1 00:00:02,920 --> 00:00:11,799 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence 2 00:00:11,840 --> 00:00:13,600 Speaker 1: with Alex steel and Paul Sweeney. 3 00:00:13,720 --> 00:00:16,919 Speaker 2: The real app performance has been the US corporate high yield. 4 00:00:17,079 --> 00:00:19,480 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:19,520 --> 00:00:23,320 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:22,800 --> 00:00:26,400 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:26,440 --> 00:00:29,080 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:29,280 --> 00:00:32,360 Speaker 2: These are two big time blue chip companies. 9 00:00:32,520 --> 00:00:36,120 Speaker 3: The window between the peak and cut changing super fast. 10 00:00:36,280 --> 00:00:40,880 Speaker 1: Bloomberg Intelligence with Alex Steinel and Paul Sweeney on Bloomberg Radio. 11 00:00:42,240 --> 00:00:44,760 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 12 00:00:44,800 --> 00:00:47,519 Speaker 2: business stories impacting Wall Street and the global markets. 13 00:00:47,600 --> 00:00:49,800 Speaker 3: Each and every week we provide you in depth research 14 00:00:49,840 --> 00:00:51,720 Speaker 3: and data on some of the two thousand companies and 15 00:00:51,760 --> 00:00:54,560 Speaker 3: one hundred and thirty industries our analysts cover worldwide. 16 00:00:54,640 --> 00:00:56,960 Speaker 2: Today, we'll look at how Boing seven three seven Max 17 00:00:57,040 --> 00:00:58,680 Speaker 2: crisis is weighing on deliveries. 18 00:00:58,760 --> 00:01:00,840 Speaker 3: Plus we'll talk about how many countries are building their 19 00:01:00,840 --> 00:01:03,440 Speaker 3: own killer technology based on Iranian designs. 20 00:01:03,600 --> 00:01:06,399 Speaker 2: But first we dive into big tech and Apple. We 21 00:01:06,480 --> 00:01:09,440 Speaker 2: heard that Apple assembled fourteen billion dollars of iPhones in 22 00:01:09,440 --> 00:01:12,520 Speaker 2: India for the last fiscal year, doubling its production. 23 00:01:12,720 --> 00:01:14,840 Speaker 3: It's a sign that Apple is accelerating a push to 24 00:01:14,880 --> 00:01:17,600 Speaker 3: diversify beyond China. So for more we were drawn by 25 00:01:17,640 --> 00:01:21,280 Speaker 3: anirag Rana Bloomberg Intelligence technology analyst, and we asked Aniraq 26 00:01:21,360 --> 00:01:24,080 Speaker 3: why Apple has been cutting its reliance on China. 27 00:01:24,120 --> 00:01:26,000 Speaker 4: One of the things we have seen that over the 28 00:01:26,080 --> 00:01:28,720 Speaker 4: last two and a half three years, Apple has been 29 00:01:28,760 --> 00:01:31,800 Speaker 4: assembling its phone outside and you know, for us, the 30 00:01:31,840 --> 00:01:34,319 Speaker 4: real reason for that is a couple of years ago, 31 00:01:34,400 --> 00:01:37,319 Speaker 4: there was a COVID big issue in China. It had 32 00:01:37,319 --> 00:01:40,320 Speaker 4: an impact on some of the phones coming out, that 33 00:01:40,360 --> 00:01:43,520 Speaker 4: had an impact on sales and so forth. Now having 34 00:01:43,560 --> 00:01:47,080 Speaker 4: said that, that was one reason. Second Apple, prior to 35 00:01:47,160 --> 00:01:49,840 Speaker 4: the you know, you could say the COVID issue was 36 00:01:50,040 --> 00:01:54,760 Speaker 4: completely dependent on China for all the assembly and their pots. 37 00:01:55,160 --> 00:01:57,360 Speaker 4: Now what we are seeing is they are moving out 38 00:01:57,360 --> 00:02:01,200 Speaker 4: of the assembly from China into other eights, mostly India. 39 00:02:01,600 --> 00:02:03,960 Speaker 4: But one of the things I tell everybody at the 40 00:02:04,000 --> 00:02:07,040 Speaker 4: same time, they still make most of the parts, so 41 00:02:07,080 --> 00:02:09,120 Speaker 4: it's you know, if we ever get into a problem 42 00:02:09,120 --> 00:02:13,400 Speaker 4: with China in terms of geopolitical issues, we still lean 43 00:02:13,480 --> 00:02:15,720 Speaker 4: those parts to assemble the phone. It's not as if 44 00:02:15,919 --> 00:02:18,280 Speaker 4: you know, those parts are available all over the world, 45 00:02:18,800 --> 00:02:19,240 Speaker 4: an rag. 46 00:02:19,400 --> 00:02:22,639 Speaker 2: I just wonder how you know investors in Apple view 47 00:02:22,680 --> 00:02:25,200 Speaker 2: this China risk? Are they of the opinion I assume 48 00:02:25,200 --> 00:02:27,280 Speaker 2: that if they own stock in the company there they 49 00:02:27,320 --> 00:02:29,440 Speaker 2: have some level of comfort with the China risk here? 50 00:02:29,680 --> 00:02:31,680 Speaker 2: Did they just believe it's hey, you know, it's kind 51 00:02:31,720 --> 00:02:35,320 Speaker 2: of a mutually beneficial relationship Apple and China that at 52 00:02:35,360 --> 00:02:37,240 Speaker 2: the end of the day, that's what's going to keep 53 00:02:37,320 --> 00:02:38,000 Speaker 2: everything moving. 54 00:02:38,680 --> 00:02:41,440 Speaker 4: Well, I've seen two people, I mean two different buckets. 55 00:02:41,440 --> 00:02:44,560 Speaker 4: One is, people are extremely concerned about the US China 56 00:02:44,639 --> 00:02:47,640 Speaker 4: relationship in the long run. They obviously have you know, 57 00:02:47,639 --> 00:02:50,639 Speaker 4: they don't want to deal with Apple or any other 58 00:02:50,680 --> 00:02:53,760 Speaker 4: companies that you know, fall into that bucket. But the 59 00:02:53,800 --> 00:02:56,160 Speaker 4: others said, listen, this is spart and parcel of the 60 00:02:56,160 --> 00:03:00,200 Speaker 4: global world chain, supply chains, and most manufacturing companies are 61 00:03:00,200 --> 00:03:02,880 Speaker 4: dependent on China. Like it or not. They seem to 62 00:03:02,919 --> 00:03:07,639 Speaker 4: be okay with it, you know from our side, you know, yes, absolutely. 63 00:03:07,720 --> 00:03:11,000 Speaker 4: The biggest risk that Apple faces from a stock point 64 00:03:11,040 --> 00:03:12,960 Speaker 4: of view, from a revenue point of view, from a 65 00:03:12,960 --> 00:03:15,840 Speaker 4: supply chain point of view, is if something happens between 66 00:03:15,880 --> 00:03:18,000 Speaker 4: the US and China, and we've talked about that quite 67 00:03:18,040 --> 00:03:20,640 Speaker 4: a bit, but from a sales point of view, I 68 00:03:20,639 --> 00:03:23,040 Speaker 4: think it is to me that's a bigger issue right 69 00:03:23,080 --> 00:03:27,200 Speaker 4: now in the medium term, because China accounts for eighteen 70 00:03:27,200 --> 00:03:30,520 Speaker 4: to twenty percent of total of Apple sale and frankly speaking, 71 00:03:30,760 --> 00:03:33,360 Speaker 4: that is the big growth engine, and we have seen 72 00:03:33,440 --> 00:03:36,240 Speaker 4: over the last twelve months of problems in that growth 73 00:03:36,240 --> 00:03:37,480 Speaker 4: engine because of huahweh. 74 00:03:37,960 --> 00:03:41,000 Speaker 3: How much do they make these phones for in India 75 00:03:41,160 --> 00:03:43,640 Speaker 3: versus China versus other areas, and trying to get a 76 00:03:43,640 --> 00:03:45,640 Speaker 3: sense of where the margins are and what they look like. 77 00:03:46,440 --> 00:03:48,920 Speaker 4: That's a very good question. And frankly speaking, we thought 78 00:03:48,960 --> 00:03:51,720 Speaker 4: when they started making more phones in India or we 79 00:03:51,800 --> 00:03:54,320 Speaker 4: started seeing new phones coming out of that, that would 80 00:03:54,400 --> 00:03:56,560 Speaker 4: have an impact on their gross margins. But they have 81 00:03:56,640 --> 00:03:59,320 Speaker 4: managed it very well. And remember one of these things, 82 00:03:59,360 --> 00:04:01,960 Speaker 4: it's the fact increase that they outsourced their stuff to 83 00:04:02,800 --> 00:04:05,520 Speaker 4: and you know, it's kind of somebody else's headache. But 84 00:04:05,760 --> 00:04:07,680 Speaker 4: in the end, you know, Apple will have to make 85 00:04:07,760 --> 00:04:11,440 Speaker 4: some you could say, concessions. But at the same time, 86 00:04:11,560 --> 00:04:14,840 Speaker 4: so far we have not seen any impact on Apple's 87 00:04:14,840 --> 00:04:17,400 Speaker 4: gross margins. I mean surprisingly we have seen them you know, 88 00:04:17,440 --> 00:04:19,480 Speaker 4: hold up very nicely over the last two years. 89 00:04:19,640 --> 00:04:22,479 Speaker 2: Can you just kind of characterize a competitive landscape for 90 00:04:23,040 --> 00:04:27,240 Speaker 2: Apple in China visa the Huawei and other phones here 91 00:04:27,279 --> 00:04:30,880 Speaker 2: are they maintaining share, losing share, gaining share? How's Apple doing? 92 00:04:31,440 --> 00:04:31,520 Speaker 3: So? 93 00:04:31,680 --> 00:04:34,520 Speaker 4: Apple has not done the same number of sales as 94 00:04:34,560 --> 00:04:37,039 Speaker 4: Wawe over the last twelve months. Now, there are two 95 00:04:37,040 --> 00:04:40,120 Speaker 4: elements of it. One is the competitive landscape. People are 96 00:04:40,160 --> 00:04:43,280 Speaker 4: choosing Chinese phone so over a foreign brand, So that's 97 00:04:43,320 --> 00:04:46,880 Speaker 4: one aspect. The second aspect, which I'm hoping is probably 98 00:04:47,080 --> 00:04:49,400 Speaker 4: you know correct in the long run for Apple's sake, 99 00:04:49,800 --> 00:04:52,080 Speaker 4: is that Wahwei didn't have a very you know, brand 100 00:04:52,080 --> 00:04:54,440 Speaker 4: new phone for several years, and this is their first 101 00:04:54,480 --> 00:04:57,440 Speaker 4: big new refresh, which is why people who have been 102 00:04:57,800 --> 00:04:59,840 Speaker 4: using Quawei phones in the past are going out and 103 00:05:00,000 --> 00:05:02,720 Speaker 4: refreshing their phone at a much faster clip. So that 104 00:05:02,760 --> 00:05:06,279 Speaker 4: could be the second reason Apple is it doesn't have 105 00:05:06,400 --> 00:05:09,560 Speaker 4: that same you know I would say, I mean, the 106 00:05:09,560 --> 00:05:12,280 Speaker 4: cache is still there. But typically what I would do 107 00:05:12,400 --> 00:05:14,480 Speaker 4: is if I have an Apple phone, you know, I'm 108 00:05:14,520 --> 00:05:17,200 Speaker 4: doing everything on it, you know, chat and the pictures. 109 00:05:17,240 --> 00:05:19,400 Speaker 4: But in China, what happens is you do a whole 110 00:05:19,440 --> 00:05:23,200 Speaker 4: lot of your transactions using the apps that you have 111 00:05:23,480 --> 00:05:26,200 Speaker 4: or the super apps, and for that you can download 112 00:05:26,200 --> 00:05:29,040 Speaker 4: those app in any ecosystem. So I would say, on 113 00:05:29,040 --> 00:05:31,360 Speaker 4: a on a you know, competitive basis, you are less 114 00:05:31,400 --> 00:05:33,919 Speaker 4: prone to be an Apple customer than you are in 115 00:05:33,960 --> 00:05:34,719 Speaker 4: the Western world. 116 00:05:34,760 --> 00:05:37,440 Speaker 3: Well that's interesting. So and then to that point, is 117 00:05:37,480 --> 00:05:40,200 Speaker 3: that what the regulation or the penalties in the EU 118 00:05:40,240 --> 00:05:42,039 Speaker 3: and the US is going to force Apple to do 119 00:05:42,120 --> 00:05:45,560 Speaker 3: an essence, so it won't become that ecosystem in the 120 00:05:45,600 --> 00:05:46,080 Speaker 3: same way. 121 00:05:47,160 --> 00:05:48,919 Speaker 4: Well, there is no super app in the US that 122 00:05:49,040 --> 00:05:50,800 Speaker 4: is very much like v chat. I mean you could 123 00:05:50,839 --> 00:05:52,760 Speaker 4: you could say WhatsApp could be one of them. But 124 00:05:53,240 --> 00:05:55,720 Speaker 4: frankly speaking, I mean Apple's done such a good job 125 00:05:55,800 --> 00:05:59,240 Speaker 4: of uh you know, I would say, maintaining their customer 126 00:05:59,279 --> 00:06:02,880 Speaker 4: base in the US and in Europe. That I mean, 127 00:06:03,000 --> 00:06:05,080 Speaker 4: I don't I don't see that happening. That certainly a 128 00:06:05,120 --> 00:06:07,680 Speaker 4: new app comes in and people start using that over 129 00:06:07,960 --> 00:06:10,000 Speaker 4: what's going on with Apple or the habits that they 130 00:06:10,080 --> 00:06:10,720 Speaker 4: have right now. 131 00:06:10,920 --> 00:06:12,600 Speaker 3: So what's the next catalyst now for Apple? What are 132 00:06:12,600 --> 00:06:14,560 Speaker 3: you looking at? Well, any catalyst I guess would. 133 00:06:14,320 --> 00:06:16,560 Speaker 4: Be a big ate the tune I mean that's it's 134 00:06:16,640 --> 00:06:20,479 Speaker 4: Tune's Worldwide Developers conference where they are supposed to talk 135 00:06:20,480 --> 00:06:23,560 Speaker 4: about AI and what's a of Apple's AI strategy. That 136 00:06:23,720 --> 00:06:26,599 Speaker 4: is the only thing that can actually put some fire 137 00:06:26,640 --> 00:06:28,880 Speaker 4: in this because other than that, I mean, we don't 138 00:06:28,880 --> 00:06:31,640 Speaker 4: see China bouncing back this year. We don't see any 139 00:06:31,680 --> 00:06:35,240 Speaker 4: major new product announcement, and obviously Apple Vision pro is 140 00:06:35,279 --> 00:06:38,120 Speaker 4: not going to drive the overall growth rate of the company. 141 00:06:38,360 --> 00:06:41,599 Speaker 4: So it's the iPhone and if there is anything that's 142 00:06:41,600 --> 00:06:43,839 Speaker 4: out there that can force Paul to go out and 143 00:06:43,880 --> 00:06:45,760 Speaker 4: buy a new phone, I think that's going to drive 144 00:06:45,800 --> 00:06:46,440 Speaker 4: the next cycle. 145 00:06:46,600 --> 00:06:50,240 Speaker 2: Our Thanks to anor Ad Rana, Bloomberg Intelligence technology analyst. 146 00:06:50,320 --> 00:06:52,919 Speaker 3: We next look at the Bloomberg Big Take story titled 147 00:06:52,960 --> 00:06:57,680 Speaker 3: Iran's Better Stealthier Drones are remaking global warfare. It's about 148 00:06:57,680 --> 00:07:00,880 Speaker 3: how countries from Central Asia to South America are building 149 00:07:00,920 --> 00:07:03,919 Speaker 3: their own killer technology based on Iranian designs, and the 150 00:07:03,960 --> 00:07:06,400 Speaker 3: tech often has US components. 151 00:07:06,680 --> 00:07:08,719 Speaker 2: For more, we were joined by the story's co author 152 00:07:08,839 --> 00:07:12,840 Speaker 2: Sheridan Prosso. She's a Bloomberg News senior investigations writer. We 153 00:07:12,960 --> 00:07:16,360 Speaker 2: first asked Sheridan what she learned from her investigation process. 154 00:07:16,640 --> 00:07:19,600 Speaker 5: We took a look at how US technology flows are 155 00:07:20,120 --> 00:07:23,720 Speaker 5: going into Iran's drone program, and what we found is 156 00:07:24,040 --> 00:07:27,920 Speaker 5: just an incredible proliferation of Iranian drones now spreading throughout 157 00:07:27,960 --> 00:07:30,920 Speaker 5: the world in ways that surprised even me from when 158 00:07:30,920 --> 00:07:33,000 Speaker 5: I first started looking into this. You know, we obviously 159 00:07:33,120 --> 00:07:37,200 Speaker 5: know about Iran's drone proliferation in the Middle East contexts 160 00:07:37,320 --> 00:07:41,440 Speaker 5: right through Syria, I Rock, including now into Yemen, and 161 00:07:41,480 --> 00:07:44,720 Speaker 5: then in the Middle East, you know, conflict in Gaza 162 00:07:44,800 --> 00:07:48,400 Speaker 5: now as well. We're seeing kind of use of Iranian 163 00:07:48,480 --> 00:07:52,440 Speaker 5: drones in the periphery of that conflict as well. But 164 00:07:52,560 --> 00:07:55,080 Speaker 5: what also was surprising to us we found is that, 165 00:07:55,360 --> 00:07:59,600 Speaker 5: you know, Iranian drones are now being manufactured in Russia. 166 00:07:59,640 --> 00:08:03,840 Speaker 5: There's a program for six thousand Iranian drones there that 167 00:08:04,160 --> 00:08:06,840 Speaker 5: are starting to turn up now in the battlefields of Ukraine. 168 00:08:07,040 --> 00:08:10,560 Speaker 5: They're increasing proliferation in places like Central Asia and in 169 00:08:10,600 --> 00:08:13,240 Speaker 5: South America as well, So it really is quite an 170 00:08:13,440 --> 00:08:15,280 Speaker 5: enormous spread around the world. 171 00:08:15,720 --> 00:08:18,600 Speaker 2: How is the technology, How advanced is the technology is 172 00:08:18,640 --> 00:08:21,000 Speaker 2: just a model airplane with a lawnmower engine on the 173 00:08:21,000 --> 00:08:23,000 Speaker 2: back or are they going something further? 174 00:08:23,840 --> 00:08:28,440 Speaker 5: It essentially is, and really it's fairly low tech. But 175 00:08:29,200 --> 00:08:33,280 Speaker 5: what's been really successful about these programs is that they 176 00:08:33,280 --> 00:08:37,880 Speaker 5: are increasingly developing them and learning from experiences on the battlefield, 177 00:08:37,880 --> 00:08:41,520 Speaker 5: for example in Ukraine. So what is now believed to 178 00:08:41,520 --> 00:08:46,160 Speaker 5: be the case is that Iran learned from the way 179 00:08:46,240 --> 00:08:49,400 Speaker 5: that Iranian drones were now being able to get into 180 00:08:49,520 --> 00:08:52,400 Speaker 5: Ukraine had increased their effectiveness in the Middle East context. 181 00:08:52,480 --> 00:08:55,679 Speaker 5: So it's increasingly battlefield experience and more and more use 182 00:08:55,720 --> 00:08:59,240 Speaker 5: of these drones that are allowing them to make more 183 00:08:59,440 --> 00:09:02,400 Speaker 5: deadly str actually and in these conflicts we're seeing them, 184 00:09:02,559 --> 00:09:06,040 Speaker 5: especially in the Red Sea. And also there was the 185 00:09:06,160 --> 00:09:10,520 Speaker 5: particular case of the three servicemen who were killed in 186 00:09:10,640 --> 00:09:14,319 Speaker 5: Jordan earlier this year. It was a fairly low tech 187 00:09:14,480 --> 00:09:16,920 Speaker 5: small drone, but what it was able to do is 188 00:09:17,480 --> 00:09:20,280 Speaker 5: we learned in the course of this reporting that it 189 00:09:20,320 --> 00:09:24,200 Speaker 5: was kind of drafting in behind a US drone that 190 00:09:24,240 --> 00:09:25,959 Speaker 5: was attempting to land at the same time. And those 191 00:09:26,040 --> 00:09:28,920 Speaker 5: drafting techniques are something that they've been working on improving 192 00:09:29,440 --> 00:09:32,679 Speaker 5: in the Russian and Ukrainian context. So this kind of 193 00:09:33,000 --> 00:09:37,760 Speaker 5: learning growing, proliferating using low tech technology but actually improving 194 00:09:37,800 --> 00:09:39,920 Speaker 5: its effectiveness is actually proving very deadly. 195 00:09:40,320 --> 00:09:41,400 Speaker 3: What can we do about this. 196 00:09:41,880 --> 00:09:45,360 Speaker 5: So the US has export controls where we try to 197 00:09:45,400 --> 00:09:49,360 Speaker 5: stop US technology from going into these drones and into 198 00:09:49,400 --> 00:09:52,880 Speaker 5: the manufacturing of these drones. The issue though, is that 199 00:09:53,600 --> 00:09:56,760 Speaker 5: Iran in particular has become a master of circumventing over 200 00:09:56,840 --> 00:10:00,440 Speaker 5: forty years of sanctions, there are very developed network where 201 00:10:00,480 --> 00:10:02,600 Speaker 5: front companies from all over the world are able to 202 00:10:02,640 --> 00:10:05,800 Speaker 5: acquire this low tech technology. A lot of our export 203 00:10:05,840 --> 00:10:08,360 Speaker 5: controls are aimed at stopping sort of the higher end 204 00:10:08,400 --> 00:10:11,040 Speaker 5: you know, chips now going to China for example, for 205 00:10:11,120 --> 00:10:14,560 Speaker 5: their AI, but in fact the proliferation of kind of 206 00:10:14,679 --> 00:10:17,400 Speaker 5: lower tech you know, you need like maybe a few 207 00:10:17,520 --> 00:10:20,560 Speaker 5: hundred low tech chips, the kind that go into your 208 00:10:20,679 --> 00:10:25,280 Speaker 5: you know, lawnmower or blender, any kind of regular household equipment. 209 00:10:25,400 --> 00:10:28,000 Speaker 5: That low tech stuff is actually what's powering the drones 210 00:10:28,040 --> 00:10:30,600 Speaker 5: as well. And a lot of that is just available. 211 00:10:30,679 --> 00:10:35,520 Speaker 5: It's recycled from old products, it's available from suppliers in Asia. 212 00:10:35,760 --> 00:10:39,640 Speaker 5: China in particular has not been willing to enforce our 213 00:10:39,840 --> 00:10:45,120 Speaker 5: US export controls against Russia, for example, so there's actually 214 00:10:45,160 --> 00:10:47,880 Speaker 5: a very big loophole, particularly in Asia, for US tech 215 00:10:47,920 --> 00:10:52,320 Speaker 5: flowing now into Russia into I runs drone program in Russia. 216 00:10:52,480 --> 00:10:54,560 Speaker 5: So there are a bunch of concerted efforts now to 217 00:10:54,600 --> 00:10:55,640 Speaker 5: try to make that stop. 218 00:10:56,280 --> 00:10:59,600 Speaker 2: Sheridan, do we know how effective these drones are. 219 00:11:00,160 --> 00:11:03,080 Speaker 5: So they've been very deadly in particular instances. What we've 220 00:11:03,120 --> 00:11:06,559 Speaker 5: seen is a halt to I forget the percentage, maybe 221 00:11:06,600 --> 00:11:09,320 Speaker 5: more than fifty percent of shipping in the Red Sea 222 00:11:09,400 --> 00:11:12,439 Speaker 5: has been halted by some drone attacks. In the past 223 00:11:12,440 --> 00:11:15,679 Speaker 5: few months. We've saw the deadly attack in Lebanon and 224 00:11:15,720 --> 00:11:18,680 Speaker 5: several other very effective drone strikes as well, and so 225 00:11:19,120 --> 00:11:23,120 Speaker 5: it's really cause for alarm in Washington. You know, we're 226 00:11:23,160 --> 00:11:25,520 Speaker 5: wondering how far this is going to go, how effective 227 00:11:26,040 --> 00:11:28,520 Speaker 5: our efforts at stopping it are going to be. You know, 228 00:11:28,559 --> 00:11:32,680 Speaker 5: we're considering kind of how do you actually get US 229 00:11:32,720 --> 00:11:35,400 Speaker 5: companies to stop allowing their technology to go there. And 230 00:11:35,600 --> 00:11:38,840 Speaker 5: the companies that we talk to, for example, Texas Instruments, 231 00:11:38,920 --> 00:11:42,440 Speaker 5: Analog Devices, a lot of their staff at least eighty 232 00:11:42,480 --> 00:11:45,280 Speaker 5: percent of the drones that are turning up in Ukraine 233 00:11:45,640 --> 00:11:49,000 Speaker 5: or containing this US technology from in particularly these companies 234 00:11:49,280 --> 00:11:52,440 Speaker 5: and a few others as well, how do you get 235 00:11:52,480 --> 00:11:56,600 Speaker 5: that to stop and therefore decrease Iran's ability to proliferate 236 00:11:56,679 --> 00:11:58,360 Speaker 5: and that's the biggest question. 237 00:11:58,240 --> 00:11:59,720 Speaker 3: Right now, what did those companies say. 238 00:12:00,080 --> 00:12:03,360 Speaker 5: The companies say that we buy by US export controls, 239 00:12:03,400 --> 00:12:06,600 Speaker 5: we have our insisted our suppliers do so as well. 240 00:12:06,920 --> 00:12:09,120 Speaker 5: The issue is that there's so many loopholes, and in 241 00:12:09,160 --> 00:12:12,840 Speaker 5: particular Hong Kong is proving to be a very difficult place. 242 00:12:12,960 --> 00:12:15,679 Speaker 5: It used to be maybe ten, twelve or fifteen years ago, 243 00:12:15,720 --> 00:12:18,360 Speaker 5: we had much better relations with Hong Kong. They would 244 00:12:18,360 --> 00:12:21,640 Speaker 5: have been a lot closer to Western interests. And now 245 00:12:21,720 --> 00:12:24,000 Speaker 5: with the changes that have happened in Hong Kong in 246 00:12:24,040 --> 00:12:28,120 Speaker 5: the last three four years, we have seen less willingness 247 00:12:28,120 --> 00:12:31,160 Speaker 5: on the part of Hong Kong officials to actually enforce 248 00:12:31,520 --> 00:12:34,480 Speaker 5: US export controls, particularly going towards Russia, and so we've 249 00:12:34,480 --> 00:12:39,360 Speaker 5: seen a big uptick in proliferation from equipment going via 250 00:12:39,400 --> 00:12:42,720 Speaker 5: Hong Kong into Russia, for example. It is much better 251 00:12:42,880 --> 00:12:46,000 Speaker 5: though at enforcing UN sanctions against Iran, and so it 252 00:12:46,000 --> 00:12:48,120 Speaker 5: has successfully stopped a lot of technology going to run. 253 00:12:48,160 --> 00:12:50,640 Speaker 5: But still there are quite a few kind of leaks 254 00:12:50,679 --> 00:12:53,840 Speaker 5: in the dam basically, so it's happening all around. 255 00:12:53,800 --> 00:12:57,400 Speaker 2: Our Thanks to Sheridan Prosso Bloomberg News senior investigations writer. 256 00:12:57,760 --> 00:12:59,480 Speaker 3: Coming up, we're going to break down my Boeing seven 257 00:12:59,559 --> 00:13:02,000 Speaker 3: thirty seven Max crisis is weighing on deliveries. 258 00:13:02,200 --> 00:13:05,240 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 259 00:13:05,320 --> 00:13:07,440 Speaker 2: depth research and data on two thousand companies and one 260 00:13:07,520 --> 00:13:10,520 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 261 00:13:10,600 --> 00:13:11,760 Speaker 2: Bigo on the terminal. 262 00:13:11,920 --> 00:13:14,680 Speaker 3: I'm Paul Sweeney and am Alex Steel, and this is Bloomberg. 263 00:13:17,920 --> 00:13:21,800 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 264 00:13:21,880 --> 00:13:25,240 Speaker 1: weekdays at ten am Eastern on Applecarplay and enbroud Auto 265 00:13:25,320 --> 00:13:28,240 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 266 00:13:28,320 --> 00:13:31,760 Speaker 1: get your podcasts, or watch us live on YouTube. 267 00:13:32,840 --> 00:13:35,920 Speaker 3: We move next to the aerospace industry and Boeing. This week, 268 00:13:35,960 --> 00:13:39,120 Speaker 3: Boeing log the lowest deliveries in the first quarter since 269 00:13:39,160 --> 00:13:41,360 Speaker 3: mid twenty twenty one, and it shows just how far 270 00:13:41,440 --> 00:13:43,840 Speaker 3: the planemaker has to go on its road to recovery 271 00:13:44,000 --> 00:13:46,680 Speaker 3: from a near catastrophic accident early in January. 272 00:13:47,080 --> 00:13:49,839 Speaker 2: For more, we were joined by George ferguson Bloomberg Intelligence, 273 00:13:49,880 --> 00:13:53,720 Speaker 2: senior Aerospace, Defense and Airlines analyst. We first asked George 274 00:13:53,760 --> 00:13:55,960 Speaker 2: what the latest quarter means in terms of deliveries for 275 00:13:56,000 --> 00:13:57,319 Speaker 2: Boeing going forward. 276 00:13:57,280 --> 00:13:58,599 Speaker 6: For the year, I think this is going to be 277 00:13:58,640 --> 00:14:01,080 Speaker 6: the bottom. So i'd expect this was the worst quarter. 278 00:14:01,559 --> 00:14:03,680 Speaker 6: You know, the fa was in there doing their review 279 00:14:03,880 --> 00:14:06,720 Speaker 6: of Boeing's manufacturing. Boeing's got to come up for a 280 00:14:06,720 --> 00:14:09,400 Speaker 6: plan for the FAA. Imagine that takes some hands as well, 281 00:14:10,040 --> 00:14:13,400 Speaker 6: and manufacturing probably isn't moving very fast while they're in 282 00:14:13,440 --> 00:14:16,880 Speaker 6: the middle of this process of figuring out how to stabilize, 283 00:14:17,160 --> 00:14:20,480 Speaker 6: you know, the production of the airplanes. And so I 284 00:14:20,480 --> 00:14:22,520 Speaker 6: think for the year, this will be the worst quarter, 285 00:14:22,880 --> 00:14:25,480 Speaker 6: and I would expect that things would get better second, third, 286 00:14:25,560 --> 00:14:26,720 Speaker 6: and fourth into the end. 287 00:14:26,600 --> 00:14:27,000 Speaker 1: Of the year. 288 00:14:27,120 --> 00:14:28,680 Speaker 3: There's a couple of ways to break it down, so 289 00:14:28,760 --> 00:14:31,080 Speaker 3: let's just take it maybe piece by piece. First of all, 290 00:14:31,120 --> 00:14:33,240 Speaker 3: supply chain stuff that like Boeing will be a part 291 00:14:33,240 --> 00:14:35,240 Speaker 3: of and Airbus will be a part of too, Like, 292 00:14:35,280 --> 00:14:38,440 Speaker 3: how are the supply chain impacting their deliveries? 293 00:14:39,120 --> 00:14:41,840 Speaker 6: Well, I mean, right now, I think the biggest problem 294 00:14:41,880 --> 00:14:43,800 Speaker 6: is up at Boeing and not in the supply chain. 295 00:14:43,880 --> 00:14:46,240 Speaker 3: So the supply chain stuff is fixed, No, not at all. 296 00:14:46,280 --> 00:14:48,560 Speaker 6: So I meant for the number of deliveries we've seen 297 00:14:48,800 --> 00:14:52,080 Speaker 6: this quarter and the constriction in that number of deliveries. 298 00:14:52,120 --> 00:14:54,320 Speaker 6: This is all Boeing issue, right, This is all Boeing's 299 00:14:54,800 --> 00:14:59,320 Speaker 6: FAA review, their manufacturing review. Their supply chain, I think 300 00:14:59,400 --> 00:15:02,040 Speaker 6: is producing at at a higher rate than they are 301 00:15:02,120 --> 00:15:04,720 Speaker 6: right now. So Spirit Aero Systems would be an important 302 00:15:04,760 --> 00:15:08,480 Speaker 6: part of their supply chain. They're building somewhere around thirty 303 00:15:08,480 --> 00:15:11,400 Speaker 6: eight or they were building around thirty eight seven thirty 304 00:15:11,400 --> 00:15:14,160 Speaker 6: seven Maxes a month when we heard from them at 305 00:15:14,200 --> 00:15:15,800 Speaker 6: the end of the year, you know, for their four 306 00:15:15,920 --> 00:15:19,720 Speaker 6: Q earnings call. We understand from Spirit that their suppliers 307 00:15:20,120 --> 00:15:22,840 Speaker 6: were even building at higher rates than them in some 308 00:15:22,920 --> 00:15:26,040 Speaker 6: cases maybe even up at sort of forty two numbers. 309 00:15:26,440 --> 00:15:28,800 Speaker 6: And they're already thinking about Spirit moving to a forty 310 00:15:28,840 --> 00:15:31,440 Speaker 6: two number for the Max. Again we're talking Max, which 311 00:15:31,480 --> 00:15:34,680 Speaker 6: is the highest volume airplane. They were talking about Spirit 312 00:15:34,720 --> 00:15:37,760 Speaker 6: moving to a forty two number just prior to the 313 00:15:37,800 --> 00:15:41,560 Speaker 6: Alaska door panel incident, and that's when everything sort of 314 00:15:41,600 --> 00:15:43,080 Speaker 6: hit the skids. But I think most of it hit 315 00:15:43,120 --> 00:15:46,480 Speaker 6: the skids up at Boeing, which has to do manage 316 00:15:46,480 --> 00:15:50,800 Speaker 6: all the FAA, you know, inquiries and their manufacturing review. 317 00:15:51,240 --> 00:15:54,280 Speaker 2: George, if I guess from the company I don't want 318 00:15:54,280 --> 00:15:57,560 Speaker 2: to go too fast. I think, you know, I can't 319 00:15:57,560 --> 00:16:02,240 Speaker 2: have any more mishaps here. Almost like if I'm an investor, 320 00:16:02,280 --> 00:16:03,800 Speaker 2: I'm not sure I'm knocking on the door saying, hey, 321 00:16:03,840 --> 00:16:05,640 Speaker 2: you guys can't get back to thirty eight or forty 322 00:16:06,000 --> 00:16:07,800 Speaker 2: kind of do it when you can kind of thing. 323 00:16:08,000 --> 00:16:09,880 Speaker 6: Yeah, I mean, do it when you can. But I 324 00:16:09,920 --> 00:16:12,520 Speaker 6: mean in the long term interest of Boeing, they have 325 00:16:12,600 --> 00:16:15,760 Speaker 6: to increase build rates here and that's going to drive 326 00:16:15,840 --> 00:16:18,560 Speaker 6: better cash flow and better products. Okay, I mean, look, 327 00:16:18,560 --> 00:16:22,320 Speaker 6: their competitor across the Atlantic, right, which has, by the way, 328 00:16:22,360 --> 00:16:24,840 Speaker 6: has you know, final assembly facilities all around the world, 329 00:16:25,080 --> 00:16:26,760 Speaker 6: including one in Mobile, Alabamas. 330 00:16:26,800 --> 00:16:28,880 Speaker 2: Really Airbus has a thing in Mobile. 331 00:16:28,960 --> 00:16:32,160 Speaker 6: Absolutely, wow, absolutely, I don't know so. But their competitor 332 00:16:32,360 --> 00:16:35,480 Speaker 6: is operating up in the forty five range per month 333 00:16:35,520 --> 00:16:38,720 Speaker 6: for their A three twenty, the major competitor. If Boeing 334 00:16:38,760 --> 00:16:41,920 Speaker 6: wants to be in this business long term, they have 335 00:16:42,000 --> 00:16:44,840 Speaker 6: to stabilize production. You're right, but they've got to stabilize 336 00:16:44,840 --> 00:16:47,200 Speaker 6: it at much higher levels. Prior to the pandemic, they 337 00:16:47,200 --> 00:16:49,640 Speaker 6: were going close to sixty a month for the seven 338 00:16:49,720 --> 00:16:52,680 Speaker 6: thirty seven max. It can be done. Their job is 339 00:16:52,720 --> 00:16:53,880 Speaker 6: to make sure it happens. 340 00:16:54,320 --> 00:16:56,400 Speaker 2: So what's the timeline here? When do you think, like 341 00:16:56,520 --> 00:16:58,480 Speaker 2: year end, where would you like to see them? 342 00:16:58,600 --> 00:17:01,280 Speaker 6: So year end, what we've model the Bloomberg intelligence is 343 00:17:01,320 --> 00:17:04,160 Speaker 6: we think Boeing will be building thirty eight seven thirty 344 00:17:04,200 --> 00:17:07,880 Speaker 6: sevens a month by four Q, which should have been 345 00:17:07,920 --> 00:17:10,840 Speaker 6: where they started this year out at thirty eight. We 346 00:17:10,880 --> 00:17:12,920 Speaker 6: think they were looking to break to forty two by 347 00:17:12,920 --> 00:17:13,600 Speaker 6: the end of the year. 348 00:17:13,920 --> 00:17:16,680 Speaker 2: So do we ever get back to the sixty? Should 349 00:17:16,720 --> 00:17:17,760 Speaker 2: they ever get back to the sixty? 350 00:17:17,880 --> 00:17:19,040 Speaker 6: Well, I mean, if you again, if you look at 351 00:17:19,040 --> 00:17:22,080 Speaker 6: their competitor, their competitor says they're shooting for seventy five 352 00:17:22,119 --> 00:17:24,480 Speaker 6: a month on the A three twenty. So if their 353 00:17:24,520 --> 00:17:27,719 Speaker 6: competitor is breaking to those kind of rates, when you 354 00:17:27,800 --> 00:17:30,679 Speaker 6: break to higher rates on your primary narrow body, you 355 00:17:30,760 --> 00:17:33,399 Speaker 6: have the opportunity to go out to your customers and 356 00:17:33,520 --> 00:17:36,399 Speaker 6: non customers, people that might be upset at Boeing and 357 00:17:36,520 --> 00:17:39,439 Speaker 6: sell more airplanes. Right So, right now, what we're seeing is, 358 00:17:39,880 --> 00:17:41,880 Speaker 6: you know, United has expressed an interest in A three 359 00:17:41,920 --> 00:17:45,440 Speaker 6: twenty One's airbus is sort of constricted again, They've got 360 00:17:45,480 --> 00:17:48,880 Speaker 6: you know, the backlog is full. There's airlines that want 361 00:17:48,880 --> 00:17:51,560 Speaker 6: all those deliveries for the next number of years. We've 362 00:17:51,600 --> 00:17:54,479 Speaker 6: seen Jet Blue pop up and Spear Airlines pop up 363 00:17:54,480 --> 00:17:56,639 Speaker 6: and say, hey, we might be willing to give up 364 00:17:56,640 --> 00:17:58,480 Speaker 6: some of our airplanes. We think that's a function of 365 00:17:58,520 --> 00:18:01,600 Speaker 6: Airbus going out to those customers saying we have another 366 00:18:01,880 --> 00:18:04,399 Speaker 6: potential customer that would like a three twenty one's do 367 00:18:04,440 --> 00:18:06,560 Speaker 6: you definitely want everything you've got in the books for 368 00:18:06,560 --> 00:18:07,399 Speaker 6: the next couple of years. 369 00:18:07,720 --> 00:18:09,560 Speaker 3: This might be a very silly question, but how do 370 00:18:09,680 --> 00:18:12,640 Speaker 3: we get to the point where we got two airplane makers? 371 00:18:13,119 --> 00:18:14,240 Speaker 3: And how does that make sense? 372 00:18:14,840 --> 00:18:19,360 Speaker 6: This is not volume like automobiles, right, you sell right? 373 00:18:19,400 --> 00:18:21,080 Speaker 6: I mean a good year in this business is what 374 00:18:21,440 --> 00:18:24,160 Speaker 6: a little bit over one thousand airplanes a year? Right, 375 00:18:24,240 --> 00:18:28,320 Speaker 6: So it's not necessarily an industry that would support five 376 00:18:28,480 --> 00:18:32,000 Speaker 6: or six manufacturers with the right pricing and you know, 377 00:18:32,119 --> 00:18:34,200 Speaker 6: in the right margins. And then you've got to put 378 00:18:34,240 --> 00:18:36,840 Speaker 6: money into R and D and into development while you're 379 00:18:37,000 --> 00:18:38,520 Speaker 6: you know, so you've got to earn a decent return 380 00:18:38,600 --> 00:18:41,520 Speaker 6: so you can invest for the future. We did have 381 00:18:41,640 --> 00:18:43,760 Speaker 6: more right in the US. We had Boeing, we had 382 00:18:43,800 --> 00:18:47,959 Speaker 6: McDonald Douglas, Lockeed used to build a commercial aircraft, but 383 00:18:48,119 --> 00:18:50,760 Speaker 6: you know, I think over time it's slimmed down to 384 00:18:50,840 --> 00:18:53,520 Speaker 6: where you could make them profitable. And at the same time, 385 00:18:53,680 --> 00:18:56,879 Speaker 6: airbus was growing in Europe because the Europeans wanted to 386 00:18:56,920 --> 00:18:59,080 Speaker 6: be in this business. Right, This is a is a 387 00:18:59,119 --> 00:19:04,280 Speaker 6: good margin, strong manufacturing kind of industry which really supports 388 00:19:04,320 --> 00:19:08,040 Speaker 6: great jobs. They were rising and that meant some of 389 00:19:08,080 --> 00:19:11,240 Speaker 6: the US manufacturers had to go away to create room 390 00:19:11,359 --> 00:19:14,119 Speaker 6: for a European competitor. And what we have in the 391 00:19:14,119 --> 00:19:17,440 Speaker 6: horizon someday, I think it's probably five or six years 392 00:19:17,440 --> 00:19:19,639 Speaker 6: away at least, is the Chinese that want to be 393 00:19:19,680 --> 00:19:22,000 Speaker 6: in the business. So either the pie has to grow 394 00:19:22,280 --> 00:19:27,760 Speaker 6: even maybe fifty percent larger, or someone's got a dwindle 395 00:19:27,800 --> 00:19:29,000 Speaker 6: in that whole thing, right. 396 00:19:28,920 --> 00:19:32,479 Speaker 2: Our thanks to George ferguson Bloomberg Intelligence, Senior Aerospace, Defense 397 00:19:32,520 --> 00:19:35,639 Speaker 2: and Airlines analyst on Bloomberg Intelligence Radio, we bring you 398 00:19:35,760 --> 00:19:37,800 Speaker 2: all of the top analysts providing in depth research and 399 00:19:37,880 --> 00:19:40,440 Speaker 2: data on two thousand companies and one hundred and thirty industries. 400 00:19:40,520 --> 00:19:42,639 Speaker 3: We also have something here at Bloomberg called Bloomberg New 401 00:19:42,720 --> 00:19:45,000 Speaker 3: Energy Finance, and the idea behind it is to provide 402 00:19:45,080 --> 00:19:49,640 Speaker 3: data on commodities, power, transport, industries, buildings, agriculture, and new tech. 403 00:19:49,720 --> 00:19:50,280 Speaker 3: You name it. 404 00:19:50,480 --> 00:19:50,640 Speaker 4: Now. 405 00:19:50,640 --> 00:19:52,960 Speaker 3: This week we looked into the topic of electric vehicle 406 00:19:53,080 --> 00:19:56,320 Speaker 3: charging and how EV charging companies have struggled to make 407 00:19:56,359 --> 00:19:56,840 Speaker 3: a profit. 408 00:19:57,119 --> 00:20:01,240 Speaker 2: We talked with Ryan Fisher, Bloomberg BNFEV Charging team leader. 409 00:20:01,480 --> 00:20:03,679 Speaker 2: We first asked Ryan, who the big players are in 410 00:20:03,760 --> 00:20:04,520 Speaker 2: EV charging? 411 00:20:04,920 --> 00:20:07,720 Speaker 7: Yeah, so some of them maybe not quite household names yet, 412 00:20:07,720 --> 00:20:11,320 Speaker 7: but you've got charge Point in the US certainly people 413 00:20:11,359 --> 00:20:15,080 Speaker 7: may have heard of, and the sentiment was pretty positive 414 00:20:15,119 --> 00:20:17,000 Speaker 7: a few years ago, stock prices up and. 415 00:20:16,960 --> 00:20:18,400 Speaker 8: Then everything has kind of crashed down. 416 00:20:18,480 --> 00:20:20,800 Speaker 7: Sentiment not so great, as some of these companies have 417 00:20:20,880 --> 00:20:24,119 Speaker 7: not met the targets that they might have done. But 418 00:20:24,200 --> 00:20:26,720 Speaker 7: what we're starting to see the few companies that you 419 00:20:26,960 --> 00:20:30,159 Speaker 7: definitely won't have heard of actually have started to post 420 00:20:30,720 --> 00:20:34,000 Speaker 7: some positive profit margins. So there's like fast charging manufacturers 421 00:20:34,520 --> 00:20:37,760 Speaker 7: in Europe call Ken Power, making the kind of units 422 00:20:37,760 --> 00:20:40,159 Speaker 7: that concern big power to evs and charge it fast. 423 00:20:40,440 --> 00:20:42,119 Speaker 7: And then you've got some of the ones who do 424 00:20:42,160 --> 00:20:44,960 Speaker 7: the slower power units as well. And then also you've 425 00:20:44,960 --> 00:20:47,000 Speaker 7: got a couple of these companies that you may have 426 00:20:47,040 --> 00:20:50,040 Speaker 7: heard of, like ABB, producing chargers as part of a 427 00:20:50,160 --> 00:20:52,960 Speaker 7: portfolio so they're selling transformers and they're sort of using 428 00:20:52,960 --> 00:20:55,280 Speaker 7: that as somewhat of a way to get into companies 429 00:20:55,320 --> 00:20:56,960 Speaker 7: and sell some of their other products that they've got 430 00:20:57,000 --> 00:20:59,280 Speaker 7: and add it on as an additional So lot's going 431 00:20:59,280 --> 00:21:00,760 Speaker 7: on on the high were side. 432 00:21:00,880 --> 00:21:01,960 Speaker 8: And then you've got operators. 433 00:21:01,960 --> 00:21:04,440 Speaker 7: So these are like the companies who basically will sell 434 00:21:04,440 --> 00:21:06,800 Speaker 7: the electricity to charge a vehicle. You kind of think 435 00:21:06,840 --> 00:21:10,439 Speaker 7: of it like filling up with petrol. And none of 436 00:21:10,480 --> 00:21:12,439 Speaker 7: those so far are profitable, but we have seen some 437 00:21:12,480 --> 00:21:15,080 Speaker 7: good signs so some of those being a bit dar 438 00:21:15,160 --> 00:21:17,840 Speaker 7: positive now fast Ned posted that which is a Dutch 439 00:21:17,840 --> 00:21:21,000 Speaker 7: one the other day in the US. Unprofitable so far, 440 00:21:21,080 --> 00:21:23,960 Speaker 7: but there's a company called EVgo you may have heard of, 441 00:21:24,000 --> 00:21:27,840 Speaker 7: who has these fast charges and they actually basically delivered 442 00:21:27,920 --> 00:21:30,160 Speaker 7: one hundred and ninety one percent more energy in twenty 443 00:21:30,200 --> 00:21:32,320 Speaker 7: twenty three than they had in twenty twenty two, So 444 00:21:32,920 --> 00:21:33,919 Speaker 7: good progress there. 445 00:21:34,200 --> 00:21:37,000 Speaker 2: So Ryan, where are we kind of, I guess on 446 00:21:37,040 --> 00:21:41,440 Speaker 2: a timeline of kind of getting enough charging capabilities into 447 00:21:41,800 --> 00:21:44,920 Speaker 2: the system that can really support, you know, a wide 448 00:21:45,440 --> 00:21:48,200 Speaker 2: adoption of evs. It feels like we've hit a speed 449 00:21:48,240 --> 00:21:50,359 Speaker 2: bump here. What's the timeline? Do you think when you 450 00:21:50,440 --> 00:21:51,560 Speaker 2: talk to folks in the industry. 451 00:21:51,800 --> 00:21:54,119 Speaker 7: Yeah, it's an interesting one because we cover the global market. 452 00:21:54,240 --> 00:21:57,080 Speaker 7: So you look at China and they installed about a 453 00:21:57,119 --> 00:22:00,320 Speaker 7: million of these public charges last year, and the US 454 00:22:00,560 --> 00:22:03,199 Speaker 7: did sort of low tens of thousands. So there's a 455 00:22:03,200 --> 00:22:05,119 Speaker 7: big difference depending on where you are in the world. 456 00:22:05,480 --> 00:22:07,800 Speaker 7: I think the US and Europe are more similar in 457 00:22:07,840 --> 00:22:10,000 Speaker 7: how they'll play out, and Europe is maybe just five 458 00:22:10,080 --> 00:22:13,400 Speaker 7: years ahead. So Europe has got actually loads of competition 459 00:22:13,440 --> 00:22:15,200 Speaker 7: at the moment, and the story a little bit when 460 00:22:15,240 --> 00:22:18,639 Speaker 7: we look at this is some of the companies looking 461 00:22:18,680 --> 00:22:21,080 Speaker 7: like competition is starting to weigh on the demand that 462 00:22:21,520 --> 00:22:25,160 Speaker 7: they're delivering because it's a bit monopolistic. So I want 463 00:22:25,160 --> 00:22:27,320 Speaker 7: the best land as a company, and I want the 464 00:22:27,320 --> 00:22:29,399 Speaker 7: best grid connection, and I want that to be somewhere 465 00:22:29,440 --> 00:22:31,879 Speaker 7: that people are going and somewhere where people can buy things. 466 00:22:32,760 --> 00:22:35,600 Speaker 7: And they're realizing that, well, the demand isn't quite there yet. 467 00:22:35,640 --> 00:22:37,879 Speaker 7: But if we believe in the long term trajectory of vvs, 468 00:22:38,160 --> 00:22:40,560 Speaker 7: let's get in this business, let's get those spots. So 469 00:22:40,600 --> 00:22:42,280 Speaker 7: we've seen that in Europe, and I think the US 470 00:22:42,359 --> 00:22:44,800 Speaker 7: is just starting to tick over. The US has been 471 00:22:44,880 --> 00:22:48,320 Speaker 7: hugely dominated by Tesla. So if you look at Tesla 472 00:22:48,359 --> 00:22:50,520 Speaker 7: on the vehicle side, kind of eighty percent of these 473 00:22:50,520 --> 00:22:53,720 Speaker 7: pure battery electric vehicles five years ago kind of Tesla's 474 00:22:54,040 --> 00:22:56,439 Speaker 7: and then they also provide the supercharging, and that's kind 475 00:22:56,480 --> 00:22:58,800 Speaker 7: of pushed all the competition out. But what we saw 476 00:22:58,880 --> 00:23:01,760 Speaker 7: last year was some of these other automakers really producing 477 00:23:01,760 --> 00:23:05,359 Speaker 7: the evs and therefore providing a market for other people 478 00:23:05,440 --> 00:23:06,480 Speaker 7: to come into. 479 00:23:06,720 --> 00:23:10,240 Speaker 3: This is a super dumb question. Where does a charging 480 00:23:10,400 --> 00:23:14,040 Speaker 3: operator get the power to then enable me to put 481 00:23:14,040 --> 00:23:15,760 Speaker 3: a Tesla into that network. 482 00:23:16,080 --> 00:23:17,840 Speaker 7: There has been a lot of these companies that are 483 00:23:17,840 --> 00:23:19,840 Speaker 7: going out and they're saying, you know what, instead of 484 00:23:19,840 --> 00:23:22,080 Speaker 7: putting two charges in at my petrol station where the 485 00:23:22,119 --> 00:23:25,439 Speaker 7: power exists, I actually now need kind of twelve chargers. 486 00:23:25,480 --> 00:23:27,439 Speaker 7: And in some cases, when you look at, for example, 487 00:23:27,440 --> 00:23:29,600 Speaker 7: the Tesla stations, they've got like one hundred chargers in 488 00:23:29,640 --> 00:23:32,399 Speaker 7: one spot. Now that becomes a big grid connection. The 489 00:23:32,440 --> 00:23:35,159 Speaker 7: next thing is charging the trucks. So this could be 490 00:23:35,240 --> 00:23:37,480 Speaker 7: like the same amount of power as a town, and 491 00:23:37,720 --> 00:23:40,399 Speaker 7: a lot of the utilities are taking too long to 492 00:23:40,440 --> 00:23:41,840 Speaker 7: do it. So it's like that how long does it 493 00:23:41,840 --> 00:23:43,440 Speaker 7: take to get a permit? How long does it take 494 00:23:43,840 --> 00:23:46,199 Speaker 7: to actually get energized. Can you make the agreements with 495 00:23:46,240 --> 00:23:48,879 Speaker 7: the land, Lisa, All of this has kind of slowed 496 00:23:48,880 --> 00:23:52,159 Speaker 7: it down, but clearly industries trying to work together, and 497 00:23:52,160 --> 00:23:55,520 Speaker 7: this has become a big topic for the automakers and 498 00:23:55,560 --> 00:23:57,320 Speaker 7: the utilities as well. 499 00:23:57,720 --> 00:23:59,919 Speaker 8: Some of them trying to sign contracts on sites. 500 00:24:00,040 --> 00:24:03,760 Speaker 7: So if you imagine these companies small fry like several 501 00:24:03,760 --> 00:24:08,280 Speaker 7: small meters across multiple places, the utility is maybe not 502 00:24:08,320 --> 00:24:11,440 Speaker 7: so interested in that, But now they're actually delivering a 503 00:24:11,440 --> 00:24:13,320 Speaker 7: lot of demand. So as I say, looking to other 504 00:24:13,359 --> 00:24:15,720 Speaker 7: markets in the US and China being a good example, 505 00:24:16,400 --> 00:24:19,199 Speaker 7: the public chargers in China now deliver more energy than 506 00:24:19,240 --> 00:24:20,480 Speaker 7: the whole of Ireland. 507 00:24:21,000 --> 00:24:22,000 Speaker 8: So a lot of energy. 508 00:24:22,720 --> 00:24:26,000 Speaker 7: And therefore that becomes interesting because if you're an energy 509 00:24:26,040 --> 00:24:29,520 Speaker 7: developer and you're doing like solar on site next to 510 00:24:29,600 --> 00:24:32,760 Speaker 7: it with a battery, and we've seen what EV, which 511 00:24:32,760 --> 00:24:35,560 Speaker 7: is one of these truck charging companies, basically build a 512 00:24:35,640 --> 00:24:38,040 Speaker 7: station that's not connected to the grid at all. It's 513 00:24:38,080 --> 00:24:40,320 Speaker 7: just got straight to the solar and a battery. So 514 00:24:40,600 --> 00:24:42,000 Speaker 7: cool innovations going on there. 515 00:24:42,480 --> 00:24:46,480 Speaker 2: Hey, Ryan, Here in the US, EV sales have slowed 516 00:24:46,480 --> 00:24:48,440 Speaker 2: materially and a lot of people are trying to think 517 00:24:48,440 --> 00:24:51,200 Speaker 2: there's a combination of reasons, price being a big, big one, 518 00:24:51,680 --> 00:24:54,080 Speaker 2: but one of those drivers is the lack of a 519 00:24:54,119 --> 00:24:58,840 Speaker 2: fully ubiquitous charging infrastructure. When you talk to your EV companies, 520 00:24:59,040 --> 00:25:00,840 Speaker 2: how did they think about it? Are they concerned about 521 00:25:00,840 --> 00:25:03,480 Speaker 2: the long term demand of EV's in general, and if so, 522 00:25:03,600 --> 00:25:05,720 Speaker 2: do they feel like they could be part of the 523 00:25:05,760 --> 00:25:06,399 Speaker 2: solution there? 524 00:25:06,800 --> 00:25:10,240 Speaker 7: Yeah, and there's definitely kind of differences in opinions. The 525 00:25:10,720 --> 00:25:15,400 Speaker 7: US hionde CEO saying something along the lines of today, 526 00:25:15,800 --> 00:25:19,600 Speaker 7: why buy an EV from an automaker who's lobbying against EV's, 527 00:25:19,920 --> 00:25:23,520 Speaker 7: And obviously he's talking about the US there. But you 528 00:25:23,600 --> 00:25:25,199 Speaker 7: do see a difference in those that are kind of 529 00:25:25,200 --> 00:25:26,840 Speaker 7: in on it and those that aren't. And I think 530 00:25:26,880 --> 00:25:31,160 Speaker 7: some who aren't have previously been so they've they've committed billions, 531 00:25:31,200 --> 00:25:34,160 Speaker 7: they talked about targets, and then they're starting to row 532 00:25:34,200 --> 00:25:36,760 Speaker 7: it back. And some of that is maybe because the 533 00:25:36,760 --> 00:25:39,719 Speaker 7: technology is behind they can't do it as cheap as 534 00:25:39,720 --> 00:25:44,720 Speaker 7: everyone else. So there's different reasons. And I think when 535 00:25:44,760 --> 00:25:47,600 Speaker 7: you look at liabilities, I don't think that's talked about enough. Actually, 536 00:25:48,280 --> 00:25:51,080 Speaker 7: some of these companies have put cars out there and 537 00:25:51,600 --> 00:25:53,320 Speaker 7: then the batteries had a problem and they've got to 538 00:25:53,359 --> 00:25:53,840 Speaker 7: recall it. 539 00:25:53,760 --> 00:25:55,040 Speaker 8: And that could be multi billions. 540 00:25:55,119 --> 00:25:56,960 Speaker 7: So I think there's some caution as well in saying 541 00:25:56,960 --> 00:26:00,000 Speaker 7: why don't we put a few less casts out because 542 00:26:00,000 --> 00:26:01,560 Speaker 7: because then we can learn from them and we can 543 00:26:01,560 --> 00:26:03,840 Speaker 7: do it later. Some of the narrative has been they're 544 00:26:03,880 --> 00:26:07,600 Speaker 7: not putting the cars out because quite physibly, like the battery. 545 00:26:07,640 --> 00:26:09,520 Speaker 8: Operations are up and running. But I think there was 546 00:26:09,560 --> 00:26:10,160 Speaker 8: other reasons. 547 00:26:10,240 --> 00:26:14,080 Speaker 2: Our thanks to Ryan Fisher, Bloomberg BNF EV Charging team leader. 548 00:26:14,160 --> 00:26:15,600 Speaker 3: All right, coming up on the program, we're going to 549 00:26:15,640 --> 00:26:19,159 Speaker 3: break down how beer sales did last quarter at Constellation Brands. 550 00:26:19,320 --> 00:26:22,320 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 551 00:26:22,359 --> 00:26:24,560 Speaker 2: depth research and data on two thousand companies and one 552 00:26:24,640 --> 00:26:27,720 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 553 00:26:27,800 --> 00:26:29,120 Speaker 2: bat I go on the terminal. 554 00:26:29,320 --> 00:26:33,119 Speaker 3: I'm Paul Sweeney and am Alex Steele. This is Bloomberg. 555 00:26:36,080 --> 00:26:39,960 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 556 00:26:40,040 --> 00:26:43,560 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 557 00:26:43,600 --> 00:26:46,399 Speaker 1: Auto with the Bloomberg Business app. You can also listen 558 00:26:46,480 --> 00:26:49,600 Speaker 1: live on Amazon Alexa from our flagship New York station 559 00:26:49,960 --> 00:26:52,720 Speaker 1: just say Alexa playing Bloomberg eleven thirty. 560 00:26:53,960 --> 00:26:57,119 Speaker 3: We move now to the beverage companies Constellation Brands. So 561 00:26:57,200 --> 00:26:59,399 Speaker 3: the company reported fourth quarter earnings per share of the 562 00:26:59,400 --> 00:27:01,960 Speaker 3: beat analysts expectations, and this was the result of better 563 00:27:02,000 --> 00:27:05,159 Speaker 3: than expected beer segment sales and a wider operating margin. 564 00:27:05,440 --> 00:27:07,920 Speaker 2: For more. We were joined by Kennis Sha, Bloomberg Intelligence 565 00:27:08,040 --> 00:27:11,320 Speaker 2: Senior Consumer products analyst. We first asked Ken for his 566 00:27:11,440 --> 00:27:12,920 Speaker 2: take on the company's earnings. 567 00:27:13,119 --> 00:27:15,760 Speaker 9: So the quarter, you know, I think the backdrop, first 568 00:27:15,760 --> 00:27:19,119 Speaker 9: of all, was for a slow quarter, you know, for 569 00:27:19,280 --> 00:27:23,840 Speaker 9: most wine and beer companies right now and spirits. We've 570 00:27:23,840 --> 00:27:26,560 Speaker 9: been given some recent results from Brown Foreman and a 571 00:27:26,720 --> 00:27:30,800 Speaker 9: duck Corn portfolio. They're a producer of wines. Well, they're 572 00:27:30,840 --> 00:27:34,840 Speaker 9: all saying, you know, trade inventory reductions stemming from cooling 573 00:27:34,880 --> 00:27:38,760 Speaker 9: demand across all alcoholic beverages was kind of the backdrop 574 00:27:38,800 --> 00:27:40,760 Speaker 9: to this earnings report. So when it came out, it 575 00:27:40,840 --> 00:27:44,720 Speaker 9: beat expectations. Beer sales were up eleven percent, white and 576 00:27:44,720 --> 00:27:47,480 Speaker 9: spirits were weak. But again, this is mostly a beer company, 577 00:27:47,880 --> 00:27:50,480 Speaker 9: and so that's why it was perceived very positively because 578 00:27:50,680 --> 00:27:53,480 Speaker 9: you know, this was a dose of good news and 579 00:27:53,560 --> 00:27:59,360 Speaker 9: otherwise very cautious market. So the company is doing basically 580 00:27:59,359 --> 00:28:01,200 Speaker 9: what it said it would do. You know, it had 581 00:28:01,240 --> 00:28:05,360 Speaker 9: good results for beer, a reduced debt some more, it's 582 00:28:05,400 --> 00:28:08,920 Speaker 9: committed to expanding its big brewery operations down in Mexico, 583 00:28:09,760 --> 00:28:13,240 Speaker 9: increased the dividend thirteen percent. So from a shareholder point 584 00:28:13,240 --> 00:28:15,320 Speaker 9: of view, they're doing the things they said they would do, 585 00:28:15,640 --> 00:28:19,560 Speaker 9: and the beer results beat expectations and that gave the 586 00:28:19,600 --> 00:28:20,800 Speaker 9: market a dosa good news. 587 00:28:21,119 --> 00:28:24,960 Speaker 2: What's Constellation saying about the consumer in general? Because you know, 588 00:28:24,960 --> 00:28:26,280 Speaker 2: there's a lot of concern out there as we look 589 00:28:26,320 --> 00:28:28,200 Speaker 2: at some of the big data coming out of Washington, 590 00:28:28,280 --> 00:28:30,760 Speaker 2: DC about the consumers is inflation and all that type 591 00:28:30,760 --> 00:28:31,840 Speaker 2: of stuff. What are they seeing? 592 00:28:32,240 --> 00:28:35,040 Speaker 9: They look at the paper also, they understand, you know, 593 00:28:35,119 --> 00:28:38,640 Speaker 9: the environment that they're in that the consumer has definitely 594 00:28:38,640 --> 00:28:42,040 Speaker 9: turned a little cautious here towards purchases that they can differ. 595 00:28:42,320 --> 00:28:44,040 Speaker 9: I guess that's the best way to put it. You know, 596 00:28:44,120 --> 00:28:48,240 Speaker 9: beer is, you know, a relatively low price point product 597 00:28:48,800 --> 00:28:51,160 Speaker 9: visa the wine and spirits. You know, a high end 598 00:28:51,160 --> 00:28:53,440 Speaker 9: bottle of wine or high end bottle of bourbon you 599 00:28:53,440 --> 00:28:55,360 Speaker 9: can maybe put off for a while, but you know, 600 00:28:55,440 --> 00:28:57,560 Speaker 9: a bottle of beer or even a six pack whatever. 601 00:28:58,000 --> 00:29:01,280 Speaker 9: You're not as prone to do that. Even though Corona Medelic, 602 00:29:01,600 --> 00:29:04,600 Speaker 9: you know, command a very premium price. It's a premium product. 603 00:29:05,000 --> 00:29:06,920 Speaker 9: So they're aware that they can't just keep you know, 604 00:29:07,040 --> 00:29:10,120 Speaker 9: tacking on big price increases. They're aware of what's going on, 605 00:29:10,680 --> 00:29:13,600 Speaker 9: but they see the consumer is resilient, particularly for beer 606 00:29:13,680 --> 00:29:14,080 Speaker 9: right now. 607 00:29:14,400 --> 00:29:16,120 Speaker 3: So Ken, when we get you on, we like to 608 00:29:16,120 --> 00:29:17,640 Speaker 3: talk about all the things, and one of the things 609 00:29:17,680 --> 00:29:20,400 Speaker 3: we like talk about is we because you walk on 610 00:29:20,440 --> 00:29:22,760 Speaker 3: the street in New York City, you get the wafting. 611 00:29:23,360 --> 00:29:24,520 Speaker 3: I mean, I think it smells good. 612 00:29:24,800 --> 00:29:29,120 Speaker 2: Well, clarify this that Ken covers the cannabis. It's not 613 00:29:29,200 --> 00:29:29,840 Speaker 2: that he is. 614 00:29:30,200 --> 00:29:36,680 Speaker 3: Maybe I did not frame this correctly. Ken, you're an 615 00:29:36,680 --> 00:29:39,320 Speaker 3: analyst that also covers the cannabis stocks. When I walk 616 00:29:39,360 --> 00:29:41,120 Speaker 3: around in New York City, I smell a lot of 617 00:29:41,160 --> 00:29:45,080 Speaker 3: cannabis products. How are these companies actually doing well? 618 00:29:45,080 --> 00:29:48,360 Speaker 9: Alex are doing pretty well from a sales point of view, 619 00:29:49,040 --> 00:29:52,320 Speaker 9: from an EBITDA point of view, but you know that 620 00:29:52,800 --> 00:29:57,240 Speaker 9: the taxation on cannabis companies is so onerous and a 621 00:29:57,240 --> 00:29:59,600 Speaker 9: lot of not very many are profitable from a gap 622 00:29:59,600 --> 00:30:02,880 Speaker 9: account point of view, if you're an investor in this market, 623 00:30:03,000 --> 00:30:05,680 Speaker 9: you certainly have to be patient, and that's because you 624 00:30:06,080 --> 00:30:09,760 Speaker 9: need some help from regulators from Washington, whether it's a 625 00:30:09,800 --> 00:30:13,760 Speaker 9: reclassification from you know, a prohibited drug like marijuana is 626 00:30:13,800 --> 00:30:19,040 Speaker 9: considered today, or it's outright legalization in some states and 627 00:30:19,080 --> 00:30:21,560 Speaker 9: so on, So you need some help from regulators to 628 00:30:21,640 --> 00:30:25,080 Speaker 9: keep this thing going. So it's going in a saleser 629 00:30:25,320 --> 00:30:28,120 Speaker 9: from an industry point of view, are moving positively as 630 00:30:28,120 --> 00:30:31,040 Speaker 9: more states legalized, you know, Florida, it's going to be 631 00:30:31,040 --> 00:30:32,720 Speaker 9: on the bal Florida as it could be a you know, 632 00:30:32,760 --> 00:30:35,960 Speaker 9: a six billion dollars legal market or about three times 633 00:30:35,960 --> 00:30:38,440 Speaker 9: the size that it is now in a very short 634 00:30:38,560 --> 00:30:43,840 Speaker 9: order if in November voters approve a legalization for adult 635 00:30:43,960 --> 00:30:46,800 Speaker 9: use in November. So it's moving positively, but again from 636 00:30:46,800 --> 00:30:49,600 Speaker 9: an accounting point of view, you know, it's not looking 637 00:30:49,640 --> 00:30:50,760 Speaker 9: as rosy all right. 638 00:30:50,800 --> 00:30:54,120 Speaker 3: Thanks to Ken Shay, Bloomberg Intelligence and your Consumer Products Analyst. 639 00:30:54,480 --> 00:30:57,000 Speaker 3: Also this week, we were joined by Jason Kelly, chief 640 00:30:57,000 --> 00:31:00,840 Speaker 3: correspondent for Bloomberg Originals, and former baseball star Alex Rodriguez. 641 00:31:01,040 --> 00:31:03,520 Speaker 3: They host a new podcast on Bloomberg called The Deal 642 00:31:03,680 --> 00:31:06,920 Speaker 3: with Alex Rodriguez and Jason Kelly. In our interview, Jason 643 00:31:06,920 --> 00:31:10,080 Speaker 3: and Alex discussed how sports are consumed live, the state 644 00:31:10,120 --> 00:31:12,160 Speaker 3: of New York, Yankees and playing in New York, and 645 00:31:12,160 --> 00:31:14,560 Speaker 3: what is happening in the ranks of college sports. But 646 00:31:14,600 --> 00:31:16,920 Speaker 3: first we asked Jason about some of the deal making 647 00:31:17,000 --> 00:31:19,040 Speaker 3: in sports that really stands out. 648 00:31:19,360 --> 00:31:22,440 Speaker 10: Dial made some money on the Phoenix Suns when they 649 00:31:22,440 --> 00:31:24,360 Speaker 10: were sold for four billion dollars a couple of years ago, 650 00:31:24,440 --> 00:31:27,000 Speaker 10: so that's been one exit. I mean what's interesting is 651 00:31:27,040 --> 00:31:30,160 Speaker 10: so Sixth Street. Just speaking specifically about Sixth Street, and 652 00:31:30,240 --> 00:31:32,959 Speaker 10: you know this is started by Alan Waxman, former special 653 00:31:32,960 --> 00:31:36,160 Speaker 10: situation said for Goldman Sachs was in a partnership with TPG. 654 00:31:36,640 --> 00:31:39,320 Speaker 10: You know, so they've invested one hundred and twenty five million. 655 00:31:39,360 --> 00:31:41,040 Speaker 10: They let an investment for one hundred and twenty five 656 00:31:41,080 --> 00:31:45,440 Speaker 10: million dollars into BAFC. I mean that's real money, paid 657 00:31:45,440 --> 00:31:48,560 Speaker 10: a record franchise fee fifty three million dollars just to 658 00:31:48,600 --> 00:31:51,840 Speaker 10: buy the team. I mean they're looking at a scenario 659 00:31:51,920 --> 00:31:54,200 Speaker 10: where they can get a five x ten X. I mean, 660 00:31:54,200 --> 00:31:58,880 Speaker 10: this is a long hold. So the franchise values, as 661 00:31:58,920 --> 00:32:02,000 Speaker 10: Alex just demonstrated, think about I mean, Jerry Jones bought 662 00:32:02,040 --> 00:32:04,800 Speaker 10: the Dallas Cowboys for less than two hundred million dollars 663 00:32:04,840 --> 00:32:07,280 Speaker 10: in the late eighties early nineties, which, by the way, 664 00:32:07,360 --> 00:32:10,840 Speaker 10: they said he was insane, that that was a crazy amount. 665 00:32:10,920 --> 00:32:14,040 Speaker 10: This is a franchise now worth nine or ten billion dollars. Alex, 666 00:32:14,120 --> 00:32:15,360 Speaker 10: let's talk about ownership. 667 00:32:15,360 --> 00:32:18,520 Speaker 2: You're part of ownership group for the Minnesota Timberwolves, right 668 00:32:18,720 --> 00:32:21,440 Speaker 2: talk to us about that experience, and I love you 669 00:32:21,480 --> 00:32:24,880 Speaker 2: to talk to about My personal opinion is I'm concerned 670 00:32:24,880 --> 00:32:28,120 Speaker 2: about the evaluation of franchises. I'm concerned about salaries because 671 00:32:28,160 --> 00:32:32,800 Speaker 2: it's all predicated in large part on broadcast rights. Yeah, 672 00:32:32,800 --> 00:32:35,520 Speaker 2: and with cord cutting, I'm not sure ESPN's going to 673 00:32:35,560 --> 00:32:37,920 Speaker 2: continue to write these crazy checks. So talk to us 674 00:32:37,920 --> 00:32:40,160 Speaker 2: about kind of had what you've learned about as being 675 00:32:40,200 --> 00:32:40,760 Speaker 2: an owner there. 676 00:32:40,880 --> 00:32:43,080 Speaker 11: It's funny because one of my good friends and mentors 677 00:32:43,080 --> 00:32:45,240 Speaker 11: of Magic Johnson, and of course he played basketball for 678 00:32:45,280 --> 00:32:47,640 Speaker 11: a long time and he owns a baseball team, yep. 679 00:32:47,880 --> 00:32:49,959 Speaker 11: And I played baseball for a long time and I'm 680 00:32:50,000 --> 00:32:52,000 Speaker 11: part of the ownership group of the Minnesota Timberwolves and 681 00:32:52,000 --> 00:32:55,040 Speaker 11: the Lynx. You know what I think is there's no 682 00:32:55,160 --> 00:32:58,560 Speaker 11: question that the giant in sports in America's NFL, right, 683 00:32:58,880 --> 00:33:01,320 Speaker 11: and to think that, you know, almost twenty million people 684 00:33:01,320 --> 00:33:04,920 Speaker 11: watch Kaylin Clark. Those are NFL numbers on Sundays. I 685 00:33:04,920 --> 00:33:08,160 Speaker 11: mean that's the number one driver for all sports and 686 00:33:08,240 --> 00:33:11,000 Speaker 11: which creates a lot of people to be very bullish 687 00:33:11,000 --> 00:33:13,800 Speaker 11: in women's sports. But going back to well, we have 688 00:33:13,840 --> 00:33:15,800 Speaker 11: the links as well. But I do think that the 689 00:33:15,920 --> 00:33:18,680 Speaker 11: NFL and the NBA are global sports. Especially the NBA. 690 00:33:19,480 --> 00:33:22,920 Speaker 11: It's growing year over year. If you look at social 691 00:33:23,000 --> 00:33:25,440 Speaker 11: media as an example. As a metrics, we're almost ten 692 00:33:25,480 --> 00:33:27,640 Speaker 11: to one to the NFL. We're almost fifteen to one 693 00:33:27,680 --> 00:33:32,520 Speaker 11: to Major League Baseball. So Lebron, James, Michael Jordan, Steph Curry, 694 00:33:32,520 --> 00:33:35,480 Speaker 11: these are global names. I think that is going to 695 00:33:35,480 --> 00:33:38,880 Speaker 11: be a different landscape. But you'll have more contributors. Maybe 696 00:33:38,880 --> 00:33:41,840 Speaker 11: you have NBC pop in Amazon, Apple, there's a lot 697 00:33:41,840 --> 00:33:44,160 Speaker 11: of suitors. It's not going to be the traditional So 698 00:33:44,360 --> 00:33:46,600 Speaker 11: ESPN may not write as big as check, but is there. 699 00:33:46,920 --> 00:33:48,920 Speaker 11: I'm not speaking for the NBA. I'm just giving you 700 00:33:48,960 --> 00:33:51,120 Speaker 11: my opinion that you may have a world where NBC 701 00:33:51,240 --> 00:33:54,920 Speaker 11: may split the finals with ESPN and ABC. So I 702 00:33:54,960 --> 00:33:58,200 Speaker 11: think you'll get to a similar result just a different way. 703 00:33:58,480 --> 00:34:00,840 Speaker 3: So you said those words, and I knew those people, 704 00:34:00,920 --> 00:34:03,640 Speaker 3: So I feel like I'm not qualified ask this question. 705 00:34:03,760 --> 00:34:07,080 Speaker 3: But then for someone like me who's a newbie who 706 00:34:07,080 --> 00:34:09,440 Speaker 3: maybe wants to watch some stuff like I'm I don't know, 707 00:34:09,480 --> 00:34:11,760 Speaker 3: I would I need like a spreadsheet to like find 708 00:34:11,760 --> 00:34:14,520 Speaker 3: out like what's playing where or when what time, like 709 00:34:14,640 --> 00:34:17,319 Speaker 3: Amazon Prime, Netflix, something like that. And I wonder if 710 00:34:17,360 --> 00:34:19,719 Speaker 3: that's going to be a hurdle. Jason, what do you 711 00:34:19,719 --> 00:34:21,279 Speaker 3: think to like? I mean, it could be. 712 00:34:21,320 --> 00:34:25,760 Speaker 10: I mean, and Paul knows this space better than anyone. 713 00:34:25,880 --> 00:34:30,440 Speaker 10: You know, there's been sort of a fracturing, but now 714 00:34:30,520 --> 00:34:33,239 Speaker 10: sort of a reconsolidation. It feels like of how we're 715 00:34:33,239 --> 00:34:35,960 Speaker 10: going to consume sports. I mean, you've followed this for years. 716 00:34:36,000 --> 00:34:41,080 Speaker 10: You know that live sports. Alex knows it from being 717 00:34:41,120 --> 00:34:45,920 Speaker 10: on television and being broadcast himself. People love live sports 718 00:34:45,920 --> 00:34:47,920 Speaker 10: and that it's one of the only things that actually 719 00:34:47,960 --> 00:34:51,759 Speaker 10: keeps people coming back to live content. I do think, though, 720 00:34:51,800 --> 00:34:54,520 Speaker 10: we are in this weird world where sometimes you don't 721 00:34:54,560 --> 00:34:57,480 Speaker 10: know where to find it, and yet when you do, 722 00:34:57,960 --> 00:34:59,319 Speaker 10: it attracts the eyeballs. 723 00:35:00,320 --> 00:35:02,920 Speaker 2: New York Yankees off to a great start this year. Yes, 724 00:35:03,200 --> 00:35:06,560 Speaker 2: what's your scouting You could say, yeah in this room, 725 00:35:07,560 --> 00:35:09,560 Speaker 2: also a great start this year, and now what's your 726 00:35:09,600 --> 00:35:10,520 Speaker 2: scouting report of them? 727 00:35:10,600 --> 00:35:13,440 Speaker 11: Well, I think the Yankees have done a bunch of 728 00:35:13,440 --> 00:35:15,920 Speaker 11: good things this year, excuse me. One of them is 729 00:35:15,960 --> 00:35:18,840 Speaker 11: they've introduced baseball people back. If you think about the 730 00:35:18,840 --> 00:35:21,680 Speaker 11: powerhouse of the Yankees, they've been built by great baseball 731 00:35:21,719 --> 00:35:24,920 Speaker 11: people like Geene Michael's Stick Michael as they call them, 732 00:35:25,040 --> 00:35:27,560 Speaker 11: you know, Luke Panela, Billy Martin. They've gone away from 733 00:35:27,600 --> 00:35:30,040 Speaker 11: that the last four or five years, and they've suffered tremendously. 734 00:35:30,239 --> 00:35:32,560 Speaker 11: The fact they brought baseball people back in, they brought 735 00:35:32,600 --> 00:35:35,800 Speaker 11: a much more balanced lineup, meaning Alex there's more lefties 736 00:35:35,880 --> 00:35:40,200 Speaker 11: than righty's. Historically, Yankee Stadium is better for lefties. Last 737 00:35:40,239 --> 00:35:42,200 Speaker 11: year they had like nine righties in the lineup, which 738 00:35:42,239 --> 00:35:44,200 Speaker 11: just way too much. They've gone back to a much 739 00:35:44,239 --> 00:35:46,279 Speaker 11: balanced lineup and now they have the best one two 740 00:35:46,360 --> 00:35:48,880 Speaker 11: punch in the sport with Aaron Judge and Juan Soto. 741 00:35:49,239 --> 00:35:52,879 Speaker 11: The challenge is do they have enough pitching is one 742 00:35:53,320 --> 00:35:56,400 Speaker 11: and two? They have. They cornered themselves by bringing in 743 00:35:56,440 --> 00:36:00,160 Speaker 11: Juan Soto and not have a long term contract. Now 744 00:36:00,000 --> 00:36:02,359 Speaker 11: now is he gonna want no tiny contract for seven 745 00:36:02,400 --> 00:36:04,520 Speaker 11: hundred million dollars and is he just a one year 746 00:36:04,560 --> 00:36:06,000 Speaker 11: wonder here in New York. I think he's gonna have 747 00:36:06,040 --> 00:36:06,719 Speaker 11: a massive year. 748 00:36:06,880 --> 00:36:07,080 Speaker 1: Yep. 749 00:36:07,080 --> 00:36:09,440 Speaker 11: The question is can they keep them? Second question is 750 00:36:09,440 --> 00:36:10,719 Speaker 11: do they have enough pitching to win the title? 751 00:36:10,719 --> 00:36:12,719 Speaker 2: Well, let me ask you that question. We like to 752 00:36:12,760 --> 00:36:15,480 Speaker 2: think New York fans that New York is a selling 753 00:36:15,480 --> 00:36:17,279 Speaker 2: point everybody would love to be. If you can be 754 00:36:17,360 --> 00:36:18,919 Speaker 2: a star here, you can be a star anywhere, and there's 755 00:36:18,920 --> 00:36:20,799 Speaker 2: nothing better to be a star than New York City. 756 00:36:21,440 --> 00:36:23,759 Speaker 2: A lot of players, it's that I think they find 757 00:36:23,760 --> 00:36:25,880 Speaker 2: it hard to play in New York. What was your 758 00:36:25,880 --> 00:36:28,560 Speaker 2: experience coming to New York. I know you're a New Yorker, 759 00:36:28,880 --> 00:36:31,319 Speaker 2: so you kind of know this, But some of the 760 00:36:31,360 --> 00:36:33,080 Speaker 2: people you saw during your career. 761 00:36:32,880 --> 00:36:35,719 Speaker 11: No, Paul, You're exactly right. I mean some people. You know, 762 00:36:35,760 --> 00:36:37,200 Speaker 11: the kitchens may be a little bit too hot for 763 00:36:37,239 --> 00:36:40,120 Speaker 11: some players, and you know right away if they're uncomfortable. 764 00:36:40,520 --> 00:36:42,360 Speaker 11: It's a different place. It's the biggest media market in 765 00:36:42,360 --> 00:36:44,719 Speaker 11: the world. As they say, the pinstripes are very very 766 00:36:44,719 --> 00:36:47,680 Speaker 11: heavy and not everyone can carry them. Juan SODA's obviously 767 00:36:47,680 --> 00:36:49,359 Speaker 11: one that is going to play and play really well, 768 00:36:49,400 --> 00:36:52,000 Speaker 11: Aaron Judge, the Jeters of the world. They're icons for 769 00:36:52,080 --> 00:36:54,439 Speaker 11: life because they won here in New York. But some 770 00:36:54,600 --> 00:36:56,200 Speaker 11: I mean they melt into the sun. I mean, you've 771 00:36:56,239 --> 00:36:58,120 Speaker 11: seen a couple over the last four or five years 772 00:36:58,400 --> 00:37:01,200 Speaker 11: that were a shell of themselves and you quickly have 773 00:37:01,239 --> 00:37:02,399 Speaker 11: to pivot and get them out of here. 774 00:37:02,760 --> 00:37:05,120 Speaker 3: So this is this is really cool. Like what you 775 00:37:05,160 --> 00:37:07,640 Speaker 3: guys do is super fun. Jason comes in and he 776 00:37:07,640 --> 00:37:09,360 Speaker 3: talks about it, and you can tell he's like totally 777 00:37:09,360 --> 00:37:11,239 Speaker 3: digging this. What's it like to work with Jason Kelly? 778 00:37:12,680 --> 00:37:14,440 Speaker 3: How do you manage that guy? Like? 779 00:37:14,520 --> 00:37:18,080 Speaker 11: What is Alex? We already made a deal because we 780 00:37:18,120 --> 00:37:20,359 Speaker 11: are you know, he's covered private equity. He's a great writer, 781 00:37:20,520 --> 00:37:22,560 Speaker 11: so I say, he writes and I used to bat, 782 00:37:22,640 --> 00:37:24,399 Speaker 11: so I hit, he writes, and he made a good team. 783 00:37:24,800 --> 00:37:28,279 Speaker 11: But no, Alex, in all seriousness, is really the intersection 784 00:37:28,520 --> 00:37:31,160 Speaker 11: of Jason's career, mostly here at Bloomberg, in my career, 785 00:37:31,200 --> 00:37:33,680 Speaker 11: mostly with the Yankees. And the fact is what we're 786 00:37:33,680 --> 00:37:36,480 Speaker 11: talking about is exactly both. And we live in a 787 00:37:36,520 --> 00:37:39,960 Speaker 11: world where it used to be sports and media and culture. 788 00:37:40,080 --> 00:37:42,120 Speaker 11: Now all three have come together and that's what we 789 00:37:42,160 --> 00:37:44,120 Speaker 11: try to take away and then also a lot of 790 00:37:44,200 --> 00:37:46,919 Speaker 11: lessons learned in this world of Shark Tank where young 791 00:37:46,920 --> 00:37:49,680 Speaker 11: people want to be more entrepreneurs than athletes, right, And 792 00:37:49,760 --> 00:37:52,479 Speaker 11: that's I think we're serving up and teaching and hoping 793 00:37:52,560 --> 00:37:55,760 Speaker 11: inspiring through storytelling a lot of greats. 794 00:37:55,880 --> 00:37:57,600 Speaker 2: And I like, so you guys do kind of bringing 795 00:37:58,040 --> 00:38:01,640 Speaker 2: sports entertainment, you know, all that together, and we're seeing 796 00:38:01,640 --> 00:38:05,040 Speaker 2: it actually now in college sports with it the nil 797 00:38:05,480 --> 00:38:08,120 Speaker 2: the transfer portals, a lot of these kids are able 798 00:38:08,120 --> 00:38:11,640 Speaker 2: to monetize their value totally. But there's some downside to that. 799 00:38:11,680 --> 00:38:14,200 Speaker 2: It seems like if you talk to you know, coach 800 00:38:14,320 --> 00:38:17,360 Speaker 2: j Right at Villanova or some others, they're saying, boy, I'm. 801 00:38:17,200 --> 00:38:18,480 Speaker 11: Not sure, maybe we've gone too far. 802 00:38:18,520 --> 00:38:20,400 Speaker 2: What do you think, Alex about what's happening in the 803 00:38:20,440 --> 00:38:22,680 Speaker 2: college ranks about paying some of these athletes. 804 00:38:22,719 --> 00:38:24,719 Speaker 11: It's a very dangerous road. It's a very dangerous and 805 00:38:24,800 --> 00:38:27,080 Speaker 11: very slippery And the reason why I love that players 806 00:38:27,120 --> 00:38:29,439 Speaker 11: are getting you know, the finances and all of that, 807 00:38:29,760 --> 00:38:32,120 Speaker 11: but maybe there's a structure where there's more parity. Maybe 808 00:38:32,120 --> 00:38:34,359 Speaker 11: there's a structure where kids don't get the money when 809 00:38:34,360 --> 00:38:36,320 Speaker 11: they're not ready for it. And they get in trouble 810 00:38:36,360 --> 00:38:38,560 Speaker 11: by not knowing how to pay taxes, And is this 811 00:38:38,560 --> 00:38:40,879 Speaker 11: more of a liability than an asset. I'm all for 812 00:38:40,920 --> 00:38:43,719 Speaker 11: somebody getting market value, but is there a world that 813 00:38:43,760 --> 00:38:46,640 Speaker 11: we can, you know, hold unto their thirty or thirty 814 00:38:46,680 --> 00:38:48,719 Speaker 11: five until they get the majority of that where that 815 00:38:48,760 --> 00:38:52,160 Speaker 11: money is compounding for them, So gifting the curse. And 816 00:38:52,200 --> 00:38:54,600 Speaker 11: the other part is that I'm concerned is we want 817 00:38:54,640 --> 00:38:56,839 Speaker 11: to teach Coach k is one of my great friends 818 00:38:56,880 --> 00:38:59,160 Speaker 11: and one of the great great personalities in all of sports. 819 00:38:59,600 --> 00:39:01,640 Speaker 11: You want athletes to be around coach k for three 820 00:39:01,719 --> 00:39:04,000 Speaker 11: or four years, not just one great point so and 821 00:39:04,040 --> 00:39:05,520 Speaker 11: same thing with Kyle Parry and all of that. So 822 00:39:05,520 --> 00:39:07,600 Speaker 11: we want to teach these kids that you know, the 823 00:39:07,640 --> 00:39:10,239 Speaker 11: power of restriction and to be able to wait a 824 00:39:10,280 --> 00:39:12,520 Speaker 11: little bit before they get you know, the marshmallow as 825 00:39:12,520 --> 00:39:13,560 Speaker 11: they say, all right. 826 00:39:13,560 --> 00:39:16,399 Speaker 3: Thanks to former baseball star Alex Rodriguez and Jason Kelly, 827 00:39:16,480 --> 00:39:19,480 Speaker 3: chief correspondent for Bloomberg Originals and executive producer of the 828 00:39:19,520 --> 00:39:22,959 Speaker 3: Deal with Alex Rodriguez and Jason Kelly, this is. 829 00:39:22,880 --> 00:39:27,680 Speaker 1: The Bloomberg Intelligence Podcast, available on Apples, Spotify, and anywhere 830 00:39:27,680 --> 00:39:30,720 Speaker 1: else you will get your podcasts. Listen live each weekday 831 00:39:30,840 --> 00:39:33,800 Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the 832 00:39:33,920 --> 00:39:37,360 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 833 00:39:37,400 --> 00:39:40,560 Speaker 1: can also watch us live every weekday on YouTube and 834 00:39:40,760 --> 00:39:42,360 Speaker 1: always on the Bloomberg terminal