1 00:00:01,560 --> 00:00:05,680 Speaker 1: This is Bloomberg Intelligence with Scarletfoo and Paul Sweeney. 2 00:00:05,760 --> 00:00:07,880 Speaker 2: How do you think the FED is looking at tariffs? 3 00:00:08,000 --> 00:00:09,240 Speaker 2: The uncertainty of terriffs. 4 00:00:09,280 --> 00:00:11,760 Speaker 3: Let's take a look at the sectors and how they performed. 5 00:00:11,800 --> 00:00:14,360 Speaker 2: A lot of investors getting whipsaled every day by news. 6 00:00:14,160 --> 00:00:18,280 Speaker 1: Events, breaking market headlines, and corporate news from across the globe. 7 00:00:18,320 --> 00:00:20,960 Speaker 3: Could we see a market disruption of market events? 8 00:00:20,960 --> 00:00:23,000 Speaker 2: So people just too exuberant out there? 9 00:00:23,160 --> 00:00:25,680 Speaker 3: You see some so called low quality stocks driving this 10 00:00:25,800 --> 00:00:26,560 Speaker 3: short term rally. 11 00:00:26,600 --> 00:00:31,400 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 12 00:00:31,560 --> 00:00:33,440 Speaker 1: YouTube and Bloomberg Originals. 13 00:00:33,880 --> 00:00:36,239 Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big 14 00:00:36,280 --> 00:00:38,560 Speaker 2: business stories impacting Wall Street and the global markets. 15 00:00:38,600 --> 00:00:40,560 Speaker 3: Each and every week, we provide in depth research and 16 00:00:40,640 --> 00:00:42,479 Speaker 3: data on some of the two thousand companies and one 17 00:00:42,560 --> 00:00:45,080 Speaker 3: hundred and thirty industries that our analysts cover worldwide. 18 00:00:45,120 --> 00:00:47,279 Speaker 2: Today it's another major earnings week, but we'll break down 19 00:00:47,320 --> 00:00:50,360 Speaker 2: some big tech earnings from this week. Spoiler alert, the 20 00:00:50,520 --> 00:00:53,320 Speaker 2: AI fuel spending search keeps racing. 21 00:00:53,080 --> 00:00:55,880 Speaker 3: Ahead, plus that AI frenzy is now spilling over to 22 00:00:55,960 --> 00:00:59,200 Speaker 3: heavy machinery and oil fracking. We look into how Caterpillar 23 00:00:59,240 --> 00:01:01,160 Speaker 3: fared when they reported this past week. 24 00:01:01,280 --> 00:01:04,560 Speaker 2: But first, Verizon, the US largest mobile service provider, reported 25 00:01:04,600 --> 00:01:06,839 Speaker 2: a loss in wireless phone subscribers in the third quarter 26 00:01:06,880 --> 00:01:09,319 Speaker 2: as a new chief executive officer laid out an aggressive 27 00:01:09,319 --> 00:01:11,399 Speaker 2: growth strategy to reclaim market share. 28 00:01:11,560 --> 00:01:14,319 Speaker 3: Dan Shulman, a former CEO of PayPal, was appointed just 29 00:01:14,319 --> 00:01:16,560 Speaker 3: a few weeks ago to replace Hans Westbrook over at 30 00:01:16,640 --> 00:01:19,560 Speaker 3: Verizon after two straight quarters of subscriber declines and a 31 00:01:19,600 --> 00:01:22,440 Speaker 3: stock performance that has lagged the two main rivals. 32 00:01:22,560 --> 00:01:25,160 Speaker 2: For more, we were joined by John Butler, Bloomberg Intelligence 33 00:01:25,200 --> 00:01:28,199 Speaker 2: senior telecom analyst. I first asked John to break down 34 00:01:28,280 --> 00:01:29,120 Speaker 2: Verizon's earnings. 35 00:01:29,360 --> 00:01:32,640 Speaker 4: So this first of all, I'll tell you the dividend 36 00:01:32,800 --> 00:01:36,119 Speaker 4: is safe, Paul. I mean, that's the good news for Verison. 37 00:01:36,360 --> 00:01:41,080 Speaker 4: And it's safe because new CEO Dan Shulman, who recently 38 00:01:41,520 --> 00:01:45,760 Speaker 4: replaced Hans Wesperg at the helm of Verizon, sort of 39 00:01:45,840 --> 00:01:49,320 Speaker 4: laid out is his new plan for growth. I think 40 00:01:49,360 --> 00:01:53,920 Speaker 4: the real watchword of the day here for Verizon is 41 00:01:54,000 --> 00:01:59,440 Speaker 4: to pivot from a very technology or network oriented company 42 00:01:59,520 --> 00:02:02,480 Speaker 4: to now Shulman is going to turn them into a 43 00:02:02,600 --> 00:02:07,000 Speaker 4: very consumer focused company. I think he's really going to 44 00:02:07,120 --> 00:02:10,760 Speaker 4: take a page out of T mobiles book, but in 45 00:02:10,880 --> 00:02:14,320 Speaker 4: terms of promoting, I think, unlike T Mobile, he's going 46 00:02:14,360 --> 00:02:16,760 Speaker 4: to do it in a more discipline manner. 47 00:02:17,520 --> 00:02:20,840 Speaker 2: So I guess as I think about the wireless business, 48 00:02:20,840 --> 00:02:22,480 Speaker 2: I mean, we all have a phone in our pocket, 49 00:02:23,720 --> 00:02:26,000 Speaker 2: it just seems like the only way to grow revenue 50 00:02:26,040 --> 00:02:30,640 Speaker 2: is either add subscribers, which can be expensive, or raise prices, 51 00:02:30,919 --> 00:02:34,480 Speaker 2: which how long can you do that? How do you 52 00:02:34,520 --> 00:02:35,200 Speaker 2: grow the business? 53 00:02:35,600 --> 00:02:38,839 Speaker 4: I mean, that's one thing he talked about, was how 54 00:02:38,880 --> 00:02:41,320 Speaker 4: to grow the business here. And what you're seeing with 55 00:02:41,360 --> 00:02:45,560 Speaker 4: the telecoms is they're all pushing more heavily into broadband. 56 00:02:45,560 --> 00:02:49,400 Speaker 4: They're doing a very good job there with Verizon, like 57 00:02:49,520 --> 00:02:53,320 Speaker 4: AT and T, they've got two avenues of growth there. 58 00:02:53,400 --> 00:02:58,600 Speaker 4: One is fiber broadband. Verizon is buying frontiers, so they're 59 00:02:58,639 --> 00:03:03,600 Speaker 4: going to onboard about a new fiber subscribers in the 60 00:03:03,639 --> 00:03:07,680 Speaker 4: new year. And the other is fixed wireless access, which 61 00:03:07,720 --> 00:03:10,239 Speaker 4: is sort of that wireless link into the home. It's 62 00:03:10,240 --> 00:03:14,440 Speaker 4: been very popular with people. So once you get those 63 00:03:14,520 --> 00:03:19,320 Speaker 4: broadband subscribers, probably more than half of them don't have wireless, 64 00:03:19,400 --> 00:03:23,880 Speaker 4: and so Verizon's game is to continue to build that 65 00:03:24,040 --> 00:03:27,640 Speaker 4: broadband base and then cross sell wireless. 66 00:03:27,160 --> 00:03:28,040 Speaker 5: Into that base. 67 00:03:28,840 --> 00:03:32,440 Speaker 4: You've also got switching activity that goes on in any 68 00:03:32,440 --> 00:03:36,160 Speaker 4: given quarter. No matter how hard the carriers try, you're 69 00:03:36,200 --> 00:03:39,520 Speaker 4: always going to lose some subscribers and they're up for grabs, 70 00:03:39,560 --> 00:03:41,680 Speaker 4: and I think for Verizon now was looking to get 71 00:03:41,720 --> 00:03:46,160 Speaker 4: their fair share of those. And there's also modest, very 72 00:03:46,320 --> 00:03:52,160 Speaker 4: modest organic growth in the business through population growth and 73 00:03:52,240 --> 00:03:56,480 Speaker 4: some immigration, although immigration is down this year. 74 00:03:56,640 --> 00:03:56,880 Speaker 5: YEP. 75 00:03:57,000 --> 00:03:58,760 Speaker 2: I don't even know where we are, John, in terms 76 00:03:58,800 --> 00:04:01,760 Speaker 2: of the five G, six G, four G. Are there 77 00:04:02,160 --> 00:04:05,840 Speaker 2: technological changes coming to the wireless business or are we 78 00:04:05,880 --> 00:04:07,600 Speaker 2: at kind of where we're at in terms of capacity 79 00:04:07,880 --> 00:04:09,000 Speaker 2: and usage and so on. 80 00:04:09,960 --> 00:04:15,520 Speaker 4: So capacity is on the rise. Spectrum is the lifeblood 81 00:04:15,520 --> 00:04:20,120 Speaker 4: a wireless The more spectrum you have, the more network 82 00:04:20,160 --> 00:04:23,479 Speaker 4: capacity you have. To put it in Layman's terms, for 83 00:04:23,880 --> 00:04:28,560 Speaker 4: the average smartphone user, that means higher download speeds. And 84 00:04:28,760 --> 00:04:33,280 Speaker 4: Verizon is currently activating what's called cband spectrum. It's very 85 00:04:33,360 --> 00:04:36,600 Speaker 4: high capacity, and so you're going to see their average 86 00:04:36,640 --> 00:04:41,039 Speaker 4: network speeds across the nation edge up over time as 87 00:04:41,080 --> 00:04:46,120 Speaker 4: they activate that spectrum. In terms of the generational upgrades 88 00:04:46,120 --> 00:04:48,800 Speaker 4: that you alluded to, the three G four G five G. 89 00:04:49,680 --> 00:04:53,839 Speaker 4: We're mid cycle now. We launched five G about five 90 00:04:53,960 --> 00:04:57,359 Speaker 4: years ago, and I think you'll see an upgrade to 91 00:04:57,520 --> 00:05:01,960 Speaker 4: six G as we get towards twin thirty. But right 92 00:05:02,000 --> 00:05:04,400 Speaker 4: now it's sort of status quo on that front. 93 00:05:04,880 --> 00:05:08,680 Speaker 2: I guess the issue for of a Verizon is now 94 00:05:08,760 --> 00:05:11,560 Speaker 2: going more customer centric and as you mentioned, when I 95 00:05:11,600 --> 00:05:14,320 Speaker 2: read that, it seemed just like what T Mobile's been 96 00:05:14,320 --> 00:05:17,080 Speaker 2: doing for years and years and years. Gone back to 97 00:05:17,160 --> 00:05:19,719 Speaker 2: John Ledger, Is this a strategy you think can be 98 00:05:20,560 --> 00:05:21,920 Speaker 2: successful for Verizon? 99 00:05:22,400 --> 00:05:23,080 Speaker 5: We'll see. 100 00:05:23,200 --> 00:05:26,080 Speaker 4: I mean that's their big challenge, right I mean, T 101 00:05:26,320 --> 00:05:30,559 Speaker 4: Mobile was always the branding king. They did a great 102 00:05:30,680 --> 00:05:33,400 Speaker 4: job there, just as you said, starting with John Ledger, 103 00:05:33,440 --> 00:05:35,240 Speaker 4: who made himself the face. 104 00:05:34,960 --> 00:05:35,520 Speaker 5: Of the brand. 105 00:05:35,600 --> 00:05:38,800 Speaker 4: They really did a terrific job there. They went out 106 00:05:38,880 --> 00:05:42,480 Speaker 4: as a sort of a hip, counterculture, consumer friendly brand. 107 00:05:43,240 --> 00:05:46,599 Speaker 4: Verizon was at the opposit opposite end of that spectrum, 108 00:05:46,760 --> 00:05:52,640 Speaker 4: leaning into their great network coverage. They still have that. 109 00:05:52,720 --> 00:05:55,640 Speaker 4: They have probably the best coverage in the industry, but 110 00:05:55,760 --> 00:05:59,240 Speaker 4: in terms of network speed and performance, the other two 111 00:05:59,400 --> 00:06:01,920 Speaker 4: AT and TS and T Mobile have really caught up. 112 00:06:02,080 --> 00:06:05,960 Speaker 4: So the challenge for Verizon now is to nurture a 113 00:06:06,000 --> 00:06:10,720 Speaker 4: more consumer friendly brand image. Dare I say I'm a 114 00:06:10,960 --> 00:06:14,799 Speaker 4: fun brand image? I have to chuckle. That really isn't 115 00:06:14,839 --> 00:06:19,279 Speaker 4: something we would associate with Verizon. But I think Shulman, 116 00:06:19,400 --> 00:06:23,919 Speaker 4: given his background at other telcos and also in a 117 00:06:23,960 --> 00:06:29,599 Speaker 4: reviving PayPal, has some experience there with branding, and I 118 00:06:29,680 --> 00:06:32,559 Speaker 4: think it's going to be interesting to see he does 119 00:06:32,720 --> 00:06:35,600 Speaker 4: with Verizon to improve that brand image. 120 00:06:35,720 --> 00:06:38,960 Speaker 2: Our thanks to John Butler, Bloomberg Intelligence Senior Telecom Analyst. 121 00:06:39,240 --> 00:06:39,640 Speaker 6: This week. 122 00:06:39,760 --> 00:06:42,240 Speaker 2: Boeing on Wednesday announced a four point nine billion dollar 123 00:06:42,279 --> 00:06:46,400 Speaker 2: accounting charge and delayed debut for Triple seven ex Jetliner, 124 00:06:46,640 --> 00:06:49,480 Speaker 2: every reminder of the long covery ahead for the US planemaker, 125 00:06:49,600 --> 00:06:52,800 Speaker 2: even as rising aircraft deliveries bolster its cash. 126 00:06:52,880 --> 00:06:56,200 Speaker 3: The setback underscores the challenges ahead as CEO Kelly Orbrok 127 00:06:56,320 --> 00:06:59,320 Speaker 3: works to stabilize Boeing even as the company benefits from 128 00:06:59,360 --> 00:07:02,119 Speaker 3: surging air orders with support from the White House. 129 00:07:02,279 --> 00:07:04,760 Speaker 2: For more, we were joined by George Ferguson, Bloomberg Intelligence 130 00:07:04,760 --> 00:07:07,760 Speaker 2: Senior Aerospace, Defense and Airlines analyst. We first asked George 131 00:07:07,760 --> 00:07:09,800 Speaker 2: for his key takeaways on Boeing's earnings. 132 00:07:10,000 --> 00:07:13,160 Speaker 7: What I saw from earnings is that the commercial airplane 133 00:07:13,160 --> 00:07:17,600 Speaker 7: business had about a four hundred thirty million dollar loss 134 00:07:17,640 --> 00:07:20,360 Speaker 7: when you back out that about five billion dollar charge 135 00:07:20,760 --> 00:07:23,600 Speaker 7: for Triple seven. I think that number was a bit 136 00:07:23,640 --> 00:07:25,800 Speaker 7: better than consensus, a little bit better than what we 137 00:07:25,800 --> 00:07:29,680 Speaker 7: were looking for. I think it's another sign that commercial 138 00:07:29,760 --> 00:07:34,560 Speaker 7: airplane is getting closer to break even. And then in 139 00:07:34,600 --> 00:07:38,360 Speaker 7: the cash flow statement, Boeing was cash flow positive at 140 00:07:38,400 --> 00:07:40,960 Speaker 7: an operating level and free cash flow. It was about 141 00:07:40,960 --> 00:07:44,240 Speaker 7: a billion dollars in the operating level and free cashflow 142 00:07:44,640 --> 00:07:48,280 Speaker 7: a couple hundred million. I think that, you know, that's 143 00:07:48,320 --> 00:07:52,600 Speaker 7: above where consensus expected it. We saw five billion dollars 144 00:07:53,000 --> 00:07:56,560 Speaker 7: an inventory get unlocked during the quarter, meaning you know, 145 00:07:56,840 --> 00:08:00,200 Speaker 7: Boeing has been sitting on something like ninety billion million 146 00:08:00,280 --> 00:08:03,160 Speaker 7: dollars inventory that is like eighty seven I think was 147 00:08:03,240 --> 00:08:06,960 Speaker 7: exact number, and that came down to eighty two billion 148 00:08:07,320 --> 00:08:10,080 Speaker 7: because they've been buying from suppliers, putting things on shelves 149 00:08:10,720 --> 00:08:13,360 Speaker 7: as they try to keep the supply base healthy while 150 00:08:13,360 --> 00:08:15,840 Speaker 7: they've been going through some of their challenges here, and 151 00:08:15,880 --> 00:08:18,760 Speaker 7: now they're starting to take that, you know, that inventory 152 00:08:19,240 --> 00:08:22,200 Speaker 7: off the shelves, put it into airplanes. That's gonna that's 153 00:08:22,240 --> 00:08:25,400 Speaker 7: going to hyper drive some of the cash generation of 154 00:08:25,480 --> 00:08:28,080 Speaker 7: Boeing as they bring that inventory I think down to 155 00:08:28,120 --> 00:08:31,880 Speaker 7: probably a sixty or fifty billion dollar level. So I 156 00:08:31,880 --> 00:08:34,520 Speaker 7: think those are both big positives in the charge was 157 00:08:34,640 --> 00:08:36,960 Speaker 7: largely non cash for an airplane that I think is 158 00:08:37,360 --> 00:08:39,920 Speaker 7: still very competitive, just gets delayed a bit. 159 00:08:40,120 --> 00:08:42,440 Speaker 2: All right, how about the deliveries of the seven thirty seven. 160 00:08:42,480 --> 00:08:44,240 Speaker 2: What's the guidance there, George, because we know that's the 161 00:08:44,240 --> 00:08:44,920 Speaker 2: big cash driver. 162 00:08:45,200 --> 00:08:48,720 Speaker 7: I think, yeah, so they're you know, Boeing is kind 163 00:08:48,760 --> 00:08:51,520 Speaker 7: of out of the game of giving guidance right now, 164 00:08:51,520 --> 00:08:53,719 Speaker 7: but they've they said, you know, the FAAS allowed them 165 00:08:53,720 --> 00:08:56,600 Speaker 7: to go to forty two a month build rate, which 166 00:08:56,600 --> 00:09:00,120 Speaker 7: would which would be above what they've done in in 167 00:09:00,120 --> 00:09:02,320 Speaker 7: the last quarter. I think we've got a modeled at 168 00:09:02,320 --> 00:09:04,720 Speaker 7: about forty four or forty five per month for the 169 00:09:04,760 --> 00:09:08,280 Speaker 7: next three months because there's still some inventory airplanes they'll 170 00:09:08,280 --> 00:09:12,480 Speaker 7: deliver as as well as what they're building. Just heard 171 00:09:12,840 --> 00:09:16,960 Speaker 7: Kelly Orpberg say on the call that he would anticipate 172 00:09:17,040 --> 00:09:20,760 Speaker 7: sort of cranking up those build rates from forty two 173 00:09:21,040 --> 00:09:24,280 Speaker 7: in increments of five every six months. 174 00:09:24,280 --> 00:09:26,480 Speaker 5: No sooner, obviously. 175 00:09:26,240 --> 00:09:29,439 Speaker 7: Won't break unless they feel like they've got things stabilized. 176 00:09:29,840 --> 00:09:32,520 Speaker 7: So I think we've got a path here to hire 177 00:09:32,600 --> 00:09:35,600 Speaker 7: build rates over, you know, to the end of the decade. 178 00:09:36,160 --> 00:09:39,440 Speaker 7: So you know, I would expect that as they get 179 00:09:39,800 --> 00:09:42,160 Speaker 7: a year down the road here will be probably break 180 00:09:42,200 --> 00:09:45,440 Speaker 7: even in this business. You know, maybe a little bit longer, 181 00:09:45,480 --> 00:09:47,120 Speaker 7: but I think we'll be break even in that business. 182 00:09:47,160 --> 00:09:49,920 Speaker 7: And again that's I think all part of the turnaround 183 00:09:49,960 --> 00:09:52,920 Speaker 7: is getting seven three seven to perform. That's that's going 184 00:09:52,960 --> 00:09:55,079 Speaker 7: to be the financial driver. 185 00:09:55,720 --> 00:09:58,920 Speaker 3: So Kelly Orpberg has now been CEO for just over 186 00:09:59,000 --> 00:10:01,360 Speaker 3: a year. He started in August of twenty twenty four. 187 00:10:01,400 --> 00:10:02,960 Speaker 3: I can't believe it's been that long already. I know, 188 00:10:03,120 --> 00:10:06,280 Speaker 3: I know, and a lot has happened, clearly. And what 189 00:10:06,400 --> 00:10:09,960 Speaker 3: I didn't realize is that Boeing is still facing some 190 00:10:10,080 --> 00:10:14,440 Speaker 3: labor issues. Saint Louis Aria machinists still strike. They've been 191 00:10:14,480 --> 00:10:16,840 Speaker 3: striking for more than three months. What does this say 192 00:10:16,880 --> 00:10:19,840 Speaker 3: about Kelly Orberg's leadership and what kind of grade would 193 00:10:19,880 --> 00:10:22,080 Speaker 3: you give him, George for his leadership so far? 194 00:10:22,920 --> 00:10:24,840 Speaker 7: Yeah, I mean I'd give him a very high grade. 195 00:10:24,920 --> 00:10:28,800 Speaker 7: Right again, I think that, you know, the biggest thing 196 00:10:28,840 --> 00:10:33,359 Speaker 7: he needed to do was like improve morale, improve quality, 197 00:10:34,440 --> 00:10:37,880 Speaker 7: and it appears to you know, to be the case. 198 00:10:38,320 --> 00:10:41,319 Speaker 7: I think, you know, the proof is again build rates 199 00:10:41,760 --> 00:10:46,120 Speaker 7: the FA, returning some you know, giving Boeing the ability 200 00:10:46,160 --> 00:10:47,840 Speaker 7: to go to forty two, and returning some of their 201 00:10:47,880 --> 00:10:51,880 Speaker 7: ability to certify some of the airplanes. So I think 202 00:10:51,880 --> 00:10:54,040 Speaker 7: i'd give it all high in Saint Louis right now, 203 00:10:55,480 --> 00:10:58,040 Speaker 7: Saint Louis is where the defense business is centered. Out 204 00:10:58,080 --> 00:11:01,680 Speaker 7: of right now, the defense business not performing great, but 205 00:11:01,880 --> 00:11:05,600 Speaker 7: getting better, you know. I think there's definitely more to 206 00:11:05,600 --> 00:11:09,240 Speaker 7: come in the defense business as they start building the 207 00:11:09,320 --> 00:11:12,560 Speaker 7: F forty seven, which is the sixth generation fighter that 208 00:11:12,600 --> 00:11:15,760 Speaker 7: they won, but that's still some preliminary work. My guess 209 00:11:15,840 --> 00:11:18,360 Speaker 7: is that the sides are still a little bit a 210 00:11:18,400 --> 00:11:21,120 Speaker 7: part on, you know, where they want to be for 211 00:11:21,160 --> 00:11:24,080 Speaker 7: an agreement, and it's not as critical to get those 212 00:11:24,120 --> 00:11:27,200 Speaker 7: folks back to the production lines as it was to 213 00:11:27,200 --> 00:11:32,120 Speaker 7: get a commercial seven thirty seven machinists back to production lines. 214 00:11:32,160 --> 00:11:34,680 Speaker 7: So he's probably doing the right thing for the business here, 215 00:11:35,200 --> 00:11:37,319 Speaker 7: and you know, making sure he can get an agreement 216 00:11:37,320 --> 00:11:39,839 Speaker 7: he can live with, especially in defense where it's harder 217 00:11:39,840 --> 00:11:43,640 Speaker 7: to bear increased costs. And again i'd give I'd give 218 00:11:43,679 --> 00:11:46,560 Speaker 7: him high grades. I think the company's at a turnaround 219 00:11:46,640 --> 00:11:47,640 Speaker 7: right now and doing well. 220 00:11:47,880 --> 00:11:49,920 Speaker 2: George about the thirty seconds left. Just we don't talk 221 00:11:49,920 --> 00:11:52,000 Speaker 2: about the Triple seven much. How does that kind of 222 00:11:52,000 --> 00:11:55,600 Speaker 2: figure into their portfolio, into the economics of Boeing. 223 00:11:56,360 --> 00:11:58,680 Speaker 7: Yeah, when it finally gets certified, it'll be the biggest 224 00:11:58,720 --> 00:12:03,120 Speaker 7: airplane in production, So it kind of replaces seven four 225 00:12:03,200 --> 00:12:05,920 Speaker 7: seven and A three eighty as the queen of the skies. 226 00:12:06,640 --> 00:12:10,280 Speaker 7: A three fifty dash one thousand's the closest competitor. Can 227 00:12:10,440 --> 00:12:13,440 Speaker 7: it can't be as densified, It can't have as many 228 00:12:13,480 --> 00:12:16,200 Speaker 7: seats inside it, So I think you'll find a seat 229 00:12:16,240 --> 00:12:19,480 Speaker 7: cost advantage in the Triple seven. It's got core customers 230 00:12:19,920 --> 00:12:23,160 Speaker 7: in those you know, in those Middle East carriers, those 231 00:12:23,200 --> 00:12:29,040 Speaker 7: Asian carriers that are the big sort of East West connectors, 232 00:12:29,120 --> 00:12:31,679 Speaker 7: And I think it'll be fine. I think the delay 233 00:12:31,720 --> 00:12:33,760 Speaker 7: won't won't hurt its ability to be sold. And it's 234 00:12:33,760 --> 00:12:35,560 Speaker 7: already got five hundred in the backlog all right. 235 00:12:35,559 --> 00:12:38,439 Speaker 2: Thanks to George Ferguson, Bloomberg Intelligence senior Aerospace, Defense and 236 00:12:38,480 --> 00:12:40,000 Speaker 2: Airlines analyst, coming up. 237 00:12:40,080 --> 00:12:42,600 Speaker 3: AI demand is going so fast that the cloud giants 238 00:12:42,640 --> 00:12:44,880 Speaker 3: are racing to catch up. How did that fare for 239 00:12:44,960 --> 00:12:47,000 Speaker 3: some big tech earnings this week. That's next. 240 00:12:47,120 --> 00:12:49,800 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing end 241 00:12:49,800 --> 00:12:52,559 Speaker 2: depth research and data on two thousand companies in one hundred. 242 00:12:52,280 --> 00:12:53,000 Speaker 8: And thirty industries. 243 00:12:53,080 --> 00:12:56,440 Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal. 244 00:12:56,520 --> 00:12:57,559 Speaker 3: I'm Scarlett Foo and. 245 00:12:57,520 --> 00:12:59,360 Speaker 2: I'm Paul Sweeney, and this is Bloomberg. 246 00:13:03,400 --> 00:13:07,920 Speaker 1: This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 247 00:13:08,240 --> 00:13:09,560 Speaker 1: on Bloomberg Radio. 248 00:13:10,120 --> 00:13:12,560 Speaker 2: Demand for AI keeps growing so fast that the cloud 249 00:13:12,600 --> 00:13:14,920 Speaker 2: giants are racing to catch up. At least that was 250 00:13:14,960 --> 00:13:18,880 Speaker 2: the message this week from tech giants Alphabet, Meta and Microsoft. 251 00:13:18,440 --> 00:13:20,920 Speaker 3: And the company they're looking to catch in Vidio. This week, 252 00:13:20,960 --> 00:13:23,160 Speaker 3: the tech giant became the first company ever to have 253 00:13:23,200 --> 00:13:25,439 Speaker 3: a market cap of over five trillion dollars. 254 00:13:25,840 --> 00:13:28,240 Speaker 2: The AI spent is not slowing down for more. We 255 00:13:28,280 --> 00:13:31,640 Speaker 2: spoke with Ana rog Rana, Bloomberg Intelligence technology analyst. 256 00:13:31,840 --> 00:13:34,640 Speaker 6: See I think the common theme is that capital expenditures 257 00:13:34,640 --> 00:13:37,840 Speaker 6: are going up, which means there to spend a lot 258 00:13:37,880 --> 00:13:43,360 Speaker 6: more money to expand their data center footwork and need 259 00:13:43,600 --> 00:13:46,600 Speaker 6: more chip capacity to take care of the AI demand 260 00:13:46,640 --> 00:13:48,120 Speaker 6: that they are saying. So, I think that's the common 261 00:13:48,160 --> 00:13:50,960 Speaker 6: message for all of them. When you look at Microsoft, 262 00:13:51,040 --> 00:13:54,520 Speaker 6: I think their CAPEX numbers nobody was expecting would go 263 00:13:54,679 --> 00:13:57,199 Speaker 6: up this much. I mean, we were expecting them to rise, 264 00:13:57,280 --> 00:13:59,360 Speaker 6: but they basically came out and said, you know, we 265 00:13:59,440 --> 00:14:02,720 Speaker 6: thought we'll be fine by now. But they're still capacity constrained. 266 00:14:02,960 --> 00:14:05,160 Speaker 6: The demand is coming through. They talked a lot about 267 00:14:05,200 --> 00:14:08,960 Speaker 6: their open AI agreement, the revised one. You know, I 268 00:14:09,040 --> 00:14:11,800 Speaker 6: still think they're probably in one of the better places 269 00:14:12,040 --> 00:14:14,240 Speaker 6: than they have been in the past several years. 270 00:14:14,600 --> 00:14:19,080 Speaker 2: All right, let's just compare and contrast Meta and Google. 271 00:14:19,760 --> 00:14:22,920 Speaker 2: We had talking about big CAPEX increases. Is that just 272 00:14:22,960 --> 00:14:25,440 Speaker 2: the market saying, hey, we trust you Google with this 273 00:14:25,520 --> 00:14:28,560 Speaker 2: increased spending. Maybe not so much over there at Meta. 274 00:14:28,840 --> 00:14:31,040 Speaker 6: You know, if you're looking at between both of them, 275 00:14:31,520 --> 00:14:34,680 Speaker 6: Google is showcasing that they are seeing the benefit of 276 00:14:34,720 --> 00:14:39,160 Speaker 6: AI in actual revenue generation from their cloud business. Cloud 277 00:14:39,160 --> 00:14:42,960 Speaker 6: business accelerated, It accelerated last quarter as well. We're really 278 00:14:43,000 --> 00:14:45,720 Speaker 6: seeing tangible benefits. Then you have Nthropic signing up with 279 00:14:45,760 --> 00:14:49,760 Speaker 6: Google Cloud to use their TPUs. They have the chip business. Also, 280 00:14:50,320 --> 00:14:52,680 Speaker 6: the big question for everybody is, well, Meta, you're spending 281 00:14:52,720 --> 00:14:54,760 Speaker 6: all this money, how are you going to monetize it, 282 00:14:54,800 --> 00:14:56,800 Speaker 6: and they talk about, you know, they're going to monetize 283 00:14:56,840 --> 00:14:59,640 Speaker 6: it internally through better ads and serving ads. Well they're 284 00:14:59,640 --> 00:15:01,880 Speaker 6: still so me at some mean all the time. Anyway, 285 00:15:02,160 --> 00:15:04,200 Speaker 6: the question is where is all this money going and 286 00:15:04,320 --> 00:15:06,800 Speaker 6: how do you get it back? I think that's where 287 00:15:06,800 --> 00:15:09,920 Speaker 6: the dichotomy is between these two vendors. And Google has 288 00:15:09,960 --> 00:15:12,440 Speaker 6: i think, done a phenomenal job of explaining to the 289 00:15:12,480 --> 00:15:15,680 Speaker 6: market what their AI strategy is and why is it 290 00:15:15,720 --> 00:15:16,480 Speaker 6: working so well. 291 00:15:16,840 --> 00:15:19,440 Speaker 3: So it's a matter of meta not telling a story 292 00:15:19,520 --> 00:15:22,560 Speaker 3: to investors, a narrative that resonates with investors or that 293 00:15:22,640 --> 00:15:24,640 Speaker 3: convinces investors the way that alphabet is. 294 00:15:25,720 --> 00:15:28,080 Speaker 6: See, when you think about it, spending five ten billion 295 00:15:28,080 --> 00:15:30,200 Speaker 6: would be okay, But when you talk about spending you 296 00:15:30,200 --> 00:15:34,320 Speaker 6: know sixty seventy eighty billion dollars of AI related you know, 297 00:15:34,560 --> 00:15:38,280 Speaker 6: research going into your products. Well, where is the benefit 298 00:15:38,320 --> 00:15:38,560 Speaker 6: of that? 299 00:15:38,920 --> 00:15:41,120 Speaker 3: How is not a new story that they're telling. They 300 00:15:41,320 --> 00:15:43,280 Speaker 3: told this story last quarter, in the quarter before, and 301 00:15:43,320 --> 00:15:44,360 Speaker 3: investors seem to like it. 302 00:15:44,480 --> 00:15:46,480 Speaker 6: Fair point. But when you look at now, Google is 303 00:15:46,520 --> 00:15:49,680 Speaker 6: showcasing that we actually see the benefits and actual numbers 304 00:15:49,720 --> 00:15:52,680 Speaker 6: that we are reporting. So between the two vendors. It's 305 00:15:52,760 --> 00:15:54,880 Speaker 6: very clear what I can see on the Google side, 306 00:15:55,240 --> 00:15:57,800 Speaker 6: it's not so much not so much clear on the 307 00:15:57,800 --> 00:15:58,440 Speaker 6: Meta side. 308 00:15:58,520 --> 00:16:00,640 Speaker 2: And I think also another part of it is having 309 00:16:00,760 --> 00:16:03,080 Speaker 2: used to follow that the stock is one of the 310 00:16:03,120 --> 00:16:05,240 Speaker 2: reasons Meta was working so well over the last several years. 311 00:16:05,280 --> 00:16:08,240 Speaker 2: It was a cost cutting story. After the metaverse debacle. 312 00:16:08,320 --> 00:16:10,320 Speaker 2: You know, people were concerned about all the spending on 313 00:16:10,360 --> 00:16:13,400 Speaker 2: the Meta rate, right, Yeah, it seemed like zeer. Yeah, 314 00:16:13,400 --> 00:16:15,480 Speaker 2: they got that, they saw the light and they started 315 00:16:15,680 --> 00:16:17,560 Speaker 2: cutting costs in the stock work O Thanks to Anna 316 00:16:17,600 --> 00:16:20,800 Speaker 2: rod Rana, Bloomberg Intelligence Technology Analyst. Next, we look at 317 00:16:20,800 --> 00:16:24,440 Speaker 2: earnings from one of the world's biggest producers of heavy machinery, Caterpillar. 318 00:16:24,600 --> 00:16:27,160 Speaker 3: This week, Cat reported third quarter earnings and revenue that 319 00:16:27,200 --> 00:16:30,200 Speaker 3: beat analyst estimates. The company stated their boost and earnings 320 00:16:30,240 --> 00:16:32,800 Speaker 3: was driven by their power generators and turbines that keep 321 00:16:32,840 --> 00:16:34,240 Speaker 3: AI data centers running. 322 00:16:34,520 --> 00:16:36,680 Speaker 2: For more on this, we were joined by Chris Chiolino, 323 00:16:36,760 --> 00:16:39,320 Speaker 2: Bloomberg Intelligence Senior US machinery analyst. 324 00:16:40,360 --> 00:16:43,480 Speaker 9: It was a great quarter. You know, despite pretty elevated 325 00:16:43,520 --> 00:16:47,960 Speaker 9: expectations coming into the print a bigger tariff headwind, CAT 326 00:16:47,960 --> 00:16:51,520 Speaker 9: really delivered very solid three key results. It was really 327 00:16:51,640 --> 00:16:55,360 Speaker 9: driven by higher volumes across all three of their core businesses, 328 00:16:56,160 --> 00:17:00,280 Speaker 9: with particular strength and energy and transportation. Again, but I think, 329 00:17:00,280 --> 00:17:02,120 Speaker 9: you know, one of the more encouraging signs that we 330 00:17:02,160 --> 00:17:06,280 Speaker 9: took away from the results were that orders accelerated here 331 00:17:06,320 --> 00:17:09,240 Speaker 9: in the quarter, and we also saw a backlog improved 332 00:17:09,280 --> 00:17:12,560 Speaker 9: sequentially to a record forty billion dollars. So we think 333 00:17:12,600 --> 00:17:16,879 Speaker 9: we see you know, above average production and earnings visibility 334 00:17:16,920 --> 00:17:18,520 Speaker 9: as we begin to think about next year. 335 00:17:19,480 --> 00:17:22,680 Speaker 3: Did the company say a lot about the power producing 336 00:17:22,760 --> 00:17:26,680 Speaker 3: equipment including turbines and generators that have investors excited about 337 00:17:26,720 --> 00:17:29,080 Speaker 3: it being kind of a derivative play to the AI story. 338 00:17:30,040 --> 00:17:33,159 Speaker 9: Absolutely, so, you know, we continue to hear more and 339 00:17:33,240 --> 00:17:36,920 Speaker 9: more about AI and data centers and Cat's exposure there. 340 00:17:37,880 --> 00:17:40,840 Speaker 9: Power gens probably you know, roughly thirty percent of the 341 00:17:40,960 --> 00:17:44,399 Speaker 9: energy and transportation business, roughly you know, fifteen percent of 342 00:17:44,440 --> 00:17:48,160 Speaker 9: the overall enterprise, but it continues to be the fastest 343 00:17:48,200 --> 00:17:51,360 Speaker 9: growing part of the portfolio. They're bringing on a lot 344 00:17:51,400 --> 00:17:54,080 Speaker 9: of capacity here over these next three years. I think 345 00:17:54,119 --> 00:17:55,960 Speaker 9: you really begin to see a step change as we 346 00:17:56,000 --> 00:17:59,959 Speaker 9: move into twenty twenty seven, particularly on the large engines. 347 00:18:00,359 --> 00:18:01,720 Speaker 5: So there is. 348 00:18:01,840 --> 00:18:05,159 Speaker 9: More of a focus and investment on the energy and 349 00:18:05,200 --> 00:18:08,160 Speaker 9: transportation business and it has become, you know, the biggest 350 00:18:08,200 --> 00:18:09,320 Speaker 9: part of their portfolio. 351 00:18:09,560 --> 00:18:12,040 Speaker 2: Wow, are there other companies or let me put it 352 00:18:12,040 --> 00:18:14,919 Speaker 2: this way, who does cat compete with in that segment 353 00:18:14,960 --> 00:18:15,560 Speaker 2: of the business. 354 00:18:16,760 --> 00:18:19,439 Speaker 9: Yeah, so there's a number of different competitors, and it 355 00:18:19,480 --> 00:18:23,359 Speaker 9: really breaks down on relative by size on some of 356 00:18:23,400 --> 00:18:26,080 Speaker 9: the gen sets. Cummins is a is a big one, 357 00:18:26,880 --> 00:18:30,360 Speaker 9: Siemens Energy, and then you also have a few other 358 00:18:30,800 --> 00:18:34,480 Speaker 9: European and Asian players. But you know, this is certainly 359 00:18:35,480 --> 00:18:37,840 Speaker 9: a market that's growing, you know, pretty exponentially. 360 00:18:37,880 --> 00:18:38,160 Speaker 6: Here. 361 00:18:38,760 --> 00:18:41,440 Speaker 9: Backlogs extend several years, so we think we have pretty 362 00:18:41,440 --> 00:18:44,159 Speaker 9: good visibility at least through you know, the next three years. 363 00:18:44,920 --> 00:18:47,400 Speaker 3: Does this part of the business mean that Caterpillar will 364 00:18:47,440 --> 00:18:51,840 Speaker 3: need to rely more on domestic market opportunities as opposed 365 00:18:51,840 --> 00:18:53,520 Speaker 3: to global market opportunities. 366 00:18:54,640 --> 00:18:57,919 Speaker 9: So their footprint is the largest, the energy and transportation 367 00:18:57,960 --> 00:19:01,679 Speaker 9: footprint is the largest in North America, But you know, 368 00:19:01,920 --> 00:19:04,439 Speaker 9: I think the opportunity is global. They are a large 369 00:19:04,480 --> 00:19:08,400 Speaker 9: global producer that they serve you know, essentially almost all 370 00:19:08,440 --> 00:19:11,159 Speaker 9: markets around the world. I think, even particularly with an 371 00:19:11,240 --> 00:19:13,919 Speaker 9: energy and transportation it's like something like one hundred different countries. 372 00:19:14,000 --> 00:19:17,639 Speaker 9: So while I think the immediate near term excitement is 373 00:19:17,880 --> 00:19:20,359 Speaker 9: more focused here in North America, I do think longer 374 00:19:20,440 --> 00:19:22,560 Speaker 9: term there's an opportunity international as well. 375 00:19:23,320 --> 00:19:27,720 Speaker 2: What's the company saying about impact, if any, on tariffs 376 00:19:27,760 --> 00:19:29,760 Speaker 2: on their business now going forward? 377 00:19:30,680 --> 00:19:33,479 Speaker 9: Yeah, So tariffs were actually a much bigger headwind than 378 00:19:33,520 --> 00:19:36,640 Speaker 9: we anticipated in the quarter, and even KAT I think 379 00:19:36,640 --> 00:19:38,760 Speaker 9: it kind of shook out somewhere around a six hundred 380 00:19:38,800 --> 00:19:43,479 Speaker 9: million dollar headwind in three Q. But margins, margins were 381 00:19:43,840 --> 00:19:48,119 Speaker 9: better than expected, really pretty remarkably resilient despite these price 382 00:19:48,280 --> 00:19:51,840 Speaker 9: costs headwinds. Four Q will actually see a step up 383 00:19:51,880 --> 00:19:55,359 Speaker 9: in the tariff costs, and then as we think about 384 00:19:55,440 --> 00:19:58,520 Speaker 9: next year, you know, Kat's really been kind of hesitant 385 00:19:58,560 --> 00:20:01,320 Speaker 9: to pull the pricing level on a lot of tariffs 386 00:20:01,320 --> 00:20:03,800 Speaker 9: thus far. We think that's you know, more of an 387 00:20:03,840 --> 00:20:05,840 Speaker 9: opportunity for them here in the near term to gain 388 00:20:05,840 --> 00:20:08,760 Speaker 9: some market share. So as we think about twenty twenty six, 389 00:20:08,840 --> 00:20:11,160 Speaker 9: it'll be interesting to see, you know, do they continue 390 00:20:11,200 --> 00:20:14,879 Speaker 9: to offset through more costs and productivity efficiencies or do 391 00:20:14,920 --> 00:20:18,320 Speaker 9: they lean into pricing a little bit more. But tariffs 392 00:20:18,359 --> 00:20:20,240 Speaker 9: will step up here in the near term and then 393 00:20:20,400 --> 00:20:22,800 Speaker 9: you know, twenty twenty six, it still remains to be seen, 394 00:20:22,840 --> 00:20:26,080 Speaker 9: but i'd expect a demand backdrop to improve. So they 395 00:20:26,080 --> 00:20:28,480 Speaker 9: certainly should have the opportunity to push pricing a little 396 00:20:28,480 --> 00:20:29,840 Speaker 9: bit more aggressively next year. 397 00:20:30,040 --> 00:20:32,440 Speaker 2: Our thanks to Chris Chile, you know, Bloomberg Intelligence senior 398 00:20:32,520 --> 00:20:33,720 Speaker 2: US machinery analyst. 399 00:20:34,080 --> 00:20:36,879 Speaker 3: We move next to news from the logistics company UPS. 400 00:20:37,040 --> 00:20:39,600 Speaker 3: This week, UPS said it expects to cut thirty four 401 00:20:39,680 --> 00:20:42,600 Speaker 3: thousand jobs this year in an effort to cut expenses 402 00:20:42,640 --> 00:20:43,920 Speaker 3: and improve profitability. 403 00:20:44,040 --> 00:20:46,919 Speaker 2: This comes despite the companies reporting third quarter earnings that 404 00:20:47,000 --> 00:20:50,280 Speaker 2: beat analyst expectations. For more on this guest host Lisa 405 00:20:50,320 --> 00:20:53,200 Speaker 2: Matteo and I were joined by Lee Glasgow, Bloomberg Intelligence 406 00:20:53,200 --> 00:20:55,520 Speaker 2: Senior Transport, Logistics and Shipping analysts. 407 00:20:55,560 --> 00:20:57,879 Speaker 10: So it's going on to the EPs is they are making 408 00:20:57,960 --> 00:21:01,160 Speaker 10: progress and they're executing on their plan. And their plan 409 00:21:01,920 --> 00:21:07,080 Speaker 10: really is to create a network that can not only handle, 410 00:21:07,119 --> 00:21:08,159 Speaker 10: but thrive. 411 00:21:08,080 --> 00:21:09,680 Speaker 5: In an ever changing environment. 412 00:21:09,840 --> 00:21:13,000 Speaker 10: And that change is being driven by e commerce, it's 413 00:21:13,080 --> 00:21:17,360 Speaker 10: being driven by the uncertainty around tariffs. And what they've 414 00:21:17,400 --> 00:21:22,560 Speaker 10: been able to do is increase productivity through technology, whether 415 00:21:22,600 --> 00:21:28,400 Speaker 10: it's automation or AI. And that also they were stepping 416 00:21:28,440 --> 00:21:31,440 Speaker 10: away from business from Amazon. You know, they noted another 417 00:21:31,640 --> 00:21:34,880 Speaker 10: morning call that there are three quarters into a six 418 00:21:35,000 --> 00:21:37,680 Speaker 10: quarter glide down of Amazon business. And the reason why 419 00:21:37,680 --> 00:21:40,560 Speaker 10: they want to move away from Amazon business that tends. 420 00:21:40,359 --> 00:21:44,919 Speaker 5: To be lower margin, lower yielding packages. 421 00:21:45,640 --> 00:21:47,400 Speaker 10: But that's not to say that they don't want to 422 00:21:47,400 --> 00:21:50,520 Speaker 10: totally walk away from Amazon, because their return business is 423 00:21:50,800 --> 00:21:54,199 Speaker 10: a good business for them, and we're seeing you know, 424 00:21:54,280 --> 00:21:57,640 Speaker 10: the success in the numbers, and you know, going into 425 00:21:57,680 --> 00:22:01,360 Speaker 10: the quarter, I think investors were cautious or had low 426 00:22:01,440 --> 00:22:07,600 Speaker 10: expectations and management kind of exceeded those with the results. 427 00:22:08,080 --> 00:22:12,359 Speaker 10: And their outlook really shows us that, you know, expectations 428 00:22:12,359 --> 00:22:15,840 Speaker 10: for the fourth quarter in twenty twenty six, at least 429 00:22:15,880 --> 00:22:19,080 Speaker 10: as it relates to you know, sell side analyst consensus 430 00:22:19,720 --> 00:22:22,280 Speaker 10: is probably a bit low and it needs to move higher. 431 00:22:22,680 --> 00:22:24,439 Speaker 4: Lee, can you get more into the cuts that we 432 00:22:24,440 --> 00:22:27,720 Speaker 4: were talking about, thirty four thousand job cuts, where were 433 00:22:27,720 --> 00:22:29,639 Speaker 4: they seen and what kind of let's say, year over 434 00:22:29,760 --> 00:22:32,120 Speaker 4: year cost savings does it expect in twenty twenty five 435 00:22:32,160 --> 00:22:32,639 Speaker 4: from all of this. 436 00:22:33,840 --> 00:22:37,160 Speaker 10: Yeah, so you know what they're trying to do their 437 00:22:37,240 --> 00:22:40,840 Speaker 10: overall cost savings, which includes you know, the head count reductions, 438 00:22:41,040 --> 00:22:44,480 Speaker 10: you know, they're looking to get three point five billion 439 00:22:44,880 --> 00:22:47,680 Speaker 10: dollars in cost savings this year. They've done around two 440 00:22:47,720 --> 00:22:50,879 Speaker 10: point two billion of that so far, and some of 441 00:22:50,880 --> 00:22:54,600 Speaker 10: the reductions are driven by you know, they offered early. 442 00:22:54,440 --> 00:22:56,000 Speaker 5: Retirement for some of their drivers. 443 00:22:56,040 --> 00:22:58,719 Speaker 10: They said they've had pretty good pickup with that, and 444 00:22:58,760 --> 00:23:01,720 Speaker 10: that payoff should be about a year from what it 445 00:23:01,840 --> 00:23:05,119 Speaker 10: costs cost something one hundred and seventy five one hundred 446 00:23:05,119 --> 00:23:07,280 Speaker 10: and eighty million dollars, and they mentioned on the call 447 00:23:07,359 --> 00:23:09,679 Speaker 10: that it will take about a year to get to 448 00:23:09,720 --> 00:23:12,080 Speaker 10: make those costs back up, so you know, it really 449 00:23:12,119 --> 00:23:13,400 Speaker 10: should be paying for itself. 450 00:23:13,520 --> 00:23:15,680 Speaker 5: And they're closing a lot of facilities. 451 00:23:15,720 --> 00:23:20,320 Speaker 10: So they've they've closed you know, something like ninety ninety 452 00:23:20,320 --> 00:23:23,800 Speaker 10: five facilities so far, and that's being driven by they 453 00:23:23,800 --> 00:23:26,239 Speaker 10: don't need the network they had when they were you know, 454 00:23:26,760 --> 00:23:29,879 Speaker 10: really handling a lot of Amazon business and now that 455 00:23:30,000 --> 00:23:32,360 Speaker 10: you know, like I mentioned earlier, they're walking away from 456 00:23:32,359 --> 00:23:35,400 Speaker 10: that business, they're kind of reconfiguring their network. And they're 457 00:23:35,440 --> 00:23:40,120 Speaker 10: also you know, as I mentioned, they're increasing overall automation. 458 00:23:40,520 --> 00:23:42,119 Speaker 10: You know, they know, they're on their call that they've 459 00:23:42,240 --> 00:23:46,719 Speaker 10: added automations around thirty five more facilities and about sixty 460 00:23:46,760 --> 00:23:51,680 Speaker 10: six percent of their packages touch these automated facilities, which 461 00:23:51,720 --> 00:23:55,120 Speaker 10: is around three hundred basis points more than was last year, 462 00:23:55,320 --> 00:23:58,320 Speaker 10: and that that numbers is going to continue as management 463 00:23:58,359 --> 00:24:01,560 Speaker 10: makes more inroads at modernizing their facilities. 464 00:24:02,320 --> 00:24:03,320 Speaker 4: Lee, what is UPS? 465 00:24:03,320 --> 00:24:05,160 Speaker 2: So maybe feed FedEx for that matter. How are they 466 00:24:05,359 --> 00:24:07,399 Speaker 2: kind of talking to you guys about tariffs and how 467 00:24:07,400 --> 00:24:10,360 Speaker 2: it might be impacting their business just as a big, 468 00:24:10,359 --> 00:24:11,480 Speaker 2: big part of supply chain. 469 00:24:11,800 --> 00:24:12,920 Speaker 5: Yeah, you know, it's interesting. 470 00:24:13,000 --> 00:24:15,520 Speaker 10: So for like a UPS, you know, there's good in 471 00:24:15,600 --> 00:24:17,440 Speaker 10: bad when it comes to the tariffs and the more 472 00:24:17,480 --> 00:24:21,520 Speaker 10: protectionist policies in the US. You know, we've ended the 473 00:24:21,840 --> 00:24:26,560 Speaker 10: Dominimus exemptions, which you know stated that if a shipment 474 00:24:26,600 --> 00:24:29,040 Speaker 10: came into the United States and it was worth eight 475 00:24:29,119 --> 00:24:30,879 Speaker 10: hundred dollars or less, it didn't have to pay a 476 00:24:30,960 --> 00:24:35,520 Speaker 10: duty or a tariff. You know, the Biden administration was 477 00:24:35,560 --> 00:24:38,359 Speaker 10: working towards getting rid of that. That Trump brought that 478 00:24:38,440 --> 00:24:41,480 Speaker 10: Trump administration brought that to the finish line. You know, 479 00:24:41,600 --> 00:24:45,520 Speaker 10: first it was it was just packages that were coming 480 00:24:45,560 --> 00:24:47,880 Speaker 10: in from China and Hong Kong, and now that's been 481 00:24:48,200 --> 00:24:50,359 Speaker 10: you know, all packages coming to the United States and 482 00:24:50,640 --> 00:24:53,520 Speaker 10: that's hurting volumes they noted their US or they're China 483 00:24:53,560 --> 00:24:56,920 Speaker 10: to US volumes were down around twenty percent, and that's 484 00:24:57,200 --> 00:25:00,600 Speaker 10: having a negative impact. Now you look at their forward business, 485 00:25:00,640 --> 00:25:04,280 Speaker 10: you know, because of all these packages are now if 486 00:25:04,320 --> 00:25:07,200 Speaker 10: they're are going to be coming in lower value packages 487 00:25:07,240 --> 00:25:10,480 Speaker 10: have to pay duty, they need to lean more heavily. 488 00:25:10,160 --> 00:25:11,400 Speaker 5: On their customs business. 489 00:25:11,400 --> 00:25:15,520 Speaker 10: So you've seen their supply chain business outperform this quarter, 490 00:25:15,560 --> 00:25:17,280 Speaker 10: and I suspect a lot of that had to do 491 00:25:17,800 --> 00:25:20,960 Speaker 10: with the additional fees that they generate from helping shippers 492 00:25:21,480 --> 00:25:23,920 Speaker 10: clear packages through customs. 493 00:25:23,760 --> 00:25:27,240 Speaker 2: Our thanks to Lee Clasgow Bloomberg Intelligence senior Transport, Logistics 494 00:25:27,240 --> 00:25:28,040 Speaker 2: and shipping analysts. 495 00:25:28,200 --> 00:25:31,080 Speaker 3: Coming up, we focus in on the European earning season. 496 00:25:31,200 --> 00:25:34,120 Speaker 2: So far, you're listening to Bloomberg Intelligence on Bloomberg Radio, 497 00:25:34,320 --> 00:25:36,760 Speaker 2: providing in depth research and data on two thousand companies 498 00:25:36,760 --> 00:25:38,160 Speaker 2: and one hundred and thirty industries. 499 00:25:38,359 --> 00:25:41,240 Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal. 500 00:25:41,320 --> 00:25:43,159 Speaker 3: I'm Scarlet Fool and I'm Paul Sweeney. 501 00:25:43,400 --> 00:25:44,960 Speaker 2: This is Bloomberg. 502 00:25:50,720 --> 00:25:54,399 Speaker 11: Urt in the game. We tough it out, feel exhausted, 503 00:25:54,840 --> 00:25:59,120 Speaker 11: we push on, feeling down, We pull ourselves up by 504 00:25:59,160 --> 00:26:03,040 Speaker 11: the bootstraps. But there are times when bootstraps aren't enough, 505 00:26:03,480 --> 00:26:05,800 Speaker 11: when stress gets to us and we need to talk 506 00:26:05,800 --> 00:26:09,080 Speaker 11: to someone about what we're really going through. So we're 507 00:26:09,080 --> 00:26:12,040 Speaker 11: going to reach out because sometimes mental health is not 508 00:26:12,119 --> 00:26:14,960 Speaker 11: a one person job. Is it Love your Mind Today 509 00:26:14,960 --> 00:26:17,600 Speaker 11: dot org? That's Love your Mind Today dot org. Brought 510 00:26:17,600 --> 00:26:19,679 Speaker 11: to you by the Huntsman Mental Health Institute and the 511 00:26:19,720 --> 00:26:20,360 Speaker 11: Head Counselor. 512 00:26:21,960 --> 00:26:26,480 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 513 00:26:26,800 --> 00:26:28,119 Speaker 1: on Bloomberg Radio. 514 00:26:28,960 --> 00:26:31,119 Speaker 2: We've been covering plenty of earnings from US companies this 515 00:26:31,160 --> 00:26:34,920 Speaker 2: past month, but European earnings are also resoundingly beating expectations, 516 00:26:35,119 --> 00:26:36,399 Speaker 2: namely in the European tech. 517 00:26:36,280 --> 00:26:39,959 Speaker 3: Space, especially as growing investment in artificial intelligence lifts demand 518 00:26:40,240 --> 00:26:43,600 Speaker 3: and counters trade headwinds on that in the overall European market. 519 00:26:43,640 --> 00:26:46,600 Speaker 3: We were joined by Tim craighead Bloomberg Intelligence Global Chief 520 00:26:46,600 --> 00:26:47,400 Speaker 3: Content Officer. 521 00:26:47,800 --> 00:26:52,440 Speaker 8: So far, so good. I wouldn't say it's as dramatic 522 00:26:52,520 --> 00:26:55,040 Speaker 8: as what you're finding over here. We don't have the 523 00:26:55,080 --> 00:26:58,760 Speaker 8: big tech you know to the same degree by any measure. 524 00:26:58,960 --> 00:27:02,600 Speaker 8: But if you look so far earnings twenty I'm sorry, 525 00:27:02,680 --> 00:27:09,200 Speaker 8: fifty three percent beat versus high twenty percent miss Europe 526 00:27:09,240 --> 00:27:13,640 Speaker 8: doesn't play the game like the US, where every company 527 00:27:13,720 --> 00:27:17,879 Speaker 8: is trying to manage estimates and you know, down to 528 00:27:17,960 --> 00:27:22,080 Speaker 8: the tenth degree. This is a good reporting period for 529 00:27:22,119 --> 00:27:24,120 Speaker 8: Europe so far, and there's Yeah. 530 00:27:24,400 --> 00:27:26,440 Speaker 3: What are some of the big themes that are driving 531 00:27:26,600 --> 00:27:28,280 Speaker 3: earnings growth when there is growth? 532 00:27:28,440 --> 00:27:31,399 Speaker 8: Yeah, it's an interesting thing. I'm going to put this 533 00:27:31,480 --> 00:27:34,959 Speaker 8: into a little bit of different perspective to answer your question. 534 00:27:35,440 --> 00:27:38,119 Speaker 8: If you look over the course of the past three years, 535 00:27:38,160 --> 00:27:43,439 Speaker 8: where we've seen US earnings ratchet up, European earnings have 536 00:27:43,600 --> 00:27:49,639 Speaker 8: been minus one percent. Wow, I mean, it's a shocking 537 00:27:50,119 --> 00:27:54,359 Speaker 8: dis Yeah. A big part of that is technology over here, 538 00:27:54,920 --> 00:27:57,840 Speaker 8: but a big part of that over there is that 539 00:27:57,880 --> 00:28:02,280 Speaker 8: there's been some really big drags au Those and energy 540 00:28:02,960 --> 00:28:07,320 Speaker 8: and basic materials, sink, metals, money, and chemicals were about 541 00:28:07,359 --> 00:28:11,359 Speaker 8: twenty seven percent, not to be overly precise of the 542 00:28:11,440 --> 00:28:17,199 Speaker 8: earnings pie in twenty twenty two. That group has fallen 543 00:28:17,840 --> 00:28:22,440 Speaker 8: two thirds in earnings since then to where it's now 544 00:28:22,520 --> 00:28:25,760 Speaker 8: down to ten percent of earnings, and it's just been 545 00:28:25,800 --> 00:28:29,639 Speaker 8: a massive drag. The good thing looking forward is that 546 00:28:30,080 --> 00:28:34,240 Speaker 8: those three are a smaller and all of them seem 547 00:28:34,480 --> 00:28:37,360 Speaker 8: to be settling and there's reasons to think they can 548 00:28:37,400 --> 00:28:41,360 Speaker 8: move forward, which gives a window for other businesses like 549 00:28:41,440 --> 00:28:46,760 Speaker 8: industrials or technology financials, which have been huge with earnings growth, 550 00:28:47,280 --> 00:28:49,040 Speaker 8: to start to shine through in next year. 551 00:28:49,840 --> 00:28:54,560 Speaker 2: Broadbly speaking, rising trade tensions can't be good for Europe. 552 00:28:55,760 --> 00:28:57,160 Speaker 2: What are the companies saying. 553 00:28:57,360 --> 00:28:59,200 Speaker 5: Yeah, it's. 554 00:29:00,720 --> 00:29:05,000 Speaker 8: It's interesting in that it's another element to this earning story. 555 00:29:05,400 --> 00:29:07,960 Speaker 8: You know, there's not many of the sectors that have 556 00:29:08,040 --> 00:29:11,880 Speaker 8: actually had positive earnings growth this year. If you look 557 00:29:11,880 --> 00:29:15,720 Speaker 8: at earnings revision trends across sectors, and you have to 558 00:29:15,760 --> 00:29:20,040 Speaker 8: think part of it is the uncertainty. It could be 559 00:29:20,080 --> 00:29:23,880 Speaker 8: a direct impact where you're having to pay levees, it 560 00:29:23,920 --> 00:29:28,040 Speaker 8: could be uncertainty from buyers. It's definitely a majority of 561 00:29:28,120 --> 00:29:30,760 Speaker 8: companies over the first half of the year and even 562 00:29:30,800 --> 00:29:35,240 Speaker 8: this reporting period have talked about those two elements supplier 563 00:29:35,400 --> 00:29:40,240 Speaker 8: uncertainty or direct impact that are an issue for earnings. 564 00:29:40,240 --> 00:29:42,920 Speaker 8: There's been a third or more that have said, yes, 565 00:29:43,000 --> 00:29:44,800 Speaker 8: we can mitigate this, that and the other, but it 566 00:29:44,880 --> 00:29:47,360 Speaker 8: is an issue. And to the degree that things are 567 00:29:47,400 --> 00:29:50,120 Speaker 8: starting to settle out a little bit, it's another one 568 00:29:50,160 --> 00:29:53,240 Speaker 8: of those things where we could see some positivity as 569 00:29:53,280 --> 00:29:54,240 Speaker 8: we look into next year. 570 00:29:54,640 --> 00:29:58,520 Speaker 3: What's the relationship between European companies earnings and AI. You 571 00:29:58,560 --> 00:30:00,960 Speaker 3: don't have the big chip makers we do in video 572 00:30:01,080 --> 00:30:04,880 Speaker 3: that obviously benefit from the demand for AI and data centers, 573 00:30:05,400 --> 00:30:08,480 Speaker 3: but you do have ASML, which is a chip manufacturing 574 00:30:08,480 --> 00:30:11,640 Speaker 3: equipment maker, so it's tied there. But most of these companies, 575 00:30:11,640 --> 00:30:14,120 Speaker 3: I would imagine are using AI to create efficiencies and 576 00:30:14,160 --> 00:30:15,160 Speaker 3: create productivity. 577 00:30:15,920 --> 00:30:19,600 Speaker 8: It's you hit the nail on the head from the 578 00:30:19,600 --> 00:30:25,520 Speaker 8: standpoint of ASML is the proximate company there, and clearly 579 00:30:25,560 --> 00:30:28,240 Speaker 8: you wouldn't have AI to the same degree within Vidia 580 00:30:28,280 --> 00:30:30,160 Speaker 8: at AL if you didn't have AI. But it's only 581 00:30:30,200 --> 00:30:34,440 Speaker 8: one component. SAP is a play if you wanted to 582 00:30:34,440 --> 00:30:38,120 Speaker 8: be a second derivative, which again is a big component 583 00:30:38,200 --> 00:30:43,600 Speaker 8: of European tech, But it is much more of what 584 00:30:44,360 --> 00:30:48,440 Speaker 8: are companies doing to drive their business and you'll be 585 00:30:48,480 --> 00:30:50,840 Speaker 8: hearing more and more on this. We're doing some pretty 586 00:30:50,840 --> 00:30:54,680 Speaker 8: in depth work with our year head outlooks, through corporate 587 00:30:54,680 --> 00:30:58,240 Speaker 8: surveys and otherwise on what are the impacts of the 588 00:30:58,280 --> 00:31:04,240 Speaker 8: AI and we are seeing we are seeing companies focus 589 00:31:04,320 --> 00:31:10,720 Speaker 8: on customer service, better data efficiencies. It's not that much 590 00:31:10,920 --> 00:31:13,360 Speaker 8: of a headcount issue, even though you certainly see some 591 00:31:13,480 --> 00:31:16,800 Speaker 8: headlines on that here as well as over there, so 592 00:31:17,040 --> 00:31:17,720 Speaker 8: it's interesting. 593 00:31:18,240 --> 00:31:19,480 Speaker 3: And then I got to ask you about the one 594 00:31:19,480 --> 00:31:21,719 Speaker 3: theme that has been driving European stocks, which is European 595 00:31:21,720 --> 00:31:24,520 Speaker 3: defense companies. This is like where we're going to see 596 00:31:25,000 --> 00:31:27,400 Speaker 3: a lot of the numbers, maybe because certainly there's a 597 00:31:27,440 --> 00:31:28,920 Speaker 3: lot of enthusiasm for this group. 598 00:31:29,040 --> 00:31:29,280 Speaker 5: YEP. 599 00:31:29,520 --> 00:31:33,600 Speaker 8: Valuations have ratcheted up, sales and earnings have ratcheted up. 600 00:31:34,760 --> 00:31:39,400 Speaker 8: The European defense imperative is a critical theme. Everybody's talking 601 00:31:39,400 --> 00:31:45,520 Speaker 8: about it, from regulators to corporates to investors. Those stocks 602 00:31:45,560 --> 00:31:50,280 Speaker 8: have gone haywire. The evaluations are far higher than the 603 00:31:50,400 --> 00:31:54,760 Speaker 8: US comparables. Even if we go to three and a 604 00:31:54,800 --> 00:31:58,160 Speaker 8: half percent of GDP, which is now targeted across the 605 00:31:58,280 --> 00:32:02,960 Speaker 8: NATO countries for spending, it's a question of how much 606 00:32:02,960 --> 00:32:06,720 Speaker 8: of that can actually be spent in Europe. It's a 607 00:32:06,880 --> 00:32:11,120 Speaker 8: narrow window in terms of who are the European defense contractors. 608 00:32:11,200 --> 00:32:14,480 Speaker 8: Ryan Mattell is a big deal. There's a huge push 609 00:32:14,920 --> 00:32:18,840 Speaker 8: from an industrial capacity perspective to make that a broader base. 610 00:32:19,000 --> 00:32:22,280 Speaker 2: Right Thanks to Tim craigk Ed Bloomberg Intelligence Global Content Officer. 611 00:32:22,760 --> 00:32:25,600 Speaker 2: This week we were joined by AI expert Peter Werner. 612 00:32:25,800 --> 00:32:29,000 Speaker 2: He is co chair of Cooley's Global Emerging Companies and 613 00:32:29,080 --> 00:32:32,600 Speaker 2: Vice chairman of Cooley's Business Department. They represent and guide 614 00:32:32,600 --> 00:32:34,440 Speaker 2: many of the industries that are most prominent in the 615 00:32:34,440 --> 00:32:38,400 Speaker 2: startup ecosystems, such as AI, space tech, and digital health. 616 00:32:38,560 --> 00:32:40,760 Speaker 3: Peter joined a program to discuss the future of the 617 00:32:40,800 --> 00:32:43,360 Speaker 3: workforce and how AI is affecting various industries. 618 00:32:43,760 --> 00:32:46,440 Speaker 12: It's such an interesting conundrum. I think about it in 619 00:32:46,440 --> 00:32:49,280 Speaker 12: two ways. One for us, for our large law firm 620 00:32:49,680 --> 00:32:53,400 Speaker 12: for professional services organizations generally, and then for our clients 621 00:32:53,560 --> 00:32:58,320 Speaker 12: largely technology focused clients, small ones disrupting industries and large ones. 622 00:32:58,680 --> 00:33:00,000 Speaker 13: There's a real combination. 623 00:33:00,720 --> 00:33:03,120 Speaker 12: And you alluded to it with the investment bankers and 624 00:33:03,480 --> 00:33:08,760 Speaker 12: open a Open a Eyes statement recently about trying to 625 00:33:08,920 --> 00:33:13,959 Speaker 12: train LLM to take to simulate the jobs that currently 626 00:33:14,000 --> 00:33:18,000 Speaker 12: invest in bankers, entry level investment bankers do for hundreds 627 00:33:18,000 --> 00:33:22,360 Speaker 12: and hundreds of hours a month per per banker. Lots 628 00:33:22,400 --> 00:33:27,480 Speaker 12: of short term, medium term optimism, right, reduction of drudgery. 629 00:33:27,840 --> 00:33:30,560 Speaker 12: People people getting to go home earlier and get more 630 00:33:30,560 --> 00:33:33,960 Speaker 12: sleep because they don't have to format one hundred page 631 00:33:34,280 --> 00:33:40,840 Speaker 12: presentations or create tables Comparing the last version of a 632 00:33:40,920 --> 00:33:43,880 Speaker 12: one hundred page merger agreement with the next version and 633 00:33:43,960 --> 00:33:46,840 Speaker 12: things like that. That all seem amazing, but then you 634 00:33:46,880 --> 00:33:50,200 Speaker 12: start to think longer term, what does that mean? 635 00:33:50,320 --> 00:33:51,040 Speaker 13: What does that mean? 636 00:33:51,120 --> 00:33:57,000 Speaker 12: For philis A referenced the junior bankers getting getting training 637 00:33:57,120 --> 00:33:58,560 Speaker 12: by virtue of those reps. 638 00:33:58,680 --> 00:33:59,160 Speaker 13: How are we. 639 00:33:59,160 --> 00:34:02,120 Speaker 12: Replacing those reps so that ten years from now we 640 00:34:02,160 --> 00:34:03,280 Speaker 12: know who the senior. 641 00:34:03,000 --> 00:34:04,880 Speaker 13: Bankers are going to be? How do we get from 642 00:34:04,880 --> 00:34:05,440 Speaker 13: here to there? 643 00:34:05,840 --> 00:34:11,120 Speaker 12: Really interesting and really complicated as it relates to big tech. 644 00:34:11,320 --> 00:34:13,319 Speaker 12: We've got earnings coming up this week for a lot 645 00:34:13,320 --> 00:34:15,400 Speaker 12: of them, and you've got a ton of companies that 646 00:34:15,520 --> 00:34:19,160 Speaker 12: work we work with that sell into big enterprises that 647 00:34:19,200 --> 00:34:21,000 Speaker 12: are ready to get acquired. 648 00:34:20,480 --> 00:34:24,560 Speaker 13: By big tech. Yeah, like they are selling into enterprises. 649 00:34:24,000 --> 00:34:26,719 Speaker 12: That don't really know what the futures of their platforms 650 00:34:26,760 --> 00:34:28,600 Speaker 12: are going to be in terms of how they're going 651 00:34:28,640 --> 00:34:29,280 Speaker 12: to use labors. 652 00:34:29,280 --> 00:34:30,719 Speaker 13: So lots of uncertainty there. 653 00:34:30,600 --> 00:34:33,120 Speaker 3: Lots of uncertainty, and you raise some really good points here. 654 00:34:33,400 --> 00:34:37,560 Speaker 3: Do you see companies management starting to address how to 655 00:34:37,600 --> 00:34:40,279 Speaker 3: answer some of those questions, like, you know, where are 656 00:34:40,320 --> 00:34:42,000 Speaker 3: we going to get that senior talent from if they're 657 00:34:42,000 --> 00:34:44,799 Speaker 3: not going to be in the trenches in the early 658 00:34:44,840 --> 00:34:46,560 Speaker 3: parts of their career because the early part of your 659 00:34:46,560 --> 00:34:48,040 Speaker 3: career just doesn't exist anymore. 660 00:34:48,880 --> 00:34:51,719 Speaker 13: Yeah, I can speak most. 661 00:34:53,480 --> 00:34:56,359 Speaker 12: Passionately about that from the standpoint of my law firm, 662 00:34:56,520 --> 00:34:59,719 Speaker 12: which is really a proxy for professional services organizations all over. 663 00:35:00,200 --> 00:35:02,440 Speaker 12: We are in the middle of trying to figure out, Okay, 664 00:35:02,960 --> 00:35:04,839 Speaker 12: we have first year so we have one hundred first 665 00:35:04,920 --> 00:35:07,960 Speaker 12: year associates coming to join us on Thursday across the firm, 666 00:35:08,520 --> 00:35:12,160 Speaker 12: and maybe they'll be fine, But what about the ones 667 00:35:12,160 --> 00:35:15,040 Speaker 12: that we're courting right now, the first year lawyers who 668 00:35:15,040 --> 00:35:17,839 Speaker 12: are coming here in three years, if they're not going 669 00:35:17,920 --> 00:35:21,080 Speaker 12: to get to do one hundred venture capital financings a 670 00:35:21,120 --> 00:35:24,400 Speaker 12: year form one hundred companies a year because robots are 671 00:35:24,440 --> 00:35:27,360 Speaker 12: doing it, Like what we need is do we just 672 00:35:27,440 --> 00:35:31,440 Speaker 12: need to have a virtual reality simulation of that and 673 00:35:31,480 --> 00:35:33,319 Speaker 12: we don't build them out to clients, but we put 674 00:35:33,320 --> 00:35:36,640 Speaker 12: them through their paces virtually so that they gain experientially. 675 00:35:36,680 --> 00:35:40,400 Speaker 12: Still or is there a whole new way of training 676 00:35:40,440 --> 00:35:41,040 Speaker 12: those people? 677 00:35:41,120 --> 00:35:42,200 Speaker 13: Of course there. 678 00:35:42,040 --> 00:35:46,400 Speaker 12: Are also because there were we as a as an 679 00:35:46,440 --> 00:35:49,320 Speaker 12: ecosystem here in California, Like people understand that, and so 680 00:35:49,360 --> 00:35:51,680 Speaker 12: of course there are now startups that are saying, Okay, 681 00:35:51,719 --> 00:35:55,480 Speaker 12: we are going to be your simulation platform to simulate 682 00:35:55,520 --> 00:35:59,040 Speaker 12: the reps that professional services organizations and other knowledge workers 683 00:35:59,200 --> 00:36:02,320 Speaker 12: wouldn't otherwise get. So hire us to train your junior 684 00:36:02,360 --> 00:36:04,520 Speaker 12: people so that in ten years you can make partners 685 00:36:04,560 --> 00:36:06,000 Speaker 12: or you can make managing directors. 686 00:36:07,360 --> 00:36:10,200 Speaker 2: Are your clients to what extent are they receptive to 687 00:36:10,880 --> 00:36:13,640 Speaker 2: integrating AI to their business? To maybe a little bit 688 00:36:13,880 --> 00:36:15,560 Speaker 2: reticent here, they're just not quite sure. 689 00:36:16,520 --> 00:36:19,759 Speaker 12: Well, you've got, I mean, tale of two kinds of companies. 690 00:36:20,080 --> 00:36:25,719 Speaker 12: You've got these amazing AI native companies disrupting older industries 691 00:36:26,080 --> 00:36:28,840 Speaker 12: where they are all about it and they're talking in 692 00:36:29,560 --> 00:36:34,240 Speaker 12: their board meetings about the ratio of headcount to revenue 693 00:36:34,600 --> 00:36:39,879 Speaker 12: and trying to be really focused on efficiency and optimizing technologies, 694 00:36:39,880 --> 00:36:43,600 Speaker 12: building everything in a labor light way. And then you've 695 00:36:43,600 --> 00:36:47,120 Speaker 12: got incumbents who are trying to like lift up this big, 696 00:36:47,160 --> 00:36:51,640 Speaker 12: heavy organization and insert like AI technology layer underneath it, 697 00:36:52,120 --> 00:36:55,960 Speaker 12: change the way they've all been doing things forever and start, 698 00:36:56,000 --> 00:36:58,800 Speaker 12: you know, laying off people, but laying off the right people, 699 00:36:58,920 --> 00:37:02,520 Speaker 12: retraining other people. I mean that's a complicated task across 700 00:37:02,520 --> 00:37:03,239 Speaker 12: all industries. 701 00:37:04,080 --> 00:37:08,560 Speaker 3: So, Peter, are what jobs are AI proof meeting. AI 702 00:37:08,640 --> 00:37:10,640 Speaker 3: can help you, but it's not going to take your job. 703 00:37:10,719 --> 00:37:13,680 Speaker 3: Are there any industries, Are there any specific roles? 704 00:37:14,400 --> 00:37:17,799 Speaker 13: I mean, I'd love to know the answer to that. 705 00:37:18,760 --> 00:37:24,320 Speaker 12: My instinct is that the most senior, most experienced, people 706 00:37:24,719 --> 00:37:28,360 Speaker 12: with the highest EQ and the ability to read rooms 707 00:37:28,400 --> 00:37:31,960 Speaker 12: think laterally, be strategic and creative, like in the white 708 00:37:32,000 --> 00:37:33,040 Speaker 12: color world, those. 709 00:37:32,920 --> 00:37:33,960 Speaker 13: Are the last ones to go. 710 00:37:34,120 --> 00:37:34,880 Speaker 3: But that's not everyone. 711 00:37:35,000 --> 00:37:36,600 Speaker 13: Maybe they never go. Who knows right. 712 00:37:36,680 --> 00:37:40,239 Speaker 12: But then and then beyond that, I would say there 713 00:37:40,280 --> 00:37:43,440 Speaker 12: is a correlation between like more manual work, et cetera, 714 00:37:43,640 --> 00:37:47,480 Speaker 12: and like it's going to take longer to replace those jobs. 715 00:37:47,480 --> 00:37:50,600 Speaker 12: But you still think about the on shoring of like 716 00:37:50,760 --> 00:37:55,480 Speaker 12: American manufacturing now where we have we have dark factories 717 00:37:55,880 --> 00:37:59,120 Speaker 12: that we're building in the US that have no humans 718 00:37:59,160 --> 00:38:02,640 Speaker 12: working in them. So this is not about all blue 719 00:38:02,640 --> 00:38:07,080 Speaker 12: collar labor or like physical labor is insulated permanently. 720 00:38:07,480 --> 00:38:08,120 Speaker 13: I'm not sure. 721 00:38:08,480 --> 00:38:11,120 Speaker 3: I don't know our Thanks to Peter Werner CHERF Cooley's 722 00:38:11,120 --> 00:38:12,320 Speaker 3: Business Department. 723 00:38:12,120 --> 00:38:14,919 Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 724 00:38:15,000 --> 00:38:17,360 Speaker 2: providing in depth research and data on two thousand companies 725 00:38:17,360 --> 00:38:18,960 Speaker 2: and one hundred and thirty industries and. 726 00:38:18,960 --> 00:38:22,560 Speaker 3: Remember you can access Bloomberg Intelligence via bio on the terminal. 727 00:38:22,719 --> 00:38:23,920 Speaker 3: I'm Scarlet Foo and. 728 00:38:23,880 --> 00:38:26,480 Speaker 2: I'm Paul Sweeney. Stay with us. Today's stop stories and 729 00:38:26,520 --> 00:38:28,760 Speaker 2: global business headlines are coming up right now.