1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:18,560 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 4 00:00:18,640 --> 00:00:21,880 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:21,960 --> 00:00:23,120 Speaker 1: us live on YouTube. 6 00:00:24,040 --> 00:00:26,400 Speaker 2: Well, a few headlines for Intel. So, for one, the 7 00:00:26,440 --> 00:00:29,520 Speaker 2: Trump administration reportedly weighing a ten percent government stake in 8 00:00:29,560 --> 00:00:32,479 Speaker 2: Intel and then SoftBank buying in. So let's go to 9 00:00:32,560 --> 00:00:35,480 Speaker 2: someone who knows more about this. That would be Dan 10 00:00:35,600 --> 00:00:40,400 Speaker 2: Ive's globalhead of Technology research this morning, joining us from Westfield, 11 00:00:40,400 --> 00:00:42,600 Speaker 2: New Jersey, where they do have some good restaurants and shopping. 12 00:00:42,640 --> 00:00:46,680 Speaker 2: Might I add there, Dan, thanks for joining us so 13 00:00:46,840 --> 00:00:49,720 Speaker 2: the news this could see the US become the company's 14 00:00:49,840 --> 00:00:54,040 Speaker 2: largest shareholder. I mean, what does that mean for Intel? 15 00:00:54,080 --> 00:00:56,200 Speaker 2: But also for the future. Are we going to be 16 00:00:56,240 --> 00:00:56,720 Speaker 2: seeing more. 17 00:00:56,600 --> 00:00:56,800 Speaker 3: Of this. 18 00:00:59,040 --> 00:01:02,080 Speaker 4: Intel? You know, because everyone knows backward was against the wall. 19 00:01:02,400 --> 00:01:05,039 Speaker 5: I mean, look, I think ultimately, if this didn't happen, 20 00:01:05,720 --> 00:01:09,760 Speaker 5: strategic breakup was basically a done deal, and I think 21 00:01:09,920 --> 00:01:12,920 Speaker 5: US government recognized and it's not national security, but like 22 00:01:13,360 --> 00:01:17,319 Speaker 5: they needed to revive Intel clearly un orthodox in terms 23 00:01:17,319 --> 00:01:20,679 Speaker 5: of the structure. Look for Intel, I mean, it's a 24 00:01:20,680 --> 00:01:25,240 Speaker 5: little Cinderella's story at least that's happening here based on 25 00:01:25,280 --> 00:01:27,640 Speaker 5: a lot of dark days I've seen the last few years. 26 00:01:29,120 --> 00:01:31,640 Speaker 3: At least you may not be aware, but the preseason 27 00:01:31,760 --> 00:01:34,160 Speaker 3: rankings for college football off come ount and Penn State 28 00:01:34,280 --> 00:01:37,360 Speaker 3: is number two, and that's the highest I can remember. Okay, 29 00:01:37,440 --> 00:01:39,520 Speaker 3: And I've been following these dudes for a long time, 30 00:01:39,560 --> 00:01:43,240 Speaker 3: since I was a kid. Hey, Dan, how do investors 31 00:01:43,240 --> 00:01:46,880 Speaker 3: feel about the US government taking a direct equity investment 32 00:01:46,959 --> 00:01:47,559 Speaker 3: in a company? 33 00:01:47,560 --> 00:01:49,280 Speaker 6: What have you heard from some of Intel's shareholders? 34 00:01:50,240 --> 00:01:52,640 Speaker 4: Look, I mean, obviously it's a head Scratcherie. 35 00:01:52,640 --> 00:01:56,360 Speaker 5: If you're an Intel shareholder, you're popping the champagne, right, 36 00:01:56,360 --> 00:01:58,840 Speaker 5: I mean, because this is something came out of left field, 37 00:01:58,840 --> 00:02:01,560 Speaker 5: and obviously the soft bank as well. But look, it 38 00:02:02,200 --> 00:02:06,080 Speaker 5: does it crosses into a gray zone, right, I mean 39 00:02:06,520 --> 00:02:09,600 Speaker 5: a sort of line the sand, Like Lisa was saying, 40 00:02:09,720 --> 00:02:12,920 Speaker 5: does it end here? Is there more like this? But 41 00:02:12,960 --> 00:02:15,720 Speaker 5: I think that's the issue is that like his government 42 00:02:16,160 --> 00:02:19,320 Speaker 5: gets more into especially when it comes to chips in AI, 43 00:02:20,400 --> 00:02:22,960 Speaker 5: and there's a lot of unint in the consequences, and 44 00:02:23,000 --> 00:02:23,960 Speaker 5: I think that's some of the. 45 00:02:23,919 --> 00:02:27,280 Speaker 2: Worry and then we have soft bank buy in. So 46 00:02:27,600 --> 00:02:30,440 Speaker 2: I guess the thinking mind is is there's a potential 47 00:02:30,520 --> 00:02:33,640 Speaker 2: for a turnaround at Intel. I mean, do you see that? 48 00:02:35,120 --> 00:02:37,400 Speaker 5: I mean, look, I think there's a better chance to 49 00:02:37,560 --> 00:02:42,320 Speaker 5: me playing Bethpage Ryder Cup in September. 50 00:02:43,760 --> 00:02:45,200 Speaker 4: Than the turnaround Intel. 51 00:02:45,600 --> 00:02:48,880 Speaker 5: Now again, like I'm not saying like you definitely have 52 00:02:49,280 --> 00:02:51,800 Speaker 5: clearly like they're a lot better today than. 53 00:02:51,720 --> 00:02:54,760 Speaker 4: They were twenty four hours ago. But look, this is 54 00:02:54,760 --> 00:02:56,560 Speaker 4: an ever psychophill climb. 55 00:02:56,880 --> 00:03:01,000 Speaker 5: I mean Intel has run like motor vehicles and that's 56 00:03:01,040 --> 00:03:03,200 Speaker 5: a big problem. 57 00:03:03,400 --> 00:03:07,120 Speaker 3: Secretary Letnic was on another network today saying that we 58 00:03:07,160 --> 00:03:09,560 Speaker 3: need to bring more chip manufacturing back to the US. 59 00:03:09,600 --> 00:03:13,440 Speaker 3: That's been a theme of President Trump as well. How 60 00:03:13,480 --> 00:03:16,239 Speaker 3: do you think about it? How is how should the 61 00:03:16,360 --> 00:03:18,040 Speaker 3: US proceed here? 62 00:03:18,040 --> 00:03:18,440 Speaker 6: Do you think? 63 00:03:19,720 --> 00:03:22,040 Speaker 5: Look, I mean they're trying to weigh the groundwork, and 64 00:03:22,080 --> 00:03:25,040 Speaker 5: obviously you've seen investments, But the reality is it's going 65 00:03:25,120 --> 00:03:28,519 Speaker 5: to be really more around AI and it's going to 66 00:03:28,600 --> 00:03:31,520 Speaker 5: be about a lot more like what i'll call next technologies. 67 00:03:31,560 --> 00:03:36,280 Speaker 5: The reality is, as I've said, to produce chips in 68 00:03:36,360 --> 00:03:39,760 Speaker 5: the US and the supply chain moving on from Asia 69 00:03:39,840 --> 00:03:43,040 Speaker 5: to the US, I've used, it's almost an impossibility and 70 00:03:43,640 --> 00:03:46,720 Speaker 5: relative to cost structure, taking four to five years to 71 00:03:46,760 --> 00:03:49,960 Speaker 5: build a factory, you know, and then just the reality 72 00:03:49,960 --> 00:03:53,480 Speaker 5: of the IP that's really based in Asia. So well, 73 00:03:53,560 --> 00:03:56,600 Speaker 5: they have great talking points and they're moving the needle, 74 00:03:57,400 --> 00:04:01,240 Speaker 5: but the reality is, like I've said, like that is that's. 75 00:04:01,040 --> 00:04:01,600 Speaker 4: Gonna be. 76 00:04:03,040 --> 00:04:05,640 Speaker 5: I'll call it four to five years before you see 77 00:04:05,680 --> 00:04:07,280 Speaker 5: any sort of real movement there. 78 00:04:07,800 --> 00:04:09,320 Speaker 2: Hey, Dan, I gotta take you back to that that 79 00:04:09,400 --> 00:04:13,400 Speaker 2: ten stake. Can you explain how exactly it's gonna be funded? 80 00:04:14,800 --> 00:04:15,480 Speaker 4: Look, that's good. 81 00:04:15,480 --> 00:04:16,960 Speaker 5: I mean you could go back to maybe some of 82 00:04:16,960 --> 00:04:19,799 Speaker 5: those like Fanny Fredday, like you know, they is like 83 00:04:19,800 --> 00:04:23,359 Speaker 5: like Odds structures government almost like a you know, in 84 00:04:23,480 --> 00:04:26,240 Speaker 5: terms of how they're going to actually get paid back, 85 00:04:26,839 --> 00:04:29,400 Speaker 5: what the ownership is that equity? 86 00:04:30,960 --> 00:04:33,600 Speaker 4: Look, and I think the devil's in the details right 87 00:04:33,640 --> 00:04:36,800 Speaker 4: in terms of you know, do you have a board seat? 88 00:04:37,000 --> 00:04:39,960 Speaker 4: Are your border observer? I mean, I think that's. 89 00:04:39,960 --> 00:04:42,560 Speaker 5: Those are some of the sort of questions that need 90 00:04:42,600 --> 00:04:45,480 Speaker 5: to get asked. But it all comes down to, like 91 00:04:46,040 --> 00:04:50,039 Speaker 5: I think it delays a breakup, but I still believe 92 00:04:50,160 --> 00:04:51,320 Speaker 5: the end result. 93 00:04:51,120 --> 00:04:53,839 Speaker 4: For Intel is gonna be a strategic breakup. 94 00:04:55,040 --> 00:04:59,360 Speaker 3: So, Dan, what's the next big thing that we're gonna 95 00:04:59,360 --> 00:05:01,200 Speaker 3: be talking to you out in the coming weeks. 96 00:05:01,200 --> 00:05:03,120 Speaker 6: Do you think is it an earnings release? Is it 97 00:05:03,160 --> 00:05:05,520 Speaker 6: a is it a new product launch? What should we 98 00:05:05,560 --> 00:05:07,880 Speaker 6: be paying attention to in your world of technology? 99 00:05:08,760 --> 00:05:12,159 Speaker 5: I think we'll be talking next Thursday morning, you know, 100 00:05:12,200 --> 00:05:15,479 Speaker 5: I mean, like, you know, obviously godfather of AI, Jensen 101 00:05:15,560 --> 00:05:16,760 Speaker 5: NVIDI like when they were poor. 102 00:05:17,000 --> 00:05:20,120 Speaker 4: Look, I think to me, you know, I'm believed Toby 103 00:05:20,160 --> 00:05:20,600 Speaker 4: on the show. 104 00:05:20,680 --> 00:05:22,480 Speaker 5: You know, obviously the last few weeks, like you look 105 00:05:22,480 --> 00:05:26,440 Speaker 5: at earning season, there's a validation movement for tech, validation 106 00:05:26,600 --> 00:05:30,159 Speaker 5: for AI and and I think now come down to 107 00:05:30,440 --> 00:05:33,520 Speaker 5: within video or reporting like okay, like what like what 108 00:05:33,640 --> 00:05:34,360 Speaker 5: is demanded spy? 109 00:05:34,480 --> 00:05:36,719 Speaker 4: We think demand spies ten to twelve to one. 110 00:05:37,920 --> 00:05:39,599 Speaker 5: And I think that is going to be the next 111 00:05:39,680 --> 00:05:43,839 Speaker 5: data point that ultimately I think puts fuel in this rally. 112 00:05:43,880 --> 00:05:48,040 Speaker 5: I believe tech stocks rally hard into year end despite 113 00:05:48,080 --> 00:05:50,760 Speaker 5: some you know, whether it's fed geopolitical or other sort 114 00:05:50,800 --> 00:05:52,799 Speaker 5: of headline risk or news. 115 00:05:53,560 --> 00:05:56,440 Speaker 2: Heyden can can Intel catch up to let's say Taiwan 116 00:05:56,520 --> 00:06:01,640 Speaker 2: semiconductor manufacturing, contract, chip making and chip design? You know, 117 00:06:01,640 --> 00:06:04,920 Speaker 2: they miss out in this boom and spending in artificial inhealgance. 118 00:06:06,360 --> 00:06:09,360 Speaker 5: I mean it's like me playing going to Rocker Park 119 00:06:10,160 --> 00:06:12,920 Speaker 5: and playing in a pickup game of the NBA player. 120 00:06:13,080 --> 00:06:17,520 Speaker 5: It's just not Look, they've missed, they've missed the window. 121 00:06:18,440 --> 00:06:19,880 Speaker 4: I'm not saying like you can have. 122 00:06:19,760 --> 00:06:24,120 Speaker 5: Some small victories, but I mean that's the shame of 123 00:06:24,160 --> 00:06:26,960 Speaker 5: the thing, Like they've missed it. Now, Look, I can't 124 00:06:27,160 --> 00:06:29,280 Speaker 5: you have a big install base. You could have some 125 00:06:29,360 --> 00:06:32,400 Speaker 5: wins here and there. But you look where a TSMC, 126 00:06:32,640 --> 00:06:35,160 Speaker 5: You look in the nvidio, you look what broad comes down. 127 00:06:35,279 --> 00:06:37,920 Speaker 5: You look at obviously what lesas sou and AMD is done. 128 00:06:38,080 --> 00:06:40,440 Speaker 5: I think that's part of the problem with Intel and 129 00:06:40,440 --> 00:06:42,880 Speaker 5: they look, I mean US government, soft bank, others will 130 00:06:42,920 --> 00:06:46,279 Speaker 5: get involved, but they have to stop running it like 131 00:06:46,279 --> 00:06:48,320 Speaker 5: like motor vehicle Dan. 132 00:06:48,520 --> 00:06:49,960 Speaker 6: All right, let's get to the heart of the matter. 133 00:06:50,000 --> 00:06:50,160 Speaker 4: Here. 134 00:06:50,400 --> 00:06:52,800 Speaker 6: Is Penn State overrated at number two? 135 00:06:53,920 --> 00:06:54,120 Speaker 4: No? 136 00:06:54,200 --> 00:06:57,719 Speaker 5: I mean, like I believe, not just number two. I 137 00:06:57,720 --> 00:06:59,719 Speaker 5: think like they'll be the number one team in the country. 138 00:06:59,760 --> 00:07:03,200 Speaker 5: I think this is our year twenty twenty five and 139 00:07:03,400 --> 00:07:07,680 Speaker 5: Michigan Penn State this year. You know, you look at 140 00:07:07,720 --> 00:07:10,840 Speaker 5: Ohio State. I think big Ted's going to dominate Texas. 141 00:07:10,840 --> 00:07:14,720 Speaker 5: Obviously great teams, but this is the year we are 142 00:07:15,040 --> 00:07:16,160 Speaker 5: I think we win the Natty. 143 00:07:17,160 --> 00:07:20,320 Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this. 144 00:07:22,480 --> 00:07:26,160 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 145 00:07:26,240 --> 00:07:29,320 Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android 146 00:07:29,360 --> 00:07:32,640 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 147 00:07:32,720 --> 00:07:35,840 Speaker 1: you get your podcasts, or watch us live on YouTube. 148 00:07:36,640 --> 00:07:37,960 Speaker 6: Home Depot we're going to go there. 149 00:07:38,000 --> 00:07:40,440 Speaker 2: Okay, so it looks like consumers they are staying away 150 00:07:40,440 --> 00:07:42,800 Speaker 2: from those big purchases. But we want to learn more 151 00:07:42,800 --> 00:07:45,280 Speaker 2: about this, dig deeper into it. Let's bring in Drew Redding. 152 00:07:45,320 --> 00:07:50,000 Speaker 2: He's Bloomberg Intelligence US home building analysts joining us from Princeton. Drew, 153 00:07:50,080 --> 00:07:52,600 Speaker 2: thanks for joining us. How much is that a reflection 154 00:07:52,720 --> 00:07:55,600 Speaker 2: of interest rates and inflation what we heard from from 155 00:07:55,640 --> 00:07:56,240 Speaker 2: home Depot. 156 00:07:58,200 --> 00:08:01,000 Speaker 7: Yeah, so it was actually a pretty much inline quarter 157 00:08:01,160 --> 00:08:04,160 Speaker 7: for home Depot today, comps up about one, a little 158 00:08:04,160 --> 00:08:06,080 Speaker 7: shy consensus, but if you back out some of the 159 00:08:06,120 --> 00:08:09,920 Speaker 7: four x impact, it was pretty much in line. Now, 160 00:08:10,480 --> 00:08:13,120 Speaker 7: of course, growth isn't as strong as you would like 161 00:08:13,200 --> 00:08:14,720 Speaker 7: to see, and a lot of that, as you mentioned, 162 00:08:14,800 --> 00:08:18,360 Speaker 7: has to do with where rates are, both rates on 163 00:08:18,400 --> 00:08:20,800 Speaker 7: home equity loans and mortgage rates. You have to remember 164 00:08:21,360 --> 00:08:24,720 Speaker 7: housing turnover is at the lowest level since the financial crisis. 165 00:08:25,040 --> 00:08:27,280 Speaker 7: And what we've heard consistently from home Depot over the 166 00:08:27,360 --> 00:08:30,240 Speaker 7: last several quarters is that consumers are pulling back on 167 00:08:30,360 --> 00:08:34,120 Speaker 7: big ticket discretionary categories. So think of things like kitchen 168 00:08:34,120 --> 00:08:37,199 Speaker 7: and bathroom models are flooring, and the reason is because 169 00:08:37,200 --> 00:08:39,800 Speaker 7: these tend to be financed with that and with rates 170 00:08:39,800 --> 00:08:43,480 Speaker 7: where they are, and consumers with the expectation that rates 171 00:08:43,480 --> 00:08:45,560 Speaker 7: are going to pull back, they're taking away and see 172 00:08:45,559 --> 00:08:49,480 Speaker 7: approach and deciding to opt for those smaller ticket projects instead. 173 00:08:50,320 --> 00:08:50,880 Speaker 6: Drew. 174 00:08:50,960 --> 00:08:55,000 Speaker 3: What what does home depots say about TERRF risk for them? 175 00:08:55,000 --> 00:08:56,360 Speaker 6: How did they quantify for the street? 176 00:08:57,800 --> 00:09:00,560 Speaker 7: Yeah, good question obviously on you know of mind for 177 00:09:00,600 --> 00:09:03,120 Speaker 7: a lot of investors. So Home Depot has done well 178 00:09:03,160 --> 00:09:06,200 Speaker 7: to diversify that are sourcing over the last several years. 179 00:09:06,679 --> 00:09:09,640 Speaker 7: They get about fifty percent of their products from the US, 180 00:09:09,679 --> 00:09:12,360 Speaker 7: so they are in pretty good shape from that regard. 181 00:09:13,120 --> 00:09:16,040 Speaker 7: We would estimate, you know, products coming from China somewhere 182 00:09:16,080 --> 00:09:18,839 Speaker 7: around fifteen to twenty percent. And there's a couple of 183 00:09:18,880 --> 00:09:20,840 Speaker 7: ways that they're going to manage this one. Given the 184 00:09:20,880 --> 00:09:23,640 Speaker 7: scale that they have, they're able to push back against suppliers. 185 00:09:24,440 --> 00:09:27,640 Speaker 7: The second. They continue to diversify their supply chain. On 186 00:09:27,679 --> 00:09:30,720 Speaker 7: their last quarter call, they mentioned that no single country 187 00:09:30,760 --> 00:09:32,920 Speaker 7: outside of the US will be more than ten percent 188 00:09:33,000 --> 00:09:36,200 Speaker 7: of sourcing. And then lastly, I think we're going to 189 00:09:36,200 --> 00:09:39,679 Speaker 7: start to see some selective price increases coming through in 190 00:09:39,720 --> 00:09:42,319 Speaker 7: the next several quarters. Now they've done a little bit 191 00:09:42,600 --> 00:09:44,680 Speaker 7: of pre buy on the inventory side to make sure 192 00:09:44,679 --> 00:09:47,120 Speaker 7: that they had some of that lower cost product on 193 00:09:47,200 --> 00:09:49,720 Speaker 7: the shelves for consumers. But I think, you know, as 194 00:09:49,720 --> 00:09:51,120 Speaker 7: we get to the end of this year and into 195 00:09:51,160 --> 00:09:52,760 Speaker 7: next year, you're going to start to see a little 196 00:09:52,760 --> 00:09:55,679 Speaker 7: bit of pricing. Now, we wouldn't expect it to be 197 00:09:55,840 --> 00:09:59,680 Speaker 7: to be widespread or significant. Remember, Home Depot sales about 198 00:09:59,720 --> 00:10:02,520 Speaker 7: thirty to forty thousand products on their shelves, so they 199 00:10:02,559 --> 00:10:05,760 Speaker 7: tend to take a portfolio approach and manage pricing really 200 00:10:05,800 --> 00:10:10,600 Speaker 7: across the entire project, rather than raising prices across the board. 201 00:10:10,880 --> 00:10:13,440 Speaker 2: Sure, so are you telling me my next home Depot 202 00:10:13,520 --> 00:10:15,839 Speaker 2: run is going to be more expensive? It's going to 203 00:10:15,880 --> 00:10:17,920 Speaker 2: cost me more, Drew. I have painting, I have a 204 00:10:17,960 --> 00:10:20,679 Speaker 2: deck to build, I have things to do. I mean 205 00:10:20,720 --> 00:10:22,360 Speaker 2: you're saying this could take effect pretty soon. 206 00:10:23,440 --> 00:10:26,640 Speaker 7: Well, maybe not your next trip, Okay, the next couple. 207 00:10:26,760 --> 00:10:29,120 Speaker 7: Maybe looking more towards the end of this year or 208 00:10:29,120 --> 00:10:33,400 Speaker 7: into next year, we would expect to see prices up marginally. 209 00:10:33,040 --> 00:10:36,320 Speaker 2: So I need to rush now. Well, if consumers are 210 00:10:36,320 --> 00:10:39,120 Speaker 2: putting off those big projects, what are they focusing on? 211 00:10:39,160 --> 00:10:41,920 Speaker 2: I mean, is it the smaller ones or are they 212 00:10:41,920 --> 00:10:43,320 Speaker 2: just canceling projects altogether? 213 00:10:44,760 --> 00:10:49,400 Speaker 7: Yeah, it tends to be more maintenance repair oriented, you know, 214 00:10:49,559 --> 00:10:52,560 Speaker 7: so there's projects around the house where things break and 215 00:10:52,600 --> 00:10:56,240 Speaker 7: you have to fix them immediately, or replacement products for 216 00:10:56,800 --> 00:10:59,440 Speaker 7: appliances and things of that nature. And again, what we're 217 00:10:59,440 --> 00:11:01,959 Speaker 7: not seeing is is the big ticket discretionary of things 218 00:11:02,000 --> 00:11:06,280 Speaker 7: like like kitchen and baths that require financing. 219 00:11:07,320 --> 00:11:09,960 Speaker 3: What is going on with the mortgage market here, Drew? 220 00:11:10,000 --> 00:11:12,760 Speaker 3: What do your companies say, What do they expect mortgage 221 00:11:12,800 --> 00:11:14,600 Speaker 3: rates to do here? Because we do have a FED 222 00:11:14,600 --> 00:11:19,160 Speaker 3: that presumably is going to start cutting rates. 223 00:11:20,080 --> 00:11:22,439 Speaker 7: Yeah, so mortgage rates are have come down over the 224 00:11:22,520 --> 00:11:24,240 Speaker 7: last couple of months. We're in the six and a 225 00:11:24,280 --> 00:11:28,120 Speaker 7: half percent range. So really the move in mortgage rates 226 00:11:28,120 --> 00:11:30,720 Speaker 7: has already kind of front run the expectations for what 227 00:11:30,760 --> 00:11:33,360 Speaker 7: the Fed's going to do, so I wouldn't expect to 228 00:11:33,400 --> 00:11:35,960 Speaker 7: see a whole lot of reaction on the mortgage rate 229 00:11:36,080 --> 00:11:40,080 Speaker 7: side from an upcoming FED cut. And not to mention, 230 00:11:40,120 --> 00:11:41,920 Speaker 7: remember the last time the FED cut rates, we saw 231 00:11:41,960 --> 00:11:44,600 Speaker 7: an increase in mortgage rates. So I think what we 232 00:11:44,679 --> 00:11:46,880 Speaker 7: really need to see. I mean, sure it would be 233 00:11:46,880 --> 00:11:48,600 Speaker 7: great if we could get rates into the high five 234 00:11:48,720 --> 00:11:51,320 Speaker 7: or low six percent range, but you know, as we've 235 00:11:51,360 --> 00:11:53,920 Speaker 7: discussed before, what you really need to see is rates 236 00:11:53,960 --> 00:11:57,000 Speaker 7: remain consistent and stable, and that's just something that we 237 00:11:57,080 --> 00:12:00,160 Speaker 7: haven't had. You know, homeowners, when they're out shopping for 238 00:12:00,160 --> 00:12:01,440 Speaker 7: a home, they want to be able to get a 239 00:12:01,440 --> 00:12:03,360 Speaker 7: good grasp of what they're going to be spending, and 240 00:12:03,400 --> 00:12:05,960 Speaker 7: with all the volatility we've seen in rates over the 241 00:12:06,000 --> 00:12:09,920 Speaker 7: last couple of years, that's become increasingly challenging. Now on 242 00:12:10,320 --> 00:12:13,040 Speaker 7: the home building side, we continue to see the builders 243 00:12:14,440 --> 00:12:17,240 Speaker 7: increase their use of incentives, and primarily that's for mortgage 244 00:12:17,320 --> 00:12:19,920 Speaker 7: rate buydown, so they're getting their buyers somewhere around one 245 00:12:19,960 --> 00:12:24,200 Speaker 7: hundred basis points lower than the headline rate. Of course, 246 00:12:24,440 --> 00:12:27,560 Speaker 7: as the demand environment continues to remain weak, we're seeing 247 00:12:27,559 --> 00:12:29,559 Speaker 7: an increased use of that, and that's what we expect 248 00:12:30,040 --> 00:12:33,120 Speaker 7: through the second half. So from the builder's perspective, they're 249 00:12:33,160 --> 00:12:36,000 Speaker 7: getting their buyers, you know, better monthly payments than you're 250 00:12:36,000 --> 00:12:37,439 Speaker 7: seeing at the headline rate. 251 00:12:37,720 --> 00:12:40,320 Speaker 2: Heydrew before you go. Low's reports this week too, I 252 00:12:40,320 --> 00:12:43,280 Speaker 2: believe it's tomorrow. Do you expect to hear a similar 253 00:12:43,320 --> 00:12:44,559 Speaker 2: story from them? 254 00:12:45,640 --> 00:12:48,000 Speaker 7: Yeah, pretty much. I mean, the one difference will be 255 00:12:48,040 --> 00:12:51,000 Speaker 7: that Low's has a greater exposure to do it yourself customer, 256 00:12:51,400 --> 00:12:53,200 Speaker 7: and as we know, over the last couple of years, 257 00:12:53,240 --> 00:12:55,760 Speaker 7: they've really been impacted to a greater degree than the 258 00:12:55,760 --> 00:12:59,760 Speaker 7: professional customer, you know, due to concerns over the economy 259 00:12:59,800 --> 00:13:02,720 Speaker 7: or the cumulative impact of inflation. So we do think 260 00:13:02,720 --> 00:13:05,640 Speaker 7: that on a relative basis that exposure will weigh on them. 261 00:13:06,160 --> 00:13:07,760 Speaker 7: But we do think that they're going to benefit a 262 00:13:07,800 --> 00:13:11,160 Speaker 7: little bit more from some from the recent hurricane activity, 263 00:13:11,240 --> 00:13:15,280 Speaker 7: also from strong seasonal trends. So by and large, we 264 00:13:15,320 --> 00:13:17,800 Speaker 7: think it's going to be pretty much the same stories. 265 00:13:17,800 --> 00:13:19,960 Speaker 7: That trends are starting to improve, but it's still that 266 00:13:20,000 --> 00:13:22,920 Speaker 7: big ticket discretionary piece that remains weak. 267 00:13:23,320 --> 00:13:23,480 Speaker 5: Jre. 268 00:13:23,520 --> 00:13:26,880 Speaker 3: How about on the existing home market, how's that market 269 00:13:26,960 --> 00:13:29,319 Speaker 3: doing and are the regional differences these days. 270 00:13:30,720 --> 00:13:33,840 Speaker 7: Yeah, I mean, the existing home market is pretty much frozen. 271 00:13:33,880 --> 00:13:37,120 Speaker 7: We've been bumping along that four million annualized run rate 272 00:13:37,520 --> 00:13:39,240 Speaker 7: for a couple of years now, and if you think 273 00:13:39,280 --> 00:13:42,240 Speaker 7: of what normalized is somewhere around five million. Now, we're 274 00:13:42,280 --> 00:13:45,319 Speaker 7: twenty twenty five percent below what we would normally be doing. 275 00:13:46,840 --> 00:13:49,000 Speaker 7: You know, part of the reason has been the lack 276 00:13:49,040 --> 00:13:51,360 Speaker 7: of inventory, but we're seeing more inventory come home to 277 00:13:51,480 --> 00:13:54,120 Speaker 7: the market. So what we expect is going to happen 278 00:13:54,160 --> 00:13:57,400 Speaker 7: is that you'll start to see some volume improvements off 279 00:13:57,400 --> 00:13:59,160 Speaker 7: of a low base, but we think that that's going 280 00:13:59,240 --> 00:14:02,640 Speaker 7: to come at the expensive pricing. We've seen home prices 281 00:14:02,679 --> 00:14:05,319 Speaker 7: start to moderate. They're still rising at the national level, 282 00:14:05,600 --> 00:14:07,920 Speaker 7: but we think you start to see the increases lesson 283 00:14:08,000 --> 00:14:10,240 Speaker 7: and in some of the markets around the country. To 284 00:14:10,280 --> 00:14:13,840 Speaker 7: your point, if you look at, you know, markets in Florida, Texas, 285 00:14:13,880 --> 00:14:16,960 Speaker 7: some in the Southwest, we're already seeing home prices come 286 00:14:17,040 --> 00:14:19,040 Speaker 7: down on a year over year basis. So it's kind 287 00:14:19,080 --> 00:14:22,720 Speaker 7: of a rolling scenario where different markets are seeing minor 288 00:14:22,800 --> 00:14:25,480 Speaker 7: corrections at different times, and that's kind of how we 289 00:14:25,560 --> 00:14:27,120 Speaker 7: expect it to play out going forward. 290 00:14:28,040 --> 00:14:31,120 Speaker 3: Stay with us more from Bloomberg Intelligence coming up after this. 291 00:14:33,360 --> 00:14:37,040 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 292 00:14:37,120 --> 00:14:40,240 Speaker 1: weekdays at ten am Eastern on Apple, Coarclay and Android 293 00:14:40,240 --> 00:14:43,560 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 294 00:14:43,600 --> 00:14:46,720 Speaker 1: you get your podcasts, or watch us live on YouTube. 295 00:14:47,280 --> 00:14:49,600 Speaker 3: All right, let's get into the medtech space. Here's a 296 00:14:49,640 --> 00:14:52,560 Speaker 3: company I know very well in the famed Chase Manhattan 297 00:14:52,600 --> 00:14:55,760 Speaker 3: credit training program, which is trained half of Wall Street 298 00:14:55,840 --> 00:14:58,800 Speaker 3: over the years. The final project is like you get 299 00:14:58,800 --> 00:15:00,600 Speaker 3: a week to do a big credit reach search report. 300 00:15:00,680 --> 00:15:03,320 Speaker 3: My credit research report was on med Tronic. I know 301 00:15:03,360 --> 00:15:05,760 Speaker 3: all about this stuff. Anyway, they're in the news here today, 302 00:15:05,800 --> 00:15:09,200 Speaker 3: Elliott Investment Management, the activists, they took a stake in 303 00:15:09,240 --> 00:15:10,680 Speaker 3: this company and they wanted some change and I think 304 00:15:10,680 --> 00:15:11,400 Speaker 3: they got something. 305 00:15:11,400 --> 00:15:11,640 Speaker 4: Here. 306 00:15:11,840 --> 00:15:16,200 Speaker 3: Matt Hendrickson, senior tech analyst at Bloomberg Intelligence joints us. 307 00:15:16,200 --> 00:15:19,120 Speaker 3: Here Matt brings up to data what's happening at Metronic? Uh? 308 00:15:19,240 --> 00:15:23,360 Speaker 8: Yeah, So with the Elliott Management news, they reported that 309 00:15:23,400 --> 00:15:26,760 Speaker 8: they have a significant stake in the stock and they're 310 00:15:26,800 --> 00:15:31,120 Speaker 8: going to plan to bring on two new border directors. 311 00:15:31,800 --> 00:15:37,160 Speaker 8: These are previous med tech CEOs from back in history. 312 00:15:38,240 --> 00:15:43,240 Speaker 8: And basically they're looking to revitalize growth and capture efficiencies too. 313 00:15:43,400 --> 00:15:47,520 Speaker 8: As they quoted in the earnings call built oxygen for 314 00:15:47,600 --> 00:15:51,040 Speaker 8: future growth. And so one of the things we saw 315 00:15:51,160 --> 00:15:55,080 Speaker 8: in the quarter in the earnings today, there were some 316 00:15:55,200 --> 00:15:58,880 Speaker 8: areas that had strong growth, strong momentum, but in their 317 00:15:58,920 --> 00:16:02,600 Speaker 8: diversified portfolio, there are other areas that kind of, let's say, 318 00:16:02,640 --> 00:16:03,560 Speaker 8: needed some tweaking. 319 00:16:04,360 --> 00:16:07,680 Speaker 2: But when it comes to this the board, who are 320 00:16:07,680 --> 00:16:09,800 Speaker 2: some of the additions that are that are coming in 321 00:16:10,240 --> 00:16:12,680 Speaker 2: because of a lad and has Elliott, the schools. 322 00:16:12,400 --> 00:16:15,360 Speaker 8: The size of the state as I see now, I 323 00:16:15,360 --> 00:16:19,040 Speaker 8: have not seen an actual size of what the steake is. 324 00:16:20,400 --> 00:16:24,760 Speaker 8: Some of these the board directors, they were former CEOs 325 00:16:24,840 --> 00:16:28,720 Speaker 8: at den Supply so some medtech companies. They were also 326 00:16:29,000 --> 00:16:33,640 Speaker 8: previously at Becton Dickinson other ones. They are able to 327 00:16:33,840 --> 00:16:36,400 Speaker 8: come in with more of an operational background and so 328 00:16:36,480 --> 00:16:39,560 Speaker 8: being able to drive kind of that efficiency, to be 329 00:16:39,600 --> 00:16:41,600 Speaker 8: able to create the same means to be able to 330 00:16:41,640 --> 00:16:43,240 Speaker 8: invest into their R and D programs. 331 00:16:43,480 --> 00:16:45,080 Speaker 3: Right for the folks in front of the terminal, the 332 00:16:45,120 --> 00:16:48,120 Speaker 3: tickers M D T, then you type in the A 333 00:16:48,400 --> 00:16:51,160 Speaker 3: n R function to get the analyst rating. Street doesn't 334 00:16:51,160 --> 00:16:53,760 Speaker 3: know what to do with this stock? Seventeen buy, sixteen 335 00:16:53,800 --> 00:16:56,720 Speaker 3: holds in one sell. What's the what's the confusion out 336 00:16:56,760 --> 00:16:57,160 Speaker 3: there about this? 337 00:16:57,280 --> 00:16:58,960 Speaker 8: Name the US? 338 00:16:59,640 --> 00:17:01,000 Speaker 6: Everybody he needs medicals. 339 00:17:00,800 --> 00:17:04,439 Speaker 8: Everyone needs medical devices. Metronic has invested a lot of 340 00:17:04,440 --> 00:17:09,320 Speaker 8: money into these home run type products. Pulse field ablation, 341 00:17:09,640 --> 00:17:13,239 Speaker 8: renal deinnervation, all these products are trying to disrupt a 342 00:17:13,440 --> 00:17:18,879 Speaker 8: current market, either if it's atual fibrillation, hypertension, if you 343 00:17:18,920 --> 00:17:20,480 Speaker 8: get if you hit a home run like you're doing 344 00:17:20,480 --> 00:17:22,400 Speaker 8: with pulse field ablation, it is going to drive us 345 00:17:22,440 --> 00:17:27,080 Speaker 8: what pulse field ablation, it's basically a way to ablate 346 00:17:27,680 --> 00:17:30,560 Speaker 8: an area that's being affected by atrol fibrillation without using 347 00:17:30,600 --> 00:17:33,560 Speaker 8: heat or without freezing, so that prevents kind of the 348 00:17:33,800 --> 00:17:37,159 Speaker 8: damage to the tissue. If you hit home runs like that, 349 00:17:37,200 --> 00:17:39,920 Speaker 8: you're going to have key growth drivers. Other products like 350 00:17:39,960 --> 00:17:42,840 Speaker 8: renal de innervation is taking longer for that growth to develop. 351 00:17:43,280 --> 00:17:47,199 Speaker 8: So analysts, including myself, see all these products in the 352 00:17:47,200 --> 00:17:50,920 Speaker 8: pipeline get very excited about the potential for that growth 353 00:17:51,080 --> 00:17:54,119 Speaker 8: to accelerate from let's say the four to five percent 354 00:17:54,119 --> 00:17:58,359 Speaker 8: they're currently at to six percent, and then we're just 355 00:17:58,400 --> 00:18:01,600 Speaker 8: still waiting for that execution of those commercialization of the 356 00:18:01,640 --> 00:18:05,879 Speaker 8: products to get to that higher growth. Some analysts, as 357 00:18:05,920 --> 00:18:08,400 Speaker 8: you've see in the an R, they are more bullish 358 00:18:08,440 --> 00:18:11,320 Speaker 8: on when that will come up. Others are starting to say, 359 00:18:11,320 --> 00:18:13,520 Speaker 8: wait a minute, we've seen this story before and so 360 00:18:13,560 --> 00:18:15,919 Speaker 8: they are waiting. It's a wait and see story for 361 00:18:16,440 --> 00:18:17,400 Speaker 8: those analysts. 362 00:18:17,760 --> 00:18:20,920 Speaker 2: I noticed when we talk with tariffs, they scaled back 363 00:18:20,960 --> 00:18:23,399 Speaker 2: the impact of tariff, so they lifted their full year guidance. 364 00:18:23,440 --> 00:18:26,480 Speaker 2: Are you seeing that more from other companies in this space? 365 00:18:26,720 --> 00:18:29,040 Speaker 8: Yes, I would say the majority of the companies that 366 00:18:29,080 --> 00:18:33,280 Speaker 8: have reported so far. Metronic always reports because their July 367 00:18:33,359 --> 00:18:36,560 Speaker 8: fiscal quarter end. All the companies that reported their June 368 00:18:36,600 --> 00:18:38,639 Speaker 8: fiscal end had a similar thing where they cut it 369 00:18:38,640 --> 00:18:41,800 Speaker 8: by roughly half of what they had predicted in the 370 00:18:41,840 --> 00:18:42,399 Speaker 8: first quarter. 371 00:18:43,000 --> 00:18:46,000 Speaker 3: This company is based in Dublin, as in Ireland's just 372 00:18:46,320 --> 00:18:48,000 Speaker 3: the tax scam. 373 00:18:48,600 --> 00:18:51,240 Speaker 8: I will not call it a tax scam, but their 374 00:18:51,280 --> 00:18:55,440 Speaker 8: main headquarters is in Minneapolis. And when they acquired Coavidian 375 00:18:55,480 --> 00:18:58,600 Speaker 8: and they worked through that integration process that cond. 376 00:18:58,440 --> 00:19:00,560 Speaker 3: Call scam because back and Pain where worked on those 377 00:19:00,640 --> 00:19:02,280 Speaker 3: Dublin docks deals back in the eighties. 378 00:19:02,280 --> 00:19:03,120 Speaker 6: That's when they first. 379 00:19:02,960 --> 00:19:06,439 Speaker 3: Changed the laws so to bring services and manufacturing to 380 00:19:06,480 --> 00:19:09,760 Speaker 3: Ireland and we did all the fancy financing associated that, 381 00:19:09,920 --> 00:19:11,119 Speaker 3: and you know what it worked. 382 00:19:11,160 --> 00:19:14,880 Speaker 6: Go to Dublin. Now, this place is bustling with corporate stuff. 383 00:19:14,920 --> 00:19:17,480 Speaker 3: It's like one of the great European cities in terms 384 00:19:17,480 --> 00:19:22,760 Speaker 3: of just for your industry, healthcare, technology, Dublin dots No. 385 00:19:22,560 --> 00:19:24,320 Speaker 8: No, we have a lot of other A lot of 386 00:19:24,320 --> 00:19:27,119 Speaker 8: other companies are building out plants there. I mean, I 387 00:19:27,160 --> 00:19:30,520 Speaker 8: know Dexcom has their CGM factory out in Ireland and 388 00:19:30,560 --> 00:19:32,760 Speaker 8: all those things. So yeah, it's definitely an up and 389 00:19:32,800 --> 00:19:34,920 Speaker 8: coming location for this. 390 00:19:34,920 --> 00:19:39,639 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 391 00:19:39,800 --> 00:19:43,280 Speaker 1: and anywhere else you get your podcasts. Listen live each 392 00:19:43,320 --> 00:19:47,080 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 393 00:19:47,200 --> 00:19:50,720 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 394 00:19:51,160 --> 00:19:54,080 Speaker 1: You can also watch us live every weekday on YouTube 395 00:19:54,480 --> 00:19:56,720 Speaker 1: and always on the Bloomberg terminal.