WEBVTT - Mnuchin Eyes TikTok 0:00:00.600 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.520 Eastern on Apple car Play and Android Auto with the 0:00:17.520 --> 0:00:21.400 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.360 or watch us live on YouTube. 0:00:25.239 --> 0:00:28.680 Steve Menushan is apparently targeting a purchase of TikTok from 0:00:28.720 --> 0:00:31.320 his Chinese parent company. This comes a day after House 0:00:31.560 --> 0:00:34.240 lawmakers passed a bipartisan bill that would ban the widely 0:00:34.280 --> 0:00:37.720 popular social media app in the US. Quite interesting, particularly 0:00:37.760 --> 0:00:40.240 after he led that buyout of a NYCB. 0:00:40.720 --> 0:00:43.320 I know, and I think it's even more interesting about 0:00:43.320 --> 0:00:46.320 it is because there was that whole issue with NYCB earlier. 0:00:46.360 --> 0:00:48.920 It cause a lot of concern about regional banking, a 0:00:48.920 --> 0:00:51.760 lot of concern about TikTok and the minds of teenagers 0:00:51.760 --> 0:00:54.360 all across the country and politicians. 0:00:54.360 --> 0:00:57.840 So let's go to Dan Ives. He joins US managing 0:00:57.840 --> 0:01:00.880 director and senior equity analyst ever at Web Securities. He 0:01:00.920 --> 0:01:04.200 always has opinions about these things. Hey, Dan, I guess 0:01:04.200 --> 0:01:07.120 it's twofold. What do you think about manution leading a 0:01:07.120 --> 0:01:09.280 group of investors to buy TikTok let's just start there. 0:01:10.440 --> 0:01:13.440 He's gonna join the long list, right, I mean, others 0:01:13.480 --> 0:01:17.399 haven't talked. If you a strategic financial you're gonna have 0:01:17.480 --> 0:01:20.320 a long list of buyers from Big TAC as well 0:01:20.360 --> 0:01:26.160 as outside looking to get TikTok because it's a unique 0:01:26.200 --> 0:01:29.840 golden asset that no one ever thought would become available. 0:01:29.920 --> 0:01:33.759 We still believe only a twenty five percent chance this 0:01:33.840 --> 0:01:35.040 ban actually happened. 0:01:35.600 --> 0:01:38.080 So what's gonna be the big sticking point for that 0:01:38.200 --> 0:01:42.320 kind of a bet? Is it the algorithm? 0:01:43.080 --> 0:01:47.120 It's all about the source code is not gonna lead 0:01:47.240 --> 0:01:50.680 by dance in China. Are not gonna allow the source 0:01:50.720 --> 0:01:53.680 code and the algorithm to go to a US company, 0:01:54.280 --> 0:01:57.240 And that's buying an F one car without the engine. 0:01:57.440 --> 0:02:01.200 That's the fundamental issue here is that because of the 0:02:01.240 --> 0:02:05.760 source code, it makes us extremely complex. The value is 0:02:05.920 --> 0:02:08.079 vastly different without the source code. 0:02:09.240 --> 0:02:11.760 Well, then here's my question in terms of what the 0:02:11.800 --> 0:02:14.799 government will allow. It's like, well, the government like a 0:02:14.919 --> 0:02:18.399 minus led investor takeover. Will the government like a Netflix 0:02:18.520 --> 0:02:20.760 or a Netflix I'm in, a meta or another social 0:02:20.800 --> 0:02:25.320 media company buying TikTok, like if you divest, like they 0:02:25.320 --> 0:02:26.920 have to be okay, with who's going to buy it? 0:02:27.000 --> 0:02:29.480 What do you think the devil's in. 0:02:29.440 --> 0:02:31.359 The details, right, I mean the problem is, Look, this 0:02:31.400 --> 0:02:35.200 is all a third rail issue. It's great theater in 0:02:35.320 --> 0:02:39.560 DC in front of the microphones. The reality is the 0:02:39.680 --> 0:02:42.960 selling and ban of TikTok. First, besides First Amendment, what 0:02:43.000 --> 0:02:46.200 could happen to other social media. There's a huge ripple effect, 0:02:46.280 --> 0:02:51.280 the negative retaliatory from China as well as ultimately, how 0:02:51.320 --> 0:02:54.880 could you sell this without the source code? And that 0:02:55.040 --> 0:02:57.200 and Bye Dance in Beijing are not going to allow 0:02:57.280 --> 0:02:58.880 source code to be sold. 0:02:59.280 --> 0:03:00.000 And that's the issue. 0:03:00.000 --> 0:03:02.200 Shoot for Senate, I mean, the Shumer you even let 0:03:02.240 --> 0:03:04.920 this get on the floor, that's going to be the problem. 0:03:04.960 --> 0:03:08.120 It's very good for grand standing, but the reality of 0:03:08.160 --> 0:03:09.640 it is very complex. 0:03:10.440 --> 0:03:12.760 I mean, and you add to that that Congress really 0:03:12.840 --> 0:03:14.960 just has not done well in the past of turning 0:03:15.960 --> 0:03:18.760 denunciations of these perceived tech abuses into law. I mean, 0:03:18.800 --> 0:03:22.080 you think about things about protecting children online, anti trust authority, 0:03:22.160 --> 0:03:24.720 data privacy. This is not something that has come into 0:03:24.720 --> 0:03:27.080 really forceful law. So I mean there's a chance this 0:03:27.200 --> 0:03:29.400 might just all fall apart anyway. 0:03:29.680 --> 0:03:31.720 That's why it goes. But like all the work. 0:03:31.720 --> 0:03:34.960 We've done twenty five percent chans a ban actually happens 0:03:35.000 --> 0:03:39.320 because to Alex to your point, Okay, so now a 0:03:39.400 --> 0:03:42.240 ban happens the twenty five percent chance, how do you 0:03:42.320 --> 0:03:45.840 sell it? So you're forcing them to they don't have 0:03:45.920 --> 0:03:47.760 to sell without source code. 0:03:47.880 --> 0:03:50.040 Then who's going to buy it? And then it comes 0:03:50.080 --> 0:03:50.480 down to this. 0:03:50.640 --> 0:03:54.000 Now let's say it gets sold to Microsoft, to Oracle, 0:03:54.520 --> 0:03:57.440 then is there anti trust issues from a government perspective? 0:03:57.480 --> 0:03:59.920 The problem is you can't put Genie back in the bottle. 0:04:00.520 --> 0:04:04.720 This is going to have huge complications because TikTok as 0:04:04.760 --> 0:04:07.640 well as the precedent and even the Spider Web in 0:04:07.720 --> 0:04:09.280 terms of how it gets sold. 0:04:09.880 --> 0:04:12.120 How much do you think TikTok's worth? Like, let's just 0:04:12.160 --> 0:04:12.720 game it out. 0:04:13.840 --> 0:04:17.799 One hundred billion with the source code, without the source code, 0:04:18.279 --> 0:04:19.520 thirty to forty billion. 0:04:19.960 --> 0:04:24.400 Wow, that is a big, big, big, big difference. So 0:04:24.440 --> 0:04:26.160 what do you watching next for it? Then? Like, what's 0:04:26.200 --> 0:04:27.159 the next trigger point for you? 0:04:27.800 --> 0:04:27.920 Well? 0:04:27.960 --> 0:04:30.560 I think now the soap opera, we'll see that in 0:04:30.560 --> 0:04:32.760 the two or two area. So it does it actually 0:04:32.760 --> 0:04:36.520 get to the Senate for what negotiations go behind the scenes? 0:04:36.600 --> 0:04:37.720 You have one hundred and fifty. 0:04:37.520 --> 0:04:41.200 Million users, So you know you're in election year too, 0:04:41.360 --> 0:04:44.920 So it goes back to that third rail issue. Voting 0:04:45.360 --> 0:04:48.880 down TikTok as a ban not good for the eighteen 0:04:48.960 --> 0:04:50.039 twenty four year old vote. 0:04:50.120 --> 0:04:52.599 So that's we got to see how this all puts out. 0:04:52.640 --> 0:04:55.000 Obviously Trump on one side, by none the other in 0:04:55.120 --> 0:04:58.359 terms of TikTok ban book, Manutian has the first shot 0:04:58.360 --> 0:05:01.200 across the bout in terms of you know, looking for 0:05:01.400 --> 0:05:04.800 you know, potential to line up as buyers. Others are 0:05:04.839 --> 0:05:07.680 clearly behind the scenes doing the same thing. But it's 0:05:07.720 --> 0:05:10.719 all a game of high stakes poker right now playing out. 0:05:11.839 --> 0:05:15.760 So on the assumption that somehow this algorithm and the 0:05:15.800 --> 0:05:18.680 source code does become part of the sale, who do 0:05:18.720 --> 0:05:21.280 you think is the best strategic fit for this as 0:05:21.320 --> 0:05:21.760 a buyer. 0:05:23.000 --> 0:05:25.960 Look, there's a better chance of me playing in March 0:05:26.000 --> 0:05:29.680 Madness next week than this being sold with source code. 0:05:30.880 --> 0:05:32.240 And that's what you never know. 0:05:32.360 --> 0:05:33.760 Man, they could never. 0:05:34.000 --> 0:05:37.480 Again and again three pointer decent but but look, but 0:05:37.520 --> 0:05:40.839 the point is, you never know in terms of now 0:05:41.000 --> 0:05:44.760 what Beijing and byte Dance are thinking to now even 0:05:44.800 --> 0:05:46.840 to just trajector you this out, what's do they do 0:05:46.920 --> 0:05:49.240 it without source code and there's buyers. 0:05:50.440 --> 0:05:51.800 Then the question is. 0:05:52.080 --> 0:05:55.760 Where does it is a big tact Is it a 0:05:55.800 --> 0:05:59.839 consortium like Ammunition other financial buyers? And this is gonna 0:05:59.880 --> 0:06:03.240 be just despite whoever regulatory it'll get, It'll go through 0:06:03.279 --> 0:06:06.039 the court system. And I think that's how this is 0:06:06.040 --> 0:06:08.359 all going to play out, is there's a huge ripple 0:06:08.400 --> 0:06:11.200 effect unintended consequences when you go down this path. 0:06:12.040 --> 0:06:13.599 Before I let you go, I got to ask Tesla. 0:06:13.640 --> 0:06:15.640 We talked about it earlier in the hour after that 0:06:15.880 --> 0:06:18.359 downgrade yesterday over at Wells Fargo, saying that it's a 0:06:18.360 --> 0:06:22.320 growth company with no growth, Uh correct, accurate, not accurate? 0:06:23.400 --> 0:06:26.520 Look for now, I mean clearly going through massive headwinds 0:06:26.600 --> 0:06:29.640 in China, but we've never called Tesla for the last 0:06:29.640 --> 0:06:32.240 decade in terms of the next thirty days sixty days. 0:06:32.400 --> 0:06:34.760 On the other side, growth is still going to be 0:06:34.920 --> 0:06:39.000 massive ev leadership AI. That's what we continue to be 0:06:39.040 --> 0:06:41.360 bullish here. But no doubt it is a white knuckle 0:06:41.440 --> 0:06:44.839 period that we're going through in you know, especially in 0:06:44.920 --> 0:06:47.320 China for Tesla, and that's why bears are all coming 0:06:47.360 --> 0:06:48.160 out of hibernation. 0:06:49.520 --> 0:06:51.120 Yeah, so what do you think is next for them 0:06:51.120 --> 0:06:53.560 in the next two quarters or so in terms of 0:06:53.600 --> 0:06:56.400 analysts coming out with dimmer views on it. 0:06:57.480 --> 0:06:59.000 Yeah, clearly numbers are getting caught. 0:06:59.040 --> 0:07:01.760 A lot that's getting probably, But it comes down to, 0:07:01.800 --> 0:07:04.440 like they got away out the goalpost. Are the price 0:07:04.480 --> 0:07:07.600 cuts done? We just came back from Asia. I think 0:07:07.720 --> 0:07:10.240 ninety five percent price cuts are done. If they put 0:07:10.240 --> 0:07:12.800 a line to stand, their street starts to look through 0:07:13.520 --> 0:07:15.400 second half of the year into next year, and I 0:07:15.400 --> 0:07:17.640 think then we sort of bought them out. It's also 0:07:17.640 --> 0:07:21.120 about Musk the twenty five percent ownership I think at 0:07:21.160 --> 0:07:24.440 the shareholder me and they formally go to Texas from Delaware. 0:07:24.960 --> 0:07:27.800 That continues to also be an overhang over the stock. 0:07:27.880 --> 0:07:30.400 I think a lot of that gets resolved. We've been 0:07:30.400 --> 0:07:33.680 here before. I don't view this as really the end 0:07:34.200 --> 0:07:35.560 of the Tessa growth story. 0:07:35.760 --> 0:07:38.240 Yeah, it's just sort of like delayed kind of thing. 0:07:38.640 --> 0:07:41.640 Hate real quick twenty seconds in video headed into their 0:07:41.920 --> 0:07:44.240 GTCAI conference, what do you think. 0:07:44.800 --> 0:07:48.880 The godfather of Ai Jensen I think continues to is 0:07:48.960 --> 0:07:52.560 going to show behind the curtains just what's coming and 0:07:52.600 --> 0:07:55.600 because they're going to continue to lead the revolution. And 0:07:55.640 --> 0:07:58.400 this is not a nineteen ninety nine moment, it's a 0:07:58.520 --> 0:08:02.400 nineteen ninety five and get out the popcorn parties you started. 0:08:03.280 --> 0:08:05.320 That's how you love Dana Ives. He gives you those 0:08:05.360 --> 0:08:09.880 wonderful soundbites. Dan Ives of Rodwood Bush. We appreciate your time. Today. 0:08:10.120 --> 0:08:14.000 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:14.080 --> 0:08:17.000 weekdays at ten am Eastern on applecar. 0:08:16.640 --> 0:08:19.360 Play and Android Auto with the Bloomberg Business Act. 0:08:19.520 --> 0:08:22.360 You can also listen live on Amazon Alexa from our 0:08:22.400 --> 0:08:26.760 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:08:28.000 --> 0:08:30.800 So one stock to watch is US Steel. It's down 0:08:30.840 --> 0:08:34.280 another one point three percent today. President Biden says that 0:08:34.480 --> 0:08:37.960 US Steel should stay in American owned and operate a company. 0:08:38.120 --> 0:08:40.480 This is nip On Steel over in Japan is trying 0:08:40.480 --> 0:08:43.840 to buy the company. JP Morgan now saying that it 0:08:43.920 --> 0:08:48.800 is possible that Cleveland Cliffs could rebid for US Steel. 0:08:48.920 --> 0:08:51.400 So it's a lot. It's a lot happening. At the 0:08:51.480 --> 0:08:53.040 end of the day, is we need the steal. We 0:08:53.080 --> 0:08:55.920 want to produce it. Prices are not that great, therefore 0:08:56.040 --> 0:08:59.400 the consolidation therefore a backstop. Who better to talk to 0:09:00.320 --> 0:09:03.600 Bloomberg Intelligence A senior analyst. He covers basic materials for 0:09:03.679 --> 0:09:07.000 US right here at Bloomberg Richard, How did this whole thing? 0:09:07.440 --> 0:09:08.920 I don't want to say fall apart, because it hasn't 0:09:08.960 --> 0:09:10.800 fallen apart, but like what happened? 0:09:13.040 --> 0:09:13.360 Really? 0:09:13.440 --> 0:09:14.160 Politics? 0:09:14.440 --> 0:09:16.640 Oh, that's so weird. 0:09:16.920 --> 0:09:20.680 If you look at US steel is located in Pennsylvania. 0:09:21.720 --> 0:09:25.240 Biden won Pennsylvania by a little over eight thousand votes 0:09:25.920 --> 0:09:32.160 last election twenty twenty. Steel Union members in Pennsylvania are 0:09:32.200 --> 0:09:37.320 about seven hundred and fifty thou Union members in Pennsylvania, and. 0:09:37.320 --> 0:09:39.000 They don't necessarily want this deal to go through. 0:09:39.160 --> 0:09:41.880 And the union does not want the deal go through. 0:09:42.200 --> 0:09:45.079 And you also had Trump come out saying that he would. 0:09:44.920 --> 0:09:45.600 Block the deal. 0:09:45.760 --> 0:09:48.200 You know, there's three or four you know, I'm not 0:09:48.360 --> 0:09:53.000 a election expert, but there's three or four critical states 0:09:53.040 --> 0:09:57.520 that probably will flip the election. In Pennsylvania's probably. 0:09:57.200 --> 0:09:57.920 One of them. 0:09:58.280 --> 0:10:00.880 So I guess I'm sort of wondering, knowing that that 0:10:01.120 --> 0:10:04.640 is the politics of the situation, what was the motivation 0:10:04.880 --> 0:10:06.600 to bring the deal in the first place. 0:10:07.440 --> 0:10:10.480 The motivation is if you look at the US steel 0:10:10.520 --> 0:10:17.000 market is actually with the Infrastructure Act and Inflation Reduction Act, 0:10:17.120 --> 0:10:21.960 is actually probably one of the more higher growth steel 0:10:22.000 --> 0:10:25.720 markets across the world. And Nippon Steel has said that 0:10:25.800 --> 0:10:29.720 they want to get to one hundred million tons of 0:10:29.800 --> 0:10:32.559 steel production a year. This was kind of helped them 0:10:32.600 --> 0:10:33.959 along that goal. 0:10:35.160 --> 0:10:38.079 Without them though, could they not do it? And is 0:10:38.120 --> 0:10:40.720 it because it's just expensive to get it done or 0:10:40.800 --> 0:10:43.400 is it because the prices are low so their margins 0:10:43.400 --> 0:10:44.000 are not great? 0:10:45.720 --> 0:10:46.640 Not quite falling? 0:10:47.040 --> 0:10:51.959 Oh that if the Japanese company Nippon Steel went away, 0:10:52.400 --> 0:10:55.160 and they you need all this product here in the 0:10:55.240 --> 0:10:58.160 US to help satisfy all the infrastructure acting the chips 0:10:58.200 --> 0:11:01.280 act without a buyer, why can't you still just do 0:11:01.320 --> 0:11:01.920 it on their own? 0:11:02.040 --> 0:11:02.320 Is no? 0:11:02.480 --> 0:11:04.000 US still can't do it on their own? 0:11:04.080 --> 0:11:04.920 Can Okay? 0:11:04.960 --> 0:11:09.920 And they have outlined a plan to get there, to 0:11:10.000 --> 0:11:12.800 improve their assets and build up. You know, they're building 0:11:12.840 --> 0:11:16.440 another plant in Arkansas, Big River Steel too, which they 0:11:16.480 --> 0:11:19.480 built you know, but back in August, Cliffs kind of 0:11:19.480 --> 0:11:21.720 put them in play. Cliffs came in with an offer 0:11:22.080 --> 0:11:25.160 for thirty five dollars a share, kind of put US steel, 0:11:25.679 --> 0:11:30.240 you know, said that they had to evaluate strategic alternatives, 0:11:30.559 --> 0:11:32.679 spent a few months doing this, and then came up 0:11:32.720 --> 0:11:34.880 with where Nippon was the highest bidder. 0:11:35.679 --> 0:11:38.320 So, I guess if you've got these competing bids for it. 0:11:38.360 --> 0:11:40.640 I mean, what's the expectation for how long this can 0:11:40.720 --> 0:11:41.000 go on? 0:11:41.760 --> 0:11:47.600 Well, it's it's currently under reviewed by SYPHIUS, which is 0:11:47.600 --> 0:11:51.200 the Committee for Foreign Investment in the US. Syphius deals with 0:11:51.360 --> 0:11:56.560 national security, so as people said, their deliberations are shrouded 0:11:56.600 --> 0:12:00.480 in secrecy. So you know, initially, when when we looked 0:12:00.480 --> 0:12:06.760 at the deal and we saw the union opposition, we said, 0:12:06.960 --> 0:12:09.959 what they should do is US steal and NIPHN should 0:12:10.000 --> 0:12:14.160 slow walk the deal locked approval get passed the November 0:12:14.160 --> 0:12:20.280 fifth election, and then maybe, you know, politicians attentions turn elsewhere. 0:12:20.640 --> 0:12:22.480 Is it possible that US steal says all right later 0:12:23.440 --> 0:12:25.520 and like the and they're just going to go on 0:12:25.520 --> 0:12:26.160 their own way. 0:12:27.120 --> 0:12:30.920 I don't think suareholders would appreciate that appen. 0:12:31.080 --> 0:12:33.560 So now they're like, okay, we want to get right right. 0:12:33.600 --> 0:12:36.880 I mean the steal, you know, the stock was traded 0:12:37.120 --> 0:12:40.200 like in the mid twenties, and you got a deal 0:12:40.240 --> 0:12:41.680 for fifty five dollars a share. 0:12:42.200 --> 0:12:43.640 You want to take that, you want to get something. 0:12:45.120 --> 0:12:48.360 I guess my question is, let's pretend that the the 0:12:48.440 --> 0:12:50.960 nip On deal falls through. Let's say Cleveland Clips comes 0:12:51.000 --> 0:12:53.480 back in and rebids, right, and the company's like, all right, 0:12:53.480 --> 0:12:56.160 I guess we're up for sale. Is the US government 0:12:56.200 --> 0:12:58.640 going to like that deal? Because that's gonna that's gonna 0:12:58.640 --> 0:13:00.520 be antitrust concern right. 0:13:00.640 --> 0:13:05.880 That's so it's just from national securities to anti trust concerns. 0:13:06.000 --> 0:13:10.040 And also the other thing one of the areas of 0:13:10.320 --> 0:13:14.480 anti trust would would come on our scrutiny. US still 0:13:14.520 --> 0:13:16.480 and clean Cliffs are two of the biggest players to 0:13:16.520 --> 0:13:21.439 the auto industry, so you have, you know, the auto companies, 0:13:22.280 --> 0:13:24.839 you know, not happy with the deal there. 0:13:25.400 --> 0:13:27.600 So to go back though to the politics of it, 0:13:27.760 --> 0:13:30.200 just thinking through some of the opposition to the npon bid, 0:13:30.200 --> 0:13:32.280 because a lot of that had to do with the 0:13:32.320 --> 0:13:35.800 objection from the steel workers. So if you think of 0:13:35.840 --> 0:13:38.360 it of an American bidder coming in, do you think 0:13:38.440 --> 0:13:41.800 that's an easier that's an easier thing for steel workers 0:13:41.800 --> 0:13:42.760 to accept? 0:13:42.920 --> 0:13:47.800 Well, it's you know, Cleveland Cliffs is has a very 0:13:47.800 --> 0:13:51.319 good relationship with the steel workers union, so that's why 0:13:51.440 --> 0:13:54.880 the union has been favoring Cleveland Cliffs. In fact, in 0:13:54.920 --> 0:13:58.360 the in the union agreements, there's a thing called right 0:13:58.440 --> 0:14:02.760 to bid where if a be under a with the 0:14:02.880 --> 0:14:07.840 US steel has a contract with the steel union gets 0:14:07.840 --> 0:14:10.480 acquired by somebody, the union has a right to bid. 0:14:10.760 --> 0:14:17.280 So in this whole escapade, the US steel Workers Union 0:14:17.360 --> 0:14:20.800 assign their right to bid to cliffs, so favoring cliffs 0:14:20.840 --> 0:14:22.080 and things along those lines. 0:14:22.320 --> 0:14:25.280 Can I just ask, like, what's the fear of a 0:14:25.320 --> 0:14:29.080 foreign company owning US steel? I mean, they're gonna nip 0:14:29.120 --> 0:14:30.760 on steel is going to pack it up and move 0:14:30.760 --> 0:14:31.000 it to. 0:14:31.000 --> 0:14:33.480 Japan because Japan is supposed to be like a friendly 0:14:33.720 --> 0:14:35.680 country like well, and it's. 0:14:35.520 --> 0:14:37.760 Not like they're going to like raise prices to the 0:14:37.800 --> 0:14:39.840 point where they're going to shoot themselves in the foot 0:14:39.920 --> 0:14:44.240 to like have sales decline. I mean what it's now 0:14:44.640 --> 0:14:47.040 part of this is jingoistic, is that agreed? 0:14:47.320 --> 0:14:50.120 And also Japan is the biggest number the number one 0:14:50.640 --> 0:14:54.360 a foreign direct investor in the United States. US has 0:14:54.480 --> 0:14:58.160 over five trillion dollars a foreign direct investment. Japan accounts 0:14:58.200 --> 0:15:01.760 for fifteen percent of it. It's the biggest foreign direct 0:15:01.840 --> 0:15:05.600 investor in the United States. So on that it doesn't 0:15:05.640 --> 0:15:06.960 really make sense either. 0:15:06.840 --> 0:15:10.200 Hence just pointing out the whole union politicking of it. Okay, 0:15:10.200 --> 0:15:13.280 so what do you think actually happens? Best guess? 0:15:13.560 --> 0:15:17.000 Best guess I think you got a lots smart people 0:15:17.080 --> 0:15:18.800 and at both companies. 0:15:19.040 --> 0:15:19.720 I think. 0:15:22.080 --> 0:15:24.440 I, like I said earlier, I would slow walk the. 0:15:24.440 --> 0:15:26.479 Deal and get something. 0:15:26.520 --> 0:15:29.400 Passed the elections and see what happens. You're probably going 0:15:29.480 --> 0:15:32.280 to have to pay the union a little bit more 0:15:32.400 --> 0:15:35.800 to get them on board. But Nippon still just could 0:15:35.920 --> 0:15:38.560 deal two to three days ago with the unions in Japan, 0:15:39.240 --> 0:15:47.200 so obviously they realized the worker landscape of wages are 0:15:47.240 --> 0:15:47.680 going up. 0:15:48.040 --> 0:15:50.240 Oh you know what, I wonder if the financing picture 0:15:50.280 --> 0:15:52.680 will be a little bit easier if they cancel walk 0:15:52.720 --> 0:15:55.240 the deal and get it past the election, because looking 0:15:55.280 --> 0:15:56.960 at the FED dot plot, we could have had a 0:15:56.960 --> 0:15:58.800 couple of industry cuts by then, so maybe it'll be 0:15:58.840 --> 0:15:59.440 a bit cheaper. 0:16:00.400 --> 0:16:04.720 They have everything all right align you know, companies have 0:16:05.640 --> 0:16:08.600 you know, signed up to provide them the fifteen billion 0:16:08.640 --> 0:16:10.400 dollars that don't need to buy all. 0:16:10.320 --> 0:16:14.600 Right, So banks have broadening out for a second, what 0:16:14.720 --> 0:16:17.360 is steel demand like right now globally and in the US, 0:16:17.400 --> 0:16:19.560 and how prices because if you want to find one 0:16:19.560 --> 0:16:22.520 ticker for steel prices, good luck, it is such a 0:16:22.560 --> 0:16:25.240 regional market. Yeah, give me the landscape. 0:16:25.400 --> 0:16:28.000 No steel prices are you know, what we had was 0:16:28.080 --> 0:16:30.800 kind of an interesting year. Usually you have steel prices 0:16:30.960 --> 0:16:34.160 at the beginning of the year increase because of seasonality. 0:16:34.280 --> 0:16:38.320 Obviously constructions construction is the biggest market summer, it's easier 0:16:38.320 --> 0:16:39.040 to do construction. 0:16:39.120 --> 0:16:40.240 Everybody's buying steel. 0:16:40.520 --> 0:16:44.920 What happened is that auto workers strike last year. Everybody 0:16:44.920 --> 0:16:47.480 held off buying steel because they thought steel prices would 0:16:47.560 --> 0:16:51.520 really go down because the auto workers strike was rumored 0:16:51.560 --> 0:16:55.160 to be prolonged. And really what happened is the auto 0:16:55.200 --> 0:16:58.560 workers strike didn't have as much effect as people thought. 0:16:59.280 --> 0:17:02.400 Everybody rushed back to the market and really pulled in 0:17:03.000 --> 0:17:05.240 pricing at the end of last year, so you had 0:17:05.320 --> 0:17:08.320 kind of that peak of pricing rather than coming in 0:17:08.359 --> 0:17:11.720 the first quarter. Actually prices peak back at the end 0:17:11.760 --> 0:17:16.879 of January. They've it looks like now they're probably've hit 0:17:16.920 --> 0:17:19.520 a bottom. Both New Core and Cliffs that come out 0:17:19.560 --> 0:17:23.040 with announcements that you know, eight hundred and twenty five 0:17:23.080 --> 0:17:27.240 dollars a ton we want and eight forty respectively, So 0:17:27.280 --> 0:17:30.800 that's kind of stopped the free falling prices. You have 0:17:30.920 --> 0:17:35.560 a lot uncertainty. What I would characterize across the world 0:17:35.720 --> 0:17:39.000 is hand the mouth buying. You're just buying what you need. 0:17:39.080 --> 0:17:42.480 You're not taking any speculative risk or anything like that 0:17:42.520 --> 0:17:43.680 to build up inventoris. 0:17:43.760 --> 0:17:46.240 Hi, Richard, thanks a lot. We super appreciate it. Richard Burg, 0:17:46.280 --> 0:17:49.760 Bloomberg Intelligence, Senior analyst on US Steel. 0:17:52.200 --> 0:17:56.080 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:56.160 --> 0:17:58.840 weekdays at ten am Eastern on Affo car Playing and 0:17:58.960 --> 0:18:01.439 broun Otto with the bloom Bird Business app. Listen on 0:18:01.520 --> 0:18:04.760 demand wherever you get your podcasts, or watch us live 0:18:04.880 --> 0:18:06.240 on YouTube. 0:18:07.440 --> 0:18:10.040 So let's get to the retail sales here. That disappointed 0:18:10.040 --> 0:18:12.320 and this just goes to my point. I tell everyone 0:18:12.359 --> 0:18:13.960 I'm on a budget and no one believes me, and 0:18:14.040 --> 0:18:16.159 yet these sales prove that it's true. Just putting that 0:18:16.200 --> 0:18:19.639 out there. Jill Blanchard is president of Enterprise Client Solutions 0:18:19.680 --> 0:18:22.480 over at Advantage At Solutions and she joins US. So 0:18:22.480 --> 0:18:26.280 I'm looking at Control Group flat for February back out autos, 0:18:26.359 --> 0:18:28.800 back out gas just up by three tenths. You also 0:18:28.800 --> 0:18:32.080 had January revised lower. What's the state of the economy 0:18:32.080 --> 0:18:34.120 When you look at consumption, you look at retail. 0:18:35.880 --> 0:18:38.840 So hello, thanks for having me back. I was listening 0:18:38.840 --> 0:18:43.600 before Happy Friday Eve. It still continues to be a 0:18:43.640 --> 0:18:47.160 struggle for consumers out there when we look at things 0:18:47.240 --> 0:18:49.479 like in consumer package, because the prices are still up 0:18:49.520 --> 0:18:50.960 six point eight percent. 0:18:50.720 --> 0:18:51.680 Versus last year. 0:18:52.520 --> 0:18:55.200 The good news is that in the recent Advantage Outlook survey, 0:18:55.240 --> 0:18:58.159 manufacturers fifty percent said that they don't have plans to 0:18:58.520 --> 0:19:00.879 increase prices, but we do have a that plan to 0:19:01.000 --> 0:19:03.560 increase prices on non core items, so think of things 0:19:03.640 --> 0:19:04.280 like a. 0:19:04.240 --> 0:19:06.359 Smaller size package or a low fat version. 0:19:06.560 --> 0:19:10.200 Where we really get concerned is with the value priced brands, 0:19:10.200 --> 0:19:12.360 and so those are the lower price brands that typically 0:19:12.359 --> 0:19:16.159 compete with like a private brand. Those those brands have 0:19:16.359 --> 0:19:19.720 increased their prices one point five points higher than a 0:19:19.760 --> 0:19:22.960 mainstream price or a premium price, and so essentially is 0:19:23.000 --> 0:19:26.160 the rising of the floor further squeezing consumers. 0:19:26.920 --> 0:19:30.399 So it's interesting, you've got the cheaper stuff is getting 0:19:30.440 --> 0:19:34.040 more expensive, and then you've got continued triflation. It sounds like, 0:19:34.160 --> 0:19:37.680 so you know, how much more of this can consumers take? 0:19:37.720 --> 0:19:39.679 Because you know, at the same time you've got an 0:19:39.720 --> 0:19:42.960 incredibly strong job market, so something's got to give. 0:19:43.000 --> 0:19:44.520 I would have thought at some point. 0:19:46.320 --> 0:19:49.119 We do see a lot of give actually out there 0:19:49.160 --> 0:19:50.760 in the form of a few things. 0:19:50.800 --> 0:19:52.680 One is trade down right or pare down. 0:19:52.720 --> 0:19:56.720 And so we see consumers you know, pairing down whether 0:19:56.760 --> 0:19:58.879 they're buying a you know, a used luxury car instead 0:19:58.880 --> 0:20:00.960 of a new luxury car, or they're trying to make 0:20:01.000 --> 0:20:02.879 meals at home instead of going out, and so we 0:20:02.920 --> 0:20:06.399 see a lot of shifting in that spending to lower 0:20:06.440 --> 0:20:10.480 price things. We see consumers buying more private brand boys. 0:20:10.960 --> 0:20:13.240 They're having a really good day. In fact, to seventy 0:20:13.240 --> 0:20:15.760 five percent of retailers say that they're number one growth 0:20:15.760 --> 0:20:19.920 strategy is private brand. We see consumers buying things on promotions, 0:20:19.920 --> 0:20:23.520 so we're definitely seeing a big shift in behavior. Promotions 0:20:23.560 --> 0:20:26.879 are a top strategy for manufacturers and for retailers, but 0:20:26.920 --> 0:20:29.960 they've got to be really careful not to sacrifice tomorrow 0:20:29.960 --> 0:20:34.400 by giving away today. And consumers are becoming more disloyal 0:20:34.480 --> 0:20:36.320