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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 2: Or Melinda sitting in for Alex Steel Paul Swin. You're

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Speaker 2: live here in on OL Bloomberg Interactive Broker Studio or

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Speaker 2: streaming live on YouTube as well, So head over to

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Speaker 2: YouTube dot com search Bloomberg Podcast. That's where you'll find us.

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Speaker 2: Earlier today on Surveance, we had Dan Ives from What

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Speaker 2: Bush Securities on doing a little victory lap on his

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Speaker 2: bullish tesla call. The stocks up seventeen percent today, the

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Speaker 2: most since March of twenty twenty one, on the back

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Speaker 2: of some pretty darn good earnings numbers. Let's break it

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Speaker 2: down to Craig Trudell. He's a Global autos editor for

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Speaker 2: Bloomberg News. Joins us from Zoom from London on Zoom

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Speaker 2: on that technology there. Hey, Craig, what stood out to you?

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Speaker 2: Why do you think the stock is up seventeen percent today?

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Speaker 2: What did you see it out of earnings release?

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Speaker 3: I mean it was really It's really quite a combination,

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Speaker 3: because oftentimes it feels like it's not necessarily the case

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Speaker 3: that you can count on both both earnings and the

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Speaker 3: vision to be positive. In this case, they both both

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Speaker 3: were working in Musk's favor. I think the earnings were

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Speaker 3: much better than expected. I do think that those expectations

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Speaker 3: came down quite a bit over the last year year

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Speaker 3: and a half, but they sort of they did exceed

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Speaker 3: expectations by pretty significant measures. And the profit margins in particular,

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Speaker 3: or something that everybody keeps a very close eye on

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Speaker 3: their automotive profit margins when you back out the credits

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Speaker 3: that they sell to other automakers for regulatory purposes, those

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Speaker 3: in particular, I feel like, are you know, just quarter

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Speaker 3: in and quarter out what everybody looks at? That was

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Speaker 3: a big beat. And then I think Musk was as

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Speaker 3: self assured as I've ever heard. He's never won lacking

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Speaker 3: in confidence. And for him to throw out, you know,

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Speaker 3: twenty to thirty percent sales increase for next year, I

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Speaker 3: think was very surprising to people. After you know, we're

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Speaker 3: nine ten months into the year and they've delivered fewer

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Speaker 3: vehicles in twenty twenty four than they did in twenty

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Speaker 3: twenty three.

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Speaker 4: Hey, Craig, So when I'm walking around New York City

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Speaker 4: ever so often, every so often I will see, to

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Speaker 4: my surprise, a cyber truck. What is the leaatest on that?

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Speaker 4: What do they say in earnings? What can we expect there?

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Speaker 3: Yeah, they said that it was gross margin positive for

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Speaker 3: the first time in the most recent quarter. And so

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Speaker 3: we're almost we're roughly a year into the launch of

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Speaker 3: that vehicle. So I would I would say that's a

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Speaker 3: little on the early side, just relative to how Tesla

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Speaker 3: has you know, are done with with the new vehicle

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Speaker 3: launches in the past. So so that is another another

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Speaker 3: positive I think, you know, in terms of volume, it's

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Speaker 3: it's still quite low relative to the Model Y and

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Speaker 3: the Model three. That is still where you see the

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Speaker 3: vast majority of of Tesla's deliveries, so much so that

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Speaker 3: Tesla has even yet to break out that that vehicle.

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Speaker 3: And in terms of you know, quarterly results, and so

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Speaker 3: you know, I think we have a rough idea of

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Speaker 3: how many they've sold. Ironically, based on the recalls that

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Speaker 3: the company has had to do with the vehicle. It's

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Speaker 3: it's as of the latest recall was, which was just

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Speaker 3: a few weeks ago. It was around twenty seven thousand units,

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Speaker 3: I believe, So, you know, that's that's pretty small for

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Speaker 3: a company that you know, may sell somewhere around one

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Speaker 3: point eight million vehicles this year.

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Speaker 2: Where is the the focus from the company here in

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Speaker 2: terms of they've seems like they have a lot of

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Speaker 2: balls in their obviously the car business itself, robotaxis, artificial intelligence.

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Speaker 2: What do they what do you think they really want

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Speaker 2: you to focus on? What does Elon want investors to

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Speaker 2: focus on?

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Speaker 5: Do you think?

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Speaker 3: I think that's actually really one of the most interesting

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Speaker 3: things here. And I think Liam Denning's column for Bloomberg

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Speaker 3: Opinion this morning, uh, you know, does a great job

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Speaker 3: of laying out this idea that uh, you know, Musk's

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Speaker 3: emphasis has really been on, you know, don't don't bother

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Speaker 3: with the here and now, forget uh you know, forget

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Speaker 3: that the near term earnings. The sort of big potential

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Speaker 3: for this company has to do with, you know, selling

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Speaker 3: self driving cars and humanoid robots and and things that uh,

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Speaker 3: you know, we've heard Elon talk about time and time again,

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Speaker 3: but not actually deliver. Uh. And I think you know,

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Speaker 3: if if if you're sort of looking at this company

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Speaker 3: sort of class half full. It's it's uh, you know,

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Speaker 3: I'm I'm less concerned than I am today about the

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Speaker 3: here and now of this company and the earnings power

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Speaker 3: of Tesla and its current business, and therefore, you know,

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Speaker 3: more encouraged that they have, you know, the ability and

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Speaker 3: the time and the financial wherewithal to go out and

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Speaker 3: pursue those you know, big stretch goals that Musk has

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Speaker 3: stepped for the company, and you know, depending on who

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Speaker 3: you ask, you know may or may not be able

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Speaker 3: to actually follow through on his various predictions.

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Speaker 4: Well, from an equity perspective, this stock has been all

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Speaker 4: over the place this year. I mean we were just

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Speaker 4: looking earlier and year to date the stock was in

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Speaker 4: the red. Now it seems as though today's games have

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Speaker 4: pushed it to drift about eight ten percent higher for

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Speaker 4: the year. What's the goal case here? What are people saying,

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Speaker 4: how many how much legs do they have to run?

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Speaker 4: Can the stock go much further? What's the consensus there?

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Speaker 3: You're absolutely right. I mean back in April this was

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Speaker 3: a stock that was down forty three percent for the year,

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Speaker 3: and so for them to have, you know, come all

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Speaker 3: the way back. They it sold off quite a bit,

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Speaker 3: you know, after the Robotaxi unveiling just a few weeks ago,

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Speaker 3: and you know, we we've now seen the shares go

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Speaker 3: go positive again for the year. We'll see if they

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Speaker 3: stay in positive territory. I think, you know, whether whether

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Speaker 3: or not the company can can actually grow next year

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Speaker 3: with deliveries, I think is really important because even Musk,

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Speaker 3: who's you know, sort of perpetually said, you know, next

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Speaker 3: year will be our year for autonomy, even he is saying,

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Speaker 3: you know that that this cyber cab that they showed

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Speaker 3: a couple of weeks ago isn't going to be ready

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Speaker 3: in twenty twenty six, and so we need this company

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Speaker 3: to bring you know, more affordable vehicles to market, to

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Speaker 3: to make teslas more accessible to to to more consumers

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Speaker 3: and get back to when it's you know, growing again,

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Speaker 3: to put it to put it, put it simply, and

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Speaker 3: you know, I think it's still unclear what exactly they

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Speaker 3: have to offer that's going to make make help them

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Speaker 3: get there.

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Speaker 2: Craig, thanks so much for joining us. Really appreciate getting

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Speaker 2: some of your time and perspective. Craig Trudell, He's a

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Speaker 2: global autos editor for Bloomberg News. He's based in London,

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Speaker 2: joining us via that zoom thing. You know, I think

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Speaker 2: for me, and I think for a lot of investors

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Speaker 2: and a lot of people that just think about the

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Speaker 2: EV business, what is the ultimate demand out there for EV's.

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Speaker 2: We had the early adopters, go, We've had the people

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Speaker 2: that just love the technology.

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Speaker 5: You know, they've bought their evs.

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Speaker 2: Now it's about okay, Now I got to service the

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Speaker 2: rest of the people the exact one value the people

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Speaker 2: they may want cool design.

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Speaker 4: Get the rest of us on board.

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Speaker 2: Yeah, So I'm just not sure how that plays on.

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Speaker 2: We've seen some of the existing auto manufacturers, like the

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Speaker 2: Volkswagens and Fords kind of.

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Speaker 6: Pulled back a little bit exactly.

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Speaker 4: They started to pull back on their development there because

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Speaker 4: they weren't really seeing demand as you just mentioned. So

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Speaker 4: I think it's really interesting when we think about the

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Speaker 4: broader landscape and whether or not they're actually going to

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Speaker 4: be able to attract the broader group.

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Speaker 5: Yeah.

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Speaker 2: You know, you got that whole thing about the charging network.

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Speaker 2: You got to you know a lot of people I

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Speaker 2: talked to so say, when the charging network is like

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Speaker 2: the gasoline state, network in this country.

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Speaker 5: That's one I'll think about an EP.

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Speaker 2: I don't know how that all plays out, but great

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Speaker 2: day for Tesla and Edge shareholders.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: Following not getting the deal done? What's going on there?

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Speaker 2: Because they need to get people back to work. They

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Speaker 2: need to start cracking out some airplanes and getting some

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Speaker 2: cash into the door. Next guest has some thoughts on

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Speaker 2: all this whole labor negotiation, unrest issues, workplace issues.

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Speaker 5: Jessica Kriegel joints.

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Speaker 2: It's in our Bloomberg Interactive Broker Studio chief scientists of

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Speaker 2: Workplace Culture and the firm is named Culture Partners. So

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Speaker 2: there you go, joining us here in our Bloomberg Interactive

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Speaker 2: Broker Studio. Thirty five percent seen or thirty percent whatever.

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Speaker 2: It was seemed pretty good to me, helping out with

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Speaker 2: the four to one k's. Then labor comes back with

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Speaker 2: defined pensions. Now my response would be nobody. I'm six

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Speaker 2: years old. I don't know one person with a defined

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Speaker 2: benefit pension plan that's nineteen seventies. Can you give us

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Speaker 2: your thoughts about what's happening between Boeing and their striking workers.

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Speaker 5: How do you view it?

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Speaker 7: I don't know anyone that has a pension anymore these days,

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Speaker 7: but they've been asking for it since the beginning, and

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Speaker 7: it's a non starter. They're not going to get the pensions.

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Speaker 7: I think Boeing will literally go bankrupt if they have

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Speaker 7: to give up those pensions. But they have been asking

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Speaker 7: for forty percent since the beginning. Boeing originally offered twenty five.

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Speaker 7: They said overwhelmingly absolutely not enough. Then they came back

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Speaker 7: at thirty percent, which was their quote unquote best and

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Speaker 7: final offer, but apparently not because two weeks later they

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Speaker 7: came back with thirty five percent. And they've got two

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Speaker 7: thirds of the union that is still saying that's not enough,

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Speaker 7: a third has been converted, a third did say yeah,

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Speaker 7: I'll go back to work for that. So they're getting

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Speaker 7: closer and they're going to have to bridge that gap.

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Speaker 7: I think they'll have to go to forty percent, and

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Speaker 7: since they're probably not going to get the pension, they

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Speaker 7: might have to go above forty percent. They might have

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Speaker 7: to go to forty five percent in order to say

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Speaker 7: no pensions. But we'll give you more, and we'll give

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Speaker 7: you a bigger signing bonus to make up for all

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Speaker 7: the time that they haven't been paid. It's hard right now.

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Speaker 3: For the union workers.

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Speaker 4: Jessica, I know that you are of the opinion that

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Speaker 4: management has been so focused on their balance sheet that

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Speaker 4: they've pretty much forgotten about the workplace culture. What does

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Speaker 4: that look like? I mean, how do you kind of

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Speaker 4: turn that around? You did say that it seems like

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Speaker 4: it's a little bit too late now.

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Speaker 7: Yeah, I mean CEOs all over the world are focused

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Speaker 7: on driving results right now, and some can take that

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Speaker 7: so literally to only mean focusing on the financial results.

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Speaker 7: But as we're seeing with Boeing, this is a classic

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Speaker 7: example if you focus so much on the financials and

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Speaker 7: not on the hearts and minds of your employees and

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Speaker 7: bringing people along for the ride. Culture is really about

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Speaker 7: how you think and act. It's not about the buzzwords

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Speaker 7: you have on a poster board about your values. Kelly

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Speaker 7: Orper did an interview the other day saying we got

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Speaker 7: to focus on culture change, and we're doing that right

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Speaker 7: now by revisiting our values. I mean, is that really

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Speaker 7: going to move the need for the people who feel

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Speaker 7: so much resentment, feel like they've lost so much, they

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Speaker 7: have to see leaders take the lead on culture change,

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Speaker 7: which means pay us what we think we're owed, show

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Speaker 7: up on the floor, stop focusing so much on the

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Speaker 7: balance seat, and also focus on quality control. Also focus

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Speaker 7: on what we as people bring to the organization and

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Speaker 7: what we need.

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Speaker 2: High school buddy Mine life long engineer at Boeing in Seattle,

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Speaker 2: and he says, hey, you know, he's not a radical dude,

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Speaker 2: He's just saying, hey, this is what I think happened.

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Speaker 2: They've management left the c suite, left Seattle twenty years

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Speaker 2: ago for Chicago.

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Speaker 5: Now they're in DC.

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Speaker 2: That felt to a lot of these engineering types who

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Speaker 2: take pride in the work that we lost their support,

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Speaker 2: or we lost their support of the engineers drive Boeing

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Speaker 2: and they started focusing more on profitability as opposed to

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Speaker 2: the engineering prowess of Boeing.

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Speaker 5: And that's twenty years ago.

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Speaker 2: Yeah, and one could argue they think that's the beginning

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Speaker 2: of perhaps some of these problems that we're now seeing

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Speaker 2: twenty years later, I don't know how you get that back.

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Speaker 7: Well. I think they've done a good job actually, because

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Speaker 7: Kelly Orperg is someone with an engineering background, so they

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Speaker 7: have realized they don't need to be encounter at the

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Speaker 7: c suite level. They need someone who's been an engineer,

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Speaker 7: who understands he's saying, let's get back to the floor.

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Speaker 7: He bought a house in Seattle. He said, we're going

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Speaker 7: back to Seattle. So there is already a shift to

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Speaker 7: make up for what that is a well documented complaint

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Speaker 7: that the union workers has if you lost the soul

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Speaker 7: of this company, and this is a fight for the soul, right.

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Speaker 2: I always tell people that one of the great drives

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Speaker 2: from an airport to a downtown is in Seattle. You

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Speaker 2: get out of your plane in Sea Tech, you get

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Speaker 2: on one over that eye whatever that is, and you

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Speaker 2: drive to Seattle.

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Speaker 5: It's about a forty minute drive in.

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Speaker 2: On the left of you on the highway for almost

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Speaker 2: forty miles is Boeing, and it's airfield after airfre right,

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Speaker 2: and hangar after hangar, and plane after plane, and they're

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Speaker 2: taken off and flane. All about that to me is

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Speaker 2: Boeing and the fact when senior management left there, it

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Speaker 2: seemed like for a lot of people, oh lost to

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Speaker 2: heart and soul there.

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Speaker 4: So, in building off of Paul's earlier question, I'm curious,

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Speaker 4: did it seem as though there was a stronger, more

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Speaker 4: intense crackdown after all the hiccups that Boeing has seen

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Speaker 4: this year, or does this seem like it's kind of

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Speaker 4: been a bubbling up point and it's finally bubbling over.

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Speaker 4: As to why workers are so unhappy.

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Speaker 7: Well, Boeing has had a lot of very public embarrassments

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Speaker 7: right in recent times, and I think the employees are

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Speaker 7: saying the executives are not protecting the company's brand and reputation,

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Speaker 7: so we will We are not okay with the quality control,

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Speaker 7: we are not okay with the way that production has

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Speaker 7: deteriorated over time, and so we are going to fight

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Speaker 7: to do things the right way. Because these are engineers

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Speaker 7: who take a lot of value. They love the fact

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Speaker 7: that they can produce some of the most high quality

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Speaker 7: machines in the world. Right they don't want to create

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Speaker 7: garbage material anymore. So they're fighting for it. And I

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Speaker 7: think this is something that will get resolved. It will

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Speaker 7: absolutely get resolved. They're going to get back to the table.

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Speaker 7: Maybe a few more weeks. Some people say we're only

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Speaker 7: at the halfway point. Either way, they're going to come together.

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Speaker 7: Boeing will get back on track. I'm not worried about

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Speaker 7: the future of the company.

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Speaker 2: Let's pivot a little bit away from Boeing get back

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Speaker 2: to another key issue which I keep raising because I

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Speaker 2: just wonder how things revolving. Are people back in the office,

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Speaker 2: what's the new oral? I guess we are when you

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Speaker 2: talk to your clients. Yeah, Are we in a permanent

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Speaker 2: hybrid situation?

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Speaker 1: Now?

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Speaker 5: No?

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Speaker 7: I mean right now. I think twenty twenty five is

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Speaker 7: going to be the year of forcing people back into

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Speaker 7: the office. Amazon just made an announcement that people have

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Speaker 7: to be back five days a week. I think that

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Speaker 7: is regressive thinking, if you want my personal opinion, because

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Speaker 7: think of the language people use when they talk about

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Speaker 7: return to the office. Go back to the office. It's

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Speaker 7: going backwards, as if COVID was just a pause and

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Speaker 7: now we can press play again and nothing's changed. But

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Speaker 7: the reality is culture has changed. If culture is how

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Speaker 7: people think and act, we had a major experience that

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Speaker 7: evolved our thinking about how we can be productive. And

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Speaker 7: I think companies that are forcing people back into the

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Speaker 7: office are counting on some people to leave that it's

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Speaker 7: a way to do layoffs without doing layoffs, and they're

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Speaker 7: relying on activity based manager. It's easy to manage activity

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Speaker 7: of your employees if you can see them at the desk.

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Speaker 7: The more elevated way of leading a team is to

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Speaker 7: manage to outcomes and you don't have to be in

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Speaker 7: the office to manage to outcomes. So companies that want

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Speaker 7: the competitive edge on attracting talent from all over the nation,

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Speaker 7: they're going to allow people to work from home. And

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Speaker 7: companies that have a real estate bill that they're worried about,

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Speaker 7: they're going to force people back into the office.

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Speaker 4: And I mean our incentives enough as food and all

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Speaker 4: the different things enough to lure people back into the office.

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Speaker 4: Or do you think that a lot of people are

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Speaker 4: really hard and fast I want to be removed.

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Speaker 7: Well, it depends on the person, right There are some

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Speaker 7: people who are just excited to get back into the office.

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Speaker 7: They want the kombucha Fridays and the Hawaiian shirt Tuesdays

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Speaker 7: or whatever it is that people do right now to

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Speaker 7: create quote unquote culture. Those are not culture things. Those

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Speaker 7: are just perks, they're fun. Ultimately, it's how are we

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Speaker 7: making decisions, how are people thinking? How are we committed

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Speaker 7: to the mission of the organization? And I can do

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Speaker 7: that at home or I can do that in the office.

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Speaker 7: And I would ask, if you're questioning right now as

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Speaker 7: a leader, whether or not you should force people back

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Speaker 7: into the office. Is think about what are the results

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Speaker 7: we're trying to achieve, What are the shared beliefs within

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Speaker 7: our team that are getting in the way of hitting

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Speaker 7: those results, and what do we need those beliefs to

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Speaker 7: be And is working from home going to help drive

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Speaker 7: those correct beliefs that will get us the results or not.

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Speaker 7: That's really the deeper work of leadership, rather than add

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Speaker 7: do we get people in the office three or five

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Speaker 7: days a week? So that's that's arbitrary.

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Speaker 5: I think that Amazon might be a little bit of

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Speaker 5: harbring rym. We might see more companies.

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Speaker 7: Yeah, well absolutely. Also, Amazon is not going to have

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Speaker 7: trouble replacing people that that don't want right because it's Amazon,

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Speaker 7: and so there are companies like that that can do

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Speaker 7: whatever they want and they'll be able to hire other companies.

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Speaker 7: They have to be a little bit more strategic about

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Speaker 7: how theyre going to attract talent.

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Speaker 5: Interesting.

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Speaker 2: I guess it's just ever evolving, satary evolved a Bloomberg

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Speaker 2: or four.

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Speaker 5: Days a week. I don't know, you will see. I'm

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Speaker 5: fine a week working. Just find for me.

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Speaker 2: Jessica Krigle, thank you so much for joining us. Jessica Krikles,

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Speaker 2: she's a chief scientist of workplace culture at Culture Partners,

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Speaker 2: joining us. Lifer in a Bloomberg interactive studio talking about

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Speaker 2: Boeing and just kind of the workplace in general, kind

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Speaker 2: of the evolving US workplace.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Affo card Playing and

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Speaker 1: broud Otto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 2: All Right, it is earnings, fast and furious. I think

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Speaker 2: today was probably the busiest day, or will be the

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Speaker 2: busiest day of the week. What's been a busy week,

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Speaker 2: and we've heard from pretty much everybody across the board,

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Speaker 2: all types of industries. One of the companies is United

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Speaker 2: Parcel Service UPS came out with some numbers. The stock

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Speaker 2: is up five percent, today, So some pretty good numbers.

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Speaker 2: Presumably Lee Claskal is he's right here now to Lee Clascott,

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Speaker 2: Senior Transport Logistics and Shipping annols for Bloomberg Intelligence. He

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Speaker 2: joins us from our Princeton, New Jersey offices. Hayley talk

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Speaker 2: to us about UPS stocks up five percent. So I

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Speaker 2: guess the market like what they saw.

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Speaker 8: Yeah, hey, Paul, Yeah, So UPS had a pretty good

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Speaker 8: print this morning, and they all so you know, indicated

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Speaker 8: that earnings might be a little better than expectations are

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Speaker 8: in the fourth quarter.

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Speaker 6: UPS has been kind of a show me story.

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Speaker 8: They've been doing a lot of self help things, but

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Speaker 8: a lot of those initiatives really haven't bubbled up to

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Speaker 8: the bottom line or the revenue numbers, just given the

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Speaker 8: difficult backdrop. And what we saw today was earnings per

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Speaker 8: share finally inflected, earnings per share growth finally inflected positively

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Speaker 8: after seven quarterly declines. So I see things seem to

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Speaker 8: be working for UPS. And you know, we expect earnings

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Speaker 8: expectations for the fourth quarter and probably next year to

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Speaker 8: move higher on kind of the progress that they've made

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Speaker 8: thus far.

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Speaker 4: Hey, Lee, I mean you mentioned that difficult backdrop. As

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Speaker 4: I'm looking at ups, we're seeing shares down about twelve

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Speaker 4: percent year to date. As we're thinking about the future,

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Speaker 4: I mean, how much of a move higher do you

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Speaker 4: really anticipate as we're thinking about the year end, should

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Speaker 4: investors start to see some gains here?

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Speaker 8: Well, we don't do buy whole cell recommendations of Bloomberg Intelligence,

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Speaker 8: but you know, what we can tell you is that

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Speaker 8: the company are doing the right things to see their

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Speaker 8: margins expand and and you know, our view is that

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Speaker 8: margin expansion could be more than than where where the

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Speaker 8: market currently is at. And a lot of that has

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Speaker 8: to do with a lot of the cost savings that

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Speaker 8: they've been able to generate. They've been able to, you know,

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Speaker 8: shut down various shifts, sorting shifts, They've been able to

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Speaker 8: close some facilities and just do more with the network

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Speaker 8: that they have. That and if you fast forward that,

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Speaker 8: you know, maybe you know, volumes could start to improve

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Speaker 8: a little more meaningfully from here. You know, they expect

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Speaker 8: a better peak season this year, albeit probably not as

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Speaker 8: as robust as they were probably planning for three months ago,

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Speaker 8: but the peak season is expected to grow and the

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Speaker 8: reason for you know, them tempering the outlook for the

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Speaker 8: peak season is given the fact that the peak season

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Speaker 8: is condensed. The peak season, for those don't know, is

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Speaker 8: from Black Friday to Christmas Eve. And because of that

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Speaker 8: condensed peaks time, you know, a lot of retailers think

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Speaker 8: that some consumers might be going to the stores versus

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Speaker 8: ordering online.

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Speaker 6: And making that gamble whether or not you get it

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Speaker 6: under the tree in time.

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Speaker 2: Haylee, we love talking to you for a variety of reason.

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Speaker 2: It's not the least of which is the companies you

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Speaker 2: cover lead give us a real sense of how the

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Speaker 2: underlying economy is doing, whether it's stuff's being shipped by

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Speaker 2: rail or truck or air cargo. What's GPS telling you

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Speaker 2: about kind of underlying activity that they're seeing.

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Speaker 8: Well, first and foremost, I love talking to you as well, Paul,

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Speaker 8: But you know what I think they're telling us is

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Speaker 8: the consumer is doing okay. You know, it's not doom

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Speaker 8: and gloom going into to the holiday season.

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Speaker 6: I think that you know, you are going to see growth.

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Speaker 8: Like I said earlier, that growth might be a little

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Speaker 8: more tempered, but you know, we are seeing a return

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Speaker 8: to kind of seasonality, which is really good because it's

438
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Speaker 8: not just going to impact the parcel providers. It's going

439
00:21:06,520 --> 00:21:09,440
Speaker 8: to impact the truckload providers, you know, like the Knights,

440
00:21:09,480 --> 00:21:11,359
Speaker 8: Swifts and the Warners of the world. It's going to

441
00:21:11,400 --> 00:21:13,840
Speaker 8: impact the intermodial providers like the JB Hunts and the

442
00:21:13,920 --> 00:21:14,480
Speaker 8: hub groups of.

443
00:21:14,480 --> 00:21:16,480
Speaker 6: The world, and the railroads as well.

444
00:21:16,840 --> 00:21:21,520
Speaker 8: So, you know what we're hearing about the consumer and

445
00:21:21,640 --> 00:21:25,399
Speaker 8: the fact that B to B volume grew for the

446
00:21:25,480 --> 00:21:28,879
Speaker 8: first time in a long time within their domestic business

447
00:21:29,200 --> 00:21:32,600
Speaker 8: is also telling me, you know that things might be

448
00:21:33,119 --> 00:21:36,600
Speaker 8: might be a little better in twenty twenty five. So

449
00:21:36,800 --> 00:21:40,760
Speaker 8: you know, we're pretty optimistic that demand should be increasing

450
00:21:40,840 --> 00:21:43,600
Speaker 8: across most of the modes that we cover, and you know,

451
00:21:43,720 --> 00:21:45,960
Speaker 8: twenty twenty five, in our view, is going to be

452
00:21:46,000 --> 00:21:48,159
Speaker 8: a much better year than twenty twenty four was.

453
00:21:49,000 --> 00:21:51,639
Speaker 4: And I do know back in about April, I remember

454
00:21:51,720 --> 00:21:57,040
Speaker 4: that it became UPS became USPS's primary air cargo provider.

455
00:21:57,240 --> 00:21:59,399
Speaker 4: Is that still a topic of conversation? How much does

456
00:21:59,440 --> 00:22:01,439
Speaker 4: that really add to the business if at all?

457
00:22:02,280 --> 00:22:04,920
Speaker 6: Yeah, so it is a great business win for them.

458
00:22:05,000 --> 00:22:08,399
Speaker 8: You know, FedEx walked away from it for various reasons

459
00:22:08,440 --> 00:22:11,000
Speaker 8: and UPS decided to pick it up. It's going to

460
00:22:11,080 --> 00:22:14,840
Speaker 8: be consistent volumes at a consistently good margin.

461
00:22:15,320 --> 00:22:16,679
Speaker 6: And you know what they're doing is.

462
00:22:16,680 --> 00:22:19,679
Speaker 8: They're really restructuring their overall business. They've been getting out

463
00:22:19,720 --> 00:22:22,560
Speaker 8: of businesses that are a lot more volatile. They just

464
00:22:22,680 --> 00:22:26,560
Speaker 8: sold their freight brokerage business, which was called Coyote to

465
00:22:26,840 --> 00:22:32,000
Speaker 8: r XO and and then that was earlier last month.

466
00:22:32,359 --> 00:22:35,280
Speaker 8: And then in twenty twenty one they sold their less

467
00:22:35,280 --> 00:22:39,280
Speaker 8: than truckload business UPS Freight to TFI and those were

468
00:22:39,480 --> 00:22:43,280
Speaker 8: not great businesses for UPS. And now UPS can really

469
00:22:43,359 --> 00:22:46,960
Speaker 8: focus on being a parcel provider. And to answer your question,

470
00:22:47,080 --> 00:22:50,080
Speaker 8: what that US postal service business can also do, It's

471
00:22:50,119 --> 00:22:52,320
Speaker 8: going to build density, and density is the name of

472
00:22:52,400 --> 00:22:55,600
Speaker 8: the game in any transportation company, and so they can

473
00:22:55,680 --> 00:22:59,480
Speaker 8: build off that density with other volumes.

474
00:23:00,359 --> 00:23:02,600
Speaker 2: All right, Lee, thanks so much for joining us. I'd

475
00:23:02,600 --> 00:23:06,520
Speaker 2: appreciate getting your expertise and all things logistics, railroads, trucks,

476
00:23:06,600 --> 00:23:09,639
Speaker 2: the sea transport, the air transport. Lee covers it all

477
00:23:09,680 --> 00:23:12,159
Speaker 2: and again his transports companies just got to give you

478
00:23:12,160 --> 00:23:15,040
Speaker 2: a real good insight into the strength of the overall

479
00:23:15,280 --> 00:23:18,119
Speaker 2: economy when you can see kind of what types of

480
00:23:18,200 --> 00:23:21,480
Speaker 2: goods are being transported all around the country and the world.

481
00:23:21,600 --> 00:23:22,679
Speaker 5: So some good stuff there.

482
00:23:24,080 --> 00:23:27,920
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

483
00:23:28,040 --> 00:23:31,560
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

484
00:23:31,600 --> 00:23:34,320
Speaker 1: Auto with the Bloomberg Business App. You can also listen

485
00:23:34,480 --> 00:23:37,560
Speaker 1: live on Amazon Alexa from our flagship New York station,

486
00:23:37,960 --> 00:23:40,560
Speaker 1: Just say Alexa playing Bloomberg eleven.

487
00:23:40,440 --> 00:23:43,480
Speaker 5: Thirty R Normal lend us sitting in for Alex still on.

488
00:23:43,520 --> 00:23:45,320
Speaker 2: Paul Sweney, You're live here in on our Bloomberg Interactive

489
00:23:45,320 --> 00:23:48,280
Speaker 2: Broker Studio, streaming video live on what.

490
00:23:48,440 --> 00:23:49,040
Speaker 5: Is that YouTube?

491
00:23:49,119 --> 00:23:50,960
Speaker 2: That's the interesting that thing the internetew dot com. So

492
00:23:51,119 --> 00:23:54,200
Speaker 2: just head over there and search Bloomberg Podcast, Bloomberg News

493
00:23:54,600 --> 00:23:55,320
Speaker 2: Morning Console.

494
00:23:55,400 --> 00:23:57,560
Speaker 5: We got to pull out this morning. I'm just gonna

495
00:23:57,600 --> 00:23:58,920
Speaker 5: guess dead heat.

496
00:23:59,080 --> 00:24:02,400
Speaker 2: Jody Schneider joined political news director for Bloomberg Television and Radio.

497
00:24:02,640 --> 00:24:05,200
Speaker 2: She joined us in Washington, DC. Jody, what do we

498
00:24:05,320 --> 00:24:08,240
Speaker 2: learn from the latest Bloomberg Morning Console poll.

499
00:24:09,320 --> 00:24:13,000
Speaker 9: Well, it reconfirms Paul that things are just very very close.

500
00:24:13,080 --> 00:24:16,120
Speaker 9: Probably couldn't get any closer. It is that dead heat.

501
00:24:16,480 --> 00:24:19,960
Speaker 9: We've seen some of that during this last year or

502
00:24:20,080 --> 00:24:22,760
Speaker 9: so of the polls we've done with Morning Consult, but

503
00:24:22,920 --> 00:24:25,160
Speaker 9: this one is as close as ever. And of course

504
00:24:25,200 --> 00:24:28,199
Speaker 9: it's the last one before the election, So it matters

505
00:24:28,680 --> 00:24:32,360
Speaker 9: as much as ever we're really seeing, you know, it's

506
00:24:32,840 --> 00:24:36,800
Speaker 9: up maybe a point or half a point in particular states,

507
00:24:37,040 --> 00:24:40,480
Speaker 9: but it's forty nine forty nine when you get to

508
00:24:41,280 --> 00:24:43,840
Speaker 9: all the swing states, and we are focused on those

509
00:24:43,840 --> 00:24:46,879
Speaker 9: swing states, the ones where they are going to determine

510
00:24:47,160 --> 00:24:51,199
Speaker 9: who wins the electoral college, which is who wins the presidency.

511
00:24:51,640 --> 00:24:54,200
Speaker 4: Definitely, And Jody, as you just said, we are really

512
00:24:54,280 --> 00:24:56,919
Speaker 4: coming up less than two weeks away from the election.

513
00:24:57,600 --> 00:24:59,520
Speaker 4: What are you seeing from those swing states? What has

514
00:24:59,600 --> 00:25:02,600
Speaker 4: really been general consensus of this latest chapter.

515
00:25:03,680 --> 00:25:06,200
Speaker 9: Yeah, I think the poll really reflects that that it

516
00:25:06,400 --> 00:25:09,800
Speaker 9: is so close that almost you know, too close to call.

517
00:25:09,880 --> 00:25:12,320
Speaker 9: In a number of states. There's some talk about, well,

518
00:25:12,440 --> 00:25:14,399
Speaker 9: one or the other may win the popular vote, but

519
00:25:14,520 --> 00:25:17,399
Speaker 9: that is, you know, almost beside the point. It is

520
00:25:17,520 --> 00:25:21,080
Speaker 9: those swing states where in the past somebody has won

521
00:25:21,200 --> 00:25:25,199
Speaker 9: by twenty thousand votes or forty thousand votes. Hillary Clinton

522
00:25:25,320 --> 00:25:29,560
Speaker 9: lost the blue Wall states of Michigan, Wisconsin, and Pennsylvania

523
00:25:29,880 --> 00:25:34,200
Speaker 9: by fewer than eighty thousand votes in twenty sixteen, so

524
00:25:34,359 --> 00:25:36,399
Speaker 9: it really is kind of, you know, down to that

525
00:25:36,720 --> 00:25:39,920
Speaker 9: so called knife's edge in the final days of the campaign,

526
00:25:40,200 --> 00:25:42,800
Speaker 9: and that's why you see the candidates in their running

527
00:25:42,840 --> 00:25:47,399
Speaker 9: mates almost exclusively focusing in those seven swing states, and

528
00:25:47,720 --> 00:25:52,000
Speaker 9: the Democratic candidate so much on those blue wall states.

529
00:25:52,160 --> 00:25:53,760
Speaker 9: She really needs to win there.

530
00:25:54,520 --> 00:25:57,520
Speaker 2: Jody, what are your sources tell you about the timing

531
00:25:57,720 --> 00:26:00,200
Speaker 2: of when we may have some resolution all on the

532
00:26:00,320 --> 00:26:04,960
Speaker 2: actual vote itself. Will we know eleven pm on November fifth,

533
00:26:05,080 --> 00:26:07,440
Speaker 2: or will be hours later, days later?

534
00:26:08,359 --> 00:26:11,359
Speaker 9: Yeah, that's the question everybody I know is asking me.

535
00:26:12,640 --> 00:26:14,720
Speaker 9: So that's what everybody wants to know. When are we

536
00:26:14,760 --> 00:26:17,880
Speaker 9: gonna know? And we may well not know that night,

537
00:26:18,400 --> 00:26:21,840
Speaker 9: not only the presidential but the House of Representatives. The

538
00:26:21,920 --> 00:26:24,159
Speaker 9: House is going to be a close race for control

539
00:26:24,240 --> 00:26:26,239
Speaker 9: of the House and it's going to go through New

540
00:26:26,320 --> 00:26:29,840
Speaker 9: York and California, So we may not know that night

541
00:26:30,240 --> 00:26:32,639
Speaker 9: who will control the House will probably know the Senate.

542
00:26:33,280 --> 00:26:36,760
Speaker 9: The presidential we may not know. In twenty twenty, of course,

543
00:26:36,800 --> 00:26:39,560
Speaker 9: we didn't find out till Saturday, but you might recall

544
00:26:39,960 --> 00:26:42,680
Speaker 9: two thousand, where we didn't know until December when it

545
00:26:42,720 --> 00:26:45,800
Speaker 9: went to the Supreme Court. So we may be in

546
00:26:45,920 --> 00:26:49,640
Speaker 9: a situation like that, and you know, the markets may

547
00:26:49,680 --> 00:26:53,359
Speaker 9: not wake up to that uncertainty until it starts happening

548
00:26:53,400 --> 00:26:55,440
Speaker 9: as well, which will be something else for us to

549
00:26:55,520 --> 00:26:56,400
Speaker 9: cover here at Bloomberg.

550
00:26:56,760 --> 00:27:00,359
Speaker 4: How exactly are the candidates strategizing in this last stretch

551
00:27:00,480 --> 00:27:01,520
Speaker 4: to mobilize voters.

552
00:27:02,640 --> 00:27:05,720
Speaker 9: Yeah, so they're really going to those swing states, you know,

553
00:27:05,920 --> 00:27:10,760
Speaker 9: trying to really make their case. They're so called closing arguments.

554
00:27:11,000 --> 00:27:13,280
Speaker 9: Kamala Harris is trying to do that in and we

555
00:27:13,359 --> 00:27:16,080
Speaker 9: heard her at a CNN town hall doing this last night,

556
00:27:16,440 --> 00:27:19,119
Speaker 9: sort of saying, I am you know, I have a

557
00:27:19,160 --> 00:27:23,200
Speaker 9: plan for the future, but I have experience with I've

558
00:27:23,200 --> 00:27:25,280
Speaker 9: been the vice president for the past four years, and

559
00:27:25,400 --> 00:27:28,920
Speaker 9: Donald Trump will be a danger to America. That's her case.

560
00:27:29,240 --> 00:27:32,000
Speaker 9: Donald Trump's case has been to kind of double down

561
00:27:32,200 --> 00:27:37,040
Speaker 9: on his rhetoric of making people feel that this administration

562
00:27:37,280 --> 00:27:41,159
Speaker 9: has failed them. He's done it on the economy, and

563
00:27:41,240 --> 00:27:44,320
Speaker 9: he's been successful on the economy, including a chosen our

564
00:27:44,400 --> 00:27:46,800
Speaker 9: poll that he is the one people trust more on

565
00:27:46,880 --> 00:27:49,320
Speaker 9: the economy. And he's making the case that to leave

566
00:27:49,440 --> 00:27:53,480
Speaker 9: this with her would be a danger to the future

567
00:27:53,480 --> 00:27:57,160
Speaker 9: of this country. So they're both making arguments based somewhat

568
00:27:57,240 --> 00:28:00,840
Speaker 9: more on that their other, their opponent, would do harmful

569
00:28:00,920 --> 00:28:04,159
Speaker 9: things to the future of America than as much on

570
00:28:04,280 --> 00:28:08,520
Speaker 9: their record. Their closing arguments are kind of mirror images

571
00:28:08,600 --> 00:28:09,879
Speaker 9: of themselves in some ways.

572
00:28:10,600 --> 00:28:13,320
Speaker 2: Jody, turnout, I've been told by the experts is really

573
00:28:13,400 --> 00:28:14,400
Speaker 2: really important here.

574
00:28:14,880 --> 00:28:16,280
Speaker 5: What do we expect turnout to be?

575
00:28:17,200 --> 00:28:20,080
Speaker 2: And number two, does either party have an advantage in

576
00:28:20,359 --> 00:28:21,080
Speaker 2: driving turnout?

577
00:28:22,280 --> 00:28:24,000
Speaker 9: Yeah, so I think turnout is key.

578
00:28:24,080 --> 00:28:25,040
Speaker 10: It's certainly key.

579
00:28:24,920 --> 00:28:28,639
Speaker 9: In those swing states. The other interesting fact, Paul, to

580
00:28:28,840 --> 00:28:32,600
Speaker 9: edit all this is early voting. We're seeing massive early voting.

581
00:28:32,760 --> 00:28:35,240
Speaker 9: I think it's as much as eighteen million or more

582
00:28:35,320 --> 00:28:39,200
Speaker 9: people have already voted, either by mail or in person,

583
00:28:39,600 --> 00:28:42,000
Speaker 9: and we will be seeing a massive amount of that

584
00:28:42,120 --> 00:28:44,760
Speaker 9: in the next week, historic amounts of early voting. Now,

585
00:28:44,840 --> 00:28:47,920
Speaker 9: in the past people said early voting tended to favor Democrats,

586
00:28:48,200 --> 00:28:51,040
Speaker 9: but now the Republicans are pushing it as well, and

587
00:28:51,240 --> 00:28:54,240
Speaker 9: it's becoming more the fabric of people thinking, well, why

588
00:28:54,280 --> 00:28:56,440
Speaker 9: should I wait? Why should I wait till election day?

589
00:28:56,760 --> 00:28:59,840
Speaker 9: So some of these closing arguments really might be falling

590
00:29:00,160 --> 00:29:03,840
Speaker 9: and so called jaffiers because people have already voted. And

591
00:29:04,160 --> 00:29:07,440
Speaker 9: we'll see when we do the historical analysis of this

592
00:29:07,760 --> 00:29:10,520
Speaker 9: campaign how early voting played into it.

593
00:29:11,360 --> 00:29:14,200
Speaker 4: With about thirty seconds or less. Just how important is

594
00:29:14,320 --> 00:29:16,239
Speaker 4: age in this election? Is that playing a factor at all?

595
00:29:17,200 --> 00:29:19,920
Speaker 9: It's playing a factor, but more gender seems to be.

596
00:29:20,320 --> 00:29:23,000
Speaker 9: It really does seem to be a very gender focused election.

597
00:29:23,760 --> 00:29:27,120
Speaker 9: The Democrats, you know, winning more women and Donald Trump

598
00:29:27,720 --> 00:29:31,320
Speaker 9: kind of doubling down on the mail vote, both older

599
00:29:31,440 --> 00:29:34,640
Speaker 9: and younger. But it really gender seems to be the

600
00:29:34,720 --> 00:29:36,640
Speaker 9: dividing line here more than age.

601
00:29:37,360 --> 00:29:38,720
Speaker 5: Jody, thank you so much for joining us.

602
00:29:38,760 --> 00:29:42,000
Speaker 2: Really appreciate your reporting as always. Jody Schneider. She's political

603
00:29:42,040 --> 00:29:44,920
Speaker 2: news director for Bloomberg Television and Radio. She joins us

604
00:29:44,920 --> 00:29:48,080
Speaker 2: from our newsroom in Washington, d C.

605
00:29:49,920 --> 00:29:53,760
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

606
00:29:53,880 --> 00:29:57,400
Speaker 1: weekdays at ten am Eastern on applecar Play and androyd

607
00:29:57,440 --> 00:30:00,560
Speaker 1: Otto with the Bloomberg Business. You can also and live

608
00:30:00,680 --> 00:30:03,800
Speaker 1: on Amazon Alexa from our flagship New York station Just

609
00:30:03,920 --> 00:30:06,800
Speaker 1: Say Alexa playing Bloomberg eleven thirty.

610
00:30:08,360 --> 00:30:08,640
Speaker 5: Normal.

611
00:30:08,680 --> 00:30:10,880
Speaker 2: Linda is sitting in for Alex Steele Paul Swhen you

612
00:30:10,960 --> 00:30:13,480
Speaker 2: allow here on Bloomberg in nactive broke restview streaming the

613
00:30:13,560 --> 00:30:15,720
Speaker 2: video thing on YouTube, so aheadver YouTube dot com search

614
00:30:15,760 --> 00:30:18,520
Speaker 2: Bloomberg Podcast. That's where your finest is. John was just

615
00:30:18,600 --> 00:30:20,720
Speaker 2: reporting new home sales give in a little bit better

616
00:30:20,760 --> 00:30:22,720
Speaker 2: than expect it. Let's break it down with an expert.

617
00:30:22,760 --> 00:30:25,640
Speaker 2: We can do that with Bloomberg Intelligence. They got everybody

618
00:30:25,680 --> 00:30:28,480
Speaker 2: over there, Drew reading, he's a Bloomberg Intelligence US home

619
00:30:28,560 --> 00:30:29,840
Speaker 2: building analyst, Drew.

620
00:30:29,920 --> 00:30:31,480
Speaker 5: What you make of these numbers?

621
00:30:31,520 --> 00:30:31,640
Speaker 6: Here?

622
00:30:31,680 --> 00:30:33,680
Speaker 2: The new home sales seven hundred and thirty eight thousand.

623
00:30:33,800 --> 00:30:36,040
Speaker 2: Consensus was seven hundred and twenty thousand, so a little

624
00:30:36,040 --> 00:30:36,840
Speaker 2: bit better than expected.

625
00:30:38,040 --> 00:30:40,680
Speaker 11: Yeah, and not surprised to see a good number in September.

626
00:30:40,760 --> 00:30:43,600
Speaker 11: You have to remember in September we had mortgage rates

627
00:30:43,640 --> 00:30:45,960
Speaker 11: at the lowest level in about a year and a half,

628
00:30:46,080 --> 00:30:48,600
Speaker 11: so they hit as low as six point one. So

629
00:30:48,680 --> 00:30:50,720
Speaker 11: we got the data today and it's already backward looking

630
00:30:50,840 --> 00:30:53,640
Speaker 11: because since the beginning of October rates have shot back up.

631
00:30:54,080 --> 00:30:56,200
Speaker 11: It's about six point nine percent, and if you look

632
00:30:56,240 --> 00:30:58,680
Speaker 11: at the payment on a monthly basis, that's about nine

633
00:30:58,720 --> 00:31:01,640
Speaker 11: percent higher. So what we have heard is things have

634
00:31:01,760 --> 00:31:04,640
Speaker 11: started to slow down. The builders are noting more seasonality,

635
00:31:05,120 --> 00:31:07,000
Speaker 11: so we would expect things to slow down a little

636
00:31:07,000 --> 00:31:08,280
Speaker 11: bit as we get October data.

637
00:31:08,880 --> 00:31:10,960
Speaker 4: So as we think about the FED moving forward, Drew

638
00:31:11,280 --> 00:31:14,240
Speaker 4: and people expecting potential cuts what does this mean for

639
00:31:14,320 --> 00:31:16,760
Speaker 4: home builders when we're thinking about it on a longer scale,

640
00:31:16,960 --> 00:31:17,760
Speaker 4: looking further out.

641
00:31:19,560 --> 00:31:22,200
Speaker 11: Yeah, well, certainly, you know, it's all about affordability, and

642
00:31:22,480 --> 00:31:25,360
Speaker 11: mortgage rates are certainly a key part of that. Our

643
00:31:25,440 --> 00:31:28,200
Speaker 11: expectation was that we would get somewhere in that low

644
00:31:28,280 --> 00:31:30,960
Speaker 11: six percent range that would help spur at a little

645
00:31:30,960 --> 00:31:32,560
Speaker 11: bit of activity. I think you really need to see

646
00:31:32,560 --> 00:31:35,959
Speaker 11: a five handle to see more robust activity. But it's

647
00:31:36,000 --> 00:31:39,280
Speaker 11: important to mind it's not just about rates, it's prices too.

648
00:31:39,400 --> 00:31:42,120
Speaker 11: Prices are up more than fifty percent since the beginning

649
00:31:42,200 --> 00:31:45,560
Speaker 11: of twenty twenty. That's really the biggest component. And you know,

650
00:31:46,080 --> 00:31:49,680
Speaker 11: we did an analysis on monthly payments relative income and

651
00:31:49,760 --> 00:31:51,960
Speaker 11: based strictly on that just to show you how how

652
00:31:52,000 --> 00:31:53,920
Speaker 11: to whack the market is. Right now, prices would need

653
00:31:54,000 --> 00:31:56,280
Speaker 11: to fall somewhere about twenty five percent in order for

654
00:31:56,360 --> 00:32:00,440
Speaker 11: monthly payments relative income to fall in line with historical averages.

655
00:32:00,480 --> 00:32:02,720
Speaker 11: So it's a combination of what's happening with prices and

656
00:32:02,800 --> 00:32:03,720
Speaker 11: what's happening with rates.

657
00:32:04,080 --> 00:32:06,200
Speaker 4: Right, and so if we were to see a potential

658
00:32:06,400 --> 00:32:09,160
Speaker 4: uptake in we're to see a flight of existing homes

659
00:32:09,160 --> 00:32:11,520
Speaker 4: to come back on the market. How much competition do

660
00:32:11,560 --> 00:32:13,600
Speaker 4: you think that would actually pose for home builders when

661
00:32:13,600 --> 00:32:14,840
Speaker 4: we're thinking about new properties.

662
00:32:16,200 --> 00:32:19,200
Speaker 11: Yeah, that's a great question. Inventories are up about twenty

663
00:32:19,240 --> 00:32:22,200
Speaker 11: percent compared to last year. At the national level, they're

664
00:32:22,240 --> 00:32:25,000
Speaker 11: still down about twenty percent compared to pre pandemic levels,

665
00:32:25,040 --> 00:32:28,760
Speaker 11: but it's very market specific. You're seeing markets in Texas

666
00:32:28,880 --> 00:32:32,080
Speaker 11: think you know, Austin, Dallas, Houston, and San Antonio, as

667
00:32:32,120 --> 00:32:35,880
Speaker 11: well as most of the markets across Florida where inventories

668
00:32:35,880 --> 00:32:38,200
Speaker 11: are rising, you know, anywhere from thirty to fifty percent year.

669
00:32:38,240 --> 00:32:41,320
Speaker 11: Every year their back above twenty nineteen levels. So the

670
00:32:41,400 --> 00:32:44,760
Speaker 11: competitive dynamic is certainly shifting for builders in those markets,

671
00:32:44,800 --> 00:32:48,720
Speaker 11: particularly in Texas, and I think what you'll ultimately see

672
00:32:48,800 --> 00:32:50,680
Speaker 11: is that builders are going to have to continue to

673
00:32:50,800 --> 00:32:53,680
Speaker 11: lean on incentives. I think it could start to put

674
00:32:53,760 --> 00:32:56,520
Speaker 11: some downward pressure on prices as we move forward. So

675
00:32:56,560 --> 00:32:58,960
Speaker 11: if builders want to clear that speco inventory that they've

676
00:32:58,960 --> 00:33:01,000
Speaker 11: build up over the last year, they're gonna have to

677
00:33:01,080 --> 00:33:03,880
Speaker 11: keep their foot down on the gas pedal in terms

678
00:33:03,920 --> 00:33:05,560
Speaker 11: of their use of sales incentives.

679
00:33:06,160 --> 00:33:08,120
Speaker 2: Hey, Drew, thanks for joining us. We appreciate you hopping

680
00:33:08,120 --> 00:33:11,040
Speaker 2: on there. Drew reading home Building analysts Bloomberg Intelligence from Princeton,

681
00:33:11,080 --> 00:33:14,360
Speaker 2: New Jersey a little bit better than expected new home sales,

682
00:33:14,800 --> 00:33:15,520
Speaker 2: so we note that.

683
00:33:17,080 --> 00:33:20,960
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

684
00:33:21,080 --> 00:33:24,600
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

685
00:33:24,600 --> 00:33:27,360
Speaker 1: Auto with the Bloomberg Business app. You can also listen

686
00:33:27,520 --> 00:33:30,560
Speaker 1: live on Amazon Alexa from our flagship New York station,

687
00:33:30,960 --> 00:33:33,720
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.

688
00:33:34,920 --> 00:33:36,560
Speaker 2: All right. When I started in the media business on

689
00:33:36,600 --> 00:33:39,719
Speaker 2: Wall Street thirty five years ago, my clients were radio companies,

690
00:33:39,800 --> 00:33:44,840
Speaker 2: TV companies, magazine companies, newspaper companies. Then along came cable television,

691
00:33:44,960 --> 00:33:47,120
Speaker 2: and then seeing the Internet, can You Age?

692
00:33:47,280 --> 00:33:49,080
Speaker 5: Which upended everything.

693
00:33:49,240 --> 00:33:53,080
Speaker 2: Our next guest was the MNA banker for the old media,

694
00:33:53,840 --> 00:33:55,560
Speaker 2: and now he's the lead m and A banker for

695
00:33:55,760 --> 00:33:57,840
Speaker 2: the new media. Terry kwasa JOINTS and he's the founder

696
00:33:57,920 --> 00:34:00,800
Speaker 2: and CEO of Luma Partners. I work with two moons

697
00:34:00,800 --> 00:34:02,800
Speaker 2: ago back on Wall Street when we were banking some

698
00:34:02,920 --> 00:34:07,240
Speaker 2: of those older media companies. Now it's all about Google, Facebook, Snapchat,

699
00:34:07,320 --> 00:34:11,080
Speaker 2: all these kinds of Amazon now major player and digital advertising. Terry,

700
00:34:11,080 --> 00:34:13,080
Speaker 2: thanks so much for joining us here in our studio.

701
00:34:14,080 --> 00:34:17,400
Speaker 2: You are in the biggest best industry I can think of,

702
00:34:17,560 --> 00:34:20,480
Speaker 2: I mean digital advertising. It has exploded over the last

703
00:34:20,520 --> 00:34:23,520
Speaker 2: ten to fifteen years. You banked the companies that support

704
00:34:23,560 --> 00:34:26,120
Speaker 2: the technology of all those big media companies that we like,

705
00:34:26,280 --> 00:34:28,919
Speaker 2: like Google and Facebook. Talk to us about the state

706
00:34:28,960 --> 00:34:31,000
Speaker 2: of digital advertising today. Is this as strong as it

707
00:34:31,360 --> 00:34:32,640
Speaker 2: it's been over the last several years.

708
00:34:32,960 --> 00:34:33,160
Speaker 1: Yeah.

709
00:34:33,280 --> 00:34:36,680
Speaker 10: Look, first of all, you're absolutely right to denote that,

710
00:34:36,880 --> 00:34:40,320
Speaker 10: you know, this is massive. We're talking about a trillion

711
00:34:40,400 --> 00:34:45,320
Speaker 10: dollars of spend globally. And what's interesting about it is

712
00:34:45,360 --> 00:34:50,359
Speaker 10: that the vast majority of that spend is actually those

713
00:34:50,440 --> 00:34:53,400
Speaker 10: ads are bought programmatically and all that that's just a

714
00:34:53,480 --> 00:34:58,120
Speaker 10: fancy word meaning auction bought in auctions, and so there's

715
00:34:58,200 --> 00:35:01,800
Speaker 10: a lot of technology that requires sort of real time

716
00:35:02,000 --> 00:35:07,080
Speaker 10: assessment and targeting of each particular ad slot that happens

717
00:35:07,160 --> 00:35:11,640
Speaker 10: in milliseconds. So the technology has completely moved to this

718
00:35:11,800 --> 00:35:16,000
Speaker 10: sort of software intermediated world. From a from a business

719
00:35:16,080 --> 00:35:20,080
Speaker 10: model standpoint, the giants that you mentioned there are somewhere

720
00:35:20,200 --> 00:35:24,640
Speaker 10: in the ninety plus percent of their revenue comes from advertising.

721
00:35:25,000 --> 00:35:27,560
Speaker 10: Not everyone can be bloomberg, right, I mean, I mean

722
00:35:27,719 --> 00:35:31,480
Speaker 10: so and but but it's beyond just those large platforms

723
00:35:31,560 --> 00:35:38,440
Speaker 10: so media and historically subscription based media like a Bloomberg,

724
00:35:38,880 --> 00:35:41,960
Speaker 10: but also like a Netflix and like a you know,

725
00:35:42,160 --> 00:35:44,440
Speaker 10: Disney that had these sort of B to B models

726
00:35:44,480 --> 00:35:46,200
Speaker 10: in the old TV world that you and I covered

727
00:35:46,239 --> 00:35:47,759
Speaker 10: well decades ago.

728
00:35:48,600 --> 00:35:49,160
Speaker 5: That's all.

729
00:35:49,320 --> 00:35:52,800
Speaker 10: They're all now shifting to advertising in order to garner

730
00:35:53,280 --> 00:35:55,640
Speaker 10: larger audiences and supplement their revenues.

731
00:35:56,120 --> 00:35:59,160
Speaker 4: I mean, obviously, this is ever evolving space. It seems

732
00:35:59,160 --> 00:36:01,800
Speaker 4: like there's something new every single day. How do you

733
00:36:01,880 --> 00:36:02,880
Speaker 4: all stay nimble?

734
00:36:03,680 --> 00:36:07,080
Speaker 10: You're absolutely right, Nora. In fact, I describe this sector

735
00:36:07,120 --> 00:36:11,640
Speaker 10: as having uniquely sorry, having five attributes scale. I mentioned

736
00:36:11,680 --> 00:36:14,360
Speaker 10: at trillion dollars, right, growth, So if you looked at

737
00:36:14,360 --> 00:36:17,200
Speaker 10: the combin and a growth rate of digital advertising, it's

738
00:36:17,280 --> 00:36:21,800
Speaker 10: over twenty percent for twenty years. Name another industry that

739
00:36:22,000 --> 00:36:25,799
Speaker 10: has that characteristic of growth. I'll wait, there is none.

740
00:36:26,800 --> 00:36:30,920
Speaker 10: It has fragmentation. There are thousands of companies across this

741
00:36:31,040 --> 00:36:37,440
Speaker 10: ecosystem that either offer services, media, data, software. It's very,

742
00:36:37,600 --> 00:36:41,280
Speaker 10: very complex. That's the fourth item. Tremendous amount of complexity.

743
00:36:41,480 --> 00:36:45,920
Speaker 10: And fifth what you mentioned, Noura, it's dynamic. It just

744
00:36:46,200 --> 00:36:48,600
Speaker 10: keeps changing. If you don't like it. Wait three months,

745
00:36:48,680 --> 00:36:51,239
Speaker 10: it'll be different. Either there will be a new technology,

746
00:36:51,760 --> 00:36:56,279
Speaker 10: or there'll be a new media channel witness TikTok vertical video,

747
00:36:56,440 --> 00:36:59,360
Speaker 10: a short form video, or there'll be a new technology

748
00:36:59,440 --> 00:37:02,839
Speaker 10: policy Google with you know, removing cookies, which is there

749
00:37:03,160 --> 00:37:06,160
Speaker 10: sort of identifier. Or there could be new regulation and

750
00:37:06,239 --> 00:37:11,719
Speaker 10: we're seeing a virulent antitrust and privacy legislation from both

751
00:37:11,760 --> 00:37:13,120
Speaker 10: the US government and Europe.

752
00:37:13,320 --> 00:37:14,600
Speaker 5: That's kind of where I wanted to go.

753
00:37:15,640 --> 00:37:18,600
Speaker 2: Terry and his firm, Luma Partners, they host these leading

754
00:37:19,080 --> 00:37:21,400
Speaker 2: conferences where all these tech people come together.

755
00:37:21,440 --> 00:37:22,520
Speaker 5: And I go to these conferences and.

756
00:37:22,560 --> 00:37:25,800
Speaker 2: I don't know anyone, I don't know any company, but

757
00:37:25,840 --> 00:37:27,880
Speaker 2: I just step back and I say, collectively, these are

758
00:37:27,920 --> 00:37:30,960
Speaker 2: the people that put all the ads on the Googles

759
00:37:31,000 --> 00:37:31,480
Speaker 2: of Facebook.

760
00:37:31,920 --> 00:37:33,920
Speaker 5: They figure it out. That's how I think about it.

761
00:37:34,200 --> 00:37:36,000
Speaker 2: Talk to us about M and A in your business,

762
00:37:36,040 --> 00:37:39,880
Speaker 2: because it's comprised of in the advertising technology space that

763
00:37:40,000 --> 00:37:42,879
Speaker 2: supports all the digital advertising that we all experience every day,

764
00:37:43,320 --> 00:37:45,080
Speaker 2: a lot of M and A. That's where you fit.

765
00:37:45,239 --> 00:37:46,680
Speaker 2: Talk to us about how that activity has been over

766
00:37:46,680 --> 00:37:47,359
Speaker 2: the last several years.

767
00:37:47,480 --> 00:37:52,440
Speaker 10: So first of all, you're right, your non recognition of

768
00:37:52,560 --> 00:37:55,400
Speaker 10: these people that are really driving the Internet. I mean,

769
00:37:55,440 --> 00:37:57,600
Speaker 10: think about it, right, who gets the headlines? Rupert Murdoch,

770
00:37:57,680 --> 00:38:04,680
Speaker 10: David Zaslov, right, great guys, meaningless as in terms of

771
00:38:04,760 --> 00:38:08,239
Speaker 10: their power and influence over how this all gets made.

772
00:38:08,480 --> 00:38:11,120
Speaker 10: The real people are these people that we don't even know,

773
00:38:12,040 --> 00:38:14,920
Speaker 10: you know, doing sort of B to B advertising technology,

774
00:38:15,120 --> 00:38:20,759
Speaker 10: certainly do so. This sector has gone through a wave

775
00:38:20,800 --> 00:38:24,520
Speaker 10: of new company formation, and there's always new innovation, so

776
00:38:24,560 --> 00:38:30,520
Speaker 10: there's always new companies, but it's direly in need of consolidation.

777
00:38:30,680 --> 00:38:34,319
Speaker 10: That's where I identified this as an opportunity fourteen years

778
00:38:34,360 --> 00:38:37,879
Speaker 10: ago when I formed Luma, and it's completely manifested and has.

779
00:38:37,840 --> 00:38:38,960
Speaker 6: A lot more to go.

780
00:38:40,120 --> 00:38:43,520
Speaker 10: Lately, the last eighteen months or eighteen of the last

781
00:38:43,560 --> 00:38:46,280
Speaker 10: twenty four months, we saw a huge slowdown in NEMENA

782
00:38:46,320 --> 00:38:50,440
Speaker 10: activity at ten year low because you know, the economy,

783
00:38:50,560 --> 00:38:54,319
Speaker 10: all these macro uncertainties. People weren't sure what was going

784
00:38:54,400 --> 00:38:58,280
Speaker 10: to happen with interest rates, with inflation, and so basically

785
00:38:58,360 --> 00:39:01,440
Speaker 10: everyone cut costs, improved their profitability in twenty two and

786
00:39:01,520 --> 00:39:04,960
Speaker 10: twenty three in anticipation for a recession that never came.

787
00:39:05,080 --> 00:39:07,000
Speaker 10: I swear to God, if we get to the end

788
00:39:07,040 --> 00:39:10,800
Speaker 10: of twenty four and there's not a recession. Jerome Powell

789
00:39:10,840 --> 00:39:12,560
Speaker 10: deserves to be on the twenty dollars bill. I mean,

790
00:39:12,840 --> 00:39:17,759
Speaker 10: what an incredible job. And so now everyone is like, wait,

791
00:39:18,000 --> 00:39:19,799
Speaker 10: we haven't done m and A for a couple of years.

792
00:39:20,040 --> 00:39:23,480
Speaker 10: We direly need new technologies and new markets to enter

793
00:39:23,880 --> 00:39:26,360
Speaker 10: and by the way, we've got our ebit done a

794
00:39:26,480 --> 00:39:29,399
Speaker 10: great place right now and we can't and the ad

795
00:39:29,520 --> 00:39:31,920
Speaker 10: market continues to grow. So not only is there not

796
00:39:32,000 --> 00:39:35,520
Speaker 10: a recession, digital ANTSPENT is growing fourteen percent this year

797
00:39:35,800 --> 00:39:38,520
Speaker 10: I'm talking about is the trillion dollar industry growing at

798
00:39:38,520 --> 00:39:41,920
Speaker 10: fourteen percent. Those are large numbers, so every year it

799
00:39:42,040 --> 00:39:45,680
Speaker 10: forms like an industry size of growth. And next year

800
00:39:46,200 --> 00:39:48,440
Speaker 10: forecasted to grow twelve percent. So it turns out you

801
00:39:48,560 --> 00:39:51,200
Speaker 10: can't cut your way to growth. And so they're back

802
00:39:51,280 --> 00:39:53,879
Speaker 10: on the bandwagon and strategic M and A is coming back.

803
00:39:54,360 --> 00:39:57,360
Speaker 2: The biggest platforms, as you mentioned before, the Facebook's, the Googles,

804
00:39:57,400 --> 00:39:59,800
Speaker 2: the Amazons of the world. It feels like Washington is

805
00:40:00,080 --> 00:40:03,560
Speaker 2: they got their regulatory sites trained upon them. How does

806
00:40:03,600 --> 00:40:05,920
Speaker 2: that impact kind of everybody else.

807
00:40:06,080 --> 00:40:06,720
Speaker 5: In the industry.

808
00:40:06,920 --> 00:40:12,000
Speaker 10: Excellent question. Here is my problem with the DOJ and

809
00:40:12,080 --> 00:40:18,560
Speaker 10: the FTC so Jonathan and Lena, they're well intended policies

810
00:40:18,920 --> 00:40:21,880
Speaker 10: to curb big tech. No one would argue with that

811
00:40:22,080 --> 00:40:25,919
Speaker 10: big tech. Look, come on, man, these companies have enormous power,

812
00:40:26,000 --> 00:40:30,360
Speaker 10: so by all means rain them in. However, the effect

813
00:40:30,800 --> 00:40:34,200
Speaker 10: of the well intended legislation was to put a pall

814
00:40:34,320 --> 00:40:36,759
Speaker 10: on all M and A activity. I mean, when they

815
00:40:36,960 --> 00:40:41,600
Speaker 10: blocked the Simon and Schuster deal, it's like it's like, sorry,

816
00:40:42,000 --> 00:40:45,919
Speaker 10: nineteen seventy seven called and they want their antitrust legislation back.

817
00:40:46,160 --> 00:40:50,000
Speaker 10: So it's it's totally ludicrous. They've i think overstepped. And

818
00:40:50,320 --> 00:40:52,800
Speaker 10: the net result is, you know, if you've got a

819
00:40:52,840 --> 00:40:56,560
Speaker 10: half a dozen companies that are omni powerful like at Amazon, Google, Facebook,

820
00:40:56,640 --> 00:41:01,839
Speaker 10: you know, and it's it's it's companies numbered seven through

821
00:41:01,960 --> 00:41:04,120
Speaker 10: fifty that you need to be doing M and A

822
00:41:04,200 --> 00:41:06,040
Speaker 10: in order to compete with the top six, and now

823
00:41:06,360 --> 00:41:09,680
Speaker 10: they're foreclosed from doing so. And so actually it's had

824
00:41:09,680 --> 00:41:12,600
Speaker 10: the opposite effect. It's actually increased monopoly power.

825
00:41:13,280 --> 00:41:15,560
Speaker 4: So let's talk AI. I mean, not that big of

826
00:41:15,600 --> 00:41:18,440
Speaker 4: a deal, but I'm curious, how does it actually impact

827
00:41:18,480 --> 00:41:20,719
Speaker 4: your business? Of course, that is something that everyone's been

828
00:41:20,800 --> 00:41:23,680
Speaker 4: watching in terms of AI and how obviously it trickles

829
00:41:23,680 --> 00:41:25,600
Speaker 4: into social media and how we think about the Internet

830
00:41:25,719 --> 00:41:27,799
Speaker 4: and things of that nature. And I'm sure it's very,

831
00:41:27,920 --> 00:41:29,200
Speaker 4: very critical to digital ad.

832
00:41:30,840 --> 00:41:33,640
Speaker 10: So I put AI in the category of shiny new objects, right,

833
00:41:33,680 --> 00:41:36,560
Speaker 10: I mean, and marketing loves the shiny new object. People

834
00:41:36,680 --> 00:41:40,319
Speaker 10: in this industry went crazy for Oh my god, five

835
00:41:40,440 --> 00:41:44,839
Speaker 10: g web three NFTs And you know, I feel there's

836
00:41:44,880 --> 00:41:48,040
Speaker 10: a responsibility, as someone who understands what's going on here

837
00:41:48,080 --> 00:41:51,200
Speaker 10: to call balls and strikes. So I said, this is nonsense,

838
00:41:51,280 --> 00:41:54,680
Speaker 10: this is bunk. You're wasting your dollars by all means.

839
00:41:54,760 --> 00:41:57,799
Speaker 10: Marketers spend in those categories for experimental purposes to look

840
00:41:57,840 --> 00:42:00,600
Speaker 10: cool and speak at conferences. But you're just know that

841
00:42:00,680 --> 00:42:04,360
Speaker 10: you're lighting all of that money on fire. Now AI.

842
00:42:04,440 --> 00:42:06,600
Speaker 10: There's a lot of hype around AI. So wait, are

843
00:42:06,680 --> 00:42:09,560
Speaker 10: we saying this is yet another shiny new object. I

844
00:42:09,680 --> 00:42:12,360
Speaker 10: believe this is one where there's both hype and reality.

845
00:42:12,520 --> 00:42:17,480
Speaker 10: In fact, one could make the argument that digital advertising

846
00:42:17,520 --> 00:42:21,440
Speaker 10: in media is the perfect application for AI because these

847
00:42:21,480 --> 00:42:25,160
Speaker 10: are large language models that do a lot of interesting things,

848
00:42:25,480 --> 00:42:27,680
Speaker 10: but they need huge amounts of data. Well, there is

849
00:42:27,800 --> 00:42:31,120
Speaker 10: no industry with more data in terms of real time

850
00:42:31,239 --> 00:42:35,960
Speaker 10: bidded trillions of AD calls daily in real time. It's

851
00:42:36,040 --> 00:42:38,920
Speaker 10: the perfect application for AI, and we're going to see

852
00:42:38,920 --> 00:42:42,400
Speaker 10: a spectrum from evolution to revolution. I put them in

853
00:42:42,440 --> 00:42:45,440
Speaker 10: three buckets. There's, of course, they're going to improve efficiency

854
00:42:45,600 --> 00:42:48,920
Speaker 10: in and around media data and workflow around how all

855
00:42:48,960 --> 00:42:52,640
Speaker 10: this stuff works because it's complex and AI will improve that.

856
00:42:53,280 --> 00:42:56,759
Speaker 10: Then there is another category around generative AI that's going

857
00:42:56,800 --> 00:42:59,640
Speaker 10: to improve content and the creative of the ads so

858
00:42:59,719 --> 00:43:02,960
Speaker 10: that they become more effective, not just more efficient, but

859
00:43:03,160 --> 00:43:06,040
Speaker 10: more effective. And then there's a third category of who

860
00:43:06,160 --> 00:43:10,279
Speaker 10: knows it could fundamentally change navigation on the web. What

861
00:43:10,360 --> 00:43:12,919
Speaker 10: do I mean by that it's gonna change search because

862
00:43:12,960 --> 00:43:18,319
Speaker 10: search is where you ask questions, whereas AI gives you answers. Right,

863
00:43:18,920 --> 00:43:23,000
Speaker 10: why do we need to manually navigate to websites? If

864
00:43:23,160 --> 00:43:26,200
Speaker 10: the if the publisher can simply publish to the ll M,

865
00:43:26,560 --> 00:43:29,680
Speaker 10: because the interface isn't gonna be manual navigation to a

866
00:43:29,880 --> 00:43:33,400
Speaker 10: www dot you know. Uh, it's just you're just gonna

867
00:43:33,440 --> 00:43:36,160
Speaker 10: ask your AI and a I'll give you the answer.

868
00:43:36,440 --> 00:43:41,320
Speaker 10: So the whole digital media world from a publisher standpoint,

869
00:43:41,520 --> 00:43:45,040
Speaker 10: could be going from uh B two C to B

870
00:43:45,160 --> 00:43:47,560
Speaker 10: two B where the B two B the other the

871
00:43:47,640 --> 00:43:49,560
Speaker 10: last B on B two B is in fact the

872
00:43:49,960 --> 00:43:51,080
Speaker 10: l ll ms of the AI.

873
00:43:51,360 --> 00:43:52,600
Speaker 5: You haven't lost your energy.

874
00:43:52,440 --> 00:43:55,040
Speaker 10: Dude, Oh no, hell no, I'm just getting so.

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00:43:55,120 --> 00:43:56,799
Speaker 2: I told these people when this guy comes in, you're

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00:43:56,800 --> 00:43:58,600
Speaker 2: gonna you're gonna know. Terry Quash, I thank you so

877
00:43:58,719 --> 00:44:00,719
Speaker 2: much for joining us. Tarry Quash is founder and CEO

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00:44:00,719 --> 00:44:04,920
Speaker 2: of loom of Partners, really focusing on the digital advertising market,

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00:44:05,000 --> 00:44:07,800
Speaker 2: all the companies that kind of fuel the global digital

880
00:44:07,800 --> 00:44:09,640
Speaker 2: advertising and what's digital advertising.

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00:44:09,680 --> 00:44:11,000
Speaker 5: It's all the ads that come on your.

882
00:44:11,239 --> 00:44:14,680
Speaker 2: Facebook feed, each Google search, Snapchat, all that kind of stuff.

883
00:44:15,120 --> 00:44:18,040
Speaker 2: Somebody's responsible for that. Terry is certainly one of them.

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00:44:18,480 --> 00:44:21,000
Speaker 2: The investment banker to the tech world getting an upbeat

885
00:44:21,080 --> 00:44:24,719
Speaker 2: view of digital advertising. Artificial intelligence a big, big player.

886
00:44:25,520 --> 00:44:26,920
Speaker 2: You know, if you're an advertiser, you want to make

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00:44:26,920 --> 00:44:29,640
Speaker 2: sure that your ad message gets to the right person,

888
00:44:29,840 --> 00:44:32,680
Speaker 2: the right customer or potential customer, and AI can.

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00:44:32,719 --> 00:44:35,920
Speaker 5: Certainly help in that. So we'll keep an eye on that.

890
00:44:36,000 --> 00:44:38,360
Speaker 2: So we appreciate getting a few minutes of Terry's presence

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00:44:38,360 --> 00:44:39,480
Speaker 2: here in our New York studio.

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Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple Spotify,

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00:44:45,239 --> 00:44:46,560
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00:44:53,480 --> 00:44:56,680
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