1 00:00:02,400 --> 00:00:09,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:09,119 --> 00:00:13,320 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:13,320 --> 00:00:15,800 Speaker 1: Eastern on Apple car Playing and Broud Auto with the 4 00:00:15,800 --> 00:00:19,720 Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts, 5 00:00:19,920 --> 00:00:22,280 Speaker 1: or watch us live on YouTube. 6 00:00:23,480 --> 00:00:25,000 Speaker 2: Let's get more on you missed. 7 00:00:25,040 --> 00:00:27,400 Speaker 3: So it was really that one year inflation expectation following 8 00:00:27,440 --> 00:00:30,400 Speaker 3: at two point seven percent, the lowest in December twenty twenty. 9 00:00:30,560 --> 00:00:33,760 Speaker 3: Johanna Sho's University of Michigan Surveys of Consumer director and 10 00:00:33,800 --> 00:00:36,640 Speaker 3: she joins us now walk us through the increase in 11 00:00:36,720 --> 00:00:39,960 Speaker 3: sentiment and the decline in those one year inflation expectations. 12 00:00:41,080 --> 00:00:44,440 Speaker 4: Consumers actually now have had several months of general improvements 13 00:00:44,479 --> 00:00:46,960 Speaker 4: and how they feel about the economy, and clearly the 14 00:00:47,080 --> 00:00:49,600 Speaker 4: drop in one year inflation expectations is a huge part 15 00:00:49,640 --> 00:00:52,760 Speaker 4: of it. Consumers are one hundred percent aware and have 16 00:00:52,880 --> 00:00:56,720 Speaker 4: noticed that inflation has slowed down quite a bit, not 17 00:00:56,840 --> 00:00:58,600 Speaker 4: just this year, but over the course of the last 18 00:00:58,600 --> 00:01:02,440 Speaker 4: two Yearsnsumers are starting to feel a bit more optimistic 19 00:01:02,480 --> 00:01:04,880 Speaker 4: about the future. You know, with one year business conditions, 20 00:01:04,880 --> 00:01:07,800 Speaker 4: we've had four or five consecutive months of increases at 21 00:01:07,800 --> 00:01:10,480 Speaker 4: this point, I think they are recovering a bit from 22 00:01:10,520 --> 00:01:12,480 Speaker 4: the malays that we were saying earlier in the summer. 23 00:01:13,400 --> 00:01:17,119 Speaker 5: So the headline, Joanne cam in it you've missed sentiment 24 00:01:17,240 --> 00:01:20,319 Speaker 5: sixty nine versus consensus sixty eight point five and sixty 25 00:01:20,319 --> 00:01:22,520 Speaker 5: seven point nine last period. Can you frame that give 26 00:01:22,560 --> 00:01:25,080 Speaker 5: us a sense of context there? Like, for example, for im, 27 00:01:25,440 --> 00:01:29,720 Speaker 5: above fifties means economies are expanding. Below fifty means it's contracting. 28 00:01:29,880 --> 00:01:32,800 Speaker 5: What does a number of sixty nine mean to you? 29 00:01:32,880 --> 00:01:34,039 Speaker 5: Put that in context for us? 30 00:01:34,080 --> 00:01:34,319 Speaker 6: Please? 31 00:01:35,200 --> 00:01:38,039 Speaker 4: So overall it's still below the historical average that we've 32 00:01:38,040 --> 00:01:40,360 Speaker 4: seen since nineteen seventy eight. But I think what's more 33 00:01:40,360 --> 00:01:43,560 Speaker 4: important than just the number itself is the overall trend. 34 00:01:43,840 --> 00:01:48,240 Speaker 4: And now we've had two consecutive months of increases in 35 00:01:48,440 --> 00:01:51,800 Speaker 4: in sentiment. We're at the highest level since in several 36 00:01:51,880 --> 00:01:54,440 Speaker 4: months now, and so you know, I think the thing 37 00:01:54,480 --> 00:01:58,160 Speaker 4: to notice that consumers are starting to feel a bit 38 00:01:58,200 --> 00:02:01,279 Speaker 4: more upbeat, and that's the or trend that we've been seeing. 39 00:02:01,760 --> 00:02:04,720 Speaker 3: How does it go on party lines, Republican versus Democrat? 40 00:02:04,760 --> 00:02:08,760 Speaker 3: Because is this the first survey that really encapsulates Biden 41 00:02:08,840 --> 00:02:09,960 Speaker 3: out Harrison. 42 00:02:10,720 --> 00:02:13,360 Speaker 4: Yeah, We saw a bit of that at the with 43 00:02:13,400 --> 00:02:17,320 Speaker 4: the August reading, and we saw kind of a continuation 44 00:02:17,400 --> 00:02:20,520 Speaker 4: of that. So it's very clear that democrats are seeing 45 00:02:21,160 --> 00:02:25,240 Speaker 4: both Democrats and Republicans are now increasingly expecting a Harris 46 00:02:25,280 --> 00:02:29,480 Speaker 4: win relative to last month and certainly relative to when 47 00:02:29,520 --> 00:02:32,120 Speaker 4: it was Biden versus Trump. Now, Democrats think that's a 48 00:02:32,160 --> 00:02:36,120 Speaker 4: good thing, and we see that in their economic expectations 49 00:02:36,520 --> 00:02:39,600 Speaker 4: that really surged in August, and we were continuing to see, 50 00:02:39,680 --> 00:02:42,680 Speaker 4: you know, this higher level in September as well. Republicans, 51 00:02:42,720 --> 00:02:44,480 Speaker 4: on the other hand, think that the potential of a 52 00:02:44,520 --> 00:02:48,120 Speaker 4: Harris presidency is bad news, and their their sentiment, their 53 00:02:48,160 --> 00:02:52,440 Speaker 4: expectations have declined. And so we saw a widening of 54 00:02:52,480 --> 00:02:58,320 Speaker 4: the normal partisan gap in August, with Democrats improving, but 55 00:02:58,400 --> 00:03:01,960 Speaker 4: that was offset by Republicans. I'm getting worse, And we 56 00:03:02,000 --> 00:03:03,960 Speaker 4: saw a little bit more of that, not as dramatic 57 00:03:04,000 --> 00:03:07,120 Speaker 4: as last month, but that partisan gap is continuing to widen. 58 00:03:08,040 --> 00:03:10,000 Speaker 3: All right, Thanks so much to really appreciate Joanne Joan 59 00:03:10,080 --> 00:03:13,320 Speaker 3: Chu University of Michigan Surveys of Consumers Director joining us 60 00:03:13,320 --> 00:03:15,840 Speaker 3: there on. You mish solely grinding its way higher and 61 00:03:15,960 --> 00:03:18,680 Speaker 3: at that one year and Blanche expectation falling as well. 62 00:03:20,200 --> 00:03:24,080 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 63 00:03:24,160 --> 00:03:27,679 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 64 00:03:27,720 --> 00:03:30,480 Speaker 1: Auto with the Bloomberg Business app. You can also listen 65 00:03:30,600 --> 00:03:33,720 Speaker 1: live on Amazon Alexa from our flagship New York station. 66 00:03:34,080 --> 00:03:36,840 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 67 00:03:38,480 --> 00:03:40,520 Speaker 5: All right, let's go to our friends at Boeing here, 68 00:03:40,600 --> 00:03:43,600 Speaker 5: I mean, stockdown two point seven percent. They got to 69 00:03:43,680 --> 00:03:47,600 Speaker 5: strike up there in that Pacific Northwest region of the world, 70 00:03:48,120 --> 00:03:51,000 Speaker 5: which is where they are generally based. I think the 71 00:03:51,040 --> 00:03:53,880 Speaker 5: heart and souls certainly there. George Ferguson joins us. He'son 72 00:03:53,880 --> 00:04:00,640 Speaker 5: Bloomberg Intelligence, Senior aerospace analyst for Bloomberg Intelligence. George, how 73 00:04:00,720 --> 00:04:03,400 Speaker 5: is it so we've got we've got to strike affecting 74 00:04:03,720 --> 00:04:08,480 Speaker 5: Boeing up there in the Seattle area. How impactful is 75 00:04:08,520 --> 00:04:10,240 Speaker 5: this strike to them? What do they need to do? 76 00:04:11,480 --> 00:04:11,640 Speaker 7: Yeah? 77 00:04:11,720 --> 00:04:15,160 Speaker 8: So it's super impactful, right because it's on there seven 78 00:04:15,240 --> 00:04:18,000 Speaker 8: thirty seven Max, I mean, it's going to be on 79 00:04:18,080 --> 00:04:20,240 Speaker 8: the programs that are out of the Pacific Northwest, I 80 00:04:20,240 --> 00:04:23,120 Speaker 8: should say first once you're going to be seven sixty seven, 81 00:04:23,600 --> 00:04:26,320 Speaker 8: Triple seven and the seven thirty seven max. 82 00:04:26,800 --> 00:04:29,000 Speaker 6: The seven thirty seven max is what matters most. 83 00:04:28,880 --> 00:04:31,520 Speaker 8: Right, that's the revenue generator. 84 00:04:31,600 --> 00:04:35,040 Speaker 6: That's the that's the cash flow generator. That's part of 85 00:04:35,760 --> 00:04:36,760 Speaker 6: that's not even part of. 86 00:04:37,120 --> 00:04:40,640 Speaker 8: That's the largest part of their recovery plan for the 87 00:04:40,680 --> 00:04:44,080 Speaker 8: back half, so super important. Look, we'll see how long 88 00:04:44,600 --> 00:04:46,760 Speaker 8: the strike lasts, but if they can't get seven thirty 89 00:04:46,800 --> 00:04:51,040 Speaker 8: sevens delivered, this bat half recovery isn't bad shape. 90 00:04:51,160 --> 00:04:52,599 Speaker 3: So let me get this straight. You were in the 91 00:04:52,640 --> 00:04:56,159 Speaker 3: city yesterday then there was this huge Bloomberg Intelligence celebrating 92 00:04:56,160 --> 00:04:59,239 Speaker 3: fifteen year party where you all are like struggling to focus, 93 00:04:59,279 --> 00:05:01,800 Speaker 3: and it somehow you wind up back at home this morning. 94 00:05:01,839 --> 00:05:02,520 Speaker 2: What is this? 95 00:05:04,160 --> 00:05:04,640 Speaker 6: It's been a. 96 00:05:04,600 --> 00:05:06,800 Speaker 8: Busy twenty four hours. They wish they could have time 97 00:05:07,440 --> 00:05:08,520 Speaker 8: a strike differently, but. 98 00:05:09,360 --> 00:05:11,760 Speaker 3: I definitely thought it'd be showing up very tired. But 99 00:05:11,800 --> 00:05:13,560 Speaker 3: in the studio, all right, what's the TikTok? 100 00:05:13,600 --> 00:05:16,679 Speaker 2: Now? So what's the schedule of events? 101 00:05:18,080 --> 00:05:19,800 Speaker 8: Well, I mean, I think you know, Boeing and the 102 00:05:19,839 --> 00:05:21,720 Speaker 8: machinists have to get back together at the table and 103 00:05:21,720 --> 00:05:24,400 Speaker 8: figure out what the machinists want so they can get 104 00:05:24,440 --> 00:05:26,560 Speaker 8: them back on the job and start delivering airplanes and 105 00:05:26,560 --> 00:05:30,680 Speaker 8: generating cash right the meanest machinists sounded like they were 106 00:05:30,680 --> 00:05:33,080 Speaker 8: a little bit coy about it too. I heard one 107 00:05:33,080 --> 00:05:34,320 Speaker 8: of them saying, you know what, as soon as we 108 00:05:34,360 --> 00:05:36,240 Speaker 8: have a chance, we'll get back together to talk about it, 109 00:05:36,320 --> 00:05:39,360 Speaker 8: or something like that. So it sounds like they think 110 00:05:39,400 --> 00:05:42,200 Speaker 8: they've got a bit of the upper hand, which I 111 00:05:42,240 --> 00:05:45,360 Speaker 8: think they do. I think, you know, Boeing probably has 112 00:05:45,400 --> 00:05:48,640 Speaker 8: to go back and look in their pockets and figure 113 00:05:48,640 --> 00:05:52,880 Speaker 8: out how much more, how much more of a pay increase. 114 00:05:52,600 --> 00:05:53,000 Speaker 6: They can give. 115 00:05:53,120 --> 00:05:56,680 Speaker 8: Right the Spirit Aero Systems folks got a mid thirties 116 00:05:56,720 --> 00:05:59,640 Speaker 8: pay increase, So I suspect the machinists are looking at 117 00:05:59,640 --> 00:06:03,160 Speaker 8: that thinking, hey, we probably deserve something close to that. 118 00:06:04,640 --> 00:06:08,120 Speaker 8: And I think that they want some better guarantees on 119 00:06:08,160 --> 00:06:08,679 Speaker 8: an airplane. 120 00:06:08,680 --> 00:06:09,760 Speaker 6: They want to be guaranteed. 121 00:06:10,480 --> 00:06:13,960 Speaker 8: I think that the next generation seven thirty seven, it's 122 00:06:14,000 --> 00:06:16,760 Speaker 8: the most important airplane for Boeing. So if the machinist 123 00:06:16,800 --> 00:06:20,000 Speaker 8: union has sort of longevity in their sites, they want 124 00:06:20,279 --> 00:06:21,320 Speaker 8: to be building that. 125 00:06:21,279 --> 00:06:24,440 Speaker 6: Seven thirty seven successor. And they don't want just the 126 00:06:24,480 --> 00:06:26,760 Speaker 6: commitment to be able to build it to last for 127 00:06:26,839 --> 00:06:28,839 Speaker 6: the four years of this contract. But they wanted to 128 00:06:28,920 --> 00:06:31,800 Speaker 6: last longer, if not forever. 129 00:06:32,080 --> 00:06:35,200 Speaker 5: And George, just refresh our memory. Where does Boeing actually 130 00:06:35,320 --> 00:06:37,520 Speaker 5: make their planes? I know they do it up in Seattle, 131 00:06:37,520 --> 00:06:39,400 Speaker 5: but did they do it in the question maybe some 132 00:06:39,480 --> 00:06:41,720 Speaker 5: areas of the country that are not unionized. 133 00:06:43,320 --> 00:06:47,560 Speaker 8: Well, so they do make the seven eighty seven in 134 00:06:47,839 --> 00:06:51,760 Speaker 8: South Carolina down by Charleston, and that's a non union plan, 135 00:06:51,880 --> 00:06:55,320 Speaker 8: So I expect that seven eighty seven production will continue. 136 00:06:55,960 --> 00:06:58,599 Speaker 8: Everything else is made up in the Pacific Northwest from 137 00:06:58,640 --> 00:07:02,400 Speaker 8: a commercial airplane stand point, and so seven sixty sevens, 138 00:07:02,720 --> 00:07:06,320 Speaker 8: triple sevens, they're made in Everett, Washington, north of Seattle, 139 00:07:06,960 --> 00:07:09,920 Speaker 8: and the seven thirty seven has made is final assembled 140 00:07:10,280 --> 00:07:13,080 Speaker 8: at a single plant in rent in Washington, which kind 141 00:07:13,080 --> 00:07:15,080 Speaker 8: of southeast of Seattle. 142 00:07:15,320 --> 00:07:17,840 Speaker 6: Those are all union shops. I expect them all to 143 00:07:17,880 --> 00:07:19,840 Speaker 6: be doing little to know work today. 144 00:07:20,080 --> 00:07:22,520 Speaker 8: And then of course the fuselage comes out of Wichita, 145 00:07:22,640 --> 00:07:25,280 Speaker 8: which is owned by Spirit Air Systems, which Boeing. 146 00:07:25,080 --> 00:07:26,800 Speaker 6: Is buying, Whichita, Kansas. 147 00:07:27,320 --> 00:07:30,360 Speaker 8: But again, they had a strike earlier this year, got 148 00:07:30,560 --> 00:07:34,679 Speaker 8: mid thirties pay increase and they should be continuing to work. 149 00:07:35,400 --> 00:07:39,080 Speaker 2: So I guess then the question becomes how long? 150 00:07:39,600 --> 00:07:41,520 Speaker 3: Now I know we talked about that yesterday and you're like, look, 151 00:07:41,560 --> 00:07:43,560 Speaker 3: it can't go on more than like two weeks. One 152 00:07:43,600 --> 00:07:46,800 Speaker 3: analyst I was mentioning fifty days was what they were 153 00:07:46,880 --> 00:07:49,160 Speaker 3: kind of looking at, which is a significant cash burn 154 00:07:49,240 --> 00:07:50,440 Speaker 3: for Boeing. 155 00:07:50,520 --> 00:07:51,600 Speaker 2: What's your best guess? 156 00:07:53,440 --> 00:07:55,160 Speaker 8: Yeah, I mean, I think there's a lot of people 157 00:07:55,200 --> 00:07:58,200 Speaker 8: out there saying fifty days because that's the average strike 158 00:07:58,240 --> 00:08:00,480 Speaker 8: blah blah blah. I just don't, you know, I don't 159 00:08:00,640 --> 00:08:04,120 Speaker 8: subscribe to that being the right logic here. I'm saying 160 00:08:04,160 --> 00:08:07,000 Speaker 8: a couple of weeks because I think Boeing really needs 161 00:08:07,040 --> 00:08:10,680 Speaker 8: these workers back on the job. There is no substitute 162 00:08:10,840 --> 00:08:14,880 Speaker 8: for these workers, period, and so I think they've got 163 00:08:14,920 --> 00:08:19,800 Speaker 8: to go engage the union intently and figure out what's 164 00:08:19,840 --> 00:08:22,280 Speaker 8: going to take to put them back, you know, back 165 00:08:22,320 --> 00:08:24,680 Speaker 8: on the job. I mean we think what we you know, 166 00:08:24,840 --> 00:08:28,920 Speaker 8: our analysis was that it would cost an extra billion 167 00:08:28,960 --> 00:08:31,720 Speaker 8: dollars a year or something like that for wages right 168 00:08:31,760 --> 00:08:35,880 Speaker 8: around there at the twenty five percent increase, that would 169 00:08:35,880 --> 00:08:39,880 Speaker 8: probably trim Boeing commercial margins one hundred and seventy two 170 00:08:39,920 --> 00:08:40,960 Speaker 8: hundred basis points. 171 00:08:41,360 --> 00:08:42,160 Speaker 6: Do you like that? 172 00:08:42,840 --> 00:08:44,640 Speaker 8: No, But it's not the end of the world, right, 173 00:08:44,679 --> 00:08:47,840 Speaker 8: They back in back pre pandemic, this was a company 174 00:08:47,840 --> 00:08:52,920 Speaker 8: that was making thirteen percent ish margins in that business 175 00:08:52,960 --> 00:08:53,720 Speaker 8: ten to thirteen. 176 00:08:54,240 --> 00:08:56,960 Speaker 6: So can you bear that and be profitable? You can? 177 00:08:57,000 --> 00:08:57,720 Speaker 6: Can you bear more? 178 00:08:57,760 --> 00:08:58,000 Speaker 7: You can? 179 00:08:58,080 --> 00:09:01,080 Speaker 8: So I think that means that Boeing has the leeway. 180 00:09:01,720 --> 00:09:04,240 Speaker 8: They got to get the building airplanes in volume again. 181 00:09:04,600 --> 00:09:06,360 Speaker 8: So they got to engage the union and get it done. 182 00:09:06,400 --> 00:09:08,520 Speaker 8: That's why I'm saying, I think less than a couple 183 00:09:08,559 --> 00:09:09,920 Speaker 8: of weeks, I think they got to get it done. 184 00:09:10,120 --> 00:09:11,640 Speaker 5: Hey, George, I mean, I know in the past you 185 00:09:11,760 --> 00:09:14,120 Speaker 5: talked to us about, you know, the labor shortages and 186 00:09:14,200 --> 00:09:18,840 Speaker 5: aerospace industry. Where are we where's the industry in terms 187 00:09:18,840 --> 00:09:22,040 Speaker 5: of getting past that is that's still a challenge getting 188 00:09:22,080 --> 00:09:23,720 Speaker 5: good folks in the factory floors. 189 00:09:24,600 --> 00:09:27,080 Speaker 8: I think it's totally still a challenge, right, And so 190 00:09:28,000 --> 00:09:31,120 Speaker 8: we saw a pretty decent turnover in the aerospace workers, 191 00:09:32,240 --> 00:09:33,960 Speaker 8: you know, coming out of the pandemic. I think some 192 00:09:34,000 --> 00:09:37,920 Speaker 8: of them watched their industry. It looked like the collapse, right. 193 00:09:38,200 --> 00:09:40,720 Speaker 8: Air travel went to zero for a couple of quarters, 194 00:09:40,800 --> 00:09:44,480 Speaker 8: or almost zero, so you know, demand for airplanes. People 195 00:09:44,600 --> 00:09:47,360 Speaker 8: looked at it and thought, hey, you know, the industry 196 00:09:47,360 --> 00:09:49,920 Speaker 8: I'm in is horrible and if you are, I think 197 00:09:50,000 --> 00:09:52,440 Speaker 8: near retirement age, you said let's cast it in and 198 00:09:52,480 --> 00:09:55,240 Speaker 8: moved to Jacksonville, Florida or something like that, right, So 199 00:09:55,280 --> 00:09:57,280 Speaker 8: it's hard to get those folks back to the line 200 00:09:57,320 --> 00:10:00,600 Speaker 8: from Jacksonville and backfill. 201 00:10:01,720 --> 00:10:02,920 Speaker 6: Part of the backfield challenges. 202 00:10:02,960 --> 00:10:06,000 Speaker 8: The backfield came out of some of the suppliers, so 203 00:10:06,040 --> 00:10:09,200 Speaker 8: they kind of hurt their own ecosystem as they pulled 204 00:10:09,200 --> 00:10:11,760 Speaker 8: some of the backfill in. And they're in the middle 205 00:10:11,760 --> 00:10:16,560 Speaker 8: of training that we even't heard CEO Calhoun say the 206 00:10:16,640 --> 00:10:19,079 Speaker 8: old CEO Calhoun say. I think at one of his 207 00:10:19,160 --> 00:10:23,160 Speaker 8: congressional testimonies he talked about people coming in the door 208 00:10:23,200 --> 00:10:26,760 Speaker 8: having experience bending metal and you know, working with their hands, 209 00:10:26,760 --> 00:10:28,600 Speaker 8: and I think, you know, he said something like in 210 00:10:28,640 --> 00:10:31,240 Speaker 8: the old days, and this isn't exactly right, but it's close. 211 00:10:31,720 --> 00:10:33,679 Speaker 8: You know, maybe seventy five percent of people that came 212 00:10:33,679 --> 00:10:37,040 Speaker 8: to the door had experience working with their hands metalworking. 213 00:10:37,640 --> 00:10:39,440 Speaker 6: Now twenty five percent. 214 00:10:39,920 --> 00:10:42,439 Speaker 8: So they're in the middle of trying to train that 215 00:10:42,480 --> 00:10:46,280 Speaker 8: next generation of aerospace workers and the supply chain is 216 00:10:46,360 --> 00:10:50,640 Speaker 8: still trying to backfill. I think it's it's been getting better, Yeah, 217 00:10:50,679 --> 00:10:52,600 Speaker 8: but that training and backfill is still going there. 218 00:10:52,880 --> 00:10:54,560 Speaker 2: All right, Hey George, we appreciate it. 219 00:10:54,960 --> 00:10:58,680 Speaker 3: George ferguson Bloomberg Intelligence and your aerospace, defense and Airlines analyst. 220 00:10:58,760 --> 00:11:01,199 Speaker 2: Great stuff. Good to see you there. 221 00:11:02,640 --> 00:11:06,559 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 222 00:11:06,640 --> 00:11:09,720 Speaker 1: weekdays at ten am Eastern on Apple CarPlay and Android 223 00:11:09,720 --> 00:11:12,840 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 224 00:11:12,880 --> 00:11:17,239 Speaker 1: you get your podcasts, or watch us live on YouTube. 225 00:11:17,840 --> 00:11:21,040 Speaker 3: I'm Alex you alongside pauls. We need this Bloomberg Intelligence Radio. 226 00:11:21,480 --> 00:11:23,240 Speaker 3: We bring you all the top news and business and 227 00:11:23,280 --> 00:11:26,079 Speaker 3: finance economics. So there are lens of our Bloomberg Intelligence folks. 228 00:11:26,120 --> 00:11:28,839 Speaker 3: They cover two thousand companies and one hundred and thirty 229 00:11:28,880 --> 00:11:31,040 Speaker 3: industries worldwide. They're a little tired today. They had a 230 00:11:31,080 --> 00:11:33,400 Speaker 3: fifteen year anniversary party yesterday, so you. 231 00:11:33,360 --> 00:11:34,760 Speaker 5: Know, cut it loose a little bit. 232 00:11:35,000 --> 00:11:37,040 Speaker 3: Yeah, yeah, yeah, yeah. I mean Paul got some sleep, 233 00:11:37,040 --> 00:11:38,680 Speaker 3: but the other guys, I'm not sure. All right, But 234 00:11:39,080 --> 00:11:41,040 Speaker 3: so we want to go outside of Bloomberg Intelligence now 235 00:11:41,080 --> 00:11:43,640 Speaker 3: for a look on how to market is positioned into 236 00:11:43,679 --> 00:11:46,800 Speaker 3: the FED. Mohagman is head of Solutions and Multi Asset 237 00:11:46,880 --> 00:11:50,640 Speaker 3: Strategies over at Invesco and he joins us, Now, what 238 00:11:50,960 --> 00:11:54,040 Speaker 3: is this setup like in terms of asset allocation headed 239 00:11:54,080 --> 00:11:54,800 Speaker 3: into Wednesday? 240 00:11:56,600 --> 00:11:58,720 Speaker 9: Well, Alex, thanks for having me, nice to be here 241 00:11:58,760 --> 00:12:01,520 Speaker 9: with you and Paul. I think, you know, we are 242 00:12:01,600 --> 00:12:04,400 Speaker 9: continuing to maintain a bit of a defensive posture, and 243 00:12:04,440 --> 00:12:07,559 Speaker 9: we have been defensive for about a couple of months now, 244 00:12:08,200 --> 00:12:11,559 Speaker 9: and really this is around what we're seeing in economic 245 00:12:11,600 --> 00:12:14,840 Speaker 9: growth expectations, both from the market and from the data. 246 00:12:15,520 --> 00:12:17,600 Speaker 9: We are very benchmark aware, so you know, I think 247 00:12:17,640 --> 00:12:21,280 Speaker 9: that underweight isn't something that's significant at this point, just 248 00:12:21,320 --> 00:12:24,600 Speaker 9: given how the economy has been incredibly resilient and the 249 00:12:24,640 --> 00:12:27,240 Speaker 9: market has been incredibly resilient. But what we're seeing in 250 00:12:27,280 --> 00:12:29,840 Speaker 9: the labor market and what we're seeing with economic growth 251 00:12:30,480 --> 00:12:32,800 Speaker 9: over the several last several quarters is something that we're 252 00:12:32,800 --> 00:12:33,760 Speaker 9: watching very closely. 253 00:12:34,640 --> 00:12:34,679 Speaker 7: Mo. 254 00:12:35,000 --> 00:12:38,040 Speaker 5: And how about being defensive, what does that mean fixed 255 00:12:38,080 --> 00:12:39,479 Speaker 5: and come versus equities. 256 00:12:39,080 --> 00:12:42,679 Speaker 9: Here, Yeah, so that means we have a little bit 257 00:12:42,679 --> 00:12:45,480 Speaker 9: of a longer duration profile versus our benchmark, So we're 258 00:12:45,520 --> 00:12:49,079 Speaker 9: you know, favoring fixed income over equity. So and within equities, 259 00:12:49,160 --> 00:12:51,040 Speaker 9: you know, there's a bit of a tilt towards more 260 00:12:51,040 --> 00:12:56,400 Speaker 9: defensive sector, so think healthcare, consumer staples, information technology. You know, 261 00:12:56,440 --> 00:12:58,800 Speaker 9: these are the areas that are a bit more defensive. 262 00:12:58,840 --> 00:13:01,679 Speaker 9: These are companies that are higher quality and lower volatility, 263 00:13:02,160 --> 00:13:05,559 Speaker 9: generally cash flow rich and can weather an economic downturn 264 00:13:05,640 --> 00:13:06,680 Speaker 9: or a slow down in growth. 265 00:13:07,559 --> 00:13:09,400 Speaker 3: So does that mean that you think that the bond market, 266 00:13:09,440 --> 00:13:10,959 Speaker 3: if we look at the equity in the bond market, 267 00:13:11,000 --> 00:13:13,320 Speaker 3: is being on different pages in that we're making like 268 00:13:13,400 --> 00:13:16,080 Speaker 3: another run in the smp here versus the bond bowl 269 00:13:16,080 --> 00:13:17,600 Speaker 3: appears to be very sticky. 270 00:13:18,120 --> 00:13:20,240 Speaker 2: Does that mean that the economic. 271 00:13:19,760 --> 00:13:22,920 Speaker 3: Situation is geared more towards a recession than a soft 272 00:13:22,960 --> 00:13:23,800 Speaker 3: landing in your view? 273 00:13:25,600 --> 00:13:27,880 Speaker 9: I don't think so. I think we're still probably base 274 00:13:27,960 --> 00:13:30,880 Speaker 9: case soft landing. But you know, what we're thinking about 275 00:13:31,040 --> 00:13:33,280 Speaker 9: is just in the shorter term period, so from a 276 00:13:33,280 --> 00:13:37,920 Speaker 9: tactical perspective, just given how far extended the equity markets are, 277 00:13:38,120 --> 00:13:40,760 Speaker 9: and you know, in our opinion, yields are very attractive 278 00:13:40,760 --> 00:13:43,320 Speaker 9: at these levels they have been, although they've you know, 279 00:13:43,400 --> 00:13:46,200 Speaker 9: come back a little bit. You know, we're kind of 280 00:13:46,200 --> 00:13:50,320 Speaker 9: extending that duration profile getting underweight equity slightly relative to 281 00:13:50,320 --> 00:13:53,120 Speaker 9: our benchmarks. And again this is all around growth and 282 00:13:53,160 --> 00:13:56,720 Speaker 9: growth expectations. Although we don't necessarily see a recession in 283 00:13:56,720 --> 00:13:57,760 Speaker 9: the next couple of quarters. 284 00:13:58,679 --> 00:14:00,760 Speaker 5: So, MO, how about on the pick income side, are 285 00:14:00,760 --> 00:14:03,200 Speaker 5: we sitting here in to your treasures at three point 286 00:14:03,280 --> 00:14:04,800 Speaker 5: six percent or are we going out there and taking 287 00:14:04,840 --> 00:14:08,760 Speaker 5: some credit risk? What are we doing there in fixingcome So. 288 00:14:09,120 --> 00:14:12,640 Speaker 9: In credit we favor again higher quality credit, so you know, 289 00:14:12,720 --> 00:14:15,360 Speaker 9: credit spreads continue to be incredibly tight, you know, relative 290 00:14:15,360 --> 00:14:18,160 Speaker 9: to equities. I think credit is a very attractive risk 291 00:14:18,200 --> 00:14:22,680 Speaker 9: adjusted allocation. But we're probably not right now favoring kind 292 00:14:22,680 --> 00:14:26,480 Speaker 9: of the lower quality high yield sectors and we're taking 293 00:14:26,520 --> 00:14:26,920 Speaker 9: a bit more. 294 00:14:27,240 --> 00:14:27,920 Speaker 10: It's posteros. 295 00:14:28,000 --> 00:14:30,280 Speaker 5: So the best performance this year and fixing them has 296 00:14:30,320 --> 00:14:32,640 Speaker 5: been and by far has been in US corporate high. 297 00:14:32,520 --> 00:14:36,400 Speaker 9: Yield exactly, and I think that's part of the reason 298 00:14:37,000 --> 00:14:39,000 Speaker 9: that we've gotten a bit defensive. So just to kind 299 00:14:39,040 --> 00:14:41,160 Speaker 9: of backtrack a little bit, you know, we have been 300 00:14:41,560 --> 00:14:45,800 Speaker 9: pretty risk gone in portfolios for the last several years. 301 00:14:45,800 --> 00:14:48,640 Speaker 9: You know, post COVID, we took a little bit more 302 00:14:48,680 --> 00:14:50,880 Speaker 9: of an aggressive stance versus our benchmarks. We kind of 303 00:14:50,920 --> 00:14:54,560 Speaker 9: maintained that stance over the last several years, and now 304 00:14:54,600 --> 00:14:57,200 Speaker 9: what we're seeing is just that softening of the economic data. 305 00:14:57,240 --> 00:14:59,760 Speaker 9: We're seeing some softening in the labor markets, and that's 306 00:15:00,040 --> 00:15:02,400 Speaker 9: that's kind of what's informing a bit of a defensive posture. 307 00:15:02,600 --> 00:15:04,880 Speaker 9: But I don't really want to overdo that, right. You know, 308 00:15:04,920 --> 00:15:08,920 Speaker 9: we're not kind of underweight equities to a significant magnitude. 309 00:15:08,920 --> 00:15:12,800 Speaker 9: We're not suggesting that people move into cash. It's actually 310 00:15:12,880 --> 00:15:15,880 Speaker 9: quite the opposite. We're telling investors and clients to get 311 00:15:15,920 --> 00:15:19,200 Speaker 9: out of cash. We've seen elevated cash balances now for 312 00:15:19,800 --> 00:15:22,120 Speaker 9: a long time, and the yields on offer if you 313 00:15:22,160 --> 00:15:24,840 Speaker 9: extend that duration, seem to be very attractive to us, 314 00:15:24,880 --> 00:15:27,400 Speaker 9: especially as we're moving into an easing cycle and those 315 00:15:27,400 --> 00:15:29,000 Speaker 9: short term rates are going to be coming down. 316 00:15:29,320 --> 00:15:29,520 Speaker 2: Yeah. 317 00:15:29,800 --> 00:15:32,280 Speaker 3: JP Morgan was saying that usually the rate cut cycle 318 00:15:32,320 --> 00:15:34,840 Speaker 3: needs to get underway more significantly for than the money 319 00:15:34,880 --> 00:15:36,480 Speaker 3: to move, But you're right, I mean over six tillion 320 00:15:36,520 --> 00:15:40,400 Speaker 3: dollars ready to roll. Hey, I'm curious as to dollar yen. 321 00:15:40,880 --> 00:15:42,920 Speaker 3: It has a pretty significant rerating at this point. I 322 00:15:42,960 --> 00:15:45,840 Speaker 3: think we're at one forty right. There was some reports 323 00:15:45,880 --> 00:15:48,360 Speaker 3: on Bloomberg that we're seeing some bullish bets on the 324 00:15:48,440 --> 00:15:51,040 Speaker 3: yen right now. What's your take on where that currency 325 00:15:51,080 --> 00:15:55,280 Speaker 3: goes and is the carry trade unwind situation. 326 00:15:55,200 --> 00:16:00,240 Speaker 9: Over So from a currency perspective, just kind of consist 327 00:16:00,280 --> 00:16:02,920 Speaker 9: with my comments earlier around equities and fixed income, we 328 00:16:03,080 --> 00:16:04,800 Speaker 9: have a bit more of a defensive posture, So that 329 00:16:04,840 --> 00:16:10,160 Speaker 9: means overweights and dollar, GBP, euro versus international currencies, you know, 330 00:16:10,280 --> 00:16:12,880 Speaker 9: especially if you kind of think about the more emerging 331 00:16:12,880 --> 00:16:18,160 Speaker 9: market currencies. You know, I think right now the defensive 332 00:16:18,160 --> 00:16:20,720 Speaker 9: posture is probably warranted just given we're kind of going 333 00:16:20,800 --> 00:16:23,200 Speaker 9: into election season. September and October tend to be more 334 00:16:23,280 --> 00:16:27,120 Speaker 9: volatile months for the market overall, and that home country bias, 335 00:16:27,480 --> 00:16:29,480 Speaker 9: at least for US is kind of an important factor 336 00:16:29,520 --> 00:16:31,240 Speaker 9: as we get through the next few months. 337 00:16:31,760 --> 00:16:34,760 Speaker 5: In terms of the equity market, where's evaluation for you guys? 338 00:16:34,800 --> 00:16:37,280 Speaker 5: Do you feel like this market is fully valued at 339 00:16:37,280 --> 00:16:38,560 Speaker 5: this point? How do you guys think about that? 340 00:16:40,360 --> 00:16:42,560 Speaker 9: I would say fully valued to maybe a little extended, 341 00:16:42,600 --> 00:16:45,920 Speaker 9: just given what we've seen here to date. So for us, 342 00:16:46,440 --> 00:16:51,880 Speaker 9: there's no real concerns around earnings or earnings projections. There 343 00:16:51,880 --> 00:16:54,480 Speaker 9: has been some revisions that we're taking a close look at, 344 00:16:54,480 --> 00:16:56,920 Speaker 9: but for now, you know, I would I would say 345 00:16:56,920 --> 00:17:00,320 Speaker 9: probably well priced or maybe a little bit extent did 346 00:17:01,120 --> 00:17:03,200 Speaker 9: relative to what we see kind of on offer in 347 00:17:03,280 --> 00:17:05,399 Speaker 9: other places outside of the US, and I think my 348 00:17:05,480 --> 00:17:08,320 Speaker 9: comments are very much on the US side, and the 349 00:17:08,320 --> 00:17:10,560 Speaker 9: equity market in the US is pretty concentrated. That's another 350 00:17:10,680 --> 00:17:14,560 Speaker 9: topic that we're having a lot of conversations on with clients. 351 00:17:15,359 --> 00:17:18,199 Speaker 9: You know, we expect to see that broadening if the 352 00:17:18,240 --> 00:17:21,239 Speaker 9: economy continues to be resilient, but if we are going 353 00:17:21,320 --> 00:17:25,440 Speaker 9: to go into a prolonged downturn or a growth kind 354 00:17:25,440 --> 00:17:30,920 Speaker 9: of scare, you know, actually the defensive sectors should perform better. 355 00:17:30,960 --> 00:17:33,480 Speaker 9: And I've talked about this a little bit on the 356 00:17:33,520 --> 00:17:38,280 Speaker 9: show before. In the past the relationship between equity sectors 357 00:17:38,320 --> 00:17:41,800 Speaker 9: and rates was was really when when wastes were going up, 358 00:17:42,480 --> 00:17:44,840 Speaker 9: you know that that was not necessarily a good thing 359 00:17:45,040 --> 00:17:48,280 Speaker 9: for sectors that had more duration exposure or more interest 360 00:17:48,359 --> 00:17:51,800 Speaker 9: rates sensitivity, So technology, healthcare we've kind of seen the 361 00:17:51,840 --> 00:17:54,159 Speaker 9: opposite of that. So you know, it's a little bit 362 00:17:54,160 --> 00:17:56,879 Speaker 9: of a weird dynamic at the moment, but I do 363 00:17:56,920 --> 00:18:00,000 Speaker 9: think that should renormalize. So what the catalyst needs to 364 00:18:00,160 --> 00:18:02,920 Speaker 9: be for small cap value stocks to really get going again, 365 00:18:03,000 --> 00:18:06,399 Speaker 9: I think is a little bit of a change in 366 00:18:06,400 --> 00:18:10,200 Speaker 9: the regime and an economy that kind of reaccelerates because 367 00:18:10,200 --> 00:18:13,080 Speaker 9: those companies small cap companies, value companies. They tend to 368 00:18:13,080 --> 00:18:16,639 Speaker 9: have more operating leverage, they tend to be more geared 369 00:18:16,680 --> 00:18:19,240 Speaker 9: to the business cycle, and I do think longer term 370 00:18:19,240 --> 00:18:20,640 Speaker 9: that relationship will still hold. 371 00:18:20,880 --> 00:18:22,760 Speaker 3: All right, Well, thanks a lot, We really appreciate thanks 372 00:18:22,760 --> 00:18:25,600 Speaker 3: for stopping by mo Hagman joining us. There was his 373 00:18:25,640 --> 00:18:28,240 Speaker 3: call on acid allocation. He had of solutions and multi 374 00:18:28,240 --> 00:18:29,800 Speaker 3: asset strategies. Over at Invesco. 375 00:18:31,359 --> 00:18:35,240 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 376 00:18:35,320 --> 00:18:38,840 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 377 00:18:38,880 --> 00:18:41,639 Speaker 1: Auto with the Bloomberg Business App. You can also listen 378 00:18:41,760 --> 00:18:44,879 Speaker 1: live on Amazon Alexa from our flagship New York station 379 00:18:45,240 --> 00:18:48,280 Speaker 1: Just Say Alexa, playing Bloomberg eleven thirty. 380 00:18:49,359 --> 00:18:52,520 Speaker 3: Alex Steel alongside Paul Sweeney for Bloomberg Intelligence Radio. We're 381 00:18:52,520 --> 00:18:55,800 Speaker 3: broadcasting to live from Interactive Broker Studio right here in 382 00:18:55,840 --> 00:18:58,199 Speaker 3: midtown Manhattan. I saw that though for the Weimo thing 383 00:18:58,600 --> 00:19:00,840 Speaker 3: that like a driverless car like show up even if 384 00:19:00,880 --> 00:19:03,480 Speaker 3: you didn't order one, that'd be kind of weird, right, 385 00:19:03,600 --> 00:19:05,760 Speaker 3: and yeah, like like, I mean, what if you don't. 386 00:19:05,600 --> 00:19:09,560 Speaker 5: Want to get into car? The perfect stranger about it, 387 00:19:09,800 --> 00:19:10,520 Speaker 5: no one at all? 388 00:19:10,600 --> 00:19:12,520 Speaker 3: Yeah, Okay, well, it's an adjustment period for us. 389 00:19:12,560 --> 00:19:14,080 Speaker 2: All all right? Joining us now is Dan. 390 00:19:14,119 --> 00:19:17,840 Speaker 3: I was managing director and senior equity analyst at Wedbush Securities. 391 00:19:17,840 --> 00:19:19,760 Speaker 3: I bet you he's probably bullish on WEIMO and would 392 00:19:19,760 --> 00:19:22,000 Speaker 3: totally get into a driverless car, no worries, Am I right? 393 00:19:22,080 --> 00:19:27,040 Speaker 7: Dan? I mean I've done it. Look, I think I 394 00:19:27,040 --> 00:19:29,240 Speaker 7: think end of the decade, I think twenty percent of 395 00:19:29,359 --> 00:19:31,640 Speaker 7: ride share are going to be no drivers. 396 00:19:32,040 --> 00:19:33,560 Speaker 2: But isn't it weird that they would show up? You 397 00:19:33,560 --> 00:19:34,359 Speaker 2: wouldn't have a choice. 398 00:19:34,400 --> 00:19:36,280 Speaker 3: It would just be like, here's your driverless car, even 399 00:19:36,320 --> 00:19:37,040 Speaker 3: if you don't want it. 400 00:19:38,320 --> 00:19:41,960 Speaker 7: Yeah. Look, there's gonna be clearly kings to work out here. 401 00:19:42,000 --> 00:19:45,359 Speaker 7: But I mean, and we'll see this at Tessa's Roado 402 00:19:45,520 --> 00:19:49,320 Speaker 7: Taxi day. But the technology is starting to get to 403 00:19:49,400 --> 00:19:52,119 Speaker 7: a point where this is no longer sci fi. I 404 00:19:52,160 --> 00:19:55,800 Speaker 7: know the next few years, it's something where demisation is 405 00:19:55,800 --> 00:19:57,800 Speaker 7: gonna be clear. That's why you see that Uber waymo 406 00:19:58,119 --> 00:19:58,520 Speaker 7: mm hmm. 407 00:19:59,520 --> 00:20:01,919 Speaker 3: Well, and I should point out that you're in Bangkok, 408 00:20:02,640 --> 00:20:04,840 Speaker 3: so it's like, what time is it? It's like midnight 409 00:20:04,920 --> 00:20:09,560 Speaker 3: now Friday and Friday. I know he's a good guy, Dan. 410 00:20:09,680 --> 00:20:12,120 Speaker 3: We appreciate that by the way I'm looking at Adobe, 411 00:20:12,200 --> 00:20:13,640 Speaker 3: Adobe is down nine percent. 412 00:20:14,080 --> 00:20:16,080 Speaker 2: What was the problem with their earnings yesterday? 413 00:20:17,000 --> 00:20:20,080 Speaker 7: I think it's really just the softer guidens. But I mean, 414 00:20:20,440 --> 00:20:24,280 Speaker 7: in our opinion, this is just just a transition in 415 00:20:24,359 --> 00:20:26,520 Speaker 7: that Adobe story. I mean, when you look at AI 416 00:20:26,680 --> 00:20:29,920 Speaker 7: and use cases, I think they are probably within three 417 00:20:29,960 --> 00:20:34,440 Speaker 7: to six months of significantly benefiting from AI stock obviously, 418 00:20:34,600 --> 00:20:36,600 Speaker 7: you know, is one of the core plays in big tech. 419 00:20:37,160 --> 00:20:40,000 Speaker 7: But you look at Adobe, obviously little softness. But then 420 00:20:40,040 --> 00:20:42,399 Speaker 7: you look at a Oracle, which I think is probably 421 00:20:42,400 --> 00:20:46,119 Speaker 7: even more important to the broader AI story for big tech. 422 00:20:47,440 --> 00:20:49,399 Speaker 3: Then what about some of the other like so then 423 00:20:49,440 --> 00:20:51,960 Speaker 3: how do we distinguish like what's the line item right? 424 00:20:52,040 --> 00:20:55,280 Speaker 3: And as an investor, how do you know when to 425 00:20:55,359 --> 00:20:57,480 Speaker 3: buy that? Like you might three see three to six 426 00:20:57,480 --> 00:20:59,920 Speaker 3: months until we get a really big payoff for Adobe, 427 00:21:01,040 --> 00:21:01,760 Speaker 3: how do you play it? 428 00:21:02,840 --> 00:21:05,960 Speaker 7: Yeah, Look, that's why we use so much work in 429 00:21:06,000 --> 00:21:09,120 Speaker 7: the field, because they're trying to figure out second third 430 00:21:09,240 --> 00:21:13,120 Speaker 7: derivatives of AI. Who's benefit in terms of real monization. 431 00:21:13,280 --> 00:21:15,680 Speaker 7: That's where you look at, of course Pall and Teer 432 00:21:16,440 --> 00:21:19,920 Speaker 7: Oracle Service. Now I think Salesforce next week some big 433 00:21:19,920 --> 00:21:23,960 Speaker 7: announcements at Dreamforce. What they're going to talk about now, 434 00:21:24,000 --> 00:21:27,120 Speaker 7: Adobe maybe a little softer. They haven't seen it yet, right, 435 00:21:27,240 --> 00:21:31,119 Speaker 7: So this is really gonna be sort of pieces of 436 00:21:31,160 --> 00:21:34,280 Speaker 7: a puzzle trying to figure out who in software are 437 00:21:34,280 --> 00:21:38,280 Speaker 7: benefits from the second derivative. Clearly the hyperscale players, and 438 00:21:38,320 --> 00:21:40,960 Speaker 7: we would argue even cybersecurity are going to benefits. Is 439 00:21:41,000 --> 00:21:43,679 Speaker 7: more workless, move to the cloud. 440 00:21:43,960 --> 00:21:46,400 Speaker 5: So Dan, as soon as I get off the air 441 00:21:46,440 --> 00:21:48,640 Speaker 5: here and finish up my twenty seven straight hours of radio, 442 00:21:48,760 --> 00:21:51,200 Speaker 5: I'm gonna go to my Apple Store app and I'm 443 00:21:51,200 --> 00:21:52,560 Speaker 5: going to pre order that Apple. 444 00:21:53,080 --> 00:21:54,359 Speaker 2: Oh this is today, You're doing today? 445 00:21:54,480 --> 00:21:57,400 Speaker 5: Do it today? Yeah, okay, already gave me my instructions 446 00:21:57,640 --> 00:21:59,960 Speaker 5: Apple sixteen pro. I'm gonna spend a an jillion dollars. 447 00:22:00,359 --> 00:22:01,879 Speaker 5: How many people are out there are going to be 448 00:22:01,880 --> 00:22:04,320 Speaker 5: doing the same thing? How big is this new phone? 449 00:22:05,240 --> 00:22:07,680 Speaker 7: Well, first off, I mean I think it is huge new, 450 00:22:07,840 --> 00:22:09,359 Speaker 7: the Sweeney upgrade. 451 00:22:11,520 --> 00:22:13,680 Speaker 2: This is the this is the start of the super psycle. 452 00:22:13,720 --> 00:22:17,640 Speaker 7: I mean for years, exactly for years, the Sweeney upgrade. 453 00:22:17,920 --> 00:22:21,800 Speaker 7: I know. But Paul, I mean I think now it 454 00:22:21,920 --> 00:22:24,040 Speaker 7: comes down to it's not just you. There's three hundred 455 00:22:24,119 --> 00:22:28,320 Speaker 7: million iPhones that have an upgrade four plus years. And 456 00:22:28,520 --> 00:22:32,159 Speaker 7: this is everything we're seeing here in Asia is showing 457 00:22:32,240 --> 00:22:34,760 Speaker 7: that this is weeding to what we believe is gonna 458 00:22:34,760 --> 00:22:38,120 Speaker 7: be an AI driven supercycle. And I think we'll see 459 00:22:38,119 --> 00:22:40,960 Speaker 7: this pre orders and obviously going to the next week, 460 00:22:41,040 --> 00:22:44,160 Speaker 7: but I think demand's gonna be pretty robust here street. 461 00:22:44,240 --> 00:22:46,919 Speaker 7: I think still underestimate what this is gonna be about. 462 00:22:47,160 --> 00:22:50,679 Speaker 3: Okay, but are people in China really buying into that supercycle? Like, 463 00:22:50,840 --> 00:22:53,200 Speaker 3: I know Asia is bigger than just China, but can 464 00:22:53,280 --> 00:22:56,480 Speaker 3: we have a supercycle without a super strong China demand 465 00:22:56,520 --> 00:22:57,320 Speaker 3: for the iPhone? 466 00:22:58,280 --> 00:23:00,720 Speaker 7: Yeah, So it's a great point. You cannot have a 467 00:23:00,800 --> 00:23:06,159 Speaker 7: super cycle without growth in China. To that point, you 468 00:23:06,240 --> 00:23:08,520 Speaker 7: have one hundred million iPhones in China that are in 469 00:23:08,520 --> 00:23:12,119 Speaker 7: that window of an upgrade opportunity, and everything we're seeing 470 00:23:12,280 --> 00:23:16,520 Speaker 7: that actually China, you will now start to see modern 471 00:23:16,600 --> 00:23:21,560 Speaker 7: to significant growth in the region from iPhone sixteen over 472 00:23:22,119 --> 00:23:25,280 Speaker 7: you know, call it the next year. And that's huge Apple. 473 00:23:25,480 --> 00:23:27,440 Speaker 7: I mean that goes from a headwind too, a taland 474 00:23:28,480 --> 00:23:30,720 Speaker 7: which is really key this whole sum of the part 475 00:23:30,840 --> 00:23:35,400 Speaker 7: story as it plays out, and they monetize China front 476 00:23:35,400 --> 00:23:35,879 Speaker 7: and center. 477 00:23:36,840 --> 00:23:40,840 Speaker 5: So folks when technology channels like Dan i'ves go to Asia, 478 00:23:41,200 --> 00:23:44,000 Speaker 5: it's not just to see their clients. The big reason 479 00:23:44,040 --> 00:23:46,960 Speaker 5: is to do what they call channel checks. Since much 480 00:23:46,960 --> 00:23:50,480 Speaker 5: of global tech hardware software comes out of that part 481 00:23:50,520 --> 00:23:52,480 Speaker 5: of the world. You get a good sense of kind 482 00:23:52,480 --> 00:23:54,960 Speaker 5: of who's making this stuff, who's buying the stuff, who's 483 00:23:55,000 --> 00:23:57,000 Speaker 5: selling the stuff. So Dan IIMs, what's kind of the 484 00:23:57,040 --> 00:23:59,200 Speaker 5: vibe you're getting from your your channel checks there in 485 00:23:59,240 --> 00:24:00,240 Speaker 5: Asia these days? 486 00:24:00,720 --> 00:24:03,639 Speaker 7: Yeah, I mean look across Taiwan, and I think just 487 00:24:03,680 --> 00:24:08,800 Speaker 7: across Asia, demand is not slowing. I mean it's accelerating 488 00:24:09,240 --> 00:24:11,320 Speaker 7: in terms of broader when we look at from a 489 00:24:11,400 --> 00:24:14,480 Speaker 7: chip perspective in ai which I think is very very 490 00:24:14,520 --> 00:24:17,320 Speaker 7: important and Jensen talked about this week, demands outstream and 491 00:24:17,400 --> 00:24:22,439 Speaker 7: supply we think twelve to fifteen X and that is 492 00:24:22,480 --> 00:24:25,440 Speaker 7: the most important thing is the use cases where the 493 00:24:25,440 --> 00:24:30,960 Speaker 7: it'torical pound tier that will ultimately be the drivers, but enterprises. 494 00:24:31,640 --> 00:24:35,360 Speaker 7: We're talking about a trillion dours of tap acts that 495 00:24:35,640 --> 00:24:37,439 Speaker 7: ultimately is coming to techo of the next three to 496 00:24:37,520 --> 00:24:38,119 Speaker 7: four years. 497 00:24:39,560 --> 00:24:41,040 Speaker 2: What is that? 498 00:24:41,119 --> 00:24:42,920 Speaker 3: What you make of the in media rally the last 499 00:24:43,000 --> 00:24:47,360 Speaker 3: five days, like how do you understand that structural shift 500 00:24:47,480 --> 00:24:51,040 Speaker 3: and that thesis versus the daily swings of some of 501 00:24:51,080 --> 00:24:54,639 Speaker 3: the biggest players where seemingly they become more important on 502 00:24:54,720 --> 00:24:57,080 Speaker 3: the central banks some days and drag up the broader 503 00:24:57,119 --> 00:24:59,199 Speaker 3: equity market, and I can't find a headline on that. 504 00:25:00,480 --> 00:25:02,199 Speaker 7: Look, I think part of I mean that was a 505 00:25:02,240 --> 00:25:05,760 Speaker 7: confluence of things from the watch parties to technicals to 506 00:25:05,880 --> 00:25:08,600 Speaker 7: just come into September, and obviously the Macro sell off 507 00:25:08,640 --> 00:25:12,160 Speaker 7: tech front and center. But I think, look, anyone that's 508 00:25:12,200 --> 00:25:16,440 Speaker 7: doing checks in tech, you're not coming back in any 509 00:25:16,480 --> 00:25:20,840 Speaker 7: way negative. Uninvidia. I mean, it is actually getting more 510 00:25:20,840 --> 00:25:23,919 Speaker 7: and more incremental, not just for Nvidia chips, and I 511 00:25:23,960 --> 00:25:27,000 Speaker 7: think brought the AI revolution, so we're gonna have these 512 00:25:27,000 --> 00:25:30,760 Speaker 7: ebbs and flus. But I continue to believe this will 513 00:25:30,800 --> 00:25:33,840 Speaker 7: be a tech market that ultimately rallies into your end 514 00:25:34,560 --> 00:25:38,119 Speaker 7: because I think it all comes down to fundamentals and 515 00:25:38,240 --> 00:25:40,439 Speaker 7: Macro's gonna do what Macro's going to do. But we 516 00:25:40,480 --> 00:25:44,440 Speaker 7: are not seeing any So it is an acceleration clearly 517 00:25:44,520 --> 00:25:46,639 Speaker 7: that we're seeing over the last few weeks. 518 00:25:47,600 --> 00:25:49,640 Speaker 5: All Right, Dan, thanks so much for joining us there 519 00:25:49,800 --> 00:25:52,920 Speaker 5: as always appreciated. Managing director, Senior equity analyst for Webbush 520 00:25:52,960 --> 00:25:56,199 Speaker 5: to curious securities. He's Bangkok Tiland, go out and get 521 00:25:56,240 --> 00:25:59,400 Speaker 5: into some trouble. Uh that's an order, so Dan, I'm 522 00:25:59,600 --> 00:26:02,440 Speaker 5: doing it? Or use again there bullish seeing some channel 523 00:26:02,520 --> 00:26:05,240 Speaker 5: checks there in Asia, suggesting that the demand continues to 524 00:26:05,280 --> 00:26:07,760 Speaker 5: be there, not just for I guess Ai chips, but 525 00:26:07,960 --> 00:26:09,440 Speaker 5: just for you know, tech in general. 526 00:26:09,520 --> 00:26:10,800 Speaker 3: I feel like he's been in Asia for like a 527 00:26:10,840 --> 00:26:12,440 Speaker 3: month the last three times I've talked to him. 528 00:26:12,600 --> 00:26:13,399 Speaker 2: He's been there every. 529 00:26:13,240 --> 00:26:15,200 Speaker 5: Time, five times a year. I think, oh yeah. 530 00:26:15,359 --> 00:26:17,119 Speaker 3: But what I think is interesting, Like we can always 531 00:26:17,160 --> 00:26:19,240 Speaker 3: joke about Dan ives being the bullish guy on tech 532 00:26:19,280 --> 00:26:22,480 Speaker 3: for sure, but is so interesting to get that take 533 00:26:22,520 --> 00:26:25,600 Speaker 3: on the structural shift versus a cyclical market and from 534 00:26:25,680 --> 00:26:29,600 Speaker 3: understanding how the cyclicality makes sense when we're all transitioning 535 00:26:29,640 --> 00:26:31,280 Speaker 3: to a different kind of world. And you can see 536 00:26:31,280 --> 00:26:33,520 Speaker 3: that in lots of other sectors as well. Obviously energy 537 00:26:33,560 --> 00:26:35,800 Speaker 3: is one that I'm gonna be paying attention to cars 538 00:26:35,840 --> 00:26:38,879 Speaker 3: with EVS and the structure issues with that, So it's 539 00:26:38,960 --> 00:26:39,400 Speaker 3: kind of fun. 540 00:26:40,880 --> 00:26:44,800 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 541 00:26:44,880 --> 00:26:47,920 Speaker 1: weekdays at ten am Eastern on Apple car Play and 542 00:26:47,920 --> 00:26:51,200 Speaker 1: Android Auto with the Bloomberg Business You can also listen 543 00:26:51,320 --> 00:26:54,400 Speaker 1: live on Amazon Alexa from our flagship New York station, 544 00:26:54,760 --> 00:26:58,480 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 545 00:26:59,160 --> 00:27:01,800 Speaker 5: All right, what are we doing here with these markets? 546 00:27:01,840 --> 00:27:03,400 Speaker 5: That's a lot of folks are trying to figure out 547 00:27:03,600 --> 00:27:06,000 Speaker 5: as a think about next week when we get the 548 00:27:06,040 --> 00:27:11,560 Speaker 5: Federal Reserve giving us their thoughts on earnings. Cissel joins 549 00:27:11,600 --> 00:27:15,719 Speaker 5: US Chief Presidency of Banryon Capital Management, joining us from 550 00:27:15,840 --> 00:27:19,280 Speaker 5: Chicago via zoom. Shane, thanks so much for joining us here. 551 00:27:19,520 --> 00:27:22,280 Speaker 5: We've had a whole slew of economic data really over 552 00:27:22,320 --> 00:27:24,880 Speaker 5: the past a couple of weeks. You put it all 553 00:27:24,880 --> 00:27:28,320 Speaker 5: together and it seems like the market is getting ready 554 00:27:28,320 --> 00:27:30,199 Speaker 5: for the Fed to begin cutting rates. How are you 555 00:27:30,240 --> 00:27:32,960 Speaker 5: guys positioning kind of your portfolio and what are you 556 00:27:32,960 --> 00:27:33,719 Speaker 5: telling your clients? 557 00:27:34,600 --> 00:27:36,600 Speaker 11: Well, as much as I love to be a confrarion, 558 00:27:37,359 --> 00:27:41,000 Speaker 11: I am in complete alignment with market sentiment and that 559 00:27:41,080 --> 00:27:44,359 Speaker 11: the Fed will cut at this meeting. You know, Chairman 560 00:27:44,600 --> 00:27:48,479 Speaker 11: Powell has been very transparent and in his remarks at 561 00:27:48,520 --> 00:27:51,920 Speaker 11: Jackson Hole, he was very clear that it was time 562 00:27:52,000 --> 00:28:01,480 Speaker 11: to make a pivot from their previous roadmap to make changes, 563 00:28:01,520 --> 00:28:04,639 Speaker 11: and cuts were part of that change. So I agree 564 00:28:04,640 --> 00:28:06,960 Speaker 11: with the market. I think where the debate comes in 565 00:28:07,080 --> 00:28:09,680 Speaker 11: is how big that rate cut will be. And as 566 00:28:09,720 --> 00:28:14,240 Speaker 11: you noted earlier, the market probability for a fifty basis 567 00:28:14,240 --> 00:28:19,479 Speaker 11: point cut is actually rising. And I'm not sure I 568 00:28:19,760 --> 00:28:24,240 Speaker 11: understand what is driving this belief that the FED will 569 00:28:24,280 --> 00:28:29,679 Speaker 11: cut fifty basis points. They've been super cautious, and I 570 00:28:29,920 --> 00:28:35,679 Speaker 11: just can't imagine cutting fifty basis points without seeing something 571 00:28:35,920 --> 00:28:40,440 Speaker 11: in the economic growth activity or in the US economy 572 00:28:40,160 --> 00:28:43,840 Speaker 11: that warrants that kind of what I think would be 573 00:28:43,880 --> 00:28:47,040 Speaker 11: kind of a knee jerk reaction. So we're telling clients, 574 00:28:47,320 --> 00:28:52,000 Speaker 11: you know, to prepare for a loosening cycle. The FED 575 00:28:52,120 --> 00:28:56,640 Speaker 11: is obviously loosening policy, and we want to take advantage 576 00:28:56,640 --> 00:29:00,320 Speaker 11: of that, which in an economy where it's which is 577 00:29:00,640 --> 00:29:03,600 Speaker 11: fairly stable, means that it's a risk on environment. 578 00:29:03,920 --> 00:29:06,120 Speaker 3: So let's go back to what happened in Vidia in 579 00:29:06,160 --> 00:29:09,280 Speaker 3: the last five days. Right, I mentioned this yesterday, Charlie 580 00:29:09,320 --> 00:29:11,360 Speaker 3: Micgela got over at no Mora said that Nvidia was 581 00:29:11,400 --> 00:29:14,720 Speaker 3: basically the central banker of power. That yeah, yeah, we 582 00:29:14,720 --> 00:29:16,640 Speaker 3: can look at the FED, but it was Nvidia and 583 00:29:16,680 --> 00:29:18,760 Speaker 3: the FOMO that kind of gripped the market that has 584 00:29:18,800 --> 00:29:21,320 Speaker 3: really propelled the s and be higher this week. What 585 00:29:21,480 --> 00:29:23,960 Speaker 3: matters more for you and your acid allocation, is it 586 00:29:23,960 --> 00:29:26,320 Speaker 3: what's happening with Nvidia stock or what Jay Powell says 587 00:29:26,320 --> 00:29:26,880 Speaker 3: on Wednesday? 588 00:29:27,640 --> 00:29:29,120 Speaker 11: What Jay Powell says on Wednesday? 589 00:29:29,160 --> 00:29:33,160 Speaker 2: Oh me and entirely Vida killing me. Sorry, I know 590 00:29:33,440 --> 00:29:34,800 Speaker 2: I love Nvidia, I do. 591 00:29:35,040 --> 00:29:37,600 Speaker 11: But as much as we want to pretend it's a 592 00:29:37,640 --> 00:29:41,360 Speaker 11: proxy for the economy, and it is to some extent, 593 00:29:41,760 --> 00:29:45,719 Speaker 11: we should not be basing our portfolio management decisions on, uh, 594 00:29:45,960 --> 00:29:50,680 Speaker 11: the the technical trends of a single stock, especially one 595 00:29:50,880 --> 00:29:54,880 Speaker 11: which is kind of you know, shrinking in terms of 596 00:29:54,960 --> 00:29:58,719 Speaker 11: its growth potential. It's an amazing company. It's growing, you know, 597 00:29:58,760 --> 00:30:01,680 Speaker 11: triple digits, but it's growing at a slower rate than 598 00:30:01,720 --> 00:30:04,520 Speaker 11: it was a year ago, and that is reflective of 599 00:30:04,560 --> 00:30:07,680 Speaker 11: what I think the economy is doing. But the Fed 600 00:30:07,880 --> 00:30:10,320 Speaker 11: policies at the end of the day, what drives the 601 00:30:10,400 --> 00:30:15,000 Speaker 11: underlying market liquidity and the under my alying opportunity for 602 00:30:15,080 --> 00:30:18,800 Speaker 11: investors in banks or whatever they take access capital. So, 603 00:30:19,920 --> 00:30:23,280 Speaker 11: you know, nvidious great and control access to capital. 604 00:30:23,680 --> 00:30:26,800 Speaker 5: So I guess just looking at the equity markets in general, 605 00:30:26,880 --> 00:30:29,760 Speaker 5: give us your thoughts on valuation here these days, a 606 00:30:29,800 --> 00:30:32,480 Speaker 5: lot of folks feel like it's stretched. A lot of 607 00:30:32,480 --> 00:30:33,880 Speaker 5: folks will say, yeah, but if you pull out some 608 00:30:33,880 --> 00:30:35,840 Speaker 5: of those big tech names, not so much. So how 609 00:30:35,840 --> 00:30:36,680 Speaker 5: do you guys look at it? 610 00:30:38,280 --> 00:30:42,719 Speaker 11: So I learn at Fidelity, and this is super basic, 611 00:30:42,800 --> 00:30:45,360 Speaker 11: but I think it's actually a really great tool for 612 00:30:45,440 --> 00:30:47,920 Speaker 11: people out there who just want to do like quick 613 00:30:47,960 --> 00:30:49,760 Speaker 11: math in their head. But I learned the role of 614 00:30:49,800 --> 00:30:52,280 Speaker 11: twenty during my days at Fidelity. So that is taking 615 00:30:52,320 --> 00:30:55,560 Speaker 11: the pe of the market and adding in the inflation 616 00:30:55,680 --> 00:30:58,560 Speaker 11: number and then looking at it in a historical basis, 617 00:30:58,560 --> 00:31:03,040 Speaker 11: and the general consensus zip it was valuations were above twenty, 618 00:31:03,480 --> 00:31:06,120 Speaker 11: it was stretched, and if it was below twenty, it 619 00:31:06,320 --> 00:31:12,000 Speaker 11: was attractive. And so we're well above twenty. Yes, some 620 00:31:12,040 --> 00:31:14,600 Speaker 11: of that has to do with tech stocks and how 621 00:31:15,200 --> 00:31:18,600 Speaker 11: how much they are are kind of weighing on the market. 622 00:31:18,640 --> 00:31:21,560 Speaker 11: But I think even in the equal weight indexes we 623 00:31:21,640 --> 00:31:26,040 Speaker 11: are above that twenty number, and so there's definitely opportunities 624 00:31:26,040 --> 00:31:28,320 Speaker 11: in the market. But it feels like we're a little 625 00:31:28,320 --> 00:31:31,000 Speaker 11: frothy here. I don't think we're super expensive by any 626 00:31:31,000 --> 00:31:35,240 Speaker 11: stretch of the imagination, but I do think that I 627 00:31:35,280 --> 00:31:36,640 Speaker 11: wouldn't call the market. 628 00:31:36,440 --> 00:31:38,360 Speaker 2: Cheap favorite pick right now. 629 00:31:40,920 --> 00:31:43,240 Speaker 10: You know, I really like Apple. 630 00:31:43,520 --> 00:31:44,520 Speaker 11: I really like Apple. 631 00:31:44,760 --> 00:31:48,280 Speaker 2: Okay, why so the stock up beating. 632 00:31:48,120 --> 00:31:51,520 Speaker 11: Up, and then they had their iPhone event last week, 633 00:31:51,600 --> 00:31:55,040 Speaker 11: which was sort of like anti climactic, So the stock. 634 00:31:54,760 --> 00:31:58,000 Speaker 10: Has been kind of, you know, not doing much for 635 00:31:58,040 --> 00:31:58,480 Speaker 10: a while. 636 00:31:58,640 --> 00:32:01,280 Speaker 11: Valuation wise, it's attract when you compare to the rest 637 00:32:01,320 --> 00:32:06,440 Speaker 11: of the Mag seven, and I think that overall, they're 638 00:32:06,480 --> 00:32:09,360 Speaker 11: doing the right things to maintain market share, and I 639 00:32:09,400 --> 00:32:11,520 Speaker 11: think that there's a potential for them to take market 640 00:32:11,560 --> 00:32:15,200 Speaker 11: share in the future. So you know, from that standpoint, 641 00:32:15,320 --> 00:32:18,120 Speaker 11: I think Apple has the ability to grow their global 642 00:32:18,120 --> 00:32:22,880 Speaker 11: footprint and people like the ecosystem. I'm definitely one of 643 00:32:22,920 --> 00:32:26,680 Speaker 11: those people. The stock is relatively attractive on a valuation basis, 644 00:32:26,680 --> 00:32:28,880 Speaker 11: whereas you look at something like an n Video or 645 00:32:29,120 --> 00:32:30,760 Speaker 11: one of the other names in the Mag seven and 646 00:32:30,840 --> 00:32:34,200 Speaker 11: they don't look quite as attractive on a valuation basis. 647 00:32:34,240 --> 00:32:36,880 Speaker 2: Paul scrolling on his old iPhone, ready. 648 00:32:36,640 --> 00:32:39,239 Speaker 3: To buy the new iPhone very soon, as in like 649 00:32:39,280 --> 00:32:41,040 Speaker 3: in forty five minutes time, exactly. 650 00:32:41,120 --> 00:32:42,760 Speaker 2: All right, Shanna, thanks a lot, really appreciate it. 651 00:32:42,760 --> 00:32:46,200 Speaker 3: A shanea ccil President CEO, benmon On Capital Management joining 652 00:32:46,280 --> 00:32:46,600 Speaker 3: us there. 653 00:32:46,680 --> 00:32:47,720 Speaker 2: Thank you. Very much. 654 00:32:49,280 --> 00:32:53,160 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 655 00:32:53,240 --> 00:32:56,280 Speaker 1: weekdays at ten am Eastern on Apple car Play and 656 00:32:56,280 --> 00:32:59,200 Speaker 1: Android Auto with the Bloomberg Business app. You can also 657 00:32:59,280 --> 00:33:02,760 Speaker 1: listen live on Amazon Alexa from our flagship New York station, 658 00:33:03,120 --> 00:33:05,920 Speaker 1: Just Say Alexa playing Bloomberg eleven thirty. 659 00:33:07,960 --> 00:33:09,480 Speaker 2: This is Bloomberg Intelligence Radio. 660 00:33:09,520 --> 00:33:11,160 Speaker 3: We bring you all the top news in business and 661 00:33:11,200 --> 00:33:14,400 Speaker 3: finance economics from our beautiful world headquarters right here in 662 00:33:14,520 --> 00:33:18,880 Speaker 3: midtown Manhattan. There's a really interesting big Take story today 663 00:33:18,880 --> 00:33:21,960 Speaker 3: that everyone should read. You can find it Bloomberg Big 664 00:33:22,000 --> 00:33:25,120 Speaker 3: Takes story about college football players facing an ugly truth 665 00:33:25,200 --> 00:33:27,920 Speaker 3: about payment details. You can read the story on Bloomberg 666 00:33:28,000 --> 00:33:30,160 Speaker 3: and at Bloomberg dot com slash Big Tape. But we're 667 00:33:30,200 --> 00:33:33,880 Speaker 3: lucky to Peter Robinson here. He's an investigations reporter here 668 00:33:33,880 --> 00:33:37,080 Speaker 3: at Bloomberg News. Part of this story. I thought college 669 00:33:37,120 --> 00:33:39,640 Speaker 3: football players got their own money now and that was awesome, 670 00:33:39,720 --> 00:33:40,520 Speaker 3: and that was it. 671 00:33:40,600 --> 00:33:41,200 Speaker 2: What's going on. 672 00:33:42,600 --> 00:33:45,800 Speaker 12: That's exactly what the popular belief is. And that's why 673 00:33:45,840 --> 00:33:48,560 Speaker 12: my colleague Noah Bluhire and I wanted to look into this. 674 00:33:48,720 --> 00:33:52,080 Speaker 12: Because if you are a casual fan and you hear 675 00:33:52,120 --> 00:33:56,120 Speaker 12: about these deals apparently worth millions for college football players. 676 00:33:56,200 --> 00:33:59,360 Speaker 12: You think, well, that problem of the players being exploited 677 00:33:59,400 --> 00:34:03,000 Speaker 12: while the coaches and the administrators make millions has been fixed. 678 00:34:03,040 --> 00:34:06,280 Speaker 12: But we took a really deep dive into these contracts, 679 00:34:06,320 --> 00:34:09,440 Speaker 12: and they're at most of the big time football schools. 680 00:34:09,800 --> 00:34:13,880 Speaker 12: They're controlled by booster groups, which are essentially wealthy individuals, 681 00:34:14,000 --> 00:34:18,480 Speaker 12: think the richest car dealer in town, and they're in 682 00:34:18,560 --> 00:34:21,520 Speaker 12: charge of the deal. They write the contracts, and we 683 00:34:21,560 --> 00:34:25,400 Speaker 12: actually got our hands on at least three of these contracts, 684 00:34:25,560 --> 00:34:28,440 Speaker 12: and in many cases, according to other people we've talked 685 00:34:28,480 --> 00:34:32,120 Speaker 12: to as well, these come with broad termination rights which 686 00:34:32,400 --> 00:34:35,959 Speaker 12: wouldn't be seen in virtually any other industry. But there's 687 00:34:35,960 --> 00:34:38,560 Speaker 12: one contract we looked at that said it can be 688 00:34:38,680 --> 00:34:43,319 Speaker 12: terminated at any time for any reason. So players are 689 00:34:44,280 --> 00:34:47,680 Speaker 12: essentially still being exploited. It's a version of the black 690 00:34:47,760 --> 00:34:50,160 Speaker 12: market that's existed in college football for a long time. 691 00:34:50,600 --> 00:34:54,680 Speaker 5: Peter, By and large, do these student athletes have representation, 692 00:34:54,760 --> 00:34:57,879 Speaker 5: whether it's legal or an agent to kind of protect them. 693 00:34:57,920 --> 00:35:02,680 Speaker 10: Here, it really catches catch can and it depends on 694 00:35:02,719 --> 00:35:03,200 Speaker 10: the player. 695 00:35:03,440 --> 00:35:08,560 Speaker 12: And you can imagine for someone who's a teenager, these 696 00:35:08,560 --> 00:35:12,319 Speaker 12: are seventeen, eighteen, nineteen year old kids. They're entering this 697 00:35:12,400 --> 00:35:16,440 Speaker 12: world for the first time. And a majority of the 698 00:35:16,480 --> 00:35:21,520 Speaker 12: players to Division one schools are black, many from disadvantaged backgrounds, 699 00:35:21,640 --> 00:35:27,319 Speaker 12: and so you have these situations where players are not 700 00:35:27,760 --> 00:35:30,600 Speaker 12: aware of their options, they're not apprized of their options. 701 00:35:30,600 --> 00:35:34,360 Speaker 12: And because it's a third party relationship between the university 702 00:35:34,800 --> 00:35:38,319 Speaker 12: and these donor groups, there's really no one looking out 703 00:35:38,320 --> 00:35:40,920 Speaker 12: for their interests. There's no one accountable when one of 704 00:35:40,960 --> 00:35:41,879 Speaker 12: these deals goes wrong. 705 00:35:42,040 --> 00:35:43,040 Speaker 2: So how do we fix this? 706 00:35:45,719 --> 00:35:48,280 Speaker 12: Many people I've talked to look at the pro leagues 707 00:35:48,280 --> 00:35:51,799 Speaker 12: and they say, what's happening in college football is a 708 00:35:51,840 --> 00:35:56,799 Speaker 12: professionalization of college football, and in the pro leagues the 709 00:35:56,840 --> 00:36:02,960 Speaker 12: players collectively bargain. In the pro leagues, the NFL Players Association, 710 00:36:03,160 --> 00:36:06,759 Speaker 12: for instance, requires that the contracts be disclosed to them 711 00:36:06,840 --> 00:36:08,879 Speaker 12: so that all the players know what all the terms are. 712 00:36:08,920 --> 00:36:13,160 Speaker 12: It's a very transparent, very fair market, and so many 713 00:36:13,239 --> 00:36:16,240 Speaker 12: people I talked to said that that's exactly what should 714 00:36:16,239 --> 00:36:19,480 Speaker 12: happen in college support and at least in big time 715 00:36:19,520 --> 00:36:21,600 Speaker 12: college football, where there are billions being made. 716 00:36:22,560 --> 00:36:24,960 Speaker 5: These booster groups are now have a new moniker. They're 717 00:36:25,000 --> 00:36:27,759 Speaker 5: called collectives. Which I think is kind of spooky in 718 00:36:27,760 --> 00:36:29,960 Speaker 5: and of themselves. And we actually know some people that 719 00:36:30,040 --> 00:36:32,799 Speaker 5: are parts of collectives of their university, and those are 720 00:36:32,800 --> 00:36:36,360 Speaker 5: the ones that are who's monitoring or regulating these collectives? 721 00:36:36,360 --> 00:36:40,399 Speaker 10: If anyone, Well, that's exactly the question. And yeah, you're right. 722 00:36:40,440 --> 00:36:44,080 Speaker 12: The word collective hasn't been in popular use since the 723 00:36:44,160 --> 00:36:49,080 Speaker 12: nineteen thirty Soviet Union. But because of the way that 724 00:36:49,239 --> 00:36:53,720 Speaker 12: NCAA has lost repeated anti trust suits and has lost 725 00:36:53,719 --> 00:36:57,640 Speaker 12: the ability to enforce really any rules over college football, 726 00:36:57,920 --> 00:37:00,839 Speaker 12: there is no one monitoring this. Congress has looked at this, 727 00:37:01,400 --> 00:37:04,520 Speaker 12: has held a dozen hearings since twenty twenty, but there 728 00:37:04,560 --> 00:37:08,759 Speaker 12: just hasn't been the momentum for bipartisan legislation that might 729 00:37:08,880 --> 00:37:10,800 Speaker 12: put some guardrails in this market. 730 00:37:11,480 --> 00:37:14,240 Speaker 3: What about the whole and forgive my complete lack of knowledge. 731 00:37:14,239 --> 00:37:16,680 Speaker 3: The likeness thing like image of likeness, what's that called? 732 00:37:16,719 --> 00:37:18,240 Speaker 3: What's the nil? 733 00:37:18,640 --> 00:37:19,279 Speaker 5: That's what we're talking. 734 00:37:19,400 --> 00:37:22,520 Speaker 10: Yeah, okay, if you follow college. 735 00:37:22,200 --> 00:37:24,680 Speaker 2: Sports, you clearly I don't look ahead. 736 00:37:27,000 --> 00:37:30,200 Speaker 12: You know that name image likeness has become. It's amazing 737 00:37:30,239 --> 00:37:34,640 Speaker 12: how rapidly it's become part of the daily coverage in sports, 738 00:37:34,680 --> 00:37:39,200 Speaker 12: and it gives people the impression that athletes are signing 739 00:37:39,280 --> 00:37:43,480 Speaker 12: endorsement deals with Nike, with Adidas, that they're out there 740 00:37:43,880 --> 00:37:44,720 Speaker 12: on social media. 741 00:37:45,360 --> 00:37:46,200 Speaker 10: But the interesting thing. 742 00:37:46,120 --> 00:37:50,520 Speaker 12: About college football is that although there isn't really good 743 00:37:50,520 --> 00:37:53,480 Speaker 12: statistics about this, the best statistics we have show that 744 00:37:54,040 --> 00:37:57,239 Speaker 12: about eighty percent of these NIL deals are actually from 745 00:37:57,280 --> 00:38:00,520 Speaker 12: these collectives. So people have the impression that Adidas and 746 00:38:00,600 --> 00:38:04,640 Speaker 12: Nike are pouring money into into the sport, into especially 747 00:38:04,719 --> 00:38:07,600 Speaker 12: specific players, but at least as far as what the 748 00:38:07,640 --> 00:38:09,879 Speaker 12: players are making individually, that's not the case. 749 00:38:09,920 --> 00:38:12,520 Speaker 10: It's still these collectives that are in charge. 750 00:38:13,040 --> 00:38:15,719 Speaker 5: And Peter, is this a case so far with the 751 00:38:15,760 --> 00:38:17,759 Speaker 5: big stars get most of the money and if you're 752 00:38:17,760 --> 00:38:19,440 Speaker 5: in a non if you're in like an Olympic sport, 753 00:38:19,440 --> 00:38:21,080 Speaker 5: you're not getting much if anything. 754 00:38:22,120 --> 00:38:26,080 Speaker 12: Yeah, it really depends on the individual athlete. And like 755 00:38:26,120 --> 00:38:28,600 Speaker 12: the rest of the economy, it's it's a star system. 756 00:38:29,480 --> 00:38:34,800 Speaker 12: We looked closely at these contracts and talk to agents, 757 00:38:34,960 --> 00:38:38,959 Speaker 12: and what's happening is that if you are a star 758 00:38:39,080 --> 00:38:42,600 Speaker 12: with leverage, you can make you know, a starter at 759 00:38:42,640 --> 00:38:46,160 Speaker 12: a at a power conference school in football can make 760 00:38:46,600 --> 00:38:49,880 Speaker 12: in the six figures every year. But if you're not 761 00:38:49,960 --> 00:38:54,080 Speaker 12: a starter, you you're on a month to month contract. 762 00:38:54,160 --> 00:38:56,399 Speaker 12: If you don't perform well or if you're injured, that 763 00:38:56,400 --> 00:38:59,439 Speaker 12: that money goes away. So it's just not a guarantee, 764 00:39:00,040 --> 00:39:04,040 Speaker 12: especially in the same way that coaches have. Coaches, even 765 00:39:04,080 --> 00:39:07,280 Speaker 12: assistant coaches in college football can make four hundred thousand, 766 00:39:07,480 --> 00:39:08,759 Speaker 12: even up to two million and up. 767 00:39:08,920 --> 00:39:09,280 Speaker 6: Wow. 768 00:39:09,640 --> 00:39:11,440 Speaker 3: All right, Peter, thanks a lot, We really appreciate it 769 00:39:11,520 --> 00:39:14,760 Speaker 3: was a really great piece everybody. Peter Robson Investigations reporter 770 00:39:14,920 --> 00:39:17,440 Speaker 3: joining us from Seattle, Washington Again. You can find that 771 00:39:18,040 --> 00:39:21,080 Speaker 3: story on the Bloomberg and at Bloomberg dot com Slash 772 00:39:21,239 --> 00:39:24,040 Speaker 3: Big Take talking about college football players facing on ugly 773 00:39:24,080 --> 00:39:26,760 Speaker 3: truth about how they actually get paid for step. 774 00:39:27,000 --> 00:39:31,480 Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 775 00:39:31,719 --> 00:39:34,640 Speaker 1: and anywhere else you will get your podcasts. Listen live 776 00:39:34,719 --> 00:39:38,320 Speaker 1: each weekday ten am to noon Eastern on Bloomberg dot com, 777 00:39:38,400 --> 00:39:41,840 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 778 00:39:41,960 --> 00:39:45,080 Speaker 1: You can also watch us live every weekday on YouTube 779 00:39:45,160 --> 00:39:46,960 Speaker 1: and always on the Bloomberg terminal