Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence
Speaker 1: with Scarletfoo and Paul Sweeney.
Speaker 2: How do you think the FED is looking at tariffs?
Speaker 2: The uncertainty of terriffs.
Speaker 3: Let's take a look at the sectors and how they performed.
Speaker 2: A lot of investors getting whipsaled every day by news events,
Speaker 2: breaking market headlines.
Speaker 1: And corporate news from across the globe.
Speaker 3: Could we see a market disruption of market event?
Speaker 2: So people just too exuberant out there?
Speaker 3: You see some so called low quality stocks driving this
Speaker 3: short term rally.
Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
Speaker 1: YouTube and Bloomberg Originals.
Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big
Speaker 2: business story is impacting Wall Street and the global markets.
Speaker 3: Each and every week we provide in depth research and
Speaker 3: data on some of the two thousand companies and one
Speaker 3: hundred and thirty industries are analysts cover worldwide.
Speaker 2: Today, we'll look at the outlook for US railroad, transportation,
Speaker 2: telecoms and cloud computing business for twenty twenty six plus.
Speaker 3: We speak with the writer and producer of the film
Speaker 3: Ball Run on capturing the excess and high octane world
Speaker 3: of Wall Street.
Speaker 2: First, we lean into the world of luxury. According to
Speaker 2: the most recent Bloomberg Intelligence research, the recovery of luxury
Speaker 2: goods makers in twenty twenty six hinges on limited price
Speaker 2: increases and a shift toward volume led growth.
Speaker 3: For more pollen guest host Normal and I spoke with
Speaker 3: deb Acon, Bloomberg Intelligence luxury goods analysts.
Speaker 4: We started out twenty twenty five with an expectation that
Speaker 4: we'd move back to growth, and that certainly didn't materialize
Speaker 4: through the first half of the year, but we seem
Speaker 4: to be ending at around three to four percent growth
Speaker 4: as we exit twenty twenty five. Now, the US has
Speaker 4: been robust, Middle East doing very well, but particularly in
Speaker 4: the first half the year, it was China which was
Speaker 4: the drag. And what we've noticed is we end the year.
Speaker 4: We've actually just heard on a fireside chat over the
Speaker 4: last few days from Laurel where they're mentioning high end
Speaker 4: beauty doing very well out of the US, but also
Speaker 4: in China too, So they're adding to what we've heard
Speaker 4: from the luxury companies, where we've seen two thirds of
Speaker 4: luxury companies and most of the top ten switching to
Speaker 4: growth in China in Q three from a low base
Speaker 4: from negatives a year ago. But actually that we're calling
Speaker 4: green shoots into the end of year.
Speaker 5: How are these companies holding up as it releads to
Speaker 5: tariff overhangs.
Speaker 4: Yeah, so we did a lot of work around May
Speaker 4: time and again through July and August with the different
Speaker 4: tariff rates moving around, and what we've actually seen it
Speaker 4: was less detrimental overall in our numbers. We probably think
Speaker 4: that EPs won't be pulled as much as was expected
Speaker 4: because there have been some cost savings and the biggest
Speaker 4: companies and those that were where brands were really in favor,
Speaker 4: have managed to pass on price, and generally because these
Speaker 4: companies operate on high gross margin, the cost in the US,
Speaker 4: they've moved around two to four percent on additional price
Speaker 4: into the US as well as two three percent from
Speaker 4: the beginning of the year, So some of those brands
Speaker 4: have absorbed passing through six seven percent pricing to the
Speaker 4: US consumer, and we think into twenty twenty six that
Speaker 4: moves nearer to two to three percent overall, so it
Speaker 4: should be less intimidating for the consumer overall twenty twenty six.
Speaker 4: So it's one of our drivers for the year ahead.
Speaker 2: Dev talk to us about the Chinese consumer. Are they
Speaker 2: not traveling? So is that an impact for New York
Speaker 2: and London and Paris and things like that.
Speaker 4: We actually have a survey out of our Asia office
Speaker 4: that we've just incorporated into a travel document which will
Speaker 4: be producing. But this piece of work has already produced
Speaker 4: and actually on October versus May. The China consumer is
Speaker 4: looking to travel more into Europe to start with, So
Speaker 4: that's the first big positive. I think part of that
Speaker 4: is is just on the way the tariff situation has
Speaker 4: gone maybe so that would be the first time that
Speaker 4: we're looking for them to come back so versus three
Speaker 4: months ago. They're looking to traveling outside of Asia. But
Speaker 4: overall what we call the China cohort that's actually really
Speaker 4: operateing more avidly across the Asia region. We're not seeing
Speaker 4: so much travel from Chinese into Japan, and of course
Speaker 4: we know that there are there's some political commentary there
Speaker 4: as well, so we wouldn't expect that to pick up
Speaker 4: next year. But we are seeing Korea, Singapore, Australia and
Speaker 4: others being positive and the first move to Europe should
Speaker 4: hopefully indicate that towards the end of the year and
Speaker 4: as tariffs settle more in twenty twenty six, that we
Speaker 4: see some of that return to the US as well.
Speaker 5: And sticking with China, how are we thinking about supply
Speaker 5: chain operations as it releads to a lot of these
Speaker 5: luxury firms, especially stemming from China.
Speaker 4: Yeah, so if we think about maybe if we if
Speaker 4: we look at it from some of the aspirational or
Speaker 4: entry level luxury companies, then they will have some production
Speaker 4: moving around the Asia region. But if we think about
Speaker 4: the heritage traditional higher end luxury companies, then most of
Speaker 4: their production is France, Italy, some Portugal, some parts of
Speaker 4: southern Spain. Not so much going on in the Asia region,
Speaker 4: and so they've been able to manage on the twenty
Speaker 4: percent tariff from made in Europe over to the US
Speaker 4: more so than some of the peer group. For example,
Speaker 4: one of our entry level that we call branded affordable
Speaker 4: jewelry Pandora producers out of Thailand, it's really suffered in
Speaker 4: terms of share price this year versus some of the
Speaker 4: Asian retail jewelers who've done very very well on the
Speaker 4: price of gold.
Speaker 2: So you got to explain this whole handbag thing to me,
Speaker 2: dev I was in Italy in September towards some place
Speaker 2: factors and artisan shops where they make these handbags and
Speaker 2: they sell them for tens of thousands of dollars in euros?
Speaker 2: What is going on there? Who buys that?
Speaker 6: Yeah?
Speaker 4: It has I always say, if you bought a Ermez,
Speaker 4: you have a just as good or a better correlation
Speaker 4: than if you'd have held gold. So I think that
Speaker 4: you know, these bags, particularly for sought after material, the
Speaker 4: craftsmanship and the fact that they have continued value, are
Speaker 4: seen as investment pieces, and so we have the middle ground.
Speaker 4: You know, if we look over the last year and
Speaker 4: one of the things that we think for twenty twenty
Speaker 4: six bags from Tapestry, from Coach, Ralph Lauren, others as
Speaker 4: well as ready to wear have done very very well,
Speaker 4: resonated with a consumer who's been a little bit more
Speaker 4: skeptical on the consumer sentiment side and maybe shopped around
Speaker 4: one thousand dollars or so. But at the very high
Speaker 4: end there hasn't been much of a move. So we've
Speaker 4: seen Mmes, Brunello, Kuche you others doing very very well
Speaker 4: at that high end.
Speaker 2: All right, thanks to Debacon Bloomberg Intelligence luxury goods analyst.
Speaker 2: We move next to a conversation with Jonathan Goldstein, co
Speaker 2: founder and CEO of Kine International. It's an alternative asset
Speaker 2: manager specializing in real estate investment solutions.
Speaker 3: Jonathan's real estate and experiential investments have helped him morph
Speaker 3: into sports related investments. In twenty twenty two, he also
Speaker 3: became director and co owner of Chelsea Football Club, a
Speaker 3: prominent soccer club in the English Premier League.
Speaker 2: He shares details about his new club and what it
Speaker 2: means to be part of a growing ownership group.
Speaker 6: While I'm on the board of Chelsea and obviously the
Speaker 6: buyout was led by my partner Todd Bowley and in
Speaker 6: partnership with clear Lake. Back in twenty twenty two, teams
Speaker 6: doing well, obviously huge success in the summer in New York,
Speaker 6: winning the Club World Club Championship, which was a proud
Speaker 6: moment for the fans. The women's team don't extraordinarily well,
Speaker 6: winning the Women's Premier League for multi times in the
Speaker 6: a row last summer. So you know, we're very proud
Speaker 6: of the development since we've been involved in twenty twenty two.
Speaker 6: We think there's more to come. We're very excited.
Speaker 2: So the valuations on some of these franchises, whether it's
Speaker 2: huge franchises like in the English Premier League or the
Speaker 2: National Football League here in US, just beyond the realm
Speaker 2: of arguably even one hundred millionaires. These are billionaires, if
Speaker 2: not private equity corporate money. So that leads some people
Speaker 2: to say, Hey, I'm going to go to some of
Speaker 2: these smaller sports where I can maybe get some better value.
Speaker 2: How about cricket Trent Rockets. What's the play there? And
Speaker 2: I don't know that's all I got from cricket.
Speaker 6: First of all, let me explain that the way that
Speaker 6: the one hundred competition works that we've invested in and
Speaker 6: try and put in an American language. Please, Let's assume
Speaker 6: you have a baseball game, YEP, where you have one
Speaker 6: hundred pitches per side, and the objective is to score
Speaker 6: as many runs of those one hundred pitches as you can.
Speaker 6: It's short form nature of the game two to two
Speaker 6: and a half hours, exciting every pitch is important and
Speaker 6: this is what the English Cricket Board created five years
Speaker 6: ago in London in the UK with one hundred with
Speaker 6: eight franchises around the country. Now it modeled itself on
Speaker 6: the Indian Premier League, which obviously has been a phenomenal
Speaker 6: product for the Indian population and globally for those who
Speaker 6: like cricket. It has the second most valuable broadcast rights
Speaker 6: a game in the world, behind the NFL on a
Speaker 6: per game basis. There are larger broadcast contracts, but not
Speaker 6: on a per game basis. So we have watched this
Speaker 6: competition in the UK and we thought there was a
Speaker 6: significant opportunity for us to get involved add value, and
Speaker 6: we watched other people get involved obviously, and there's you know,
Speaker 6: of the eight teams, four of them are owned directly
Speaker 6: by Indian Premier League teams. One of them is owned
Speaker 6: by a group of what they call themselves the tech
Speaker 6: Titans on the West coast of America, you know, the
Speaker 6: Microsoft CEO by way of example. And then so you know,
Speaker 6: a lot of you know, Indian heritage love cricket, and
Speaker 6: so we thought, you know, here it's a significant opportunity
Speaker 6: to create the baby product to the IPL and over
Speaker 6: five to ten years grow that. It's a great window
Speaker 6: of the summer in the UK. Obviously, you have to,
Speaker 6: just like in America, a good external climate to play
Speaker 6: cricket because you want to outdoors. You can't play in
Speaker 6: the rain, just like baseball. So it's a great time
Speaker 6: mid July to mid August where there's a window for
Speaker 6: an opportunity to build huge product and broadcast and spectator.
Speaker 6: And I think what's really important is that you're building
Speaker 6: it in a country which has an undercurrent of love
Speaker 6: for the sport.
Speaker 2: So therefore you for a good base thing for me
Speaker 2: to go see. I'm not looking out to see a
Speaker 2: cricket match.
Speaker 6: Well right, professional, I'm going to invite you next summer.
Speaker 6: I think what we're doing here and what playing back
Speaker 6: to your initial question, we've watched the valuations of the
Speaker 6: NFL teams of the you know, the baseball teams. I
Speaker 6: mean Todd obviously led the way with the Dodgers, you know,
Speaker 6: over ten years ago at just around two billion dollars.
Speaker 6: And we've seen what trades are happening today. You know,
Speaker 6: we saw, you know, the valuation has been put on
Speaker 6: the NFL teams recently, and even the MLS is training
Speaker 6: at very high levels. So you know, you try and
Speaker 6: see a situation where you think you can add value
Speaker 6: and grow a franchise and grow a Business.
Speaker 3: Jonathan, Do you see a future for cricket in the US.
Speaker 6: Well, I think there's a future for most sports in
Speaker 6: most places. It depends upon the depth of demand and
Speaker 6: the depth of local participation. I don't think you can
Speaker 6: just pick up a sport and put it in each
Speaker 6: country unless there is an underlying desire. But in my view,
Speaker 6: there's a much greater opportunity in the UK because of
Speaker 6: the inherent nature the love of cricket that people grew
Speaker 6: up with. And I think there's so much competition in
Speaker 6: the US for again, no basketball and baseball and football
Speaker 6: and all the major sports. I think the MLS has
Speaker 6: made a breakthrough, but it hasn't really gone up to
Speaker 6: the top table. And I think if you look at
Speaker 6: how many years that's been at it, I think cricket
Speaker 6: will find itself even harder to get to that top
Speaker 6: table in the US.
Speaker 2: Go to any of the parks in Yes, Queens Brooklyn.
Speaker 3: Across the street from my house.
Speaker 2: World class cricket dudes out there.
Speaker 6: Yeah.
Speaker 3: Yeah, they're playing every Sunday and every Saturday.
Speaker 2: It's crazy everyone.
Speaker 6: Well, let's say, you know, I think Americans have had
Speaker 6: a view of cricket overall, which is wrong, right. It's
Speaker 6: an amazing sport. Even the five day variety is probably
Speaker 6: the most the most enthralling sport you could ever watch. Yeah,
Speaker 6: and I think that, you know, I think that cricket
Speaker 6: is a growth area and that's why we put some
Speaker 6: money behind it.
Speaker 2: Our thanks to Jonathan Goldtein, co founder and CEO Caine International.
Speaker 3: Coming up, Railroad's on the move, telecoms in orbit, and
Speaker 3: gaming in the cloud. As we look ahead to twenty
Speaker 3: twenty six, you're.
Speaker 2: Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth
Speaker 2: research and data on two thousand companies and one hundred
Speaker 2: and thirty industries.
Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal.
Speaker 3: I'm Scarlet Foo and.
Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
Speaker 1: on Bloomberg Radio.
Speaker 2: Start on the rails. Heading into twenty twenty six, North
Speaker 2: American railroad companies are betting on precision technology and cost
Speaker 2: control as a navigate steadier demand.
Speaker 3: According to the latest Bloomberg Intelligence research, North American railroads
Speaker 3: earnings growth look poised to pick up next year, but
Speaker 3: may fall short of double digits because of President Trump's tariffs.
Speaker 2: For more guest hosts, Christine Aquino and I are joined
Speaker 2: by Lee Klascow, Bloomberg Intelligence Senior Transport, Logistics and Chipping analysts.
Speaker 7: We are thinking that next year is going to be
Speaker 7: a better year, but it's not going to be a
Speaker 7: great year. So earnings for the rails broadly speaking increased
Speaker 7: by mid single digits. We expect that to accelerate to
Speaker 7: high single digits. I think investors would really like to
Speaker 7: see it get it into the double digits and even
Speaker 7: mid teens, but I think we might be a ways
Speaker 7: out for that for a while. And that's really being
Speaker 7: driven on the demand side. We're really expecting tepid demand
Speaker 7: across the board at low single digit growth. You know,
Speaker 7: some rails might do slightly better than others, like CSX,
Speaker 7: which has easier comparisons versus this year in Canadian Pacific,
Speaker 7: which is has a lot of synergy opportunities following its
Speaker 7: merger with Kansas City a couple of years ago, and
Speaker 7: they're still working through some new business opportunities following that merger.
Speaker 7: So those two rails will probably outperform when it comes
Speaker 7: to volume growth and you could see flat growth from
Speaker 7: a rail like Norfolk Southern, which is dealing with possibly
Speaker 7: some loss share on the intermodal side and some tougher
Speaker 7: comparisons when it comes to export coal.
Speaker 8: Yeah, well, very interestingly, of course, still a challenging outlook.
Speaker 8: It seemed like for the rail sector next year. How
Speaker 8: do tarriffs play into that outlook because we still don't
Speaker 8: have a lot of clarity on whether terrors are going
Speaker 8: to stay, But if they do, how could that disrupt
Speaker 8: the outlook for rail in twenty twenty six.
Speaker 7: Yeah, So it's impacting rails differently. It's impacting the Canadian rails,
Speaker 7: Canadian National and Pacific, Kansas City or Kansas City Southern,
Speaker 7: they're impacting them, you know, kind of on if you
Speaker 7: think about it, forest products or metals or photos that's
Speaker 7: being negatively impacted. And if you look at Union Pacific,
Speaker 7: you know, if you have inconsistency with imports coming into
Speaker 7: southern California.
Speaker 2: That's impacting them.
Speaker 7: So you know, it's really creating a level of uncertainty
Speaker 7: among shippers and that's creating, you know what I would say,
Speaker 7: not allowing the rails to operate as fluid as they
Speaker 7: possibly can. Because of that stop and go demand.
Speaker 2: Well, one of the big topics in the railroad industry,
Speaker 2: and I think it'll be most of the year, is
Speaker 2: the proposed Union Pacific Norfolk Southern m and A transaction
Speaker 2: here creating the first east west coast to coast railroad
Speaker 2: in the United States. Is this even going to get approved?
Speaker 7: Do you think we're we're kind of cautious on that,
Speaker 7: you know, I think we have like a forty percent
Speaker 7: probability that the deal gets done and we're well below consensus.
Speaker 7: We admit we might be a little naive thinking that,
Speaker 7: you know, the STB will remain you know, neutral when
Speaker 7: they take a look at this deal because the parties
Speaker 7: have to prove that it's in the public interest and
Speaker 7: it's going to enhance competition. Some could argue that some
Speaker 7: of that enhanced competition is going on right now because
Speaker 7: you've seen Burlington Northern, which is a competitor in the West,
Speaker 7: teaming up with CSX to provide coast to coast services
Speaker 7: not through an acquisition but through more of a collaborative effort.
Speaker 7: And you are seeing CSX winning some share from Norfolk
Speaker 7: Southern based on that.
Speaker 8: Yeah, Well, if that does not clear the regulators. Lee,
Speaker 8: what do you think that will say about the future
Speaker 8: of potential consolidation or strategic partnerships across the rail industry.
Speaker 8: Is it kind of do you think people are going
Speaker 8: to see as a one off sort of situation or
Speaker 8: is it kind of a harbinger of challenges to come
Speaker 8: when it comes to M and A in this space.
Speaker 7: Well, the SDB raised the bar for large Class one
Speaker 7: railroads to merge back in two thousand and one, and
Speaker 7: that was really driven on some service issues from a
Speaker 7: mergers and so you know that's why the bar has
Speaker 7: been set so high. All the other railroads obviously they're
Speaker 7: talking in their book, but you know, they think that
Speaker 7: they can create a better network through collaboration. You know,
Speaker 7: we think that it can happen through a merger or
Speaker 7: through collaboration. But you know, like I mentioned earlier, Union
Speaker 7: Pacific and Norfolk Southern still have to you know, clear
Speaker 7: that high hurdle that it enhances competition and it's also
Speaker 7: in the public interest, which is again it's it's really
Speaker 7: tough to prove. Also, you know, we expect that you know,
Speaker 7: we probably get an answer about whether or not the
Speaker 7: STB or the Service Transportation Board will approve this deal
Speaker 7: in early twenty twenty seven, so we'll be talking about
Speaker 7: it all year, and I hope to talk to you
Speaker 7: guys about it all year.
Speaker 2: Our thanks to lead Clasical Bloomberg Intelligence, senior Transport, Logistics
Speaker 2: and Shipping analyst, we move next to the telecom and
Speaker 2: satellite space. Bloomberg Intelligence recently put out as out Look
Speaker 2: for US telecoms and satellites in twenty twenty six.
Speaker 3: To their research, slowing wireless service revenue gains and mounting
Speaker 3: cable competition are prompting a deeper push into broadband for
Speaker 3: growth as US telecoms enter next year.
Speaker 2: For more guestos, Alex Semonova and I were joined by
Speaker 2: John Butler, Bloomberg Intelligence senior telecom analysts.
Speaker 9: So I think the big thing to keep in mind here, Paul,
Speaker 9: is as we roll into twenty twenty six, I think
Speaker 9: we're going to see price promotion take a modest step up.
Speaker 9: The bullets are really flying in wireless right now. I
Speaker 9: think part of it is AT and TM Verizon both
Speaker 9: have new CEOs. Both CEOs are going to want to
Speaker 9: make their mark. I think the one to watch is
Speaker 9: Dan Shulman at Verizon He is very focused on volume.
Speaker 9: He wants to get Verizon back to subscriber growth, and
Speaker 9: I think the only way to do it is going
Speaker 9: to be by promoting a little bit more aggressively than
Speaker 9: they have in the past.
Speaker 10: John, Where do you see the strongest incremental demanding from.
Speaker 10: Is it going to be mobile data? Is it going
Speaker 10: to be broadband?
Speaker 9: Two areas, alex One, as you touched on, is broadband.
Speaker 9: That's a real growth factor for the telecoms. If you
Speaker 9: look at fixed wireless access, which is delivering broadband over
Speaker 9: a wireless link into the home, that has proven to
Speaker 9: be exceptionally popular with people. So I think the all
Speaker 9: three telcodes are going to lean into broadband in order
Speaker 9: to supplement the slowdown in wireless growth. But the one
Speaker 9: area I'm watching as we move into next year is satellite.
Speaker 9: Starlink is partnered with T Mobile. The two of them
Speaker 9: are already offering limited texting service on a nationwide basis.
Speaker 9: It's sort of early stages. They are early innings, if
Speaker 9: you will, for them. Verizon, an AT and T are
Speaker 9: partnered with AST Space Mobile, which is in the process
Speaker 9: of launching its constellation. Now they actually have more better
Speaker 9: satellites than starlink, and so the space race is on.
Speaker 9: As I like to say, it's going to be really
Speaker 9: interesting to see once for Verizon and AT and T
Speaker 9: are able to launch services early next year, how that
Speaker 9: market segment unfolds.
Speaker 2: So the wireless operators the verizons of the world, AT
Speaker 2: and TS, John, they they're partnering with some of these
Speaker 2: space satellite services.
Speaker 9: Yeah, I mean, I think the way to think about it,
Speaker 9: Paul is it's almost like cell sites in space at
Speaker 9: this point yep. So the major carriers have partnered with
Speaker 9: starlink and AST to provide that infrastructure and the transmission
Speaker 9: capability up in space to be able to provide coverage
Speaker 9: outside the range of terrestrial networks now, so essentially that
Speaker 9: concept of coverage everywhere is going to become a reality
Speaker 9: as we move through next year.
Speaker 10: We will say it was getting a new iPhone in
Speaker 10: T Mobile. I'm still grandfathered into my father's plan, very
Speaker 10: Lucky's still paying for my cell phone.
Speaker 2: But they immediately got on comment by the way, to
Speaker 2: get Wi Fi.
Speaker 10: With them with T Mobile, So it's really interesting and
Speaker 10: a new offering from them.
Speaker 2: As you mentioned, is there a six G out there,
Speaker 2: because we I think I've grown up and we've had
Speaker 2: three G, four G, five G. Is there a six
Speaker 2: G out there?
Speaker 1: Not yet.
Speaker 9: I think six G is going to move onto the
Speaker 9: horizon probably as we move through next year. It's a
Speaker 9: development process by the industry, and so that standard, if
Speaker 9: you will, is getting developed now by industry committees. It
Speaker 9: will then move into tests probably in twenty twenty eight
Speaker 9: and become a reality for us by twenty thirty. Right now,
Speaker 9: we're mid cycle with five GS. So if you think
Speaker 9: back to when four G was originally launched, it was
Speaker 9: much lower speed than it is today, So that standard
Speaker 9: those generations of mobile evolve over what are typically ten
Speaker 9: year cycles. So we're mid cycle with five G. Expect
Speaker 9: better speeds and better performance there as we move through
Speaker 9: the next five years, and then ultimately six G will appear,
Speaker 9: probably again in the twenty thirty timeframe.
Speaker 2: Our thanks to John Butler, Bloomberg Intelligence senior telecom analyst.
Speaker 2: Now we move to the cloud gaming space. Bloomberg Intelligence
Speaker 2: has recently put out a deep dive in cloud streamed
Speaker 2: gaming and specifically how AI could accelerate game development with
Speaker 2: a shift toward cloud based games.
Speaker 3: This development could in theory make physical gaming consoles obsolete
Speaker 3: for more. We talked to Nathan Nadu, he is Bloomberg
Speaker 3: Intelligence technology research analyst.
Speaker 11: Consoles will decline gradually and that's what I mean, and
Speaker 11: no kind of remaining over the long term as a
Speaker 11: NICHS device for loyal fans, the really hardcore gamers. As
Speaker 11: advancement in cloud infrastructure and we see what's happening with
Speaker 11: data centers as well as a wider spread of mobile
Speaker 11: gaming playing games from mobile device is whether smartphones or tablets.
Speaker 11: As that game wider spread and people become less interested,
Speaker 11: you know, in playing games at an unportable gaming hardware
Speaker 11: that's stuck at home or living room. If they can
Speaker 11: do so and have the same experience on momor device,
Speaker 11: why not right?
Speaker 2: So where are we in kind of that evolution in
Speaker 2: terms of really putting more and more of the content
Speaker 2: of the technology, of the capabilities in the cloud. How
Speaker 2: is that changing the gaming experience the gaming business?
Speaker 11: Yes? So the key pain point to cloud gaming is
Speaker 11: network latency because that literally depends on the distance between
Speaker 11: the user's hardware, whether a mobile device or console, to
Speaker 11: the nearest cell tower. And we know that five G
Speaker 11: network coverage are improving not just in emerging markets, but
Speaker 11: also becoming better in even develop markets including China and
Speaker 11: the US and so as that infrastructure and also cloud
Speaker 11: improved because the proximity to data centers also is factor
Speaker 11: in determining the experience of cloud. So far, you know,
Speaker 11: in emerging market there is a pain point, but we're
Speaker 11: seeing really huge uptick in coverage footprint, whether five G
Speaker 11: or four glte in markets like India and Middle East
Speaker 11: and Latin America. So that just support our conclusion that
Speaker 11: you know, in the next ten years, the experience that
Speaker 11: pain point would become better. And also let's not forget
Speaker 11: that you know, mobile phones, mobile screens capture you know,
Speaker 11: a lot of our attention economy. Actually, there's a study
Speaker 11: according to Harmony Harmony Healthcare it that it captures more
Speaker 11: than five hours of our time every every day, at
Speaker 11: about twenty percent of those times actually go to gaming
Speaker 11: among Generation Alpha and Generation Z and the other bulk
Speaker 11: of the gamers. And also these gamers don't really care
Speaker 11: about playing games at home anymore if they can play
Speaker 11: on mobile because what they care about is access and
Speaker 11: also be able to do things on their mobile devices.
Speaker 11: So I feel like with this generation coming up and
Speaker 11: entering into the workforce, and they're the one who would
Speaker 11: see spending power increasing. And I feel like there's a
Speaker 11: lot less inclination to actually play games on a console.
Speaker 11: If down ten years downline, you can have the same
Speaker 11: experience playing games on a mobile device.
Speaker 2: Thanks to Nathan Nadu, Bloomberg Intelligence technology research.
Speaker 3: Analyst, coming up from factory floors to farm fields, how
Speaker 3: US machinery makers are positioned for twenty twenty six.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio for writing
Speaker 2: in depth research and data on two thousand companies and
Speaker 2: one hundred and thirty industries.
Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal.
Speaker 3: I'm Scarlett Foo and.
Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
Speaker 1: on Bloomberg Radio.
Speaker 2: Let's turn out to US machinery heading into twenty twenty six.
Speaker 2: The outlook is defined by softer demand but steady investment,
Speaker 2: and manufacturers focus on automation, replacement cycles and cost discipline.
Speaker 3: For more on this, Paul caught up with Chrispherchilino, Bloomberg
Speaker 3: Intelligence Senior US machinery analyst.
Speaker 12: We believe that the US machinery earnings are likely approaching
Speaker 12: a inflection point in twenty twenty six, really after a
Speaker 12: multi year downturn. You know, despite lingering tariff headwinds, the
Speaker 12: prospect of lower interest rates, policy and regulatory clarity, normalizing inventories,
Speaker 12: and better pricing have really provided a favorable setup for
Speaker 12: most machinery producers heading into twenty six. I would say
Speaker 12: the outlooks do vary a little bit by end market.
Speaker 12: You know, we're most constructive on the outlook for construction
Speaker 12: equipment next year, particularly as non residential construction markets approach
Speaker 12: to trough. You also have favorable secular trends around power generation,
Speaker 12: infrastructure and mega projects as well as some of these
Speaker 12: reshoring investments. So we have really good visibility in terms
Speaker 12: of twenty six and really even beyond. On the flip
Speaker 12: side of that, we're a little more cautious on the
Speaker 12: ad equipment outlook, and then I throw, you know, commercial
Speaker 12: vehicles somewhere in between.
Speaker 2: There equipment companies. I think about Caterpillar, for example, and
Speaker 2: that stocks up fifty four year to date. So has
Speaker 2: the market already discounted the cyclical up turner ors or
Speaker 2: more to go.
Speaker 12: Yeah, I think there's a lot of runway here. You know,
Speaker 12: there's been a lot of optimism around their power gen
Speaker 12: and exposure to the data center market. But I think
Speaker 12: we're still very early innings in this story playing out.
Speaker 12: They're going to double their large engine capacity here through
Speaker 12: the end of the decade. Gas turbines are going to
Speaker 12: be up two and a half times. You're just beginning
Speaker 12: to see some of these products come to the marketplace,
Speaker 12: and really there's just insatiable demand for power generation, and
Speaker 12: I would say Caterpillar and Cummings are somewhat uniquely positioned
Speaker 12: within the machinery space to kind of capitalize on these
Speaker 12: these longer term secular stories.
Speaker 2: Yeah, that is a long term secular story power generation.
Speaker 2: So did do they disclose backlog information or anything like
Speaker 2: that to get a sense of kind of how big
Speaker 2: this business could be for them?
Speaker 12: Yeah, So Caterpillar's backlog for the enterprise is at a
Speaker 12: record level and it just continues to, you know, set
Speaker 12: new records with each passing quarter. In terms of their
Speaker 12: actual power generation business. Uh, No, they keep that pretty
Speaker 12: close to the vest, but it does expend, It does
Speaker 12: extend multiple years and the fact that they're making you know,
Speaker 12: essentially more than doubling their large engine capacity through the
Speaker 12: end of the decade. Just I think uh lends support
Speaker 12: to they have very good visibility for several years out
Speaker 12: and same thing I would allude to that as Cummings
Speaker 12: as well. You know, they have very good backlog visibility
Speaker 12: in terms of their power generation business. And then you
Speaker 12: throw on, you know, the cyclical recovery that we should
Speaker 12: see in these businesses. It's a pretty favorable set up,
Speaker 12: not only for twenty six but beyond all.
Speaker 2: Right, you mentioned the other part of the business are
Speaker 2: a different part of the business, one that focuses on
Speaker 2: the agricultural sector of the economy. We know the farmers
Speaker 2: in a really tough spot these days, and when they
Speaker 2: face financial difficulties, they're not buying deer tractors and things
Speaker 2: like that. So what's the outlook there over twenty six Yeah, right.
Speaker 12: Now, we anticipate that the large ag market here in
Speaker 12: North America will be down another ten to fifteen percent
Speaker 12: in twenty twenty six, So this is going to mark
Speaker 12: the third year of a downturn. And really, to put
Speaker 12: things into perspective, assuming we're down in other you know,
Speaker 12: double digits in twenty six, we're going to be volumes
Speaker 12: are going to be at the lowest level in more
Speaker 12: than four decades as long as we've been tracking the industry.
Speaker 12: So I do think there's pretty high degree of confidence
Speaker 12: that this will mark the trough of the cycle. And
Speaker 12: we actually think that downside risk is probably limited here
Speaker 12: and relative to a lot of the other sectors that
Speaker 12: we cover. The problem is, you know, farm fundamental still
Speaker 12: remain quite weak, crop prices are still low, while the
Speaker 12: government still continues to hand out additional aid payments. Farmers
Speaker 12: historically don't use this to go out and spend on
Speaker 12: new machinery. But we think really the bigger overhang here
Speaker 12: is still the lingering export market uncertainty. You know, we
Speaker 12: did have a US China trade agreement. I think farmers
Speaker 12: are really just going to take a wait and see approach,
Speaker 12: and until we get tangible progress on you know, China
Speaker 12: executing on some of these purchase orders and commitments, I
Speaker 12: think farmers are just going to be hesitant to go
Speaker 12: out and spend on equipment. When we do see that
Speaker 12: come to fruition, hopefully then you'll start to see a
Speaker 12: rebound and crop prices, and then maybe we could become
Speaker 12: a little bit more constructive on the equipment outlook there.
Speaker 2: So just to put a bow on that, Chris weig
Speaker 2: about thirty seconds off, what is the export market for
Speaker 2: the US farmer generally on average? And what is it today?
Speaker 12: Yeah, so we export the vast majority of particularly our
Speaker 12: row crops soybeans. China is still the largest buyer of
Speaker 12: our beans. We do send a lot of corn to
Speaker 12: Mexico in Japan as well, but put those big row
Speaker 12: crops corn, soy wheat. That's what really drives farmer profitability.
Speaker 12: It's more than half of US crop cash receipts and
Speaker 12: we need to start to see some kind of a
Speaker 12: rebound there before. I think we've become a little bit
Speaker 12: more positive on the outlook.
Speaker 2: Thanks to Chris Cheerle, you know, Bloomberg Intelligence senior US
Speaker 2: machinery analyst. We shift gears now to the creative side
Speaker 2: of financial storytelling.
Speaker 3: Wall Street has long been a backdrop for films exploring ambition,
Speaker 3: excess and high stakes drama, from The Wolf of Wall
Speaker 3: Street to Margin Call and The Big Short.
Speaker 2: Now you can add another to your list. It's called
Speaker 2: bull Run, a film based on the memoir entitled Discussion
Speaker 2: Materials Tales of a Rookie Wall Street Investment Banker. For more,
Speaker 2: we caught up the film's writer and producer, Bill Keenan.
Speaker 13: So like all those movies classics, right, they, bull Run
Speaker 13: has an outsider as a protagonist, So we kind of
Speaker 13: have that journey of someone entering this world trying to
Speaker 13: figure out what to do and where they fit in.
Speaker 13: I think the difference is a lot of those films
Speaker 13: follow that story of kind of there's this crazy excess,
Speaker 13: there's ultimately this corruption that happens and then redemption, and
Speaker 13: the protagonist in bull Run really retains this outsider's perspective,
Speaker 13: which is the way I experienced it. I kind of
Speaker 13: saw life through the eyes of a storyteller and tried
Speaker 13: to maintain this distance, and I think we tried to
Speaker 13: do that in this film. So it's not so much
Speaker 13: about the corruption as it is about just observing the
Speaker 13: absurdity that goes on in this world.
Speaker 2: So you were on Wall Street. Tell us what you
Speaker 2: did in Wall Street and how that might have influenced
Speaker 2: kind of this product.
Speaker 13: Yeah, what I did, well, my title I was an
Speaker 13: investment banking associate in the Industrials group at Deutsche Bank.
Speaker 13: We parted ways after about two years. I think it
Speaker 13: was mutual. It wasn't for me, and it wasn't They
Speaker 13: weren't sad to see me go, but it was I mean,
Speaker 13: the beauty of Wall Street is that again as a storyteller,
Speaker 13: it's such a combustible environment. So everything is so urgent
Speaker 13: and is life and death. But then it's like this
Speaker 13: is a specialty lubricin's deal, and like it's not. It's
Speaker 13: okay if it doesn't go through, but it's fun to
Speaker 13: be a part of it. I knew the second that
Speaker 13: I started this would be so ripe with anecdotes and
Speaker 13: characters that it was you know, I need to stay
Speaker 13: long enough that I could get enough material to write
Speaker 13: about it.
Speaker 3: I kind of think of your book Discussion Materials as
Speaker 3: a twenty twenty version of Liars Poker, except instead of
Speaker 3: bond Trader, as you're writing about investment bankers. So when
Speaker 3: you were there, I mean, you kind of sounds like
Speaker 3: you decided early on that you're going to take notes
Speaker 3: and observe everything. What were you doing in meetings? Were
Speaker 3: you taking notes on what people were saying, or were
Speaker 3: you kind of engaging in you know, the lubricant steal.
Speaker 13: Yeah, I mean, I mean, I think you know like this.
Speaker 13: I was always commended at the beginning by like the
Speaker 13: staffers and the senior bankers because they saw me with
Speaker 13: the notepads and every day it was a new notepad.
Speaker 13: And of course they didn't necessarily know that I wasn't
Speaker 13: taking notes on the content as much as like who
Speaker 13: was doing what and what would lend itself to a story.
Speaker 13: But it was, you know, it felt like it was
Speaker 13: a lot longer than two years, but I got I
Speaker 13: got enough out out of those two years to you know.
Speaker 2: They pack a lot in two years because you're working
Speaker 2: around the clock.
Speaker 13: You're working, Yeah, And you know, I'd like to kind
Speaker 13: of the way that I try to capture what the
Speaker 13: experience was like. The first day that I showed up,
Speaker 13: I didn't even know where my desk was, and I'm
Speaker 13: kind of going around this maze of cubicles and I
Speaker 13: get called over to the staffer and he says, here's
Speaker 13: an address, and here's three names. And ultimately what I
Speaker 13: was tasked with doing that first day was taking around
Speaker 13: these three energy executives through midtown Manhattan. They start were
Speaker 13: starting a new venture and they were looking to raise
Speaker 13: like a couple hundred million dollars from these private equity firms.
Speaker 13: And so I said to the staffer, you know, we
Speaker 13: just met. You know, I don't know what's going on.
Speaker 13: And his response was definitely, don't tell that to these guys,
Speaker 13: like as far as they know, you're a full timer
Speaker 13: and you've been here for a long time. And so
Speaker 13: you know, being thrown in the deep end. Then ultimately
Speaker 13: meeting these guys and and feeling that responsibility, it was,
Speaker 13: you know, you feel accountable. Tuesday, I show up, I
Speaker 13: gets AFT on a fertilizer deal and I had two
Speaker 13: tasks that day. I do find my desk. I sit
Speaker 13: at my desk for twelve hours. And the first task
Speaker 13: is to chart the cow dung spot prices historically over time.
Speaker 13: And the second thing is the managing director in that
Speaker 13: sector he had recently undergone gastric bypass surgery. He lost
Speaker 13: about eighty pounds, and so I had to change the
Speaker 13: photo of him in the team pages of all the decks.
Speaker 13: And I'm thinking, Monday, Tuesday, what's Wednesday going to bring?
Speaker 13: But like this is this is like two, this is gold.
Speaker 3: It is gold. But you know, and this is why
Speaker 3: it's so great talking to you and the book is
Speaker 3: so fantastic. You also chronicle participating in these odd meetings
Speaker 3: with managing directors, updating sell spreadsheets at two in the morning,
Speaker 3: reformatting the font in pitch books. I think about all
Speaker 3: this and how open AI in twenty twenty five is
Speaker 3: hiring former investment bankers to train its models and presumably
Speaker 3: replace the need for to hire people like you to
Speaker 3: handle these mundane tasks. Is that a good thing.
Speaker 13: I think all these things are going to need oversight,
Speaker 13: like we know. But I mean, the reality is we
Speaker 13: were sort of outsourcing it, not to AI, but to
Speaker 13: all these other companies and other countries, and they did
Speaker 13: a lot of my work. To be honest, I kind
Speaker 13: of took credit for most of it and change the
Speaker 13: names and made sure all the everything appeared as though
Speaker 13: I had done the work. But anything that makes it
Speaker 13: more efficient and gets kind of people out of the
Speaker 13: way when they don't serve a purpose, that's additive. I
Speaker 13: think it is useful.
Speaker 2: Yeah, I've been telling Scarlett, you know, the first two
Speaker 2: or three years of my I was in investment banking
Speaker 2: associate as well. After business. Well, I felt like most
Speaker 2: of what I did can be I'm sorry to say,
Speaker 2: but I mean, though I need to be sitting at
Speaker 2: the printer at two o'clock in the morning on a Tuesday,
Speaker 2: I can't AI do this with me.
Speaker 13: But totally the fact is though to have that experience
Speaker 13: as a human to pay or use their huge value
Speaker 13: to that, and you hope that there's a way. I
Speaker 13: think the way humans are, they always find a way
Speaker 13: to go towards struggle.
Speaker 2: My kids are in the workforce now and the whole
Speaker 2: work from home versus I'm like, go to the office.
Speaker 2: All my memories are sitting at the printer and the
Speaker 2: guys I sat at the printer with at two o'clock
Speaker 2: in the morning on a Tuesday, and they're still my
Speaker 2: best friend, the guys that I can call up and
Speaker 2: they will I need anything.
Speaker 4: Boom.
Speaker 3: Yeah, that's how it goes with Band of Brothers. Really, So, Bill,
Speaker 3: when you adapted this into a film, what was that
Speaker 3: process like? Was that I mean, I'm sure you could
Speaker 3: write a book about that process too.
Speaker 2: Yeah, I mean.
Speaker 13: There were practical issues. We shot it during the pandemic,
Speaker 13: so this was an independent film shot in one location.
Speaker 13: So we're all over each other. We got the mass on.
Speaker 13: We had to shut down production in fact for a
Speaker 13: couple of days, so there was that. We got through it.
Speaker 13: As far as the story, you know, so much of
Speaker 13: my experience was me versus Excel, me versus PowerPoint me,
Speaker 13: and the phone with somebody telling me the numbers didn't tie.
Speaker 13: I just screwed this up. And so there's a lot
Speaker 13: of internal drama that's great for a book but does
Speaker 13: not lend itself to a visual medium. So the director
Speaker 13: did a great job of really retaining the spirit of
Speaker 13: the book and the humor and how I viewed that world,
Speaker 13: but then putting it in a visually compelling, commercial sort
Speaker 13: of feel.
Speaker 2: Our thanks to Bill keenan writer and producer of the
Speaker 2: film Bull Run. That's this week's edition of Bloomberg Intelligence
Speaker 2: on Bloomberg Radio, providing in depth research and data on
Speaker 2: two thousand companies and one hundred and thirty industries.
Speaker 3: And remember you can access Bloomberg Intelligence via b I
Speaker 3: go on the terminal. I'm Scarlett Foo and.
Speaker 2: I'm Paul Sweeney. Stay with us. Today's top stories and
Speaker 2: global business headlines are coming up right now.