WEBVTT - ASML Guidance Cut, US Bank Earnings 0:00:00.160 --> 0:00:09.040 Bloomberg Audio Studios, Podcasts, radio News. Now you're listening to 0:00:09.080 --> 0:00:13.080 the Bloomberg Intelligence Podcast. Catch us live weekdays at ten 0:00:13.119 --> 0:00:15.840 am Eastern on Apple Card playing Android Auto with the 0:00:15.840 --> 0:00:19.759 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:22.360 or watch us live on YouTube. 0:00:23.480 --> 0:00:26.920 I'm Alexi alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 0:00:27.280 --> 0:00:29.280 We bring you all the top news and business, economics 0:00:29.280 --> 0:00:31.840 and finance through a lens of our Bloomberg Intelligence folks, 0:00:32.080 --> 0:00:33.519 and we have one of them here for it with 0:00:33.600 --> 0:00:36.640 us right now, Man Deep saying he's Bloomberg Intelligence senior 0:00:36.680 --> 0:00:39.760 technology analysts. I'm this ASML News, so let me update 0:00:39.760 --> 0:00:42.360 you on what we see ASML has been halted a 0:00:42.360 --> 0:00:45.880 few times for volatility. The stock dropped like a stone 0:00:46.040 --> 0:00:49.000 after cutting its twenty twenty five net sales and gross 0:00:49.040 --> 0:00:53.240 margin guidance, and its third quarter bookings also missed estimates. 0:00:53.360 --> 0:00:55.880 And these guys make the machines that you need to 0:00:56.000 --> 0:00:59.720 make AI chips, Mandeep. Is this a negative sign for 0:00:59.760 --> 0:01:00.720 a chip demand? 0:01:01.640 --> 0:01:05.920 I mean, look, when it comes to ASML again, everything 0:01:06.000 --> 0:01:09.600 is driven by Kapex. And when I say Capex, it's 0:01:09.640 --> 0:01:13.839 really coming from the foundry guys like TSMC, like Samsung. 0:01:14.360 --> 0:01:18.160 We know Samsung had layoffs recently, so clearly they are 0:01:18.200 --> 0:01:21.920 not doing very well. But TSMC is so the fact 0:01:22.000 --> 0:01:27.280 that their buyers are so concentrated and the geopolitical tensions continue, 0:01:27.440 --> 0:01:32.160 and you know, the second half estimates the comps are tougher. 0:01:32.319 --> 0:01:36.959 To me, this is just a sign of expectations kind 0:01:36.959 --> 0:01:39.640 of going up to the point where you will not 0:01:39.760 --> 0:01:42.840 see any positive revisions from the print this quarter. And 0:01:42.880 --> 0:01:46.120 that's what happened with the SML. Expectations had gone up 0:01:46.520 --> 0:01:49.400 and they didn't surprise to the upside, so we could 0:01:49.440 --> 0:01:50.720 expect the same from others. 0:01:50.880 --> 0:01:53.080 The magnitude of the miss on the orders versus the 0:01:53.200 --> 0:01:57.280 estimate seemed huge to me. Yes, that typical or not 0:01:57.320 --> 0:01:59.280 to play. When they missed, they really miss. 0:02:00.120 --> 0:02:04.400 So that's that comes down to how SEMIS typically is 0:02:04.440 --> 0:02:07.480 when you go back to prior cycles. When these companies miss, 0:02:07.640 --> 0:02:10.040 they miss big. We've seen that with Micron, we have 0:02:10.120 --> 0:02:12.640 seen that with some of the other names. But in 0:02:12.680 --> 0:02:16.880 the case of ASML, the secular drivers are intact. When 0:02:16.919 --> 0:02:20.079 you think about you know, every foundry looking to use 0:02:20.120 --> 0:02:23.679 their machines, looking to go to you know, smaller nodes. 0:02:24.000 --> 0:02:28.400 TSMC actually doing very well, so they are their largest customer. 0:02:28.440 --> 0:02:31.400 And when you think about you know how well TSMC 0:02:31.520 --> 0:02:34.880 has done in terms of their AI revenue. I don't 0:02:34.919 --> 0:02:38.079 think they are cutting back capex, but it's always about 0:02:38.120 --> 0:02:41.519 that incremental buyer when it comes to these semi companies, 0:02:41.840 --> 0:02:44.960 especially the ones that are reliant on CAPEX spend, and 0:02:45.000 --> 0:02:47.360 if you take China out of the equation or the 0:02:47.440 --> 0:02:50.639 fact that they are restricted in some way, those are 0:02:50.680 --> 0:02:53.720 some of your incremental buyers. So that's where it has 0:02:53.720 --> 0:02:54.280 an impact. 0:02:54.520 --> 0:02:57.440 We have a great function on the terminal. It's SPLC. 0:02:57.520 --> 0:02:59.600 It's a supply chain analysis, So if you type in 0:02:59.680 --> 0:03:02.160 as and then go to the supply chain, you can 0:03:02.200 --> 0:03:05.440 see who their competitors and their customers are. So competitors 0:03:05.480 --> 0:03:09.600 are Applied Materials, KLA LAM Research, so you can kind 0:03:09.600 --> 0:03:11.120 of see all of them are going to be down 0:03:11.160 --> 0:03:13.680 on this news. And then to Mandeev's point, customers are 0:03:13.720 --> 0:03:17.120 folks like TSMC, Samsung, Intel also although albeit not a 0:03:17.160 --> 0:03:19.600 huge customer anymore, but you know the problems that Intel 0:03:19.639 --> 0:03:23.640 has had a semiconductor manufacturing Micron. So watch that stock 0:03:24.120 --> 0:03:27.840 sk Heinex am I saying Heinex, Yeah, memory yep, and 0:03:27.880 --> 0:03:30.920 then you have global founderies as well. This is a 0:03:30.960 --> 0:03:33.720 really ignorant question. Where does in Nvidia sit in this 0:03:33.800 --> 0:03:35.400 story that we're talking about. 0:03:35.320 --> 0:03:39.040 Well, Nvidia is sort of the first derivative. So if 0:03:39.080 --> 0:03:43.160 TSMC is not buying machines from ASML, that means they 0:03:43.160 --> 0:03:48.120 are not expanding their supply for the latest cost packaging 0:03:48.200 --> 0:03:51.720 and the foundry side in terms of manufacturing and video's chips. 0:03:52.000 --> 0:03:56.640 So TSMC determines what kind of capacity expansion they're looking 0:03:56.680 --> 0:03:59.960 for for twenty twenty five and beyond, and based on 0:04:00.160 --> 0:04:03.360 that they are placing an order for ASML equipment. So 0:04:04.120 --> 0:04:06.920 it is a very big sign. And to your point 0:04:06.960 --> 0:04:09.800 about Intel being a buyer, well, Intel is under pressure 0:04:09.840 --> 0:04:13.000 to curtail their capex as well, so you're taking a 0:04:13.040 --> 0:04:15.960 lot of the incremental buyers out of the equation, even 0:04:16.000 --> 0:04:18.839 though there is no substitute for ASML. So it's not 0:04:18.920 --> 0:04:21.880 as if ASML is losing market share to anyone. It's 0:04:21.960 --> 0:04:25.320 just the incremental buyers are fewer compared to where they were. 0:04:25.360 --> 0:04:26.599 You know, a couple of quarters back. 0:04:26.760 --> 0:04:29.240 Okay, what I know about AI you can put into 0:04:29.279 --> 0:04:32.279 a shot class. So answer this question like I'm a 0:04:32.279 --> 0:04:35.720 five year old. Is this fundamentally changed the AI story 0:04:36.080 --> 0:04:36.520 for tech? 0:04:37.360 --> 0:04:38.000 It doesn't. 0:04:38.400 --> 0:04:42.240 It's just that everyone is expecting some sort of digestion 0:04:42.360 --> 0:04:44.960 period when it comes to AI. We have had you know, 0:04:45.240 --> 0:04:49.560 a long up to the right sort of scenario so far. 0:04:49.640 --> 0:04:53.200 When it comes to generative AI, and everyone expects a 0:04:53.240 --> 0:04:56.600 pause at some point, their signs are you know, in 0:04:56.760 --> 0:05:01.599 Vidia chip demand remains insay siable despite the restrictions. But 0:05:01.640 --> 0:05:03.880 when it comes to you know, semis, the way it 0:05:03.920 --> 0:05:07.520 works is first your foundry guys are gonna slow down 0:05:07.560 --> 0:05:11.320 their supply expansion. Then you know and Vidia will see 0:05:11.760 --> 0:05:15.280 fewer beat and raises, and so there is a derivative 0:05:15.320 --> 0:05:16.359 aspect to how. 0:05:16.200 --> 0:05:16.840 It flows through. 0:05:16.880 --> 0:05:19.599 It doesn't all happen in the same quarter, and to 0:05:19.680 --> 0:05:22.960 me ESML missing is one of the first signs that 0:05:23.160 --> 0:05:26.280 you know, things may be cooling down a little bit. 0:05:26.360 --> 0:05:28.919 It may not get reflected in a video's quarter this 0:05:29.000 --> 0:05:31.680 time around, but two quarters down the line in Vidia 0:05:31.760 --> 0:05:32.960 could get affected. 0:05:32.760 --> 0:05:35.479 Which then also reads the question like which customer is 0:05:35.520 --> 0:05:38.479 the problem for ASML, Like what are their customer lists 0:05:38.480 --> 0:05:40.600 are calling them saying like guys, look, we don't really 0:05:40.640 --> 0:05:43.400 need the equipment, like we know it may not be TSMC, 0:05:43.520 --> 0:05:45.000 So then is an Intel because that's more of an 0:05:45.040 --> 0:05:48.920 idiosyncratic Intel issue rather than like a broader AI chip 0:05:49.000 --> 0:05:49.960 story issue. 0:05:50.120 --> 0:05:53.839 Yeah, and Intel and Samsung, I mean, look, Samsung, we 0:05:54.000 --> 0:05:57.400 know isn't doing very well on the manufacturing side. When 0:05:57.720 --> 0:06:01.640 people talk about generative AI chips and GPUs, everyone is 0:06:01.680 --> 0:06:05.120 going to TSMC as if there's only game in town. 0:06:05.440 --> 0:06:09.000 Samsung isn't able to make that latest switch to that 0:06:09.080 --> 0:06:12.479 latest note for you know, generative AI chips, and that's 0:06:12.520 --> 0:06:15.920 where we heard Samsung doing a layoff, So clearly they 0:06:15.960 --> 0:06:19.960 are curtailing their costs. Intel is curtailing their costs. So 0:06:20.000 --> 0:06:23.640 you take out two of the top buyers of ASML 0:06:24.040 --> 0:06:28.440 gear and we know they sell you know, multimillion dollar machines, 0:06:28.520 --> 0:06:32.080 So these are expensive purchases. And it's not as if 0:06:32.400 --> 0:06:35.560 ASML is losing business, it's just it won't get reflected 0:06:35.600 --> 0:06:38.120 in the next quarter or you know, the couple of quarters. 0:06:38.360 --> 0:06:42.719 So this ASML deposit us depository receipts down twelve percent. 0:06:42.760 --> 0:06:45.920 Is that a reasonable reaction do you think in this market? 0:06:46.560 --> 0:06:47.159 I think so. 0:06:47.320 --> 0:06:50.760 I mean, given we are seeing some gross margin compression 0:06:50.760 --> 0:06:54.919 and for semi's companies, gross margin is huge. Anytime you 0:06:55.000 --> 0:06:58.480 see gross margin compression, that is your first sign that 0:06:58.600 --> 0:07:01.800 you know thinks are aren't going your way, and it's 0:07:01.960 --> 0:07:04.679 it's a sign that the demand is somewhat cooling off 0:07:05.120 --> 0:07:07.320 or your costs are going up. In this case, I 0:07:07.400 --> 0:07:10.360 think it is a function of orders getting delayed. And uh, 0:07:11.200 --> 0:07:14.040 I think the reaction was warranted. Probably you may see 0:07:14.040 --> 0:07:17.040 an ore reaction today. People may realize they still have 0:07:17.080 --> 0:07:19.680 a strong mode tomorrow and then buy the stock. But 0:07:20.040 --> 0:07:21.320 I think the reaction was warrant. 0:07:21.400 --> 0:07:23.080 We've been looking for this, like a little bit of 0:07:23.080 --> 0:07:24.400 a pickup. 0:07:24.080 --> 0:07:27.480 Or a crap or just something right, like not everything 0:07:27.520 --> 0:07:30.200 in sunshine and roses like all the time, and diy'd 0:07:30.240 --> 0:07:32.680 be really appreciate it. Thanks for the hustle, Mandy saying, 0:07:32.720 --> 0:07:36.000 is there anything you don't know? I wonder if we 0:07:36.040 --> 0:07:36.840 talked to him about. 0:07:36.640 --> 0:07:41.400 Like Childen technos on Wall Street for real, you need 0:07:41.520 --> 0:07:43.960 to stuff I was funding back in the day for you. 0:07:44.280 --> 0:07:47.200 Unbelievable man need Bloomberg intelligion. 0:07:47.800 --> 0:07:49.280 By the way, he's got a cast on, so who 0:07:49.280 --> 0:07:49.920 knows what's going on? 0:07:50.000 --> 0:07:50.880 Oh okay, well we'll get that. 0:07:50.920 --> 0:07:56.040 In commercial break, you're listening to the Bloomberg Intelligence podcast. 0:07:56.320 --> 0:07:59.360 Catch us live weekdays at ten am Eastern on Apple 0:07:59.400 --> 0:08:02.640 car Play and Android Auto with the Bloomberg Business. You 0:08:02.680 --> 0:08:05.960 can also listen live on Amazon Alexa from our flagship 0:08:06.000 --> 0:08:09.840 New York station just Say Alexa playing Bloomberg eleven thirty. 0:08:11.720 --> 0:08:14.920 And these banks just I know, Rush did today, I 0:08:14.960 --> 0:08:18.360 mean really really really solid numbers. Although Golden sastock is 0:08:18.400 --> 0:08:21.600 now down by about seven tenths of one percent. Yeah, 0:08:21.840 --> 0:08:24.320 that's actually kind of surprising for me, But I'm taking 0:08:24.360 --> 0:08:27.600 a look at say, Bank of America. That stock is 0:08:27.760 --> 0:08:30.240 also down now by eight tenths of one percent. But 0:08:30.320 --> 0:08:33.679 on the surface, these numbers looked really great. City stock, yeah, 0:08:33.720 --> 0:08:33.960 I thought. 0:08:34.440 --> 0:08:37.199 And the capital markets, yeah, the capital markets. The trading 0:08:37.200 --> 0:08:40.360 business I thought did very well. But I know the 0:08:40.400 --> 0:08:44.000 street likes the more predictable feed business in this special. 0:08:43.800 --> 0:08:45.040 Yea, But they didn't seem to care about that when 0:08:45.040 --> 0:08:47.160 it came to JP Morgan, Malls Fargo. You know who 0:08:47.240 --> 0:08:48.680 might know the answer to this, I think I know 0:08:48.800 --> 0:08:52.160 Alison Williams, Bloomberg Intelligence senior analysts for global banks and 0:08:52.160 --> 0:08:55.240 asset managers. So for my you know, let I read 0:08:55.320 --> 0:08:57.400 here there were really good numbers, and then the stocks 0:08:57.400 --> 0:08:59.240 were down and tell us why they were, And it. 0:08:59.280 --> 0:09:01.959 Is all about the expectations. Keep in mind that we 0:09:02.400 --> 0:09:05.800 did get sort of a change in expectations not necessarily 0:09:05.840 --> 0:09:09.400 baked into the numbers with the reports on Friday, the 0:09:09.520 --> 0:09:12.880 very strong trading and fees for JP Morgan, which set 0:09:12.920 --> 0:09:17.360 the tone, and the banks delivered on today net interest income, 0:09:17.920 --> 0:09:21.480 which you know for JP Morgan basically they had talked 0:09:21.520 --> 0:09:24.800 it down in September. Then they beat the numbers and 0:09:25.080 --> 0:09:29.480 raised four Q guidance, but Jamie still talking negatively about 0:09:29.520 --> 0:09:34.160 next year. And for Bank of America, really they did 0:09:34.200 --> 0:09:37.760 exactly what they said. Interest income trought, the number came 0:09:37.800 --> 0:09:40.760 in and they are not going to talk about guidance 0:09:40.800 --> 0:09:43.720 for not interesting income until you know the next call 0:09:43.840 --> 0:09:47.320 for next year. So I think it's I think the 0:09:47.360 --> 0:09:50.480 stock is probably fine, just reacting to things coming in 0:09:50.600 --> 0:09:55.559 basically as you know, good but versus sort of raised expectations. 0:09:56.000 --> 0:09:59.720 What's the expectation here for when you talk to your 0:09:59.720 --> 0:10:03.440 invest about just regulation of banks, where's that headwind? Because 0:10:03.480 --> 0:10:04.960 I know it has been a headwind off and on 0:10:05.080 --> 0:10:07.200 for really since a great financial crisis. Where are we 0:10:07.240 --> 0:10:07.880 now with the basil? 0:10:08.280 --> 0:10:11.360 Yeah, it is, and it's depends on the election, Okay 0:10:11.440 --> 0:10:17.000 at this point, right, so if you know, Trump wins, 0:10:17.320 --> 0:10:20.640 then the role could be derailed sort of indefinitely. So 0:10:20.720 --> 0:10:25.959 that would be positive for banks if you know democratic 0:10:26.520 --> 0:10:30.560 when will sort of continue on the same path. So Basel, 0:10:31.880 --> 0:10:33.959 you know, the rules were very onerous that were introduced 0:10:34.040 --> 0:10:38.440 last year. Basically we've we've gotten the signal that they're 0:10:38.480 --> 0:10:41.840 going to be lighter. You know, we sort of had 0:10:42.000 --> 0:10:46.120 had those expectations set within the last several weeks, but 0:10:46.200 --> 0:10:47.679 we're still waiting for that proposal. 0:10:48.400 --> 0:10:51.280 When we just break down the broader sort of investment banking, 0:10:52.440 --> 0:10:55.440 can we say M and A's back, so like they 0:10:55.480 --> 0:10:58.160 seem to be talking good about it, that's not a sentence. 0:10:58.160 --> 0:11:01.160 They seem to be talking like positively about M and A. 0:11:02.240 --> 0:11:04.959 So it is, and you know so from Goldman Sachs, 0:11:04.960 --> 0:11:07.760 who's the leader in EM and A. Very good numbers 0:11:08.080 --> 0:11:12.920 and the fact that their pipeline is upsequentially. 0:11:13.760 --> 0:11:14.360 Is very good. 0:11:14.400 --> 0:11:16.800 But fourth quarter does tend to be seasonally strong, so 0:11:17.600 --> 0:11:19.599 we do have to see is it, you know, is 0:11:19.640 --> 0:11:22.120 it just the typical seasonality or is there a little 0:11:22.120 --> 0:11:23.040 bit more momentum. 0:11:23.559 --> 0:11:25.240 Are all our friends on Wall Street are thinking get 0:11:25.240 --> 0:11:26.480 paid like really well. 0:11:26.280 --> 0:11:29.480 This year, I mean it, you know, bonus bonuses do 0:11:29.720 --> 0:11:32.800 look good for this year, especially for death fees. I 0:11:32.800 --> 0:11:36.120 mean really that for September. 0:11:37.000 --> 0:11:40.760 Yeah, well, underwriting right was was really quite strong across 0:11:40.760 --> 0:11:43.040 the board. What are some of the questions that you 0:11:43.160 --> 0:11:45.840 have now? And whichever bank you want to focus on, 0:11:45.920 --> 0:11:47.520 Like what's a big glaring. 0:11:48.800 --> 0:11:50.680 So you know, the election is is going to be 0:11:50.679 --> 0:11:53.720 important in terms of what that means for the for 0:11:53.800 --> 0:11:55.800 the capital rules. I think that's that's sort of the 0:11:55.800 --> 0:11:59.880 big structural question. You know, markets are strong. Things look 0:12:00.240 --> 0:12:02.720 that momentum is likely to continue in the fourth quarter. 0:12:03.120 --> 0:12:06.400 I think maybe the next thing that we're looking at is, 0:12:06.960 --> 0:12:09.280 you know, can we get signs of improving long growth 0:12:09.360 --> 0:12:13.240 because that is really you know, interesting income. That recovery 0:12:13.280 --> 0:12:15.959 is what investors are looking for. Can we get a 0:12:16.040 --> 0:12:18.960 momentum there? You know, the other side of the lending 0:12:19.000 --> 0:12:23.360 business is credit, and all signs are are pointing pretty 0:12:23.360 --> 0:12:23.920 good right there. 0:12:23.960 --> 0:12:25.960 All right, As a former city banker, I have an 0:12:26.000 --> 0:12:29.559 interest in that institution. Where is Jane Fraser in the 0:12:29.600 --> 0:12:33.600 turnaround of that bank? And does the street believe that 0:12:33.640 --> 0:12:35.560 she can get it to the point where it generate 0:12:35.640 --> 0:12:36.880 really competitive returns. 0:12:37.440 --> 0:12:40.000 You know, I think, you know, the street has been 0:12:40.040 --> 0:12:43.040 burned so many times for getting their hopes up on 0:12:43.120 --> 0:12:46.880 City Group over the years, and so City Group is 0:12:46.920 --> 0:12:49.640 delivering on what they want to do. We saw that 0:12:49.720 --> 0:12:53.320 in the in the numbers this quarter. They like the 0:12:53.320 --> 0:12:56.040 other banks, are getting a lot of upside from markets 0:12:56.720 --> 0:13:00.440 by keeping the costs stable. And so for them it's 0:13:00.520 --> 0:13:03.679 really you know, these regulatory headwinds which are so hard 0:13:03.720 --> 0:13:07.520 to predict, and you know, I think the best thing 0:13:07.960 --> 0:13:10.320 that could have happened to City is this you know, 0:13:10.400 --> 0:13:13.880 regulatory scrutiny that finally is making them, you know, make 0:13:14.000 --> 0:13:15.800 a lot of the changes that probably should have been 0:13:15.840 --> 0:13:19.600 done a long time ago, you know, getting the risk 0:13:19.640 --> 0:13:23.600 systems together, improving their operating efficiency, which at the end 0:13:23.640 --> 0:13:25.880 of the day will will be helpful in the long term. 0:13:25.920 --> 0:13:28.360 On Friday, we talked about a well spargo in particular, 0:13:28.440 --> 0:13:30.080 and you were saying that the big question you have 0:13:30.120 --> 0:13:33.120 is when the loans pick up, whend a loans pick up, 0:13:33.240 --> 0:13:34.959 and what do we learn from say City and Bank 0:13:34.960 --> 0:13:35.720 of America on that. 0:13:36.520 --> 0:13:39.439 So it's hard to say, you know, I think that 0:13:39.800 --> 0:13:44.520 it's it's going forward, right. So the FED cuts happened 0:13:44.679 --> 0:13:46.439 in the last couple of the weeks of the quarter, 0:13:47.160 --> 0:13:50.200 so we're not necessarily going to see the impact of 0:13:50.240 --> 0:13:53.880 that right away. Maybe the Senior Loan Officer survey will 0:13:54.360 --> 0:13:56.679 give us a little bit of insight when that comes 0:13:56.679 --> 0:13:58.040 out in a couple of weeks. 0:13:58.400 --> 0:14:01.400 All Right, we got more inans Stanley tomorrow, I believe. 0:14:01.160 --> 0:14:05.480 Organ standing tomorrow. They have you know, really raised the 0:14:05.520 --> 0:14:09.920 bar for them all these all these banks, especially Goldman, 0:14:09.960 --> 0:14:12.960 strong numbers today, so we'll see if they can deliver 0:14:13.040 --> 0:14:16.319 on that. They tend to be more skew towards equities trading. 0:14:17.200 --> 0:14:19.240 That's been the source of strength, So we'll see. 0:14:19.520 --> 0:14:21.760 And are they going to be like past cycles they 0:14:21.760 --> 0:14:25.640 being all the big banks like next week all issuing that. 0:14:27.280 --> 0:14:30.680 Yeah, that tends to be. That tends to be the focus. 0:14:30.880 --> 0:14:33.040 And one more thing I'll add about them. You know, 0:14:33.120 --> 0:14:36.760 while the institutional there's a lot of positive momentum, I 0:14:36.800 --> 0:14:39.200 think it will be all about the wealth flows for them, 0:14:39.200 --> 0:14:42.480 So they will need to you know, if they get 0:14:42.480 --> 0:14:45.560 institutional right and ride this way with everyone else, that's great, 0:14:46.240 --> 0:14:48.280 but they do need to deliver and show that that 0:14:48.280 --> 0:14:51.600 wealth business is continuing together at which they always which 0:14:51.720 --> 0:14:54.400 you know, the markets should be very helpful on that 0:14:54.560 --> 0:14:55.560 front as well. 0:14:55.360 --> 0:14:59.240 Right, because it's expanding pie that they're all competing for now, Right, 0:14:59.320 --> 0:15:02.440 it's not like tiny pie that isn't growing at the 0:15:02.520 --> 0:15:05.640 end of the day. One more question about Goldman and 0:15:05.680 --> 0:15:07.600 this is a little personal for me because I have 0:15:07.600 --> 0:15:13.080 a Marcus account for their consumer Did they what they say? 0:15:13.120 --> 0:15:14.800 Did they say that they're lowering rates a lot and 0:15:14.840 --> 0:15:15.480 they of. 0:15:15.600 --> 0:15:20.200 Steel inflows were noted during the four point one Now, yeah, 0:15:20.280 --> 0:15:22.400 it's just another message. 0:15:22.560 --> 0:15:25.080 I mean, come on, guys, like they just lowered ones. Anyway, 0:15:25.400 --> 0:15:27.520 How are they doing on offloading all the risk and 0:15:27.560 --> 0:15:29.840 stuff for their consumer business? I know that they already 0:15:29.880 --> 0:15:32.400 offloaded a lot to GM. They took a write down 0:15:32.440 --> 0:15:34.200 for it or charge for it. Where are they in 0:15:34.200 --> 0:15:34.800 this process? 0:15:34.880 --> 0:15:37.040 Yeah, so one step closer with the sale of the 0:15:37.200 --> 0:15:40.520 of the GM portfolio. They are hanging on to Marcus. 0:15:40.640 --> 0:15:45.480 But you know, FED lowers rates. That positive for the 0:15:45.520 --> 0:15:51.320 banks means that there's less competition, less competitive pricing pressure, 0:15:52.120 --> 0:15:54.560 but for the consumer, you know, not as favorable. 0:15:54.720 --> 0:15:56.000 You know what I'm gonna do, I'm gonna find something 0:15:56.040 --> 0:15:58.240 that is competitive. I'm gonna go to those munis like 0:15:58.400 --> 0:16:00.760 Plasman saying like, see later we're gets some take my 0:16:00.800 --> 0:16:01.920 money and run free. 0:16:02.000 --> 0:16:04.200 Yeah, but you can't pull your money out at a 0:16:04.240 --> 0:16:06.080 moment's notice, Marcus. 0:16:06.080 --> 0:16:09.120 No, I know, I know, but I'll know, Like in general, 0:16:09.200 --> 0:16:10.800 I should have known when John Tucker going to Marcus 0:16:10.800 --> 0:16:11.800 account that that was the top. 0:16:12.040 --> 0:16:13.800 Yes, you're playing data. 0:16:13.920 --> 0:16:16.080 Yeah, totally fault. All right, Alison, thanks a lot. We 0:16:16.120 --> 0:16:20.240 really appreciate. Alison Williams, Bloomberg Intelligence, a senior Global banks 0:16:20.240 --> 0:16:21.920 and Asset Manager analyst. 0:16:23.480 --> 0:16:27.360 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:27.440 --> 0:16:30.520 weekdays at ten am Eastern on Affo car playing Android 0:16:30.560 --> 0:16:33.600 Auto with the Bloomberg Business app. Listen on demand wherever 0:16:33.680 --> 0:16:36.840 you get your podcasts, or watch us live on YouTube. 0:16:38.480 --> 0:16:40.800 Let's not bowing. They are back in the news again, 0:16:41.040 --> 0:16:45.200 and when we talk news. George Ferguson again. George Ferguson, 0:16:45.280 --> 0:16:48.760 senior Aerospace defense analyst for Bloomberg Intelligence. George, I'd like 0:16:48.880 --> 0:16:51.400 this move. Boeing puts up a twenty five billion dollar 0:16:51.760 --> 0:16:55.120 shelf offering gives us some flexibility to shore up it's 0:16:55.160 --> 0:16:57.160 balance sheet. I know we have to talk about dilution, 0:16:57.360 --> 0:16:59.520 but tell us what Boeing is doing here with this 0:16:59.600 --> 0:17:00.920 twenty five billion dollar shelf. 0:17:02.720 --> 0:17:05.640 Yeah, so I think Kelly Orpberg went out and brought 0:17:05.720 --> 0:17:08.240 up the big guns, right so, I think he wants 0:17:08.320 --> 0:17:10.359 to shore up the balance sheet. I think so he 0:17:10.400 --> 0:17:13.440 can show the union that Boeing has plenty of cash 0:17:13.480 --> 0:17:16.200 to make it through this strike. I think that's part 0:17:16.240 --> 0:17:18.200 of a strategy, you know, to get the union back 0:17:18.240 --> 0:17:22.720 to the table and get them to rethink probably some 0:17:22.920 --> 0:17:23.600 of their demands. 0:17:23.800 --> 0:17:25.360 That's that's what I see here. 0:17:27.000 --> 0:17:29.080 And what is the sense of their balance sheet? Just 0:17:29.119 --> 0:17:30.680 give us sense, George. I know you've been calling it 0:17:30.760 --> 0:17:34.040 out and highlighting it for us for quarters. Now talk 0:17:34.080 --> 0:17:36.400 to us about kind of the cash on their balance sheet, 0:17:36.840 --> 0:17:38.879 the cash burn. How long can they go before they 0:17:38.920 --> 0:17:40.959 really do need to think about fresh capital. 0:17:42.560 --> 0:17:45.040 Yeah, so I think they need capital now, right So, 0:17:45.080 --> 0:17:47.280 I think it is part of why Kelly or Berg 0:17:47.600 --> 0:17:51.280 and Boeing and going going to the market, because you know, 0:17:51.359 --> 0:17:54.720 they just pre announced earnings for the third quarter. Cash 0:17:54.800 --> 0:17:57.720 balances were right around ten billion. That's about what they've 0:17:57.760 --> 0:18:01.000 told us they need to operate the kind company. So 0:18:01.080 --> 0:18:03.160 I think that really put their back up against the wall. 0:18:03.160 --> 0:18:06.080 As you know, they're managing a dance with the creditors 0:18:06.080 --> 0:18:09.240 as well, because you know, they're really up against the 0:18:09.400 --> 0:18:11.520 edge on their investment grade credit rating. 0:18:11.560 --> 0:18:13.840 So I think it really precluded going to the. 0:18:14.480 --> 0:18:19.560 Debt markets here, and so you know, I guess the 0:18:19.680 --> 0:18:22.239 question is too now is it's a stain power right now? 0:18:22.320 --> 0:18:26.000 Long can Boeing manage with the ten billion? They couldn't 0:18:26.000 --> 0:18:29.879 manage very long strike, And so to get better negotiating 0:18:30.560 --> 0:18:32.840 leverage with the unions, I think if you put another 0:18:33.080 --> 0:18:35.760 ten fifteen billion dollars in the balance sheet here, I 0:18:35.800 --> 0:18:38.800 think it gives you at least a quarter, probably multiple 0:18:38.920 --> 0:18:43.360 quarters of potential cash burn. So you can tell the union, look, 0:18:43.359 --> 0:18:47.560 I'm gonna I'm gonna wait this out into you, you know, 0:18:48.000 --> 0:18:51.400 bring me some demands that I can make. 0:18:52.359 --> 0:18:54.120 Just hold that thought for one second, because I want 0:18:54.119 --> 0:18:56.920 to point out ASML, which is a company that makes 0:18:57.000 --> 0:19:01.440 lithography machines so you can make AI is now halted 0:19:01.560 --> 0:19:04.440 after a steep drop and earnings that did not look great. 0:19:05.240 --> 0:19:08.680 Third quarter net sales did come in higher than estimated, 0:19:08.760 --> 0:19:12.320 but their third quarter bookings fell below about two point 0:19:12.400 --> 0:19:16.840 sixty three billion euros, substantially below the estimate. They're also 0:19:16.880 --> 0:19:20.080 taking a look at twenty twenty five net sales, also 0:19:20.359 --> 0:19:24.960 below estimates. This is quite interesting read through for AI Again, 0:19:25.040 --> 0:19:28.639 they make the lithography machines that help make AI chips, 0:19:28.920 --> 0:19:31.920 and that stock is now halted after falling steeply after 0:19:31.960 --> 0:19:35.239 those numbers came out at shocking shocking. Right, let's take 0:19:35.240 --> 0:19:36.919 a look at Videota in video down. 0:19:36.800 --> 0:19:39.119 Four point four percent just on that news, just in 0:19:39.119 --> 0:19:39.960 the last couple of minutes. 0:19:40.000 --> 0:19:42.240 Okay, so not only just from the news over the 0:19:42.640 --> 0:19:45.240 over the night, George Foy, let you go, how much 0:19:45.320 --> 0:19:46.399 time does this by Boeing? 0:19:48.440 --> 0:19:51.040 I think ad buys them at least a quarter, if 0:19:51.119 --> 0:19:51.520 not more. 0:19:51.720 --> 0:19:53.800 I mean, look, I think if you're negotiating with the union, 0:19:54.280 --> 0:19:56.600 I'd be really surprised if the average union member is 0:19:56.640 --> 0:20:00.399 ready to go a quarter without a job and so, 0:20:00.760 --> 0:20:01.600 you know, without income. 0:20:01.720 --> 0:20:03.400 I shouldn't say without a job. They have a job 0:20:03.440 --> 0:20:06.119 at Boeing, I guess, but without an income. So I 0:20:06.200 --> 0:20:08.280 think it gives them plenty of staypowner. I think that's 0:20:08.320 --> 0:20:10.040 what Boeing has. 0:20:09.920 --> 0:20:11.359 To do here, right, If they're going to get the 0:20:11.440 --> 0:20:14.520 union to come back to the table and negotiating good faith. 0:20:14.320 --> 0:20:16.000 They have to be able to say, look, We're not 0:20:16.160 --> 0:20:18.480 over a barrel. We can wait you out. 0:20:18.680 --> 0:20:18.800 Now. 0:20:18.880 --> 0:20:21.160