1 00:00:01,560 --> 00:00:05,680 Speaker 1: This is Bloomberg Intelligence with Scarletfoo and Paul Sweeney. 2 00:00:05,760 --> 00:00:07,880 Speaker 2: How do you think the FED is looking at tariffs? 3 00:00:08,000 --> 00:00:09,200 Speaker 2: The uncertainty of terriffs. 4 00:00:09,320 --> 00:00:12,160 Speaker 3: Let's take a look at the sectors and how they performed. 5 00:00:11,800 --> 00:00:14,360 Speaker 2: A lot of investors getting whip saled every day by news. 6 00:00:14,160 --> 00:00:18,280 Speaker 1: Events, breaking market headlines, and corporate news from across the globe. 7 00:00:18,320 --> 00:00:20,919 Speaker 3: Could we see a market disruption of market events? 8 00:00:21,000 --> 00:00:23,000 Speaker 2: So people just too exuberant out there? 9 00:00:23,160 --> 00:00:25,680 Speaker 3: You see some so called low quality stocks driving this 10 00:00:25,800 --> 00:00:26,560 Speaker 3: short term rally. 11 00:00:26,600 --> 00:00:31,400 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 12 00:00:31,560 --> 00:00:33,480 Speaker 1: YouTube and Bloomberg Originals. 13 00:00:34,600 --> 00:00:36,839 Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big 14 00:00:36,880 --> 00:00:39,159 Speaker 2: business story is impacting Wall Street and the global markets. 15 00:00:39,400 --> 00:00:41,640 Speaker 3: Each and every week we provide in depth research and 16 00:00:41,720 --> 00:00:43,559 Speaker 3: data on some of the two thousand companies and one 17 00:00:43,640 --> 00:00:46,120 Speaker 3: hundred and thirty industries are analysts covered worldwide. 18 00:00:46,159 --> 00:00:48,680 Speaker 2: Today, we'll look at why the chip giant Envidia invested 19 00:00:48,720 --> 00:00:51,600 Speaker 2: two billion dollars more in the AI cloud computing startup 20 00:00:51,680 --> 00:00:52,320 Speaker 2: Core Week. 21 00:00:52,240 --> 00:00:54,400 Speaker 3: Plus a look at why a turnaround planet the coffee 22 00:00:54,440 --> 00:00:56,120 Speaker 3: giant Starbucks is starting to take hold. 23 00:00:56,480 --> 00:00:58,560 Speaker 2: But first we begin in the auto sector this week, 24 00:00:58,640 --> 00:01:01,240 Speaker 2: General Motors release earnings that eat analysts expectations. 25 00:01:01,280 --> 00:01:03,600 Speaker 3: The company also said it expects profits to grow as 26 00:01:03,680 --> 00:01:06,200 Speaker 3: much as two billion dollars this year and plans to 27 00:01:06,240 --> 00:01:08,520 Speaker 3: return more of that money to shareholders with a higher 28 00:01:08,520 --> 00:01:09,880 Speaker 3: dividend and buybacks for. 29 00:01:09,920 --> 00:01:12,240 Speaker 2: More We were joined by Steve Man Bloomerg Intelligence, Global 30 00:01:12,240 --> 00:01:13,720 Speaker 2: Autos and Industrials analyst. 31 00:01:14,080 --> 00:01:16,640 Speaker 3: We began by asking Steve to break down GM's EV 32 00:01:16,880 --> 00:01:18,520 Speaker 3: versus gas engine portfolio. 33 00:01:19,000 --> 00:01:22,160 Speaker 4: Oh, it's actually ice engine is much greater. I know 34 00:01:22,240 --> 00:01:25,560 Speaker 4: they have a full portfolio of EV's, but you're talking 35 00:01:25,600 --> 00:01:30,039 Speaker 4: about like eighty five ninety percent ICE versus ten fifteen 36 00:01:30,120 --> 00:01:33,600 Speaker 4: percent evs. So you know they do have a big portfolio, 37 00:01:33,959 --> 00:01:36,280 Speaker 4: but it was just at the beginning of rolling them out. 38 00:01:36,840 --> 00:01:39,080 Speaker 4: You know, they do have still they do still have 39 00:01:39,160 --> 00:01:42,039 Speaker 4: one more major rollout coming out, which is the Chevy 40 00:01:42,080 --> 00:01:45,760 Speaker 4: Bolt of smaller vehicles, which the industry and GM thinks 41 00:01:45,800 --> 00:01:49,120 Speaker 4: that that's where the market is going, a cheaper, more 42 00:01:49,200 --> 00:01:51,760 Speaker 4: convenient ev Steve. 43 00:01:51,800 --> 00:01:54,680 Speaker 2: It's almost to the point where the street rewards these 44 00:01:54,680 --> 00:01:58,400 Speaker 2: companies if they not just not fully back away, but 45 00:01:58,400 --> 00:02:02,480 Speaker 2: at least slow down the evolution to evs and just 46 00:02:02,520 --> 00:02:05,320 Speaker 2: focus on what's making money today? Is that kind of 47 00:02:05,320 --> 00:02:06,960 Speaker 2: what where the industry is today? 48 00:02:07,680 --> 00:02:11,560 Speaker 4: Yeah, exactly, like Trump actually did the auto industry a 49 00:02:11,639 --> 00:02:17,359 Speaker 4: major favor by relaxing the miles per gallon the mandate. 50 00:02:17,800 --> 00:02:22,839 Speaker 4: So basically every vehicle in the Big Three's portfolio are 51 00:02:22,880 --> 00:02:27,640 Speaker 4: currently meeting those mandates. And what it means is less 52 00:02:27,639 --> 00:02:31,920 Speaker 4: penalties right and no need to buy EV credits going forward, 53 00:02:32,440 --> 00:02:36,240 Speaker 4: huge savings. And what that means is it could translate 54 00:02:36,320 --> 00:02:41,520 Speaker 4: into a slower increase in car prices for consumers, especially 55 00:02:41,560 --> 00:02:44,120 Speaker 4: for big trucks. Makes the big trucks a lot more 56 00:02:44,200 --> 00:02:47,840 Speaker 4: attractive to sell for the Big Three, So they're going 57 00:02:47,960 --> 00:02:52,320 Speaker 4: to sell as many as possible given this opportunity. I 58 00:02:52,320 --> 00:02:55,840 Speaker 4: know we talked about hybrid for GM, it's going to 59 00:02:55,880 --> 00:02:59,160 Speaker 4: be a huge a sinkhold for them if they invest 60 00:02:59,160 --> 00:03:02,200 Speaker 4: in that technology today. So let's let's not do that. 61 00:03:02,480 --> 00:03:06,520 Speaker 4: Maintain whatever they can do with evs and really push 62 00:03:07,040 --> 00:03:08,040 Speaker 4: the ice vehicles. 63 00:03:08,639 --> 00:03:11,400 Speaker 3: Maintain what they can with ev so that you know, 64 00:03:11,480 --> 00:03:14,600 Speaker 3: small ten to fifteen percent of their overall portfolio. Forget 65 00:03:14,600 --> 00:03:19,239 Speaker 3: about hybrids and just focus on the mammoth gas guzzling vehicles. 66 00:03:19,480 --> 00:03:23,839 Speaker 3: What happens then if gas prices do turn up higher unexpectedly, 67 00:03:23,880 --> 00:03:25,720 Speaker 3: and I know that the administration is doing all it 68 00:03:25,760 --> 00:03:28,720 Speaker 3: can to prevent that from happening. But I'm looking at 69 00:03:28,720 --> 00:03:32,040 Speaker 3: triple A gas prices and they bottomed at around two 70 00:03:32,120 --> 00:03:34,800 Speaker 3: seventy nine and have now made their way back up 71 00:03:34,840 --> 00:03:35,840 Speaker 3: towards two ninety. 72 00:03:36,040 --> 00:03:36,280 Speaker 5: Yeah. 73 00:03:36,760 --> 00:03:39,800 Speaker 4: I mean historically, when gas prices go up, it does 74 00:03:39,880 --> 00:03:43,040 Speaker 4: impact ice sales, and you know, it may it may 75 00:03:43,120 --> 00:03:46,000 Speaker 4: push some buyers into evs, you know, depending on how 76 00:03:46,240 --> 00:03:50,240 Speaker 4: how where the expansion of the EV charging network is at. 77 00:03:50,400 --> 00:03:52,520 Speaker 4: But I think at the end of the day, if 78 00:03:52,840 --> 00:03:56,520 Speaker 4: gas prices do go up, actually benefits the Japanese companies 79 00:03:56,520 --> 00:03:59,440 Speaker 4: like Toyota and Honda, where they have a full suite 80 00:03:59,480 --> 00:04:02,000 Speaker 4: of hybrid vehicles that actually consumer love. 81 00:04:02,880 --> 00:04:03,160 Speaker 3: Yeah. 82 00:04:03,200 --> 00:04:08,080 Speaker 2: I just leased the Honda CRV hybrid. Uh huh, my son, 83 00:04:08,120 --> 00:04:10,000 Speaker 2: your drives in California all the time where the gas is. 84 00:04:10,000 --> 00:04:12,400 Speaker 3: Really expert Yes, that's right. He probably wanted it. And 85 00:04:12,400 --> 00:04:13,720 Speaker 3: how often does he have to fill up? 86 00:04:14,440 --> 00:04:16,760 Speaker 2: Not that often? I mean, just not that often. It's great, 87 00:04:16,800 --> 00:04:18,120 Speaker 2: it's a great tech technology. 88 00:04:18,400 --> 00:04:18,679 Speaker 1: Steve. 89 00:04:18,760 --> 00:04:21,640 Speaker 2: Let's just while we got you here, what's the call 90 00:04:21,760 --> 00:04:26,679 Speaker 2: these days on Tesla as we talk about this EV business? 91 00:04:26,680 --> 00:04:29,000 Speaker 2: But really, for Tesla, we're talking about so so much more. 92 00:04:30,080 --> 00:04:35,000 Speaker 4: Yeah, looking at GM as a as a backdrop, you 93 00:04:35,000 --> 00:04:38,640 Speaker 4: know GM's earnings for twenty twenty six is probably a 94 00:04:38,680 --> 00:04:41,840 Speaker 4: little bit light. There's probably some more upside on the 95 00:04:41,880 --> 00:04:45,599 Speaker 4: shift mix for more ice. So what means for Tesla 96 00:04:45,880 --> 00:04:50,000 Speaker 4: it's an uphill battle for them. I know the stock 97 00:04:50,240 --> 00:04:55,120 Speaker 4: is trading, you know, at an astronomical valuation at the moment. 98 00:04:55,839 --> 00:05:00,720 Speaker 4: Investors are very focused on their robo taxi, this vehicle 99 00:05:00,839 --> 00:05:04,680 Speaker 4: build out. Uh. They people feel that, you know, they 100 00:05:04,680 --> 00:05:09,120 Speaker 4: can actually outcompete the likes of Uber and Lyft. So 101 00:05:09,520 --> 00:05:12,040 Speaker 4: you know, sales will be weak in the fourth quarter 102 00:05:12,279 --> 00:05:15,919 Speaker 4: for Tesla, but I believe the you know, the investors 103 00:05:15,920 --> 00:05:20,479 Speaker 4: are actually looking over past that into you know, what 104 00:05:20,600 --> 00:05:23,280 Speaker 4: is the what is the catalyst or what is what 105 00:05:23,360 --> 00:05:26,040 Speaker 4: is Elon Musk going to talk about in their next 106 00:05:26,040 --> 00:05:27,960 Speaker 4: earning calls on the Robotaxi. 107 00:05:28,040 --> 00:05:31,480 Speaker 3: Yeah, it's always about the Elon Musk narrative, his vision 108 00:05:31,640 --> 00:05:33,520 Speaker 3: going forward of what this company is going to be. 109 00:05:34,320 --> 00:05:37,160 Speaker 3: I wonder, you know, my Mary Barrow talked about the 110 00:05:37,240 --> 00:05:40,320 Speaker 3: charging infrastructure in the network and how we're not there 111 00:05:40,360 --> 00:05:44,359 Speaker 3: in the United States. Tesla is offering the supercharger and 112 00:05:44,400 --> 00:05:46,320 Speaker 3: that's part of its business model to be able to 113 00:05:46,320 --> 00:05:50,640 Speaker 3: make that charger available to other automakers. How big a 114 00:05:50,680 --> 00:05:54,760 Speaker 3: contributor is that to its revenue, to its profitability when 115 00:05:54,800 --> 00:05:55,320 Speaker 3: it's prob. 116 00:05:56,240 --> 00:05:59,880 Speaker 4: Yeah, it's still it's still a small amount. It is. Uh. 117 00:06:00,200 --> 00:06:02,919 Speaker 4: What they do is they want to expand that business. 118 00:06:03,839 --> 00:06:07,919 Speaker 4: So they are talking to you know, gas stations like 119 00:06:07,920 --> 00:06:11,920 Speaker 4: wah wah out in Pennsylvania are actually you know, buying superchargers, 120 00:06:11,960 --> 00:06:16,080 Speaker 4: installing it into next to the gas pumps and next 121 00:06:16,080 --> 00:06:18,760 Speaker 4: to the stations. So they are trying to expand it 122 00:06:19,880 --> 00:06:25,160 Speaker 4: in terms of charging, selling these supercharging business and in 123 00:06:25,279 --> 00:06:28,560 Speaker 4: the in the revenues from the charging, it's still really 124 00:06:28,760 --> 00:06:31,880 Speaker 4: really small. I would say around ten percent, maybe less. 125 00:06:32,279 --> 00:06:36,040 Speaker 2: Hey, what do we know about how important are incentives here? 126 00:06:36,040 --> 00:06:38,200 Speaker 2: I look at other countries around the world and they 127 00:06:38,200 --> 00:06:42,320 Speaker 2: have got these huge EVY percentages of China sales China, 128 00:06:43,160 --> 00:06:47,760 Speaker 2: the Nordic countries. How important are government incentives to get there? 129 00:06:48,040 --> 00:06:49,440 Speaker 2: It is very important. 130 00:06:49,480 --> 00:06:52,400 Speaker 4: I think the Germans are actually putting back the incentives 131 00:06:52,600 --> 00:06:57,919 Speaker 4: and it has lifted ev sales in Europe, in Germany. 132 00:06:58,160 --> 00:07:01,359 Speaker 4: But at the end of the day, you really want 133 00:07:01,400 --> 00:07:06,400 Speaker 4: to build a sustainable growth environment for these cars, and 134 00:07:06,520 --> 00:07:08,880 Speaker 4: Mary Barr is right. You know, we actually publish a 135 00:07:09,080 --> 00:07:12,840 Speaker 4: very extensive report on ev charging, comparing charging network in 136 00:07:12,880 --> 00:07:17,400 Speaker 4: the US versus China night and day, right, So you know, 137 00:07:17,480 --> 00:07:21,000 Speaker 4: it's about convenience, it's about costs for the US consumer. 138 00:07:21,880 --> 00:07:25,080 Speaker 4: It's great to have it's great for consumer to have 139 00:07:25,160 --> 00:07:28,880 Speaker 4: some subsidy, you know, help pay for the for the 140 00:07:28,920 --> 00:07:34,160 Speaker 4: cars that they're buying. But I think long term, you know, 141 00:07:34,400 --> 00:07:39,720 Speaker 4: it really needs the consumer to really buy into the product. 142 00:07:40,320 --> 00:07:43,160 Speaker 2: Thanks to Steve Man, Bloomberg Intelligence Global Autos and Industrials 143 00:07:43,160 --> 00:07:46,360 Speaker 2: analyst return next to some news in the aerospace industry 144 00:07:46,440 --> 00:07:46,760 Speaker 2: this week. 145 00:07:46,840 --> 00:07:49,720 Speaker 3: American Airlines projected revenue growth for twenty twenty six, but 146 00:07:50,040 --> 00:07:52,280 Speaker 3: said that the winter storm that raged across the US 147 00:07:52,320 --> 00:07:54,239 Speaker 3: this week will clip revenue this quarter. 148 00:07:54,520 --> 00:07:57,560 Speaker 2: We also heard from jetbou Airways, who reported a wider 149 00:07:57,640 --> 00:08:01,240 Speaker 2: loss than expected last quarter, highlighting challenges a strategy to 150 00:08:01,360 --> 00:08:03,280 Speaker 2: win over higher paying customers. 151 00:08:03,320 --> 00:08:05,080 Speaker 3: For all of this, as well as other news in 152 00:08:05,080 --> 00:08:07,400 Speaker 3: the aerospace industry, we were joined by Sid Phillip. He 153 00:08:07,400 --> 00:08:11,000 Speaker 3: has Bloomberg's chief correspondent for Global Aviation. We began by 154 00:08:11,040 --> 00:08:13,280 Speaker 3: asking Sid for his take on American and Jet Blue's 155 00:08:13,280 --> 00:08:14,000 Speaker 3: recent results. 156 00:08:14,440 --> 00:08:16,800 Speaker 5: So the airline industry is actually in a sort of 157 00:08:17,040 --> 00:08:19,640 Speaker 5: bit of a flux at the moment. I mean, you've 158 00:08:19,840 --> 00:08:22,280 Speaker 5: obviously had the impact of all these storms, you've had 159 00:08:22,320 --> 00:08:26,720 Speaker 5: the impact of the government shutdown, and you've got the 160 00:08:26,800 --> 00:08:29,520 Speaker 5: uncertainty about the year ahead. And so American Airlines is 161 00:08:29,560 --> 00:08:32,080 Speaker 5: taking a more bullish view of the year ahead. They're 162 00:08:32,080 --> 00:08:35,480 Speaker 5: sort of following their peers United and Delta in targeting 163 00:08:35,559 --> 00:08:38,520 Speaker 5: the most premium end of the spectrum, and they're sort 164 00:08:38,520 --> 00:08:42,760 Speaker 5: of hoping that by aiming their product at the premium 165 00:08:42,840 --> 00:08:45,760 Speaker 5: end of the market, they can sort of offset the 166 00:08:45,440 --> 00:08:48,280 Speaker 5: sort downturn that's happened in the bottom end of the market. 167 00:08:48,840 --> 00:08:52,120 Speaker 5: Jet Blue also talking about how at the moment things 168 00:08:52,160 --> 00:08:55,719 Speaker 5: look a bit shaky, but they're talking about how they 169 00:08:55,720 --> 00:08:58,920 Speaker 5: see a road to profitability and a free cash flow 170 00:08:58,920 --> 00:09:01,320 Speaker 5: by the end of twenty twenty seven, and so slightly 171 00:09:01,360 --> 00:09:04,319 Speaker 5: more long term view of when the recovery might happen. 172 00:09:04,720 --> 00:09:08,559 Speaker 5: And that sort of explains the dichotomy in the earnings 173 00:09:08,600 --> 00:09:10,120 Speaker 5: forecast for both these companies. 174 00:09:10,320 --> 00:09:12,280 Speaker 3: And of course Jeblue is also doing what it can 175 00:09:12,400 --> 00:09:16,240 Speaker 3: to premium premiumize if that's a verb, it's experience for 176 00:09:16,320 --> 00:09:19,320 Speaker 3: customers to with absolutely opening up that new lounge and JFK. 177 00:09:20,400 --> 00:09:22,640 Speaker 3: So that is the story with airlines, and it's been 178 00:09:22,679 --> 00:09:25,800 Speaker 3: fairly consistent too with what we heard from Delta and United. 179 00:09:26,240 --> 00:09:30,360 Speaker 3: Where does that leave the smaller carriers that need to 180 00:09:30,400 --> 00:09:34,160 Speaker 3: either team up or fade into oblivion. I'm thinking Spirit, 181 00:09:34,200 --> 00:09:37,680 Speaker 3: I'm thinking Frontier. Is there still a market for these 182 00:09:37,679 --> 00:09:38,839 Speaker 3: discount carriers? 183 00:09:39,840 --> 00:09:41,800 Speaker 5: So the market at the moment is very tough for 184 00:09:41,840 --> 00:09:44,960 Speaker 5: the discount carriers. So essentially what's happening is that the 185 00:09:45,000 --> 00:09:47,240 Speaker 5: top end of the market is going to Delta and 186 00:09:47,320 --> 00:09:50,440 Speaker 5: United for their premium products like first class in business class, 187 00:09:50,600 --> 00:09:52,160 Speaker 5: and on the other end of the market you have 188 00:09:52,240 --> 00:09:54,920 Speaker 5: sort of everyone else competing to get the lowest cost 189 00:09:55,320 --> 00:09:57,400 Speaker 5: tickets into the hands of the passengers, and that sort 190 00:09:57,400 --> 00:10:01,199 Speaker 5: of eroding margins, especially as costs for both pilots and 191 00:10:01,280 --> 00:10:04,520 Speaker 5: Cavin Krue are hurting the ultralo cost carriers and the 192 00:10:04,520 --> 00:10:07,079 Speaker 5: low cost carriers, and sort of that's sort of been 193 00:10:07,120 --> 00:10:10,640 Speaker 5: explained by this gay shaped recovery that airline executives are 194 00:10:10,640 --> 00:10:13,200 Speaker 5: talking about, and so Jet Blue and the others are 195 00:10:13,200 --> 00:10:15,200 Speaker 5: sort of trying to get the premium end of it. 196 00:10:15,240 --> 00:10:18,160 Speaker 5: I mean, we've seen even Spirit Airlines talking about how 197 00:10:18,200 --> 00:10:21,000 Speaker 5: they're adding a so called business class product. They've added 198 00:10:21,040 --> 00:10:23,319 Speaker 5: Wi Fi, They've added all sorts of things to keep 199 00:10:23,360 --> 00:10:25,920 Speaker 5: people coming back to them, and so they're hoping that 200 00:10:26,240 --> 00:10:30,640 Speaker 5: by slightly differentiating themselves from just very commoditized ultra low 201 00:10:30,679 --> 00:10:33,719 Speaker 5: cost carriers, they can be able to get in those customers. 202 00:10:34,240 --> 00:10:36,520 Speaker 2: Well, then it kind of goes back to the point, 203 00:10:37,120 --> 00:10:39,920 Speaker 2: is there a need for her real true low cost 204 00:10:39,960 --> 00:10:43,240 Speaker 2: carrier out there? Are some of these supposed ones are 205 00:10:43,240 --> 00:10:45,520 Speaker 2: going kind of mid market higher market. Is there a 206 00:10:45,679 --> 00:10:47,560 Speaker 2: market demand for that or is everybody just willing to 207 00:10:47,559 --> 00:10:48,360 Speaker 2: pay up for travel? 208 00:10:49,640 --> 00:10:51,800 Speaker 5: At the moment, it looks the people who are willing 209 00:10:51,840 --> 00:10:54,079 Speaker 5: to pay up for travel are the people willing to 210 00:10:54,080 --> 00:10:56,280 Speaker 5: pay up for travel, and so at the bottom end 211 00:10:56,280 --> 00:10:58,120 Speaker 5: of the market. I mean, everyone talks about how there 212 00:10:58,160 --> 00:11:00,320 Speaker 5: will be a recovery of the ultralocost carrier years and 213 00:11:00,360 --> 00:11:03,840 Speaker 5: that once people are more certain about the economy, and 214 00:11:03,920 --> 00:11:06,920 Speaker 5: once people at the bottom end of that k start 215 00:11:06,960 --> 00:11:10,120 Speaker 5: to see some stability in the economy, people will travel 216 00:11:10,160 --> 00:11:13,079 Speaker 5: because I mean, remember during the pandemic, there was after 217 00:11:13,679 --> 00:11:15,880 Speaker 5: as we exited the pandemic, there was this boom in 218 00:11:15,920 --> 00:11:18,840 Speaker 5: travel for across the board and that sort of has 219 00:11:19,000 --> 00:11:21,840 Speaker 5: further split up, and so we will see that demand 220 00:11:22,080 --> 00:11:25,080 Speaker 5: coming back, we just don't know when and what sort 221 00:11:25,080 --> 00:11:26,000 Speaker 5: of shape that will be. 222 00:11:27,440 --> 00:11:30,360 Speaker 3: So sid you also cover Boeing, and it came out 223 00:11:30,360 --> 00:11:32,760 Speaker 3: with its results and in terms of the numbers for 224 00:11:32,800 --> 00:11:35,600 Speaker 3: the fourth quarter free cash flow topping estimates, it generated 225 00:11:35,640 --> 00:11:37,760 Speaker 3: cash for a second straight quarter. That sounds like it's 226 00:11:37,800 --> 00:11:41,600 Speaker 3: good news. How far along this recovery, this long awaited 227 00:11:41,640 --> 00:11:43,880 Speaker 3: covery is Boeing Actually. 228 00:11:44,600 --> 00:11:46,840 Speaker 5: So Boeing is on the road to recovery. They're still 229 00:11:46,920 --> 00:11:49,720 Speaker 5: not they yet, but they are recover They are recovering. 230 00:11:49,720 --> 00:11:52,680 Speaker 5: I mean their fourth quarter results and their Follio results 231 00:11:52,760 --> 00:11:56,600 Speaker 5: were boosted by the sale of their Jefferson Digital Aviation 232 00:11:56,720 --> 00:11:59,600 Speaker 5: subsidiary and that sort of gave them a nine point 233 00:11:59,640 --> 00:12:02,440 Speaker 5: six pl in the dollar boost. And at the same time, 234 00:12:02,520 --> 00:12:06,000 Speaker 5: the Boeing is sort of ramping up production. They are 235 00:12:06,520 --> 00:12:09,120 Speaker 5: ramping up sales. I mean they've seen a surgeon sales. 236 00:12:09,160 --> 00:12:13,439 Speaker 5: I mean in the last ever since the Trump administration 237 00:12:13,480 --> 00:12:16,040 Speaker 5: came in, we've seen a surgeon Boeing sales. And so 238 00:12:16,720 --> 00:12:20,160 Speaker 5: Kelly Ottberg, the new CEO, is sort of pushing Boeing 239 00:12:20,200 --> 00:12:23,360 Speaker 5: to improve production, ramp up production at a steady base. 240 00:12:23,400 --> 00:12:26,040 Speaker 5: I mean they've gone to about forty two seven three 241 00:12:26,080 --> 00:12:29,040 Speaker 5: seven max jets a month, and they are sort of 242 00:12:29,080 --> 00:12:32,240 Speaker 5: further boosting those production numbers and that will get them 243 00:12:32,280 --> 00:12:34,600 Speaker 5: on at the sort of where they want to be 244 00:12:34,640 --> 00:12:37,280 Speaker 5: in the Kelly Outberg's talked about how ten billion in 245 00:12:37,320 --> 00:12:39,400 Speaker 5: free cash flow is his target and the company's on 246 00:12:39,440 --> 00:12:39,959 Speaker 5: its way there. 247 00:12:40,679 --> 00:12:43,720 Speaker 2: Thanks to Sid Phillip Bloomberg Intelligence senior Aerospace, Defense and 248 00:12:43,760 --> 00:12:45,360 Speaker 2: Airlines analysts coming up a. 249 00:12:45,280 --> 00:12:47,520 Speaker 3: Look at why the wireless provider AT and T posted 250 00:12:47,559 --> 00:12:50,319 Speaker 3: fourth quarter profit and revenue do beat Wall Street estimates. 251 00:12:50,440 --> 00:12:53,280 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 252 00:12:53,320 --> 00:12:55,480 Speaker 2: depth research and data on two thousand companies and one 253 00:12:55,559 --> 00:12:56,600 Speaker 2: hundred and thirty industries. 254 00:12:56,720 --> 00:12:59,760 Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal. 255 00:13:00,120 --> 00:13:02,960 Speaker 2: Scarlet Foo and I'm Paul Sweeney, and this is Bloomberg. 256 00:13:07,480 --> 00:13:12,000 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 257 00:13:12,320 --> 00:13:13,800 Speaker 1: on Bloomberg Radio. 258 00:13:14,320 --> 00:13:16,880 Speaker 2: We moved to some news in that tech space this week. 259 00:13:16,880 --> 00:13:19,439 Speaker 3: We heard that the CHIPDRII and Vidia invested an additional 260 00:13:19,480 --> 00:13:22,400 Speaker 3: two billion dollars in the a cloud computing startup core Weave. 261 00:13:22,480 --> 00:13:24,880 Speaker 2: As part of the collaboration, core Weef will be among 262 00:13:25,000 --> 00:13:27,760 Speaker 2: the first to deploy forthcoming Nvidia products. 263 00:13:27,880 --> 00:13:30,480 Speaker 3: We brought in on our Granda Bloomberg Intelligence tech analysts 264 00:13:30,480 --> 00:13:31,080 Speaker 3: to tell us more. 265 00:13:31,200 --> 00:13:33,200 Speaker 2: We first asked an A Rock for his reaction to 266 00:13:33,240 --> 00:13:33,680 Speaker 2: this deal. 267 00:13:33,920 --> 00:13:36,000 Speaker 6: If you go back in history and see when Cordeviev 268 00:13:36,120 --> 00:13:38,600 Speaker 6: was going public, it was having a hard time getting 269 00:13:38,600 --> 00:13:40,800 Speaker 6: a good pricing, and then Nvidia kicked in and said, 270 00:13:41,000 --> 00:13:42,360 Speaker 6: you know, we're going to be a part of this 271 00:13:42,400 --> 00:13:45,360 Speaker 6: particular IPO. And I think what's happening here is this 272 00:13:45,520 --> 00:13:48,600 Speaker 6: and Vidia is creating the chips, and Codeviev is helping 273 00:13:48,640 --> 00:13:52,880 Speaker 6: them sell the computing using those chips. Two different public 274 00:13:52,920 --> 00:13:56,840 Speaker 6: that's out there now. At this time, Codeviev has a 275 00:13:56,880 --> 00:14:00,720 Speaker 6: massive backlog of ordos, but it needs to get funding 276 00:14:00,800 --> 00:14:03,559 Speaker 6: done in order to convert that into data centers and 277 00:14:03,600 --> 00:14:06,360 Speaker 6: then capacity. Now you know, in Vidia isn't giving them 278 00:14:06,360 --> 00:14:08,480 Speaker 6: money straight away, but it's basically saying, you know, we 279 00:14:08,559 --> 00:14:12,160 Speaker 6: have confidence in this in this company, and it would help. 280 00:14:12,640 --> 00:14:15,200 Speaker 6: Then code We've go out and raise capital from outside. 281 00:14:15,280 --> 00:14:18,000 Speaker 6: So I think it's a little bit more like spreading 282 00:14:18,040 --> 00:14:20,800 Speaker 6: the Nvidia ecosystem is what that's happening right now. 283 00:14:21,080 --> 00:14:25,200 Speaker 2: Looking at your research note, note that Coreweve has fifty 284 00:14:25,320 --> 00:14:29,960 Speaker 2: billion dollars in remaining performance obligations. What does that mean? 285 00:14:30,680 --> 00:14:33,000 Speaker 6: Yeah, basically it says this is kind of the contracted 286 00:14:33,080 --> 00:14:35,680 Speaker 6: revenue they have on hand, which means, you know, Microsoft 287 00:14:35,680 --> 00:14:38,040 Speaker 6: has said, you know what, I'm good for ten out 288 00:14:38,080 --> 00:14:40,640 Speaker 6: of that. For example, Meta has a deal with them, 289 00:14:40,680 --> 00:14:43,280 Speaker 6: so they have this backlog of all these orders. But 290 00:14:43,600 --> 00:14:46,000 Speaker 6: you know, unlike other companies, you just can't go out 291 00:14:46,040 --> 00:14:48,480 Speaker 6: and fulfill the demand. You have to create a very 292 00:14:48,520 --> 00:14:52,120 Speaker 6: large data centers using in Vidia chips. It then starts 293 00:14:52,120 --> 00:14:54,760 Speaker 6: to work out or runs, and then you realize that 294 00:14:54,840 --> 00:14:57,840 Speaker 6: fifty billion into revenue over the next several years. 295 00:14:58,080 --> 00:15:01,520 Speaker 2: So what's the gating issue here for or Corewave? Is 296 00:15:01,520 --> 00:15:04,680 Speaker 2: it more access to more data centers? What's kind of 297 00:15:04,680 --> 00:15:07,680 Speaker 2: the gating issue for them to fulfill that revenue? 298 00:15:08,840 --> 00:15:12,280 Speaker 6: Multiple gating factors. One is actually the data center itself. 299 00:15:12,280 --> 00:15:15,000 Speaker 6: For that, you need land, you need power. You know, 300 00:15:15,040 --> 00:15:16,920 Speaker 6: the chip side is okay at this point because in 301 00:15:17,040 --> 00:15:19,680 Speaker 6: radio is there, but then also you need capital. I mean, 302 00:15:19,680 --> 00:15:22,440 Speaker 6: code Weave is not a company like Microsoft or Amazon 303 00:15:22,680 --> 00:15:25,560 Speaker 6: that has unlimited capital to create these data centers, it 304 00:15:25,600 --> 00:15:28,320 Speaker 6: has to go in the market and raise capital. Before 305 00:15:28,320 --> 00:15:30,560 Speaker 6: they went public, I mean their cost of capital was 306 00:15:30,640 --> 00:15:33,840 Speaker 6: north of ten percent. Right now after they went public, 307 00:15:33,880 --> 00:15:35,560 Speaker 6: I mean the cost of capital has gone down to 308 00:15:35,600 --> 00:15:38,760 Speaker 6: about eight percent. But the entire neo clouds are in, 309 00:15:38,920 --> 00:15:41,440 Speaker 6: whether it is code Weave or whether it is nebus, 310 00:15:41,880 --> 00:15:45,720 Speaker 6: really depends on private credit lending or lending by other 311 00:15:46,400 --> 00:15:49,560 Speaker 6: banks to really come up with the funding to create 312 00:15:49,560 --> 00:15:50,640 Speaker 6: these data centers. 313 00:15:51,280 --> 00:15:55,400 Speaker 2: So I also see that Microsoft unveil's latest AI chip 314 00:15:55,480 --> 00:15:58,360 Speaker 2: to reduce reliance on in video. What's going on there? 315 00:15:58,800 --> 00:16:01,000 Speaker 6: So this is something that's going on with all hyper 316 00:16:01,000 --> 00:16:04,000 Speaker 6: scale cloud providers, you know, whether that's Google with its CPUs, 317 00:16:04,360 --> 00:16:07,760 Speaker 6: Amazon with its chip, and now Microsoft launching I mean 318 00:16:07,800 --> 00:16:10,200 Speaker 6: they have one chip, but the first generation was not 319 00:16:10,840 --> 00:16:13,160 Speaker 6: you could say, did not do that well in terms 320 00:16:13,280 --> 00:16:16,760 Speaker 6: of you know, reception from customers. What Microsoft is hoping 321 00:16:16,800 --> 00:16:19,160 Speaker 6: here right now is, you know, for training, they'll still 322 00:16:19,280 --> 00:16:22,600 Speaker 6: use the more powerful and video chips, but for you know, 323 00:16:22,720 --> 00:16:25,120 Speaker 6: running let's say a co pilot, they could get around 324 00:16:25,160 --> 00:16:28,560 Speaker 6: and use less powerful chips and big and if they 325 00:16:28,600 --> 00:16:31,320 Speaker 6: do that, they actually save a lot of money. You know, 326 00:16:31,520 --> 00:16:33,960 Speaker 6: in our math, we think if if Microsoft is going 327 00:16:34,000 --> 00:16:36,320 Speaker 6: to spend you know, somewhere north of one hundred and 328 00:16:36,320 --> 00:16:38,880 Speaker 6: forty billion dollars this year, more than fifty of that 329 00:16:39,040 --> 00:16:41,400 Speaker 6: is going to go just buying chips, and so you know, 330 00:16:41,480 --> 00:16:43,760 Speaker 6: it's it's a very big ticket for them, and they 331 00:16:43,800 --> 00:16:46,520 Speaker 6: everybody needs to be doing this, frankly in house. 332 00:16:46,600 --> 00:16:49,880 Speaker 3: Our thanks to Honor A. Grannap Bloomberg Intelligence Technology analyst. 333 00:16:49,800 --> 00:16:51,680 Speaker 2: Move next to earnings from the coffee Chaine. 334 00:16:51,520 --> 00:16:54,480 Speaker 3: Starbucks, and this week the company reported global sales at 335 00:16:54,600 --> 00:16:57,440 Speaker 3: established locations whereas four percent in the most recent quarter 336 00:16:57,640 --> 00:16:59,040 Speaker 3: that top to analyst estimates. 337 00:16:59,200 --> 00:17:02,120 Speaker 2: For more I was joined Michael Halen, Bloomberg Intelligence Senior 338 00:17:02,120 --> 00:17:04,520 Speaker 2: Restaurant and Food service analysts. At first they asked Michael 339 00:17:04,520 --> 00:17:07,800 Speaker 2: to break down how CEO Brian Nichols turnaround plan is 340 00:17:07,840 --> 00:17:08,720 Speaker 2: going at Starbucks. 341 00:17:09,119 --> 00:17:14,040 Speaker 7: The turnaround plans are starting to really take a hold 342 00:17:14,119 --> 00:17:18,040 Speaker 7: right now, and results really improved, rising, you know, four 343 00:17:18,080 --> 00:17:22,200 Speaker 7: percent system wide same Star sales US as well. China 344 00:17:22,280 --> 00:17:24,679 Speaker 7: was up seven percent. You know here in the US, 345 00:17:24,720 --> 00:17:28,680 Speaker 7: it's you know, mainly about better operations, right They rolled 346 00:17:28,720 --> 00:17:33,760 Speaker 7: out new operating standards late last year and that They 347 00:17:33,840 --> 00:17:37,760 Speaker 7: seem to be really boosting the speed of service, which 348 00:17:37,840 --> 00:17:41,320 Speaker 7: is creating happier customers that come back more frequently. 349 00:17:41,480 --> 00:17:41,680 Speaker 4: Right. 350 00:17:42,560 --> 00:17:46,960 Speaker 7: Some food innovation including protein cold foam seems to be 351 00:17:47,040 --> 00:17:50,040 Speaker 7: hitting the mark right. And they're doing a better job 352 00:17:50,080 --> 00:17:53,760 Speaker 7: on the marketing side. So all those are driving drove 353 00:17:53,960 --> 00:17:55,480 Speaker 7: better Same Star sales than expected. 354 00:17:55,680 --> 00:17:57,880 Speaker 2: Yeah, I don't know the one. I go to the 355 00:17:57,920 --> 00:18:00,560 Speaker 2: Starbucks thirty five Wall Township, New Jery. They do a 356 00:18:00,560 --> 00:18:04,320 Speaker 2: great job for me, and I've noticed the change. I mean, 357 00:18:04,320 --> 00:18:06,560 Speaker 2: you know, little things like you know, writing your name 358 00:18:06,600 --> 00:18:08,080 Speaker 2: back on the coup like they used to back in 359 00:18:08,080 --> 00:18:10,920 Speaker 2: the early days. As in addition to that sticker which 360 00:18:10,960 --> 00:18:13,280 Speaker 2: was a little antiseptic. I guess talk to us about 361 00:18:13,280 --> 00:18:16,080 Speaker 2: costs there. Are they looking at their costs as well? 362 00:18:16,640 --> 00:18:20,280 Speaker 7: Yeah, they they've identified two billion dollars in annual costs 363 00:18:20,280 --> 00:18:22,120 Speaker 7: that they want to get after over the next one 364 00:18:22,160 --> 00:18:25,959 Speaker 7: to two years. You know, Right now, margins have been impacted. 365 00:18:26,000 --> 00:18:28,920 Speaker 7: They've gotten those same Star sales and traffic numbers up 366 00:18:29,000 --> 00:18:32,160 Speaker 7: by adding labor to the stores, right, and so they're 367 00:18:32,160 --> 00:18:35,480 Speaker 7: seeing margin compression still. So now that they got people 368 00:18:35,520 --> 00:18:38,520 Speaker 7: coming back to the stores, now that the operations are 369 00:18:38,560 --> 00:18:41,440 Speaker 7: more dialed in, you know, CEO Brian Nichol said, they're 370 00:18:41,440 --> 00:18:43,480 Speaker 7: not quite where they need to be throughout the day. 371 00:18:43,480 --> 00:18:46,080 Speaker 7: They're great at peak, but they have some improvement still 372 00:18:46,119 --> 00:18:48,760 Speaker 7: to do. But you know, now that people are coming 373 00:18:48,800 --> 00:18:51,399 Speaker 7: back to the stores, they're gonna you know, focus a 374 00:18:51,440 --> 00:18:54,760 Speaker 7: little bit more on where where they can save some money, 375 00:18:54,840 --> 00:18:57,880 Speaker 7: because you know, it was a smart move, real reallocating 376 00:18:57,920 --> 00:18:58,840 Speaker 7: labor into the stores. 377 00:18:58,840 --> 00:19:02,240 Speaker 2: But Costley talk to about the competitive environment because you 378 00:19:02,240 --> 00:19:04,960 Speaker 2: go to like, I don't know, small towns, seems like 379 00:19:04,960 --> 00:19:08,240 Speaker 2: there's a coffee joint on every corner of these days. 380 00:19:08,280 --> 00:19:11,000 Speaker 2: What's the competitive landscape for Starbucks these days. 381 00:19:10,800 --> 00:19:13,280 Speaker 7: Well, you know, it's as it's as competitive as it's 382 00:19:13,280 --> 00:19:16,159 Speaker 7: ever been. You know, you have some of these younger 383 00:19:17,200 --> 00:19:19,960 Speaker 7: chains that seem to do really well with gen Z, 384 00:19:20,280 --> 00:19:24,000 Speaker 7: like Dutch Bros. And UH seven Brew, and they're they're 385 00:19:24,040 --> 00:19:28,560 Speaker 7: opening up these drive through cans, you know, throughout the 386 00:19:28,600 --> 00:19:32,359 Speaker 7: suburbs across America, you know, in the cities. You know, 387 00:19:32,400 --> 00:19:35,280 Speaker 7: there's a lot of competition with these you know, very 388 00:19:35,400 --> 00:19:39,080 Speaker 7: high end coffee shops that are you know, using very 389 00:19:39,320 --> 00:19:42,920 Speaker 7: you know, very high quality coffee and offering an elevated 390 00:19:43,359 --> 00:19:46,520 Speaker 7: food experience. So competition is tough, and that's why you 391 00:19:46,560 --> 00:19:49,600 Speaker 7: know Starbucks is is making some changes. You know, they're 392 00:19:49,640 --> 00:19:52,159 Speaker 7: focusing on on health and wellness, right They're looking to 393 00:19:52,200 --> 00:19:55,159 Speaker 7: improve the food in the bake case there, looking to 394 00:19:55,200 --> 00:19:57,920 Speaker 7: improve the food or throughout the day they're looking into 395 00:19:58,000 --> 00:20:02,159 Speaker 7: some new innovative drink off rings to boost that afternoon 396 00:20:02,240 --> 00:20:05,919 Speaker 7: day part. And so you know, this is just the 397 00:20:05,960 --> 00:20:09,080 Speaker 7: beginning of what Starbucks, you know, things they need to 398 00:20:09,119 --> 00:20:12,600 Speaker 7: do for long term continued same Star sales growth. 399 00:20:13,000 --> 00:20:15,960 Speaker 3: Our thanks to Michael Halen, Bloomberg Intelligence Senior Restaurant and 400 00:20:16,000 --> 00:20:17,240 Speaker 3: Food Service analyst, we. 401 00:20:17,320 --> 00:20:19,199 Speaker 2: Moved next to the telecommunication space. 402 00:20:19,359 --> 00:20:21,800 Speaker 3: This week. AT and T reported fourth quarter profit and 403 00:20:21,840 --> 00:20:23,520 Speaker 3: revenue that beat analyst estimates. 404 00:20:23,680 --> 00:20:26,480 Speaker 2: The results were fueled by customers who subscribed to more 405 00:20:26,560 --> 00:20:29,640 Speaker 2: than one connectivity service. AT and T added more than 406 00:20:29,680 --> 00:20:32,879 Speaker 2: a half a million fixed and mobile internet subscribers in 407 00:20:32,920 --> 00:20:33,320 Speaker 2: the quarter. 408 00:20:33,520 --> 00:20:36,120 Speaker 3: So we brought in John Butler, our senior telecom analyst, 409 00:20:36,200 --> 00:20:38,760 Speaker 3: and began by asking John where AT and T stands 410 00:20:38,800 --> 00:20:39,960 Speaker 3: relative to its rivals. 411 00:20:40,400 --> 00:20:44,080 Speaker 8: Host the earnings call, they held a breakout session with 412 00:20:44,160 --> 00:20:47,360 Speaker 8: the master relations with the cell side, and there were 413 00:20:47,400 --> 00:20:52,440 Speaker 8: a lot of questions about how broadband, or how competition 414 00:20:52,640 --> 00:20:57,760 Speaker 8: is now shifting from wireless over to broadband. I actually 415 00:20:57,840 --> 00:21:00,960 Speaker 8: think AT and T is in a great position relative 416 00:21:01,040 --> 00:21:05,400 Speaker 8: to their competitors because they're the fiber leader, and they're 417 00:21:05,440 --> 00:21:09,479 Speaker 8: about to buy Luhmann's fiber business and add another million 418 00:21:09,840 --> 00:21:14,840 Speaker 8: fiber subscribers there. So in terms of their ability to 419 00:21:14,880 --> 00:21:19,880 Speaker 8: sell what are called converged packages or wireless together with broadband, 420 00:21:20,680 --> 00:21:23,720 Speaker 8: they're in a great position there because they have both 421 00:21:23,800 --> 00:21:27,720 Speaker 8: fiber and they have a smaller fixed wireless access business, 422 00:21:27,760 --> 00:21:30,000 Speaker 8: which is that wireless broadband product. 423 00:21:30,440 --> 00:21:32,639 Speaker 2: John, this is a cup of AT and T that 424 00:21:32,680 --> 00:21:35,440 Speaker 2: spends twenty twenty two billion dollars in capex every year. 425 00:21:35,760 --> 00:21:36,760 Speaker 2: What does that capex for? 426 00:21:36,920 --> 00:21:40,960 Speaker 8: Typically a lot of it, Paul is going towards wireless 427 00:21:40,960 --> 00:21:44,480 Speaker 8: network up grades as well as the deployment of fibers. 428 00:21:44,520 --> 00:21:48,200 Speaker 8: So this year, for example, they're going to add five 429 00:21:48,320 --> 00:21:52,359 Speaker 8: million new fiber homes, but it costs about two thousand dollars, 430 00:21:53,200 --> 00:21:56,680 Speaker 8: maybe twice that in some markets to build a new 431 00:21:56,760 --> 00:22:00,040 Speaker 8: what's called a fiber homes pass. So a lot a 432 00:22:00,040 --> 00:22:03,720 Speaker 8: lot of capital is getting spent this year, next year, 433 00:22:03,800 --> 00:22:05,919 Speaker 8: and maybe to a little bit of a lesser degree 434 00:22:05,960 --> 00:22:08,720 Speaker 8: in twenty eight. That's sort of laying the foundation to 435 00:22:08,760 --> 00:22:13,520 Speaker 8: build out that fiber network and that five G wireless network. 436 00:22:14,000 --> 00:22:16,480 Speaker 8: Beyond that, AT and T has said we're going to 437 00:22:16,560 --> 00:22:20,560 Speaker 8: cut our cap backs, We're going to lower our capital intensity, 438 00:22:21,080 --> 00:22:23,320 Speaker 8: and you're going to see a lot more free cash 439 00:22:23,400 --> 00:22:26,600 Speaker 8: flow flow through and they're going to be able to 440 00:22:26,640 --> 00:22:30,199 Speaker 8: fund hopefully some dividend growth after that and increase the 441 00:22:30,280 --> 00:22:31,080 Speaker 8: share buyback. 442 00:22:31,440 --> 00:22:34,000 Speaker 3: Yeah. I'm looking at the dividend yield for AT and 443 00:22:34,040 --> 00:22:37,600 Speaker 3: T four point six percent. For Verizon, it's almost seven percent. 444 00:22:38,560 --> 00:22:40,280 Speaker 3: For Team Mobile a little bit less at two point 445 00:22:40,359 --> 00:22:44,359 Speaker 3: nineteen percent, John, Where did the telecom stand when it 446 00:22:44,400 --> 00:22:47,639 Speaker 3: comes to this rotation out of big tech looking for 447 00:22:47,720 --> 00:22:51,720 Speaker 3: some cyclicals, looking for parts of the market that haven't 448 00:22:51,800 --> 00:22:52,560 Speaker 3: been overbought. 449 00:22:53,280 --> 00:22:57,200 Speaker 8: So it's a good question, Scorelett. I always say telecoms, 450 00:22:57,240 --> 00:23:00,560 Speaker 8: particularly the dividend payers like AT and TM, rise in 451 00:23:01,119 --> 00:23:05,360 Speaker 8: our bond proxies to a degree. I think sentiment has 452 00:23:05,400 --> 00:23:07,800 Speaker 8: been pushed around a little bit by the fact that 453 00:23:07,840 --> 00:23:11,560 Speaker 8: we have new CEOs at both Verizon and T Mobile, 454 00:23:11,560 --> 00:23:13,600 Speaker 8: and these guys are going to be looking to make 455 00:23:13,640 --> 00:23:16,880 Speaker 8: their mark. So there's been a little bit of concern 456 00:23:17,040 --> 00:23:20,000 Speaker 8: or more than a little bit of concern that the 457 00:23:20,160 --> 00:23:23,760 Speaker 8: competitive intensity and wireless is going to pick up as 458 00:23:23,840 --> 00:23:26,479 Speaker 8: these new CEOs look to make their mark, and I 459 00:23:26,520 --> 00:23:30,120 Speaker 8: think that has led to some of the pressure, particularly 460 00:23:30,160 --> 00:23:32,920 Speaker 8: on AT and T, though again I think they put 461 00:23:32,960 --> 00:23:36,360 Speaker 8: a lot of those concerns to rest with their by 462 00:23:36,440 --> 00:23:40,240 Speaker 8: reiterating their fiber plans and laying out new free cash 463 00:23:40,240 --> 00:23:41,000 Speaker 8: flow guidance. 464 00:23:41,240 --> 00:23:43,399 Speaker 2: John on the competitive land front, where are the cable 465 00:23:43,440 --> 00:23:44,840 Speaker 2: companies these days? 466 00:23:45,560 --> 00:23:50,160 Speaker 8: They're struggling, Paul. I mean they're at a technology disadvantage 467 00:23:50,160 --> 00:23:54,440 Speaker 8: in that they they're offering broadband over those legacy coaxial 468 00:23:54,560 --> 00:23:58,480 Speaker 8: cable networks. They're doing what they can to upgrade the 469 00:23:58,600 --> 00:24:03,159 Speaker 8: technology and increase speeds on those networks, but at the 470 00:24:03,240 --> 00:24:06,680 Speaker 8: end of the day, fiber really is a superior product 471 00:24:06,720 --> 00:24:10,880 Speaker 8: to everything else on the market, and fixed wireless access, 472 00:24:10,960 --> 00:24:14,199 Speaker 8: which has been offered by the telcos has been a 473 00:24:14,320 --> 00:24:18,360 Speaker 8: very popular choice given the fact that it's an easy setup. 474 00:24:19,040 --> 00:24:22,400 Speaker 8: It's over the air, so there's very little problems with it. 475 00:24:22,400 --> 00:24:26,440 Speaker 8: It's pretty much problem free. As broadband goes over time, 476 00:24:26,480 --> 00:24:28,919 Speaker 8: it sort of has a headroom problem. It can't offer 477 00:24:28,960 --> 00:24:32,720 Speaker 8: the same speeds as fiber. But through it all, cable 478 00:24:32,800 --> 00:24:36,040 Speaker 8: is sort of flying underneath those two products, sort of 479 00:24:36,760 --> 00:24:40,200 Speaker 8: you know, trying to compete with what is a legacy 480 00:24:40,240 --> 00:24:41,840 Speaker 8: product in the market. 481 00:24:41,840 --> 00:24:44,280 Speaker 3: John, did we learn anything from AT and t's results 482 00:24:44,320 --> 00:24:48,520 Speaker 3: regarding iPhones and you know, consumers signing on for the 483 00:24:48,680 --> 00:24:50,120 Speaker 3: latest version of the iPhone? 484 00:24:50,800 --> 00:24:54,720 Speaker 8: So great question. It's very interesting AT and T over 485 00:24:54,840 --> 00:24:57,800 Speaker 8: indexes to the iPhone. They have a lot more users 486 00:24:57,880 --> 00:25:02,840 Speaker 8: than Verizon or Team because they had an early exclusivity 487 00:25:02,960 --> 00:25:07,399 Speaker 8: deal when the iPhone first launched. They were asked about 488 00:25:07,440 --> 00:25:10,960 Speaker 8: the foldable iPhone that's rumored to be coming out next 489 00:25:11,040 --> 00:25:13,520 Speaker 8: year and whether that's really going to move the dial 490 00:25:13,640 --> 00:25:16,679 Speaker 8: for them. Their answer to me was interesting, I didn't 491 00:25:16,680 --> 00:25:21,520 Speaker 8: expect it, which is they've been tracking the performance and 492 00:25:22,080 --> 00:25:25,199 Speaker 8: the sales of the foldables that they have available on 493 00:25:25,240 --> 00:25:28,800 Speaker 8: the network on the Android side, and their expectation is 494 00:25:28,840 --> 00:25:32,320 Speaker 8: that we won't see a huge bump in iPhone sales 495 00:25:32,359 --> 00:25:35,280 Speaker 8: next year. I think time will tell. I actually think 496 00:25:35,320 --> 00:25:40,480 Speaker 8: foldables are going to resonate well with people, and Android 497 00:25:40,640 --> 00:25:44,440 Speaker 8: isn't always the best read through there. I think it's 498 00:25:44,480 --> 00:25:47,040 Speaker 8: a different kind of user that's on the Android phone 499 00:25:47,160 --> 00:25:49,840 Speaker 8: versus iPhone. But we'll have to see in the fall. 500 00:25:50,040 --> 00:25:53,159 Speaker 2: Thanks to John Butler, Bloomberg Intelligence senior telecom analyst. 501 00:25:53,160 --> 00:25:55,720 Speaker 3: Coming up a look at why the logistics company UPS 502 00:25:55,800 --> 00:25:58,680 Speaker 3: says it expects to cut another thirty thousand jobs this year. 503 00:25:58,840 --> 00:26:01,240 Speaker 2: You're listening to Bloomberg Intel Elegence on Bloomberg Radio pro 504 00:26:01,359 --> 00:26:03,679 Speaker 2: riding in depth research and data on two thousand companies 505 00:26:03,680 --> 00:26:04,960 Speaker 2: and one hundred and thirty industries. 506 00:26:05,040 --> 00:26:07,920 Speaker 3: You can access Bloomberg Intelligence through Bigo on the terminal. 507 00:26:08,000 --> 00:26:09,160 Speaker 3: I'm Scarlett Foe and. 508 00:26:09,040 --> 00:26:10,960 Speaker 2: I'm Paul Sweeney, and this is Bloomberg. 509 00:26:18,200 --> 00:26:22,720 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 510 00:26:23,040 --> 00:26:24,359 Speaker 1: on Bloomberg Radio. 511 00:26:25,040 --> 00:26:27,920 Speaker 2: We move next to news from the logistics company UPS. 512 00:26:28,240 --> 00:26:31,800 Speaker 3: This week, UPS forecast full year sales that beat analyst estimates. 513 00:26:31,920 --> 00:26:34,439 Speaker 2: However, the company also said it expects to cut another 514 00:26:34,560 --> 00:26:37,640 Speaker 2: thirty thousand jobs this year to raining cost and boost profitability. 515 00:26:37,760 --> 00:26:39,880 Speaker 3: For more on this and the state of the shipping industry, 516 00:26:39,920 --> 00:26:42,400 Speaker 3: we brought in Thomas Black. He's a Bloomberg opinion columnist. 517 00:26:42,520 --> 00:26:44,560 Speaker 2: We first asked Thomas to give us his take on 518 00:26:44,600 --> 00:26:46,080 Speaker 2: what we heard from UPS. 519 00:26:46,520 --> 00:26:49,680 Speaker 9: UPS continues to shrink to become more profitable. That's the 520 00:26:49,720 --> 00:26:55,640 Speaker 9: big takeaway there. They're reducing their Amazon business, and they're 521 00:26:55,680 --> 00:27:00,280 Speaker 9: trying to retrench with more profitable packages, and that's probably 522 00:27:00,320 --> 00:27:04,000 Speaker 9: a move away from some of the e commerce deliveries 523 00:27:04,040 --> 00:27:06,359 Speaker 9: where the competition is fierce and there's lots of little 524 00:27:06,400 --> 00:27:08,960 Speaker 9: companies that are out there competing. 525 00:27:09,640 --> 00:27:12,640 Speaker 3: So how far along this journey of shrinking to become 526 00:27:12,680 --> 00:27:15,399 Speaker 3: more profitable are they? Are we in the third inning? 527 00:27:15,440 --> 00:27:16,840 Speaker 3: Are we in the seventh inning? 528 00:27:18,560 --> 00:27:20,480 Speaker 9: This will be the last year of this, so I 529 00:27:20,520 --> 00:27:23,800 Speaker 9: would say we're in the sixth inning heading toward the ninth. 530 00:27:24,440 --> 00:27:28,280 Speaker 9: So after this year, Carol to May, the CEO at UPS, 531 00:27:28,320 --> 00:27:31,800 Speaker 9: said we're going to be a leaner company and ready 532 00:27:31,800 --> 00:27:34,239 Speaker 9: to grow. So it's going to be a little bit 533 00:27:34,280 --> 00:27:37,600 Speaker 9: painful this year, she walked analysts through it. The first 534 00:27:37,600 --> 00:27:40,120 Speaker 9: half is going to be more painful as they glide 535 00:27:40,160 --> 00:27:42,520 Speaker 9: down from Amazon and they take some write downs and 536 00:27:42,560 --> 00:27:46,520 Speaker 9: so forth. As you know, they retired their fleet of 537 00:27:46,800 --> 00:27:50,280 Speaker 9: MD eleven's, which is this old plane that was assently 538 00:27:50,320 --> 00:27:52,960 Speaker 9: had the crash. So they're going through all of this 539 00:27:53,160 --> 00:27:55,760 Speaker 9: in the first half, and then the second half things 540 00:27:55,760 --> 00:27:58,800 Speaker 9: should start to turn around. They're also they're not only 541 00:27:58,840 --> 00:28:03,520 Speaker 9: shrinking their Amazon business, are shrinking their footprint, their facilities 542 00:28:03,920 --> 00:28:07,120 Speaker 9: and the older ones are being retired and they're replacing 543 00:28:07,160 --> 00:28:10,120 Speaker 9: those with new automated facilities, and that's going to allow 544 00:28:10,160 --> 00:28:14,359 Speaker 9: them to lay off more union workers. So that big 545 00:28:14,600 --> 00:28:19,159 Speaker 9: union contract where the teamsters push through a big labor 546 00:28:19,200 --> 00:28:22,320 Speaker 9: increase is turning around to bite them a little bit 547 00:28:22,359 --> 00:28:26,200 Speaker 9: because UPS is dealing with that by shrinking its workforce. 548 00:28:26,680 --> 00:28:31,359 Speaker 2: How does this UPS strategy differ from that of fed X. 549 00:28:34,960 --> 00:28:39,080 Speaker 9: They're similar in the sense that they're both cutting costs aggressively. 550 00:28:39,760 --> 00:28:41,640 Speaker 9: Of fed X is a little bit different because it 551 00:28:41,680 --> 00:28:46,360 Speaker 9: doesn't have the labor costs from the union workforce, so 552 00:28:47,000 --> 00:28:50,360 Speaker 9: it's a little bit more flexible. And fed X is 553 00:28:50,480 --> 00:28:54,480 Speaker 9: undergoing a major overhaul that's probably in its last innings 554 00:28:54,520 --> 00:28:57,040 Speaker 9: as well. And the last part of that is the 555 00:28:57,080 --> 00:29:00,160 Speaker 9: most difficult part, where they're going to combine their two 556 00:29:00,240 --> 00:29:03,400 Speaker 9: separate networks, the ground network and express network. They're in 557 00:29:03,440 --> 00:29:05,440 Speaker 9: the middle of that, but so they're going to be 558 00:29:05,480 --> 00:29:06,920 Speaker 9: coming out of that as well. So we're going to 559 00:29:06,960 --> 00:29:09,960 Speaker 9: have two parcel companies that are restructured and ready to 560 00:29:09,960 --> 00:29:11,240 Speaker 9: grow at the end of this year. 561 00:29:11,840 --> 00:29:14,960 Speaker 3: Every time there's some kind of headline regarding UPS laying 562 00:29:14,960 --> 00:29:17,920 Speaker 3: off workers or cutting positions, it's in. It's these massive 563 00:29:18,000 --> 00:29:20,560 Speaker 3: numbers right this time around. It's up to thirty thousand 564 00:29:20,560 --> 00:29:23,640 Speaker 3: positions this year. And as you mentioned, Thomas, this is 565 00:29:23,640 --> 00:29:28,240 Speaker 3: all due to trimming down and small downsizing the scope 566 00:29:28,280 --> 00:29:31,560 Speaker 3: of the company. At what point are we looking at 567 00:29:32,080 --> 00:29:34,280 Speaker 3: job cuts tied to AI or have we not got 568 00:29:34,280 --> 00:29:35,160 Speaker 3: even gotten there yet? 569 00:29:36,240 --> 00:29:39,240 Speaker 9: Well, I would instead of saying AI, I would say 570 00:29:39,240 --> 00:29:43,360 Speaker 9: automation and that those are these new facilities that handle 571 00:29:43,440 --> 00:29:48,920 Speaker 9: packages automatically. You even have the induction of packages where 572 00:29:48,960 --> 00:29:51,720 Speaker 9: you have robots putting the packages on the conveyor belts 573 00:29:52,120 --> 00:29:55,080 Speaker 9: and taking them off. So those are the steps toward 574 00:29:55,160 --> 00:29:58,600 Speaker 9: more automation. This is that physical AI that people talk about. 575 00:29:58,640 --> 00:29:58,840 Speaker 3: Right. 576 00:30:00,680 --> 00:30:03,320 Speaker 9: An interesting stat that Carol to May gave on the 577 00:30:03,360 --> 00:30:07,200 Speaker 9: cause that those automated buildings are twenty eight percent more 578 00:30:07,200 --> 00:30:11,120 Speaker 9: efficient than the older buildings. So the more automation is 579 00:30:11,160 --> 00:30:14,520 Speaker 9: where they're leaning into. So it's part of it shrinking 580 00:30:14,600 --> 00:30:19,400 Speaker 9: some of the low profit volume plus more automation to 581 00:30:19,480 --> 00:30:20,920 Speaker 9: replace the human workers. 582 00:30:20,920 --> 00:30:25,000 Speaker 2: Basically, e commerce continues to grow, and I guess Double Digits, 583 00:30:25,760 --> 00:30:29,200 Speaker 2: who's handling all these packages of ups, is maybe backing 584 00:30:29,240 --> 00:30:29,800 Speaker 2: away a little bit. 585 00:30:30,800 --> 00:30:34,920 Speaker 9: Well, Amazon has its own delivery network. It tends to 586 00:30:36,040 --> 00:30:39,680 Speaker 9: want to deliver into those big urban areas where it 587 00:30:39,840 --> 00:30:43,960 Speaker 9: just takes things from a warehouse to a residential home. 588 00:30:44,240 --> 00:30:47,760 Speaker 9: So they do that very well. Where they want help 589 00:30:47,880 --> 00:30:50,200 Speaker 9: is on the rural areas. That's where they turn to 590 00:30:50,440 --> 00:30:55,760 Speaker 9: folks like UPS and the postal service. So obviously Amazon 591 00:30:55,840 --> 00:30:57,880 Speaker 9: is a big player there. We'll also have lots of 592 00:30:57,920 --> 00:31:02,080 Speaker 9: smaller companies. These are big type companies that have apps 593 00:31:02,120 --> 00:31:05,440 Speaker 9: and workers show up and they have an app on 594 00:31:05,440 --> 00:31:07,280 Speaker 9: their phone and it gives them a delivery route and 595 00:31:07,320 --> 00:31:10,720 Speaker 9: they throw packages in their car or their truck and 596 00:31:10,760 --> 00:31:13,440 Speaker 9: they go delivers. There's a lot of those companies that 597 00:31:13,560 --> 00:31:17,120 Speaker 9: tend to operate in urban areas, so there's actually a 598 00:31:17,160 --> 00:31:20,160 Speaker 9: lot of capacity out there for retailers or people who 599 00:31:20,200 --> 00:31:23,320 Speaker 9: are really smart on their inventory management to tap into. 600 00:31:23,880 --> 00:31:26,040 Speaker 3: That was Thomas Black, Bloomberg opinion columnist. 601 00:31:26,400 --> 00:31:28,720 Speaker 2: We move now to a Bloomberg Big Takes story we 602 00:31:28,800 --> 00:31:32,920 Speaker 2: recently focused on entitled Yale's endowment model falters at tough 603 00:31:32,960 --> 00:31:35,680 Speaker 2: moment for universities. You can find it on Bloomberg dot 604 00:31:35,680 --> 00:31:36,640 Speaker 2: com and the Terminal. 605 00:31:36,880 --> 00:31:38,960 Speaker 3: So the story looks at how Yale bet on private 606 00:31:38,960 --> 00:31:41,440 Speaker 3: equity and other I liquid investments, and now some of 607 00:31:41,440 --> 00:31:44,880 Speaker 3: the wealthiest endowments, including Yale and others that follow the 608 00:31:44,920 --> 00:31:46,960 Speaker 3: Yale model, are on the hook for hundreds of millions 609 00:31:47,000 --> 00:31:49,920 Speaker 3: of dollars in new endowment taxes from the White House. 610 00:31:50,160 --> 00:31:53,160 Speaker 2: Now universities are dumping private equity funds at discounts following 611 00:31:53,240 --> 00:31:56,240 Speaker 2: years of poor returns, while public stocks have outperformed the 612 00:31:56,320 --> 00:31:57,000 Speaker 2: asset class. 613 00:31:57,320 --> 00:31:59,920 Speaker 3: For more, we brought in Janet Lauren Bloomberg's Higher Education 614 00:32:00,080 --> 00:32:00,800 Speaker 3: finance reporter. 615 00:32:00,920 --> 00:32:02,880 Speaker 2: You first asked Janet to break down what is happening 616 00:32:02,920 --> 00:32:04,040 Speaker 2: with Yale's and down model. 617 00:32:04,320 --> 00:32:06,680 Speaker 10: From time to time, We've seen that in certain years 618 00:32:06,720 --> 00:32:12,920 Speaker 10: where simple just outperformed private equity and other VC And 619 00:32:13,000 --> 00:32:16,160 Speaker 10: in twenty twenty one, remember the outstanding returns that these 620 00:32:16,160 --> 00:32:20,720 Speaker 10: schools had, but now higher interest rates, fewer exits. You've 621 00:32:20,720 --> 00:32:24,240 Speaker 10: got a huge amount of money locked up in private equity, 622 00:32:24,640 --> 00:32:27,600 Speaker 10: in some cases forty percent. And you know, look, these 623 00:32:27,640 --> 00:32:31,120 Speaker 10: schools would like a little cash. They're looking, you know, 624 00:32:31,160 --> 00:32:33,720 Speaker 10: perhaps they want to change managers. They need the cash 625 00:32:33,840 --> 00:32:36,560 Speaker 10: to do other things as well and refresh their portfolios. 626 00:32:36,600 --> 00:32:39,120 Speaker 10: But when you have, you know, in the forty percent 627 00:32:39,280 --> 00:32:42,560 Speaker 10: locked up, you know, time to think about other things. 628 00:32:42,560 --> 00:32:44,880 Speaker 10: And that's perhaps why you saw Yale doing its first 629 00:32:44,920 --> 00:32:46,920 Speaker 10: ever sale last year, which was a big deal. 630 00:32:47,520 --> 00:32:50,760 Speaker 2: So again this sale, Yale unloaded about two point five 631 00:32:50,800 --> 00:32:56,280 Speaker 2: billion dollars in LBO funds at a discount that is brutal. Well, 632 00:32:56,520 --> 00:32:58,440 Speaker 2: is it unprecedented. 633 00:32:57,880 --> 00:33:00,120 Speaker 10: Or other we Well, Yale has done it for the 634 00:33:00,200 --> 00:33:02,920 Speaker 10: first time. You know, others had been doing this before. 635 00:33:03,040 --> 00:33:06,920 Speaker 10: Harvard has unloaded a lot in previous years. But it's 636 00:33:06,960 --> 00:33:11,400 Speaker 10: sort of a new normal in some ways looking at secondaries. 637 00:33:11,400 --> 00:33:15,840 Speaker 10: The secondary market is very popular right now, and you know, 638 00:33:15,920 --> 00:33:20,000 Speaker 10: they in the hunt for potential cash and liquidity. You know, 639 00:33:20,040 --> 00:33:22,760 Speaker 10: you look at the UC Endowment where we talked about 640 00:33:22,840 --> 00:33:25,360 Speaker 10: this eighty twenty they call it the Blue and Gold Fund, 641 00:33:25,480 --> 00:33:28,120 Speaker 10: very proud of it, and in the height of the 642 00:33:28,160 --> 00:33:32,480 Speaker 10: pandemic when they wanted some liquidity, they gave almost two 643 00:33:32,560 --> 00:33:37,440 Speaker 10: billion dollars in cash to the campuses for liquidity. Compare 644 00:33:37,440 --> 00:33:40,400 Speaker 10: that to two thousand and eight when schools were forced 645 00:33:40,400 --> 00:33:43,400 Speaker 10: to sell on the secondaries or borrow. That's kind of 646 00:33:44,040 --> 00:33:45,600 Speaker 10: a stark example right there. 647 00:33:45,640 --> 00:33:47,840 Speaker 3: When you need money, when you need money, and I 648 00:33:47,880 --> 00:33:50,600 Speaker 3: think that's a key phrase here, especially in twenty twenty six, 649 00:33:50,680 --> 00:33:54,240 Speaker 3: because this White House has been targeting higher ed and 650 00:33:54,880 --> 00:33:57,400 Speaker 3: even though Yale has not been targeted to the extent 651 00:33:57,480 --> 00:34:01,240 Speaker 3: that Harvard has, for instance, or Columbia, these schools need 652 00:34:01,280 --> 00:34:03,800 Speaker 3: money in a way that they didn't before, for nothing 653 00:34:03,800 --> 00:34:05,760 Speaker 3: else to pay taxes on their endowment. 654 00:34:06,000 --> 00:34:08,319 Speaker 10: Yes, and that's a huge game changer. You know, a 655 00:34:08,400 --> 00:34:11,960 Speaker 10: year ago we may not be having this conversation. Yale 656 00:34:12,000 --> 00:34:15,280 Speaker 10: and Harvard each had pegged their bill for the endowment tax, 657 00:34:15,360 --> 00:34:18,319 Speaker 10: which is now eight percent of net investment returns, to 658 00:34:18,400 --> 00:34:21,600 Speaker 10: be about three hundred million dollars a year. 659 00:34:22,040 --> 00:34:24,719 Speaker 2: Wow. And is that enforced? Is that happening right now? 660 00:34:24,840 --> 00:34:29,000 Speaker 10: Absolutely? That happened in July first, when the big beautiful ACCT. 661 00:34:29,080 --> 00:34:33,200 Speaker 2: How about the the actual I guess halting payments to 662 00:34:33,239 --> 00:34:35,560 Speaker 2: some of these universities that President Trump administration I've talked 663 00:34:35,560 --> 00:34:38,000 Speaker 2: ab for some of their funding. Has that happened? 664 00:34:38,840 --> 00:34:43,760 Speaker 10: So many schools have had settlements. Harvard famously has not yet. 665 00:34:45,200 --> 00:34:49,520 Speaker 10: There was a lawsuit in last September. The district court 666 00:34:49,600 --> 00:34:53,839 Speaker 10: ruled in favor of Harvard. Late December the government appealed. 667 00:34:54,040 --> 00:34:56,720 Speaker 10: So that's still in flux. But there's a huge concern 668 00:34:56,800 --> 00:34:59,400 Speaker 10: of Harvard in all universities. Are we still going to 669 00:34:59,480 --> 00:35:04,239 Speaker 10: get this federal research funding going forward, and Harvard may 670 00:35:04,239 --> 00:35:09,040 Speaker 10: have temporarily solved their problem, still very unclear, but what 671 00:35:09,239 --> 00:35:13,359 Speaker 10: is the money going forward? School our universities, these large 672 00:35:13,400 --> 00:35:15,600 Speaker 10: research universities still going to be able to count on 673 00:35:15,680 --> 00:35:18,960 Speaker 10: hundreds of millions of dollars. You know, Northwestern, which settled 674 00:35:19,600 --> 00:35:24,280 Speaker 10: around Thanksgiving, had been self funding their research the tune 675 00:35:24,280 --> 00:35:27,160 Speaker 10: of something like thirty or forty million dollars a month. 676 00:35:27,880 --> 00:35:30,840 Speaker 10: So we're talking, you know, lots and lots of money. 677 00:35:31,480 --> 00:35:33,120 Speaker 3: Yeah, they need the money in a way that they 678 00:35:33,120 --> 00:35:36,320 Speaker 3: didn't before. And going back to the Yell endowment strategy 679 00:35:36,400 --> 00:35:39,400 Speaker 3: and how well it worked at least initially when David 680 00:35:39,440 --> 00:35:41,960 Speaker 3: Swinson launched it back I think in the eighties and 681 00:35:42,080 --> 00:35:44,440 Speaker 3: nineties those were the heydays of the Yell endowment model. 682 00:35:44,920 --> 00:35:50,239 Speaker 3: Maybe it made sense when private equity, private investing was 683 00:35:50,239 --> 00:35:52,400 Speaker 3: not a big thing yet, was not yet mainstream, or 684 00:35:52,400 --> 00:35:54,200 Speaker 3: maybe it makes more sense on a low rate environment. 685 00:35:54,239 --> 00:35:56,120 Speaker 3: But times have changed, and that's a big part of it. 686 00:35:56,120 --> 00:35:59,359 Speaker 10: Right absolutely, first mover advantage. You know, there weren't as 687 00:35:59,360 --> 00:36:02,799 Speaker 10: many institutional investors doing what he was doing. He was 688 00:36:03,080 --> 00:36:06,520 Speaker 10: he saw inefficiencies in the market and he said look, 689 00:36:06,560 --> 00:36:08,840 Speaker 10: this is what we can do. We have the ability 690 00:36:08,880 --> 00:36:12,160 Speaker 10: to lock up money for a while. We're very long 691 00:36:12,239 --> 00:36:16,000 Speaker 10: term investors. We invest in scent in for centuries. We 692 00:36:16,080 --> 00:36:19,120 Speaker 10: can do this and they and it was extremely successful, 693 00:36:19,560 --> 00:36:23,319 Speaker 10: and others tried to copy. Certainly more money piled into 694 00:36:23,360 --> 00:36:28,480 Speaker 10: private equity, sovereign wealth funds, pension funds, foundations, and when 695 00:36:28,480 --> 00:36:30,880 Speaker 10: you have a lot of money chasing returns, it just 696 00:36:31,400 --> 00:36:35,120 Speaker 10: it just isn't a successful especially at this higher interest 697 00:36:35,200 --> 00:36:36,600 Speaker 10: rate when there are fewer exits. 698 00:36:37,000 --> 00:36:39,280 Speaker 2: What is the l model in terms of asset allocation? 699 00:36:39,440 --> 00:36:40,759 Speaker 2: And is it dead now? 700 00:36:41,120 --> 00:36:43,319 Speaker 10: Well, you know, we had the head of a very 701 00:36:43,400 --> 00:36:46,960 Speaker 10: large pension fund say it's not dead. It's perhaps on 702 00:36:47,400 --> 00:36:51,520 Speaker 10: life support, but it's you know, it's it's looking at 703 00:36:51,560 --> 00:36:55,239 Speaker 10: inefficiencies in the market. Now. Typically Yale has not been 704 00:36:55,400 --> 00:36:59,920 Speaker 10: a big investor in US equities, you know, timey share 705 00:37:00,239 --> 00:37:03,560 Speaker 10: of you know, we don't know the details because unfortunately 706 00:37:03,600 --> 00:37:07,720 Speaker 10: they stopped publishing their asset elogition when David Swentz had died. 707 00:37:07,920 --> 00:37:11,560 Speaker 10: You know, a huge loss for me personally because it 708 00:37:11,640 --> 00:37:14,640 Speaker 10: gave me some great insight. But they, you know, typically 709 00:37:14,680 --> 00:37:18,359 Speaker 10: had a very very tiny investment in US equities Now 710 00:37:18,400 --> 00:37:21,280 Speaker 10: look at the University of California, you know, eighty percent 711 00:37:21,440 --> 00:37:25,279 Speaker 10: in global equities. But you know who is who are 712 00:37:25,280 --> 00:37:28,400 Speaker 10: they trying to emulate? You know, some investor in Omaha 713 00:37:28,560 --> 00:37:32,600 Speaker 10: who's been pretty successful, Yeah, you know, betting on America. 714 00:37:32,760 --> 00:37:34,960 Speaker 3: Yeah, but just buying cheap index funds. I guess what's 715 00:37:35,000 --> 00:37:37,759 Speaker 3: not immediately obvious to people is that an endowment is 716 00:37:37,760 --> 00:37:40,640 Speaker 3: more of a fund of funds rather than just a 717 00:37:40,719 --> 00:37:42,560 Speaker 3: fund like the UC fund, the Blow and Gold fund 718 00:37:42,600 --> 00:37:45,200 Speaker 3: you were talking about. That's almost like a very basic 719 00:37:45,480 --> 00:37:48,000 Speaker 3: personal account where you're just putting money into index funds 720 00:37:48,040 --> 00:37:50,400 Speaker 3: and not dealing with it for a long time exactly. 721 00:37:50,440 --> 00:37:53,359 Speaker 3: But Yale is like they're picking fund managers like it's 722 00:37:53,520 --> 00:37:54,600 Speaker 3: very very complex. 723 00:37:54,800 --> 00:37:58,359 Speaker 10: Well, it's actively managed. And Yale is very famous for, 724 00:37:58,560 --> 00:38:01,680 Speaker 10: you know, having managers for ten or more years. They 725 00:38:01,719 --> 00:38:03,920 Speaker 10: did a story maybe ten years ago that talked about 726 00:38:03,920 --> 00:38:07,799 Speaker 10: the length of managers and it's often ten years. And 727 00:38:07,960 --> 00:38:10,560 Speaker 10: you know, Yale very smartly came up with a new 728 00:38:10,600 --> 00:38:13,480 Speaker 10: program they called the Prospect Fellowship, and they're looking for 729 00:38:13,600 --> 00:38:16,680 Speaker 10: new talent. And we had a comment from a former 730 00:38:16,760 --> 00:38:20,279 Speaker 10: Princeton manager who talked about, you know, they look for 731 00:38:20,400 --> 00:38:23,080 Speaker 10: talent and they grow with them. So maybe a small 732 00:38:23,200 --> 00:38:28,000 Speaker 10: allocation to a manager today think Hill House at Yale. 733 00:38:28,160 --> 00:38:32,319 Speaker 10: It turns when they're successful into you know, billion dollar investments, 734 00:38:32,360 --> 00:38:34,920 Speaker 10: and especially when they've done well. You know, you can 735 00:38:35,000 --> 00:38:37,960 Speaker 10: grow with a successful manager and then all of a sudden, 736 00:38:38,000 --> 00:38:41,600 Speaker 10: your allocations are much larger as you're growing with them, 737 00:38:41,600 --> 00:38:43,640 Speaker 10: and that's what they're seeking, So that's sort of like 738 00:38:43,680 --> 00:38:44,919 Speaker 10: a refresh for them. 739 00:38:45,640 --> 00:38:48,560 Speaker 3: That was Janet Lauren, Bloomberg's Higher Education finance reporter. 740 00:38:48,840 --> 00:38:51,560 Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 741 00:38:51,640 --> 00:38:54,080 Speaker 2: providing in depth research and data on two thousand companies 742 00:38:54,120 --> 00:38:55,440 Speaker 2: and one hundred and thirty industries. 743 00:38:55,560 --> 00:38:58,319 Speaker 3: And remember you can access Bloomberg Intelligence b I go 744 00:38:58,560 --> 00:39:01,160 Speaker 3: on the terminal. I'm Scarlett and I'm Paul Sweeney. 745 00:39:01,239 --> 00:39:03,760 Speaker 2: Stay with us. Today's top stories and global business headlines 746 00:39:03,760 --> 00:39:04,839 Speaker 2: are coming up right now. 747 00:39:07,160 --> 00:39:07,200 Speaker 4: M