WEBVTT - Tech, EM, and US Steel 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.640 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.159 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market moven News. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.800 you listen to podcasts, and at Bloomberg dot Com Slash podcast. Dan, 0:00:55.840 --> 0:01:00.160 I've senior Equadanaos Whatbush Security covers all things technology. Hey Dan, 0:01:00.240 --> 0:01:02.080 let's start with the Apple news that just came across 0:01:02.200 --> 0:01:05.679 the tape here A little bit delaying or halting temporarily 0:01:05.959 --> 0:01:08.600 at least some of their watch sales in the US. 0:01:09.560 --> 0:01:11.119 What do you make of this news? Again, it stocks 0:01:11.120 --> 0:01:13.120 off about one point three percent today. 0:01:14.280 --> 0:01:16.560 Yeah, I mean, look, there have been some issues on 0:01:16.600 --> 0:01:18.800 the on the Apple watch side, and a lot of 0:01:18.840 --> 0:01:21.080 it is really around models in terms of what they're 0:01:21.080 --> 0:01:24.919 trying to drive. I view this as just a small 0:01:24.959 --> 0:01:28.000 bump of the room. But I actually think watchals this 0:01:28.160 --> 0:01:30.679 holiday season are going to be up double digit. So 0:01:30.760 --> 0:01:33.840 I viewed this is sort of noise relative to the 0:01:33.840 --> 0:01:34.800 broader story. 0:01:36.000 --> 0:01:39.280 And I was informed that you are at the airport. 0:01:39.400 --> 0:01:42.640 So for YouTube audience, unfortunately can't see Dan right now, 0:01:42.640 --> 0:01:45.320 but usually he's got the pastels on. Paul knows what 0:01:45.360 --> 0:01:49.320 I'm talking about, but he needs so we're disappointed there. 0:01:49.640 --> 0:01:51.880 But when you have a stock like this, obviously back 0:01:51.920 --> 0:01:55.440 around at three trillion dollar market cap threshold, trading round 0:01:55.520 --> 0:01:59.880 records in news like this kind of breakdown to us, 0:02:00.000 --> 0:02:01.840 does it make sense to you because you'd think, I mean, 0:02:01.880 --> 0:02:03.960 the stock's only down I think a little more than 0:02:04.000 --> 0:02:06.200 one percent at this point. Is it just kind of 0:02:06.200 --> 0:02:07.560 a reason to sell a little bit here? 0:02:08.600 --> 0:02:08.799 Yeah? 0:02:09.120 --> 0:02:13.040 And does in my opinion this is the start of 0:02:13.160 --> 0:02:16.800 the next phase of the Apple growth story, because essentially 0:02:16.800 --> 0:02:20.959 what's happening now is services is upticking. Despite some of 0:02:21.000 --> 0:02:22.799 the news come out of China. You know, I saw 0:02:22.840 --> 0:02:27.360 Bloomberg report it, which is obviously overall headwind, China is 0:02:27.400 --> 0:02:31.400 actually resilient as overall demand. So when you put it together, 0:02:31.800 --> 0:02:35.520 I think a year from now, still in pastels, I 0:02:35.520 --> 0:02:37.640 think we're looking to afford trillion dollar mark now. 0:02:38.880 --> 0:02:42.560 So Dan give us I don't know your latest thinking 0:02:42.600 --> 0:02:45.560 on just China in general, because arguably there is no 0:02:45.639 --> 0:02:49.680 company in the world that is more exposed positively and 0:02:49.720 --> 0:02:53.160 potentially negatively to China, both as a customer and as 0:02:53.200 --> 0:02:56.959 a source of product. How do you break that down 0:02:57.000 --> 0:02:58.240 for your clients? 0:02:59.680 --> 0:03:03.200 Yeah, look, I think, and someone like myself spends so 0:03:03.280 --> 0:03:06.440 much time in the region, you got to separate between 0:03:07.160 --> 0:03:10.200 headline risk and what's really happening in the market. I 0:03:10.240 --> 0:03:13.600 think Huawei, what we've seen in terms of cold tech 0:03:13.639 --> 0:03:14.399 war between. 0:03:14.280 --> 0:03:15.200 US and China. 0:03:15.320 --> 0:03:18.919 Yeah, it's an issue, but there's one hundred million iPhones 0:03:18.919 --> 0:03:22.160 in China that have an upgrade in three years, so 0:03:22.280 --> 0:03:25.000 the demand continues to be strong there, and I think 0:03:25.000 --> 0:03:29.120 when it comes from a production perspective, they'll diversify some 0:03:29.360 --> 0:03:33.400 into India. But the reality is next two to three years, 0:03:33.919 --> 0:03:36.680 I mean, that's not going to significantly change. That is 0:03:36.720 --> 0:03:40.120 the hearts and lungs of the Apple story, supply and demand. 0:03:41.760 --> 0:03:44.680 And Dan, we know you're arguably the biggest bull on 0:03:44.760 --> 0:03:46.760 Wall Street when it comes to technology. But what do 0:03:46.800 --> 0:03:49.040 you think is the biggest risk to your brule case 0:03:49.160 --> 0:03:50.320 in the shorter term? 0:03:50.400 --> 0:03:50.640 Here? 0:03:51.880 --> 0:03:56.240 Look, I think the biggest risk your term is China. 0:03:56.320 --> 0:04:01.720 It's not the numbers, it's not fed despite the poker game, 0:04:02.320 --> 0:04:04.840 you know, regard everyone knows you're gonna have cuts in 0:04:04.920 --> 0:04:08.560 twenty four that I think creates really this Pillsbury dough 0:04:08.600 --> 0:04:09.680 Boys soft landing. 0:04:10.360 --> 0:04:12.480 I think it's really the China story. It's the it's 0:04:12.480 --> 0:04:13.680 the geopolitical. 0:04:13.720 --> 0:04:16.800 But that's also why a lot of the Bears that 0:04:16.839 --> 0:04:20.240 have been hibernation mode through all of twenty twenty three, 0:04:20.720 --> 0:04:23.040 they're starting to come out of their caves a little 0:04:23.720 --> 0:04:26.680 and look at this market, because I believe it's started 0:04:26.720 --> 0:04:28.560 this new tech bowl market. 0:04:28.839 --> 0:04:31.839 Hey, Dan, I guess AI. As we think back to 0:04:31.880 --> 0:04:34.920 twenty twenty three, AI was certainly a theme, the theme, 0:04:35.040 --> 0:04:38.800 certainly the tech theme. As we look forward to twenty 0:04:38.800 --> 0:04:42.880 twenty four. Is there something else out there? How do 0:04:42.880 --> 0:04:45.320 you what's the theme for twenty twenty four in your mind? 0:04:45.680 --> 0:04:47.520 Yeah, Paul, I think it's okay. 0:04:47.520 --> 0:04:50.960 I think it's really use cases because if you if 0:04:51.000 --> 0:04:54.960 you follow the breadcrumbs filew the use cases, you'll find 0:04:55.080 --> 0:04:58.599 the treasure. So the use cases are really what's gonna 0:04:58.720 --> 0:05:06.200 drive leg of growth for Microsoft, for Google, for what 0:05:06.240 --> 0:05:09.200 we see with the Godfather of AI and Vidia and Jenten, 0:05:09.279 --> 0:05:12.080 and then you have some of the pure players like Pound, Pier, Mango, 0:05:12.160 --> 0:05:14.720 Dib and others. And I think it's actually a year 0:05:14.760 --> 0:05:16.560 from now it's going to be the rest of tech. 0:05:16.800 --> 0:05:21.200 The rest of tech joins this party. I still view 0:05:21.279 --> 0:05:24.960 it from a tech party. It's nine to thirty pm, 0:05:25.080 --> 0:05:26.480 it's not two am. 0:05:27.120 --> 0:05:30.640 Who So, walk us through Tesla. You had a note 0:05:30.640 --> 0:05:32.080 that came out at the end of the last week 0:05:32.120 --> 0:05:35.160 talking about how Tesla battle with unions in Scandinavia. Now 0:05:35.160 --> 0:05:37.320 on the radar for the street, you do have a 0:05:37.360 --> 0:05:39.839 twelve month price target around three hundred and ten dollars 0:05:39.880 --> 0:05:42.360 currently trading for Tesla. Right now it stucks around two 0:05:42.440 --> 0:05:45.120 hundred and fifty seven dollars. Walk us through what you're 0:05:45.120 --> 0:05:47.159 seeing with Tesla here and what you see moving forward. 0:05:48.080 --> 0:05:49.839 Yeah, I mean, look, I think when you look at. 0:05:49.680 --> 0:05:52.800 Deliveries, feel d risk for Q four. I think we're 0:05:52.800 --> 0:05:55.960 seeing a good China number, and I think that's something. 0:05:56.160 --> 0:05:57.840 There's a stock that's going to probably move higher in 0:05:57.839 --> 0:06:00.120 the next few weeks, going to deliveries in early in 0:06:00.200 --> 0:06:01.080 early January. 0:06:01.279 --> 0:06:02.000 Bill with the. 0:06:02.040 --> 0:06:06.320 Union issue, it's a UFC battle at WWE. I mean 0:06:06.480 --> 0:06:09.160 they're they're starting to see it now in Scandinavia. It 0:06:09.279 --> 0:06:12.720 was Sweden originally, Now it's gone to Norway. Than when 0:06:12.920 --> 0:06:19.080 Denmark the worry here, you give in here then uaw 0:06:19.640 --> 0:06:24.240 sean fain. They watched this carefully, so you can't give 0:06:24.240 --> 0:06:25.360 it in to you give a mile. 0:06:25.440 --> 0:06:27.320 And I think that's why this battle is so. 0:06:27.440 --> 0:06:31.080 Important, because I think there's a better chance to me 0:06:31.520 --> 0:06:35.880 playing an NFL playoffs than teslavn union workers. Wow. 0:06:37.680 --> 0:06:39.720 Hey, so Dan, one of the things I'm trying to 0:06:39.720 --> 0:06:43.360 get wrap my head around is again, AI, I guess 0:06:43.400 --> 0:06:45.479 I'm there. I was, you know, a little bit, you know, 0:06:46.720 --> 0:06:49.719 I don't know, just cautious, skeptical at the beginning. I 0:06:49.760 --> 0:06:51.600 guess what would help me get a little bit more 0:06:51.600 --> 0:06:54.400 on board is I can go back and look at 0:06:54.440 --> 0:06:57.880 the IBC technology spend over the last you know, number 0:06:57.880 --> 0:07:01.520 of years. How much of that going forward incrementally will 0:07:01.560 --> 0:07:05.240 be AI versus I don't know, just tech spending growth 0:07:05.240 --> 0:07:05.720 in general. 0:07:06.600 --> 0:07:09.440 Sure, it's a great question. I think actually it's it's 0:07:09.440 --> 0:07:12.600 a phenomenal question because it hits it the crux here 0:07:13.520 --> 0:07:15.920 in twenty twenty three, we think we'll less than one 0:07:15.960 --> 0:07:22.040 percent of budgets or AI twenty four based on our analysis, 0:07:22.280 --> 0:07:25.480 eight to ten percent of it budgets will be AI driven. 0:07:26.040 --> 0:07:30.400 That's why it's the Latto ticket for those companies with 0:07:30.480 --> 0:07:33.840 the use cases, software chip services. 0:07:33.480 --> 0:07:36.000 That go into that market. And I think it's all 0:07:36.160 --> 0:07:37.080 use case driven. 0:07:37.360 --> 0:07:40.680 Eighty use cases today, three four months ago you had 0:07:40.760 --> 0:07:42.000 less than twenty. 0:07:42.680 --> 0:07:45.480 We've talked so much, and especially analysts on Wall Street 0:07:45.560 --> 0:07:50.000 about the productivity boom potentially when it comes to AI. 0:07:50.200 --> 0:07:53.160 Walk us through what you think AI skills are and 0:07:53.240 --> 0:07:56.040 how employees can acquire them. 0:07:57.080 --> 0:07:59.320 Well, I think I was just I was at a 0:07:59.320 --> 0:08:02.320 conference speak in a few weeks ago, and it was 0:08:02.360 --> 0:08:05.960 more of an accounting conference, and you know they're My 0:08:06.080 --> 0:08:09.200 suggestion is, you know, for anyone on the account it's 0:08:09.240 --> 0:08:11.960 really gonna be developer language, whether it's Python or other. 0:08:12.000 --> 0:08:14.240 I think you're gonna see more and more from a 0:08:14.280 --> 0:08:18.240 developer language perspective starting early that you're going to see 0:08:18.320 --> 0:08:22.880 more starting take that over as another skill set, because 0:08:22.960 --> 0:08:27.640 if you understand AI and the developer language as more 0:08:27.680 --> 0:08:34.160 of these functional areas finance, marketing, within hospitals, within healthcare, 0:08:34.480 --> 0:08:37.040 it's going to just from a skill set perspective and 0:08:37.280 --> 0:08:38.680 be that much more valuable. 0:08:38.760 --> 0:08:41.840 Do you think it's not necessarily than just the stereotypical 0:08:41.920 --> 0:08:44.280 STEM type careers. It can go beyond that. 0:08:45.240 --> 0:08:46.480 I think it goes way beyond that. 0:08:46.600 --> 0:08:49.600 And that's why I just disagree with the view the 0:08:49.640 --> 0:08:52.760 whole like it takes away everyone's jobs, because I think 0:08:52.800 --> 0:08:55.160 in the the next three to five years it's a 0:08:55.280 --> 0:08:59.000 job creator when you actually start to look at what's 0:08:59.040 --> 0:09:02.800 going to happen from the developers first by marketing and 0:09:02.920 --> 0:09:06.080 use cases. And I think that's why it's so important. 0:09:06.640 --> 0:09:08.679 So then we'll be come out for the for really 0:09:08.720 --> 0:09:09.720 the next decade. 0:09:10.480 --> 0:09:12.640 All right, Dan ives, thank you so much. We appreciate that. 0:09:12.720 --> 0:09:15.440 As always, Dan i'ves He's a managing director, senior equity 0:09:15.480 --> 0:09:20.680 analyst web Bush Securities and a huge Penn State fan 0:09:20.760 --> 0:09:24.160 he made even going down to Atlanta as Penn State 0:09:24.200 --> 0:09:27.839 football that Nitleylands continued preparations for the December thirtieth Peach 0:09:27.880 --> 0:09:30.720 Bowl date with old miss in Atlanta. 0:09:30.800 --> 0:09:32.360 I bet we see your picture on I bet you'll 0:09:32.360 --> 0:09:33.600 see that social medium. 0:09:33.679 --> 0:09:35.720 Yeah, he'll be out there on the field. We'll figure 0:09:35.760 --> 0:09:37.480 that out. So against a little bit of news out 0:09:37.480 --> 0:09:40.760 there on Apple today about a temporary hault of certain 0:09:40.840 --> 0:09:45.679 watches starting in a few days in the US, stock 0:09:45.720 --> 0:09:48.520 off a little more than one percent. Maybe on that news, 0:09:48.600 --> 0:09:52.640 dan Ives takeaway was not material to the overall story 0:09:52.960 --> 0:09:53.600 at Apple. 0:09:55.120 --> 0:09:58.959 You're listening to the teenth Ken's Line program Bloomberg Markets 0:09:59.000 --> 0:10:02.080 weekdays at ten am, daring on Bloomberg dot com, the 0:10:02.160 --> 0:10:05.320 iHeartRadio app, and the Bloomberg Business App, or listen on 0:10:05.360 --> 0:10:07.360 demand wherever you get your podcasts. 0:10:09.120 --> 0:10:12.160 Niphan agreeing to buy US Steel for fourteen point one 0:10:12.200 --> 0:10:15.720 billion dollars, the deal of the day, books Southerman Jorans, 0:10:15.720 --> 0:10:18.319 And she's a columnist covering all these industrial companies and 0:10:18.400 --> 0:10:20.720 end deals, so a great voice to get on that. 0:10:20.720 --> 0:10:25.160 She's from Bloomberg Opinion zooming in from Boston. Hey Brooke, 0:10:25.400 --> 0:10:27.440 what do you make of this deal. I mean, it 0:10:27.960 --> 0:10:29.719 kind of feels like I'm trying to wrap my head 0:10:29.720 --> 0:10:32.679 around the valuation. The last time I had paid attention, 0:10:33.600 --> 0:10:37.160 Cleveland Cliffs had a seven billion dollar offer on the table, 0:10:37.679 --> 0:10:39.839 and now fourteen billion. Where did that come from? 0:10:41.000 --> 0:10:43.959 It is certainly a very robust premium. I mean, I 0:10:44.000 --> 0:10:47.280 think that underscores the value of these assets, especially in 0:10:47.320 --> 0:10:51.080 the context of the saer amount of investment we're seeing 0:10:51.120 --> 0:10:54.640 in the US in infrastructure and also in factory construction. 0:10:54.800 --> 0:10:57.640 You need steel to make all of those things. US 0:10:57.679 --> 0:11:02.160 steel has also been pivoting toward greener production strategies. All 0:11:02.160 --> 0:11:04.720 of that is very valuable, and these are scarce assets. 0:11:04.720 --> 0:11:08.960 There's not that many big steel companies left to purchase 0:11:08.960 --> 0:11:11.600 and for nipon. The ability to gain a really strong 0:11:11.679 --> 0:11:14.680 foothold in the US, I think is what's really driving 0:11:14.679 --> 0:11:17.400 this premium here. But it's certainly a significant step up 0:11:17.400 --> 0:11:19.640 from what we were talking about in August when Cleveland 0:11:19.640 --> 0:11:22.480 Cliffs lobbed in its initial bid, And I think that's 0:11:22.480 --> 0:11:25.480 why you see Cleveland Cliffs out this morning congratulating US 0:11:25.520 --> 0:11:28.880 steal on this steal and wishing them luck. I think 0:11:28.880 --> 0:11:31.520 that economic gulf is just far too wide for them 0:11:31.520 --> 0:11:32.319 to be able to close. 0:11:32.559 --> 0:11:35.200 If you look at US steel stock ticker simple AX 0:11:35.280 --> 0:11:37.680 up about twenty six percent on pace for its best 0:11:37.720 --> 0:11:41.000 day since August fourteenth of earlier this year, you look 0:11:41.040 --> 0:11:45.600 at Nippon, it's actually down about close to five percent. 0:11:45.760 --> 0:11:47.640 So is it fair to say, if you are a 0:11:47.840 --> 0:11:50.440 US steel shareholder that they're liking this steal? 0:11:51.960 --> 0:11:53.640 I mean sure, I don't know what there is to 0:11:53.679 --> 0:11:56.480 not like about this steal. If you're a US steel shareholder, 0:11:57.120 --> 0:12:00.200 it's normal for you know, stocks of the acquired to 0:12:00.240 --> 0:12:01.959 go down on the announcement. I mean, I think the 0:12:02.000 --> 0:12:05.839 biggest question as a US steel shareholder is what the 0:12:05.960 --> 0:12:09.240 US government is going to think of this steal. You know. 0:12:09.320 --> 0:12:11.720 On the call today to talk about it, executives said 0:12:11.720 --> 0:12:15.160 they did not foresee any issues from ascifius perspective, although 0:12:15.200 --> 0:12:18.160 of course this will get a review with a foreign 0:12:18.240 --> 0:12:21.679 company buying a US one, I think that it might 0:12:21.720 --> 0:12:25.240 be slightly more complicated than their answers on the call suggested. 0:12:25.400 --> 0:12:28.800 It's this is a very politically charged industry. It was 0:12:28.880 --> 0:12:31.680 not that long ago that we were slapping tariffs on 0:12:31.840 --> 0:12:37.360 steel imported from Japan as a quote unquote national security issue. 0:12:37.679 --> 0:12:40.000 And so I think this is going to get a 0:12:40.040 --> 0:12:44.040 lot of scrutiny. We already had some comments from politicians, 0:12:44.080 --> 0:12:45.920 you know, back in August, when this kind of first 0:12:47.320 --> 0:12:50.560 came under you know, the prospect of a deal was 0:12:50.640 --> 0:12:52.920 being talked about, the number of politicians said, we do 0:12:53.000 --> 0:12:55.880 not want to see US steals sold to a foreign company. 0:12:55.920 --> 0:12:58.160 And obviously that is the announcement that we're getting today. 0:12:58.160 --> 0:13:00.400 And so it's going to be interesting to see what 0:13:00.520 --> 0:13:02.520 happens with this now, I will say. I mean, there's 0:13:02.520 --> 0:13:05.960 been a number of foreign companies making investments in the US, 0:13:06.080 --> 0:13:10.160 spurred by the incentives included in the Chips Act, included 0:13:10.200 --> 0:13:13.040 in the IRA those have been cheered by the Biden administration. 0:13:13.480 --> 0:13:16.120 And from a practical standpoint, if jobs are being created 0:13:16.120 --> 0:13:18.960 and factories are being built, does it really matter if 0:13:19.000 --> 0:13:21.720 it's a US company or a US subsidiary of a 0:13:21.800 --> 0:13:24.760 company that's based in a country that's a strong US ally. 0:13:25.440 --> 0:13:28.120 Maybe not, But politics can be very prickly. 0:13:28.800 --> 0:13:31.600 How about the unions, Brooke, I know the unions are 0:13:31.640 --> 0:13:35.480 a very important voice in these deals, and I believe 0:13:35.520 --> 0:13:38.800 the union had supported the Cleveland Cliffs offered. I'm not 0:13:38.840 --> 0:13:40.440 sure about this one. 0:13:41.520 --> 0:13:44.280 No and so they you know, they the head of 0:13:44.320 --> 0:13:46.760 the unions made some comments of Bloomberg News this morning 0:13:46.840 --> 0:13:49.319 in the interview that the notice on this deal was 0:13:49.400 --> 0:13:52.640 rather short and they were not involved in the communication 0:13:53.840 --> 0:13:57.000 leading up to it, and so it will be interesting 0:13:57.080 --> 0:14:00.480 to see, you know, what tactic the union takes doesn't 0:14:00.679 --> 0:14:03.679 like this deal. I don't know what avenues they have 0:14:03.840 --> 0:14:06.160 to push back. At this point, they'd transferred their right 0:14:06.360 --> 0:14:08.640 to they'd said they were willing to transfer their right 0:14:08.679 --> 0:14:11.320 to counterbid to Cleveland Cliffs. But as I mentioned, Cleveland 0:14:11.360 --> 0:14:14.600 Cliffs is that this morning congratulating us steal and the deal. 0:14:14.640 --> 0:14:17.760 They do not look like they're gearing up to try 0:14:17.800 --> 0:14:21.480 to challenge this offer. And the difference between what Cleveland 0:14:21.480 --> 0:14:24.920 Cliffs was offering Nipon is now offering is very wide, 0:14:25.280 --> 0:14:28.160 and that would be a very tough bridge to tough 0:14:28.200 --> 0:14:31.400 gap to bridge. So I'm not entirely sure what the 0:14:31.480 --> 0:14:33.240 union can do to block the deal. 0:14:33.040 --> 0:14:33.520 At this point. 0:14:33.760 --> 0:14:35.920 So any sort of regulatory hurdles. 0:14:37.200 --> 0:14:39.400 Yes, like I just was talking about with Cyphius, I 0:14:39.440 --> 0:14:41.080 think that's going to be a key one to watch. 0:14:41.600 --> 0:14:46.600 So there's nothing like can you actually explain Syphius to me? 0:14:46.640 --> 0:14:49.080 Because I was just going to ask about DOJ or FTC, 0:14:49.240 --> 0:14:51.680 but maybe there's a different body here, So explain the 0:14:51.680 --> 0:14:52.480 Syphius review. 0:14:53.360 --> 0:14:57.280 Sure, So Syphius gets involved when there's a foreign company 0:14:57.320 --> 0:15:01.280 acquiring a US act and they tend to review deals 0:15:01.280 --> 0:15:04.760 from a national security perspective. So it's a different process 0:15:04.800 --> 0:15:07.480 than what we typically see from the anti trust regulators. 0:15:08.400 --> 0:15:10.600 You know, there was some question about whether a Cleveland 0:15:10.600 --> 0:15:13.880 Cliff's US steel combination would raise anti trust red flags. 0:15:13.920 --> 0:15:17.160 I don't think that's the primary concern in this case 0:15:17.200 --> 0:15:21.280 is Nipon does not have a particularly robust presence in 0:15:21.320 --> 0:15:24.240 the US already from a steel perspective. So the question 0:15:24.360 --> 0:15:27.160 is really going to be are we comfortable with letting 0:15:27.200 --> 0:15:30.920 a foreign company own this US asset? Obviously, Japan is 0:15:30.960 --> 0:15:33.480 a very important US ally. It is a very different 0:15:33.600 --> 0:15:35.880 question than if there was a Chinese company trying to 0:15:35.880 --> 0:15:38.640 come in and buy a US steel maker. But I 0:15:38.760 --> 0:15:41.600 still think, just given the environment that we are in 0:15:41.760 --> 0:15:45.960 politically and all of the scrutiny over ownership of important 0:15:46.040 --> 0:15:49.320 American assets, that this is going to get sub scrutiny. 0:15:49.640 --> 0:15:52.760 Do you foresee additional m and A happening in that 0:15:52.840 --> 0:15:55.400 particular industry group. On the back of this. 0:15:57.520 --> 0:15:59.520 Never say never. I mean, anytime you have a big 0:15:59.600 --> 0:16:01.880 deal like this, it tends to get people thinking about 0:16:01.920 --> 0:16:04.960 what other possibilities there could be. But this is already 0:16:04.960 --> 0:16:08.560 a very consolidated industry, and so I think to see 0:16:08.680 --> 0:16:13.120 much more consolidation happen would be difficult. And then you 0:16:13.160 --> 0:16:15.640 do start bumping up on questions of antitrust. 0:16:16.560 --> 0:16:20.680 So explain to me, Brooke. I know one of the 0:16:20.720 --> 0:16:22.640 growth areas of US Steel is I think they have 0:16:22.680 --> 0:16:25.480 a new plant maybe in Arkansas or something. Can you 0:16:25.480 --> 0:16:27.920 talk to us about that plant and that technology. 0:16:29.320 --> 0:16:33.920 Sure, and so it's a greener technology, you know, they 0:16:34.000 --> 0:16:37.080 use sort of more recycled materials. This is sort of 0:16:37.120 --> 0:16:39.880 the considered the future of steel making, and so that's 0:16:39.880 --> 0:16:43.760 obviously a very attractive asset for Nifeon. And you know, 0:16:43.840 --> 0:16:45.760 these companies talked a lot about and McCall about sort 0:16:45.760 --> 0:16:50.760 of their shared commitment to decarbonizing, about investing in R 0:16:50.760 --> 0:16:54.440 and D and new technologies to try to improve upon 0:16:54.480 --> 0:16:57.080 the steel making process. And so that's certainly one of 0:16:57.120 --> 0:16:58.720 the key drivers of this acquisition. 0:17:00.120 --> 0:17:02.600 And when it comes to something like this, especially if 0:17:02.640 --> 0:17:04.720 you're thinking about steel and what that means for the 0:17:04.760 --> 0:17:08.880 global economy as far as the position that these two 0:17:08.920 --> 0:17:11.280 companies are in, what do you think this tells us 0:17:11.359 --> 0:17:15.120 about the global economy if these two are potentially mrging here? 0:17:16.800 --> 0:17:19.040 Sure, I mean, I think it's a vote of confidence 0:17:19.200 --> 0:17:24.879 in the US manufacturing renaissance or revitalization of US supply chains, 0:17:24.960 --> 0:17:27.199 on shoring, whatever you want to call it. It's a 0:17:27.280 --> 0:17:30.720 narrative that's taken some hits recently. If you look at 0:17:30.760 --> 0:17:33.520 particularly in the EV sector, there's been a number of 0:17:33.600 --> 0:17:37.359 companies sort of pulling back or delaying some of the 0:17:37.359 --> 0:17:40.399 investments that they've announced, and you know that sort of 0:17:40.480 --> 0:17:42.280 just does raise the question of, Okay, well, what does 0:17:42.320 --> 0:17:46.439 this on shoring boom actually look like? And this is 0:17:46.440 --> 0:17:48.280 something that I've written about a lot. Is I think 0:17:48.320 --> 0:17:50.760 that you know, there was a lot of enthusiasm around this, 0:17:50.840 --> 0:17:53.440 partly because of the government stimulus, that this was never 0:17:53.520 --> 0:17:58.000 going to be sort of a clear and streamlined timeline. 0:17:58.080 --> 0:17:59.919 That there's a lot of variability here, a lot of 0:18:00.080 --> 0:18:03.280 pushes and pulls. This is not something that has you know, 0:18:03.880 --> 0:18:08.080 managed to separate itself entirely from the broader economy. That 0:18:08.119 --> 0:18:11.320 companies are still sort of subject to those economic forces, 0:18:11.359 --> 0:18:14.720 but there are underlying tailwinds here that are driving investment, 0:18:14.760 --> 0:18:16.840 one of which, of course is the stimulus funds, and 0:18:16.840 --> 0:18:19.760 that there is you know, the lessons learned from COVID, 0:18:19.800 --> 0:18:22.480 but also you know the terrafs or the Trump administration 0:18:22.560 --> 0:18:24.880 that it's very valuable to have a US supply chain 0:18:24.920 --> 0:18:28.560 and not be dependent on having ship goods from across oceans. 0:18:29.359 --> 0:18:31.600 And then you know, the energy transition. Things like that 0:18:31.640 --> 0:18:36.400 are very strong underlying forces that I think will ultimately 0:18:36.480 --> 0:18:39.120 lead to more manufacturing in the US. It just may 0:18:39.119 --> 0:18:42.320 not happen on the on the timeline that we might 0:18:42.359 --> 0:18:43.120 have been hoping for. 0:18:43.640 --> 0:18:46.000 Brooke, thanks so much for joining us. Brook Sutherland calumnist 0:18:46.280 --> 0:18:50.560 covering industrials and deals for Bloomberg Opinion. Again, Japan's a 0:18:50.640 --> 0:18:53.480 Nipon agrees to buy US Steel for fourteen point one billion, 0:18:53.480 --> 0:18:55.199 and of course I go check out who the bankers 0:18:55.240 --> 0:18:58.159 are on the m and a banker City Group is 0:18:58.200 --> 0:19:03.159 acting as financial advisor to Nipon steal. Barclay's, Goldman, Sachs 0:19:03.200 --> 0:19:06.679 and Evercore are advising US Steel. So this is a 0:19:06.760 --> 0:19:09.440 it's a good deal to get announced before year in 0:19:09.960 --> 0:19:12.840 to you know, global iconic names, particularly US Steel, but 0:19:12.920 --> 0:19:15.000 Nippon Steel has been a big, big player globally for 0:19:15.040 --> 0:19:17.399 a long time. So good m and a trade to 0:19:17.400 --> 0:19:19.280 get on your sheet right before year in. You go 0:19:19.400 --> 0:19:22.720 talk to your boss and well, they'll be working over 0:19:22.720 --> 0:19:24.000 the holidays papering over this deal. 0:19:24.280 --> 0:19:27.320 You're listening to the tape. Cat's are live program Bloomberg 0:19:27.440 --> 0:19:31.040 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:19:31.080 --> 0:19:34.320 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:19:34.359 --> 0:19:37.159 You can also listen live on Amazon Alexa from our 0:19:37.200 --> 0:19:42.320 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:19:43.200 --> 0:19:48.040 Penny Folly, managing director for Emerging Markets for TCW, joins 0:19:48.040 --> 0:19:51.640 this year in studio, so she gets a special gold 0:19:51.640 --> 0:19:55.840 star there. Penny, How can I play merging markets when 0:19:55.880 --> 0:19:58.600 my biggest merging market is China and I have no 0:19:58.680 --> 0:20:00.440 idea what's going on in China? How do you guys 0:20:00.440 --> 0:20:02.400 think about that from a thirty thousand foot. 0:20:02.280 --> 0:20:07.440 Level, Well, we focus obviously on fixed income. China is 0:20:07.480 --> 0:20:10.800 actually a relatively small part of the index. It's about 0:20:10.840 --> 0:20:16.480 four percent, and we're typically that's the dollar index, and 0:20:16.520 --> 0:20:21.040 we're underweight. China could use corporates to some extent, which 0:20:21.080 --> 0:20:25.560 are pretty defensive, shorter maturity, higher ratings. So that would 0:20:25.600 --> 0:20:27.720 be how we play China in the dollar market. In 0:20:27.840 --> 0:20:31.360 the local currency market, we've used China as a funder 0:20:31.880 --> 0:20:37.120 largely low you know, is it low yields. The currency 0:20:37.160 --> 0:20:40.800 has been relatively stable, so that for US is a funder. 0:20:41.119 --> 0:20:45.359 If you look at EM as a whole, the growth 0:20:45.440 --> 0:20:49.600 rates this year have widened relative to DM growth rates. 0:20:49.600 --> 0:20:52.000 We expect the same and twenty twenty four, and that 0:20:52.160 --> 0:20:56.520 excluding China, we expect growth to really remain pretty much 0:20:56.560 --> 0:20:59.080 the same from twenty three to twenty four. So I 0:20:59.119 --> 0:21:02.400 think the fundamentals are pretty attractive in these markets. If 0:21:02.440 --> 0:21:05.800 you look at the world from a debt perspective, debt 0:21:05.960 --> 0:21:09.120 peaked at about sixty two This is excluding China. Debt 0:21:09.280 --> 0:21:11.919