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Speaker 2: Boeing shares initially at their high up almost four percent.
Speaker 3: Today they're off.
Speaker 2: Those levels, just up again about one point two percent.
Speaker 3: But we had some big news early this morning.
Speaker 4: Tim Yeah, CEO Dave Calhoun stepping down at the end
Speaker 4: of the year. Chairman Larry Kellner will not stand for reelection.
Speaker 4: Stan Deal, who's the umbattled chief of Boeing's Commercial airplane division,
Speaker 4: also departing immediately. He'll be replaced by Chief Operating Officer
Speaker 4: Stephanie Pope.
Speaker 2: All Right, safe to say, much work to be done
Speaker 2: as a planemaker continues to struggle to get a handle
Speaker 2: on a spiraling safety crisis. So let's get to our
Speaker 2: key interview on Monday. Bloomberg News Boston Bureau chief Brook
Speaker 2: Sutherland with us. She's followed industrials and the space for years.
Speaker 2: She's a writer for the Bloomberg Industrial Strength newsletter. With
Speaker 2: us too, someone who knows so much about the aerospace
Speaker 2: and airline industry, Bloomberg Intelligence Senior Aerospace, Defense and Airlines analyst,
Speaker 2: George Ferguson. Hey, Brooke, and George, I feel like not
Speaker 2: a surprise maybe the news today considering that a bunch
Speaker 2: of airlines had meetings with Boeing's board last week. But
Speaker 2: CEO Dave Calhoun was not a part of those meetings.
Speaker 2: But let's go through it because it's important to understand
Speaker 2: the details. Brook, let me start with you break down
Speaker 2: the news and changes, who is all leaving, and what
Speaker 2: it means for this company going forward.
Speaker 5: Sure, so it's a pretty sweeping leadership overhaul. So Stan Deal,
Speaker 5: who oversaw the commercial Airplanes division, is retiring. He will
Speaker 5: be replaced by Stephanie Pope, who, as you said, had
Speaker 5: just been appointed to chief operating officer. You also have
Speaker 5: the chairman of the board who will not stand for
Speaker 5: re election. And then CEO Dave Calhoun is planning to
Speaker 5: depart at the end of the year. Now that is
Speaker 5: a pretty long time away from now that they do
Speaker 5: not have a replacement yet identified for Calhoun, and I
Speaker 5: think that's really the key question, is you figure out
Speaker 5: where Boeing goes from here and how it recovers is
Speaker 5: who do they get to fill that job?
Speaker 4: Yeah, so George, come on in on that. Where does
Speaker 4: Boeing go from here? And will these leadership changes at
Speaker 4: the top And we don't know them all yet, as
Speaker 4: Brook mentioned, we still don't know of new CEO for
Speaker 4: Boeing at this point. Does that is that enough to
Speaker 4: turn the company around? Is that enough to fix Boeing?
Speaker 6: Well?
Speaker 7: So, I don't think so, right. I think that what
Speaker 7: really matters is obviously stability of the production process and quality,
Speaker 7: and uh, that's just going to take a little while, uh,
Speaker 7: you know, to push through to I think, reinforce their
Speaker 7: oversight on the on the line and the stability of
Speaker 7: that manufacturing process. So I think that effort is ongoing
Speaker 7: and Dave Calhoun's obviously going to oversee that until he leaves.
Speaker 7: I think that they could have got a shot in
Speaker 7: the arm here and they the markets are giving them
Speaker 7: a bit of the shot in the arm already on
Speaker 7: bringing in someone new that they think will do a better.
Speaker 6: Job of this process.
Speaker 7: I think it's key for going to bring in someone
Speaker 7: who's got a good manufacturing resume. You know who's focused
Speaker 7: on quality manufacturing and on a strong engineering culture. That
Speaker 7: remains to be seen, but clearly the markets are excited
Speaker 7: about just the fact that it's going to change from here.
Speaker 2: George, I want to come back to you, though. The
Speaker 2: first thing I thought about, I'm like, oh, Calhoun is out,
Speaker 2: who's replacing him? And then I'm like, no, he's not
Speaker 2: stepping down until the end of the year. It's only
Speaker 2: the end of March. That's a long time. Are they
Speaker 2: just kind of buying time in your educated view of
Speaker 2: this industry, because they just weren't. They knew they had
Speaker 2: to kind of move him along, at least publicly, but
Speaker 2: they just don't have the right person yet, and that
Speaker 2: we should assume that they're going to have a new
Speaker 2: CEO in sooner rather than later, because to me, as
Speaker 2: an outsider an observer, you need to have a new
Speaker 2: CEO in place.
Speaker 7: So sorry, I think that was for me.
Speaker 2: Yeah, oh I'm sorry, Yes, no worries, yees.
Speaker 7: So I think the I think the board was a
Speaker 7: bit flat footed here, right, And I think that's what
Speaker 7: I perceive of this long wait until Calhoun leaves. You know,
Speaker 7: I think Calhoun had a number of people on the
Speaker 7: board that he was responsible for putting on there, maybe
Speaker 7: a little bit of loyalty. So I think it took
Speaker 7: the you know, the outsiders of the airlines to show
Speaker 7: up and talk to the board frankly and so. Yeah,
Speaker 7: so I think they're flat footed. I think they need
Speaker 7: time to figure out who they're going to bring in
Speaker 7: to replace Calhoun. I think it's going to be someone
Speaker 7: outside Boeing again, someone with a resume that's strong in
Speaker 7: manufacturing and a strong engineering culture.
Speaker 6: There's a lot to.
Speaker 7: Do this year at Boeing, so I'd hope that if
Speaker 7: they find someone sooner, maybe Calhoun even goes sooner because
Speaker 7: they're going to put a lot in place this year
Speaker 7: that's going to matter a lot in the years down
Speaker 7: the road.
Speaker 2: Ry and Brook come on in on that. I guess
Speaker 2: that's my point. It's like, I just thought, you got
Speaker 2: to have somebody new in that spot that as long
Speaker 2: as Dave Calhoun is there. I don't know, how do
Speaker 2: you perceive that or isn't that part of the problem
Speaker 2: that they need somebody new in charge.
Speaker 5: I mean, I think it sends a signal to say
Speaker 5: that he's departing at the end of the year. And
Speaker 5: Boeing as a company that is in need of signals
Speaker 5: right now, especially on the positive front, to show that
Speaker 5: they're taking action, that they're taking this seriously, and so
Speaker 5: I think this does that for them. But that was
Speaker 5: my initial point of like, well, it matters who you're
Speaker 5: going to get to replace him in terms of figuring
Speaker 5: out where this company goes. And I completely agree with
Speaker 5: George that it needs to be somebody with a real
Speaker 5: manufacturing expertise, somebody who is going to go line by
Speaker 5: line in that factory and get them to the point
Speaker 5: where they can deliver quality airplanes. But I think you
Speaker 5: know that this is an important moment of accountability. But
Speaker 5: I do think it's striking that you know this is
Speaker 5: coming on the heels of the criticism from customers, those
Speaker 5: who determine ultimately how much money Boeing makes and what
Speaker 5: it's marketsha looks like those are financial metrics. We've of
Speaker 5: course had very public criticism of Boeing from the FAA,
Speaker 5: which did an audit of its manufacturing line and has
Speaker 5: called upon the company to come up with a plan
Speaker 5: within ninety days to fix systemic quality control issues. We
Speaker 5: did not see this announcement come right on the heels
Speaker 5: of that FAA report, and so I think that is
Speaker 5: very interesting and sort of underlines what the challenge is
Speaker 5: here with Bowling's culture in terms of getting this company
Speaker 5: to be a real engineering manufacturing enterprise.
Speaker 2: Again.
Speaker 4: It's also, I think notable given that in twenty twenty one,
Speaker 4: the company's board actually raised the mandatory retirement age for
Speaker 4: the CEO from sixty five to seventy with the idea
Speaker 4: that Calhoun would stay on through a few more years.
Speaker 4: Here's what Dave Calhoun told CNBC a little earlier today
Speaker 4: when asked about what he wants to see in the
Speaker 4: next CEO quote. I want somebody who knows how to
Speaker 4: handle a big, long, long cycle business like ours. It's
Speaker 4: not just the production of an airplane, it's development of
Speaker 4: the next airplane. It'll be a fifty billion dollar investment.
Speaker 4: I would like somebody who clearly has the experience inside
Speaker 4: our industry. Brook, are there any names that are floating
Speaker 4: around the space right now based on your reporting? Any
Speaker 4: names come to mind of people or positions companies that
Speaker 4: they would come from at this point?
Speaker 5: I mean, I think that the best man for the
Speaker 5: job would probably be Larry Colp. When you just look
Speaker 5: at the turnaround that he's been able to engineer at GE,
Speaker 5: and the type of skills that Boeing needs are very
Speaker 5: similar to those that Larry has. He is a meticulous
Speaker 5: operator and that's really you know, a big part of
Speaker 5: his turnaround effort at GE is going in and improving
Speaker 5: factory operations one step at a time, one small change
Speaker 5: at a time that really adds up to make a
Speaker 5: big difference in terms of how that company's operations are run.
Speaker 5: Now Larry is on the cuss of the final piece
Speaker 5: of the breakup of GE. He has had, you know,
Speaker 5: a very successful track record that I don't know if
Speaker 5: he is looking is his contract challenge Atvolling, but we'll
Speaker 5: have to see. But he is obviously sort of the
Speaker 5: name that comes up just because of how much SSS
Speaker 5: he has had a GE. But you know, there's others
Speaker 5: out there that I think will certainly enter the conversation.
Speaker 5: Dave Gitlin is on Boeing's board. He was a former
Speaker 5: executive at United Technologies, which is now known as RTX.
Speaker 5: He now runs Carrier, which is an air conditioning business.
Speaker 5: But he obviously has a lot of aerospace manufacturing expertise
Speaker 5: in the connection to Boeing.
Speaker 2: Yeah, we've talked a lot with him actually on our
Speaker 2: air George, come on in on who you think might
Speaker 2: be the kind of CEO, our person out there that
Speaker 2: you think should maybe take over. And I do find
Speaker 2: it interesting in that interview on CNBC that Dave Calhoun
Speaker 2: said that he will have a say in the decision
Speaker 2: on a new CEO. I wanted to start their first job, George,
Speaker 2: does it make sense? I mean, you have to have
Speaker 2: the former CEO of Boeing who understands this company so
Speaker 2: well to help in that transition or no? Or yes?
Speaker 7: So I think you would want the CEO to help
Speaker 7: you in the transition. And as far as names are concerned,
Speaker 7: I mean, you know, there's some people I know, some
Speaker 7: people that have been in the industry for a while.
Speaker 7: Shanna hand Down at Spear comes to mind. But he
Speaker 7: said he wants to get out of the business, that
Speaker 7: his wife gave him a year to turn around spirit.
Speaker 7: I think it's gonna take longer, but ultimately get bought.
Speaker 7: And then there's Ray Connor that used to run Boeing
Speaker 7: commercial airplanes. He's very smart person, but getting getting up
Speaker 7: there in age in the in the high sixties. But
Speaker 7: I'm sure you know, they're gonna have to cast a
Speaker 7: wide up. But I'm sure there's somebody out there that's
Speaker 7: got the skills of like a Larry Culp that can
Speaker 7: come in and get the job done. That's the challenge
Speaker 7: is finding the right person.
Speaker 2: You know, did Calhoun's letter to employees, He wrote, the
Speaker 2: eyes of the world are on us, and I know
Speaker 2: we will come through this moment a better company. George,
Speaker 2: let me start with you. What's it gonna take for
Speaker 2: Boeing to come through this moment and really be a
Speaker 2: better company and not have in another year or two
Speaker 2: an issue.
Speaker 7: So I think what's gonna take is they're gonna have
Speaker 7: to change wholesale change the culture at Boeing. Right, the
Speaker 7: Boeing culture became too much about spreadsheet management, managers running
Speaker 7: you know, the different divisions, not having engineers involved and everything.
Speaker 7: I think they've really got to look at their business
Speaker 7: as all about building a quality product. You know, you
Speaker 7: can't totally give up in the financial metrics, but you
Speaker 7: have to loosen the financial metrics here because you're going
Speaker 7: to have to spend more money to train people to
Speaker 7: bring the next generation of workers into the aerospace world
Speaker 7: and their managers. You're gonna have to spend more money
Speaker 7: on oversight, which is those managers. You're going to have
Speaker 7: to get into the supply chain, stabilize the supply chain,
Speaker 7: not squeeze it, look to develop it as well as
Speaker 7: is it for You're one team, and so it's going
Speaker 7: to take a relaxation of everything's about the next penny
Speaker 7: of the bottom line and more about how do we
Speaker 7: build the infrastructure to make great airplanes for the next
Speaker 7: one hundred years.
Speaker 6: Brook.
Speaker 4: I hear what George said just now, and I think
Speaker 4: to myself, we could have had this conversation in twenty twenty,
Speaker 4: post twenty eighteen and twenty nineteen Max crashes. And indeed
Speaker 4: a lot of the folks who leveled criticism against Boeing
Speaker 4: in the wake of those two accidents did mention a
Speaker 4: lot of what George just mentioned. This all to say
Speaker 4: that these aren't new issues at Boeing at this point,
Speaker 4: and these issues weren't necessarily created under a Dave Calhoun.
Speaker 4: Does that mean that they have to go external to
Speaker 4: find someone brand new to come in and change the culture.
Speaker 5: I don't know that they have to, but I think
Speaker 5: that it would be helpful. And even with Dave Calhoun,
Speaker 5: he sort of branded himself as an outsider when he
Speaker 5: was brought in, but he'd been on the Boweing board
Speaker 5: since two thousand and nine, so this was a company
Speaker 5: that he had a lot of institutional knowledge and involvement in.
Speaker 5: And I think there's something to be said for fresh
Speaker 5: eyes at this point. To your point, you know, the
Speaker 5: time to be talking about quality control issues and manufacturing
Speaker 5: at Boeing was after those first two seven thirty seven
Speaker 5: Max crashes. We shouldn't still be having this conversation today,
Speaker 5: and yet we are. And so that suggests that you
Speaker 5: meet something more dramatic to happen, to really get to
Speaker 5: the core of what is going on at Bowing and
Speaker 5: how do you get back to making quality airplanes. But
Speaker 5: I do want to come back to what Carol was
Speaker 5: talking about from that letter, because it's not just a
Speaker 5: here and now. It is a forward looking question as
Speaker 5: well of where does Boeing go from here in the
Speaker 5: competitive landscape. They have lost a lot of market share
Speaker 5: relative to Airbus and they need to be thinking about
Speaker 5: what comes next, what is their next airplane? How do
Speaker 5: you get back to at least some level of equity
Speaker 5: with Airbus on a competitive landscape.
Speaker 2: Well, it sounds x extential almost, Brooke. I mean, are
Speaker 2: we getting to that point that you know, it's just
Speaker 2: too many mistakes and when you start to have carriers,
Speaker 2: you know, saying we're going to go elsewhere. I mean,
Speaker 2: it's about maybe the existence going forward longer term.
Speaker 8: Is that right?
Speaker 2: Is that how you're thinking about it?
Speaker 5: Sure? I mean, I don't think there's a world when
Speaker 5: where airlines want to only buy planes from Airbus. We're
Speaker 5: already in a doofully and that's not very helpful as
Speaker 5: it is, but certainly to make that more lopsided is
Speaker 5: not in those airlines interests. And I think part of
Speaker 5: why they're so frustrated is because they need Boeing to
Speaker 5: be successful. They want Boeing to be successful, not just
Speaker 5: in terms of negotiating on some of these orders, but
Speaker 5: also in terms of getting the planes that they've already
Speaker 5: purchased and actually giving them delivered on time and without
Speaker 5: any kind of defects. And so I think, you know,
Speaker 5: it's also from a US perspective, Boeing as a national champion,
Speaker 5: the US needs Boeing to be successful, and I think
Speaker 5: that's why there's so much pressure and scrutiny right now.
Speaker 5: And in the end, I mean, I think everybody's rooting
Speaker 5: for Boeing to figure this out, but they are the
Speaker 5: only ones that can really do that.
Speaker 4: Work, right, George, you heard Brooke mention the way that
Speaker 4: Airbus has pulled ahead in recent years when it comes
Speaker 4: to the market. Would it be completely out of this
Speaker 4: world to look at Airbus as a place where the
Speaker 4: next CEO of Boeing could come from? Should we dismiss that?
Speaker 6: Yeah?
Speaker 7: I mean, anything can happen, but that one I think
Speaker 7: would be very difficult.
Speaker 6: There's a potential.
Speaker 2: I guess, never say never, never say never. What last thought? Hey,
Speaker 2: Brooke just got thirty seconds. I want to go back
Speaker 2: to you on this out like moving the headquarters back
Speaker 2: to Seattle, A right, they went to Chicago, then they
Speaker 2: went to Virginia. That's a long, long away from where
Speaker 2: the product's actually made.
Speaker 5: Just quickly it is, and I think that that would
Speaker 5: be a smart symbolic move. On Boeing's point, you need
Speaker 5: to go back to where the airplanes are manufactured and
Speaker 5: make sure it's clear that that's where your executives are focused.
Speaker 2: All right, guys listen, thank you so much, really appreciate
Speaker 2: this deep dive. Bog and shares, by the way, still
Speaker 2: up about one point two percent our thanks to Bloomberg
Speaker 2: News Boston bureau chief Brooks Sutherland, also writer for the
Speaker 2: Bloomberg Industrial Strength newsletter, and of course our Bloomberg Intelligence
Speaker 2: Senior Aerospace, Defense and Airlines analyst, George Ferguson.
Speaker 3: Guys, thank you so much.
Speaker 2: You know, it's interesting though, like what they talked about,
Speaker 2: when you start to have airlines, you know, cutting some
Speaker 2: of their flight offerings because they don't have the planes
Speaker 2: that they need. That's when airlines are like enough, those
Speaker 2: are the customers are boeing.
Speaker 4: We're not the customers are Boeing. We're the customers of
Speaker 4: the airlines. The airlines are the ones.
Speaker 2: But the trickle down of it.
Speaker 1: Yeah, you're listening to the Bloomberg Business Week podcast. Catch
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Speaker 2: Well, a little bit of news. I'm sure you know
Speaker 2: we've been certainly reporting about it here at Bloomberg when
Speaker 2: it crossed a New York judge ruled Donald Trump's first
Speaker 2: criminal trial will start April fifteenth of Manhattan, getting the
Speaker 2: case back on track after a short delay that was
Speaker 2: caused when thousands of pages of new evidence emerged. And
Speaker 2: then also today, Donald Trump vowed to post a one
Speaker 2: hundred and seventy five million dollars bond in New York
Speaker 2: civil fraud lawsuit after an appeals court slashed it by
Speaker 2: more than two thirds and handed him a crucial financial
Speaker 2: lifeline as state authorities were preparing to start seizing his assets.
Speaker 2: So that's kind of the latest on former President Donald
Speaker 2: Trump's legal back Trump. But there's other stuff going on.
Speaker 8: Yeah.
Speaker 4: In the meantime, our group of very very well known
Speaker 4: Wall Street and Silicon Valley folks who are either overtly
Speaker 4: or quietly embracing the GOP nominee for president and the
Speaker 4: prospect of returning to the political turbulence of the Trump era.
Speaker 4: This story Carol by brad Stone.
Speaker 2: Brad, of course, the editor of Bloomberg Business Week, the
Speaker 2: author of several books, including two on Jeff Bezos, Amazon
Speaker 2: on Bound, and The Everything Store. Brad joins us right
Speaker 2: now from our San Francisco bureau. His story, by the way,
Speaker 2: featured in the new issue of Bloomberg Business Week that's
Speaker 2: out on newsstands, on the Bloomberg and at Bloomberg dot com. Brad,
Speaker 2: great to have you here. Let's get to the who,
Speaker 2: the what, and the why of your story, because the
Speaker 2: story of the who alone reads like Who's who. It
Speaker 2: feels like of Silicon Valley and also of Wall Street.
Speaker 2: So tell us about who's doing this and what they're
Speaker 2: up to.
Speaker 9: Right, Thank you, Carol. I was calling it the revolt
Speaker 9: of the winners, and this very conspicuous support among business
Speaker 9: leaders in tech and primarily on Wall Street for former
Speaker 9: President Trump. And as Tim described, there are kind of
Speaker 9: two brands of support. There's the overt support and so
Speaker 9: you've got Howard Lutnick of Canter Fitzgerald and John Poulson,
Speaker 9: the hedge fund owner holding fundraiser for Trump, Nelson Peltz
Speaker 9: Disney Foyle who endorse Trump recently, and then the more
Speaker 9: subtle forms of support. Ken Griffin from Citadel saying on
Speaker 9: TV that Trump would be good for the capital markets,
Speaker 9: and of course Elon Musk on the service formerly known
Speaker 9: as Twitter almost every single day, suggesting that he's moving
Speaker 9: in a right word direction and hasn't endorsed Trump, but
Speaker 9: is certainly putting a lot of distance between him and
Speaker 9: the current president.
Speaker 4: And as you mentioned the piece, you know he's saying
Speaker 4: Elon Musking, he hasn't endorsed and he won't donate to
Speaker 4: any political candidates. But certainly a lot can happen between
Speaker 4: now and November fifth, Brad. So what happened in terms
Speaker 4: of this transformation for some of these folks over the
Speaker 4: last four years There were quite a few after January
Speaker 4: sixth who came out and distanced themselves from the former president.
Speaker 4: What has happened in your view over the last four
Speaker 4: years or over the last year to move people back
Speaker 4: to former President Trump?
Speaker 8: Yeah?
Speaker 6: No, I mean I think.
Speaker 9: Look and there are plenty of business leaders who are
Speaker 9: moving in the opposite direction and endorsing or supporting President Biden.
Speaker 9: And maybe in a future column I'll look at that,
Speaker 9: but there is there is this movement. Another great example
Speaker 9: is jeff Yass by the way, from Susquehanna International, the
Speaker 9: Pennsylvania billionaire who may or may not own a portion
Speaker 9: of the company that has merged with Truth Social and
Speaker 9: given Trump a potential lifeline. He was once a never
Speaker 9: Trumper and is now certainly making some news favorable to
Speaker 9: the former president. So look, I mean, I try to
Speaker 9: diagnose what's going on here. I mean, I think there's
Speaker 9: a couple things, you know, in the in the case
Speaker 9: of jeff Yass, maybe this is very transactional. You know,
Speaker 9: Trump has reversed his position of TikTok yas is a
Speaker 9: major owner of Byte Dance. I do think there's a
Speaker 9: sort of material concern here with some of these billionaires
Speaker 9: looking at at Biden's economic and taxation policies and and
Speaker 9: and the idea that Biden raised in the State of
Speaker 9: Union to instate a billionaire tax, to increase the corporate
Speaker 9: tax rate, to roll back the higher end of some
Speaker 9: of the Trump tax cuts. There's Biden's antitrust agenda. There's
Speaker 9: the pro labor stance, and the fact that Sean Faine
Speaker 9: from the UAW was a guest of the White House
Speaker 9: during the State of the Union and recognized by the President.
Speaker 9: And you know, to somebody like Elon Musk who runs
Speaker 9: a non union shop, these are existential concerns. So I
Speaker 9: think we can get into what some of the emotional
Speaker 9: reasons might be, but those are perhaps some of the
Speaker 9: rational decision making that's going on right now.
Speaker 2: And I totally get the rational side. I love when
Speaker 2: you get into kind of the more emotional side of like,
Speaker 2: these guys are disruptors and they like when things kind
Speaker 2: of get it feels like unsettling. Talk about that kind
Speaker 2: of thinking and why they may be providing support for
Speaker 2: Donald Trump.
Speaker 9: Yeah, you know, I don't want to get too far
Speaker 9: into the psychologist's office with this analysis, but I think,
Speaker 9: you know, to some extent, they feel like Biden and
Speaker 9: you know, maybe the Biden administration victimized them a little bit,
Speaker 9: ran against the one percent or the point one percent,
Speaker 9: so they don't feel recognized. I think this maybe reassessment
Speaker 9: of tech power in Wall Street power over the last decade,
Speaker 9: you know, left them feeling at a little victimized. And yeah,
Speaker 9: and then there's the sense of being contrarians, being disruptors.
Speaker 9: You know, Peter Thild made this contrarian bet in twenty sixteen,
Speaker 9: and you know, to a certain extent it backfired on him,
Speaker 9: but he got a lot of mileage out of it,
Speaker 9: and he had the ear of the president back in
Speaker 9: twenty sixteen. So perhaps some of these business leaders are
Speaker 9: billionaires see where the political wins are shifting and want
Speaker 9: to have the ear of someone who they think, despite
Speaker 9: you know, the arguments for against, it's someone you know,
Speaker 9: who they might think has a shot of winning the
Speaker 9: next election, and so they're trying to get on that
Speaker 9: side of history. I think probably for a lot of
Speaker 9: these folks, there are different reasons. But you know, I
Speaker 9: don't think that we can dismiss the pure capitalism here
Speaker 9: and the idea that some of these folks just see
Speaker 9: a better tax regime and perhaps anti trust regime under Trump.
Speaker 4: Yeah, let's talk about the anti anti trust regime, because
Speaker 4: that is one area where President Biden has you know,
Speaker 4: been I think, in his view, pretty successful at this point.
Speaker 4: That's certainly a part of it, Brad. But I do
Speaker 4: wonder to what extent, you know, how these folks did
Speaker 4: over the last four years during President Biden. Because Carol
Speaker 4: and I were talking about this a little earlier as
Speaker 4: we were preparing for this, and we're thinking to ourself,
Speaker 4: you know, talking with each other, Well, it's not necessarily like,
Speaker 4: you know, yes, there was some rhetoric in the State
Speaker 4: of the Union, but it's not like there were policies
Speaker 4: put in place that actually hurt these folks who you
Speaker 4: write about.
Speaker 9: Yeah, and I guess that's the question I had. You know,
Speaker 9: the markets are going to determine a lot of the
Speaker 9: financial success for some of these figures. I mean, you
Speaker 9: look at like Larry Ellison of Oracle, who has been
Speaker 9: report to be dining with President Trump as Trump looks
Speaker 9: to improve his fundraising status, and you know, like the
Speaker 9: markets like predictability, and what we do know again, I'm
Speaker 9: trying not to be political here in my analysis, but
Speaker 9: what we do know is that you know, President Trump
Speaker 9: historically and certainly it seems on the compantrail brings an
Speaker 9: element of unpredictability and chaos and the markets don't like that.
Speaker 9: So I do think that, you know, some of these
Speaker 9: business leaders are trying to be opportunistic and they're embracing
Speaker 9: an agent of chaos. And it will be interesting to
Speaker 9: see where that support goes, whether it waivers as we
Speaker 9: get into the real campaign season, or people are paying
Speaker 9: attention and when the former president hasn't necessarily been as
Speaker 9: scripted as perhaps some of his handlers would like.
Speaker 2: I love this line in your story in your reporting, Brad,
Speaker 2: you say billionaires aren't all that different from Trump's main
Speaker 2: constituency constituency of less educated, working class white households. Both
Speaker 2: groups tend to seek conspiracy by far off elites who
Speaker 2: are out to deprive them of influence, expropriate their money
Speaker 2: in squander America's advantage abroad. Like, it's interesting to see,
Speaker 2: like make that connection between those two groups. But I
Speaker 2: don't know, it's just kind of very interesting and fascinating, right.
Speaker 2: We could bring a lot of therapists and psychologists on
Speaker 2: this one, but it's fascinating that connection.
Speaker 9: It's one thing that I had never seen before and
Speaker 9: don't necessarily know how to interpret, which is the sort
Speaker 9: of venom that's out there. And maybe I'm paying too
Speaker 9: much attention to social media among certain elites. For other elites,
Speaker 9: for academic leaders. I mean, this was came clear in
Speaker 9: the battle against Harvard's president by Wall Street leaders like
Speaker 9: Bill Ackman, and this idea to scramble for influence. There's
Speaker 9: a great book which I'll recommend that, Caroll. I know
Speaker 9: you're a big reader, but a book called End Times
Speaker 9: by Peter Turchin, where he actually somewhat apocalyptically describes the
Speaker 9: end of regimes across centuries and one of the telling
Speaker 9: tales of moments of instability has been when the elites
Speaker 9: start competing each other and battling for influence. So I
Speaker 9: don't know, maybe that's a little bit of a downer
Speaker 9: note to introduce, but I feel like.
Speaker 4: Sounds like a sweet movie and Compar't worry, Brad, We're
Speaker 4: not going to end on that note. Okay, we're not
Speaker 4: going to I'm going to look, the election can go anyway.
Speaker 4: We have no idea how it's going to go between
Speaker 4: now and November fifth, but we do know, and we
Speaker 4: do know that money plays a big role in politics.
Speaker 4: But does the support of the folks you write about, Brad,
Speaker 4: any idea if it actually moves the needle when it
Speaker 4: comes to what matters, which which, of course is turnout
Speaker 4: and votes in these swing states well and.
Speaker 9: And fundraising obviously does matter. And I'm not an expert
Speaker 9: in this, but you know, from what I read, President
Speaker 9: Biden is is out raising Trump, and I think that's
Speaker 9: one of the reasons why the Trump campaign has out
Speaker 9: been there soliciting, either soliciting donations or having conversations with
Speaker 9: folks like Mary Ellison and jeff Yass. And I don't
Speaker 9: know that any of them have necessarily stepped up. I
Speaker 9: mentioned the fundraiser that Lutnik and Paulsen were holding I
Speaker 9: think beginning at next month. Whether that support translates to
Speaker 9: the ballot box, I mean Trump, the Trump campan has
Speaker 9: to be careful, right, because you don't you don't want
Speaker 9: to necessarily turn off your broad base of supporters, working
Speaker 9: class supporters by trumpeting your billionaire support. So it's a
Speaker 9: careful line that they've got to they've got to walk right.
Speaker 2: And also in an industry, I feel like the tech
Speaker 2: world really knows how to play well with their enemies,
Speaker 2: their frenemies that they often work with. So could they
Speaker 2: just be hedging as you end the story, Brad in
Speaker 2: terms of the outcome, A really great read and really
Speaker 2: timely read. Brad, Thank you really appreciate. Bradstone, of course,
Speaker 2: the editor of Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 4: Agusta is certainly keeping an eye on the economic data
Speaker 4: this week and what it means for the broader market,
Speaker 4: in particular those megacap tech stocks that shape the momentum trade.
Speaker 4: And that's exactly where we go now, Carol, because this
Speaker 4: group of mega caps have had their own market branding.
Speaker 4: First it was the Fang stocks, then it was the
Speaker 4: mag seven when newcomer in Nvidia joined the crowd. Now,
Speaker 4: how does this how does this ring? Okay, I'm listening
Speaker 4: Magnificent two, the Middling too, and the Math three. I mean, gosh,
Speaker 4: it's like doesn't necessarily have the same ring too?
Speaker 2: A great name for garage band.
Speaker 6: Don't you think it is?
Speaker 5: All right?
Speaker 2: As investors have come to focus on the importance of
Speaker 2: AI and Vidian, Meta have surged ahead. Microsoft and Amazon
Speaker 2: have done reasonably well On Apple, Tesla and Alphabet have
Speaker 2: been trailing Tim the s and P five hundred.
Speaker 4: Eric Wiener is Equity as America's team leader for Bloomberg News.
Speaker 4: He writes about this for Bloomberg Business Week along with
Speaker 4: Jaron Wittenstein and Mark German. So Blazing two and tep
Speaker 4: It five are starting to emerge. The story by the
Speaker 4: way featured in the new issue of BusinessWeek magazine. You
Speaker 4: can get it on newsstands, get the story on the
Speaker 4: Bloomberg terminal, and at Bloomberg dot com slash BusinessWeek. So
Speaker 4: we've talked a lot about the rise of AI and
Speaker 4: video in video certainly ahead of the pack, meta platforms
Speaker 4: doing incredibly well. Also, are we to the point, Eric
Speaker 4: where we just have to sort of give up this
Speaker 4: moniker of mag seven because Tesla is doing so poorly well.
Speaker 6: The bigger question is does Tesla even belong?
Speaker 10: I mean, the idea of the mag seven really is
Speaker 10: the big tech stocks, and then what's been driving big
Speaker 10: tech and ever since really AI reared its head as
Speaker 10: a driver middle of last year, that's been sort of
Speaker 10: moving everything up. So the market has kind of been
Speaker 10: riding on that. You can see it in chips right now.
Speaker 6: Tesla doesn't do that.
Speaker 10: Tesla's problems are its own, completely opposite of or completely
Speaker 10: so say from the group, Apple is a different dynamic.
Speaker 10: Apple is falling into exactly you know, it's at the
Speaker 10: bottom end of the Magnificent seven if you want to
Speaker 10: call it that or whatever for a very magnificent seven reason.
Speaker 10: Whereas Apple is when you're dealing with the tesla, you're
Speaker 10: talking about ev adoption, you're talking about infrastructure, you're talking
Speaker 10: about things.
Speaker 6: At the other company's right, they don't deal with that.
Speaker 6: They don't deal with that.
Speaker 10: Apple, on the other hand, this is something that we
Speaker 10: were seeing a long time ago. They weren't getting punished
Speaker 10: for it, uh, and then people figured it out, and
Speaker 10: that was that they aren't really growing uh. And if
Speaker 10: they don't, the bet, the long term bet on Apple
Speaker 10: would be that they are going to be the ones
Speaker 10: that are going to elegantly figure out how to get
Speaker 10: AI into our pockets. And if anybody's going to do that,
Speaker 10: you know Apple's products are going to do that, and
Speaker 10: that's your long term bet.
Speaker 6: But if you're looking at them right.
Speaker 10: Now, they have a very orderly, very revenue heavy business
Speaker 10: that just churns it out. But the growth is not there.
Speaker 10: And like when you're talking about what people were buying
Speaker 10: into with Apple, they were buying into a perpetual growth machine.
Speaker 10: And if you're not going to get more people to
Speaker 10: buy iPhones, you're not going to get more people to
Speaker 10: buy their products.
Speaker 6: Where is that growth going to come from?
Speaker 10: And Vidia answers that question Meta answers that question apple less,
Speaker 10: So are you making.
Speaker 2: Though a decision or investors kind of making a decision
Speaker 2: by saying, okay, AI is the idea the technology that
Speaker 2: we all have to jump on board, and it's going
Speaker 2: to be what everything else is measured off of. Are
Speaker 2: we smart to do that already?
Speaker 6: Oh? God? Well?
Speaker 10: So my first book was in Oral History of Wall
Speaker 10: Street and it went through every boom since nineteen twenty nine,
Speaker 10: and this is normally what happens, which is that technology.
Speaker 10: I mean you can go back to like people making
Speaker 10: photocopies and is xerox being seen as revolutionary? So it's
Speaker 10: always because the stock market is a forward looking mechanism
Speaker 10: and it's got all this hope into it. The idea
Speaker 10: is like, what's going to be the next thing? And
Speaker 10: how early can I get in on that? AI appears
Speaker 10: to be the next thing. However, there have been other
Speaker 10: next things that have not panned out, and that's where
Speaker 10: you kind of have to wonder if that, like, is
Speaker 10: this the dot.
Speaker 6: Com moment or is this not?
Speaker 10: And we have yet to really see it because even
Speaker 10: at the beginning of the dot com moment, you couldn't
Speaker 10: necessarily see what it was about to become because I
Speaker 10: guess I.
Speaker 2: Just think about fang right, Facebook, Apple, Amazon, Netflix, Google,
Speaker 2: Like they all weren't the same kind of company, right,
Speaker 2: Like we just we have this love of like grouping people.
Speaker 2: It's a cute little you know word, and then kind
Speaker 2: of trading around it. I get it that they're massive companies, right,
Speaker 2: and they are great momentum you know drivers if you will.
Speaker 2: So I'm just I guess I'm trying to think about
Speaker 2: like how we need to think about the market and
Speaker 2: the importance of classification of some.
Speaker 6: Of these names. Investment strategists love to do this.
Speaker 10: You can think about the bricks where they did it
Speaker 10: on geography. You know, Yeah, you're putting together various different
Speaker 10: things and creating a thesis around it. But if you're
Speaker 10: actually looking at the market, what you kind of want
Speaker 10: to do is go beyond that and look into what
Speaker 10: each each valuation is and what their growth prospects are,
Speaker 10: because you need to time when you're buying, and you
Speaker 10: also need to time what you're buying.
Speaker 4: Does it also tell us any sort of story about
Speaker 4: indexing in the index? Given that the S and P
Speaker 4: five hundred is a market cap weighted index and it's
Speaker 4: overwhelmingly turns out to be these top companies.
Speaker 10: That is absolutely it. So when you think about what
Speaker 10: we're doing when every every day all of our four
Speaker 10: to one k's and all the things that are index related,
Speaker 10: this pressure just piles in all of these all of
Speaker 10: these fund managers and passive managers need to step in
Speaker 10: and buy these stocks because the index is weighted that way.
Speaker 10: So the more that this gets centralized, the more that
Speaker 10: centralization moves things up. What we're seeing now is the
Speaker 10: market kind of sort of fluctuating in terms of the numbers.
Speaker 10: It's not climbing as much, but the rest of the market,
Speaker 10: if you look underneath the hood, there's a lot of growth.
Speaker 10: There's a lot of companies that are moving, but they're
Speaker 10: not showing up in at the index level because they
Speaker 10: just don't have the waiting.
Speaker 2: So, do we do an injustice maybe as media, right
Speaker 2: and whoever or whoever comes up with these and then
Speaker 2: we all jump on board, right, Because as you say,
Speaker 2: we've talked about the market, the gains broadening out and
Speaker 2: the importance of all of these other names that are
Speaker 2: out there. So do we do an injustice of kind
Speaker 2: of trying to classify some of these guys.
Speaker 10: I think it's simplistic. I think what you guys are
Speaker 10: trying to do in getting behind it is the actual
Speaker 10: right answer.
Speaker 4: But like thank you, you can come back.
Speaker 10: But in all seriousness, like if you look at the
Speaker 10: socks index, you look at what chips are doing, and
Speaker 10: you start to wonder is that good for the market?
Speaker 10: Where is that going to show up? It's not that simple,
Speaker 10: And but we tend to tell a simple story because
Speaker 10: that's the easiest way for people to understand the market now.
Speaker 2: And I also think it's really smart to kind of
Speaker 2: as we go through this AI crazy four year reality,
Speaker 2: if you will, like to understand each company that even
Speaker 2: though they drop the phrase or something, but what does
Speaker 2: it really mean for their business going fard.
Speaker 10: Do you remember when the dot com era was going
Speaker 10: on in pet stores were well, yeah, exactly, pet stores
Speaker 10: are technology.
Speaker 3: Companies, exactly.
Speaker 2: The puppet is probably exactly.
Speaker 5: We know.
Speaker 3: It is really fun.
Speaker 2: Thank you, Eric Having, Equity's America's team leader at Bloomberg
Speaker 2: News joining us in studio. You're listening and watching Bloomberg
Speaker 2: Business Week, and this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch US
Speaker 1: live weekday afternoons from two to five pm Eastern Listen
Speaker 1: on Apple car Play and then Brout Auto with a
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Speaker 4: As I mentioned, it's the company behind the theme parks
Speaker 4: Lego Land, Madame two, So it's Pepa Pig Theme Park,
Speaker 4: the London Eye and many more. In fact, it's got
Speaker 4: part works and attractions in twenty three countries around the world,
Speaker 4: serving more than sixty guests per year. It's called Merlin Entertainments,
Speaker 4: formerly a publicly held company now owned by Blackstone, the
Speaker 4: Canadian Pension Plan Investment Board and more.
Speaker 6: We got the CEO with us we do.
Speaker 2: Indeed, right next to us, Scott O'Neil, he's CEO at
Speaker 2: Merlin Entertainments. He's joining us here in our studio. Scott
Speaker 2: also previously president of Madison Square Garden Sports, which was
Speaker 2: of course owner of the Knicks, Rangers, Liberty and Moore,
Speaker 2: and the CEO of Harris Blitzer Sports and Entertainment, which
Speaker 2: includes the Philadelphia seventy six Ers, New Jersey Devils and more.
Speaker 2: Scots are we've read.
Speaker 11: Look at you guys, having the whole background.
Speaker 2: In Sorry, we've done your bio we're done.
Speaker 4: That's not everything.
Speaker 2: How are you?
Speaker 9: You know?
Speaker 11: I'm pretty happy I moved to the UK. It's been
Speaker 11: a big adjustment.
Speaker 3: Do you like that?
Speaker 6: I do.
Speaker 11: I didn't anticipate how challenging.
Speaker 6: The move would be.
Speaker 11: I've grown up in this little bubble between New York, Philly, Connecticut,
Speaker 11: New Jersey, and.
Speaker 2: What was challenging the weather or just different.
Speaker 11: I just think, well, I have My youngest is seventeen
Speaker 11: years old, So taking a seventeen year old out I
Speaker 11: had just have to do this. One quick story is
Speaker 11: you know, we're having that heart to heart, that father
Speaker 11: daughter connect conversation, and she she holds up her finger
Speaker 11: and points in my chest and says, dad, let me
Speaker 11: get this straight. Your career is more important than my happiness.
Speaker 11: And she turns and just walks out of the room.
Speaker 2: And I was like, but but I love you.
Speaker 6: I mean I love you, honey filizes up.
Speaker 11: So that transition was harder than we thought. But she's
Speaker 11: happy now, she's in London with me. She won an
Speaker 11: international basketball championship, gold.
Speaker 2: Medal score, congratulations.
Speaker 11: So she's doing great. She's she's thriving. My wife's happy.
Speaker 11: So yes, So life's sad you'll can you imagine, I
Speaker 11: can tell you're in my chest.
Speaker 4: Boom boom, She'll never forgive you. But that's okay, No, yeah,
Speaker 4: that's okay. You know, your business is all about leisure
Speaker 4: and discretionary spending, and you've got a great view around
Speaker 4: the world because you're in what more than twenty countries
Speaker 4: at this.
Speaker 11: Point, twenty three countries.
Speaker 4: So just give us an idea of how things are
Speaker 4: going when it comes to.
Speaker 3: That spending and doing stuff.
Speaker 11: Yeah, well, we're pretty fortunate. For those of us who
Speaker 11: had children in COVID, it was a little close when
Speaker 11: we couldn't leave the house. And when COVID ended, we
Speaker 11: got on planes as quickly as we could. But the
Speaker 11: one thing we were searching for was connection and meaning
Speaker 11: and memories. And we moved away from the economy of
Speaker 11: things the economy of experiences, and so we have a
Speaker 11: lot of tailwinds. It is a look, it's it's we
Speaker 11: go from Malaysia, Korea, Japan, China all the way to
Speaker 11: the US and everything in between. Yeah, and so we
Speaker 11: get to see quite a bit. So whenever people are like,
Speaker 11: how's business, I'm like, so, where is it bad? Yeah,
Speaker 11: China is tougher than we anticipated. We anticipated even this
Speaker 11: year of recovery a little bit quicker than it's come.
Speaker 2: So people are doing it or is it just a
Speaker 2: fraction of what it was.
Speaker 6: It's just slower.
Speaker 11: Yeah, yeah, Domestic tourism slower. Their international tourism coming out
Speaker 11: of China is a bit more than we thought. US
Speaker 11: is still fine. The US is great, and the US
Speaker 11: consumer we're wonderful people.
Speaker 4: You spend money.
Speaker 11: We do love to spend money, and we love experiences
Speaker 11: and memories and fun things.
Speaker 2: So does that mean we're a pre pandemic for you guys?
Speaker 11: We're over pre pandemic over people, both in terms of
Speaker 11: revenue and volume. And the UK is a little schizophrenic,
Speaker 11: very good for internationals last year. This year it's a
Speaker 11: little slower. Domestics is slow and Europe slow. Now remember
Speaker 11: we had bizarre weather last year. Okay, so you know
Speaker 11: most of our peers Disney and Universal and I know
Speaker 11: you've never most people listening maybe haven't heard of Marlin
Speaker 11: Entertainments before, but we are the number two theme parks
Speaker 11: in the tracks business in the world.
Speaker 2: Does that frustrates you, like if you think about so
Speaker 2: many of those names, like a Land like we just
Speaker 2: went through them. I mean, they're well known, bands are great,
Speaker 2: but that the recognition it's coming.
Speaker 11: Okay, it is coming.
Speaker 6: It's a great change.
Speaker 4: But it doesn't even matter if these brands aren't necessarily connected.
Speaker 4: The other people know that Madame Tusodes is owned by
Speaker 4: the same folks who on Legoland.
Speaker 11: I think it does. I think when you talk about
Speaker 11: not to be too technical, but we are Bloomberg, you know,
Speaker 11: when you talk about Ibada meeting multiple, when you think
Speaker 11: about how do you grow your multiple? One of the
Speaker 11: things that that I think matters to Disney is their brand,
Speaker 11: you know. And I think one of the things that
Speaker 11: matters to Universal are the licensed partners, the brand ip partners.
Speaker 11: And you look at ours green you know, you take
Speaker 11: you know personally, I take Legoland and Peppa and Madame
Speaker 11: Tussaus and I put them up against there. So I
Speaker 11: and I we're dragging behind them. Now, we're we're way
Speaker 11: ahead of our the US regional theme parks like the
Speaker 11: Six Flags and the Sea Worlds and the Cedar Fairs
Speaker 11: in terms of multiple. But I think we've got a
Speaker 11: we have a journey ahead of us to map that
Speaker 11: the brand and the experience to where we are.
Speaker 2: It's the movie or something like like, how do you
Speaker 2: know what I'm seriously.
Speaker 11: There could be some content around it, right, So we
Speaker 11: have a lot of different brands and so so we
Speaker 11: have to take a portfolio approach for sure. But yeah,
Speaker 11: I did know, I know, I just I did about amazing, amazing,
Speaker 11: amazing executive for sure, just like.
Speaker 2: How you kind of you know, capitalize.
Speaker 9: It all of that.
Speaker 11: Yeah, well, well they are a whole host of things,
Speaker 11: you know. I I'm I'm following a founder, Sir Nick Varney,
Speaker 11: he's ND And I thought to myself, could that be
Speaker 11: me someday?
Speaker 3: So like when you.
Speaker 2: Yes, I'm taking the job.
Speaker 11: But it's sir, don't I somehow don't think that's gonna happen.
Speaker 4: Maybe she'll have to stay at school and take a
Speaker 4: test when during the ceremony that could happen. Let's not
Speaker 4: get ahead of her.
Speaker 11: So, so following a founder is there's so many wonderful things.
Speaker 11: And I come from a family of founders, and my
Speaker 11: brothers and sisters of all family companies and will only
Speaker 11: sell out and out of the five of us, and
Speaker 11: and and the the magic, the stuff. You can't see
Speaker 11: this on the radio. But the feel of the business
Speaker 11: that you have as.
Speaker 3: A founder thirty your family on YouTube.
Speaker 11: Damn so so there's so many wonderful things and they
Speaker 11: feel the business so well, and a lot of this
Speaker 11: stuff becomes intuitive and that's hard. And they have like
Speaker 11: this father or motherly like figure, you know, like a
Speaker 11: larger than life figure, and sort of come in after
Speaker 11: that their whole host of challenges culturally, et cetera.
Speaker 6: With leadership, but there's.
Speaker 11: Also usually these gaping holes of opportunity. And because the
Speaker 11: founders have such rhythm and intuitiveness in the business, you
Speaker 11: have things that I think can really underpin future success,
Speaker 11: like digitizing the business, like driving data, like dynamic pricing,
Speaker 11: like the stuff that I've my whole life have made
Speaker 11: made a business of. Come into a new business and
Speaker 11: you think, you know, my eyes are as big as saucers,
Speaker 11: and I'm thinking, Okay, there's enough opportunity.
Speaker 4: When you think about the different types of products that
Speaker 4: you offer, the different attractions that you have, what's growing
Speaker 4: and what's struggling right now, Like where's the opportunity for growth?
Speaker 11: Yeah, Well, in Legoland, that's about forty percent of our business.
Speaker 11: Lego Land resorts. There are ten of them, three in
Speaker 11: the US, Korea, Japan, Malaysia, Dubai, Germany, Denmark, London, et cetera.
Speaker 11: We're building a one in Shanghai in China as well.
Speaker 11: It's a really good business and we have to invest
Speaker 11: in making me a premium.
Speaker 2: It's like, oh, sorry, but god, that brand is wonderful
Speaker 2: well recognition, you.
Speaker 11: Know, and you know Neil's who's the CEO. They're just
Speaker 11: understands the brand and how to grow it, and their
Speaker 11: partnerships are smart and they're wonderful people, and they know
Speaker 11: how to do deals and drive deals, and they're one
Speaker 11: of our largest investors and so so that's an unbelievable opportunity.
Speaker 11: But we have to continue to invest, invest, invest, how
Speaker 11: do you make that more premium. That's what we're finding
Speaker 11: is like there is a flight to quality. Premium is
Speaker 11: going to matter. Our resort theme parks business a lot
Speaker 11: more complicated. It's kind of like if you can imagine
Speaker 11: a six flags dropped in Europe, that's what we have
Speaker 11: in Europe. And I'm of the school of bigger is better.
Speaker 11: So mega resorts will matter and regional ones will really struggle.
Speaker 11: And so we're on the effort of that, and then
Speaker 11: where I think there's the max growth from us. We
Speaker 11: had over twenty percent growth in this segment. We call
Speaker 11: it gateway and London is the best example. We have
Speaker 11: two what we call must see, must do We call
Speaker 11: them anchor attractions, the London Eye by the Way, and
Speaker 11: Man two Sad's the original, and then we have three
Speaker 11: other attractions. One out of every four tourists into London
Speaker 11: come to one of our attractions, and forty percent of
Speaker 11: them come to at least two. So that's what I
Speaker 11: call like cluster penetration and building those in the ten
Speaker 11: most important tourist cities in the world is where I
Speaker 11: think our growth is.
Speaker 3: Going to come from.
Speaker 2: Just got a minute left, man, I wish we had
Speaker 2: ten more money.
Speaker 6: Me too.
Speaker 2: I got to ask you, though, with your sports background,
Speaker 2: do you miss it being actively involved in like running it,
Speaker 2: you know, a team and so and so forth.
Speaker 11: There are elements I love and miss. It's mostly about
Speaker 11: the people. Yeah, you know, in terms of when you
Speaker 11: when you hit a certain level at those jobs, it
Speaker 11: becomes a different type of job. And if you compare
Speaker 11: that type of job to this one, it's not even close.
Speaker 11: I mean I've got people purpose and scale, which is
Speaker 11: what I'm looking for. I'm like learning every day. I
Speaker 11: was in that business for so long. I knew it
Speaker 11: and I want I want to stretch a bit.
Speaker 2: Thirty seconds left. Are you going to add to go
Speaker 2: back to your current job? Is there stuff to add
Speaker 2: to the portfolio?
Speaker 8: Oh?
Speaker 2: Yes, so acquisitions will be coming.
Speaker 6: Yes.
Speaker 11: We just bought the Orlando Eye Yeah, in icon Park.
Speaker 11: So if you're down in Orlando swing by, it's a
Speaker 11: great respite from uh, the difficulty sometimes of grinding through
Speaker 11: a resort. We have a Legoland resort down there as well.
Speaker 11: But yes, more to come, and that's going to be
Speaker 11: an anchor for Orlando Cluster.
Speaker 3: Good to know, Good to know, Come back soon.
Speaker 11: Come see me at my resorts. Action that daughter I
Speaker 11: will three, she will actually love it, but it might
Speaker 11: be a longer show.
Speaker 3: Thanks guys, Scott O'Neil, thank you so much.
Speaker 2: Chief executive officer of Merlin Entertainment's joining us right here
Speaker 2: in our Bloomberg Interactive Brokers STUDIOMUC.
Speaker 6: Journal.
Speaker 1: Now about you let me drive?
Speaker 10: Oh no, no, no, no, honey, please, I'll gravelse.
Speaker 11: Ma, I want to drive. It's a good question.
Speaker 1: Try this is the drive to the globe. Well, young
Speaker 1: Don on Bloomberg Radio.
Speaker 2: All right, everybody, just under eighteen minutes left in today's
Speaker 2: trading session, the Monday trade on this March twenty fifth,
Speaker 2: twenty twenty four. Carol Messer along with Tim Stenoviek here
Speaker 2: in our Bloomberg Interactive Broker's studio, John just broke down
Speaker 2: the numbers, kind of bouncing around.
Speaker 3: We're off. I don't know.
Speaker 2: It's just a little change, a little bit lower here overall.
Speaker 4: Tim, Yeah, jot down four tenths of a percent, the
Speaker 4: S and P five hundred down close to two tenths
Speaker 4: of one percent. I want to see what Sarah Ponsik
Speaker 4: has to say about all this. She's financial advisor with
Speaker 4: Ubs Private Wealth Management. She joins us on Zoom from
Speaker 4: book A, Ratona, Florida. Sarah, how are you.
Speaker 5: I'm great, great to be with you too.
Speaker 6: Full disclosure.
Speaker 4: Sarah formerly our colleague here at Bloomberg before she decided
Speaker 4: to move to a sunnier place that's warm.
Speaker 8: Year round, talking about buying a snow shovel. Yeah, and
Speaker 8: I was not jealous at all.
Speaker 4: I can't no snowshovels. No snowshovels, just snow.
Speaker 8: Shovels for me right now. Although we did have we
Speaker 8: did have plenty of rain over the weekend. If it
Speaker 8: makes you feel a little better, it.
Speaker 4: Does make me feel better, but so did we. So
Speaker 4: you know, no comparing notes here, Sarah, what's up when
Speaker 4: you look around right now? Did you see an S
Speaker 4: and P five hundred that's uplisted ten percent on the year.
Speaker 4: What are you telling folks about diversification, about where opportunities are,
Speaker 4: about how they should play this out?
Speaker 8: So it's pretty amazing coming into twenty twenty four, think
Speaker 8: the majority of us were saying, all right, the outlook
Speaker 8: looks pretty good here. Still, the Federal Reserve is expected
Speaker 8: to cut interest rate, but the economy still looks strong,
Speaker 8: inflation's moderating, corporate profits are holding up. But with that said,
Speaker 8: we're probably not going to see stock market games at
Speaker 8: the same pace at which we saw them in twenty
Speaker 8: twenty three. And here we are three months into the
Speaker 8: new year, and we've seen twenty new record his for
Speaker 8: the S and P five hundred. As you mentioned, we've
Speaker 8: already seen double digit returns and it just continues. So
Speaker 8: to your question of how investors should play this out.
Speaker 8: What we're telling clients about diversification. It's a bit of
Speaker 8: a two way street because on the one hand, tech
Speaker 8: led much.
Speaker 3: Of the rally.
Speaker 8: As you know last year and the beginning of this
Speaker 8: year we have seen a broadening out. But tech is
Speaker 8: still so important in clients' portfolios, and we believe that
Speaker 8: it's a huge risk for clients to be under invested
Speaker 8: and under exposed to tech. But with that said, that
Speaker 8: doesn't mean tex your entire portfolio, and you do need
Speaker 8: to be diversified.
Speaker 1: So it goes both ways.
Speaker 3: Well, let's talk to it.
Speaker 2: I mean, what is the And I understand every investor
Speaker 2: has a specific situation right in terms of what their
Speaker 2: investor or investment objectives are Sarah. But having said that,
Speaker 2: what's a good allocation and how you think about it?
Speaker 2: And then let's also say not all tech has created equals.
Speaker 2: So when you say tech, what do you mean by
Speaker 2: it specifically?
Speaker 8: Absolutely so, when I was just speaking about tech and
Speaker 8: not being under exposed to tech, that's just large cat
Speaker 8: US tech broadly. You don't want to be under exposed
Speaker 8: to US tech. And when I say under exposed, I
Speaker 8: mean tech has come to be such a large portion
Speaker 8: of the indexes, so you don't want to have less
Speaker 8: than the indexes representation in tech in your portfolio. Now,
Speaker 8: there's another subtector of tech, and that would be small
Speaker 8: or mid cap tech or also other areas of the
Speaker 8: technology ecosystem that would be or would see a major
Speaker 8: tailwind from AI revenue. I mean, we've been talking about
Speaker 8: generative AI now for over a year. It's not a
Speaker 8: buzzard anymore. It's just become part of the daily lingo,
Speaker 8: it seems like. But there's reason for it. I mean,
Speaker 8: our Chief Investment Office estimates that AI revenues are going
Speaker 8: to expand by seventy percent per year until twenty twenty seven.
Speaker 8: And it's not just the Magnificent seven stocks that are
Speaker 8: going to benefit from that. There's other areas as well.
Speaker 8: So you need to make sure that you're looking to
Speaker 8: other companies, other areas of the tech ecosystem that could
Speaker 8: be the next big thing, but that are also seeing
Speaker 8: revenues to prove it. Now, in addition to that, no.
Speaker 2: Go ahead, Carroll, go yeah, no, no finish out.
Speaker 8: I was going to say, it's not all tech. If
Speaker 8: we're looking at diversification within the stock market. Look, you
Speaker 8: want to have exposure to other sectors too. If we
Speaker 8: highlight two as of right now, two areas that we
Speaker 8: do like are healthcare. It has you know, defensive components,
Speaker 8: but we've also seen a lot of a major boost
Speaker 8: from everything going on with weight loss drugs and therefore
Speaker 8: and also industrials. You know, we like sickle players the market,
Speaker 8: as we do expect this rally is going abroad now
Speaker 8: as we have seen so far in twenty twenty four.
Speaker 2: I had to jump on when you use the term
Speaker 2: magnificent seven because we had a great conversation with our
Speaker 2: Eric Wiener, who's our Equities in America's team leader here
Speaker 2: at Bloomberg News, and he and Jarin Wittenstein and Mark
Speaker 2: Gerrman have a story out in the new issue of
Speaker 2: Bloomberg Busines this week and they say this year the
Speaker 2: Magnificent seven has looked more like the Magnificent two, the
Speaker 2: Middling two, and the med three. And he talks about
Speaker 2: the importance of AI and Vidian Meta, which have all
Speaker 2: surged ahead. Then you've got Microsoft and Amazon that have
Speaker 2: done reasonably well, and then the other three have trailed.
Speaker 3: The S and P five hundred index.
Speaker 2: So you know you're super smart, and I think about
Speaker 2: when you were here at Bloomberg, like we could just
Speaker 2: get into the weeds of things, like, it's important that
Speaker 2: we be careful, right Like if we say magnificent seven,
Speaker 2: they're all really magnificent this year. And this is why
Speaker 2: when I say, like, when we talk about tech, we've
Speaker 2: got to kind of drill down and understand the particulars
Speaker 2: of each name.
Speaker 8: You're absolutely right, Carol, And look they were all bagni
Speaker 8: in twenty twenty three, but that's not going to continue forever.
Speaker 8: And something we always love to remind clients of is
Speaker 8: well we're experiencing right now too when you see you're
Speaker 8: like twenty twenty three and which you have. You know,
Speaker 8: companies which many people know very well just from everyday life,
Speaker 8: but then they're hearing the about them every day on
Speaker 8: the news, or they're reading about them and the financial media,
Speaker 8: or they're seeing their stock prices excel every day. Now
Speaker 8: clients say, I want more of that. I want more
Speaker 8: of that. And it's important to remind clients that, you know, say,
Speaker 8: went back to two thousand. If you look at the
Speaker 8: five largest companies from back in two thousand, how many
Speaker 8: of them are still you know, some of the top
Speaker 8: companies today. The answer is only one actually, So.
Speaker 3: Yeah, you know, these.
Speaker 8: Companies are amazing, and if you look at the revenues
Speaker 8: that they're putting up, they're amazing. But that doesn't mean
Speaker 8: that they're going to be at the top of the
Speaker 8: leaderboard every single day, every single year.
Speaker 4: Right, and then it kind of makes finding the next
Speaker 4: ones Sarah that five years from now will be at
Speaker 4: the top of the leader board even more.
Speaker 8: Difficult, right, And that's why, you know, we like looking
Speaker 8: at different, you know, thematic type of investments that give
Speaker 8: clients exposure to small and midcaps within the technology space
Speaker 8: as well, so you're not only concentrating your portfolio in
Speaker 8: whether you want to call it the Tig seven or
Speaker 8: you know the mag two this year.
Speaker 2: The middling five smug.
Speaker 8: But that way you're not just looking at you know,
Speaker 8: three five seventh.
Speaker 4: The meth three three, middling two.
Speaker 2: Sarah Ponzek always good to hear your voice and check
Speaker 2: in with you financial advisor over at UBS Private Wealth Management.
Speaker 3: Joining us there from Booker Raton, Florida.
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