1
00:00:00,240 --> 00:00:10,559
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:10,600 --> 00:00:14,560
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

3
00:00:14,600 --> 00:00:17,840
Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

4
00:00:17,920 --> 00:00:21,040
Speaker 1: Business App. Listen on demand wherever you get your podcasts,

5
00:00:21,360 --> 00:00:23,080
Speaker 1: or watch us live on YouTube.

6
00:00:24,120 --> 00:00:26,880
Speaker 2: Going back to the markets, the Dow not doing anything,

7
00:00:26,920 --> 00:00:29,319
Speaker 2: the SMP not doing anything, but within the Dow, the

8
00:00:29,320 --> 00:00:32,559
Speaker 2: best performers Amazon up almost fifteen percent. The worst performer

9
00:00:32,680 --> 00:00:35,960
Speaker 2: is Apple, down about nine point three percent following yesterday's

10
00:00:36,120 --> 00:00:40,200
Speaker 2: quarterly results and the outlook. Gene Munster is the authority

11
00:00:40,360 --> 00:00:43,680
Speaker 2: on Apple. He is managing partner at Deepwater Asset Management,

12
00:00:43,680 --> 00:00:45,559
Speaker 2: and of course years before that he was a sell

13
00:00:45,640 --> 00:00:48,040
Speaker 2: side analyst on Apple, one of the most well known.

14
00:00:48,280 --> 00:00:51,760
Speaker 2: Gene good to speak with you. Partially, I'm guessing that

15
00:00:51,800 --> 00:00:54,480
Speaker 2: Apple's declined today outside declient has a lot to do

16
00:00:54,520 --> 00:00:56,440
Speaker 2: with the fact that it was an now performer in

17
00:00:56,520 --> 00:00:59,400
Speaker 2: the lead up to these results. What did we really

18
00:00:59,480 --> 00:01:02,840
Speaker 2: learn from Apple that can be attributed to what decisions

19
00:01:02,880 --> 00:01:06,120
Speaker 2: it made versus things are beyond its control, like really

20
00:01:06,160 --> 00:01:07,320
Speaker 2: high memoryship prices.

21
00:01:08,760 --> 00:01:10,959
Speaker 3: Well, this is less about the high memory prices and

22
00:01:11,000 --> 00:01:13,840
Speaker 3: more just similar numbers about where the guidance is going.

23
00:01:14,280 --> 00:01:16,240
Speaker 3: So Scott, just to take a step back, they guided

24
00:01:16,280 --> 00:01:18,760
Speaker 3: the twelve or the shoes at twelve percent revenue grows

25
00:01:18,760 --> 00:01:22,160
Speaker 3: through September. They guided to nine to eleven. Now, when

26
00:01:22,200 --> 00:01:25,800
Speaker 3: you find this subtraction key with a company, a stock

27
00:01:25,840 --> 00:01:27,840
Speaker 3: that's been up twenty two percent over the past month

28
00:01:27,920 --> 00:01:31,200
Speaker 3: versus the NASZAK up one percent, when analysts go to

29
00:01:31,280 --> 00:01:34,039
Speaker 3: that subtraction key, that is negative for the stock. There's

30
00:01:34,120 --> 00:01:37,960
Speaker 3: just no explanation that can get investors comfortable. And I

31
00:01:38,000 --> 00:01:40,520
Speaker 3: think that's kind of where the conversation ended. But I

32
00:01:40,560 --> 00:01:42,280
Speaker 3: want to go through that a little bit and answer

33
00:01:42,319 --> 00:01:44,520
Speaker 3: your question about like what what's the substance of what's

34
00:01:44,560 --> 00:01:47,720
Speaker 3: going on? Is it's about memory costs. The answer is

35
00:01:47,800 --> 00:01:49,920
Speaker 3: a little bit about memory costs. Maybe if you think

36
00:01:49,920 --> 00:01:53,000
Speaker 3: about the ten percent decline, probably one or two percent

37
00:01:53,120 --> 00:01:55,080
Speaker 3: is about this higher memory costs. It's going to have

38
00:01:55,520 --> 00:01:58,160
Speaker 3: a fifty BIPs negative impact on their margins in the

39
00:01:58,200 --> 00:02:02,160
Speaker 3: September quarter. The picture is on revenue and effectively what

40
00:02:02,280 --> 00:02:04,480
Speaker 3: happened this is a pretty unique dynamic, but it makes

41
00:02:04,520 --> 00:02:07,000
Speaker 3: a ton of sense is that the iPhone has been

42
00:02:07,080 --> 00:02:09,000
Speaker 3: on fire. It was up twenty two percent in the

43
00:02:09,080 --> 00:02:11,160
Speaker 3: June quarter. If you look at over the past year,

44
00:02:11,200 --> 00:02:13,880
Speaker 3: it's been up twenty two percent. That compares to over

45
00:02:13,880 --> 00:02:16,560
Speaker 3: the past five years it's up three percent on average.

46
00:02:16,560 --> 00:02:20,320
Speaker 3: So we've got this huge surge and iPhone demand and separately,

47
00:02:20,360 --> 00:02:23,120
Speaker 3: the MAC up almost thirty percent. Typically it's up a

48
00:02:23,120 --> 00:02:25,720
Speaker 3: few percent. And what that means is that they have

49
00:02:25,880 --> 00:02:29,000
Speaker 3: essentially been pulling through inventory. Remember how tight inventory is

50
00:02:29,440 --> 00:02:31,560
Speaker 3: in part because of these pricing deals that they have

51
00:02:31,639 --> 00:02:34,120
Speaker 3: to try to keep costs low. They're limited to the

52
00:02:34,120 --> 00:02:37,320
Speaker 3: amount of capacity that they've had, so they pulled inventory

53
00:02:37,800 --> 00:02:40,680
Speaker 3: essentially from September into the June quarter, and that means

54
00:02:40,720 --> 00:02:42,839
Speaker 3: they just simply don't have as much. And the way

55
00:02:42,880 --> 00:02:45,000
Speaker 3: that I'm going to back test this and be pretty

56
00:02:45,000 --> 00:02:47,280
Speaker 3: easy for your listeners to do this is just look

57
00:02:47,280 --> 00:02:50,200
Speaker 3: at what the lead times on the products are right now.

58
00:02:50,240 --> 00:02:53,000
Speaker 3: They're running a few weeks now that typically would be

59
00:02:53,160 --> 00:02:55,960
Speaker 3: same day on many of their products. That's the indication

60
00:02:56,040 --> 00:02:58,680
Speaker 3: that they are in fact constrained and so effectively, what

61
00:02:58,840 --> 00:03:02,600
Speaker 3: happened is they stole demand from the September quarter and

62
00:03:02,680 --> 00:03:05,280
Speaker 3: pulled it into the June quarter. There's still a ton

63
00:03:05,320 --> 00:03:07,840
Speaker 3: of demand out there stole supply excuse me, and pulled

64
00:03:07,840 --> 00:03:10,400
Speaker 3: it into the June quarter. There's still ample demand and

65
00:03:10,440 --> 00:03:12,200
Speaker 3: I think all the end of the day, just to

66
00:03:12,240 --> 00:03:14,080
Speaker 3: put it in the most basic term, Street was at

67
00:03:14,080 --> 00:03:16,840
Speaker 3: twelve percent revenue growth for September. If they would have

68
00:03:17,000 --> 00:03:20,680
Speaker 3: kind of had currency constant and supply constant, I bet

69
00:03:20,680 --> 00:03:23,200
Speaker 3: they would have guided to better than fifteen percent growth

70
00:03:23,200 --> 00:03:24,160
Speaker 3: for the September quarter.

71
00:03:25,440 --> 00:03:27,400
Speaker 4: So, Gene, you were busy this week, as a lot

72
00:03:27,440 --> 00:03:29,040
Speaker 4: of tech investors were, with all the earnings.

73
00:03:29,080 --> 00:03:29,760
Speaker 5: But I got to.

74
00:03:29,919 --> 00:03:33,280
Speaker 4: Ask you about this story Wall Street Journal story about

75
00:03:33,320 --> 00:03:36,760
Speaker 4: Tesla spinning out its China business maybe paved the way

76
00:03:36,800 --> 00:03:40,760
Speaker 4: for a SpaceX merger. Is that does that seem reasonable

77
00:03:40,760 --> 00:03:40,960
Speaker 4: to you?

78
00:03:42,320 --> 00:03:42,560
Speaker 6: Yeah?

79
00:03:42,680 --> 00:03:46,960
Speaker 3: I would say it's reasonable, and it is going to

80
00:03:47,160 --> 00:03:49,640
Speaker 3: increase the probability that I have put on this happening

81
00:03:49,680 --> 00:03:52,520
Speaker 3: in the next few years from ninety to probably ninety

82
00:03:52,520 --> 00:03:55,000
Speaker 3: two percent. About a week ago I had it at

83
00:03:55,040 --> 00:03:58,400
Speaker 3: eighty percent. And then the Tesla earnings call, they led

84
00:03:58,440 --> 00:04:01,880
Speaker 3: a question in about the two companies coming together, which

85
00:04:01,920 --> 00:04:04,920
Speaker 3: surprised me. Elon started to answer the question, and then

86
00:04:05,160 --> 00:04:07,560
Speaker 3: Legal took over and said, really, we can't say much,

87
00:04:07,760 --> 00:04:10,200
Speaker 3: and then Elon grabbed the mic back and started to

88
00:04:10,440 --> 00:04:13,120
Speaker 3: kind of pontificate about the benefits of these two companies

89
00:04:13,120 --> 00:04:15,520
Speaker 3: being together. That took me from eighty to ninety. Now

90
00:04:15,520 --> 00:04:17,840
Speaker 3: I'm at ninety two, and the answer is it just

91
00:04:17,880 --> 00:04:20,039
Speaker 3: makes a ton of sense. Like this China piece, I

92
00:04:20,080 --> 00:04:25,719
Speaker 3: think is grossly underappreciated about the tensions tech from the

93
00:04:25,760 --> 00:04:29,560
Speaker 3: technology companies geopolitically, as I've been meeting with many companies

94
00:04:29,640 --> 00:04:32,800
Speaker 3: that have ties and these leading private companies that have

95
00:04:32,839 --> 00:04:35,600
Speaker 3: ties to China, it's pretty clear that they want as

96
00:04:35,680 --> 00:04:38,640
Speaker 3: much separation as possible, and so my view is that

97
00:04:38,640 --> 00:04:41,480
Speaker 3: we're probably a couple of years away. Elon's always been

98
00:04:41,640 --> 00:04:45,160
Speaker 3: has always structured the China business to be easily separated

99
00:04:45,200 --> 00:04:48,480
Speaker 3: from the US business for a lot of reasons. In

100
00:04:48,480 --> 00:04:51,200
Speaker 3: one of them is his master plan. Just don't it's

101
00:04:51,360 --> 00:04:53,320
Speaker 3: very simple. He's going to just keep growing up his

102
00:04:53,400 --> 00:04:57,080
Speaker 3: businesses into a master company. And so to answer your question, Paul,

103
00:04:57,160 --> 00:04:59,640
Speaker 3: is I think that this makes a ton of sense,

104
00:05:00,320 --> 00:05:02,240
Speaker 3: even though they're saying that it's not going on. I

105
00:05:02,240 --> 00:05:03,839
Speaker 3: think it very much is in the cards.

106
00:05:04,680 --> 00:05:06,919
Speaker 2: Sounds like it'd be good for Elon Musk from the

107
00:05:06,920 --> 00:05:09,560
Speaker 2: way he operates and runs his company. Would it be

108
00:05:09,600 --> 00:05:10,920
Speaker 2: good for investors?

109
00:05:12,920 --> 00:05:15,960
Speaker 3: Now, that's the key question, and I think the answer

110
00:05:16,000 --> 00:05:18,919
Speaker 3: is that the simple answers yes from two levels. And

111
00:05:18,960 --> 00:05:22,000
Speaker 3: an operational piece, which is most important is that when

112
00:05:22,000 --> 00:05:27,039
Speaker 3: you bring things together, you reduce redundancies. And there's this

113
00:05:27,160 --> 00:05:30,839
Speaker 3: long standing view and within tech companies that are highly

114
00:05:30,839 --> 00:05:34,200
Speaker 3: innovative that smaller teams are more effective, and so when

115
00:05:34,240 --> 00:05:36,960
Speaker 3: you have smaller, tighter teams and effectively you can do that.

116
00:05:37,080 --> 00:05:39,800
Speaker 3: I think that's one piece of bringing all these together.

117
00:05:39,920 --> 00:05:42,720
Speaker 3: I think their visions are very similar obviously around being

118
00:05:42,760 --> 00:05:48,359
Speaker 3: AI first, space AI with SpaceX, physical AI, trustrial with Tesla.

119
00:05:48,440 --> 00:05:49,479
Speaker 5: All that makes sense.

120
00:05:49,880 --> 00:05:52,200
Speaker 3: The other reason why I think investors would be rewarded

121
00:05:52,279 --> 00:05:55,760
Speaker 3: is that the dynamic around Tesla and SpaceX to a

122
00:05:55,800 --> 00:05:58,720
Speaker 3: lesser extent right now is really about and less investor

123
00:05:58,839 --> 00:06:02,240
Speaker 3: confidence are on the long term retail investor confidence, and

124
00:06:02,320 --> 00:06:05,680
Speaker 3: I think that that unwavering confidence would only increase if

125
00:06:05,680 --> 00:06:08,080
Speaker 3: they brought some of these together. And that has really

126
00:06:08,160 --> 00:06:11,280
Speaker 3: explained how Tesla can still be a one point two

127
00:06:11,279 --> 00:06:14,239
Speaker 3: trillion dollar company despite having many of its targets pushed

128
00:06:14,240 --> 00:06:16,640
Speaker 3: back for years. And so I think you put these

129
00:06:16,680 --> 00:06:20,240
Speaker 3: two together, it would undoubtedly be the biggest company. I

130
00:06:20,240 --> 00:06:23,240
Speaker 3: think you put them together your I think the path

131
00:06:23,279 --> 00:06:25,760
Speaker 3: to a tend jillion dollar company is as well laid

132
00:06:25,800 --> 00:06:26,640
Speaker 3: at that point.

133
00:06:26,839 --> 00:06:27,480
Speaker 6: Stay with us.

134
00:06:27,560 --> 00:06:29,760
Speaker 5: More from Bloomberg Intelligence coming up after this.

135
00:06:33,920 --> 00:06:37,600
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

136
00:06:37,680 --> 00:06:41,080
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

137
00:06:41,160 --> 00:06:44,240
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

138
00:06:44,279 --> 00:06:47,680
Speaker 1: get your podcasts, or watch us live on YouTube.

139
00:06:48,760 --> 00:06:53,120
Speaker 4: Erni's coming out of the energy patch here, excellent mobile, Chevron,

140
00:06:53,240 --> 00:06:55,480
Speaker 4: some of the big boys reporting here. Let's get in

141
00:06:55,760 --> 00:06:57,480
Speaker 4: touch with an expert on this stuff.

142
00:06:57,680 --> 00:06:58,400
Speaker 5: Vincent Piazza.

143
00:06:58,520 --> 00:07:00,240
Speaker 4: He's the senior research channel, so he covers all the

144
00:07:00,279 --> 00:07:02,280
Speaker 4: oil and gas companies for Bloomberg Intelligence.

145
00:07:02,680 --> 00:07:03,920
Speaker 5: No idea where he is.

146
00:07:04,640 --> 00:07:05,280
Speaker 6: It could be.

147
00:07:05,279 --> 00:07:06,880
Speaker 4: Philly, Princeton, Wilmington.

148
00:07:07,120 --> 00:07:08,280
Speaker 6: You never know where this guy is.

149
00:07:08,560 --> 00:07:11,040
Speaker 4: Bence, what's going on in your world of big oil?

150
00:07:12,320 --> 00:07:15,360
Speaker 6: And Good morning from Wilmington, Delaware.

151
00:07:16,400 --> 00:07:21,160
Speaker 7: But it's always sunny in Philadelphia, remember there you go. Yeah,

152
00:07:21,200 --> 00:07:24,520
Speaker 7: So look, if you think about coming into the quarter,

153
00:07:25,520 --> 00:07:30,080
Speaker 7: Exon and Chevron, significant optimism coming into the quarter, just

154
00:07:30,680 --> 00:07:34,720
Speaker 7: considering where we are on wt I and Brent. But

155
00:07:35,480 --> 00:07:40,480
Speaker 7: you know, Chevron posted a much much cleaner quarter operationally,

156
00:07:41,000 --> 00:07:46,560
Speaker 7: significant free cash flow, buybacks and dividends were up. The

157
00:07:46,680 --> 00:07:50,920
Speaker 7: debt side, you know, Chevron bought back roughly eight billion

158
00:07:50,960 --> 00:07:56,720
Speaker 7: dollars of debt. So look strong quarter operationally for Chevron,

159
00:07:57,120 --> 00:08:00,400
Speaker 7: a little more optimism coming into the quarter. For Exxon

160
00:08:00,800 --> 00:08:04,400
Speaker 7: it's down roughly two percent, little softer on the downstream side.

161
00:08:04,840 --> 00:08:10,680
Speaker 7: But Paul combined thirty two billion of free cash flow.

162
00:08:10,520 --> 00:08:11,160
Speaker 6: In the quarter.

163
00:08:11,200 --> 00:08:15,520
Speaker 7: For both companies, you're getting that back in dividends. You're

164
00:08:15,520 --> 00:08:19,880
Speaker 7: getting that back in buybacks as well. But for Exon,

165
00:08:20,000 --> 00:08:23,240
Speaker 7: Paul a little bit more of an impact from Hormuz

166
00:08:23,400 --> 00:08:27,920
Speaker 7: in three Q, so some thorny issues that they have

167
00:08:28,040 --> 00:08:28,640
Speaker 7: to deal with.

168
00:08:28,760 --> 00:08:31,080
Speaker 6: But for Chevron, much much cleaner quarter.

169
00:08:32,559 --> 00:08:35,520
Speaker 2: So does this windfall help them do anything that they

170
00:08:35,640 --> 00:08:38,080
Speaker 2: wouldn't be able to do otherwise? You talked about how

171
00:08:38,200 --> 00:08:40,880
Speaker 2: Chevron is going to reduce debt and increased share buybacks,

172
00:08:40,880 --> 00:08:42,920
Speaker 2: but operationally, can it think bigger than that?

173
00:08:43,720 --> 00:08:48,880
Speaker 7: Yeah, So if you think about Venezuela for Chevron, Chevron's

174
00:08:48,920 --> 00:08:53,040
Speaker 7: output in Venezuela will likely grow through twenty twenty eight. Again,

175
00:08:53,720 --> 00:08:59,160
Speaker 7: put the geopolitics aside. Definitely an operational ambition for them,

176
00:08:59,760 --> 00:09:04,079
Speaker 7: but one that we'll see production grow from roughly two

177
00:09:04,200 --> 00:09:07,319
Speaker 7: hundred and eighty thousand barrels to four hundred thousand.

178
00:09:07,400 --> 00:09:09,560
Speaker 6: Not a big mover right now.

179
00:09:09,480 --> 00:09:11,480
Speaker 7: But think about over the next couple of years what

180
00:09:11,520 --> 00:09:16,200
Speaker 7: could happen there with a more sanguine political backdrop in

181
00:09:16,200 --> 00:09:16,760
Speaker 7: the country.

182
00:09:17,040 --> 00:09:20,240
Speaker 4: Hey, Vince, what are your companies saying about the strait

183
00:09:20,280 --> 00:09:22,480
Speaker 4: of horror moves. I'm kind of the opinion that this

184
00:09:22,559 --> 00:09:24,880
Speaker 4: thing's never going to be really open again because it

185
00:09:24,960 --> 00:09:28,599
Speaker 4: just takes the threat of an attack to kind of

186
00:09:28,600 --> 00:09:30,599
Speaker 4: shut things down. What are your companies saying.

187
00:09:31,200 --> 00:09:35,280
Speaker 7: Well, I can tell you what they've met, and consider

188
00:09:35,360 --> 00:09:39,520
Speaker 7: that most of my coverage universe is US and domestic.

189
00:09:40,360 --> 00:09:43,480
Speaker 6: But what we see the industry doing is.

190
00:09:43,520 --> 00:09:50,960
Speaker 7: Recasting those capital flows, rejiggering, reordering seaborn maritime logistics to

191
00:09:51,000 --> 00:09:51,719
Speaker 7: dilute the.

192
00:09:51,720 --> 00:09:54,480
Speaker 6: Impact of the region. And what does that mean.

193
00:09:54,920 --> 00:09:59,360
Speaker 7: Well, it means extending transit times by up to two

194
00:09:59,520 --> 00:10:05,280
Speaker 7: three weeks and moving barrels away from geopolitical and conflict zones.

195
00:10:06,559 --> 00:10:07,800
Speaker 6: What does that mean in general?

196
00:10:07,840 --> 00:10:08,120
Speaker 5: Though?

197
00:10:08,240 --> 00:10:11,920
Speaker 7: It means a higher floor price, and it also means

198
00:10:12,000 --> 00:10:17,880
Speaker 7: a logistics environment that provides for greater redundancy, whether it's

199
00:10:18,360 --> 00:10:23,960
Speaker 7: floating storage, whether it's more land storage as well. But

200
00:10:24,160 --> 00:10:27,320
Speaker 7: it does suggest that over time, you know, we do

201
00:10:27,400 --> 00:10:30,800
Speaker 7: see that part of the world being diluted so that

202
00:10:30,840 --> 00:10:33,400
Speaker 7: you get away from those conflict zones. It means more

203
00:10:33,440 --> 00:10:38,120
Speaker 7: capital coming to North America, whether it's capital invested in

204
00:10:38,240 --> 00:10:42,160
Speaker 7: the US or Canada to get those molecules out in

205
00:10:42,240 --> 00:10:45,280
Speaker 7: the export market. It means more dollars heading down to

206
00:10:45,360 --> 00:10:50,200
Speaker 7: South America too, whether it's Venezuela, whether it's Argentina, and

207
00:10:50,240 --> 00:10:53,720
Speaker 7: even Brazil as well. So you could see over the

208
00:10:53,760 --> 00:10:58,679
Speaker 7: next several years, greater capital flowing to the Western hemisphere,

209
00:10:59,520 --> 00:11:03,800
Speaker 7: more barrels in floating storage, more barrels and land storage

210
00:11:03,800 --> 00:11:07,040
Speaker 7: to dilute the impact of subsequent geopolitical events.

211
00:11:07,559 --> 00:11:10,480
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

212
00:11:14,800 --> 00:11:18,480
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

213
00:11:18,559 --> 00:11:21,679
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

214
00:11:21,679 --> 00:11:25,000
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

215
00:11:25,040 --> 00:11:28,600
Speaker 1: you get your podcasts, or watch us live on YouTube.

216
00:11:29,400 --> 00:11:30,200
Speaker 5: Let's get right to it.

217
00:11:30,480 --> 00:11:34,680
Speaker 4: FIFA has plans to privatize some of its commercial business.

218
00:11:34,679 --> 00:11:37,400
Speaker 4: I think I've got that right, Okay, that's the global

219
00:11:37,440 --> 00:11:40,600
Speaker 4: FIFA UEFA. They're the European dudes. They're not happy with it.

220
00:11:40,960 --> 00:11:43,120
Speaker 4: And look at this just across the tape. I think

221
00:11:43,160 --> 00:11:47,559
Speaker 4: this is ap senior FIFA official resigns over Infantino's World

222
00:11:47,559 --> 00:11:52,480
Speaker 4: Cup selloff plan. Second says it deceived staff. Wow, random

223
00:11:52,480 --> 00:11:54,840
Speaker 4: Waims Joints. Is here you a sports This is a

224
00:11:54,840 --> 00:11:58,120
Speaker 4: big story, randal. This is global soccer. We just finished

225
00:11:58,120 --> 00:12:01,160
Speaker 4: with the World Cup. People have a great appreciation for football,

226
00:12:01,200 --> 00:12:04,040
Speaker 4: maybe now than they had before the World Cup. What's

227
00:12:04,080 --> 00:12:04,720
Speaker 4: going on here?

228
00:12:05,320 --> 00:12:07,600
Speaker 8: Listen, FIFA is trying to make as much money as

229
00:12:07,600 --> 00:12:09,920
Speaker 8: they possibly can. And you know, for me personally, I

230
00:12:09,920 --> 00:12:11,440
Speaker 8: thought the World Cup was going to come to a

231
00:12:11,480 --> 00:12:13,200
Speaker 8: cloth I would be able to take a deep breath.

232
00:12:13,280 --> 00:12:15,640
Speaker 5: But obviously we're witnessing a global fight right now.

233
00:12:15,640 --> 00:12:18,079
Speaker 8: We have FIFA who is over the World Cup, which

234
00:12:18,160 --> 00:12:20,840
Speaker 8: is the biggest, largest tournament and the most famous tournament.

235
00:12:20,840 --> 00:12:22,079
Speaker 5: It's the one of the players love the most.

236
00:12:22,120 --> 00:12:26,760
Speaker 8: It's one that the teams participating they have a deep

237
00:12:26,800 --> 00:12:27,760
Speaker 8: desire to win it.

238
00:12:28,000 --> 00:12:30,120
Speaker 5: But now they're saying, you know, we can.

239
00:12:30,120 --> 00:12:33,079
Speaker 8: Raise up to four point two billion dollars from Joshua

240
00:12:33,160 --> 00:12:36,440
Speaker 8: Kushners strive capital, and of course he is the son

241
00:12:36,480 --> 00:12:39,720
Speaker 8: in law of President Trump, who you BEFA catered to

242
00:12:39,840 --> 00:12:41,240
Speaker 8: brother in law, brother of.

243
00:12:41,200 --> 00:12:41,719
Speaker 5: The son in law.

244
00:12:41,720 --> 00:12:44,920
Speaker 8: Thank you for correcting that. You know, FIFA catd to

245
00:12:44,960 --> 00:12:47,400
Speaker 8: President Trump all while he was here. And you have UEFA,

246
00:12:47,400 --> 00:12:51,520
Speaker 8: who's over many of the countries who were participants, France, England, Spain,

247
00:12:51,840 --> 00:12:54,559
Speaker 8: so many who are just like, hold on, enough is enough.

248
00:12:55,000 --> 00:12:58,520
Speaker 2: Enough is enough. So UEFA is now talking about boycotting

249
00:12:58,520 --> 00:13:00,600
Speaker 2: the World Cup that's not for another four years. So

250
00:13:00,640 --> 00:13:02,360
Speaker 2: is this kind of an empty threat because there's a

251
00:13:02,440 --> 00:13:04,160
Speaker 2: lot of time between now and the next World Cup.

252
00:13:04,360 --> 00:13:05,679
Speaker 5: I don't think it's an empty threat.

253
00:13:05,760 --> 00:13:08,080
Speaker 8: I think that they're very very serious about this because

254
00:13:08,120 --> 00:13:10,640
Speaker 8: Conka Calf, who is over in North America, Central America

255
00:13:10,679 --> 00:13:12,480
Speaker 8: and the Caribbean, is also in and we have yet

256
00:13:12,520 --> 00:13:14,079
Speaker 8: to see what South America has to.

257
00:13:14,040 --> 00:13:14,960
Speaker 5: Say as well.

258
00:13:15,160 --> 00:13:17,440
Speaker 8: And so if everyone raises their hand and says we're

259
00:13:17,480 --> 00:13:20,600
Speaker 8: done with this, then of course these are membership organizations.

260
00:13:20,640 --> 00:13:23,720
Speaker 8: These aren't the members themselves. But of course to be

261
00:13:23,760 --> 00:13:25,240
Speaker 8: a part of UEFA you have to be a member,

262
00:13:25,280 --> 00:13:29,640
Speaker 8: and I think FIFA as well. So if England, France, Mexico,

263
00:13:29,760 --> 00:13:32,120
Speaker 8: the US, all of these organizations are saying, no, who

264
00:13:32,160 --> 00:13:34,680
Speaker 8: is going to be participating in this World Cup? And

265
00:13:34,720 --> 00:13:37,120
Speaker 8: it's not just the twenty thirty one, it's next year's

266
00:13:37,160 --> 00:13:39,360
Speaker 8: Women's World Cup, and of course it's top of.

267
00:13:39,320 --> 00:13:41,560
Speaker 5: Mind as well.

268
00:13:41,760 --> 00:13:46,080
Speaker 4: One of the surprising aspects to me is JP Morgan

269
00:13:46,200 --> 00:13:50,240
Speaker 4: is advising FIFA here. I'm surprised JP Morgan's would get

270
00:13:50,240 --> 00:13:52,320
Speaker 4: within a million miles of this.

271
00:13:52,679 --> 00:13:54,560
Speaker 5: Well, Jason a lot.

272
00:13:54,440 --> 00:13:58,319
Speaker 4: Of money and the potential political falloup distinctly.

273
00:13:58,480 --> 00:14:01,600
Speaker 5: Yep, it's true. That's true. How JP Morgan tried to

274
00:14:01,600 --> 00:14:03,400
Speaker 5: do the Super League years ago that.

275
00:14:03,760 --> 00:14:07,719
Speaker 8: Fell apart as well, and then outside of that, the

276
00:14:07,840 --> 00:14:12,080
Speaker 8: upside is tremendous. You know, FIFA's talking about expanding the

277
00:14:12,120 --> 00:14:14,160
Speaker 8: World Cup to sixty four teams. I believe there was

278
00:14:14,200 --> 00:14:16,880
Speaker 8: a report from the Times of London that just dropped

279
00:14:16,880 --> 00:14:18,920
Speaker 8: a couple hours or maybe minutes ago that said that

280
00:14:18,960 --> 00:14:21,520
Speaker 8: they're trying to do this by August and the vote

281
00:14:21,760 --> 00:14:24,600
Speaker 8: for this four point two billion dollars would be in September.

282
00:14:24,800 --> 00:14:26,960
Speaker 8: So who stands the profit between now and then if

283
00:14:27,000 --> 00:14:29,960
Speaker 8: you expanded before this investment goes in, of course the

284
00:14:30,000 --> 00:14:31,760
Speaker 8: investors immediately make a.

285
00:14:31,720 --> 00:14:32,320
Speaker 5: Ton of money.

286
00:14:32,760 --> 00:14:35,880
Speaker 2: Your colleague Jobs Turner in London wrote a really interesting

287
00:14:35,920 --> 00:14:39,760
Speaker 2: newsletter where he said FIFA's mistake was to value its

288
00:14:39,800 --> 00:14:42,040
Speaker 2: spin off at twenty billion dollars. What it should have

289
00:14:42,080 --> 00:14:45,240
Speaker 2: done is value it at five times that amount and

290
00:14:45,280 --> 00:14:47,800
Speaker 2: make it so that the members each country would get

291
00:14:47,800 --> 00:14:50,680
Speaker 2: even more of a payout, so that it'd be uneconomical

292
00:14:50,720 --> 00:14:51,880
Speaker 2: for them to say, no.

293
00:14:52,720 --> 00:14:54,960
Speaker 8: We were talking about this before, you know, we went live.

294
00:14:55,000 --> 00:14:57,000
Speaker 8: And if you are France, if you are England, if

295
00:14:57,040 --> 00:14:59,000
Speaker 8: you are Spain, if your Portugal, if your co issue,

296
00:14:59,000 --> 00:15:01,720
Speaker 8: twenty million dollars isn' but a good portion of these

297
00:15:01,720 --> 00:15:04,560
Speaker 8: soccer federations can make that money in their sleep, and

298
00:15:06,600 --> 00:15:09,760
Speaker 8: one hundred million dollars goes a long way. You know,

299
00:15:09,840 --> 00:15:11,640
Speaker 8: might be able to build a training facility, you might

300
00:15:11,680 --> 00:15:14,840
Speaker 8: be able to hire coaches that can better develop talent,

301
00:15:14,920 --> 00:15:17,400
Speaker 8: all of those things, whereas twenty million, I'm not so sure.

302
00:15:17,480 --> 00:15:19,440
Speaker 2: It's harder to say soccer's off for sale if you

303
00:15:19,440 --> 00:15:20,800
Speaker 2: get a one hundred million exactly.

304
00:15:20,840 --> 00:15:23,360
Speaker 8: And of course you have to remember that some of

305
00:15:23,400 --> 00:15:26,760
Speaker 8: the issues that exist in global football outside of Europe

306
00:15:26,760 --> 00:15:30,360
Speaker 8: are often the money distribution. So after you send this check,

307
00:15:30,400 --> 00:15:32,880
Speaker 8: who's going to be distributing the money. Is that person

308
00:15:32,960 --> 00:15:34,440
Speaker 8: going to be like, oh, we got twenty million dollars,

309
00:15:34,480 --> 00:15:35,480
Speaker 8: I'm going to take five of it.

310
00:15:35,560 --> 00:15:37,600
Speaker 5: Oh, no, one's looking. I'm going to take another two

311
00:15:37,680 --> 00:15:39,160
Speaker 5: and a half. And now you know you.

312
00:15:39,120 --> 00:15:41,360
Speaker 8: Have twelve and a half left to distribute amongst the players,

313
00:15:41,360 --> 00:15:43,440
Speaker 8: amongst other officials and everyone else like that.

314
00:15:43,600 --> 00:15:45,240
Speaker 5: There's no governance over that.

315
00:15:45,360 --> 00:15:47,920
Speaker 8: It would just be a blank check to these federations

316
00:15:47,920 --> 00:15:49,160
Speaker 8: and then they would have to deal with it.

317
00:15:49,200 --> 00:15:51,960
Speaker 5: So it's on life support.

318
00:15:52,000 --> 00:15:55,080
Speaker 4: I would say, is Yuweifa and the other critics of

319
00:15:55,120 --> 00:15:57,560
Speaker 4: the FIFA's plan. Are they critical of the fact that

320
00:15:57,600 --> 00:16:01,720
Speaker 4: they're selling a piece of FIFA in general or is

321
00:16:01,760 --> 00:16:02,840
Speaker 4: it to whom they are?

322
00:16:02,880 --> 00:16:04,960
Speaker 5: So I think it's both. I think it's both.

323
00:16:05,440 --> 00:16:07,160
Speaker 8: Number one of this is that if you were going

324
00:16:07,200 --> 00:16:08,840
Speaker 8: to sell a part of this, then you would want

325
00:16:08,880 --> 00:16:09,640
Speaker 8: to consult them.

326
00:16:09,520 --> 00:16:10,080
Speaker 5: To begin with.

327
00:16:10,480 --> 00:16:12,160
Speaker 8: You'd want to consult you atha, you would want to

328
00:16:12,200 --> 00:16:15,000
Speaker 8: consult concocasts, say hey, we're thinking about doing this. Then

329
00:16:15,040 --> 00:16:17,360
Speaker 8: you could say that you could get some preliminary thoughts

330
00:16:17,400 --> 00:16:17,720
Speaker 8: on it.

331
00:16:17,960 --> 00:16:20,360
Speaker 5: Everyone was shocked, you know, a week.

332
00:16:20,200 --> 00:16:22,720
Speaker 8: Ago or earlier this week when they dropped this and

333
00:16:22,760 --> 00:16:25,120
Speaker 8: said you know what we're going to be raising this money.

334
00:16:25,320 --> 00:16:27,560
Speaker 2: But your reporting has shown that these discussions have been

335
00:16:27,600 --> 00:16:28,360
Speaker 2: going on for a while.

336
00:16:28,440 --> 00:16:30,160
Speaker 5: It's not like it was last week exactly.

337
00:16:30,160 --> 00:16:32,200
Speaker 8: So now that makes you think you go back all

338
00:16:32,200 --> 00:16:34,240
Speaker 8: the way to December of last year, President Trump gets

339
00:16:34,280 --> 00:16:36,960
Speaker 8: a Peace Prize and then we have, you know, these different.

340
00:16:36,720 --> 00:16:37,400
Speaker 5: Wars that go on.

341
00:16:37,440 --> 00:16:40,680
Speaker 8: But also how long has FIFA been considering this, knowing

342
00:16:40,720 --> 00:16:42,760
Speaker 8: that this was going to be the most successful World

343
00:16:42,800 --> 00:16:45,440
Speaker 8: Cup of all time? And why did FIFA not have

344
00:16:45,520 --> 00:16:47,760
Speaker 8: conversations with other private equity firms.

345
00:16:47,760 --> 00:16:50,040
Speaker 5: Such as CVC, such as A sixth Street.

346
00:16:50,080 --> 00:16:51,960
Speaker 8: I think there's a bunch of them who might be

347
00:16:52,040 --> 00:16:55,480
Speaker 8: interested in doing this, but those conversations probably did not happen.

348
00:16:55,560 --> 00:16:57,920
Speaker 4: It's called running a process. Why did they not run

349
00:16:57,920 --> 00:17:00,800
Speaker 4: a process? And the process is, here's a pitch book,

350
00:17:00,800 --> 00:17:03,240
Speaker 4: We're gonna sit out touncover yourself, right, yeah, and do

351
00:17:03,320 --> 00:17:06,080
Speaker 4: it and then you create competition, you drive up to

352
00:17:06,160 --> 00:17:07,320
Speaker 4: value all that kind of stuff.

353
00:17:07,320 --> 00:17:09,680
Speaker 5: And you brought up JP Morgan really quickly. What about

354
00:17:09,720 --> 00:17:10,320
Speaker 5: the other banks?

355
00:17:10,560 --> 00:17:10,760
Speaker 7: Why?

356
00:17:11,320 --> 00:17:12,160
Speaker 5: I'm not saying.

357
00:17:12,000 --> 00:17:13,920
Speaker 8: There's anything wrong with JP Morgan, but I imagine that

358
00:17:13,960 --> 00:17:16,440
Speaker 8: there are other banks who might globally who might want

359
00:17:16,480 --> 00:17:17,960
Speaker 8: to be in understand.

360
00:17:17,600 --> 00:17:17,960
Speaker 5: And they're not.

361
00:17:18,840 --> 00:17:23,520
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

362
00:17:23,720 --> 00:17:27,680
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

363
00:17:27,880 --> 00:17:31,159
Speaker 1: ten am to noon Eastern on Bloomberg dot com, the

364
00:17:31,240 --> 00:17:35,119
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

365
00:17:35,160 --> 00:17:38,439
Speaker 1: can also watch us live every weekday on YouTube and

366
00:17:38,640 --> 00:17:40,600
Speaker 1: always on the Bloomberg terminal