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Speaker 2: Well, the truck in from Yellow Corp. Told workers that
Speaker 2: are shutting down. That's according to its union, jeopardizing thirty
Speaker 2: thousand jobs as the historic freight brand faces heavy debt,
Speaker 2: loads and operational woes. This company is the third largest
Speaker 2: less than truckload carrier in the US, so that means
Speaker 2: that it uses a warehouse network to combine several smaller
Speaker 2: shipments on one truck for short haul deliveries. It's different
Speaker 2: from long haul trucking in the parcel industry, those UPS's
Speaker 2: of the world, which carries individual, usually smaller packages. Very
Speaker 2: pleased this afternoon to be joined by Thomas Black, Bloomberg
Speaker 2: Industrial Logistics and Aerospace reporter. He's been all over this story.
Speaker 2: We're also joined by Bloomberg anchor and markets correspondent Crety Kupta,
Speaker 2: who's also been all over this It's good to have
Speaker 2: you both with us. Thomas, I wanted to start with
Speaker 2: you and just give us kind of the latest, because
Speaker 2: we're still reading that. It's the union that's communicating this,
Speaker 2: not Yellow.
Speaker 3: That's right.
Speaker 4: Yellow hasn't made it official yet, but all the expectations
Speaker 4: are they will to clear for bankruptcy. There may be
Speaker 4: some legal issues. They are still shopping around. Their threepl business,
Speaker 4: which is a business that coordinates freight, doesn't have truck
Speaker 4: so I don't know if that's slowing things down. But
Speaker 4: we haven't heard from the company, but the union knows
Speaker 4: this is happening because the company has shut down operations
Speaker 4: and workers are no longer going to work.
Speaker 2: Well, bankruptcy doesn't always mean that a company shuts down operations,
Speaker 2: that a company stops what it's doing. I mean, there
Speaker 2: are plenty of bankrupt companies that continue to have operations.
Speaker 2: What's going on with Yellow?
Speaker 4: Yeah, in this case, trucking is a little bit different
Speaker 4: because you can't get your products stuck in the system.
Speaker 4: So when the operations are under strus like this, customers
Speaker 4: tend to flee, and at some point they have closed operations,
Speaker 4: they are no longer picking up freight.
Speaker 5: So we do know that, all right, So Chrity, come
Speaker 5: on in here, because I know that you are following
Speaker 5: the labor story for several companies right now, so closely
Speaker 5: talk to me with Yellow specifically about what the back
Speaker 5: and forth looked like between the union and the company
Speaker 5: and what the kind of sticking points were.
Speaker 6: Well, we know that the Team Stars union negotiations have
Speaker 6: really kind of set the tone for labor negotiations across
Speaker 6: the country when it came to what they demanded from UPS,
Speaker 6: the Majorshipper, and this included things like eliminating the two
Speaker 6: tier wage system, giving benefits time off, but of course
Speaker 6: pay was at the core of it, especially because a
Speaker 6: lot of these workers, I mean they're truck drivers, they're
Speaker 6: manual laborers. This is a very intensive industry, and they
Speaker 6: weren't getting paid necessarily by the same rate depending on
Speaker 6: how many hours that they worked. UPS has really ended
Speaker 6: or the Teachers negotiations that really ended that dynamic. But
Speaker 6: Teamsters also represents a lot of workers at say Amazon
Speaker 6: for example, and Yellow among others. And the Yellow story
Speaker 6: is really interesting because they had tried to negotiate an
Speaker 6: agreement with this. By the way, I should say, what
Speaker 6: used to be kind of a name brand logistics company
Speaker 6: and of course has declined since but they ultimately, I
Speaker 6: think what you need to know here is had negotiated
Speaker 6: a fifty million dollar increase of a payment from Yellow
Speaker 6: to their employees, and their Yellow's company finances got so
Speaker 6: bad they weren't even able to make that payment. Ultimately,
Speaker 6: Teamster said, look, we're going to strike, and even that
Speaker 6: didn't pan out simply because there's no money to go around.
Speaker 5: Well, the company also really kind of put the blame
Speaker 5: on the union, saying that the union efforts hurt a
Speaker 5: plan to combine its trucking divisions for Yellow. What is
Speaker 5: Yellow's standing on that and how does that plan into
Speaker 5: the overall picture that we're seeing in the infighting between
Speaker 5: unions and these companies.
Speaker 6: Yeah, well, I think it's really speaks to kind of
Speaker 6: the pattern that I think Yellow has developed, and I
Speaker 6: mean Thomas can speak I think probably better to this,
Speaker 6: but essentially this idea that a lot of their financial
Speaker 6: troubles have come simply from trying to acquire other pieces
Speaker 6: of the logistics space, and in doing that, that kind
Speaker 6: of consolidation, which again is very normal when you're trying
Speaker 6: to be in market share, has ultimately led to these
Speaker 6: major debt issues. Add On the higher wages of workers
Speaker 6: and specifically what the teamsters are adding for and that
Speaker 6: is an additional cost. So you are seeing this kind
Speaker 6: of double barreled whammy. If I will on on kind
Speaker 6: of how they're able to deal with these, I'll allow that.
Speaker 2: Created I'll allow that. I thought, Thomas, I want to
Speaker 2: bring you back in here and talk a little bit
Speaker 2: about the other companies that might be the beneficiaries of
Speaker 2: Yellow shutting down XPO Logistics. Old dominion, for example, from
Speaker 2: the perspective of customers is that where they fled.
Speaker 4: Now, the LTL market is a little bit more concentrated,
Speaker 4: a lot more concentrated than the truckload market, so they're
Speaker 4: a handful of large players. FedEx, for example, has an
Speaker 4: LTL business. There's another company called SI, and the ones
Speaker 4: that you mentioned, those are really the dominant players in
Speaker 4: this market. There's some smaller ones, but it's concentrated. So
Speaker 4: those companies have had a decline in their volumes just
Speaker 4: coming down from the pandemic highs, so they have excess
Speaker 4: capacity and they are up you know, the freight that
Speaker 4: will come to them. They probably will try to cherry
Speaker 4: pick it a little bit to make sure they get
Speaker 4: the most profitable part of that or the freight that
Speaker 4: matches up with the lanes that they tend to run.
Speaker 4: So we're going to see that being divvied up. I
Speaker 4: would say on the union talks, the company actually came
Speaker 4: to the union to ask them to reopen the negotiation,
Speaker 4: but they their contract had run through into next year,
Speaker 4: but they wanted to do this consolidation of their different
Speaker 4: units to gain some efficiency, so they reopened that contract
Speaker 4: and the negotiations didn't go anywhere, and that that fifty
Speaker 4: million payment was a payment that they owed for the
Speaker 4: penon and when they couldn't make that, that's when the
Speaker 4: team decided to pull the plug on their negotiations. Now,
Speaker 4: whether it's the fall of the Teamsters or not, that's
Speaker 4: I don't want to make that call. Certainly the company
Speaker 4: says that's the case. I would just say that the Teamsters,
Speaker 4: besides the UPS contract, did negotiate contracts with the art
Speaker 4: Best freight unit called ABF Freight, which is also an
Speaker 4: LTL carrier, and they just they're about to ratify an
Speaker 4: agreement with t Force, which is the LTL carrier that
Speaker 4: UPS sold a couple of years ago. So it's it's
Speaker 4: not like the team stars aren't doing agreements. This one
Speaker 4: I think was maybe an outlier.
Speaker 2: Okay, that's that's that's good to know. Thomas Credie. I
Speaker 2: want to bring you back in here because you and
Speaker 2: I were chatting about this a little earlier about you
Speaker 2: know what you thought sort of the most interesting element
Speaker 2: of this story is, and it's one that struck me
Speaker 2: as well, it's the fact that pretty much everyone listening,
Speaker 2: if they're a US taxpayer, they're owners of this stock.
Speaker 2: Taxpayers are owned thirty percent.
Speaker 7: Of this they are.
Speaker 6: The irony is that the stock is a penny stock now,
Speaker 6: it doesn't even really hold that much value, So.
Speaker 2: The taxpayer should have shorted it, is what you're saying.
Speaker 6: I mean, I do not give investment advice, thank you,
Speaker 6: but yeah, I think that's my favorite fun fact time
Speaker 6: about the whole stories that look, because of these big
Speaker 6: financial troubles that Yellow has gotten into, well, then to
Speaker 6: procuring about a seven hundred million dollar load in twenty
Speaker 6: twenty when a lot of businesses were getting that kind
Speaker 6: of COVID relaef the idea that under the Trump administration,
Speaker 6: he can use these nations security measures to make sure
Speaker 6: that supply chains were working that everything was kind of
Speaker 6: trying to function as best as it could just given
Speaker 6: the dynamic there. Under that Yellow had gotten a seven
Speaker 6: hundred million dollar loan that they still have not paid back,
Speaker 6: So they basically owe the Treasury Department seven hundred million
Speaker 6: dollars and in doing that, by extension, taxpayers own about
Speaker 6: thirty percent of the stock I think. So one of
Speaker 6: my favorite kind of things to put into perspective here
Speaker 6: is simply that when you look at their long term debt,
Speaker 6: that seven hundred million dollar loan represents nearly half of it.
Speaker 6: It's a lot. So again, when I say that they're
Speaker 6: in some serious financial trouble, taxpayers are are paying part
Speaker 6: of it all.
Speaker 5: Right, final thirty seconds here, Thomas is part of the
Speaker 5: takeaway from this story about overall freight demand clients declines
Speaker 5: rather post COVID.
Speaker 7: I would just say Yellow is an outlier.
Speaker 4: They've had financial problems really since the Great Recession back
Speaker 4: in two thousand in eight two nine, so they have
Speaker 4: been battling financial difficulty for a long time. So I
Speaker 4: wouldn't read too much and do their particular problems for
Speaker 4: the freight market is depressed a little bit, but the
Speaker 4: strong carriers are going.
Speaker 2: To be able to power through really good stuff. Guys,
Speaker 2: both of you really appreciate that. That's Kredi Gupta, Bloomberg
Speaker 2: anchor and Market's correspondent, and the voice you just heard
Speaker 2: there Thomas Black, Bloomberg Industrial Logistics and aerospace reporter. Both
Speaker 2: of them have been all over this story, so we
Speaker 2: really appreciate it.
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Speaker 2: Maddie, I got a true story for you last week.
Speaker 2: I'd hear it last week. I come into work and
Speaker 2: I'm soaking with sweat, and my colleague Alex s Gittelson says, Tim,
Speaker 2: how is your bike ride in this morning? And I
Speaker 2: was like, Alex took the subway in. This is how
Speaker 2: much I sweat when I walk from the subway to
Speaker 2: our office two blocks. And he was like, Oh, I'm sorry,
Speaker 2: you're so sweaty. I thought you rode your bike all
Speaker 2: the way from Brooklyn. No, that's just because this month
Speaker 2: has been really hot. All that to say June was hot.
Speaker 2: In fact, it was the hottest June in recorded history,
Speaker 2: and this month it's the hottest ever July. It's not
Speaker 2: good news, but it's good that we have Eric Rosston
Speaker 2: all over this story. It's a big take from last
Speaker 2: week and overheating planet requires supercharged climate solutions. Eric joins
Speaker 2: us on zoom from our Washington, DC bureau. Eric, good
Speaker 2: to have you with us. First, give us the bad news.
Speaker 2: Just how bad was July?
Speaker 8: July was bad? You have characterized it well, it was
Speaker 8: the hottest month and recorded history. The temperature records go
Speaker 8: back to the middle of the nineteenth century. This year
Speaker 8: is likely to be the hottest year on record. The
Speaker 8: last nine years have been the hottest year on record,
Speaker 8: the hottest twenty two, twenty two of the hottest twenty
Speaker 8: three years have occurred this century, and every decade has
Speaker 8: been hotter than the last since the nineteen sixties.
Speaker 5: Yeah, so not great. How much more of this are
Speaker 5: we going to experience throughout the rest of this year?
Speaker 5: How much more heat can we anticipate? Is this going
Speaker 5: to happen through the end of twenty twenty three?
Speaker 8: Even well, we're helped out in some ways by the
Speaker 8: fact that July is the hottest month, and so as
Speaker 8: we spin around the sun toward fall and winter, temperatures
Speaker 8: will retreat from the peace we've seen. On the other hand,
Speaker 8: we're also entering hurricane and wildfire Season's what's making this
Speaker 8: year unduly punishing is the coincidence of not only climate change,
Speaker 8: which just steps up all the time, but also in
Speaker 8: El Nino, which is this phenomenon of the Pacific Ocean
Speaker 8: sort of coughs up lots of heat every few years,
Speaker 8: and it makes temperatures hotter and throws weather in the
Speaker 8: chaos in different parts of the world.
Speaker 2: It's pretty depressing, I gotta tell you.
Speaker 4: Eric.
Speaker 2: You know, we got a note from my kids nursery
Speaker 2: school that says AQI is over one hundred today, so
Speaker 2: we're not going to let the kids play outside. Meaning
Speaker 2: the air quality index from the wildfires in Canada a
Speaker 2: few weeks ago, a few months ago, and a few
Speaker 2: weeks ago actually happened twice recently prevented the kids from
Speaker 2: being able to play outside. But it's so hot that
Speaker 2: you got to be blasting the air conditioner. Where does
Speaker 2: the electricity come from to blast the air conditioner? Well,
Speaker 2: because it's not coming from nuclear anymore here in New York.
Speaker 2: It's coming from fossil fuels. It's creating this terrible cycle
Speaker 2: that we're in right now, which is you know, really
Speaker 2: my question is about solutions, because staying inside in blasting
Speaker 2: the ACA is not a viable solution. That's not going
Speaker 2: to keep sea levels from rising, that's not going to
Speaker 2: keep wildfires from happening, that's not going to keep the
Speaker 2: air clan. What do we do.
Speaker 8: We need to get off fossil fuels, even though it's
Speaker 8: not said that bluntly in American political culture, fossil fuels
Speaker 8: cause called fossil fuel burning causes climate change, and until
Speaker 8: we get that under control, climate change will always be
Speaker 8: in its opening act. This will be a cold summer
Speaker 8: in twenty or thirty years, and that's ultimately this whole story.
Speaker 8: You know, this is not a complicated topic. We've known
Speaker 8: for many decades that this is occurring. Scientists, you know,
Speaker 8: warned us for decades that you want to get on
Speaker 8: top of this before the symptoms start occurring. The symptoms
Speaker 8: are occurring. Fortunately, and this is the good news. We
Speaker 8: have the tools, right We have affordable solar wind and
Speaker 8: battery technology, Solar is cheaper than coal in most of
Speaker 8: the world on a levelized cost basis. We have wild
Speaker 8: investment into things that are not solved technologically. Yet this story,
Speaker 8: the reason this is the greatest story ever is that
Speaker 8: the stakes could not be higher. But you know, we
Speaker 8: have the fixes and all we need to do is
Speaker 8: the work to implement them. Like that's it. All we
Speaker 8: have to do is the work.
Speaker 5: Can we reverse some of the damage that's already been done?
Speaker 5: Or when you said this is going to be viewed
Speaker 5: as a cool summer in twenty or thirty years, is
Speaker 5: that a foregone conclusion or can we fix it still?
Speaker 8: The scientists have said, in a break from previous years,
Speaker 8: they think that as soon as we stop increasing the
Speaker 8: atmospheric concentration of greenhouse gases, that the warming will will
Speaker 8: stop pretty quickly thereafter. So let's what you know, it's
Speaker 8: what passes for good news in this space. Uh, but
Speaker 8: you know this is this is uh, it's a it's
Speaker 8: a situation, right, This is not it's not great news.
Speaker 8: We've known about it for a long time. We've made
Speaker 8: you know, we put it off for a long time.
Speaker 8: And that's just where we are. I, as someone who
Speaker 8: covers this. You know, we get climate reporters, I think
Speaker 8: get this question a lot, which is how do you
Speaker 8: deal with it? And part of the part of it
Speaker 8: is by being in touch with everything that's going on.
Speaker 8: There's a way that kind of diffuses anxiety, you know,
Speaker 8: like if you can if you can understand something, it
Speaker 8: makes it less scary. But the other thing is that,
Speaker 8: like again, I cannot over emphasize the excitement around clean
Speaker 8: energy technologies. The rate of growth, the rate of the
Speaker 8: price declines, it's just phenomenal how quickly we can solve
Speaker 8: the problem if we decide.
Speaker 2: To Nancy Lyons in our DC newsroom, who I believe
Speaker 2: it's probably Eric, just a few steps from you, because
Speaker 2: I think you're in the same newsroom today. She just
Speaker 2: sent in our chat a great question and reminded me
Speaker 2: that the problem when it comes to renewables is consistent
Speaker 2: power supply. You know, when there is no wind, when
Speaker 2: there is no sun, when it's nighttime. How do we
Speaker 2: get to a place where we can actually store power
Speaker 2: that's generated in the day to offset fossil fuel use
Speaker 2: at night? Or is the answer just nuclear?
Speaker 8: Both of the answer the price declines in utility scale
Speaker 8: batteries have plummeted like the curve just like somebody looks
Speaker 8: like somebody just like dropped an egg on the chart
Speaker 8: of price declines, right, it's just like very precipitous. So
Speaker 8: increasingly you see utility scale batteries and nuclear is an
Speaker 8: option that has been there the whole time, and it
Speaker 8: is a critical source of baseline electricity.
Speaker 9: It's just there.
Speaker 8: People just seem not to be able to build them.
Speaker 8: They're just they come in billions of dollars over budget
Speaker 8: and many years late. You know, when you look at
Speaker 8: the time crunch, we're in to have global emissions by
Speaker 8: twenty thirty, Like you can't build nuclear in that time,
Speaker 8: or at least nobody has. So you know, nuclear is
Speaker 8: you know, it's this tragedy of like having a carbon
Speaker 8: free source of power that you know, we've used for
Speaker 8: more than half a century, but nobody will build them.
Speaker 7: Yeah.
Speaker 5: In our final minute with you here, I'm curious about
Speaker 5: legislation around this because you are in DC for us.
Speaker 5: How effective has legislation like the Inflation Reduction Act been
Speaker 5: at sort of solving some of the issues that you're
Speaker 5: talking with us about.
Speaker 8: It's the most phenomenally important climate legislation that any country
Speaker 8: has ever passed. You know, the the International Energy Agency
Speaker 8: says we need to triple renewable deployment by twenty thirty,
Speaker 8: we need to double energy efficiency, and the oil and
Speaker 8: gas sector needs to cut its methane emissions by seventy
Speaker 8: five percent. There are things in the inflation reduction app
Speaker 8: and now in copycat legislation in Europe that will incentivize
Speaker 8: all of those things. So it is it's difficult to
Speaker 8: overstate the importance of how much that that legislation will
Speaker 8: help things along. There's still more that's needed. One interesting
Speaker 8: thing is like we're going to build so much solar
Speaker 8: and wind in the US that like we can't keep
Speaker 8: up with plugging it into the grid fast enough. And
Speaker 8: so it's interesting, like the federal government can you know,
Speaker 8: has U can build pipelines and highways, but they can't
Speaker 8: build transmission right, So that's something Congress has to fix.
Speaker 2: Eric, we got to run, but we love it when
Speaker 2: you join us. Thanks so much for doing this. That's
Speaker 2: Eric Roston, sustainabilitator at sustainability editor at Bloomberg News.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 5: We have been talking a lot about investors, and they've
Speaker 5: been very bullish this year on everything from AI to
Speaker 5: big tech chip manufacturing of course, Tim, but you know
Speaker 5: one other thing that they're bullish on, it turns out
Speaker 5: is women's soccer.
Speaker 1: Yeah.
Speaker 2: We got a great story featured in BusinessWeek newsletter recently
Speaker 2: the BW Daily newsletter, and with the World Cup going,
Speaker 2: we're gonna get a pulse check on women's soccer, specifically Maddie.
Speaker 10: Yeah.
Speaker 5: We're thrilled to have Bloomberg BusinessWeek editor Joel Weber here
Speaker 5: with us in studio as well as reporter Aira Budua
Speaker 5: to discuss and as always, you can find this story
Speaker 5: on Bloomberg dot com and on the terminal. But Joel,
Speaker 5: talk to us because investors, they're into a lot of
Speaker 5: sports right now.
Speaker 3: They are, Pickaball being one. So the thing with pickaball
Speaker 3: is that it's really loud. It's so loud and it's
Speaker 3: like maybe you've heard it, so've heard it. Yeah, Uh
Speaker 3: I still love it, still love it. But you know,
Speaker 3: look it's it's World Cup season, and uh it is
Speaker 3: a huge reminder of just whenever this comes around every
Speaker 3: four years, Uh, all eyes just go to it. And
Speaker 3: America is obviously really good at the American team is
Speaker 3: really good. So good, right, and kind of a lukewarm
Speaker 3: start here, we'll see what happens. But reminded how much
Speaker 3: people love watching it, right Ira so far, and I'm
Speaker 3: curious what the business really looks like. And it's just
Speaker 3: this reminder of like when this comes around, it's like
Speaker 3: pulls everybody in and it turns out this business just
Speaker 3: gets better and better and better.
Speaker 1: Yeah.
Speaker 9: It's interesting because I mean this is the third time
Speaker 9: that the National Women's Soccer League, is the third time
Speaker 9: that the US has tried a professional women's soccer league,
Speaker 9: and each time it's sort of been tied to the
Speaker 9: buzz and hype of the World Cup. So in you know,
Speaker 9: after the ninety nine Ers, the famous team in nineteen
Speaker 9: ninety nine that won it here on US soil, huge sensation,
Speaker 9: Mia Hamm all of that proved that they could draw
Speaker 9: huge crowds, they launch a league and after three seasons
Speaker 9: one hundred million dollars spent, it collapses. And I think
Speaker 9: some people thought that meant there wasn't a market beyond
Speaker 9: the national team. But if you talk to people in
Speaker 9: this world world now, they say the lesson of that
Speaker 9: was basically that you need more patience and time. If
Speaker 9: you look at any sports league, it takes decades to grow.
Speaker 9: And what you're seeing now in the National Women's Soccer
Speaker 9: League is big money coming in smart investors. You know,
Speaker 9: we look at Sixth Street just paid the private equity
Speaker 9: from just paid fifty three million dollars for the expansion
Speaker 9: franchise in San Francisco BAFC. That shatters the previous you know,
Speaker 9: you used to pay two million for that kind of thing.
Speaker 9: And they see this as a real opportunity. They think
Speaker 9: they're going to reach parody with men's soccer in this
Speaker 9: country within about a decade, and they're investing a one
Speaker 9: hundred and twenty five million as a commitment and that
Speaker 9: those kinds of numbers are what it's going to take,
Speaker 9: and it's going to take time. But now it looks
Speaker 9: like the wherewithal is there finally what's changed. Well, if
Speaker 9: you talk to Alan Waxman at Sixth Street, he says that,
Speaker 9: you know, one big thing that's changed is just the
Speaker 9: there are fewer gatekeepers, so you can get yourself in
Speaker 9: front of fans on streaming networks more easily. Right. So
Speaker 9: they have the enn WUSL as it has a deal
Speaker 9: with CBS that includes every single one of their matches.
Speaker 9: The ones that aren't on CBS broadcast or support or
Speaker 9: cable channel are also on Paramount Plus. So if you're
Speaker 9: a fan, you can see it and then you find
Speaker 9: it right right. Other sports in the past you had
Speaker 9: to take whichever little windows you could get from, you know,
Speaker 9: the gatekeepers. And so that's one and two, he said, I.
Speaker 2: Like with the like on Sundays with the Rabbit Ears
Speaker 2: trying to actually watch.
Speaker 9: A ESPN we're showing pickleball on UH And the other
Speaker 9: thing that's changed in his mind is social media has
Speaker 9: made the players accessible on a day to day basis,
Speaker 9: and they are the best promotion that you have, So
Speaker 9: you not only see them every four years or or
Speaker 9: maybe at the Olympics, you see them day to day
Speaker 9: and that and that's a way to build loyalty and
Speaker 9: build it and build a customer base.
Speaker 2: So in the past, when the past few times when
Speaker 2: this has not worked, when it's failed, it weren't It
Speaker 2: wasn't the social media era, it wasn't the streaming era.
Speaker 2: Is that enough though, to make time of success?
Speaker 9: I think if you add that third element of investor
Speaker 9: patients right right, I think that you have to recognize it.
Speaker 9: I mean, you talk to this economist David Berry out
Speaker 9: in Utah who studied these things, and if you just
Speaker 9: look at like where was the NBA at year twelve?
Speaker 9: That's how old the NWSL is right now, they're in
Speaker 9: their eleventh season. Where was the NFL? Where Major League
Speaker 9: Baseball teams? You know, the National League fourteen out of
Speaker 9: the first sixteen teams failed. You know, the Pittsburgh Steelers
Speaker 9: lost money for decades, Like you really have to in sports.
Speaker 9: It's a long term growth proposition. But once you because
Speaker 9: you're building basically generational emotional attachments, and then once you
Speaker 9: get there, it's almost impossible not to make money because
Speaker 9: people will come and watch whether you're good or bad,
Speaker 9: day in and day out. They will think about you,
Speaker 9: whether you're doing well or not. But that takes twenty
Speaker 9: thirty forty years to create.
Speaker 3: Does Messy help. I'm just thinking, you know, that goal
Speaker 3: was sensational. I watched it like five times, and between
Speaker 3: that and the fact that we've got the World Cup
Speaker 3: happening right now, you just have to kind of think
Speaker 3: that all of this could parlay into a moment.
Speaker 9: Well, I mean, the joke is that soccer has been
Speaker 9: the sport of the future in the US since nineteen
Speaker 9: seventy two, but yes, walks out, that's true, and I mean,
Speaker 9: and to that point, on the women's side, they have
Speaker 9: an issue because the European League is the women the
Speaker 9: super League in the UK and some of these teams
Speaker 9: in Spain and elsewhere that have connections to their men's sides,
Speaker 9: so Barcelona, Chelsea, these clubs, they're now starting to really
Speaker 9: invest in women's soccer and they already have emotional attachments
Speaker 9: through the men's sides with a lot of fans, and
Speaker 9: they're in some cases paying more than the National Women's
Speaker 9: Soccer League for talent. And that's going to be a
Speaker 9: challenge because you have to have whoever the equivalent to
Speaker 9: MESSI is say, and you have to be able to
Speaker 9: say we are the best league in the world, and
Speaker 9: they're going to have to compete. Sam Kerr left for Chelsea.
Speaker 9: She's the Australian player, she's the highest paid player in
Speaker 9: the world. She does not play in the National Women's
Speaker 9: Soccer League. So as they grow, they're not only going
Speaker 9: to have to invest in all the things that you
Speaker 9: have to do stadiums and so on, but they're going
Speaker 9: to have to compete for talent.
Speaker 2: When you say highest paid player in the world, we're
Speaker 2: talking We're not talking millions of dollars a year. No,
Speaker 2: we're talking less than a half million dollars a year.
Speaker 2: That was shocking for me to say.
Speaker 9: Yeah, I mean, she is reportedly the highest paid player
Speaker 9: in women's football and she makes about four hundred fifty
Speaker 9: thousand a year.
Speaker 2: Which, don't get me wrong, that's yeah, really good money, right,
Speaker 2: but that's not right men's soccer money.
Speaker 4: No.
Speaker 9: I mean, on top of that, people like Alex Morgan
Speaker 9: have real opportunities obviously in the sort of commercial space,
Speaker 9: but it's still a huge disparity. And that is another
Speaker 9: thing that comes with maturity, right, because really, when you've
Speaker 9: hit it big is when you're making streaming money or
Speaker 9: media rights money in the billions and that's when you
Speaker 9: then probably have a collective bargaining agreement that says players
Speaker 9: get half of that, and then the contracts get huge.
Speaker 9: Before that, it's more difficult to generate that kind of
Speaker 9: those kinds of salaries.
Speaker 5: It makes me think about what the audience looks like, too,
Speaker 5: because the reason that I have been drawn to women's
Speaker 5: soccer is because of the activism surrounding it. And I'm
Speaker 5: sure that that is not the case for the majority
Speaker 5: of fans, but that's what got me into it. How
Speaker 5: much of that are you seeing people who are in
Speaker 5: it for the pro these women getting paid more eventually someday.
Speaker 9: Viewership, I mean it's you know, if you go I
Speaker 9: go to Gotham FC matches out in New Jersey and
Speaker 9: there's definitely, like the signs in the crowd, a lot
Speaker 9: of them are about social justice, about believing women, these
Speaker 9: kinds of things about pay. So there's an element of
Speaker 9: that is what are I think some of the core
Speaker 9: fans are there for. And it's definitely a piece of
Speaker 9: the attraction for this, that idea that it's about time
Speaker 9: that we started supporting and following women's sports on a
Speaker 9: power of the men's I think for the league to grow,
Speaker 9: it has to break out of that. And that's what
Speaker 9: you're starting to see now where it's just an entertainment
Speaker 9: proper position. These are the best. These are fast, exciting, quality,
Speaker 9: talented players and competitive, intense matches that you're going to
Speaker 9: want to see the outcome. You're going to care who wins.
Speaker 9: And that's when you get to I think, you know,
Speaker 9: stronger investment proposition.
Speaker 3: How much is writing on the performance of the women's team,
Speaker 3: the American women's team in the World Cup right now?
Speaker 3: Because I mean, like I mentioned just there was.
Speaker 9: This tie, right and like well tonight, yeah, Portugal tomorrow
Speaker 9: three am.
Speaker 3: So so you know, for real, like a lot is
Speaker 3: writing on this right Like if if somehow America doesn't
Speaker 3: do that, well, like what does that do for this
Speaker 3: you know interest in the sport here?
Speaker 9: They have So the NWSL has twenty two of the
Speaker 9: twenty three players on the US team. So I spoke
Speaker 9: with the commissioner, Jessica Berman.
Speaker 3: Who's the one who's the one that's not.
Speaker 9: Plays in France for leon Oran, but they so they
Speaker 9: you know, I spoke with Jessica Berman. She would she said,
Speaker 9: as an American, I'm rooting for the US team and
Speaker 9: reminded me that they have sixty one players total across
Speaker 9: all the rosters are on half the teams, so they
Speaker 9: have a stake in a lot of these clubs. But
Speaker 9: it's clear that I think they would love to see
Speaker 9: a fifth World Cup victory and these players to come
Speaker 9: back to their teams which are playing right now, have
Speaker 9: them come back in the late summer fall and be
Speaker 9: returning heroes and juice the short term certainly, you know.
Speaker 9: But in the meantime they are They put together a
Speaker 9: marketing team to advertise and promote around the World Cup
Speaker 9: to say, hey, if you love watching these players on
Speaker 9: this stage, come and watch them on our stage when
Speaker 9: they get back.
Speaker 3: Right or now right, it's like all the best players
Speaker 3: are going to disappear for a little while.
Speaker 9: No, I mean I have not gone to a Gotha
Speaker 9: match during the World Cup because you know, the best
Speaker 9: players aren't there. Yeah, so's it's a short term loss
Speaker 9: for them.
Speaker 2: The marketers, the Nikes of the world, the huge, huge
Speaker 2: consumer package goods companies that want to be associated with
Speaker 2: something really cool. Are they stepping up?
Speaker 9: They have been, and it's been interesting because you look
Speaker 9: at Budweiser, or now it's bud Light. Uh uh. Nike
Speaker 9: is a big one MasterCard. I believe those deals. They've
Speaker 9: been investing in the league even as it was going
Speaker 9: through this scandal and the Sally ATE's report and really
Speaker 9: a lot of questions about player treatment, harassment, abuse, and
Speaker 9: they stuck with them through that and and have I
Speaker 9: think because the league showed that it wanted to you know,
Speaker 9: clean house. But there that that side of the of
Speaker 9: the sort of investment, you know, the media, the media
Speaker 9: side is small, the ownership side is getting bigger fast.
Speaker 9: But I think the sponsorship side has maybe been the
Speaker 9: strongest over the last few years because partly what you
Speaker 9: were describing of just there's a glow around these teams.
Speaker 9: It's not that they're great athletes and it's a great
Speaker 9: sport to watch, but these people are sort of social
Speaker 9: heroes as well.
Speaker 3: Okay, so I'm curious, like if if all these players
Speaker 3: have this World Cup they go back to, uh to
Speaker 3: their regular regular teams, who am I supposed to watch?
Speaker 3: Like you know, you you make going to pitch for
Speaker 3: Jersey here, But like you know, like how there's obviously
Speaker 3: there are very fan centric places like the Portland team
Speaker 3: Portland forms is viewed as like an example of what
Speaker 3: this can really look like. Is that true everywhere?
Speaker 10: Though?
Speaker 3: I mean there's these pockets right and like you have
Speaker 3: and you know, this is big money heading towards San Francisco.
Speaker 3: So what's the whole league like when there's like really
Speaker 3: really strong followings and then you know, I don't know
Speaker 3: what Louis Tho's.
Speaker 9: Like, right, No, this is something they need to get
Speaker 9: right because there's huge you know, Angel CITYFC came out
Speaker 9: with a huge amount of attendance and buzz to Portland Thorns.
Speaker 9: You mentioned Raining champs. They have Sophia Smith the MVP.
Speaker 9: They have a really strong following. BAFC, the new team
Speaker 9: coming next year, looks like set to really explode. Kansas
Speaker 9: City's doing great, but it's not across the whole league
Speaker 9: for sure, and they're looking to expand to sixteen teams
Speaker 9: within the next few years. And what they're going to
Speaker 9: need is that kind of enthusiasm league wide, and that's
Speaker 9: going to mean not just building that fan base, but
Speaker 9: having the type of ownership that wants to spend the
Speaker 9: money that that takes.
Speaker 3: And stars too, right, Like the stars can kind of
Speaker 3: cut through everything so who are people on the women's
Speaker 3: team right now who's viewed? We know who the regulars are,
Speaker 3: but like if somebody's gonna rise up and really kind
Speaker 3: of prove themselves, who are some of those candidates.
Speaker 9: Well, I mean, you look at Alyssa Thompson eighteen years
Speaker 9: old at Angel CITYFC. I think that's a person that
Speaker 9: many people expect, along with Sophia Smith to the face
Speaker 9: of the women's game once the sort of current generation
Speaker 9: Alex Morgan, Megan Raupino star eighteen. Yeah, and they have.
Speaker 9: That's another thing that they've developed lately is they've got
Speaker 9: fifteen year olds. A fifteen year old scored the other night,
Speaker 9: set the record for youngest player to score in the league.
Speaker 9: Because they've set up a mechanism for high school players
Speaker 9: to be able to play, and they're seeing young athletes
Speaker 9: skip the chance to go to Stanford or North Carolina
Speaker 9: to play in the league, which tells you that they
Speaker 9: believe that this this league can really be a platform
Speaker 9: for the future.
Speaker 2: So when a high school student plays, do they get
Speaker 2: paid and then if they get paid, they can't go
Speaker 2: to college?
Speaker 9: That's right, They're they're doing their opting to do this
Speaker 9: instead of going to college, but a decision to make
Speaker 9: it fifteen. Yeah. I mean in some cases they're still
Speaker 9: in high school, so they might you know, things can change,
Speaker 9: but I think they look at it as you can
Speaker 9: still go to college later.
Speaker 2: You're still are you allowed to play to play in college?
Speaker 9: Sorry?
Speaker 2: If you accept is that has that rule changed?
Speaker 9: That's a good question. I think you can go back.
Speaker 9: I don't know if you're eligibility as a as a
Speaker 9: that's a great question. As a Division one player, would
Speaker 9: be would be totally expired if you went pro in
Speaker 9: n W s L. I don't think we've we've never
Speaker 9: that's uncharted.
Speaker 1: Joy, we'll find out.
Speaker 2: Good story, check it for.
Speaker 9: You can certainly go back to school though, if you
Speaker 9: want to get it exactly.
Speaker 5: Thank you so much for joining us, both of you.
Speaker 5: Joel Webber of course our editor here in Ira Boudue,
Speaker 5: the journal.
Speaker 8: Now about you let me drive?
Speaker 9: Oh no, no, no, no, please travel.
Speaker 1: I want to drive.
Speaker 2: It's a good question.
Speaker 1: This is the drive to the clothes.
Speaker 9: On Bloomberg Radio.
Speaker 5: You know, I've just realized it's Tim. You were on
Speaker 5: path leave during the massive AI rally, so you got
Speaker 5: to miss saying AI twenty thousand times. It's broadcast.
Speaker 2: I get to keep saying it, Yes, disagreed, this AI
Speaker 2: rally continues.
Speaker 5: That is that is so true? Call it AI euphoria,
Speaker 5: the Foamo rally, a classic bull market, whatever you want
Speaker 5: to call it. The market has obviously been on a
Speaker 5: tear driven by that exact AI rally. It's sept for
Speaker 5: its longest streak of monthly games since August twenty twenty
Speaker 5: one for the S and P. So as always with
Speaker 5: too much of a good thing, you got to wonder
Speaker 5: when are we going to start to see the cracks?
Speaker 5: And that's exactly what I want to ask our next guest.
Speaker 5: We've got Vivian Hairston, director of Portfolio Management at Huntington
Speaker 5: Private Bank, joining.
Speaker 9: Us on zoom.
Speaker 5: Vivian, thank you so much for being with us. We're
Speaker 5: seeing that stock exposure for traders at record highs and
Speaker 5: the rally really driven by that magnificent seven big tech names.
Speaker 5: Is there kind of a scary catalyst looming out there
Speaker 5: that you are anticipating and that could start to kind
Speaker 5: of turn this market?
Speaker 10: Well, I want thank you for having me. I won't
Speaker 10: say that there's a scary catalyst. We are cautiously optimistic
Speaker 10: regarding markets. Really looking at the consumer, the consumer remained strong,
Speaker 10: and so markets and the economy both we're cautiously optimistic.
Speaker 7: Of course, the FED did raise rates just.
Speaker 10: By twenty five basis points, no surprise last week. But
Speaker 10: we in looking out next twelve six to twelve months,
Speaker 10: we're saying perhaps now that there's maybe a fifty five
Speaker 10: percent chance that we'll see a recession. But overall on
Speaker 10: markets again, as you just mentioned, you know, looking at
Speaker 10: equity markets, they've been very strong.
Speaker 2: They really have. Oh I just I want to go
Speaker 2: back to the fifty five percent chance that there's going
Speaker 2: to be a recession. Is that Huntington Private Banks view?
Speaker 2: It is?
Speaker 7: It is?
Speaker 2: Did that change last week after you heard fedhair Japowe
Speaker 2: will say that even though the internal economists at the
Speaker 2: FED are no longer seeing a recession as their base case.
Speaker 10: Actually we became a little bit more cautious before the meeting,
Speaker 10: and it was, you know, looking at the markets, and
Speaker 10: really after that June meeting, of course, Chair Pal was
Speaker 10: very hawkish, and so last week of course dialed it
Speaker 10: back a little bit, not as pessimistic, it seems, but
Speaker 10: we reduced our were equity waitings a little bit before
Speaker 10: the FED meeting, just looking at where equity domestic equity
Speaker 10: markets had been. I really just thought it was best,
Speaker 10: you know, to lock in some of those games.
Speaker 5: When you think about the recession call, I wonder to
Speaker 5: what extent you feel like company earnings are part of
Speaker 5: that calculation. Are you looking at earnings that we're going
Speaker 5: to get this week from the likes of Amazon and
Speaker 5: Apple when sussing out the strength of our economy.
Speaker 10: Well, we did consider the fact that earnings in the
Speaker 10: first quarter came in better than expected. Of course, those
Speaker 10: earnings were better than expected on lowered expectations. And what
Speaker 10: we're hearing now is we're beginning to hear some earnings
Speaker 10: revisions coming down again, forward earnings coming down again, and
Speaker 10: so we are kind of again just being cautious. We've
Speaker 10: seen so far. I think the expectation coming into the
Speaker 10: quarter was down about nine percent, and what we're seeing,
Speaker 10: I think is somewhere about nine point two, and so
Speaker 10: that provide us caution.
Speaker 5: And I noticed that you trimmed your equities holdings by
Speaker 5: ten percent and added to fixed income, which I'm so
Speaker 5: curious about. It feels like you're really getting paid to
Speaker 5: go into fixed income right now? How much are you
Speaker 5: changing your thinking on allocation between stocks and bonds there, So.
Speaker 10: We actually trimmed by five percent are exper holdings, and
Speaker 10: then we took that five and you are correct, and
Speaker 10: we added it to.
Speaker 7: Fixed income for a number of reasons.
Speaker 10: Of course, you know, fixed income is finally attractive after
Speaker 10: twenty some years, and so now you're seeing those yields
Speaker 10: on fixed income and cash above the inflation, and so
Speaker 10: that third leg of the stool is available to investors.
Speaker 10: And we just thought, looking at domestic equities again, looking
Speaker 10: at those returns, some of those returns we'd be happy
Speaker 10: to have had just for a year, let alone, you know,
Speaker 10: six seven months into a year, and so we thought
Speaker 10: it was prutent just to take some of those gains
Speaker 10: off the table.
Speaker 2: So raise is the question about somebody who comes to
Speaker 2: you right now with you know, a few million dollars.
Speaker 2: Let's say they had an exit. They want you to
Speaker 2: deploy the money for them. They have a time horizon
Speaker 2: of they've got they've got a long time horise, and
Speaker 2: this is money for later. Are you comfortable putting money
Speaker 2: in equities right now?
Speaker 10: We are, And you know, really not just right now
Speaker 10: when if we kind of take a look back, that
Speaker 10: five percent yield on cash is very attractive and one might.
Speaker 7: Be tempted to.
Speaker 10: Perhaps hold the money in cash. But really, as you
Speaker 10: mentioned earlier, the returns that we've seen inequities, they've been
Speaker 10: relatively narrow. Of course, we've seen that leadership in those
Speaker 10: seven tech consumers or communication services company. So now what
Speaker 10: we're beginning to see is really that performance began to
Speaker 10: broad now whereas communication services information technology is still leading
Speaker 10: here today, what we're beginning to see is a little
Speaker 10: bit of broadening, you know, if you've used energy as
Speaker 10: an example of about seven percent so far this month.
Speaker 5: Sure, and in our final kind of forty five seconds
Speaker 5: with you here, I want to talk about some of
Speaker 5: the stocks you've recently added in our note here. We
Speaker 5: have Adobe, American Express, T Mobile, and Netflix in that list.
Speaker 5: Talk to me about your thinking on Netflix because the
Speaker 5: earnings picture was not great, particularly in the market reaction.
Speaker 10: Well, really, you know again just thinking about the consumer,
Speaker 10: and my area of expertise isn't the individual companies. We
Speaker 10: have a wonderful research team that could probably talk a
Speaker 10: little bit and go a little bit deeper, but.
Speaker 7: Again looking at consumer trends.
Speaker 10: Of course, Netflix earlier changed their model a little bit
Speaker 10: in terms of how they were going to be charging
Speaker 10: clients or fiend clients, not sharing those passwords and like,
Speaker 10: and so we anticipate that they will begin to see
Speaker 10: a turn and.
Speaker 7: Some better earnings.
Speaker 2: Vivian, we're gonna have to leave it there. We really
Speaker 2: appreciate you taking the time this afternoon. Vivian Herston is
Speaker 2: a director of portfolio management at Huntington at Private Banks.
Speaker 2: She joins us via zoom this afternoon.
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