Speaker 1: Bloomberg Audio, Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Intelligence with Alex Steel and Paul'sweenye.
Speaker 3: The real app performance has been the US corporate high yield.
Speaker 4: Are the companies lean enough? Have they trimmed all the fats?
Speaker 3: The semiconductor business is a really cyclical business.
Speaker 2: Breaking market headlines and corporate news from across the globe.
Speaker 4: Do investors like the M and A that we've seen?
Speaker 3: These are two big time blue chip companies.
Speaker 4: The window between the peak and cut changing super fast.
Speaker 2: Bloomberg Intelligence with Alex Steel and Paul'sweeny on Bloomberg Radio.
Speaker 3: On Today's Bloomberg Intelligence Show, we dig inside the big
Speaker 3: business story is impacting Wall Street and the global markets.
Speaker 4: Each and every week we provide in depth research and
Speaker 4: data on some of the two thousand companies and one
Speaker 4: hundred and thirty industries our analysts cover worldwide.
Speaker 3: Today, we'll look at why US Vacation has planned to
Speaker 3: increase travel spending in twenty twenty five.
Speaker 4: Plus, we'll break down my Micron Technologies revenue forecast missed
Speaker 4: analyst projections.
Speaker 3: First, we begin with earnings from the biopharmaceutical company Pfiser.
Speaker 4: This week, viser forecasted twenty twenty five sales and earnings
Speaker 4: in line with analyst projections.
Speaker 3: It's a step towards offering relief to weary investors that
Speaker 3: feel the drugmaker is being mismanaged.
Speaker 4: For more, we are joined by Zam Fazelli, Bloomberg Intelligence,
Speaker 4: Director of Research for Global Industries and Senior Pharmaceuticals, and
Speaker 4: we first asked Sam about Pfizer's guidance for investors.
Speaker 5: Look, this is the story about a company that didn't disappoint.
Speaker 5: I think, having seen what happened during twenty twenty four,
Speaker 5: this is the company that people were a bit worried about.
Speaker 5: You know, is it going to come out and give
Speaker 5: us a whole bunch of guidance that is actually below consensus?
Speaker 5: And here we are with something that's in line with
Speaker 5: consensus pretty much mostly. There are some moving parts that's
Speaker 5: you know, to think about it if you want to
Speaker 5: get into the nitty gritty, but at the end of
Speaker 5: the day, it's pretty much in line with consensus. And
Speaker 5: that's a sigh of relief for a stock that's pretty
Speaker 5: much close to I don't know if it's an all
Speaker 5: time lobe, because this company has been around for a
Speaker 5: long long, long time. But it certainly is a very
Speaker 5: weak share price compared to where it's been before, especially
Speaker 5: in the heights of the pandemic with COVID sales and
Speaker 5: everybody think it's going to be one hundred billion dollar market
Speaker 5: a year. So U that's where we are.
Speaker 4: Speaking of vaccines for a second. We were watching the
Speaker 4: Patrick Stewart Scrooge movie. We like to do Christmas movies,
Speaker 4: and my daughter goes, when was this set like in
Speaker 4: the eighties? Right, so to the point we're like, no, honey,
Speaker 4: like it was, it was a long time ago, and
Speaker 4: we will I'll be dead at this point if we
Speaker 4: learnt that time. Okay, But I guess my question is,
Speaker 4: how do we have conviction on what these docks are
Speaker 4: going to do next year? We have no idea what
Speaker 4: the administration is going to be like or what their
Speaker 4: relationship with drug companies is going to be.
Speaker 5: Like, Yeah, but Alex, you know the government can't change
Speaker 5: things overnight, right, so by the time they take off
Speaker 5: is by the time they start putting new laws into play, which,
Speaker 5: of course one of them is possibly going to be
Speaker 5: some way of trying to rain in the PBMs. The
Speaker 5: pharmacy benefit managers, the middlemen who take the big fat
Speaker 5: chunk of a profit out of these high drug prices.
Speaker 5: By the time that happens, it will be twenty twenty
Speaker 5: six or something like that. The reality is that it's
Speaker 5: all going to be about rhetoric. Right, So are we
Speaker 5: going to have a health and human services run by
Speaker 5: RFK anti vaccine? Is you're going to tone down his
Speaker 5: anti vaccine? Is he going to get confirmed? So it's
Speaker 5: going to be all about the optic optics of it,
Speaker 5: and it's also all about the rhetoric no real impact.
Speaker 5: But investors don't look at what's happening next year. They
Speaker 5: always look at two or three years down the road.
Speaker 5: Now here we have a company and that's dealing with IRA.
Speaker 5: I think it's the first farmer company has put out
Speaker 5: their guidance and they're saying that the changes in the IRA,
Speaker 5: which are good for patients. By the way, I have
Speaker 5: to say that right up front, is going to hit
Speaker 5: them about one to one and a half billion dollars.
Speaker 5: I think the number or a billion dollars, so one
Speaker 5: and a half percent hit right. So that's because they're
Speaker 5: going to be having to cover the catastrophic.
Speaker 2: Pay that.
Speaker 5: In terms of the part the medicare coverage, and of
Speaker 5: course they've got drugs that are high priced, so that
Speaker 5: sort of thing I do expect. And of course, you know,
Speaker 5: sentiment is all in our world, so it just tells
Speaker 5: you where we are in some of these names.
Speaker 3: One of the great new functions on the Bloomberg terminals
Speaker 3: MODL for financial models, and this is where Bloomberg Intelligence
Speaker 3: and Bloomberg have compiled a lot of the earning estimate
Speaker 3: models from a lot of the leading Wall Street and analysts.
Speaker 3: And what you see there is for a company like Pfiser,
Speaker 3: they got a lot of drugs, and investors really focus
Speaker 3: on the various drugs and how they're growing. What do
Speaker 3: you focus on for Pfizer, Sam.
Speaker 5: Yeah, Sozer's twenty twenty five is about execution and getting
Speaker 5: this new company that they bought Sea Gun. It's now
Speaker 5: that new anymore. It's a while ago they bought it
Speaker 5: fully integrated, and managing those if you think about it,
Speaker 5: a lot of what they've said today with regards to
Speaker 5: the growth on the EPs line is due to managing costs.
Speaker 5: So they've come below some Wall Street expectations in terms
Speaker 5: of sales and marketing costs and you know with within
Speaker 5: even R and D costs. So but that's been the case.
Speaker 5: This is a company that's trying to find its new world,
Speaker 5: in the new world of COVID. How much vaccine am
Speaker 5: I going to sell? How much black Slovia that I'm
Speaker 5: going to say? I remember, that's a nine billion dollar
Speaker 5: line or so, right, that's not a you know for
Speaker 5: a company that's guiding into six sixty one to sixty
Speaker 5: whatever the number is here, sixty one sixty four billion
Speaker 5: dollars sales range. So that's where there is. There was
Speaker 5: a lot of sensitivity here and worry and of course
Speaker 5: they've said, I think we're on a straight line from
Speaker 5: last year to twenty twenty four to twenty twenty five,
Speaker 5: so that's where they worry was. And frankly, new drugs
Speaker 5: and stuff. It's always important, but we need City Day
Speaker 5: to come through.
Speaker 3: Our Thanks to Sam Fazzelli, Bloomberg Intelligence, Director of Research
Speaker 3: for Global Industries and senior pharmaceutical scentalists, we.
Speaker 4: Move next to commercial real estate. This week, we focus
Speaker 4: on a story titled office real Estate is facing a
Speaker 4: year of reckoning in twenty twenty five.
Speaker 3: You can find the story on Bloomberg dot Com and
Speaker 3: The Terminal. It discusses how commercial real estate is bracing
Speaker 3: for losses in twenty twenty five as lenders run out
Speaker 3: of patients and borrowers struggle to refinance loans for more.
Speaker 4: We were joining by Patrick Clark, Bloomberg real estate reporter.
Speaker 4: We first asked him why commercial real estate may suffer
Speaker 4: next year.
Speaker 6: These things take time. It's like a slow grind down,
Speaker 6: just in the way that post GFC. You know, the
Speaker 6: delinquencies in default really didn't spike until or didn't peak
Speaker 6: untill twenty twelve. It takes time for the stuff to
Speaker 6: work its way through the system. Everyone's running out of
Speaker 6: patients a bit like on the lender side, you know,
Speaker 6: the extensions no longer come free, and they might not
Speaker 6: come at all at this point. So part of it
Speaker 6: is that I think the one thing that's changed is
Speaker 6: a year ago people might have expected we were going
Speaker 6: to get six or seven rate cuts this year, and
Speaker 6: now that's you know those Not only the does not happen,
Speaker 6: but we don't expect them next year later. So you
Speaker 6: can no longer sit there hoping and expecting that interest
Speaker 6: rates are going to save you. So you kind of
Speaker 6: got to make a decision.
Speaker 3: So how does this come about? Is it in terms of, oh,
Speaker 3: my goodness, the equity folks have to write down the
Speaker 3: value of the building. That only or usually happens when
Speaker 3: I've got a loan coming due and I've got to
Speaker 3: renegotiate it, and then I've got to get a determination
Speaker 3: of the value the building or the lender will put
Speaker 3: evaluation of the building. Is that typically the precipitating factor.
Speaker 6: Yeah, I think it's you know, it's the maturity wall.
Speaker 6: As you're you know, it comes time you have to
Speaker 6: pay off that there's a big Almost all these loans
Speaker 6: have big balloon payments at the end of them, and
Speaker 6: you got to pay them off. That means you've got
Speaker 6: to get a new loan. And the new loans have
Speaker 6: not really been available, and we're certainly not available at
Speaker 6: pricing that would be tolerable. And so that's where that's
Speaker 6: where the negotiations come in. And I think the again,
Speaker 6: the way those negotiations have played out over the last
Speaker 6: eighteen months have been the can down the road, extend
Speaker 6: and pretend, or sometimes the cleaned up version of that
Speaker 6: is amend and pretend, which means you actually have to
Speaker 6: put something in to get the extension. But again, it's
Speaker 6: like the extensions are a little they become harder and
Speaker 6: harder to get over time, particularly as this hope that
Speaker 6: there's going to be an event which makes all the
Speaker 6: problems go away and dissipates.
Speaker 4: When is the maturity wall sort of coming up? And
Speaker 4: I appreciate it's probably property by property and who takes.
Speaker 6: The hit the maturity wall is you know, it's permeable, right,
Speaker 6: things pass through it. They in some ways, you know,
Speaker 6: there's there. The one thing that happens when you extend
Speaker 6: loans is that you add them to next year's maturity wall,
Speaker 6: and so the more the more loans don't pay off.
Speaker 6: And I saw stat I don't think we got into
Speaker 6: the story, but something like, you know, it's only like
Speaker 6: a quarter of Central Business District office buildings that are
Speaker 6: financed in the CNBS market have paid off at maturity
Speaker 6: over the last three or four So it's like a
Speaker 6: lot of them are pushing out. They're pushing out, and
Speaker 6: that just makes the maturity wall go higher. Now they
Speaker 6: can continue to be pushed out until they can't. And
Speaker 6: we don't know exactly when that moment will hit or
Speaker 6: with what force or with with what volume?
Speaker 3: Right, a sprinkle of companies are coming sing we're getting
Speaker 3: people back five days a week. And I wonder if
Speaker 3: that's being perceived by the commercial real estate market is
Speaker 3: all right, maybe the worst is behind us in terms
Speaker 3: of vacancies and that kind of thing. Is there any
Speaker 3: any discussion of real estate business that maybe just the
Speaker 3: business fundamentals have bottomed.
Speaker 6: I think yeah, sure, yes, and I but in some
Speaker 6: ways I think that is more of a catalyst for
Speaker 6: resolution of these situations. It's sort of like, we know
Speaker 6: what it is now. It's not great. It's it's great
Speaker 6: if you own one Vanderbilt or you know, a brand
Speaker 6: new high tech office building seven thirty one les. But
Speaker 6: you know if you own commodity office and in you know,
Speaker 6: in the garment district or something, and that's you know
Speaker 6: what it is now, and it's not great.
Speaker 7: Right.
Speaker 4: I'm just wondering, is it big banks that have a
Speaker 4: lot of these loans? Is it small guys, Like where
Speaker 4: do we see the ripples?
Speaker 8: Well?
Speaker 6: I think that one of the things that I think
Speaker 6: we've seen happen is that the bigger banks that are
Speaker 6: in you know, better situations across their business have been
Speaker 6: able to and have been reserving at a you know,
Speaker 6: at a faster at a higher rate. So they are
Speaker 6: you know, they've been quicker to acknowledge the issues and
Speaker 6: to prepare themselves to ultimately realize losses, whereas smaller banks
Speaker 6: we've seen much less of that. You know, we're starting
Speaker 6: to see smaller regional banks modify loans at a greater pace,
Speaker 6: which again I think we see as like they're pretending less.
Speaker 4: They're still they're extending and pretending less.
Speaker 6: No, no, well they're pretending less anyway, like they're acknowledging. Yes, okay,
Speaker 6: like more stuff is still yet to happen. We can't
Speaker 6: just push these things out. We have to get ourselves
Speaker 6: in position. But nobody wants this all to happen at once, right,
Speaker 6: I mean, it's in everyone's interests for these problems to
Speaker 6: be realized, you know, gradually and at a pace where
Speaker 6: they can kind of be controlled our Thanks to Patrick Clark,
Speaker 6: Bloomberg Real Estate.
Speaker 4: Reporter, coming up, we're going to dig deeper into a
Speaker 4: retirement crunch that's haunting Americans nearing sixty years old.
Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing into
Speaker 3: research and data on two thousand companies in one hundred
Speaker 3: and thirty industries. You can access Bloomberg Intelligence via Bigo
Speaker 3: on the terminal.
Speaker 4: I'll Paul Sweeney and I'm Alex Steele, and this is Bloomberg.
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 2: weekdays at ten am Eastern on applecar Playing and broud
Speaker 2: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 2: you get your podcasts, or watch us live on YouTube.
Speaker 4: We move next to the travel and leisure sector. According
Speaker 4: to a Bloomberg Intelligence survey, US vacationers plan to increase
Speaker 4: travel spending in twenty twenty five from last year.
Speaker 3: And for more on this research, we were joined by
Speaker 3: Jody Lourie, Bloomberg Intelligence Credit Analysts.
Speaker 4: We first asked Jody to walk us through some of
Speaker 4: these findings from her survey.
Speaker 9: I have to say, as a credit analyst, and I've
Speaker 9: mentioned this a few times on your show, we get
Speaker 9: uncomfortable with the amount of optimism, and we got on.
Speaker 9: I was uncomfortable personally because we did our credit outlook
Speaker 9: and it was a bit too optimistic for my liking.
Speaker 9: That said the data doesn't lie. And when we surveyed vacationers,
Speaker 9: seventy two percent said that they're willing to spend more
Speaker 9: in twenty five versus twenty four. Now you compare that
Speaker 9: to last year, where it was only sixty seven percent
Speaker 9: said they were planning to spend more in twenty four
Speaker 9: over twenty three. So it's a pretty big bumb.
Speaker 3: Where are they spending? How are they spending?
Speaker 9: Sure, so, Paul, I mean, I think if you think
Speaker 9: of the average person, going on vacation is.
Speaker 10: A big thing.
Speaker 9: We zeroed in on people who are planning vacation as
Speaker 9: a priority for next year, and for those people, they
Speaker 9: are actually saying seventy nine per center saying that they're
Speaker 9: spending more on travel overclothing, and that was compared to
Speaker 9: seventy percent last year. Now, where they're going is also
Speaker 9: interesting because we saw a big spike in vacationers who
Speaker 9: are planning on going on cruises that's thirty seven percent,
Speaker 9: as well as on all inclusive vacations. And we did
Speaker 9: see a pullback in theme parks, We saw a pullback
Speaker 9: in casinos and race tracks, and so what we're seeing
Speaker 9: is a lot of I guess set in and forget
Speaker 9: it type vacations, vacations where people can do these big,
Speaker 9: luxurious things, and also in hot places like the Caribbean,
Speaker 9: Italy or Mexico.
Speaker 4: Oh, that's interesting. And also then in terms of budget,
Speaker 4: like you said, set it and forget it, like you
Speaker 4: get the budget, it's done, like you know exactly how
Speaker 4: much you're gonna pay, you don't have to think about it.
Speaker 4: That's quite interesting. Is there what's taken a hit like
Speaker 4: you mentioned, maybe where they're not spending money as much?
Speaker 9: Right so, I think what we're a little bit concerned about,
Speaker 9: Alex and we've been expressing this for quite a few
Speaker 9: months now, is in theme parks. You know, theme parks
Speaker 9: had a very good run in twenty twenty two, and
Speaker 9: the question is are they going to see that same
Speaker 9: run in twenty and twenty five, And so far the
Speaker 9: data is saying no. It's it's a little bit hard
Speaker 9: to say, but I would suspect that a lot of
Speaker 9: people are getting sticker shop for the destination theme parks
Speaker 9: and then the regional theme parks. Of course, you know
Speaker 9: we had the big merger between six Flags and Cedar Fair.
Speaker 9: We of course have United Parks formerly SeaWorld, and I
Speaker 9: don't know if people aren't necessarily either counting that as
Speaker 9: a vacation because their one day trip, or if they're
Speaker 9: choosing instead of doing these one day trips to do
Speaker 9: these big lavish vacations and that's where their budget is going.
Speaker 4: That's interesting.
Speaker 3: How about Europe because you know, you hear stories about
Speaker 3: how Europe was just overrun by American tourists over the
Speaker 3: last several years, and after September is my Europe. That's
Speaker 3: our new thing. So we do in Europe in September
Speaker 3: last year, we did Ireland. This year, I think we're
Speaker 3: going to do Italy. Confirming that to tomorrow with Kelly
Speaker 3: with Hawaii talk to us about Europe Americans still going
Speaker 3: to Europe because I mean, I get the euroed almost parody.
Speaker 9: Oh yeah, Paul, you are going to be one of
Speaker 9: many people going to Italy next year. It seems we
Speaker 9: had a big bump from last year, so people who
Speaker 9: are going to Italy. Last year was only about eighteen
Speaker 9: percent and now it's twenty five percent of our vacationers.
Speaker 9: So that's pretty big spike. Now putting it into context,
Speaker 9: Italy isn't quite back to where it was pre pandemic
Speaker 9: in terms of vacationers or travelers into Italy, but they
Speaker 9: are getting there. What we are seeing is, you know, Mexico,
Speaker 9: the Caribbean, it's it's very, very high, and it's going
Speaker 9: to get higher. Places like Italy, Portugal, Spain, those are
Speaker 9: going to do very well next year too. Whether or
Speaker 9: not we get back to pre pandemic levels for some
Speaker 9: of those countries remains to be seen. But you might
Speaker 9: see that you're a little bit crowded. Paul, and perhaps
Speaker 9: the government of those countries they've been talking about limiting
Speaker 9: cruise lines, for example, in terms of docking and so interesting.
Speaker 9: You know, it might be a little bit harder to
Speaker 9: get there. You might have to be a little bit
Speaker 9: more creative.
Speaker 4: Going to September. Yeah, he's going in September. He doesn't
Speaker 4: have kids like he's septembery.
Speaker 9: You'll be fine.
Speaker 4: I'm the one with the problem. I'm planning a Scotland
Speaker 4: trip in July. That's going to be something. So yeah, okay, yeah,
Speaker 4: So let's talk about individual companies. So your credit analyst,
Speaker 4: which kind of companies are going to win from this.
Speaker 9: We're suspecting that Royal Caribbean and Carnival in particular, are
Speaker 9: going to do quite well from this. You could also
Speaker 9: say a Viking would do well because the smaller vessel
Speaker 9: cruise ships are going to be able to access these
Speaker 9: small islands and you know in the Mediterranean. But companies
Speaker 9: that that also could potentially do well, we think is
Speaker 9: something like a Marriott or a Hyatt in terms of
Speaker 9: you know, publicly traded companies, I should say, and the
Speaker 9: reason being is, you know, Hyatt, for example, they bought
Speaker 9: Apple Leisure in twenty twenty one and that gave them
Speaker 9: a bigger footprint into Mexico, into the Caribbean. These companies
Speaker 9: folk have been focusing a lot of their dollars on
Speaker 9: the Caribbean. But also something interesting is Marriott announced an
Speaker 9: acquisition of a company that focuses on wilderness and sort
Speaker 9: of these natural cabin type places. So really really getting
Speaker 9: a big kind of mix of things competition with I
Speaker 9: guess you could say the Airbnb or the outpost airbnbs.
Speaker 9: And we are seeing that a lot of people are
Speaker 9: preferring domestic vacations next year, you know, it's spiking to
Speaker 9: ninety eight percent or planning or going on domestic vacation
Speaker 9: versus ninety six I believe it was last year, and
Speaker 9: international is staying flat at about seventy eight percent, so
Speaker 9: people are looking domestic. We might see more national park
Speaker 9: spending or national park visits than we saw, and Marriotte's
Speaker 9: taking advantage of that.
Speaker 3: Our thanks to Jody Lorie Bloomberg Intelligence Credit Analysts.
Speaker 4: We move next to a Bloomberg Big Take story we
Speaker 4: focused on this week, titled need to Grind Retirement crunch
Speaker 4: haunts Americans nearing sixty. You can find it on Bloomberg
Speaker 4: dot Com and The Terminal.
Speaker 3: The story looks at how Generation X face's significant financial
Speaker 3: stress as they approach retirement age, with many feeling they
Speaker 3: won't be able to afford to retire comfortably.
Speaker 4: For more, we are joined by one of the story's authors,
Speaker 4: Suzanne Woolley, Bloomberg Personal Finance reporter. We first asked Suzanne
Speaker 4: to break down what she found in her reporting.
Speaker 10: Yeah, there's a lot of stress about it because, you know,
Speaker 10: as the oldest exers become sixty, I mean they were
Speaker 10: sort of the guinea pigs for four one k's. The
Speaker 10: boomers had pensions, you know, and the four one k
Speaker 10: on top of that, and now the exers are sort
Speaker 10: of looking at their balances and looking at the news
Speaker 10: about maybe Social Security having to be reformed within the
Speaker 10: next decade, and looking at the money that they're spending
Speaker 10: supporting their adult children and possibly also their parents aging parents,
Speaker 10: and it's just leading to a lot of concern about
Speaker 10: how the heck are you going to be able to
Speaker 10: retire in comfort anytime soon?
Speaker 5: Right?
Speaker 4: So, I was struck by it, was it forty three
Speaker 4: percent say they can't afford to retire at sixty five.
Speaker 4: That is staggering.
Speaker 10: It is staggering, you know. It's it's just a combination
Speaker 10: of a lot of things. I mean, housing affordability has
Speaker 10: been an issue, you know, the high cost of living
Speaker 10: is an issue. These are sort of the peak earning
Speaker 10: years for a lot of exers, and they're hit with
Speaker 10: the pandemic, which a lot of them say was a
Speaker 10: big blow to their savings, you know, and then just
Speaker 10: the cost of groceries, the cost of housing. Everything has
Speaker 10: been going up and up and up, and it's harder
Speaker 10: to save and it's harder to see, you know, how
Speaker 10: you eke more out of an already stretched budget to
Speaker 10: put away more for retirement.
Speaker 3: So is the expectation that since we're living longer, we're
Speaker 3: just going to have to work longer.
Speaker 10: I think that's part of it, yes, because exers are
Speaker 10: obviously going to live longer.
Speaker 2: You know.
Speaker 10: The truth is really that a lot of people, at
Speaker 10: least boomers, have a lot of challenges when they retire.
Speaker 10: You know, they feel sort of rootless. So in a way,
Speaker 10: maybe it's not so bad if we can work longer.
Speaker 10: There's this epidemic of loneliness in America. It gives people
Speaker 10: a sense of purpose. But the fact is, you want
Speaker 10: to have the option to retire when you want to, or.
Speaker 4: To work differently. Right, so maybe you're working part time,
Speaker 4: or maybe you're working at a job that you work
Speaker 4: maybe eight hours a day versus like fourteen hours, you know,
Speaker 4: like it's a different kind of environment and pace. Like
Speaker 4: Paul wants to be a Walmart greeter in his third career.
Speaker 4: Like I'm not entirely kidding about that, but we don't
Speaker 4: support that part.
Speaker 10: No, no, I mean, but that is, you know, that
Speaker 10: is sort of the reality. You know, in your later years,
Speaker 10: you may not want to grind away at the same
Speaker 10: job you've been doing for you know, the past couple
Speaker 10: of decades, but you might do consulting in your area,
Speaker 10: or you know, at least you'll make some money later
Speaker 10: in life. It's not just like you'll turn the switch
Speaker 10: a sixty two or sixty five and then all income
Speaker 10: coming into you is over. But I mean social security
Speaker 10: makes people a lot of nervous because that's something it's
Speaker 10: sort of the one thing in our so we can
Speaker 10: sort of depend on, and something's going to have to happen.
Speaker 2: What is it?
Speaker 3: What is the feeling in with your reporting here about
Speaker 3: social Security? I mean, do we I'm not.
Speaker 10: Yeah, it's not good. It's not good, Paul. People are
Speaker 10: really not feeling that social Security is gonna be there
Speaker 10: for them in the way they need it, and you know,
Speaker 10: unsurprisingly they place a lot of flame on that in politicians.
Speaker 4: I mean, I'm gen X and I'm assuming I'm not
Speaker 4: getting Social Security. If I do, that's super like benefit
Speaker 4: go me. But that would be like extra stuff. So like,
Speaker 4: my whole life is revolved around how do I put
Speaker 4: my money in a way that will make me money
Speaker 4: later in some kind of tax free way, because that
Speaker 4: I've seen with my parents how difficult it is to
Speaker 4: pay taxes when you don't have any income. Except for
Speaker 4: like attentionional or social Security.
Speaker 10: Yes, and for most people, you know, eighty five percent
Speaker 10: of the social Security benefits are taxed, which is bananas exactly. Yeah,
Speaker 10: that's my personal fing Yes, yeah, I like that formal
Speaker 10: assessment the bananas.
Speaker 4: Yeah. So what what's a solution?
Speaker 10: I mean, there are a lot of ways you can
Speaker 10: sort of, I mean, obviously you can. If you're over fifty,
Speaker 10: you can contribute more to your four one K. You
Speaker 10: can contribute next to seventy five hundred dollars a year
Speaker 10: if you have it this this coming year. There are
Speaker 10: ways to you know, increase your savings. They're you know,
Speaker 10: side hustles. It's really hard to come up with an
Speaker 10: answer to that question because it's different for every person.
Speaker 10: You know, what they can do. I guess just like
Speaker 10: smarter savings and making sure you're doing everything you can
Speaker 10: to optimize your tax advantage savings if your four one
Speaker 10: K and maybe I mean roths are something I think
Speaker 10: younger people should really look into.
Speaker 3: Our thanks to Susanne Willie Bloomberg Personal finance reporter.
Speaker 4: Coming up, we're going to break down some of the
Speaker 4: challenges that could be faced by President ELEC. Donald Trump's
Speaker 4: nominee for Treasury Secretary.
Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 3: depth research and data on two thousand companies in one
Speaker 3: hundred and thirty industries. You can access Bloomberg Intelligence via
Speaker 3: Big on the terminal.
Speaker 4: I'll Paul Sweeney and I'm Alex Deel, and this is Bloomberg.
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 2: weekdays at ten am Eastern on applecar Play and Android
Speaker 2: Auto with the Bloomberg Business app. You can also listen
Speaker 2: live on Amazon Alexa from our flagship New York station.
Speaker 2: Just say Alexa Play Bloomberg eleven thirty.
Speaker 4: We move next to the semiconductor company Micron Technology.
Speaker 3: This week, the largest US maker of computer memory chips,
Speaker 3: game a revenue forecast that missed Anamal's projections by about
Speaker 3: one billion dollars.
Speaker 4: The company was hurt by sluggish demand for smartphones and
Speaker 4: personal computers. So for more, we were joined by Jake Silverman,
Speaker 4: Bloomberg Intelligence semiconductor analyst.
Speaker 3: We first asked Jake for his take on Micron's earnings results.
Speaker 1: Yeah, it seems like there might be a trough in
Speaker 1: fiscal two q which is next quarter. It will kind
Speaker 1: of depend there was an inventory build up, so it
Speaker 1: kind of depends on how fast those tories deplete. Because
Speaker 1: while demand isn't particularly strong, it might be kind of weak.
Speaker 1: It is somewhat stable for the most part, So in
Speaker 1: terms of unit demand, when we think about end markets,
Speaker 1: smartphones doing a little bit better, PCs definitely doing a
Speaker 1: little bit weaker. But you know, on the other hand,
Speaker 1: as we think about the second half of the calendar year,
Speaker 1: we might see seasonal demand pick up. We might also
Speaker 1: see some content expansion opportunities for Micron. When we think
Speaker 1: about AI smartphones and aipcs, we're not exactly sure what
Speaker 1: the demand will look like yet there is you know,
Speaker 1: we do believe that there will be some uplift from that.
Speaker 3: So as Micron is a company that does have an AI,
Speaker 3: angle doesn't have what would like to develop one, how
Speaker 3: do you guys think that has the stree think.
Speaker 1: Actually, if you look at their data center revenue, a
Speaker 1: lot of that is coming from AI right now. So
Speaker 1: they have a number of different products that are actually
Speaker 1: benefiting from AI. I think the one talked about the
Speaker 1: most is high bandwidth memory, but that's still very nascent.
Speaker 1: We think it's only going to be about ten or
Speaker 1: so percent of sales, maybe a little bit more now
Speaker 1: after the recent guidance for next year, so it's pretty early.
Speaker 1: It's growing off of a low base. But you take
Speaker 1: a look at some of the other products. They also
Speaker 1: have high capacity dims with your DRAM modules that go
Speaker 1: into servers. They have lpdd R five similar style product,
Speaker 1: and then they have data center SSDs, which a slightly
Speaker 1: different story. We're seeing a little bit of a demand
Speaker 1: moderation right now, so things are maybe cooling off, but
Speaker 1: could re energize.
Speaker 4: Later in the year. So that's what I'm wondering. Do
Speaker 4: you feel like the stock reaction then is overdone based
Speaker 4: on their AI of potential.
Speaker 1: It's I think right now. It's just expectations were pretty high.
Speaker 1: A lot of it was based on AI. I don't
Speaker 1: think there was a particularly strong expectation for traditional markets.
Speaker 1: But at the same time, the weakness in those markets
Speaker 1: was more pronounced than expected, and so you're starting to see.
Speaker 2: The sell off.
Speaker 1: High band with memory really hasn't quite inflected yet, so
Speaker 1: we're not really seeing those results when I was seeing
Speaker 1: that in their results yet.
Speaker 3: How much of this is a sector issue PCs no
Speaker 3: handsets versus a Micron issue, because I like this story
Speaker 3: and it's like back in the day when I was
Speaker 3: actually running some money there, I'd be like, I take
Speaker 3: a look at this name here in this pullback Today?
Speaker 1: Yeah, look, I mean again, I think it'll come down
Speaker 1: to how much traditional demand sort of re emerges in
Speaker 1: the second half of the how much seasonality really exists.
Speaker 1: I think there are a few catalysts to re energize that,
Speaker 1: one of those being PC refresh cycle. There's also been
Speaker 1: a push towards a more premium tier mix of smartphones,
Speaker 1: people upgrading say from just the iPhone fifteen to the
Speaker 1: iPhone sixteen pro.
Speaker 4: Or iPhone twelve. But whatever, that's not me, not me,
Speaker 4: I'm not that actually.
Speaker 1: Six I do ever iPhone twelve, so.
Speaker 4: I can throw shade. Where does this is a supremely
Speaker 4: silly question, but where does Microns sit in the AI world?
Speaker 4: Like their customers are who they get product from? Whom?
Speaker 1: Yeah, so some of their customers, including video. They now
Speaker 1: have three high band memory customers. I think one of
Speaker 1: them is a MD and another one might be Google.
Speaker 1: Given that they have such high demand for their TPU
Speaker 1: and that's partially internally, but they also you know, that's
Speaker 1: for high bandwith memory. But then also some of their
Speaker 1: other products that I mentioned before, like lpdd R five,
Speaker 1: their high capacity dims, those are being sold into AI
Speaker 1: servers as well. But then you know, you have to
Speaker 1: keep in mind that some of that revenue, in fact,
Speaker 1: the majority of that revenue right now, is coming from
Speaker 1: the traditional compute side, if you think about servers that
Speaker 1: are based on the Intel and AMD CPUs.
Speaker 4: All right, thanks to Jake Silverman, Bloomberg Intelligence Semiconductor analyst.
Speaker 3: We turned now to a Bloomberg Big Takes story we
Speaker 3: focused on this week, titled Debt Risk that Lord Bessant
Speaker 3: to US Treasury now Loo Large.
Speaker 4: You can find it on Bloomberg dot com and the terminal,
Speaker 4: and the story looks at Scott Bessont, President elect Donald
Speaker 4: Trump's nominee for Treasury Secretary.
Speaker 3: The story focuses on how Bessont faces the challenge of
Speaker 3: reducing the US federal deficit, which is projected to exceed
Speaker 3: six percent of GDP in twenty twenty five.
Speaker 4: For more, we were joined by one of the stories authors,
Speaker 4: Victoria dend Renew Bloomberg US Treasury reporter.
Speaker 3: We first asked Victoria to break down some of the
Speaker 3: findings from her story.
Speaker 7: What we were trying to show is that the dead outlook,
Speaker 7: you know, a lot of experts ad looks quite challenging.
Speaker 7: And Scott Vesant, if and when not confirmed as Treasury Secretary,
Speaker 7: is going to have to deal with the challenges that
Speaker 7: the outlook poses while also trying to execute the Trump
Speaker 7: administration's economic vision. And he himself has spoken about the
Speaker 7: fiscal outlook in the past. He said he wants to
Speaker 7: bring the deficit down to three percent, essentially halving it.
Speaker 7: So we basically take a look at how possible that is,
Speaker 7: how budget and markets experts think, how likely that is
Speaker 7: based on, like you said, the drivers of the deficit,
Speaker 7: like for instance, interest cost has become a key driver,
Speaker 7: particularly in the year that just passed. So it's you know,
Speaker 7: all of the experts were most of the ones we
Speaker 7: spoke to talk about quite how halfing it to three
Speaker 7: percent will be quite quite tricky.
Speaker 3: So the US government's debt load, to put a nice
Speaker 3: round number on it, is now over twenty eight trillion dollars.
Speaker 3: I don't know, it seems like a big number to me.
Speaker 3: Is there political willpower on either side of the Aisle
Speaker 3: of Victoria. Have you learned to address this at all?
Speaker 7: Well, it's tricky because you know the new administration, they're
Speaker 7: going to have to face this issue quite early on. Obviously,
Speaker 7: the tax cuts that expire at the end of next
Speaker 7: year are going to be a very big part of
Speaker 7: the debate, and Donald Trump and his administration has said
Speaker 7: they want to extend those. That's obviously. That obviously means
Speaker 7: that a source of revenue is not going to be
Speaker 7: there if the tax cuts are extended. They do think
Speaker 7: that that's going to boost the economy in a way
Speaker 7: that's going to reduce the deficits, So that could help.
Speaker 7: But it's hard to know. I mean, there are fiscal
Speaker 7: hawks in Congress right now. You know, the Republicans. They
Speaker 7: control the House, So on the one hand, it could
Speaker 7: it could be that they it's easier for them to
Speaker 7: pass legislation, but it is a very thin minority majority. Sorry,
Speaker 7: So it could mean that actually congressional deal making when
Speaker 7: it comes to the fiscal issues is going to be
Speaker 7: much harder than it looks.
Speaker 4: And not only is it twenty eight trillion, that's up
Speaker 4: from seventeen trillion, or less at the end of twenty nineteen,
Speaker 4: and as a share of GDP debts on a trajectory
Speaker 4: to exceed even World War II levels. The idea is
Speaker 4: that you get these blowouts when you have a war
Speaker 4: because you need to fund it. We're not at war
Speaker 4: in the same kind of way, and that's part of
Speaker 4: the issue. Talk to me about issuance. We've seen Janet
Speaker 4: Yelle and Treasury Secretary issue a lot on bills. Do
Speaker 4: we think Scott Bessen is going to do more on
Speaker 4: the long end or going to stay on the bill side.
Speaker 7: Well, that is a great question, and that's when a
Speaker 7: lot of market participants are going to be looking to
Speaker 7: get hints or answers to I think when we talk about,
Speaker 7: you know, the US debtload and issuance, I don't think
Speaker 7: anyone is saying that the US is not going to
Speaker 7: be able to find buyers for instead. But as we
Speaker 7: saw last fall when heels were up, it could get
Speaker 7: a bit more expensive for the US to borrow. So
Speaker 7: that is a consideration because it weighs so much on
Speaker 7: you know, the overall spending of the government. In terms
Speaker 7: of Scott bessin we don't have too many clues yet
Speaker 7: as to how he would proceed with issuance, But what
Speaker 7: we know is that he was critical of the current
Speaker 7: treasuries and of Janet Yellen's treasuries strategy to issue more
Speaker 7: on the shorter end of the curve, which was, you know,
Speaker 7: at a time when heels were very high. So I
Speaker 7: think part of that strategy was to you know, essentially
Speaker 7: whether the higher interests at the time. So if we're
Speaker 7: going by what Scott Besson has said or other people
Speaker 7: in the kind of Trump economic orbit, we could see
Speaker 7: a shift and focus to longer treasuries. But it's always
Speaker 7: different experts, sellers when secretaries actually become secretaries and they
Speaker 7: deal with kind of a more holistic view of how
Speaker 7: issuance works and the feedback they get from markets as well,
Speaker 7: which is very critical to this.
Speaker 4: Our Thanks to Victoria Dendrinu Bloomberg US Treasury Reporter, we
Speaker 4: move next to m and A. The impact of US
Speaker 4: elections reverberated across sectors and geographies with respect to M
Speaker 4: and A in November, and a.
Speaker 3: Crucial catalyst for much of the deal making globally is
Speaker 3: future tariffs. This is according to research from Bloomberg Intelligence.
Speaker 4: And for more on this, we were joined by Andrew Silverman,
Speaker 4: Bloomberg Intelligence Senior policy analyst.
Speaker 3: We first asked Andrew what his expectations are for M
Speaker 3: and A in twenty twenty five.
Speaker 8: So it's actually really interesting. For the past year, we've
Speaker 8: seen basically the same pattern. Month after month. We've had
Speaker 8: tech companies being acquired. That's sort of like the leading
Speaker 8: target tech companies. Then we have financial companies, and then
Speaker 8: in normally in the third place, we see traditional energy companies. Right,
Speaker 8: But in November we saw this really interesting development. We
Speaker 8: saw a lot of We saw a big spike in
Speaker 8: basic materials companies being acquired, and we also saw this
Speaker 8: increase in telecom companies being acquired, and we saw an
Speaker 8: increase in media companies obviously earlier in December. And I
Speaker 8: think that that companies are positioning themselves after they saw
Speaker 8: what happened in the election and trying to proactively protect
Speaker 8: themselves for what might come in a Trump presidency.
Speaker 4: Do we think that these will be transformative monster deals
Speaker 4: we talk in like small Bolton's.
Speaker 8: Oh yeah, these are big deals like one.
Speaker 2: OK.
Speaker 8: For example, it's an eight point seven billion dollar deal
Speaker 8: for end Link. Now that's a traditional energy deal. It's
Speaker 8: sort of it's interesting companies are coming up with with
Speaker 8: different sorts of conclusions about what's going to happen in
Speaker 8: Trump presidency. We see these sort of traditional energy companies
Speaker 8: still doing these big acquisitions. But then Blackrock did an
Speaker 8: acquisition of HPS Company, and and that company is a
Speaker 8: big credit investor in clean energy. So obviously they think
Speaker 8: that either the Republicans aren't going to be as hard
Speaker 8: on clean energy companies as people might think, or maybe
Speaker 8: even there they're going to be good for clean energy companies. Obviously,
Speaker 8: you know, if he puts tariffs on on on you know,
Speaker 8: foreign investment in the United States, then you know, clean
Speaker 8: energy is a place where we might say a lot
Speaker 8: of it because a lot of the the batteries and
Speaker 8: a lot of the solar cells and the even the
Speaker 8: minerals that we use in our and our batteries are
Speaker 8: coming from China. So if what's a sixty percent tarif
Speaker 8: on China, not so great for a clean.
Speaker 3: And yeah, another reason to maybe get some deals done
Speaker 3: now before the tariff's kind of money up the situation. Perhaps,
Speaker 3: I remember Paul Talbot, one of the leading M and
Speaker 3: A bankers on Wall Street formerly Morgan Stanley. Now is
Speaker 3: he has his own firm. He's out there saying they're
Speaker 3: hiring investment bankers now in anticipation of deal activity really
Speaker 3: picking up. One of the areas I think should be
Speaker 3: better is just the regulatory environment. It seems every time
Speaker 3: over the last three, four or five years that we
Speaker 3: saw a deal announced big deals, the Federal Trade Commission
Speaker 3: would have her problem, the Department of Justice would have
Speaker 3: her problem. Now, I think the expectation is that's going
Speaker 3: to ease up a little bit. Is that what you're
Speaker 3: hearing out there.
Speaker 8: Well, certainly with Lena Congan, I think that's the single
Speaker 8: most important factor because.
Speaker 3: She's head of the FTC right exactly, very tough on
Speaker 3: on consolate.
Speaker 5: Yeah.
Speaker 8: Actually, Jen Rey and I have done some research on this,
Speaker 8: and we think that that the perception is that it's
Speaker 8: going to be a much better environment for M and A.
Speaker 8: But not so fast because there's also that strong populist
Speaker 8: stream to the Trump administration. In fact, you know, his
Speaker 8: Vice President jd. Vance is a big fan of sort
Speaker 8: of some of these progressive pieces of legislation that are
Speaker 8: trying to make you know, that's some P five hundred
Speaker 8: companies taxable when they do the organization. So it's possible
Speaker 8: that even though people are very sort of optimistic about
Speaker 8: what the environment is going to be without not only
Speaker 8: in a con for example, it may not be as
Speaker 8: spectacular as they think, all right.
Speaker 3: Thanks to Andrew Silverman, Bloomberg Intelligence Senior Policy Analysts.
Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,
Speaker 2: and anywhere else you get your podcasts. Listen live each
Speaker 2: weekday ten am to noon Eastern on Bloomberg dot com,
Speaker 2: the Ihart Radio app, tune In, and the Bloomberg Business app.
Speaker 2: You can also watch us live every weekday on YouTube
Speaker 2: and always on the Bloomberg terminal