27:14,440
Speaker 1: for high bandwith memory. But then also some of their

557
00:27:14,440 --> 00:27:17,280
Speaker 1: other products that I mentioned before, like lpdd R five,

558
00:27:17,359 --> 00:27:20,200
Speaker 1: their high capacity dims, those are being sold into AI

559
00:27:20,320 --> 00:27:22,040
Speaker 1: servers as well. But then you know, you have to

560
00:27:22,119 --> 00:27:24,760
Speaker 1: keep in mind that some of that revenue, in fact,

561
00:27:24,760 --> 00:27:27,359
Speaker 1: the majority of that revenue right now, is coming from

562
00:27:27,400 --> 00:27:31,439
Speaker 1: the traditional compute side, if you think about servers that

563
00:27:31,480 --> 00:27:35,000
Speaker 1: are based on the Intel and AMD CPUs.

564
00:27:35,480 --> 00:27:38,640
Speaker 4: All right, thanks to Jake Silverman, Bloomberg Intelligence Semiconductor analyst.

565
00:27:38,840 --> 00:27:40,879
Speaker 3: We turned now to a Bloomberg Big Takes story we

566
00:27:40,960 --> 00:27:44,000
Speaker 3: focused on this week, titled Debt Risk that Lord Bessant

567
00:27:44,000 --> 00:27:45,439
Speaker 3: to US Treasury now Loo Large.

568
00:27:45,480 --> 00:27:47,600
Speaker 4: You can find it on Bloomberg dot com and the terminal,

569
00:27:47,600 --> 00:27:50,040
Speaker 4: and the story looks at Scott Bessont, President elect Donald

570
00:27:50,080 --> 00:27:51,840
Speaker 4: Trump's nominee for Treasury Secretary.

571
00:27:51,960 --> 00:27:55,199
Speaker 3: The story focuses on how Bessont faces the challenge of

572
00:27:55,240 --> 00:27:58,200
Speaker 3: reducing the US federal deficit, which is projected to exceed

573
00:27:58,280 --> 00:28:00,000
Speaker 3: six percent of GDP in twenty twenty five.

574
00:28:00,280 --> 00:28:02,360
Speaker 4: For more, we were joined by one of the stories authors,

575
00:28:02,440 --> 00:28:05,200
Speaker 4: Victoria dend Renew Bloomberg US Treasury reporter.

576
00:28:05,520 --> 00:28:07,359
Speaker 3: We first asked Victoria to break down some of the

577
00:28:07,400 --> 00:28:08,399
Speaker 3: findings from her story.

578
00:28:08,720 --> 00:28:11,600
Speaker 7: What we were trying to show is that the dead outlook,

579
00:28:11,880 --> 00:28:13,960
Speaker 7: you know, a lot of experts ad looks quite challenging.

580
00:28:14,000 --> 00:28:18,520
Speaker 7: And Scott Vesant, if and when not confirmed as Treasury Secretary,

581
00:28:18,560 --> 00:28:20,879
Speaker 7: is going to have to deal with the challenges that

582
00:28:20,880 --> 00:28:24,119
Speaker 7: the outlook poses while also trying to execute the Trump

583
00:28:24,160 --> 00:28:27,800
Speaker 7: administration's economic vision. And he himself has spoken about the

584
00:28:27,800 --> 00:28:29,800
Speaker 7: fiscal outlook in the past. He said he wants to

585
00:28:29,840 --> 00:28:33,320
Speaker 7: bring the deficit down to three percent, essentially halving it.

586
00:28:33,720 --> 00:28:36,520
Speaker 7: So we basically take a look at how possible that is,

587
00:28:36,640 --> 00:28:40,400
Speaker 7: how budget and markets experts think, how likely that is

588
00:28:40,440 --> 00:28:42,720
Speaker 7: based on, like you said, the drivers of the deficit,

589
00:28:42,760 --> 00:28:45,280
Speaker 7: like for instance, interest cost has become a key driver,

590
00:28:45,400 --> 00:28:50,120
Speaker 7: particularly in the year that just passed. So it's you know,

591
00:28:50,360 --> 00:28:52,160
Speaker 7: all of the experts were most of the ones we

592
00:28:52,160 --> 00:28:55,720
Speaker 7: spoke to talk about quite how halfing it to three

593
00:28:55,720 --> 00:28:57,600
Speaker 7: percent will be quite quite tricky.

594
00:28:58,440 --> 00:29:00,600
Speaker 3: So the US government's debt load, to put a nice

595
00:29:00,640 --> 00:29:04,040
Speaker 3: round number on it, is now over twenty eight trillion dollars.

596
00:29:04,280 --> 00:29:06,120
Speaker 3: I don't know, it seems like a big number to me.

597
00:29:06,920 --> 00:29:09,800
Speaker 3: Is there political willpower on either side of the Aisle

598
00:29:09,840 --> 00:29:15,000
Speaker 3: of Victoria. Have you learned to address this at all?

599
00:29:15,080 --> 00:29:18,440
Speaker 7: Well, it's tricky because you know the new administration, they're

600
00:29:18,440 --> 00:29:20,960
Speaker 7: going to have to face this issue quite early on. Obviously,

601
00:29:21,000 --> 00:29:23,400
Speaker 7: the tax cuts that expire at the end of next

602
00:29:23,480 --> 00:29:24,760
Speaker 7: year are going to be a very big part of

603
00:29:24,800 --> 00:29:27,600
Speaker 7: the debate, and Donald Trump and his administration has said

604
00:29:27,600 --> 00:29:30,680
Speaker 7: they want to extend those. That's obviously. That obviously means

605
00:29:30,720 --> 00:29:33,800
Speaker 7: that a source of revenue is not going to be

606
00:29:33,800 --> 00:29:35,840
Speaker 7: there if the tax cuts are extended. They do think

607
00:29:35,880 --> 00:29:37,479
Speaker 7: that that's going to boost the economy in a way

608
00:29:37,520 --> 00:29:39,600
Speaker 7: that's going to reduce the deficits, So that could help.

609
00:29:40,800 --> 00:29:43,320
Speaker 7: But it's hard to know. I mean, there are fiscal

610
00:29:43,320 --> 00:29:47,360
Speaker 7: hawks in Congress right now. You know, the Republicans. They

611
00:29:47,600 --> 00:29:50,200
Speaker 7: control the House, So on the one hand, it could

612
00:29:50,320 --> 00:29:51,840
Speaker 7: it could be that they it's easier for them to

613
00:29:51,880 --> 00:29:55,760
Speaker 7: pass legislation, but it is a very thin minority majority. Sorry,

614
00:29:55,800 --> 00:29:59,360
Speaker 7: So it could mean that actually congressional deal making when

615
00:29:59,360 --> 00:30:01,000
Speaker 7: it comes to the fiscal issues is going to be

616
00:30:01,080 --> 00:30:02,800
Speaker 7: much harder than it looks.

617
00:30:02,920 --> 00:30:05,479
Speaker 4: And not only is it twenty eight trillion, that's up

618
00:30:05,480 --> 00:30:08,600
Speaker 4: from seventeen trillion, or less at the end of twenty nineteen,

619
00:30:09,360 --> 00:30:12,240
Speaker 4: and as a share of GDP debts on a trajectory

620
00:30:12,280 --> 00:30:15,080
Speaker 4: to exceed even World War II levels. The idea is

621
00:30:15,080 --> 00:30:17,760
Speaker 4: that you get these blowouts when you have a war

622
00:30:17,920 --> 00:30:19,800
Speaker 4: because you need to fund it. We're not at war

623
00:30:19,880 --> 00:30:21,880
Speaker 4: in the same kind of way, and that's part of

624
00:30:21,920 --> 00:30:25,120
Speaker 4: the issue. Talk to me about issuance. We've seen Janet

625
00:30:25,160 --> 00:30:29,480
Speaker 4: Yelle and Treasury Secretary issue a lot on bills. Do

626
00:30:29,520 --> 00:30:31,240
Speaker 4: we think Scott Bessen is going to do more on

627
00:30:31,280 --> 00:30:34,520
Speaker 4: the long end or going to stay on the bill side.

628
00:30:35,280 --> 00:30:37,520
Speaker 7: Well, that is a great question, and that's when a

629
00:30:37,520 --> 00:30:39,680
Speaker 7: lot of market participants are going to be looking to

630
00:30:40,200 --> 00:30:44,080
Speaker 7: get hints or answers to I think when we talk about,

631
00:30:44,200 --> 00:30:46,080
Speaker 7: you know, the US debtload and issuance, I don't think

632
00:30:46,120 --> 00:30:48,200
Speaker 7: anyone is saying that the US is not going to

633
00:30:48,200 --> 00:30:50,360
Speaker 7: be able to find buyers for instead. But as we

634
00:30:50,400 --> 00:30:52,400
Speaker 7: saw last fall when heels were up, it could get

635
00:30:52,440 --> 00:30:54,720
Speaker 7: a bit more expensive for the US to borrow. So

636
00:30:54,760 --> 00:30:57,440
Speaker 7: that is a consideration because it weighs so much on

637
00:30:57,840 --> 00:31:00,720
Speaker 7: you know, the overall spending of the government. In terms

638
00:31:00,760 --> 00:31:03,520
Speaker 7: of Scott bessin we don't have too many clues yet

639
00:31:03,680 --> 00:31:06,840
Speaker 7: as to how he would proceed with issuance, But what

640
00:31:06,880 --> 00:31:09,480
Speaker 7: we know is that he was critical of the current

641
00:31:09,480 --> 00:31:12,760
Speaker 7: treasuries and of Janet Yellen's treasuries strategy to issue more

642
00:31:12,800 --> 00:31:15,719
Speaker 7: on the shorter end of the curve, which was, you know,

643
00:31:15,720 --> 00:31:17,440
Speaker 7: at a time when heels were very high. So I

644
00:31:17,480 --> 00:31:22,000
Speaker 7: think part of that strategy was to you know, essentially

645
00:31:22,040 --> 00:31:25,600
Speaker 7: whether the higher interests at the time. So if we're

646
00:31:25,640 --> 00:31:28,520
Speaker 7: going by what Scott Besson has said or other people

647
00:31:28,520 --> 00:31:30,920
Speaker 7: in the kind of Trump economic orbit, we could see

648
00:31:30,920 --> 00:31:34,280
Speaker 7: a shift and focus to longer treasuries. But it's always

649
00:31:34,280 --> 00:31:38,560
Speaker 7: different experts, sellers when secretaries actually become secretaries and they

650
00:31:38,640 --> 00:31:41,480
Speaker 7: deal with kind of a more holistic view of how

651
00:31:41,520 --> 00:31:44,040
Speaker 7: issuance works and the feedback they get from markets as well,

652
00:31:44,040 --> 00:31:45,320
Speaker 7: which is very critical to this.

653
00:31:45,720 --> 00:31:49,479
Speaker 4: Our Thanks to Victoria Dendrinu Bloomberg US Treasury Reporter, we

654
00:31:49,520 --> 00:31:51,560
Speaker 4: move next to m and A. The impact of US

655
00:31:51,680 --> 00:31:55,400
Speaker 4: elections reverberated across sectors and geographies with respect to M

656
00:31:55,440 --> 00:31:56,520
Speaker 4: and A in November, and a.

657
00:31:56,480 --> 00:31:58,960
Speaker 3: Crucial catalyst for much of the deal making globally is

658
00:31:59,040 --> 00:32:02,880
Speaker 3: future tariffs. This is according to research from Bloomberg Intelligence.

659
00:32:02,560 --> 00:32:04,520
Speaker 4: And for more on this, we were joined by Andrew Silverman,

660
00:32:04,560 --> 00:32:06,600
Speaker 4: Bloomberg Intelligence Senior policy analyst.

661
00:32:06,840 --> 00:32:09,320
Speaker 3: We first asked Andrew what his expectations are for M

662
00:32:09,320 --> 00:32:10,480
Speaker 3: and A in twenty twenty five.

663
00:32:10,920 --> 00:32:14,400
Speaker 8: So it's actually really interesting. For the past year, we've

664
00:32:14,400 --> 00:32:17,360
Speaker 8: seen basically the same pattern. Month after month. We've had

665
00:32:17,960 --> 00:32:20,800
Speaker 8: tech companies being acquired. That's sort of like the leading

666
00:32:21,640 --> 00:32:26,320
Speaker 8: target tech companies. Then we have financial companies, and then

667
00:32:26,000 --> 00:32:31,240
Speaker 8: in normally in the third place, we see traditional energy companies. Right,

668
00:32:31,440 --> 00:32:34,680
Speaker 8: But in November we saw this really interesting development. We

669
00:32:34,720 --> 00:32:37,640
Speaker 8: saw a lot of We saw a big spike in

670
00:32:37,760 --> 00:32:41,800
Speaker 8: basic materials companies being acquired, and we also saw this

671
00:32:41,920 --> 00:32:44,800
Speaker 8: increase in telecom companies being acquired, and we saw an

672
00:32:44,840 --> 00:32:49,959
Speaker 8: increase in media companies obviously earlier in December. And I

673
00:32:50,000 --> 00:32:54,120
Speaker 8: think that that companies are positioning themselves after they saw

674
00:32:54,120 --> 00:32:58,320
Speaker 8: what happened in the election and trying to proactively protect

675
00:32:58,400 --> 00:33:01,760
Speaker 8: themselves for what might come in a Trump presidency.

676
00:33:02,200 --> 00:33:04,600
Speaker 4: Do we think that these will be transformative monster deals

677
00:33:04,720 --> 00:33:06,600
Speaker 4: we talk in like small Bolton's.

678
00:33:07,000 --> 00:33:10,000
Speaker 8: Oh yeah, these are big deals like one.

679
00:33:10,040 --> 00:33:10,200
Speaker 2: OK.

680
00:33:10,240 --> 00:33:13,840
Speaker 8: For example, it's an eight point seven billion dollar deal

681
00:33:13,920 --> 00:33:17,600
Speaker 8: for end Link. Now that's a traditional energy deal. It's

682
00:33:17,600 --> 00:33:21,280
Speaker 8: sort of it's interesting companies are coming up with with

683
00:33:21,440 --> 00:33:23,720
Speaker 8: different sorts of conclusions about what's going to happen in

684
00:33:23,760 --> 00:33:26,720
Speaker 8: Trump presidency. We see these sort of traditional energy companies

685
00:33:27,280 --> 00:33:30,800
Speaker 8: still doing these big acquisitions. But then Blackrock did an

686
00:33:30,840 --> 00:33:36,520
Speaker 8: acquisition of HPS Company, and and that company is a

687
00:33:36,520 --> 00:33:41,120
Speaker 8: big credit investor in clean energy. So obviously they think

688
00:33:41,200 --> 00:33:43,800
Speaker 8: that either the Republicans aren't going to be as hard

689
00:33:43,840 --> 00:33:47,040
Speaker 8: on clean energy companies as people might think, or maybe

690
00:33:47,080 --> 00:33:50,240
Speaker 8: even there they're going to be good for clean energy companies. Obviously,

691
00:33:51,240 --> 00:33:55,720
Speaker 8: you know, if he puts tariffs on on on you know,

692
00:33:55,800 --> 00:33:58,120
Speaker 8: foreign investment in the United States, then you know, clean

693
00:33:58,200 --> 00:34:00,200
Speaker 8: energy is a place where we might say a lot

694
00:34:00,240 --> 00:34:03,720
Speaker 8: of it because a lot of the the batteries and

695
00:34:03,760 --> 00:34:07,720
Speaker 8: a lot of the solar cells and the even the

696
00:34:07,760 --> 00:34:09,880
Speaker 8: minerals that we use in our and our batteries are

697
00:34:09,880 --> 00:34:12,520
Speaker 8: coming from China. So if what's a sixty percent tarif

698
00:34:12,640 --> 00:34:14,920
Speaker 8: on China, not so great for a clean.

699
00:34:14,760 --> 00:34:16,839
Speaker 3: And yeah, another reason to maybe get some deals done

700
00:34:17,440 --> 00:34:20,320
Speaker 3: now before the tariff's kind of money up the situation. Perhaps,

701
00:34:20,880 --> 00:34:22,920
Speaker 3: I remember Paul Talbot, one of the leading M and

702
00:34:22,960 --> 00:34:25,319
Speaker 3: A bankers on Wall Street formerly Morgan Stanley. Now is

703
00:34:25,320 --> 00:34:27,720
Speaker 3: he has his own firm. He's out there saying they're

704
00:34:27,800 --> 00:34:31,439
Speaker 3: hiring investment bankers now in anticipation of deal activity really

705
00:34:31,480 --> 00:34:34,319
Speaker 3: picking up. One of the areas I think should be

706
00:34:34,320 --> 00:34:37,239
Speaker 3: better is just the regulatory environment. It seems every time

707
00:34:37,239 --> 00:34:38,719
Speaker 3: over the last three, four or five years that we

708
00:34:38,760 --> 00:34:42,480
Speaker 3: saw a deal announced big deals, the Federal Trade Commission

709
00:34:42,480 --> 00:34:44,360
Speaker 3: would have her problem, the Department of Justice would have

710
00:34:44,400 --> 00:34:47,759
Speaker 3: her problem. Now, I think the expectation is that's going

711
00:34:47,840 --> 00:34:49,680
Speaker 3: to ease up a little bit. Is that what you're

712
00:34:49,680 --> 00:34:50,400
Speaker 3: hearing out there.

713
00:34:50,760 --> 00:34:53,960
Speaker 8: Well, certainly with Lena Congan, I think that's the single

714
00:34:54,000 --> 00:34:55,920
Speaker 8: most important factor because.

715
00:34:55,680 --> 00:34:59,120
Speaker 3: She's head of the FTC right exactly, very tough on

716
00:34:59,360 --> 00:34:59,960
Speaker 3: on consolate.

717
00:35:00,520 --> 00:35:00,759
Speaker 5: Yeah.

718
00:35:00,920 --> 00:35:03,759
Speaker 8: Actually, Jen Rey and I have done some research on this,

719
00:35:04,000 --> 00:35:08,080
Speaker 8: and we think that that the perception is that it's

720
00:35:08,080 --> 00:35:10,120
Speaker 8: going to be a much better environment for M and A.

721
00:35:10,280 --> 00:35:13,520
Speaker 8: But not so fast because there's also that strong populist

722
00:35:15,120 --> 00:35:19,480
Speaker 8: stream to the Trump administration. In fact, you know, his

723
00:35:19,640 --> 00:35:24,359
Speaker 8: Vice President jd. Vance is a big fan of sort

724
00:35:24,400 --> 00:35:28,200
Speaker 8: of some of these progressive pieces of legislation that are

725
00:35:28,320 --> 00:35:31,440
Speaker 8: trying to make you know, that's some P five hundred

726
00:35:31,440 --> 00:35:35,360
Speaker 8: companies taxable when they do the organization. So it's possible

727
00:35:35,400 --> 00:35:37,839
Speaker 8: that even though people are very sort of optimistic about

728
00:35:37,840 --> 00:35:39,680
Speaker 8: what the environment is going to be without not only

729
00:35:39,680 --> 00:35:42,479
Speaker 8: in a con for example, it may not be as

730
00:35:42,920 --> 00:35:44,680
Speaker 8: spectacular as they think, all right.

731
00:35:44,680 --> 00:35:47,520
Speaker 3: Thanks to Andrew Silverman, Bloomberg Intelligence Senior Policy Analysts.

732
00:35:47,960 --> 00:35:52,480
Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,

733
00:35:52,719 --> 00:35:55,919
Speaker 2: and anywhere else you get your podcasts. Listen live each

734
00:35:55,920 --> 00:35:59,280
Speaker 2: weekday ten am to noon Eastern on Bloomberg dot com,

735
00:35:59,400 --> 00:36:02,799
Speaker 2: the Ihart Radio app, tune In, and the Bloomberg Business app.

736
00:36:02,920 --> 00:36:05,960
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737
00:36:06,160 --> 00:36:08,040
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