1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,840 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,560 Speaker 1: or watch us live on YouTube. 6 00:00:24,040 --> 00:00:26,000 Speaker 2: You know, need some more news today on this Warner 7 00:00:26,040 --> 00:00:27,560 Speaker 2: Brothers Discovery transaction. 8 00:00:27,960 --> 00:00:30,320 Speaker 3: Again. Netflix is bidding here. They've got their bid in there. 9 00:00:30,320 --> 00:00:32,200 Speaker 2: They just amended that to make it on all cash bid, 10 00:00:32,200 --> 00:00:34,960 Speaker 2: and Paramount Skuydants is also there and they just kind 11 00:00:35,000 --> 00:00:37,400 Speaker 2: of extended their deadline today for trying to get some 12 00:00:37,440 --> 00:00:37,960 Speaker 2: shares tendered. 13 00:00:37,960 --> 00:00:39,400 Speaker 3: I don't know, but so far it's not been good 14 00:00:39,400 --> 00:00:39,720 Speaker 3: for them. 15 00:00:40,080 --> 00:00:41,720 Speaker 2: I don't know. I don't know what's going on there. 16 00:00:41,720 --> 00:00:42,800 Speaker 3: But let's talk to Semashaw. 17 00:00:42,880 --> 00:00:45,680 Speaker 2: She's a pro with this stuff, vice president Research and 18 00:00:45,720 --> 00:00:49,040 Speaker 2: Insights at Censor Tower STEMA. Are you surprised that, I 19 00:00:49,040 --> 00:00:53,120 Speaker 2: don't know, either Netflix or Paramount SKUIDANTCE hasn't raised their offer. 20 00:00:53,200 --> 00:00:55,240 Speaker 3: We kind of just seem to be waiting here. 21 00:00:56,960 --> 00:00:57,280 Speaker 4: Yeah. 22 00:00:57,320 --> 00:01:00,880 Speaker 5: Well, I'm more surprised that Paramount has a simply because 23 00:01:00,920 --> 00:01:04,160 Speaker 5: I think they need the merger more based on their performance. 24 00:01:04,240 --> 00:01:08,440 Speaker 5: They are significantly smaller, like four percent of monthly actor 25 00:01:08,600 --> 00:01:11,280 Speaker 5: users share on a global basis compared to forty eight 26 00:01:11,319 --> 00:01:15,160 Speaker 5: percent for Netflix and ten percent for HBO max very 27 00:01:15,160 --> 00:01:19,560 Speaker 5: small percentage of ott AD revenue four percent again versus 28 00:01:19,600 --> 00:01:22,759 Speaker 5: eight percent for Netflix and like thirty thirty five percent 29 00:01:22,840 --> 00:01:25,800 Speaker 5: for Hulu. So for them, this deal would be much 30 00:01:25,840 --> 00:01:30,720 Speaker 5: more transformative. Right, and HBO has those tent pole shows 31 00:01:31,240 --> 00:01:33,920 Speaker 5: like White Lotus and now like Heated Robbery that are 32 00:01:33,920 --> 00:01:38,840 Speaker 5: in the zeitgeist and make people continue to remain subscribers. 33 00:01:39,080 --> 00:01:39,280 Speaker 2: Right. 34 00:01:39,720 --> 00:01:42,760 Speaker 5: Netflix already has the highest retention rate for them, the 35 00:01:43,000 --> 00:01:47,960 Speaker 5: HBO acquisition is an opportunity to extend their growth rapidly, 36 00:01:48,040 --> 00:01:51,040 Speaker 5: like internationally where HBO is growing at a much faster 37 00:01:51,120 --> 00:01:53,280 Speaker 5: rate than anyone else. So I'm actually more surprised that 38 00:01:53,320 --> 00:01:56,560 Speaker 5: Paramount has it. But from what I've read also, the 39 00:01:56,760 --> 00:02:00,880 Speaker 5: Warner brother shareholders do not want that deal, so it 40 00:02:00,920 --> 00:02:03,400 Speaker 5: would have to probably be a substantial jump in price 41 00:02:03,800 --> 00:02:06,760 Speaker 5: to get over ninety percent of the shareholders to change 42 00:02:06,760 --> 00:02:07,160 Speaker 5: their mind. 43 00:02:07,760 --> 00:02:11,440 Speaker 6: So Paramount of Skydance State extending its tender offer for 44 00:02:11,520 --> 00:02:15,000 Speaker 6: those Warner Brothers' shares. The new offer expires February twentieth, 45 00:02:15,960 --> 00:02:20,480 Speaker 6: does this change anything. I mean roughly, I mean about 46 00:02:20,560 --> 00:02:22,160 Speaker 6: one hundred and sixty eight and a half million shares 47 00:02:22,160 --> 00:02:25,720 Speaker 6: have been tendered as of yesterday. That's only seven percent 48 00:02:25,880 --> 00:02:28,640 Speaker 6: of Warner Brothers shares outstanding. So does pushing out the 49 00:02:28,639 --> 00:02:32,160 Speaker 6: deadline actually mean it's going to get more support? 50 00:02:33,480 --> 00:02:35,320 Speaker 5: I don't think so. I don't think the delay is 51 00:02:35,360 --> 00:02:39,280 Speaker 5: simply because people haven't had a chance to tender their shares. 52 00:02:39,360 --> 00:02:42,840 Speaker 5: I just don't think that they find the offer as compelling. 53 00:02:42,880 --> 00:02:46,160 Speaker 5: And also, Warner Brothers management is sided with Netflix, right, 54 00:02:46,200 --> 00:02:51,120 Speaker 5: It's a well capitalized business, highest retention rate, you know, 55 00:02:51,440 --> 00:02:56,080 Speaker 5: content creation machine, especially on a global basis, you know, 56 00:02:56,200 --> 00:02:58,520 Speaker 5: non English language content, and so I think it's just 57 00:02:58,560 --> 00:03:01,760 Speaker 5: really hard for Amount, it's so much smaller to compete 58 00:03:01,760 --> 00:03:03,560 Speaker 5: with it. Like what does it bring to the table 59 00:03:04,520 --> 00:03:07,639 Speaker 5: for Warner Brothers which And I think that's the question. 60 00:03:08,120 --> 00:03:11,200 Speaker 2: And if Paramount does not get it, and you suggest 61 00:03:11,200 --> 00:03:13,440 Speaker 2: that you know, they probably need it, it's a mustag 62 00:03:13,560 --> 00:03:16,560 Speaker 2: versus maybe a nice to have for Netflix. What happens 63 00:03:16,560 --> 00:03:18,359 Speaker 2: you think the Paramount? If they don't get this deal, 64 00:03:18,400 --> 00:03:19,040 Speaker 2: then what do they do? 65 00:03:20,160 --> 00:03:22,200 Speaker 5: Well? I mean I think you just pushed them further 66 00:03:22,480 --> 00:03:24,760 Speaker 5: to the margin, right, as I said, they only have 67 00:03:25,040 --> 00:03:28,640 Speaker 5: like four percent of active user share on a global basis, 68 00:03:28,680 --> 00:03:30,720 Speaker 5: just to put that in perspective. Obviously, Netflix is the 69 00:03:30,760 --> 00:03:34,080 Speaker 5: belhema that forty eight percent. Amazon and Disney Plus are 70 00:03:34,160 --> 00:03:37,920 Speaker 5: about fifteen percent. So I'm not sure how they continue 71 00:03:37,960 --> 00:03:40,520 Speaker 5: to really grow. They would have to really change their model. 72 00:03:40,520 --> 00:03:42,480 Speaker 5: How are they going to grow internationally? Are they going 73 00:03:42,560 --> 00:03:44,080 Speaker 5: to try to get more sports, They're going to have 74 00:03:44,120 --> 00:03:47,600 Speaker 5: local language content. All of those endeavors to grow and 75 00:03:47,640 --> 00:03:51,000 Speaker 5: become larger require a lot of funding, right for sports, 76 00:03:51,080 --> 00:03:54,960 Speaker 5: right its content creation. So I feel like they'll sort 77 00:03:55,000 --> 00:03:58,680 Speaker 5: of still be on the periphery in many cases compared 78 00:03:58,680 --> 00:04:01,200 Speaker 5: to the larger streamers, and as a whole, by the way, 79 00:04:01,280 --> 00:04:03,840 Speaker 5: the entire space is all still competing with short form 80 00:04:03,920 --> 00:04:08,440 Speaker 5: video and just simply people's attention being pulled in other directions, right, 81 00:04:08,520 --> 00:04:12,280 Speaker 5: So I think that's kind of where that leaves them 82 00:04:12,400 --> 00:04:13,360 Speaker 5: if they don't get the deal. 83 00:04:13,920 --> 00:04:18,920 Speaker 6: So SIMA Sensor Tower is a digital market intelligence platform. 84 00:04:19,000 --> 00:04:22,919 Speaker 6: You provide data, analytics insights into the mobile app ecosystem. 85 00:04:23,240 --> 00:04:25,839 Speaker 6: What does your research what does your data show about 86 00:04:25,960 --> 00:04:29,960 Speaker 6: people's engagement with Warner Brothers properties? I mean beyond HBO, 87 00:04:30,839 --> 00:04:34,000 Speaker 6: the other stuff, and I guess that includes the cable 88 00:04:34,080 --> 00:04:38,320 Speaker 6: networks that Warner Brothers wants to spin off, that Paramountain 89 00:04:38,360 --> 00:04:41,480 Speaker 6: wants to buy, and that Netflix doesn't. And you know, 90 00:04:41,520 --> 00:04:44,279 Speaker 6: how does that compare to say what Netflix offers people. 91 00:04:45,560 --> 00:04:49,960 Speaker 5: Well, Netflix has the highest retention rate across the space, 92 00:04:50,160 --> 00:04:53,680 Speaker 5: right seventy four percent of its users are retained users. 93 00:04:53,680 --> 00:04:57,240 Speaker 5: People spend about ninety one minutes per week eleven sessions 94 00:04:57,279 --> 00:05:01,400 Speaker 5: per week on Netflix. In comparison, it's about six point 95 00:05:01,440 --> 00:05:05,159 Speaker 5: four sessions per week on Paramount. And so you know, 96 00:05:05,640 --> 00:05:08,520 Speaker 5: HBO is sort of in the middle. Our data is 97 00:05:08,560 --> 00:05:12,400 Speaker 5: really focused on the digital side of the business versus 98 00:05:12,440 --> 00:05:17,960 Speaker 5: any linear TV and then also our advertising data. So 99 00:05:18,080 --> 00:05:22,640 Speaker 5: I think what is also very attractive about HBO is 100 00:05:22,920 --> 00:05:25,760 Speaker 5: its advertising and the space of the categories that it's 101 00:05:25,800 --> 00:05:29,279 Speaker 5: in where it has decent share about five four percent 102 00:05:29,800 --> 00:05:33,280 Speaker 5: in healthcare, which is the largest category where OTT is 103 00:05:33,320 --> 00:05:38,240 Speaker 5: the largest channel for healthcare, and Netflix doesn't have that 104 00:05:38,360 --> 00:05:41,919 Speaker 5: much exposure there. So I think that is a plus 105 00:05:41,960 --> 00:05:45,279 Speaker 5: for them. As far as like Warnerbug Sorry, Paramount wanting 106 00:05:45,320 --> 00:05:47,279 Speaker 5: the other assets, I think it goes kind of goes 107 00:05:47,320 --> 00:05:50,160 Speaker 5: back with like they want to get what they can get, 108 00:05:50,200 --> 00:05:52,080 Speaker 5: so they can see how they can manage to figure 109 00:05:52,080 --> 00:05:55,279 Speaker 5: out how to grow their own business, right, So I 110 00:05:55,279 --> 00:05:58,640 Speaker 5: think that's why they're willing to take everything rather than 111 00:05:58,680 --> 00:06:01,240 Speaker 5: sort of curate what like the way Netflix is. 112 00:06:01,440 --> 00:06:03,480 Speaker 2: You know, the Netflix stock is down ten percent this 113 00:06:03,560 --> 00:06:05,760 Speaker 2: year and twelve percent over the trailing twelve months. Is 114 00:06:05,800 --> 00:06:08,040 Speaker 2: that kind of the market saying, hey, you know, I'm 115 00:06:08,040 --> 00:06:09,600 Speaker 2: not sure we want you guys to buy this thing. 116 00:06:12,040 --> 00:06:15,080 Speaker 5: Well, it also has done very well in the past. 117 00:06:15,839 --> 00:06:18,279 Speaker 5: It might be, or maybe it's just simply the uncertainty 118 00:06:18,320 --> 00:06:20,279 Speaker 5: of whether, even if they get the deal, if they'll 119 00:06:20,320 --> 00:06:24,280 Speaker 5: be able to get through antitrust, you know, the FTC, 120 00:06:24,520 --> 00:06:27,320 Speaker 5: will there be any issues getting the deal through? So 121 00:06:27,520 --> 00:06:30,560 Speaker 5: I feel like it's more about that and maybe just 122 00:06:30,640 --> 00:06:34,919 Speaker 5: the general idea that across streaming time spent is down, 123 00:06:34,960 --> 00:06:37,760 Speaker 5: and it goes back to what I said about distractions 124 00:06:37,760 --> 00:06:40,559 Speaker 5: for the consumer from short form video and other types 125 00:06:40,560 --> 00:06:44,039 Speaker 5: of technology that's taking time. So I think it might 126 00:06:44,080 --> 00:06:47,880 Speaker 5: be that sort of the deal with regulation and then 127 00:06:47,920 --> 00:06:50,280 Speaker 5: just sort of what's happening in streaming and the cost 128 00:06:50,839 --> 00:06:53,320 Speaker 5: of streaming. To get the content that gets the most 129 00:06:53,600 --> 00:06:55,960 Speaker 5: the highest audience costs a lot of money, right, and 130 00:06:55,960 --> 00:06:59,400 Speaker 5: they have a lot of competitors, including the microdramas that 131 00:07:00,080 --> 00:07:01,760 Speaker 5: you know have been growing very rapidly. 132 00:07:02,440 --> 00:07:03,080 Speaker 1: Stay with us. 133 00:07:03,240 --> 00:07:05,600 Speaker 3: More from Bloomberg Intelligence coming up after this. 134 00:07:09,440 --> 00:07:13,160 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 135 00:07:13,240 --> 00:07:16,280 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 136 00:07:16,320 --> 00:07:19,640 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 137 00:07:19,680 --> 00:07:22,800 Speaker 1: you get your podcasts, or watch us live on YouTube. 138 00:07:23,800 --> 00:07:26,000 Speaker 2: Lots of earnings kind of get you know, overshadowed a 139 00:07:26,000 --> 00:07:28,200 Speaker 2: little bit by on the news flow coming out of Davilas. 140 00:07:28,280 --> 00:07:29,840 Speaker 2: But you know, one of the big American companies that 141 00:07:29,840 --> 00:07:33,040 Speaker 2: we like to follow, General Electric, reported some numbers. 142 00:07:33,080 --> 00:07:35,000 Speaker 3: A little bit disappointed. I thought they were pretty good. 143 00:07:35,000 --> 00:07:37,400 Speaker 2: But the stock's down about five and a half percent today, 144 00:07:38,200 --> 00:07:40,520 Speaker 2: and the stock is up over the tre past twelve months, 145 00:07:40,600 --> 00:07:43,120 Speaker 2: up about sixty percent sixty zero, So maybe given back 146 00:07:43,120 --> 00:07:44,640 Speaker 2: a little bit there. But let's break it down here. 147 00:07:44,840 --> 00:07:47,880 Speaker 2: What's going on with our friends at GE. SID Philip Bloomberg, 148 00:07:47,960 --> 00:07:51,280 Speaker 2: chief correspondent covers Global Aviation for Bloomberg News. SID talk 149 00:07:51,280 --> 00:07:53,480 Speaker 2: to us about GE. What's going on with that story? 150 00:07:53,480 --> 00:07:54,440 Speaker 2: They report its earnings? 151 00:07:54,520 --> 00:07:57,679 Speaker 7: Yeah, so GE's actually they reported better than expected results. 152 00:07:57,720 --> 00:08:01,400 Speaker 7: In the fourth quarter. But unfortunately for the company, the 153 00:08:02,160 --> 00:08:06,040 Speaker 7: shareholders and the investors were expecting a much higher expectation 154 00:08:06,200 --> 00:08:09,280 Speaker 7: for the full yer next year this year, and so 155 00:08:09,320 --> 00:08:12,240 Speaker 7: the fullier outlook has underwhelmed investors, which is why the 156 00:08:12,280 --> 00:08:15,320 Speaker 7: share stumbled. And so they said that earnings will be 157 00:08:15,560 --> 00:08:18,680 Speaker 7: seven ten to seven forty a share, and that sort 158 00:08:18,720 --> 00:08:20,560 Speaker 7: of compares with about seven to ten which is what 159 00:08:20,600 --> 00:08:23,240 Speaker 7: the analyst expected. But that's still sort of they're talking 160 00:08:23,240 --> 00:08:25,800 Speaker 7: about how there's going to be low double digit percentage 161 00:08:25,840 --> 00:08:29,320 Speaker 7: of revenue growth, and that sort of after the sort 162 00:08:29,360 --> 00:08:33,160 Speaker 7: of daring performance that they've had over the last year 163 00:08:33,520 --> 00:08:35,560 Speaker 7: year and a half, that that sort of comes up 164 00:08:35,600 --> 00:08:36,880 Speaker 7: as a break for the stock. 165 00:08:37,520 --> 00:08:41,079 Speaker 2: What I like about GE or just fascinating watching the 166 00:08:41,120 --> 00:08:44,200 Speaker 2: GE story over the past twenty years. They've dramatically slimmed 167 00:08:44,200 --> 00:08:47,560 Speaker 2: down the company. They were just jillions of different businesses, 168 00:08:47,640 --> 00:08:49,959 Speaker 2: including one of the biggest financial services companies in the world. 169 00:08:50,120 --> 00:08:52,760 Speaker 3: They've slimmed that down to really a couple sectors. 170 00:08:52,800 --> 00:08:56,120 Speaker 2: Here, commercial engines and services number one, and then defense 171 00:08:56,160 --> 00:08:57,240 Speaker 2: and propulsion number two. 172 00:08:58,200 --> 00:09:00,560 Speaker 3: What's the play, Here's where's the growth for this company? 173 00:09:00,600 --> 00:09:03,240 Speaker 7: Yeah, so Larry Culp has sort of focused the company 174 00:09:03,240 --> 00:09:06,640 Speaker 7: on its core aerospace business, and aerospace has sort of 175 00:09:06,679 --> 00:09:09,719 Speaker 7: become what GE is and that's actually a really good 176 00:09:09,800 --> 00:09:12,240 Speaker 7: business for the company. I mean they have a large 177 00:09:12,240 --> 00:09:14,480 Speaker 7: sort of share of the narrow body marketplace. 178 00:09:14,520 --> 00:09:15,840 Speaker 3: I mean they make any engines. 179 00:09:15,920 --> 00:09:19,960 Speaker 7: Yeah, make engines with CFM, which is the biggest narrowbody 180 00:09:20,000 --> 00:09:23,800 Speaker 7: engine provider. They also make all the engines for Boeing's 181 00:09:24,040 --> 00:09:27,200 Speaker 7: white body aircraft. So they've got a big aerospace division 182 00:09:27,240 --> 00:09:29,600 Speaker 7: and that's sort of a business that continues to generate 183 00:09:29,679 --> 00:09:32,760 Speaker 7: revenue as you get those aircraft. These engines come in 184 00:09:32,800 --> 00:09:35,359 Speaker 7: for servicing and they come in for sort of overhauls. 185 00:09:35,440 --> 00:09:37,959 Speaker 7: That sort of keeps the revenue going. And so that's 186 00:09:37,960 --> 00:09:40,040 Speaker 7: where Culpus focused on. He's sort of focused on cutting 187 00:09:40,080 --> 00:09:43,680 Speaker 7: costs and as well as ramping up their aftermarket business 188 00:09:43,760 --> 00:09:46,760 Speaker 7: as well as their like their maintenance and repair operation, 189 00:09:46,880 --> 00:09:48,719 Speaker 7: and that's been one of the key businesses that they've 190 00:09:48,760 --> 00:09:51,440 Speaker 7: been growing. They've also been growing their defense business, and 191 00:09:51,559 --> 00:09:53,920 Speaker 7: I mean they're sort of getting a big share of 192 00:09:54,000 --> 00:09:56,960 Speaker 7: the overall defense by it. I mean that business may 193 00:09:57,000 --> 00:10:00,760 Speaker 7: come up against some investor resistance because of trump recent 194 00:10:00,800 --> 00:10:04,640 Speaker 7: announcements about gapping dividends and capping share. 195 00:10:04,440 --> 00:10:06,600 Speaker 2: By a back right, yeah, because I don't think of 196 00:10:06,679 --> 00:10:09,360 Speaker 2: G as a defense contractor like a Lockheed Martin or 197 00:10:09,400 --> 00:10:09,920 Speaker 2: something like that. 198 00:10:09,960 --> 00:10:11,800 Speaker 7: But they're not a defense prime. But they are a 199 00:10:11,800 --> 00:10:14,480 Speaker 7: major supplier to the defense industry. 200 00:10:14,200 --> 00:10:16,199 Speaker 2: On the engine side, on the jet engine side. Do 201 00:10:16,280 --> 00:10:18,240 Speaker 2: they sell to both Boeing and Airbus. 202 00:10:18,440 --> 00:10:21,400 Speaker 7: They sell to Airbus through CFM, which is their joint 203 00:10:21,440 --> 00:10:25,400 Speaker 7: venture with Saffron Ah, and so they about seventy five 204 00:10:25,400 --> 00:10:28,160 Speaker 7: percent of the overall narrow body market. So that's a 205 00:10:28,200 --> 00:10:29,520 Speaker 7: big percentage of the market. 206 00:10:29,520 --> 00:10:29,959 Speaker 3: That's awesome. 207 00:10:29,960 --> 00:10:31,720 Speaker 2: So, I mean, I always feel good seeing a GE 208 00:10:31,840 --> 00:10:32,840 Speaker 2: engine hanging on a wing. 209 00:10:32,960 --> 00:10:34,440 Speaker 3: You know, you feel like you're in good shape there. 210 00:10:35,559 --> 00:10:37,839 Speaker 2: Talk to us about just you know, we follow Boeing 211 00:10:37,920 --> 00:10:39,840 Speaker 2: very closely, and they've had their problems with the production, 212 00:10:40,000 --> 00:10:42,960 Speaker 2: as has Airbus. I mean, the whole supply chain for 213 00:10:43,880 --> 00:10:46,680 Speaker 2: aerospace and building these big jet engines. It's kind of 214 00:10:46,800 --> 00:10:49,280 Speaker 2: been tough on a global scale. What does G say 215 00:10:49,280 --> 00:10:49,959 Speaker 2: to say about that? 216 00:10:50,240 --> 00:10:51,959 Speaker 7: So, I mean that that's been one of the I mean, 217 00:10:52,000 --> 00:10:54,440 Speaker 7: Airbus famously called out G a couple of months ago, 218 00:10:54,480 --> 00:10:57,840 Speaker 7: saying that they weren't producing engine CFM wasn't producing engines 219 00:10:57,880 --> 00:11:00,599 Speaker 7: fast enough, and that's been a major sort of bottleneck 220 00:11:00,640 --> 00:11:03,280 Speaker 7: for the aviation industry as they come out of the pandemic. 221 00:11:03,280 --> 00:11:06,640 Speaker 7: I mean they've been struggling since the pandemic to actually 222 00:11:06,720 --> 00:11:08,720 Speaker 7: ramp up production. I mean air Bus had to cut 223 00:11:08,760 --> 00:11:12,839 Speaker 7: its annual outlook in December and they just about made 224 00:11:12,840 --> 00:11:17,720 Speaker 7: their target. And so we've seen the airspace the aerospace 225 00:11:17,760 --> 00:11:21,080 Speaker 7: businesses talking about sort of growth and then having to 226 00:11:21,120 --> 00:11:23,400 Speaker 7: come up against the reality of a supply chain and 227 00:11:23,400 --> 00:11:26,120 Speaker 7: the supply chain being severely constrained. At the same time, 228 00:11:27,720 --> 00:11:31,800 Speaker 7: all the suppliers, especially GE, RTX and others have been 229 00:11:31,840 --> 00:11:36,199 Speaker 7: focusing on maximizing their profitability and making sure that while 230 00:11:36,200 --> 00:11:38,840 Speaker 7: they grow and while they scale up their businesses, they 231 00:11:39,000 --> 00:11:40,920 Speaker 7: don't do that at the cost of profitability. And that 232 00:11:41,000 --> 00:11:46,520 Speaker 7: sort of runs into the airframers their ambition of ramping 233 00:11:46,559 --> 00:11:49,200 Speaker 7: up production so they won't growth at any cost, and 234 00:11:49,559 --> 00:11:52,040 Speaker 7: the suppliers are saying, hey, we will grow, but it 235 00:11:52,080 --> 00:11:53,200 Speaker 7: has to be profitable for us. 236 00:11:53,320 --> 00:11:55,920 Speaker 2: One of the things we've heard from Bowing is it's 237 00:11:56,040 --> 00:11:59,800 Speaker 2: just hard to find employees. This isn't like making a car. 238 00:12:00,120 --> 00:12:02,640 Speaker 2: You got to be really really skilled. 239 00:12:02,800 --> 00:12:04,360 Speaker 3: Does GE have that same issue? 240 00:12:04,400 --> 00:12:07,240 Speaker 7: It does, and that's the same issue that and it's 241 00:12:07,280 --> 00:12:10,760 Speaker 7: not just GE but also supplies the GEM. The problem 242 00:12:10,840 --> 00:12:14,280 Speaker 7: with the aerospace supply chain is that it's so intertwined 243 00:12:14,320 --> 00:12:17,040 Speaker 7: that you need every single path to build those parts 244 00:12:17,040 --> 00:12:19,640 Speaker 7: that you actually supply to Boeing and Airbus, and so 245 00:12:19,840 --> 00:12:22,360 Speaker 7: if one part's missing, then you can't actually put together 246 00:12:22,360 --> 00:12:25,120 Speaker 7: a net engine that goes onto a plane. And so 247 00:12:25,440 --> 00:12:29,560 Speaker 7: for the aerospace industry, hiring has been a major challenge, 248 00:12:29,600 --> 00:12:31,760 Speaker 7: and that's been something that they've been doing and they've 249 00:12:31,800 --> 00:12:33,679 Speaker 7: been trying to work on for the last couple of years. 250 00:12:34,120 --> 00:12:35,720 Speaker 7: But I don't think they're out of the woods yet. 251 00:12:36,720 --> 00:12:39,800 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 252 00:12:43,760 --> 00:12:47,440 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 253 00:12:47,520 --> 00:12:50,920 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 254 00:12:51,000 --> 00:12:54,080 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 255 00:12:54,120 --> 00:12:57,480 Speaker 1: get your podcasts, or watch us live on YouTube. 256 00:12:57,920 --> 00:12:59,240 Speaker 3: What a couple of three days. 257 00:13:00,040 --> 00:13:02,880 Speaker 2: And Davos kind of went into the week thinking maybe 258 00:13:02,880 --> 00:13:05,000 Speaker 2: we talked about big, big items like AI. 259 00:13:05,400 --> 00:13:09,360 Speaker 3: Well it all came down to Terrace Greenland and boy, 260 00:13:09,400 --> 00:13:11,280 Speaker 3: we've had a bumpy ride this week. So we try 261 00:13:11,320 --> 00:13:12,559 Speaker 3: to forget what's going on there. 262 00:13:12,600 --> 00:13:14,839 Speaker 2: Gota Maconda, he does his stuff for living, his a 263 00:13:14,880 --> 00:13:17,200 Speaker 2: lecture at the Yale School of Management. He's a Bloomberg 264 00:13:17,280 --> 00:13:18,520 Speaker 2: opinion contributor. 265 00:13:19,600 --> 00:13:20,800 Speaker 3: Got them, you know. 266 00:13:20,920 --> 00:13:23,880 Speaker 2: I guess this is a little bit of President Trump 267 00:13:23,960 --> 00:13:26,400 Speaker 2: starting off the week with some very big rhetoric and 268 00:13:26,440 --> 00:13:29,040 Speaker 2: then backing off a little bit. That's at least how 269 00:13:29,040 --> 00:13:33,000 Speaker 2: the markets have been kind of gauging it here. Has 270 00:13:33,000 --> 00:13:35,600 Speaker 2: there been any long term impact positive ord negative? 271 00:13:35,600 --> 00:13:35,720 Speaker 5: Here? 272 00:13:35,760 --> 00:13:37,480 Speaker 3: From what's happened the last several days. 273 00:13:38,200 --> 00:13:41,560 Speaker 4: There's been significant long term impact, and it's sadly all negative. 274 00:13:41,679 --> 00:13:46,040 Speaker 4: So let's just break this out. The framework that the 275 00:13:46,200 --> 00:13:49,280 Speaker 4: Trump administration is saying they have gotten. And it's to 276 00:13:49,320 --> 00:13:52,040 Speaker 4: be clear, it's not clear they have actually gotten it, 277 00:13:52,080 --> 00:13:54,520 Speaker 4: because the Europeans don't seem to be agreeing with that statement. 278 00:13:54,559 --> 00:13:57,040 Speaker 4: But let's say the Trump administration got everything they said 279 00:13:57,040 --> 00:13:59,720 Speaker 4: They got. Everything they said they got they could have 280 00:13:59,720 --> 00:14:02,559 Speaker 4: gotten with a phone call six months ago. Right like 281 00:14:03,080 --> 00:14:04,920 Speaker 4: if we had told the Danes we want to put 282 00:14:04,960 --> 00:14:07,560 Speaker 4: more bases in Greenland, we want more mineral rights in Greenland. 283 00:14:07,559 --> 00:14:09,360 Speaker 4: We want you to you know, do more to keep 284 00:14:09,400 --> 00:14:12,240 Speaker 4: the Chinese out of Greenland. Whatever, that means they would 285 00:14:12,240 --> 00:14:16,360 Speaker 4: have said, awesome, we love the idea of you doing that. 286 00:14:16,520 --> 00:14:19,560 Speaker 4: So there's no so like everything they got was on 287 00:14:19,640 --> 00:14:24,680 Speaker 4: the table just for the asking. The downside is we 288 00:14:24,760 --> 00:14:28,000 Speaker 4: have now reached a situation where the Prime Minister of Canada, 289 00:14:28,520 --> 00:14:32,160 Speaker 4: the United States is oldest, best, and most important ally 290 00:14:33,000 --> 00:14:36,080 Speaker 4: is saying that the United States is a predator that 291 00:14:36,680 --> 00:14:39,200 Speaker 4: is taking advantage of other countries, and that he needs 292 00:14:39,240 --> 00:14:43,480 Speaker 4: to make allies alliances with other countries, including China, judging 293 00:14:43,480 --> 00:14:48,640 Speaker 4: by his actions to protect himself from the United States. Like, 294 00:14:49,120 --> 00:14:52,200 Speaker 4: it's almost impossible to overstate the level of the damage there. 295 00:14:53,600 --> 00:14:58,120 Speaker 4: If the United States had somehow managed to extract ownership 296 00:14:58,160 --> 00:15:04,440 Speaker 4: of Greenland, that would not have been even close to 297 00:15:04,520 --> 00:15:08,400 Speaker 4: being worth destroying the trust that the United States has 298 00:15:08,440 --> 00:15:12,160 Speaker 4: built up with pretty much every other developed country in 299 00:15:12,200 --> 00:15:16,800 Speaker 4: the world over the course of more than a century. 300 00:15:17,360 --> 00:15:19,320 Speaker 6: You go ahead, no, no, no, So this trust that 301 00:15:19,360 --> 00:15:21,200 Speaker 6: the United States has built up, is it the trust 302 00:15:21,240 --> 00:15:24,960 Speaker 6: that the White House is now put you know, putting 303 00:15:24,960 --> 00:15:27,520 Speaker 6: at risk or this particular White House, I should say, 304 00:15:27,760 --> 00:15:31,280 Speaker 6: versus the US government overall, because in three years time, 305 00:15:31,920 --> 00:15:33,920 Speaker 6: in eight years time, you know, we could have a 306 00:15:34,040 --> 00:15:37,720 Speaker 6: very different government in charge, and do we go back 307 00:15:37,760 --> 00:15:38,400 Speaker 6: to the old ways. 308 00:15:39,280 --> 00:15:42,280 Speaker 4: Yeah, I think it started with this administration. And if 309 00:15:42,280 --> 00:15:44,720 Speaker 4: it had, and if it we were just talking about 310 00:15:44,760 --> 00:15:46,920 Speaker 4: one Trump administration, it would have been just that. And 311 00:15:46,960 --> 00:15:48,720 Speaker 4: then I think that's exactly what would happened. We would 312 00:15:48,720 --> 00:15:51,480 Speaker 4: have reset the old ways and everybody would have said, Look, 313 00:15:51,520 --> 00:15:53,240 Speaker 4: every country has a hiccop once in a while. 314 00:15:53,120 --> 00:15:53,800 Speaker 3: These things happen. 315 00:15:54,480 --> 00:15:58,280 Speaker 4: But now you will hear Europeans say straight up that 316 00:15:58,440 --> 00:16:01,320 Speaker 4: Trump is a reflection of some thing deep about what's 317 00:16:01,360 --> 00:16:04,800 Speaker 4: happening in the United States right now. That is, it 318 00:16:04,840 --> 00:16:06,640 Speaker 4: is not just the case that they do not trust 319 00:16:06,680 --> 00:16:09,880 Speaker 4: the Trump administration. It is they do not trust the 320 00:16:09,920 --> 00:16:14,000 Speaker 4: American public to not keep electing people like the Trump administration, 321 00:16:14,600 --> 00:16:18,360 Speaker 4: and that creates a completely different set of constraints and circumstances. 322 00:16:19,000 --> 00:16:22,600 Speaker 2: Are you surprised, I guess going down that thread Gotham 323 00:16:22,640 --> 00:16:26,560 Speaker 2: that we haven't heard really anything from members of Congress 324 00:16:27,520 --> 00:16:29,960 Speaker 2: over the past week or were the last year. 325 00:16:30,000 --> 00:16:33,160 Speaker 4: Even I wish I could say I was, but but 326 00:16:33,240 --> 00:16:37,040 Speaker 4: I'm not. And I think what's really striking is even 327 00:16:37,160 --> 00:16:39,480 Speaker 4: members of Congress who said that they are who are 328 00:16:39,520 --> 00:16:43,600 Speaker 4: not running for reelection, are still unwilling to criticize the 329 00:16:43,640 --> 00:16:46,440 Speaker 4: president directly with you know, like a tiny handful of exceptions, 330 00:16:46,440 --> 00:16:49,160 Speaker 4: but in the Revolican party. So even Fon Tillas, who's like, 331 00:16:49,160 --> 00:16:52,040 Speaker 4: I'm out right, like he said, i am not running 332 00:16:52,040 --> 00:16:53,800 Speaker 4: for reelection because I want to be able to speak 333 00:16:53,840 --> 00:16:56,960 Speaker 4: truth to Trump. The president Trump is saying, Hey, I 334 00:16:56,960 --> 00:16:59,400 Speaker 4: don't actually have any criticisms as the president. It's all 335 00:16:59,440 --> 00:17:02,320 Speaker 4: about his advisors. And just just be clear, like his 336 00:17:02,360 --> 00:17:05,240 Speaker 4: advisors are not the people pushing the Greenland on this. 337 00:17:06,280 --> 00:17:08,280 Speaker 4: You know, that appears to be sort of from within 338 00:17:08,359 --> 00:17:10,919 Speaker 4: the president, the from within the president's own head. And 339 00:17:11,000 --> 00:17:14,879 Speaker 4: so I'm not surprised, both because there's you know, his 340 00:17:14,920 --> 00:17:17,119 Speaker 4: control of the Republican Party's total and people want to 341 00:17:17,119 --> 00:17:20,359 Speaker 4: get re elected. But more than that, I think people 342 00:17:20,400 --> 00:17:23,600 Speaker 4: are scared, right Like, if you stand up to the president, 343 00:17:23,600 --> 00:17:27,000 Speaker 4: if you are seen as his enemy, you are deluged 344 00:17:27,119 --> 00:17:30,800 Speaker 4: by death threats and you know, things that are not 345 00:17:30,840 --> 00:17:33,240 Speaker 4: a normal part of American politics. In some sense, I 346 00:17:33,240 --> 00:17:36,840 Speaker 4: guess you could say that January sixth worked because there 347 00:17:36,840 --> 00:17:38,760 Speaker 4: are quite a few Republicans who are in fear for 348 00:17:38,800 --> 00:17:41,479 Speaker 4: their lives, not just their puular seats. 349 00:17:43,040 --> 00:17:46,080 Speaker 6: So got them, you know, Moving forward, with all of this, 350 00:17:46,320 --> 00:17:48,840 Speaker 6: I'm curious, you know, you mentioned Mark Carney and the 351 00:17:48,840 --> 00:17:51,479 Speaker 6: speech that he gave declaring there's a new world order here, 352 00:17:51,560 --> 00:17:55,160 Speaker 6: the old world order has ruptured. How does Europe respond 353 00:17:55,200 --> 00:17:59,040 Speaker 6: to this moment? Because they seem as disorganized and frankly 354 00:17:59,080 --> 00:18:01,600 Speaker 6: as weak as ever, and you know, when President Trump 355 00:18:01,680 --> 00:18:04,359 Speaker 6: pointed them as weak, it's hard to see how they 356 00:18:04,400 --> 00:18:06,920 Speaker 6: can come to agreement on how to stand up to him. 357 00:18:07,280 --> 00:18:11,600 Speaker 4: So so I mean, I would never I would never 358 00:18:11,760 --> 00:18:14,800 Speaker 4: underestimate the Europeans ability to fold under pressure. And I 359 00:18:14,880 --> 00:18:17,720 Speaker 4: like that is that, I mean that is but I 360 00:18:17,720 --> 00:18:20,560 Speaker 4: think first as you did see like they started to 361 00:18:20,600 --> 00:18:23,720 Speaker 4: put troops into Greenland, right, like that is not a 362 00:18:23,760 --> 00:18:26,520 Speaker 4: minor signal, right, I mean, so there's a lot of 363 00:18:26,560 --> 00:18:28,679 Speaker 4: like we are really starting to push back in that 364 00:18:28,720 --> 00:18:30,280 Speaker 4: way in a way that we hadn't seen before. And 365 00:18:30,320 --> 00:18:32,919 Speaker 4: I think if it had actually come down to an 366 00:18:32,920 --> 00:18:36,720 Speaker 4: American use of force, that has a clarifying right, you know, 367 00:18:36,760 --> 00:18:39,960 Speaker 4: as Oscar walt to the prospect of hanging clarifies the mind, right, 368 00:18:40,200 --> 00:18:43,640 Speaker 4: that I think would have solidified the Europeans together. And second, 369 00:18:43,680 --> 00:18:46,160 Speaker 4: the few gestures they did make, I mean it's very clear, 370 00:18:46,240 --> 00:18:49,240 Speaker 4: right the Trump administration has backed down, right. They made 371 00:18:49,240 --> 00:18:51,320 Speaker 4: lots of threats, they made lots of bluster, they got 372 00:18:51,359 --> 00:18:52,760 Speaker 4: nothing in their declaring victory. 373 00:18:52,760 --> 00:18:53,480 Speaker 3: That is a back down. 374 00:18:53,840 --> 00:18:56,520 Speaker 4: So they are they were backing down from from your 375 00:18:56,840 --> 00:19:00,119 Speaker 4: even what little counter push the Europeans did. But I 376 00:19:00,200 --> 00:19:02,560 Speaker 4: think what you will see is you'll start to see 377 00:19:02,640 --> 00:19:07,119 Speaker 4: real pushback on American companies, right because at this you know, 378 00:19:07,920 --> 00:19:11,440 Speaker 4: no European country could seriously look at American defense contractors 379 00:19:11,440 --> 00:19:14,520 Speaker 4: a trustworthy about the purchaser, right, Like Microsoft is already 380 00:19:14,520 --> 00:19:16,960 Speaker 4: facing pressure from Europeans because there's some things that it did. 381 00:19:17,840 --> 00:19:22,520 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 382 00:19:22,720 --> 00:19:26,680 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 383 00:19:26,880 --> 00:19:30,199 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 384 00:19:30,240 --> 00:19:34,119 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 385 00:19:34,160 --> 00:19:37,439 Speaker 1: can also watch us live every weekday on YouTube and 386 00:19:37,640 --> 00:19:39,600 Speaker 1: always on the Bloomberg terminal