WEBVTT - BI Weekend: Luxury, Railroad, and Machinery 2026 Outlook 0:00:02.720 --> 0:00:11.480 Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.560 --> 0:00:13.640 with Scarletfoo and Paul Sweeney. 0:00:13.720 --> 0:00:15.800 How do you think the FED is looking at tariffs? 0:00:15.960 --> 0:00:17.160 The uncertainty of terriffs. 0:00:17.280 --> 0:00:19.720 Let's take a look at the sectors and how they performed. 0:00:19.760 --> 0:00:22.440 A lot of investors getting whipsaled every day by news events, 0:00:22.520 --> 0:00:24.520 breaking market headlines. 0:00:24.000 --> 0:00:26.160 And corporate news from across the globe. 0:00:26.280 --> 0:00:28.800 Could we see a market disruption of market event? 0:00:28.920 --> 0:00:31.000 So people just too exuberant out there? 0:00:31.120 --> 0:00:33.640 You see some so called low quality stocks driving this 0:00:33.760 --> 0:00:34.520 short term rally. 0:00:34.560 --> 0:00:39.360 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.520 --> 0:00:41.440 YouTube and Bloomberg Originals. 0:00:42.080 --> 0:00:44.360 On today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.360 --> 0:00:46.680 business story is impacting Wall Street and the global markets. 0:00:46.880 --> 0:00:49.159 Each and every week we provide in depth research and 0:00:49.240 --> 0:00:51.040 data on some of the two thousand companies and one 0:00:51.120 --> 0:00:53.680 hundred and thirty industries are analysts cover worldwide. 0:00:53.760 --> 0:00:56.240 Today, we'll look at the outlook for US railroad, transportation, 0:00:56.480 --> 0:00:59.880 telecoms and cloud computing business for twenty twenty six plus. 0:01:00.040 --> 0:01:01.800 We speak with the writer and producer of the film 0:01:01.920 --> 0:01:04.920 Ball Run on capturing the excess and high octane world 0:01:04.959 --> 0:01:05.600 of Wall Street. 0:01:05.840 --> 0:01:08.200 First, we lean into the world of luxury. According to 0:01:08.240 --> 0:01:11.520 the most recent Bloomberg Intelligence research, the recovery of luxury 0:01:11.520 --> 0:01:14.680 goods makers in twenty twenty six hinges on limited price 0:01:14.760 --> 0:01:18.000 increases and a shift toward volume led growth. 0:01:17.640 --> 0:01:19.920 For more pollen guest host Normal and I spoke with 0:01:19.959 --> 0:01:22.560 deb Acon, Bloomberg Intelligence luxury goods analysts. 0:01:23.319 --> 0:01:26.920 We started out twenty twenty five with an expectation that 0:01:26.959 --> 0:01:30.520 we'd move back to growth, and that certainly didn't materialize 0:01:30.560 --> 0:01:33.720 through the first half of the year, but we seem 0:01:33.800 --> 0:01:36.680 to be ending at around three to four percent growth 0:01:36.680 --> 0:01:40.640 as we exit twenty twenty five. Now, the US has 0:01:40.720 --> 0:01:44.960 been robust, Middle East doing very well, but particularly in 0:01:44.959 --> 0:01:47.039 the first half the year, it was China which was 0:01:47.120 --> 0:01:50.320 the drag. And what we've noticed is we end the year. 0:01:50.720 --> 0:01:54.280 We've actually just heard on a fireside chat over the 0:01:54.320 --> 0:01:57.960 last few days from Laurel where they're mentioning high end 0:01:58.000 --> 0:02:02.000 beauty doing very well out of the US, but also 0:02:02.160 --> 0:02:04.560 in China too, So they're adding to what we've heard 0:02:04.560 --> 0:02:08.600 from the luxury companies, where we've seen two thirds of 0:02:08.680 --> 0:02:12.600 luxury companies and most of the top ten switching to 0:02:12.760 --> 0:02:15.880 growth in China in Q three from a low base 0:02:15.960 --> 0:02:18.600 from negatives a year ago. But actually that we're calling 0:02:18.639 --> 0:02:21.160 green shoots into the end of year. 0:02:21.680 --> 0:02:23.760 How are these companies holding up as it releads to 0:02:23.800 --> 0:02:25.040 tariff overhangs. 0:02:25.760 --> 0:02:29.000 Yeah, so we did a lot of work around May 0:02:29.080 --> 0:02:31.840 time and again through July and August with the different 0:02:31.919 --> 0:02:36.160 tariff rates moving around, and what we've actually seen it 0:02:36.240 --> 0:02:41.720 was less detrimental overall in our numbers. We probably think 0:02:41.760 --> 0:02:44.960 that EPs won't be pulled as much as was expected 0:02:45.000 --> 0:02:48.200 because there have been some cost savings and the biggest 0:02:48.240 --> 0:02:52.240 companies and those that were where brands were really in favor, 0:02:52.639 --> 0:02:55.600 have managed to pass on price, and generally because these 0:02:55.600 --> 0:03:00.720 companies operate on high gross margin, the cost in the US, 0:03:00.800 --> 0:03:03.920 they've moved around two to four percent on additional price 0:03:03.960 --> 0:03:06.799 into the US as well as two three percent from 0:03:06.840 --> 0:03:09.400 the beginning of the year, So some of those brands 0:03:09.400 --> 0:03:12.960 have absorbed passing through six seven percent pricing to the 0:03:13.080 --> 0:03:16.560 US consumer, and we think into twenty twenty six that 0:03:16.600 --> 0:03:19.120 moves nearer to two to three percent overall, so it 0:03:19.160 --> 0:03:24.000 should be less intimidating for the consumer overall twenty twenty six. 0:03:24.040 --> 0:03:27.519 So it's one of our drivers for the year ahead. 0:03:27.400 --> 0:03:30.200 Dev talk to us about the Chinese consumer. Are they 0:03:30.440 --> 0:03:33.120 not traveling? So is that an impact for New York 0:03:33.240 --> 0:03:35.040 and London and Paris and things like that. 0:03:35.640 --> 0:03:38.600 We actually have a survey out of our Asia office 0:03:38.640 --> 0:03:43.560 that we've just incorporated into a travel document which will 0:03:43.560 --> 0:03:46.200 be producing. But this piece of work has already produced 0:03:46.640 --> 0:03:52.440 and actually on October versus May. The China consumer is 0:03:52.480 --> 0:03:55.880 looking to travel more into Europe to start with, So 0:03:56.040 --> 0:03:59.600 that's the first big positive. I think part of that 0:03:59.880 --> 0:04:02.680 is is just on the way the tariff situation has 0:04:02.720 --> 0:04:05.200 gone maybe so that would be the first time that 0:04:05.240 --> 0:04:07.680 we're looking for them to come back so versus three 0:04:07.760 --> 0:04:10.720 months ago. They're looking to traveling outside of Asia. But 0:04:10.840 --> 0:04:16.640 overall what we call the China cohort that's actually really 0:04:16.680 --> 0:04:20.919 operateing more avidly across the Asia region. We're not seeing 0:04:20.920 --> 0:04:24.080 so much travel from Chinese into Japan, and of course 0:04:24.120 --> 0:04:28.400 we know that there are there's some political commentary there 0:04:28.440 --> 0:04:30.360 as well, so we wouldn't expect that to pick up 0:04:30.400 --> 0:04:35.120 next year. But we are seeing Korea, Singapore, Australia and 0:04:35.160 --> 0:04:38.520 others being positive and the first move to Europe should 0:04:38.520 --> 0:04:41.120 hopefully indicate that towards the end of the year and 0:04:41.120 --> 0:04:44.240 as tariffs settle more in twenty twenty six, that we 0:04:44.279 --> 0:04:46.559 see some of that return to the US as well. 0:04:47.440 --> 0:04:49.640 And sticking with China, how are we thinking about supply 0:04:49.760 --> 0:04:51.839 chain operations as it releads to a lot of these 0:04:52.040 --> 0:04:55.159 luxury firms, especially stemming from China. 0:04:55.400 --> 0:04:59.960 Yeah, so if we think about maybe if we if 0:05:00.040 --> 0:05:03.640 we look at it from some of the aspirational or 0:05:03.800 --> 0:05:08.800 entry level luxury companies, then they will have some production 0:05:10.120 --> 0:05:13.640 moving around the Asia region. But if we think about 0:05:13.720 --> 0:05:17.960 the heritage traditional higher end luxury companies, then most of 0:05:18.000 --> 0:05:22.120 their production is France, Italy, some Portugal, some parts of 0:05:22.160 --> 0:05:25.720 southern Spain. Not so much going on in the Asia region, 0:05:25.839 --> 0:05:30.080 and so they've been able to manage on the twenty 0:05:30.160 --> 0:05:33.600 percent tariff from made in Europe over to the US 0:05:33.880 --> 0:05:36.800 more so than some of the peer group. For example, 0:05:37.440 --> 0:05:40.360 one of our entry level that we call branded affordable 0:05:40.440 --> 0:05:44.800 jewelry Pandora producers out of Thailand, it's really suffered in 0:05:44.880 --> 0:05:47.440 terms of share price this year versus some of the 0:05:47.520 --> 0:05:50.719 Asian retail jewelers who've done very very well on the 0:05:50.760 --> 0:05:51.840 price of gold. 0:05:52.240 --> 0:05:54.800 So you got to explain this whole handbag thing to me, 0:05:54.920 --> 0:05:58.799 dev I was in Italy in September towards some place 0:05:58.920 --> 0:06:01.600 factors and artisan shops where they make these handbags and 0:06:01.600 --> 0:06:04.520 they sell them for tens of thousands of dollars in euros? 0:06:04.640 --> 0:06:06.320 What is going on there? Who buys that? 0:06:07.240 --> 0:06:07.480 Yeah? 0:06:07.560 --> 0:06:11.760 It has I always say, if you bought a Ermez, 0:06:12.120 --> 0:06:15.640 you have a just as good or a better correlation 0:06:15.800 --> 0:06:19.159 than if you'd have held gold. So I think that 0:06:20.120 --> 0:06:25.839 you know, these bags, particularly for sought after material, the 0:06:25.880 --> 0:06:29.560 craftsmanship and the fact that they have continued value, are 0:06:29.600 --> 0:06:33.279 seen as investment pieces, and so we have the middle ground. 0:06:33.320 --> 0:06:35.479 You know, if we look over the last year and 0:06:35.560 --> 0:06:37.440 one of the things that we think for twenty twenty 0:06:37.480 --> 0:06:42.080 six bags from Tapestry, from Coach, Ralph Lauren, others as 0:06:42.120 --> 0:06:44.880 well as ready to wear have done very very well, 0:06:44.960 --> 0:06:47.520 resonated with a consumer who's been a little bit more 0:06:47.520 --> 0:06:51.760 skeptical on the consumer sentiment side and maybe shopped around 0:06:51.800 --> 0:06:55.160 one thousand dollars or so. But at the very high 0:06:55.279 --> 0:06:58.040 end there hasn't been much of a move. So we've 0:06:58.040 --> 0:07:01.760 seen Mmes, Brunello, Kuche you others doing very very well 0:07:01.760 --> 0:07:02.640 at that high end. 0:07:03.120 --> 0:07:06.279 All right, thanks to Debacon Bloomberg Intelligence luxury goods analyst. 0:07:06.680 --> 0:07:09.279 We move next to a conversation with Jonathan Goldstein, co 0:07:09.320 --> 0:07:12.760 founder and CEO of Kine International. It's an alternative asset 0:07:12.760 --> 0:07:15.960 manager specializing in real estate investment solutions. 0:07:16.240 --> 0:07:19.240 Jonathan's real estate and experiential investments have helped him morph 0:07:19.280 --> 0:07:22.520 into sports related investments. In twenty twenty two, he also 0:07:22.560 --> 0:07:25.280 became director and co owner of Chelsea Football Club, a 0:07:25.360 --> 0:07:27.960 prominent soccer club in the English Premier League. 0:07:28.040 --> 0:07:30.400 He shares details about his new club and what it 0:07:30.440 --> 0:07:32.480 means to be part of a growing ownership group. 0:07:32.720 --> 0:07:34.640 While I'm on the board of Chelsea and obviously the 0:07:35.800 --> 0:07:38.760 buyout was led by my partner Todd Bowley and in 0:07:38.800 --> 0:07:41.560 partnership with clear Lake. Back in twenty twenty two, teams 0:07:41.600 --> 0:07:44.920 doing well, obviously huge success in the summer in New York, 0:07:44.920 --> 0:07:47.239 winning the Club World Club Championship, which was a proud 0:07:47.280 --> 0:07:50.960 moment for the fans. The women's team don't extraordinarily well, 0:07:51.000 --> 0:07:54.160 winning the Women's Premier League for multi times in the 0:07:54.640 --> 0:07:57.480 a row last summer. So you know, we're very proud 0:07:57.520 --> 0:07:59.960 of the development since we've been involved in twenty twenty two. 0:08:00.280 --> 0:08:02.200 We think there's more to come. We're very excited. 0:08:03.000 --> 0:08:06.120 So the valuations on some of these franchises, whether it's 0:08:06.200 --> 0:08:08.960 huge franchises like in the English Premier League or the 0:08:09.040 --> 0:08:12.280 National Football League here in US, just beyond the realm 0:08:12.320 --> 0:08:16.280 of arguably even one hundred millionaires. These are billionaires, if 0:08:16.320 --> 0:08:20.560 not private equity corporate money. So that leads some people 0:08:20.600 --> 0:08:21.640 to say, Hey, I'm going to go to some of 0:08:21.640 --> 0:08:24.679 these smaller sports where I can maybe get some better value. 0:08:25.080 --> 0:08:29.200 How about cricket Trent Rockets. What's the play there? And 0:08:29.840 --> 0:08:31.880 I don't know that's all I got from cricket. 0:08:32.000 --> 0:08:34.360 First of all, let me explain that the way that 0:08:34.400 --> 0:08:37.800 the one hundred competition works that we've invested in and 0:08:37.880 --> 0:08:40.959 try and put in an American language. Please, Let's assume 0:08:41.000 --> 0:08:43.400 you have a baseball game, YEP, where you have one 0:08:43.480 --> 0:08:47.360 hundred pitches per side, and the objective is to score 0:08:47.400 --> 0:08:50.760 as many runs of those one hundred pitches as you can. 0:08:51.080 --> 0:08:53.679 It's short form nature of the game two to two 0:08:53.720 --> 0:08:57.440 and a half hours, exciting every pitch is important and 0:08:57.480 --> 0:09:00.280 this is what the English Cricket Board created five years 0:09:00.280 --> 0:09:03.120 ago in London in the UK with one hundred with 0:09:03.160 --> 0:09:06.720 eight franchises around the country. Now it modeled itself on 0:09:06.760 --> 0:09:10.319 the Indian Premier League, which obviously has been a phenomenal 0:09:12.000 --> 0:09:15.760 product for the Indian population and globally for those who 0:09:15.840 --> 0:09:20.080 like cricket. It has the second most valuable broadcast rights 0:09:20.320 --> 0:09:23.600 a game in the world, behind the NFL on a 0:09:23.600 --> 0:09:27.520 per game basis. There are larger broadcast contracts, but not 0:09:27.559 --> 0:09:30.800 on a per game basis. So we have watched this 0:09:31.040 --> 0:09:33.200 competition in the UK and we thought there was a 0:09:33.240 --> 0:09:36.760 significant opportunity for us to get involved add value, and 0:09:37.480 --> 0:09:40.480 we watched other people get involved obviously, and there's you know, 0:09:40.520 --> 0:09:42.720 of the eight teams, four of them are owned directly 0:09:42.800 --> 0:09:45.600 by Indian Premier League teams. One of them is owned 0:09:45.640 --> 0:09:47.600 by a group of what they call themselves the tech 0:09:47.679 --> 0:09:50.520 Titans on the West coast of America, you know, the 0:09:50.559 --> 0:09:54.920 Microsoft CEO by way of example. And then so you know, 0:09:55.160 --> 0:09:58.800 a lot of you know, Indian heritage love cricket, and 0:09:58.880 --> 0:10:01.840 so we thought, you know, here it's a significant opportunity 0:10:02.200 --> 0:10:05.440 to create the baby product to the IPL and over 0:10:05.520 --> 0:10:07.800 five to ten years grow that. It's a great window 0:10:07.920 --> 0:10:10.400 of the summer in the UK. Obviously, you have to, 0:10:10.720 --> 0:10:13.720 just like in America, a good external climate to play 0:10:13.760 --> 0:10:16.560 cricket because you want to outdoors. You can't play in 0:10:16.559 --> 0:10:19.280 the rain, just like baseball. So it's a great time 0:10:19.360 --> 0:10:22.640 mid July to mid August where there's a window for 0:10:22.679 --> 0:10:27.280 an opportunity to build huge product and broadcast and spectator. 0:10:27.760 --> 0:10:30.040 And I think what's really important is that you're building 0:10:30.080 --> 0:10:33.080 it in a country which has an undercurrent of love 0:10:33.200 --> 0:10:33.840 for the sport. 0:10:34.280 --> 0:10:36.680 So therefore you for a good base thing for me 0:10:36.760 --> 0:10:38.200 to go see. I'm not looking out to see a 0:10:38.200 --> 0:10:38.800 cricket match. 0:10:39.120 --> 0:10:41.679 Well right, professional, I'm going to invite you next summer. 0:10:41.679 --> 0:10:44.400 I think what we're doing here and what playing back 0:10:44.440 --> 0:10:48.200 to your initial question, we've watched the valuations of the 0:10:48.320 --> 0:10:51.120 NFL teams of the you know, the baseball teams. I 0:10:51.120 --> 0:10:54.920 mean Todd obviously led the way with the Dodgers, you know, 0:10:55.160 --> 0:10:57.640 over ten years ago at just around two billion dollars. 0:10:57.679 --> 0:11:00.200 And we've seen what trades are happening today. You know, 0:11:00.240 --> 0:11:02.160 we saw, you know, the valuation has been put on 0:11:02.160 --> 0:11:06.480 the NFL teams recently, and even the MLS is training 0:11:06.480 --> 0:11:08.760 at very high levels. So you know, you try and 0:11:08.800 --> 0:11:10.920 see a situation where you think you can add value 0:11:11.000 --> 0:11:13.160 and grow a franchise and grow a Business. 0:11:13.480 --> 0:11:15.880 Jonathan, Do you see a future for cricket in the US. 0:11:16.480 --> 0:11:18.840 Well, I think there's a future for most sports in 0:11:18.880 --> 0:11:21.600 most places. It depends upon the depth of demand and 0:11:21.640 --> 0:11:24.440 the depth of local participation. I don't think you can 0:11:24.520 --> 0:11:26.360 just pick up a sport and put it in each 0:11:26.440 --> 0:11:30.199 country unless there is an underlying desire. But in my view, 0:11:30.760 --> 0:11:33.680 there's a much greater opportunity in the UK because of 0:11:33.720 --> 0:11:37.240 the inherent nature the love of cricket that people grew 0:11:37.320 --> 0:11:40.200 up with. And I think there's so much competition in 0:11:40.240 --> 0:11:44.040 the US for again, no basketball and baseball and football 0:11:44.080 --> 0:11:46.559 and all the major sports. I think the MLS has 0:11:46.600 --> 0:11:49.280 made a breakthrough, but it hasn't really gone up to 0:11:49.320 --> 0:11:51.400 the top table. And I think if you look at 0:11:51.440 --> 0:11:53.520 how many years that's been at it, I think cricket 0:11:53.520 --> 0:11:56.160 will find itself even harder to get to that top 0:11:56.200 --> 0:11:57.480 table in the US. 0:11:58.040 --> 0:12:01.760 Go to any of the parks in Yes, Queens Brooklyn. 0:12:01.480 --> 0:12:02.679 Across the street from my house. 0:12:02.760 --> 0:12:04.840 World class cricket dudes out there. 0:12:04.960 --> 0:12:05.160 Yeah. 0:12:05.200 --> 0:12:07.360 Yeah, they're playing every Sunday and every Saturday. 0:12:07.480 --> 0:12:08.319 It's crazy everyone. 0:12:08.360 --> 0:12:10.640 Well, let's say, you know, I think Americans have had 0:12:10.640 --> 0:12:13.120 a view of cricket overall, which is wrong, right. It's 0:12:13.160 --> 0:12:16.880 an amazing sport. Even the five day variety is probably 0:12:16.880 --> 0:12:21.240 the most the most enthralling sport you could ever watch. Yeah, 0:12:21.240 --> 0:12:23.760 and I think that, you know, I think that cricket 0:12:23.800 --> 0:12:25.520 is a growth area and that's why we put some 0:12:25.520 --> 0:12:26.240 money behind it. 0:12:26.640 --> 0:12:29.800 Our thanks to Jonathan Goldtein, co founder and CEO Caine International. 0:12:30.080 --> 0:12:32.720 Coming up, Railroad's on the move, telecoms in orbit, and 0:12:32.800 --> 0:12:34.959 gaming in the cloud. As we look ahead to twenty 0:12:35.000 --> 0:12:36.160 twenty six, you're. 0:12:36.040 --> 0:12:38.920 Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth 0:12:38.960 --> 0:12:41.240 research and data on two thousand companies and one hundred 0:12:41.240 --> 0:12:42.040 and thirty industries. 0:12:42.120 --> 0:12:45.199 You can access Bloomberg Intelligence via bi go on the terminal. 0:12:45.280 --> 0:12:46.439 I'm Scarlet Foo and. 0:12:46.360 --> 0:12:48.400 I'm Paul Sweeney, and this is Bloomberg. 0:12:52.920 --> 0:12:57.400 This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 0:12:57.760 --> 0:12:59.080 on Bloomberg Radio. 0:13:00.120 --> 0:13:02.720 Start on the rails. Heading into twenty twenty six, North 0:13:02.720 --> 0:13:06.000 American railroad companies are betting on precision technology and cost 0:13:06.040 --> 0:13:07.880 control as a navigate steadier demand. 0:13:08.000 --> 0:13:11.320 According to the latest Bloomberg Intelligence research, North American railroads 0:13:11.360 --> 0:13:13.920 earnings growth look poised to pick up next year, but 0:13:14.160 --> 0:13:17.240 may fall short of double digits because of President Trump's tariffs. 0:13:17.480 --> 0:13:20.040 For more guest hosts, Christine Aquino and I are joined 0:13:20.080 --> 0:13:24.240 by Lee Klascow, Bloomberg Intelligence Senior Transport, Logistics and Chipping analysts. 0:13:24.360 --> 0:13:26.520 We are thinking that next year is going to be 0:13:26.600 --> 0:13:28.560 a better year, but it's not going to be a 0:13:28.600 --> 0:13:32.600 great year. So earnings for the rails broadly speaking increased 0:13:32.600 --> 0:13:35.559 by mid single digits. We expect that to accelerate to 0:13:36.040 --> 0:13:38.559 high single digits. I think investors would really like to 0:13:38.600 --> 0:13:40.720 see it get it into the double digits and even 0:13:40.760 --> 0:13:43.120 mid teens, but I think we might be a ways 0:13:43.120 --> 0:13:44.959 out for that for a while. And that's really being 0:13:45.040 --> 0:13:48.520 driven on the demand side. We're really expecting tepid demand 0:13:48.640 --> 0:13:51.079 across the board at low single digit growth. You know, 0:13:51.200 --> 0:13:54.080 some rails might do slightly better than others, like CSX, 0:13:54.120 --> 0:13:58.920 which has easier comparisons versus this year in Canadian Pacific, 0:13:59.000 --> 0:14:03.160 which is has a lot of synergy opportunities following its 0:14:03.240 --> 0:14:06.960 merger with Kansas City a couple of years ago, and 0:14:07.000 --> 0:14:10.840 they're still working through some new business opportunities following that merger. 0:14:10.920 --> 0:14:14.520 So those two rails will probably outperform when it comes 0:14:14.559 --> 0:14:17.920 to volume growth and you could see flat growth from 0:14:17.920 --> 0:14:21.360 a rail like Norfolk Southern, which is dealing with possibly 0:14:21.440 --> 0:14:25.040 some loss share on the intermodal side and some tougher 0:14:25.080 --> 0:14:27.160 comparisons when it comes to export coal. 0:14:27.720 --> 0:14:30.880 Yeah, well, very interestingly, of course, still a challenging outlook. 0:14:30.920 --> 0:14:34.240 It seemed like for the rail sector next year. How 0:14:34.280 --> 0:14:38.000 do tarriffs play into that outlook because we still don't 0:14:38.120 --> 0:14:39.960 have a lot of clarity on whether terrors are going 0:14:40.000 --> 0:14:42.600 to stay, But if they do, how could that disrupt 0:14:42.920 --> 0:14:44.880 the outlook for rail in twenty twenty six. 0:14:45.680 --> 0:14:49.120 Yeah, So it's impacting rails differently. It's impacting the Canadian rails, 0:14:49.160 --> 0:14:53.720 Canadian National and Pacific, Kansas City or Kansas City Southern, 0:14:54.280 --> 0:14:57.080 they're impacting them, you know, kind of on if you 0:14:57.080 --> 0:15:00.960 think about it, forest products or metals or photos that's 0:15:01.040 --> 0:15:04.200 being negatively impacted. And if you look at Union Pacific, 0:15:04.440 --> 0:15:08.040 you know, if you have inconsistency with imports coming into 0:15:08.840 --> 0:15:10.520 southern California. 0:15:10.080 --> 0:15:11.440 That's impacting them. 0:15:11.760 --> 0:15:15.120 So you know, it's really creating a level of uncertainty 0:15:15.200 --> 0:15:19.880 among shippers and that's creating, you know what I would say, 0:15:20.440 --> 0:15:23.600 not allowing the rails to operate as fluid as they 0:15:23.640 --> 0:15:26.160 possibly can. Because of that stop and go demand. 0:15:26.920 --> 0:15:29.400 Well, one of the big topics in the railroad industry, 0:15:29.680 --> 0:15:31.880 and I think it'll be most of the year, is 0:15:32.040 --> 0:15:36.440 the proposed Union Pacific Norfolk Southern m and A transaction 0:15:36.600 --> 0:15:40.160 here creating the first east west coast to coast railroad 0:15:40.280 --> 0:15:43.360 in the United States. Is this even going to get approved? 0:15:43.360 --> 0:15:47.160 Do you think we're we're kind of cautious on that, 0:15:47.600 --> 0:15:50.160 you know, I think we have like a forty percent 0:15:50.240 --> 0:15:53.360 probability that the deal gets done and we're well below consensus. 0:15:53.360 --> 0:15:56.000 We admit we might be a little naive thinking that, 0:15:56.240 --> 0:16:00.600 you know, the STB will remain you know, neutral when 0:16:00.640 --> 0:16:03.280 they take a look at this deal because the parties 0:16:03.360 --> 0:16:05.560 have to prove that it's in the public interest and 0:16:05.600 --> 0:16:08.680 it's going to enhance competition. Some could argue that some 0:16:08.720 --> 0:16:11.360 of that enhanced competition is going on right now because 0:16:11.400 --> 0:16:15.320 you've seen Burlington Northern, which is a competitor in the West, 0:16:16.040 --> 0:16:19.520 teaming up with CSX to provide coast to coast services 0:16:19.560 --> 0:16:22.720 not through an acquisition but through more of a collaborative effort. 0:16:23.600 --> 0:16:27.080 And you are seeing CSX winning some share from Norfolk 0:16:27.080 --> 0:16:28.240 Southern based on that. 0:16:29.080 --> 0:16:33.800 Yeah, Well, if that does not clear the regulators. Lee, 0:16:33.880 --> 0:16:36.520 what do you think that will say about the future 0:16:36.560 --> 0:16:40.640 of potential consolidation or strategic partnerships across the rail industry. 0:16:40.680 --> 0:16:42.040 Is it kind of do you think people are going 0:16:42.080 --> 0:16:44.720 to see as a one off sort of situation or 0:16:44.800 --> 0:16:46.760 is it kind of a harbinger of challenges to come 0:16:46.800 --> 0:16:48.440 when it comes to M and A in this space. 0:16:49.240 --> 0:16:53.360 Well, the SDB raised the bar for large Class one 0:16:53.600 --> 0:16:56.320 railroads to merge back in two thousand and one, and 0:16:56.360 --> 0:17:00.080 that was really driven on some service issues from a 0:17:00.680 --> 0:17:03.520 mergers and so you know that's why the bar has 0:17:03.600 --> 0:17:07.160 been set so high. All the other railroads obviously they're 0:17:07.160 --> 0:17:08.959 talking in their book, but you know, they think that 0:17:09.000 --> 0:17:13.439 they can create a better network through collaboration. You know, 0:17:13.800 --> 0:17:17.000 we think that it can happen through a merger or 0:17:17.040 --> 0:17:20.320 through collaboration. But you know, like I mentioned earlier, Union 0:17:20.320 --> 0:17:23.040 Pacific and Norfolk Southern still have to you know, clear 0:17:23.119 --> 0:17:28.119 that high hurdle that it enhances competition and it's also 0:17:28.160 --> 0:17:30.400 in the public interest, which is again it's it's really 0:17:30.440 --> 0:17:35.080 tough to prove. Also, you know, we expect that you know, 0:17:35.119 --> 0:17:38.240 we probably get an answer about whether or not the 0:17:38.320 --> 0:17:41.400 STB or the Service Transportation Board will approve this deal 0:17:41.560 --> 0:17:44.720 in early twenty twenty seven, so we'll be talking about 0:17:44.760 --> 0:17:46.320 it all year, and I hope to talk to you 0:17:46.359 --> 0:17:47.320 guys about it all year. 0:17:47.720 --> 0:17:51.080 Our thanks to lead Clasical Bloomberg Intelligence, senior Transport, Logistics 0:17:51.080 --> 0:17:53.639 and Shipping analyst, we move next to the telecom and 0:17:53.760 --> 0:17:56.960 satellite space. Bloomberg Intelligence recently put out as out Look 0:17:56.960 --> 0:17:59.520 for US telecoms and satellites in twenty twenty six. 0:18:00.080 --> 0:18:03.280 To their research, slowing wireless service revenue gains and mounting 0:18:03.320 --> 0:18:06.679 cable competition are prompting a deeper push into broadband for 0:18:06.720 --> 0:18:08.680 growth as US telecoms enter next year. 0:18:08.960 --> 0:18:11.320 For more guestos, Alex Semonova and I were joined by 0:18:11.400 --> 0:18:14.240 John Butler, Bloomberg Intelligence senior telecom analysts. 0:18:14.320 --> 0:18:16.840 So I think the big thing to keep in mind here, Paul, 0:18:16.960 --> 0:18:20.240 is as we roll into twenty twenty six, I think 0:18:20.240 --> 0:18:24.440 we're going to see price promotion take a modest step up. 0:18:24.560 --> 0:18:28.919 The bullets are really flying in wireless right now. I 0:18:28.920 --> 0:18:31.880 think part of it is AT and TM Verizon both 0:18:31.960 --> 0:18:35.720 have new CEOs. Both CEOs are going to want to 0:18:35.720 --> 0:18:38.720 make their mark. I think the one to watch is 0:18:39.680 --> 0:18:45.280 Dan Shulman at Verizon He is very focused on volume. 0:18:45.359 --> 0:18:49.479 He wants to get Verizon back to subscriber growth, and 0:18:49.640 --> 0:18:51.639 I think the only way to do it is going 0:18:51.720 --> 0:18:54.800 to be by promoting a little bit more aggressively than 0:18:54.840 --> 0:18:55.840 they have in the past. 0:18:56.600 --> 0:19:00.520 John, Where do you see the strongest incremental demanding from. 0:19:00.560 --> 0:19:02.560 Is it going to be mobile data? Is it going 0:19:02.600 --> 0:19:03.480 to be broadband? 0:19:04.160 --> 0:19:08.040 Two areas, alex One, as you touched on, is broadband. 0:19:08.080 --> 0:19:11.560 That's a real growth factor for the telecoms. If you 0:19:11.640 --> 0:19:16.240 look at fixed wireless access, which is delivering broadband over 0:19:16.280 --> 0:19:19.359 a wireless link into the home, that has proven to 0:19:19.359 --> 0:19:23.720 be exceptionally popular with people. So I think the all 0:19:23.800 --> 0:19:27.800 three telcodes are going to lean into broadband in order 0:19:27.840 --> 0:19:31.920 to supplement the slowdown in wireless growth. But the one 0:19:32.160 --> 0:19:36.400 area I'm watching as we move into next year is satellite. 0:19:36.640 --> 0:19:40.480 Starlink is partnered with T Mobile. The two of them 0:19:40.560 --> 0:19:46.320 are already offering limited texting service on a nationwide basis. 0:19:46.920 --> 0:19:50.880 It's sort of early stages. They are early innings, if 0:19:50.920 --> 0:19:54.400 you will, for them. Verizon, an AT and T are 0:19:54.480 --> 0:19:58.119 partnered with AST Space Mobile, which is in the process 0:19:58.160 --> 0:20:03.720 of launching its constellation. Now they actually have more better 0:20:03.840 --> 0:20:08.159 satellites than starlink, and so the space race is on. 0:20:08.320 --> 0:20:10.320 As I like to say, it's going to be really 0:20:10.359 --> 0:20:14.199 interesting to see once for Verizon and AT and T 0:20:14.320 --> 0:20:18.080 are able to launch services early next year, how that 0:20:18.160 --> 0:20:19.679 market segment unfolds. 0:20:20.000 --> 0:20:22.760 So the wireless operators the verizons of the world, AT 0:20:22.800 --> 0:20:25.200 and TS, John, they they're partnering with some of these 0:20:26.280 --> 0:20:28.600 space satellite services. 0:20:28.800 --> 0:20:30.960 Yeah, I mean, I think the way to think about it, 0:20:31.040 --> 0:20:35.000 Paul is it's almost like cell sites in space at 0:20:35.000 --> 0:20:38.359 this point yep. So the major carriers have partnered with 0:20:38.440 --> 0:20:43.640 starlink and AST to provide that infrastructure and the transmission 0:20:43.720 --> 0:20:47.800 capability up in space to be able to provide coverage 0:20:48.400 --> 0:20:52.480 outside the range of terrestrial networks now, so essentially that 0:20:52.720 --> 0:20:57.560 concept of coverage everywhere is going to become a reality 0:20:57.640 --> 0:20:59.400 as we move through next year. 0:21:00.000 --> 0:21:01.560 We will say it was getting a new iPhone in 0:21:01.640 --> 0:21:05.119 T Mobile. I'm still grandfathered into my father's plan, very 0:21:05.200 --> 0:21:06.720 Lucky's still paying for my cell phone. 0:21:06.760 --> 0:21:09.560 But they immediately got on comment by the way, to 0:21:09.640 --> 0:21:10.480