WEBVTT - BI Weekend: Deere, Walmart Earnings, Berkshire Hathaway 13F Filings 0:00:02.720 --> 0:00:11.520 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.640 --> 0:00:13.760 with Scarletfoo and Paul Sweeney. 0:00:13.880 --> 0:00:16.680 Concerned about rising crisis spooking investors? 0:00:16.720 --> 0:00:19.000 What does renewables investment look like in the US? 0:00:19.239 --> 0:00:23.000 More power talk coming out of this administration. 0:00:22.560 --> 0:00:26.279 Breaking market headlines and corporate news from across the globe. 0:00:26.280 --> 0:00:28.280 The President wants a lower interest rates, He wants a 0:00:28.360 --> 0:00:29.160 rate cut cycle. 0:00:29.240 --> 0:00:29.680 How do you. 0:00:29.680 --> 0:00:31.640 Broaden out the AI play? 0:00:31.880 --> 0:00:33.599 Are people just looking for someone to worry about when 0:00:33.640 --> 0:00:34.240 it comes to China? 0:00:34.440 --> 0:00:38.880 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio 0:00:39.080 --> 0:00:41.240 Originals and the Bloomberg Business App. 0:00:42.200 --> 0:00:44.519 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.560 --> 0:00:47.000 business stories impacting Wall Street and the global markets. 0:00:47.080 --> 0:00:49.280 Each and every week, we provide in depth research and 0:00:49.360 --> 0:00:51.320 data on some of the two thousand companies and one 0:00:51.400 --> 0:00:54.000 hundred and thirty industries are analysts cover worldwide. 0:00:54.040 --> 0:00:56.040 Today, we'll look at why AI is emerging as a 0:00:56.040 --> 0:00:58.760 catalyst for office space demand despite fears of job cuts. 0:00:58.920 --> 0:01:01.560 Plus we'll discuss what you sent. Thirteen f filings revealed 0:01:01.560 --> 0:01:05.319 about Warren Buffett's last quarter as CEO of Berkshire Hathaway. 0:01:05.080 --> 0:01:07.440 But first we begin with news from the farm machinery 0:01:07.520 --> 0:01:08.160 leader Deer. 0:01:08.440 --> 0:01:11.360 This week, Deer boosted its annual profit outlook as the company, 0:01:11.400 --> 0:01:14.440 which is the world's biggest farm machinery maker, anticipates the 0:01:14.480 --> 0:01:16.399 agriculture economy will soon get better. 0:01:16.520 --> 0:01:16.800 For more. 0:01:16.880 --> 0:01:19.920 We were joined by Chris Ciolino, Bloomberg Intelligence senior US 0:01:20.040 --> 0:01:21.000 machinery analyst. 0:01:21.200 --> 0:01:23.319 We began by asking Chris for his take on the 0:01:23.400 --> 0:01:24.199 latest at Deer. 0:01:24.600 --> 0:01:27.160 It was a really solid beat and race quarter, and 0:01:27.200 --> 0:01:29.000 I think this kind of gives us the all clear 0:01:29.040 --> 0:01:31.559 on the cycle and that you know, twenty six will 0:01:31.600 --> 0:01:35.000 be the trough earnings year. The one Q beat was 0:01:35.560 --> 0:01:40.319 broad based, all segments, better top line, better margins than expected, 0:01:40.440 --> 0:01:44.440 really on the back of higher shipment volumes, with particular 0:01:44.440 --> 0:01:49.320 strength in the small agg business and construction. Those are 0:01:49.400 --> 0:01:52.000 markets that you know, have started to already recover now 0:01:52.040 --> 0:01:55.400 this year. The large agg business, which is obviously their 0:01:55.640 --> 0:01:58.800 bigger growth engine, continues to be soft, but I think 0:01:58.840 --> 0:02:01.720 we're seeing that business to stabilize and really for the 0:02:01.760 --> 0:02:04.000 first time, you know, in years, we're starting to see 0:02:04.000 --> 0:02:06.760 some green shoots emerge there. Order books, you know, strengthened 0:02:06.760 --> 0:02:08.240 a little bit during the quarter as well. 0:02:08.639 --> 0:02:12.360 How does this compare in contrast with what CNCH Industrial 0:02:12.440 --> 0:02:15.359 reported earlier this week, which took a more it feels 0:02:15.400 --> 0:02:16.440 like a cautious stance. 0:02:17.560 --> 0:02:19.919 Yeah, you know, I think so. Both companies are calling 0:02:20.000 --> 0:02:22.440 twenty six as the bottom. I think that's pretty well 0:02:22.480 --> 0:02:25.480 understood at this point. I think the incremental piece coming 0:02:25.480 --> 0:02:27.960 out of Deer is that you're starting to see some 0:02:28.200 --> 0:02:31.680 early signs of improvement in the North American lar jag business. 0:02:32.120 --> 0:02:34.480 That's a market they're projecting in terms of unit volumes 0:02:34.480 --> 0:02:37.080 so to be down fifteen to twenty percent this year. 0:02:37.360 --> 0:02:39.160 That's going to put volumes at the lowest level in 0:02:39.200 --> 0:02:41.639 more than four decades. But what you're starting to hear 0:02:41.639 --> 0:02:44.040 from them this quarter is that the order books strengthened, 0:02:44.080 --> 0:02:46.919 particularly just in the last month of the quarter. You're 0:02:46.919 --> 0:02:48.919 starting to see a little bit more trade flows going 0:02:48.960 --> 0:02:51.480 to China, the fleets continue to age, you have the 0:02:51.560 --> 0:02:54.760 government aid support, so this is not a big step change, 0:02:54.800 --> 0:02:57.160 but it's really the first signs of incremental improvement. 0:02:58.040 --> 0:03:00.680 You got to have a great sense of time. Chris 0:03:01.360 --> 0:03:03.680 as I said, Deer's up forty two percent year to date, 0:03:03.760 --> 0:03:06.880 so the market's anticipating this business bottoming and then turning up. 0:03:07.200 --> 0:03:09.679 How long is this cycle for some of these companies 0:03:09.720 --> 0:03:11.280 that you follow here, they're cyclical. 0:03:11.680 --> 0:03:14.280 Yeah, so a typical downturn in this business will last 0:03:14.320 --> 0:03:16.440 anywhere from two to four years. This will be the 0:03:16.480 --> 0:03:20.480 third year of the downturn. So in terms of the downturn, 0:03:20.520 --> 0:03:24.720 it looks very similar to what we've seen historically. Typically 0:03:24.880 --> 0:03:29.400 the upturns last a little bit longer. But you know, 0:03:29.480 --> 0:03:33.520 this is an incredibly volatile market and it's ultimately dictated 0:03:33.560 --> 0:03:37.480 by crop prices and farmer profitability. So the crop outlooks 0:03:38.000 --> 0:03:40.600 do have a significant impact here in terms of what 0:03:40.720 --> 0:03:43.000 farmers are willing and able to spend. 0:03:44.560 --> 0:03:47.920 And it looks like Deer relies on the US for 0:03:48.360 --> 0:03:51.480 a huge part of its revenue, if not half. What 0:03:51.560 --> 0:03:55.320 is it doing in terms of growing it's business overseas? 0:03:55.920 --> 0:03:58.680 Is it just kind of a trajectory of growth there 0:03:58.800 --> 0:04:01.160 that is so learn to what it sees in the US. 0:04:01.280 --> 0:04:03.240 Or is it competing against some established players? 0:04:04.360 --> 0:04:07.560 Yeah, so they're regional markets, But in terms of what 0:04:07.680 --> 0:04:11.840 markets matter for Deer's it's North America and then South 0:04:11.840 --> 0:04:15.840 America is becoming more important reason being those are you know, 0:04:15.920 --> 0:04:20.720 typically the bigger producers of road crops, corn, soybeans. They're 0:04:20.800 --> 0:04:25.000 larger farms, they utilize more the larger equipment that you know, 0:04:25.120 --> 0:04:28.160 is more conducive to some of the precision technologies which 0:04:28.440 --> 0:04:31.359 come in at a higher margin. Europe tends to be 0:04:31.400 --> 0:04:33.440 a little bit more stable. They get a lot of 0:04:33.480 --> 0:04:36.960 government support, So I think of that market as less cyclical. 0:04:37.480 --> 0:04:41.039 You know, lower peaks, higher troughs. Those are really kind 0:04:41.040 --> 0:04:43.240 of the three big growth engines if you think about 0:04:43.320 --> 0:04:44.920 Deer's geographic exposure. 0:04:45.800 --> 0:04:48.880 So what is Deer saying about the US farmer these days? 0:04:50.600 --> 0:04:54.560 Listen, things are still challenging. Let's not understate that, you know, 0:04:54.600 --> 0:04:57.400 crop prices really haven't moved that much and still under 0:04:57.440 --> 0:05:00.479 tremendous pressure. As we look at another year of you know, 0:05:00.680 --> 0:05:06.000 near record production, they are seeing some signs of stability, 0:05:06.080 --> 0:05:08.080 I would say, And like I mentioned earlier, I think 0:05:08.080 --> 0:05:10.800 we're starting to see some early signs of improved order 0:05:10.839 --> 0:05:14.200 activity again, albeit off a very low base, and a 0:05:14.240 --> 0:05:16.200 lot of that's predicated on you know, we're starting to 0:05:16.200 --> 0:05:19.320 see a little bit more exports going to China, you 0:05:19.400 --> 0:05:23.440 have a continued government support, and then also you know, 0:05:23.560 --> 0:05:25.520 there's certainly a need for replacement. The age of the 0:05:25.520 --> 0:05:27.400 fleet is as old as it's been in a number 0:05:27.440 --> 0:05:30.480 of years. So as farmers get more money, you start 0:05:30.480 --> 0:05:32.880 to see some stability on the crop price front. That 0:05:32.880 --> 0:05:35.080 that should, you know, unlock some pent up demand. 0:05:36.080 --> 0:05:38.440 Yeah, I'm just looking at the stock price trading at 0:05:38.480 --> 0:05:40.560 a record high, but it really has gone on a 0:05:40.680 --> 0:05:45.000 tear over the past three weeks or two weeks. What 0:05:45.080 --> 0:05:47.960 accounts for that? Was it anticipation of this report or 0:05:48.040 --> 0:05:49.040 was it something else. 0:05:50.080 --> 0:05:52.560 A combination of things, you know. I think, you know, 0:05:52.600 --> 0:05:55.800 it's pretty well understood now that this year will be 0:05:55.880 --> 0:05:58.159 the trough of the cycle, so I think there's some 0:05:58.240 --> 0:06:00.240 positioning ahead of that. And you know, a lot these 0:06:00.240 --> 0:06:03.160 heavy machinery companies typically do well in early in the 0:06:03.200 --> 0:06:06.600 rate cut environment. So the anticipation of lower rates stronger 0:06:06.640 --> 0:06:10.320 growth environment not only in the ag business, but also construction. 0:06:10.640 --> 0:06:13.960 I think that sometimes gets overlooked. They're completely refreshing their 0:06:14.000 --> 0:06:17.640 excavator product lineup. They have a pretty strong position in 0:06:17.720 --> 0:06:21.600 construction equipment, and I think the growth dynamics there moving 0:06:21.920 --> 0:06:24.440 for twenty six and twenty seven are still quite favorable. 0:06:24.640 --> 0:06:28.400 Our Thanks to Chris Ciolino, Bloomberg Intelligence Senior US machinery analyst. 0:06:28.680 --> 0:06:30.839 We move next to the retail giant Walmart. 0:06:31.000 --> 0:06:33.760 This week, Walmart issued a forecast for four year earnings 0:06:33.760 --> 0:06:37.800 that missed higher expectations, flagging the unpredictable state of trade 0:06:37.839 --> 0:06:39.280 and labor market conditions. 0:06:39.320 --> 0:06:41.920 So we brought in Emily Cone, Bloomberg's consumer team leader. 0:06:42.040 --> 0:06:44.120 We first asked Emily for her take on Walmart's most 0:06:44.120 --> 0:06:44.880 recent results. 0:06:45.080 --> 0:06:49.120 There's another solid quarter for Walmart in the fourth quarter. 0:06:49.560 --> 0:06:52.719 They did come out with conservative guidance, which is pretty 0:06:52.760 --> 0:06:57.279 typical for Walmart, come out with cautious guidance and then 0:06:57.279 --> 0:06:59.400 exceed it later in the year, which is sort of 0:06:59.400 --> 0:07:02.720 their playbook. And then their guidance was also paired with 0:07:02.800 --> 0:07:07.400 some warning signs or cautious outlook about the economy, which 0:07:07.400 --> 0:07:08.400 I found interesting. 0:07:09.120 --> 0:07:11.000 Yeah, I want to pick up on that idea, because 0:07:11.040 --> 0:07:14.720 the CFO talked to Bloomberg and mentioned that tariff driven 0:07:14.760 --> 0:07:18.200 inflation has reached or is reaching its peak, which I 0:07:18.240 --> 0:07:21.160 thought was really interesting given that there's so many people 0:07:21.160 --> 0:07:24.680 expecting rate cuts later on this year. Given that inflation 0:07:24.800 --> 0:07:27.640 seems to have settled down, what more can they tell 0:07:27.680 --> 0:07:28.600 us about pricing? 0:07:29.880 --> 0:07:33.160 I think they told us that prices rose one percent 0:07:33.200 --> 0:07:35.080 in the quarter, which I think was the same as 0:07:35.080 --> 0:07:38.240 the last quarter. But they also mentioned other things like 0:07:39.040 --> 0:07:45.320 tepid job growth, student loan delinquencies, rising consumer sentiment being uneven, 0:07:46.240 --> 0:07:49.760 things that you know, would give any CEO or CFO 0:07:49.880 --> 0:07:53.840 or company pause when they're trying to outlay what might 0:07:53.920 --> 0:07:55.160 happen in the coming year. 0:07:55.560 --> 0:07:58.000 And I've noticed over the last a couple of years 0:07:58.000 --> 0:08:00.480 they've talked about how maybe their customer base is changing 0:08:00.520 --> 0:08:02.920 a little bit. People some middle class, maybe even upper 0:08:03.480 --> 0:08:06.520 income areas coming down to Walmart. They're seeing more and 0:08:06.520 --> 0:08:07.760 more of that. Is that still the case. 0:08:07.880 --> 0:08:10.200 I think yes, that's definitely the case, and that's sort 0:08:10.200 --> 0:08:13.800 of their superpower right now that you know, poor this 0:08:13.920 --> 0:08:16.040 is the case shaped economy that we talk about a 0:08:16.040 --> 0:08:20.480 lot poor customers are pulling back in areas, but what 0:08:20.480 --> 0:08:23.720 they're seeing is wealthier clients clientele who might not have 0:08:23.800 --> 0:08:27.560 come to Walmart in the past shopping at Walmart, especially 0:08:27.600 --> 0:08:31.280 for things like their groceries, which they've invested in a 0:08:31.280 --> 0:08:33.400 lot in the last ten years. You can now find 0:08:33.520 --> 0:08:35.800 organic groceries and that's really paying off. 0:08:36.040 --> 0:08:38.600 And they also have this Walmart Plus program which they're 0:08:38.640 --> 0:08:41.000 really putting a lot of emphasis on. It's actually one 0:08:41.000 --> 0:08:44.000 of the benefits if you're an American Express Platinum cardholder, 0:08:44.040 --> 0:08:46.640 which speaks to that idea that they're really reaching for 0:08:46.679 --> 0:08:49.559 the higher income consumer. How's that going and is it 0:08:49.720 --> 0:08:53.240 making any headway on stealing Marcus share from Amazon with 0:08:53.320 --> 0:08:54.240 its Prime program. 0:08:54.679 --> 0:08:57.559 Yeah, they're seeing a huge growth in e commerce. I 0:08:57.640 --> 0:08:59.800 think that was one of the major areas that grew 0:08:59.800 --> 0:09:04.120 this quarter. That is drawing in higher income shoppers who 0:09:04.200 --> 0:09:08.960 actually pay even more than the membership for faster deliveries, 0:09:09.000 --> 0:09:12.840 speedier pickup times, and that's helping them also grow market 0:09:12.840 --> 0:09:17.319 share among wealthier shoppers who are looking for convenience over 0:09:17.640 --> 0:09:18.400 everything else. 0:09:19.040 --> 0:09:21.360 What are they saying about Did they even talk about 0:09:21.400 --> 0:09:24.360 on comments called tariffs anymore? That's still a discussion point. 0:09:25.120 --> 0:09:27.240 And what's the company saying about tariffs? 0:09:27.520 --> 0:09:31.480 Yeah, tariffs came up a little bit, but they said 0:09:31.520 --> 0:09:37.720 that they expect that that tariff driven inflation to peak now. 0:09:38.920 --> 0:09:42.360 I think they also benefit here again from their groceries. 0:09:42.440 --> 0:09:45.880 Groceries are a portion of their assortment that is less 0:09:45.880 --> 0:09:50.640 impacted by tariffs, and they're really benefiting from I think 0:09:50.679 --> 0:09:53.360 sixty percent of their sales come from groceries these days. 0:09:54.120 --> 0:09:56.679 You mentioned e commerce. It sounds like Walmart will continue 0:09:56.720 --> 0:10:00.520 to invest in technology and automation. What were some of 0:10:00.520 --> 0:10:02.400 the things that they flagged that they're working on in 0:10:02.480 --> 0:10:06.079 terms of innovation and building on the technology that they 0:10:06.080 --> 0:10:08.280 have already implemented into their system. 0:10:08.440 --> 0:10:12.520 Yeah, it was interesting. They said most of their fulfillment 0:10:12.600 --> 0:10:15.800 and stores is now coming from automated warehouses, most of 0:10:15.840 --> 0:10:20.120 their fulfillment for e commerces coming from automated warehouses. They 0:10:20.160 --> 0:10:26.520 have really made huge gains here to speed up fulfillment centers, 0:10:26.640 --> 0:10:29.760 and I think we should expect to see more of 0:10:29.800 --> 0:10:32.800 that in the coming quarters. They cited story models and 0:10:32.880 --> 0:10:35.880 automation as the main areas where they're going to be 0:10:35.880 --> 0:10:37.280 continuing to invest. 0:10:37.480 --> 0:10:39.400 You know, one of the things that's amazed me really 0:10:39.440 --> 0:10:42.480 for ten fifteen years about Walmart is how well their 0:10:42.520 --> 0:10:45.120 digital business has been, their e commerce business. They have 0:10:45.840 --> 0:10:48.080 built that to not only I mean they can go 0:10:48.160 --> 0:10:51.000 toe to toe with Amazon dot Com just about anything. 0:10:51.080 --> 0:10:53.560 It seems like is that still a growth story for them? 0:10:53.920 --> 0:10:56.559 Yeah? I think they said something like a third. They've 0:10:56.600 --> 0:11:00.920 seen a huge amount of shoppers are now actually interacting 0:11:01.000 --> 0:11:07.520 with their AI, their AI assistant on their app and 0:11:07.679 --> 0:11:13.120 on their website that really helping people make shopping decisions faster. 0:11:13.880 --> 0:11:17.000 They're seeing an increasing spend from customers who interact with 0:11:17.120 --> 0:11:20.640 the AI shopping assistant, they said, which which I think 0:11:20.640 --> 0:11:21.520 we can expect to see. 0:11:21.720 --> 0:11:24.640 Just in the last five years, their ibathas roughly doubled, 0:11:25.040 --> 0:11:26.480 but their cap X is tripled. 0:11:27.880 --> 0:11:29.680 Commerce build out, that tech build out, yep. 0:11:29.760 --> 0:11:31.520 So I mean they're putting their money where their mount 0:11:31.640 --> 0:11:31.960 is here. 0:11:32.200 --> 0:11:34.600 You know what Paul's dream job is, Emily does. He 0:11:34.720 --> 0:11:36.200 mentioned this to you, No. 0:11:36.440 --> 0:11:39.280 Be a greeter at Walmart. See, I'm a nice, friendly guy. 0:11:39.280 --> 0:11:41.319 I want themock. He wants to wear the smock. I 0:11:41.440 --> 0:11:44.679 bet you know. To that point, Walmart employees about two 0:11:44.679 --> 0:11:47.920 point one million people, which makes it a huge employer. 0:11:48.520 --> 0:11:50.160 Do we have a sense of whether they've been growing 0:11:50.160 --> 0:11:54.400 their employee base at all with this commitment to technology, 0:11:54.440 --> 0:11:55.040 to automation. 0:11:56.280 --> 0:11:59.600 I think they've definitely made a huge investment in technology. 0:12:00.200 --> 0:12:02.080 They have a lot more people working on tech than 0:12:02.120 --> 0:12:04.280 they ever have, and I think we could expect to 0:12:04.320 --> 0:12:06.040 see more of that for sure. 0:12:06.480 --> 0:12:08.600 That was Emily Cone, Bloomberg Consumer Team Leader. 0:12:08.720 --> 0:12:11.560 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:11.600 --> 0:12:13.720 depth research and data on two thousand companies and one 0:12:13.840 --> 0:12:14.880 hundred and thirty industries. 0:12:15.000 --> 0:12:18.080 You can access Bloomberg Intelligence via bi go on the terminal. 0:12:18.120 --> 0:12:19.240 I'm Scarlett Foo. 0:12:19.120 --> 0:12:21.280 And I'm Paul Sweeney, and this is Bloomberg. 0:12:26.000 --> 0:12:30.520 This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 0:12:30.840 --> 0:12:34.080 on Bloomberg Radio. 0:12:33.040 --> 0:12:36.559 Next to news from the amusement resort operator six Flags Entertainment. 0:12:36.679 --> 0:12:39.160 This week, six Flags reported twenty twenty five earnings and 0:12:39.280 --> 0:12:42.160 revenue that were slightly ahead of analyst estimates. For more 0:12:42.160 --> 0:12:44.280 on this and the latest in the travel and leisure space, 0:12:44.320 --> 0:12:47.200 were joined by Jody Lori, Bloomberg Intelligence credit analyst. 0:12:47.440 --> 0:12:50.040 We first asked Jody for her take on six Flags earnings. 0:12:50.400 --> 0:12:53.080 So I think what's interesting, Paul, is that we're seeing 0:12:53.160 --> 0:12:56.199 that some of what six Flags said, oddly was similar 0:12:56.240 --> 0:13:00.000 to what we saw on APHIS's call. And both companies 0:13:00.120 --> 0:13:03.760 has had these large impairment charges to boost EBADA, but 0:13:03.800 --> 0:13:07.720 it didn't necessarily equate to cash generation. And both companies 0:13:07.720 --> 0:13:10.760 are focused on improving their debt load and also just 0:13:11.000 --> 0:13:14.040 the core of the business, the operational side, adding in 0:13:14.240 --> 0:13:17.480 AI to boost the business and figuring out ways to 0:13:17.480 --> 0:13:19.880 turn around, and both companies are dealing with new CEOs. 0:13:20.160 --> 0:13:23.359 So it's just like a weird sort of compare contrast 0:13:23.480 --> 0:13:26.120 scenario that I've been toying with my head. 0:13:26.559 --> 0:13:28.720 I mean, Paul was talking about how Hershey Park was 0:13:28.720 --> 0:13:32.200 his first amusement park, and then we're obviously the big 0:13:32.240 --> 0:13:37.400 one would be Disney yep or Universal. Have you been there? No, Okay, 0:13:37.480 --> 0:13:38.440 that's a pretty good one. 0:13:38.520 --> 0:13:39.800 Yeah. 0:13:39.920 --> 0:13:42.600 Is that the competition for six Flags or does it 0:13:42.600 --> 0:13:45.800 work on a different level than those It is and. 0:13:45.800 --> 0:13:48.320 It isn't the competition Scarlett. I mean, I think you know, 0:13:48.400 --> 0:13:52.280 six Flags likes to compare itself more to alternatives in 0:13:52.440 --> 0:13:56.720 leisure and entertainment. There was a great slide that they 0:13:56.760 --> 0:14:00.599 provided that showcase the value proposition if you compare it 0:14:00.640 --> 0:14:05.040 to like concert tickets or in inert sporting event. The 0:14:05.120 --> 0:14:07.440 amount of time that you spend at six Flags, in 0:14:07.520 --> 0:14:10.600 theory is all day, right, So the cost to enter 0:14:11.000 --> 0:14:13.640 and the cost for the you know, the sort of 0:14:13.679 --> 0:14:16.120 concessions is much lower than what you would pay to 0:14:16.160 --> 0:14:19.600 go to a Taylor Swift concert. Now that said, I mean, 0:14:19.640 --> 0:14:22.400 I think what's so interesting is is when the company combined, 0:14:22.800 --> 0:14:25.200 there was this image that they could create like an 0:14:25.240 --> 0:14:29.040 all pass promotion right that you can enter in all parks. 0:14:29.040 --> 0:14:31.760 They've only finally started rolling out something that's a regional 0:14:31.800 --> 0:14:36.720 pass recently, and I'm curious to see what could happen 0:14:36.840 --> 0:14:39.600 with the company as they improve those sort of points 0:14:39.640 --> 0:14:41.560 of it, because what's funny is if you look at 0:14:41.600 --> 0:14:44.480 it from a revenue perspective, it did actually pretty well 0:14:44.520 --> 0:14:46.360 this year compared to twenty four, and twenty four was 0:14:46.400 --> 0:14:49.040 a pretty strong year. Same thing with some of the 0:14:49.240 --> 0:14:53.480 per cap spending pieces of it, right, the per cap component, 0:14:53.640 --> 0:14:56.360 the admissions were down, but the in park spending was decent, 0:14:56.720 --> 0:14:59.200 and so you say, what's going on, like why are 0:14:59.280 --> 0:15:01.400 they having such issues? And it comes down to an 0:15:01.400 --> 0:15:03.680 operational issue. It comes down to the fact that the 0:15:03.720 --> 0:15:06.800 legacy six Flags assets. I think we're in way worse 0:15:06.840 --> 0:15:09.840 shape than Cedar Fair anticipated when they took on the company, 0:15:10.280 --> 0:15:12.120 and they're saddled with a lot of debt. So it's 0:15:12.160 --> 0:15:14.200 really a question of if the capital markets are going 0:15:14.240 --> 0:15:17.200 to be encouraging enough to help them through. You know, 0:15:17.200 --> 0:15:19.440 they help them through in January with a new issue, 0:15:19.520 --> 0:15:22.480 but really are they able to sort of support the 0:15:22.560 --> 0:15:24.400 company through this transition. 0:15:24.280 --> 0:15:26.640 That park past You mentioned sounds like a you know, 0:15:26.680 --> 0:15:28.920 the amusement park version of an epic past, which makes 0:15:28.960 --> 0:15:31.960 sense if you're skier and you are chasing the weather 0:15:32.320 --> 0:15:34.360 around the country. What doesn't make sense to go to, 0:15:34.600 --> 0:15:36.640 you know, the West Coast for six flocks and they 0:15:36.680 --> 0:15:37.120 come back. 0:15:37.680 --> 0:15:40.680 I don't know it could scarlet. You don't talk to 0:15:40.800 --> 0:15:43.520 Ira Jersey enough. Apparently, at least when it comes to 0:15:43.600 --> 0:15:46.080 roller coasters. You probably talked him about interest rates. Next 0:15:46.080 --> 0:15:47.920 time when you have him on, ask him about his 0:15:48.000 --> 0:15:51.119 son's American Coasters Enthusiast card. 0:15:50.880 --> 0:15:52.440 That he proudly carry. 0:15:52.760 --> 0:15:57.480 If you are deep into the roller coaster dynamics and culture, 0:15:57.960 --> 0:16:00.360 people will go to the end of the Earth. And 0:16:00.360 --> 0:16:02.600 I am curious to see how the Middle East traction 0:16:02.760 --> 0:16:05.360 for six Flags, for SeaWorld and for some of the 0:16:05.360 --> 0:16:07.960 other parks that have expanded there. How that's going to 0:16:07.960 --> 0:16:10.960 play out if you do see these park coaster enthusiasts 0:16:11.000 --> 0:16:13.320 fly out to Saudi Aravia, fly out to the OAE 0:16:13.720 --> 0:16:15.200 to ride certain coasters. 0:16:15.680 --> 0:16:18.840 Our thanks to Jody Lourie, Bloomberg Intelligence credit analyst, we 0:16:18.880 --> 0:16:20.440 move next to the real estate sector. 0:16:20.600 --> 0:16:24.680 Bloomberg Intelligence recently put out research entitled AI Drives Office 0:16:24.680 --> 0:16:27.160 demand amid job cut fears. 0:16:26.960 --> 0:16:29.920 And according to BI, AI is emerging as a catalyst 0:16:30.000 --> 0:16:33.080 for office demand, reinforcing leasing momentum in New York City 0:16:33.080 --> 0:16:33.960 and San Francisco. 0:16:34.160 --> 0:16:36.120 For more on this, we were joined by Jeffrey Langbaum, 0:16:36.240 --> 0:16:38.560 Bloomberg Intelligence Senior US rit analyst. 0:16:38.880 --> 0:16:41.680 We started our conversation by asking Jeffrey to discuss what 0:16:41.680 --> 0:16:44.200 people are saying to him with regards to AI and 0:16:44.280 --> 0:16:44.920 office space. 0:16:45.320 --> 0:16:47.400 Right now, what people are thinking about is what the 0:16:47.440 --> 0:16:50.680 impact is going to be on office space if AI 0:16:51.000 --> 0:16:55.800 makes all of these industries that lease office space irrelevant. Okay, 0:16:55.840 --> 0:16:59.040 what does that mean for demand for space? And you know, 0:16:59.080 --> 0:17:03.280 we saw last week that you know that started with 0:17:03.320 --> 0:17:06.400 software and then it went to you know, industry after 0:17:06.440 --> 0:17:08.359 industry and ended up with the real estate brokers and 0:17:08.359 --> 0:17:10.640 eventually the office rates getting hit hard. 0:17:11.119 --> 0:17:13.120 So so far, this is just kind of fear that's 0:17:13.160 --> 0:17:16.240 wafting across the market. Have we actually seen any evidence 0:17:16.359 --> 0:17:17.080 of this happening. 0:17:17.200 --> 0:17:19.480 Not yet, And in fact we've seen some of the opposite. 0:17:20.480 --> 0:17:25.520 Leasing velocity has been at the highest level since before 0:17:25.560 --> 0:17:28.119 the pandemic in markets like New York and San Francisco. 0:17:28.840 --> 0:17:32.440 The reats that we follow names like sl Green Bornado 0:17:32.520 --> 0:17:36.640 Boston properties are now BXP. These guys are reporting very 0:17:36.640 --> 0:17:39.440 strong leasing volumes. We're starting to see occupancies tick up 0:17:39.480 --> 0:17:43.040 off the bottom in their portfolios. And you know, one 0:17:43.080 --> 0:17:45.120 of the one of the dynamics at play is that 0:17:45.320 --> 0:17:49.719 AI firms are leasing space as they grow, and to 0:17:49.760 --> 0:17:53.679 the extent that companies being you know, impacted by AI 0:17:54.359 --> 0:17:57.040 start to receive a little bit, there's an offset there. 0:17:57.720 --> 0:18:02.679 So your office reached docs last week sold off on 0:18:02.840 --> 0:18:03.320 this fear. 0:18:03.960 --> 0:18:05.720 Yeah, and it's not a new fear. I mean it's 0:18:05.720 --> 0:18:09.240 been it's been at play for some time now. 0:18:09.560 --> 0:18:11.280 You know, work from. 0:18:11.200 --> 0:18:15.040 Home kind of worked its way through and everyone kind 0:18:15.040 --> 0:18:18.479 of got comfortable with where hybrid kind of settled in, 0:18:18.600 --> 0:18:20.720 and then you know what was the next thing to 0:18:20.800 --> 0:18:23.040 hit office? And it was this And it's been you know, 0:18:23.080 --> 0:18:25.640 it's been out there for probably a couple of quarters. Now, 0:18:25.640 --> 0:18:28.200 what is the impact going to be? But last week 0:18:28.240 --> 0:18:30.960 when software rolled over it, it's just compounded. 0:18:31.800 --> 0:18:35.320 Is this something where because of the evidence that companies 0:18:35.400 --> 0:18:37.440 are still leasing quite a bit of space, that we're 0:18:37.440 --> 0:18:40.280 going to see a just as sharp recovery. 0:18:40.920 --> 0:18:45.960 Well that's possible, but you know there's also the risk 0:18:46.080 --> 0:18:50.880 that you know, the the equity markets are turbulent and forecasting, right, 0:18:50.920 --> 0:18:53.320 and so there is the possibility that there will be 0:18:54.160 --> 0:18:57.679 negative leasing news to come. It's certainly not showing up 0:18:57.680 --> 0:19:00.560 in the numbers now. And we do think, and this 0:19:00.600 --> 0:19:02.720 is backed up by some survey work that we just 0:19:02.760 --> 0:19:05.320 did last week of office workers in both New York 0:19:05.320 --> 0:19:06.080 and San Francisco. 0:19:06.560 --> 0:19:07.440 We actually think that. 0:19:07.400 --> 0:19:10.879 There's still a period of time to come where firms 0:19:10.920 --> 0:19:14.960 are actually leasing more space, they're expanding their headcount to 0:19:14.960 --> 0:19:16.640 try and figure out how to take advantage of AI 0:19:17.800 --> 0:19:22.280 and to grow their business. And that could actually you know, 0:19:22.960 --> 0:19:25.800 I don't know about a sharp snapback, but it could 0:19:25.880 --> 0:19:28.800 you prolong the positive vibes for some time. 0:19:28.880 --> 0:19:30.800 What's the sector of the remarket that you like the 0:19:30.800 --> 0:19:31.480 most right now? 0:19:31.840 --> 0:19:36.760 Senior housing is I mean, you know, it's the one 0:19:37.160 --> 0:19:42.600 aspect where you cannot refute the demand story at all. 0:19:42.960 --> 0:19:46.000 And at the same time, where real estate guys typically 0:19:46.200 --> 0:19:49.280 love to build what to take advantage of those demand stories. 0:19:49.560 --> 0:19:51.560 There's not much senior housing coming out of the ground, 0:19:51.800 --> 0:19:54.280 so there's a huge supply demand imbalance. 0:19:54.480 --> 0:19:57.000 Okay, but a senior housing more attractive in certain markets 0:19:57.040 --> 0:19:59.159 over other markets. How do you pick between winners and 0:19:59.200 --> 0:20:00.600 losers when it comes to senior housing. 0:20:00.640 --> 0:20:04.080