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Globe Braces For Trump Tariffs; Oil Outlook For 2025 · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
• 0:08
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 2: weekdays at ten am Eastern on Apple card playing Android
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  Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever
• 0:18
  Speaker 2: you get your podcasts, or watch us live on YouTube.
• 0:23
  Speaker 3: Katerina Simonetti, She's at Morgan Stanley Private Wealth Management. She's
• 0:26
  Speaker 3: a private wealth advisor over there. Katerina, again, I'd love
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  Speaker 3: to hear kind of the conversations you're having with your
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  Speaker 3: clients as you can close out a pretty successful twenty
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  Speaker 3: twenty four and think about next year. What do you guys,
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  Speaker 3: how are you talking to your clients these days?
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  Speaker 4: Well, Paulin and Caroline, thank you for having me on
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  Speaker 4: the show. This is a really important conversation because it's
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  Speaker 4: not lost on clients that we've had double digit returns
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  Speaker 4: for two years in a row, and it is only
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  Speaker 4: reasonable to expect that the returns in twenty five are
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  Speaker 4: going to be somewhat subdued. So clients are concerned the
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  Speaker 4: questions that we're having about how to capture returns in
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  Speaker 4: the portfolios, how to maximize the income and the portfolios,
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  Speaker 4: and most importantly, risk management in the upcoming volatility, and
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  Speaker 4: to be fair, our expectations for the year are not dim.
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  Speaker 4: We think a lot of emphasis are on FED and
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  Speaker 4: inflation and how all the other factors are going to
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  Speaker 4: play out. But when it comes to the practical things
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  Speaker 4: that we do before the year end, rebalancing the portfolio
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  Speaker 4: and achieving maximum portfolio diversification in stocks, bonds, real assets,
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  Speaker 4: and private investments is the absolute key.
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  Speaker 3: So, Katerina, I mean again, a lot of folks are standpoint.
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  Speaker 3: You can you have a third year of performance in
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  Speaker 3: the equity markets and to the extent you're going to
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  Speaker 3: be a little bit more cautious. Well, you can look
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  Speaker 3: at the fixed income market. How do you think about
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  Speaker 3: the fixed income trade? Do I sit there in a
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  Speaker 3: two year treasury and get you four point three percent
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  Speaker 3: from the US government or door it take some credit risk.
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  Speaker 4: If we are expecting then FED is not going to
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  Speaker 4: have quite as many rate cuts as originally expected. It's
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  Speaker 4: not necessarily the absolutely worst thing in the world for
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  Speaker 4: fixed income investors. Number one, we're going to get higher
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  Speaker 4: yields of cash for a little bit longer than expected.
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  Speaker 4: And two, if we don't think about fixed income as
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  Speaker 4: per se a trade but as a whold and as
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  Speaker 4: an asset that delivers that consistent income and risk management
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  Speaker 4: because on the risk adjusted basis going into twenty.
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  Speaker 1: Five, we prefer bonds or stocks.
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  Speaker 4: We think it's going to generate yield, but quality very
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  Speaker 4: much so within bonds as well as stocks is going
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  Speaker 4: to be the name of the game for.
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  Speaker 1: Twenty five.
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  Speaker 5: Volatility because there's so much well lack of clarity as
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  Speaker 5: it currently stands, Katerina, just take us through the thought
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  Speaker 5: process over at Morgan Stanley Private Wealth more broadly as
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  Speaker 5: to whether or not the FED will cut more than
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  Speaker 5: two times. What sort of realistic infrationary pressure will we
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  Speaker 5: get from the talked about tariffs that I yet to
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  Speaker 5: be imposed.
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  Speaker 1: Caroline, where do I start?
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  Speaker 4: Uncertainty about the Fed, uncertainty about inflation, uncertainty about the
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  Speaker 4: teriffs and immigration. As all these headlines are going to
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  Speaker 4: start coming out in early twenty five, all of this
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  Speaker 4: is going to play a role, and so our expectations
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  Speaker 4: for the early half of the year come with the
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  Speaker 4: expectation of the higher volatility, and last couple of weeks
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  Speaker 4: gave us a bit of a taste of what's to come. Now,
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  Speaker 4: tell investors not to chase rallies. And this is the
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  Speaker 4: other side of this coin where we have to prepare
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  Speaker 4: and stay calm and make sure that we have high
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  Speaker 4: quality portfolios, focus on sectors that generate yield, Focus on
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  Speaker 4: the areas like financials, industrials, materials, and make sure that
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  Speaker 4: we take some profits of the table and avoid higher
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  Speaker 4: concentrations in the portfolios. We've had some fantastic performance, this
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  Speaker 4: is the time to take some games.
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  Speaker 5: But the problem is you had fun state performance in
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  Speaker 5: twenty twenty three, and if you'd have that mindset around
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  Speaker 5: and in video or the Mac seven, then boy did
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  Speaker 5: you miss that rally of twenty twenty four videos up
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  Speaker 5: one hundred and eighty percent let's call it for the years.
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  Speaker 5: So how do you talk some of your clients out
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  Speaker 5: of that fomo feeling that a lot are going to
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  Speaker 5: be feeding all over again when it comes to countum
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  Speaker 5: an Ai.
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  Speaker 4: Carolin, It's only natural to feel this way, and I
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  Speaker 4: think that that what we have to ask is the
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  Speaker 4: are the valuations and profit expectations that are on the table,
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  Speaker 4: as well as the fact that FED has a lot
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  Speaker 4: of pressure on them. You know, when it comes to
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  Speaker 4: inflation in terms of cuts, are we going to get
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  Speaker 4: as many cuts as expected.
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  Speaker 1: That is the big question for us and for them.
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  Speaker 4: So when investors are looking at their holdings, of course
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  Speaker 4: it is natural not to be missing out on the
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  Speaker 4: continued growth. So we don't advise selling out of the
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  Speaker 4: entire position, but healthy profit taking and diversification into the
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  Speaker 4: other areas where a level the growth of that level
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  Speaker 4: didn't occur yet and where the possibility of future growth
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  Speaker 4: are significantly more substantial than they are in technology in
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  Speaker 4: some of these areas that achieved remarkable growth in both
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  Speaker 4: twenty four and twenty three.
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  Speaker 3: Ketterine, how do you talk to your clients about alternative investments?
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  Speaker 3: Something in private equity, private credit, hedge funds, because when
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  Speaker 3: I speak to rias, I'm really surprised that the high
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  Speaker 3: percentages they allocate to alternatives.
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  Speaker 1: How do you guys more instantly think about it.
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  Speaker 4: Well, in the time where investors are so concerned about
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  Speaker 4: the risk and politility and protecting the values of their portfolio,
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  Speaker 4: having the asset us that could hedge risk in the
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  Speaker 4: equity side of the equation, it's extremely valuable. Now it
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  Speaker 4: comes with the cost, and that cost is liquidity. So
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  Speaker 4: investors that are comfortable with giving up some of the
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  Speaker 4: liquidity in their portfolios. Are perfectly fine using the alternative
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  Speaker 4: investments because it has huge value with making sure that
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  Speaker 4: we achieve consistent risk adjusted return. But with that, it's
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  Speaker 4: just the piece of the puzzle where fixed income delivers income,
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  Speaker 4: equities deliver growth, cash delivers liquidity, and alternative investments are
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  Speaker 4: extremely effective in risk management.
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  Speaker 3: We're going to have some changes to the tax policy.
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  Speaker 3: It seems like we'll see how that plays out. Then
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  Speaker 3: that kind of goes to the asset class of municipal bonds.
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  Speaker 3: I'm a big fan of municipal bonds. A triple tax
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  Speaker 3: free treatment is I think a good and wonderful thing.
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  Speaker 3: How do you guys position municipals in a typical portfolio.
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  Speaker 1: Well, taxes are.
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  Speaker 4: A major concern and inflation is a concern as well.
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  Speaker 4: But when investors are looking at their portfolios and analyzing
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  Speaker 4: the after tax income and after tax performance that they're receiving,
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  Speaker 4: tax efficiency is something that is a part of every
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  Speaker 4: single conversation that we're having with clients, and this is
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  Speaker 4: where municipal bonds come into play.
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  Speaker 1: Now, with municipal bonds.
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  Speaker 4: You have to make sure that the tax equivalent rate
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  Speaker 4: of return that we're getting on muni bonds is actually
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  Speaker 4: as good or better that return that we can achieve
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  Speaker 4: in corporate fixed income, because there are some amazing buying opportunities.
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  Speaker 1: On that side.
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  Speaker 4: But investors certainly like having that tax free cash flow
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  Speaker 4: in their portfolios, especially in retirement.
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  Speaker 5: Taxation clarity is something that perhaps the crypto world is
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  Speaker 5: potentially yearning for, girning for for twenty twenty five. How
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  Speaker 5: have you thought about crypto and that particular area of
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  Speaker 5: potential investment alternative investment for the twenty twenty four into
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  Speaker 5: twenty twenty five, Katrina.
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  Speaker 4: Well, Caroline, when you think about the development of crypto world,
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  Speaker 4: where it turned from something that we don't mention or
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  Speaker 4: talk about into something that was, you know, the most
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  Speaker 4: exciting part of the portfolios than the most volatile part
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  Speaker 4: of the portfolios. And now we're seeing more over a
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  Speaker 4: legitimization or the use of crypto in the normal portfolios,
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  Speaker 4: you know, with the availability of ETFs, with people feeling more
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  Speaker 4: comfortable investing in this type of investments, but they can't
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  Speaker 4: lose track of the fact that the volatility still remains
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  Speaker 4: extremely high. So the positioning in the portfolio has to
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  Speaker 4: be extremely careful, and investors that are relying on the
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  Speaker 4: crypt for liquidity certainly has to have that in mind
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  Speaker 4: because the volatility in equity markets at high is high,
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  Speaker 4: but our expectations for volatility in the crypto world is
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  Speaker 4: significantly higher than that.
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  Speaker 5: Meanwhile, though, going back to the equity markets, where there
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  Speaker 5: still govies of volatility, I'm interested in your overweights industrials, utilities,
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  Speaker 5: and software, and actually that software shift from hardware to software,
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  Speaker 5: from chips into a paneteer or to a software application
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  Speaker 5: and generative AI has been a theme we've been hearing,
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  Speaker 5: but talk a little bit more about the industrials and utilities.
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  Speaker 5: What drives that For twenty twenty five.
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  Speaker 4: Kurln, we're looking for a defensive place. We're looking for
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  Speaker 4: companies that are not just delivering attractive earnings outlook, which
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  Speaker 4: is something that we see across the board and of
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  Speaker 4: course we'll be looking across the board for twenty five,
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  Speaker 4: but also that bring to the table attractive valuations. They
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  Speaker 4: didn't have that explosive growth that some of the sectors
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  Speaker 4: we're seeing. So that's where the industrials, that's where the materials,
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  Speaker 4: that's where consumer stables come in. We're looking for qualities
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  Speaker 4: and also for companies that are in position to make money,
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  Speaker 4: to be profitable in twenty five.
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  Speaker 3: All right, Katerina, thank you so much for joining us.
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  Speaker 3: Always appreciate getting some of your time and your thoughts
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  Speaker 3: on these markets. Category to Seminetti, you're listening to the
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• 9:53
  Speaker 1: Bloomberg eleven thirty.
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  Speaker 5: Coming up early for us from la Is John Gilson,
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  Speaker 5: who is one of the authors behind in today's Big Take,
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  Speaker 5: how Trump tariff threats are already roiling global trade. You
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  Speaker 5: go into this deep diet of individual companies, how they're
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  Speaker 5: already having to have a surge of shipments from Germany,
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  Speaker 5: whether it's wriestling wine or whether it's the latest maker
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  Speaker 5: of wires and technology from the US in California. How
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  Speaker 5: are they trying to front runs some of the tariffs
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  Speaker 5: that we're expecting, John Well.
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  Speaker 6: Exactly, there's been a record number of containers running through
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  Speaker 6: the ports of la and Long Beach the biggest North
• 10:30
  Speaker 6: American ports just in the last couple months. Because people
• 10:35
  Speaker 6: are trying to get ahead of this, but at the
• 10:37
  Speaker 6: same time they're balancing, like, we don't want to overorder
• 10:41
  Speaker 6: in the case of there's a company that has EarPods
• 10:44
  Speaker 6: that they supply, not Apple ones. But their concern is
• 10:49
  Speaker 6: technology changes very fast. If we order too much ahead
• 10:52
  Speaker 6: of time, we'll be stuck with all this inventory that
• 10:54
  Speaker 6: people won't want to buy. So they're trying to balance
• 10:57
  Speaker 6: all these things. Get it in while prices are cheap,
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  Speaker 6: beat the tariffs. At the same time, don't overorder. There
• 11:04
  Speaker 6: are also higher costs if you rush to get stuff
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  Speaker 6: in because free costs have gone up a lot.
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  Speaker 3: So John, it's interesting, we don't even know what's going
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  Speaker 3: to get be subject to tariffs, how much any of that,
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  Speaker 3: But it appears that companies just aren't waiting, are they.
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  Speaker 3: They're trying to just get ahead of this anyway they can.
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  Speaker 3: I mean, it's just extraordinary.
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  Speaker 6: Well, yeah, they're trying to figure out what to do.
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  Speaker 6: Because the other concern is people thought, well, let's have
• 11:31
  Speaker 6: stuff imported via Mexico assembled in Mexico, and that way
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  Speaker 6: we could get around the sort of Chinese content.
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  Speaker 1: Rules on tariffs.
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  Speaker 6: But now recently Trump said, well, we want to impose
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  Speaker 6: tariffs on Mexico and Canada because we're concerned that they're letting,
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  Speaker 6: you know, bad guys and fentanyl into the US.
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  Speaker 5: Look, well, we're looking at a market that is carneadis
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  Speaker 5: some significant setting pressure today or off by more than
• 11:57
  Speaker 5: two percent, and then ask that one hundred. Is there
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  Speaker 5: a flavor of which industries are bracing themselves the most,
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  Speaker 5: Like I'm remporting all year on the chip sector and
• 12:04
  Speaker 5: how they've had to be navigating the China US relationship.
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  Speaker 5: But you've already mentioned wine technology. This is so broad
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  Speaker 5: in its remit auto's whoever are we seeing the most
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  Speaker 5: anxiety build.
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  Speaker 1: Well, I would say across the board.
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  Speaker 6: I mean clothing is another one you mentioned or didn't mention,
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  Speaker 6: But yeah, electronics, clothing, just about anything that's made overseas,
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  Speaker 6: which is most of the consumer goods that we have
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  Speaker 6: in the US. Lawn furniture, I mean, it's not something
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  Speaker 6: that I go, oh my god, I won't be able
• 12:34
  Speaker 6: to live without lawn furniture. But at the same time,
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  Speaker 6: there are a lot of knock on effects. As Secretary
• 12:42
  Speaker 6: Yellen was talking about it'll cost more ultimately to consumers,
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  Speaker 6: and we're not sure whether that's good for the economy
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  Speaker 6: or bad.
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  Speaker 3: You've got a great graphics here, like it may take stories, folks,
• 12:52
  Speaker 3: they're deeply sourced, deeply reported, and they've got great graphics,
• 12:57
  Speaker 3: which makes it.
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  Speaker 1: Just come alive. Tariff talk abounds companies.
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  Speaker 3: You guys tracked how much companies talk about tariffs on
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  Speaker 3: our conference calls, and holy cow, itch spiked in November
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  Speaker 3: and December this year. So this is this is on
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  Speaker 3: the top of minds of corporate executives, isn't it.
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  Speaker 1: That's right exactly.
• 13:15
  Speaker 6: I mean, we have ways of searching texts of calls
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  Speaker 6: all over the place and we use that as a tool.
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  Speaker 6: It's like, yes, CEOs say that's a big issue for
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  Speaker 6: them going into twenty twenty five.
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  Speaker 1: And it's uncertain too.
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  Speaker 6: I mean, that's part of the deal, is we don't
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  Speaker 6: know what's actually going to happen because Trump has talked
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  Speaker 6: a lot, but he's not president yet.
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  Speaker 5: And that must be the frustration that ultimately a lot
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  Speaker 5: of these business leaders know that they're having to drive
• 13:44
  Speaker 5: up costs, perhaps unnecessarily, but they've just got to make
• 13:47
  Speaker 5: a call. They've got to decide whether they're going to
• 13:49
  Speaker 5: front run something that's hypothetical in nature. Do we know
• 13:52
  Speaker 5: how much is driving up costs?
• 13:54
  Speaker 6: Well, we don't know yet, I mean there and we
• 13:57
  Speaker 6: don't know how much they're going to pass on. There
• 14:00
  Speaker 6: are higher costs for shipping right now, and a lot
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  Speaker 6: of people are using air freight instead of using ships
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  Speaker 6: because they want to get it here earlier. There's stuff
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  Speaker 6: that if you order it early, you have to put
• 14:14
  Speaker 6: it in a warehouse before you put it in stores,
• 14:17
  Speaker 6: so that could be an extra cost too. And then
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  Speaker 6: we don't know what other kind of tariffs will be
• 14:22
  Speaker 6: added on, so it's very hard to know how much
• 14:26
  Speaker 6: each unit is going to cost. How much the people
• 14:30
  Speaker 6: who are processing or passing on those units are going
• 14:32
  Speaker 6: to pass on to consumers too, because you don't want
• 14:36
  Speaker 6: to raise your.
• 14:36
  Speaker 1: Prices too fast.
• 14:38
  Speaker 6: And then there are in the case of the German
• 14:41
  Speaker 6: wine maker, maybe they're just going to export to Scandinavia
• 14:43
  Speaker 6: instead of the US because I think I can make
• 14:46
  Speaker 6: money in Scandinavia. They're not a major exporter of wine.
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  Speaker 6: Some of their competitors, though, they can't do without the US.
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  Speaker 1: I mean, this is no joke here.
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  Speaker 3: I mean, you have some research from Oxford Economics where
• 15:00
  Speaker 3: I think they pulled executives.
• 15:01
  Speaker 1: What are the biggest worries you have over the next
• 15:03
  Speaker 1: two years.
• 15:04
  Speaker 3: We're talking Eurozone crisis, China, Taiwan, I mean, big, big issues,
• 15:08
  Speaker 3: the Middle East.
• 15:09
  Speaker 1: By far, the.
• 15:10
  Speaker 3: Biggest one is the global trade war. So this is
• 15:14
  Speaker 3: on top of mind just about everybody out there, that's right.
• 15:18
  Speaker 6: Yeah, And as Secretary Yellen said in the previous segment,
• 15:22
  Speaker 6: we don't know what kind of retaliation is going to happen.
• 15:25
  Speaker 6: They're talking about using a very blunt instrument across the board, tariffs,
• 15:31
  Speaker 6: and so people will retaliate, and yeah, people will stop paying.
• 15:37
  Speaker 6: We all know consumers are very unhappy about inflation. Now,
• 15:40
  Speaker 6: we don't know what effect hires tariffs are going to
• 15:42
  Speaker 6: have on inflation, but generally it raises the cost of
• 15:45
  Speaker 6: imported goods if you put tariffs on them.
• 15:48
  Speaker 3: All right, John Great Reporting John Gittilson, Bloomberg LA Bureau chief,
• 15:52
  Speaker 3: one of the contributors to the Big Take story. Check
• 15:55
  Speaker 3: out the Big Take stories on the terminal. They are
• 15:58
  Speaker 3: fantastic reporting every single You can go to Bloomberg dot
• 16:01
  Speaker 3: com slash Big Take find them online as well.
• 16:06
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• 16:21
  Speaker 5: Let's just dig into the geopolitical persuasion a little bit
• 16:24
  Speaker 5: more and indeed what the outlook for some of these
• 16:26
  Speaker 5: energy markets is going into twenty twenty five. Perfect personally
• 16:29
  Speaker 5: that Ellen Wold is with US, senior fellow at the
• 16:31
  Speaker 5: Atlantic Council and author.
• 16:33
  Speaker 1: Of Saudi Inc.
• 16:34
  Speaker 5: The Arabian Kingdoms Pursuit of Profit and Power. I am
• 16:37
  Speaker 5: so interested in your take of what the next administration
• 16:39
  Speaker 5: means for the relationship with Saudi, with Israel and going forward.
• 16:43
  Speaker 5: But just taking on where Natalia was bringing us the
• 16:47
  Speaker 5: supply demand dynamics around oil and just how important is
• 16:51
  Speaker 5: OPEK at this moment.
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  Speaker 7: So I think OPEK is actually playing a fairly critical
• 16:56
  Speaker 7: role right now because they're keeping a fair amount of
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  Speaker 7: oil off the market and they're really enabling the US
• 17:04
  Speaker 7: to have a role for its oil space, for its
• 17:07
  Speaker 7: oil market to grow. If, for example, OPEK were to decide, hey,
• 17:12
  Speaker 7: all bets are off, we're going to just open the taps.
• 17:14
  Speaker 7: Forget about all these cuts. We're just going to put
• 17:16
  Speaker 7: all of our production capacity back on the market. They
• 17:19
  Speaker 7: have the ability to tank prices. I think they don't
• 17:22
  Speaker 7: want to do that right now. But a lot in
• 17:26
  Speaker 7: terms of the oil market hinges on whether OPEK is
• 17:29
  Speaker 7: going to move forward with its very gradual plans to
• 17:32
  Speaker 7: put more of that oil back on the market, or
• 17:34
  Speaker 7: whether they're going to continue to push it off. So
• 17:37
  Speaker 7: I think that they're still very very relevant, just not
• 17:40
  Speaker 7: in quite the same way as they were, say in
• 17:42
  Speaker 7: the nineteen seventies.
• 17:44
  Speaker 3: All right, Ellen, I have to fully disclose here. I
• 17:46
  Speaker 3: am a big fan of the TV show Landman, so
• 17:48
  Speaker 3: I now consider myself an expert.
• 17:50
  Speaker 1: On oil and gas and all that kind of stuff.
• 17:53
  Speaker 3: But talk to us about the US supply because that's
• 17:57
  Speaker 3: really changed that dynamic in global oil and gas over
• 18:01
  Speaker 3: the last ten years or so. Are those guys going
• 18:04
  Speaker 3: to be drilling, baby drilling coming forward?
• 18:08
  Speaker 7: Yeah, that is a great question, and you're definitely pushing
• 18:11
  Speaker 7: me to start watching this show in my free time,
• 18:15
  Speaker 7: so thank you for that. So I think that this
• 18:20
  Speaker 7: is not the same oil market is in twenty sixteen
• 18:23
  Speaker 7: and twenty eighteen this is a different shale patch. Back then,
• 18:26
  Speaker 7: it really was a drill, baby, drill situation because we
• 18:29
  Speaker 7: had lots of companies out there. It was kind of
• 18:32
  Speaker 7: like the wild West in a little bit of a sense,
• 18:34
  Speaker 7: and they just had to keep on drilling and drilling,
• 18:37
  Speaker 7: even if they weren't, you know, breaking, even just because
• 18:41
  Speaker 7: they needed to make payroll, they needed to get all
• 18:44
  Speaker 7: that oil out there. They were being funded with the
• 18:46
  Speaker 7: intent to just.
• 18:47
  Speaker 1: Drill, drill, drill. That time is over.
• 18:50
  Speaker 7: We're in a different, different oil market now, different different
• 18:53
  Speaker 7: shale patch where we've got a lot of consolidation. We've
• 18:56
  Speaker 7: got bigger, much bigger companies at the helm now, and
• 18:59
  Speaker 7: they they're a lot better capitalized. They're much more focused
• 19:03
  Speaker 7: on not necessarily just growth, but on returning value to shareholders. Coincidentally,
• 19:09
  Speaker 7: we happen to be producing at the highest levels ever
• 19:12
  Speaker 7: right now, but companies are also using a lot better techniques,
• 19:15
  Speaker 7: a lot more sophisticated techniques to find oil, to get
• 19:19
  Speaker 7: more oil out of each well. And so I think, yes,
• 19:23
  Speaker 7: we still do have a lot of oil to get
• 19:25
  Speaker 7: out of there. We're still going to be producing at
• 19:27
  Speaker 7: fairly high levels. But that same mentality and the ability
• 19:31
  Speaker 7: to kind of predict where we're going is not there now.
• 19:34
  Speaker 7: It's really a different look now when it comes to
• 19:37
  Speaker 7: the Trump administration and drill baby drill. I think that
• 19:40
  Speaker 7: we're going to see that much more in the offshore
• 19:44
  Speaker 7: oil space because that's really an area that has suffered
• 19:47
  Speaker 7: greatly under the Biden administration's regulatory restrictions, and so I
• 19:52
  Speaker 7: think we're going to see a lot more optimism there
• 19:54
  Speaker 7: because that's an area where things take a lot more
• 19:57
  Speaker 7: capital to get going. You need a lot more time,
• 20:00
  Speaker 7: you've got to.
• 20:00
  Speaker 1: Invest a lot more.
• 20:01
  Speaker 7: But at the same time, those wealth can last a
• 20:04
  Speaker 7: lot longer than what we're seeing in say the Permian
• 20:08
  Speaker 7: and those areas. So I think they're really looking forward
• 20:11
  Speaker 7: to a Trump administration to help them get the leases
• 20:13
  Speaker 7: they need, get the permits they need to start drilling.
• 20:16
  Speaker 7: And I do think that is an area where we
• 20:19
  Speaker 7: are going to see a more kind of drill baby
• 20:21
  Speaker 7: drill outlook.
• 20:23
  Speaker 5: And the outlook under the next administration. Of relationships with
• 20:27
  Speaker 5: Saudi Arabia, of relationships with Israel, and normalization with the
• 20:31
  Speaker 5: our world more broadly, how are you looking at that
• 20:34
  Speaker 5: and what it means for your markets that you are well.
• 20:37
  Speaker 7: I think that that's a really complicated area because I
• 20:41
  Speaker 7: do think that the Trump administration is much more unabashed
• 20:45
  Speaker 7: and its support for Israel, particularly in a military sense
• 20:49
  Speaker 7: and in a diplomatic sense. So I think you're going
• 20:51
  Speaker 7: to see a lot more very overt and very strong
• 20:55
  Speaker 7: support for Israel. Does that necessarily mean that's going to
• 20:58
  Speaker 7: put them at odds with the rest of the air world,
• 21:00
  Speaker 7: I don't necessarily think so. I do think that they
• 21:05
  Speaker 7: definitely have a much more stronger stance on Iran. It
• 21:11
  Speaker 7: is entirely possible that we could see them start to
• 21:14
  Speaker 7: enforce this the oil sanctions on Iran more forcefully, and
• 21:18
  Speaker 7: if that takes Irani and oil off the market, UH,
• 21:21
  Speaker 7: that will actually.
• 21:22
  Speaker 1: Be good for Saudi Arabia.
• 21:23
  Speaker 7: That's actually what Saudi Arabia the UA would like, because
• 21:26
  Speaker 7: you know, they can put more of their oil on
• 21:28
  Speaker 7: the market or it will help prices go up. So
• 21:30
  Speaker 7: I think that while there's definitely a tension in terms
• 21:34
  Speaker 7: of the relationship between Trump and the Saudis, I think
• 21:38
  Speaker 7: that the underlying aspects in terms of UH stability, in
• 21:42
  Speaker 7: terms of trying to UH lessen Iran's funding of terrorist groups,
• 21:49
  Speaker 7: I think that are all gonna bring. Maybe that that's
• 21:53
  Speaker 7: what the Saudis would like to see, and that's what
• 21:55
  Speaker 7: the Trump administration wants to see. So while you know,
• 21:58
  Speaker 7: they may not necessarily show that there are best buddies
• 22:02
  Speaker 7: in terms of US support for Israel, I do think
• 22:05
  Speaker 7: that there are a lot of aspects where they're going
• 22:07
  Speaker 7: to see a lot of synergy.
• 22:10
  Speaker 1: Ellen.
• 22:10
  Speaker 3: If I'm a proponent of green energy, how concerned should
• 22:14
  Speaker 3: I be about the incoming Trump administration about that process?
• 22:19
  Speaker 7: So I think it really depends what your approach to
• 22:22
  Speaker 7: green energy is. I don't think that trump Is administration
• 22:24
  Speaker 7: is looking to say roll back the entire IRA. I mean,
• 22:28
  Speaker 7: this is an administration that really also has a vested interest,
• 22:31
  Speaker 7: really wants to say to increase the domestic lithium and
• 22:36
  Speaker 7: lithium battery supply chain in the United States. They may
• 22:40
  Speaker 7: have a slightly different reason for wanting this. They consider
• 22:42
  Speaker 7: it more of a national security concern than say, an
• 22:45
  Speaker 7: imperative to put more evs on the road. But this
• 22:48
  Speaker 7: is an area where you know they definitely will have
• 22:51
  Speaker 7: a lot of support there and I think that there
• 22:53
  Speaker 7: are a lot of areas where they can work together. Now,
• 22:56
  Speaker 7: if you're looking at, say offshore wind, I don't think
• 22:58
  Speaker 7: you're going to see a whole lot of support from
• 23:00
  Speaker 7: the Trump administration. But to be totally honest, the offshore
• 23:04
  Speaker 7: wind industry in the United States has got a lot
• 23:07
  Speaker 7: of headwinds, even you know, without President Trump kind of
• 23:12
  Speaker 7: putting the brakes on that. They've got issues in terms
• 23:14
  Speaker 7: of the turbines that they're using, collapses in the Atlantic,
• 23:19
  Speaker 7: problems with funding for projects, you know off of New
• 23:22
  Speaker 7: York and New Jersey. The Trump administration is a convenient
• 23:25
  Speaker 7: way to excuse perhaps a lack of interest and difficulty
• 23:30
  Speaker 7: getting it going, But I wouldn't say it's necessarily the
• 23:33
  Speaker 7: Trump administration's fault that offshore wind is having a really
• 23:37
  Speaker 7: difficult and slow start here.
• 23:40
  Speaker 5: And then what about nucleia, Yes, that is.
• 23:44
  Speaker 7: An excellent question, and I think that that is something
• 23:47
  Speaker 7: that the Trump administration could really make a mark on
• 23:50
  Speaker 7: an energy if they choose to address this. Because I
• 23:54
  Speaker 7: know you said on the previous segment about data centers
• 23:58
  Speaker 7: and these big tech companies they want to use nuclear
• 24:01
  Speaker 7: to power their data centers. They realize that, look, we've
• 24:04
  Speaker 7: got to get something.
• 24:05
  Speaker 1: That's more reliable.
• 24:06
  Speaker 7: We can't use wind and solar for this. So it's
• 24:09
  Speaker 7: either natural gas or nuclear or a combination, and that
• 24:12
  Speaker 7: is an area that the Trump administration could really push
• 24:15
  Speaker 7: things forward. We've got a lot of really interesting technology
• 24:19
  Speaker 7: in terms of small modular reactors coming up, and this
• 24:22
  Speaker 7: is an area where they could really push things forward
• 24:26
  Speaker 7: and help bring more, safer, better, more affordable nuclear technology
• 24:32
  Speaker 7: to the United States. We really haven't had a new
• 24:34
  Speaker 7: nuclear plant. It is incredibly difficult to build a.
• 24:38
  Speaker 4: New nuclear plant.
• 24:39
  Speaker 7: But nuclear is a stable, great base load source of
• 24:42
  Speaker 7: energy that is actually incredibly safe, and so there's a
• 24:46
  Speaker 7: lot of things that they could do to help push
• 24:49
  Speaker 7: that along, bring that to fruition in safe ways that
• 24:53
  Speaker 7: would really also help the environment and lower emissions.
• 24:57
  Speaker 1: All right, Ellen, thank you so much. We appreciate that.
• 24:59
  Speaker 3: Ellen Wald, Atlanta Council Senior Fellow and author of the
• 25:03
  Speaker 3: book Saudi Inc. So one of our go to voices
• 25:06
  Speaker 3: on energy.
• 25:08
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 25:12
  Speaker 2: weekdays at ten am Eastern on applecar Playing and broud
• 25:15
  Speaker 2: Oto with the Bloomberg Business app. Listen on demand wherever
• 25:19
  Speaker 2: you get your podcasts, or watch us live on YouTube.
• 25:24
  Speaker 3: Let's go to one of the big, big businesses out there,
• 25:27
  Speaker 3: particularly this time of the year, and that's the movie business.
• 25:29
  Speaker 3: When you think about the movie business, the summer is
• 25:31
  Speaker 3: the big part of the season. That's where a lot
• 25:33
  Speaker 3: of the big movies are released, and that's where the
• 25:35
  Speaker 3: box office is. But the second big driver is kind
• 25:37
  Speaker 3: of this holiday season we're in right now. Joining us
• 25:39
  Speaker 3: now is Daniel Larier, editorial director at The Box Office Company.
• 25:43
  Speaker 3: They provide data and analytics on the global film industry. Dan,
• 25:47
  Speaker 3: thanks for joining us. How has the twenty twenty four
• 25:50
  Speaker 3: box office been here in North America?
• 25:52
  Speaker 1: Oh, thanks for having me, Paul. It's been a recovery year.
• 25:55
  Speaker 8: I think coming into this here, we all expected a
• 25:58
  Speaker 8: downturn because of those and writer strikes from twenty to
• 26:02
  Speaker 8: twenty three, right, but we really saw a rally starting
• 26:06
  Speaker 8: in June. So at the beginning of the year we
• 26:07
  Speaker 8: expected maybe a ten percent slide. By now we're expecting
• 26:11
  Speaker 8: to finish the year within five percent year over year,
• 26:14
  Speaker 8: So big recovery to finish the year.
• 26:17
  Speaker 5: What has won out because of late it's been well,
• 26:21
  Speaker 5: they've been in something for everyone.
• 26:22
  Speaker 4: Really.
• 26:22
  Speaker 5: You've had gladi ETD two, you've had Wicked, you've had
• 26:26
  Speaker 5: the kids winning.
• 26:26
  Speaker 1: Out with Moana two as well. Where have been the sweet.
• 26:29
  Speaker 8: Spots Disney, It's that one word, and man, is it
• 26:33
  Speaker 8: great to have them back. This is the first year
• 26:36
  Speaker 8: since twenty nineteen that Disney returns to two billion dollars
• 26:40
  Speaker 8: in domestic box office, and this is the first year
• 26:42
  Speaker 8: really that we see them make the most out of
• 26:45
  Speaker 8: that acquisition of twentieth Century Fox a couple of years back.
• 26:48
  Speaker 8: If you remember, we didn't know what was going to
• 26:50
  Speaker 8: happen with that. They have the Avatar movies, that's a guarantee.
• 26:53
  Speaker 8: But this year we saw new franchises revive like Kingdom
• 26:57
  Speaker 8: of the Planet of the Apes and Alien Romulus to
• 26:59
  Speaker 8: get back on the map. You see other divisions like
• 27:01
  Speaker 8: Marvel with Deadpool and Wolverine, Walt Disney Studio's animation with Molanatu,
• 27:06
  Speaker 8: and Pixar with Inside Out two having huge recoveries that
• 27:10
  Speaker 8: they haven't seen yet since the pandemic.
• 27:13
  Speaker 1: So, Dan, you mentioned the writer strike, the act the
• 27:16
  Speaker 1: actor straight strike.
• 27:17
  Speaker 3: I'm hearing that twenty twenty five and twenty twenty six
• 27:20
  Speaker 3: are gonna be full production years and it's going to
• 27:23
  Speaker 3: be really big for the movie business.
• 27:25
  Speaker 1: What's your expectation for the next year or two.
• 27:27
  Speaker 8: New benchmarks, especially in this post pandemic era. Right, so,
• 27:30
  Speaker 8: we are expecting the best year in the post pandemic
• 27:33
  Speaker 8: box office in the coming year in twenty twenty five.
• 27:37
  Speaker 8: We're right now forecasting between nine point three and nine
• 27:40
  Speaker 8: point seven billion dollars domestically around the nine point five billion,
• 27:44
  Speaker 8: if you wanted to ask me for a sweet spot.
• 27:46
  Speaker 8: And that's really coming from our forecasting analyst of experts
• 27:49
  Speaker 8: in this industry that are giving us their own insights
• 27:52
  Speaker 8: as to where things are going in twenty five.
• 27:55
  Speaker 5: Let's talk a little bit about the narratives within the
• 27:58
  Speaker 5: companies themselves, because, like you said, the box office was difficult,
• 28:02
  Speaker 5: we're also seeing a restructuring that continues to be very
• 28:04
  Speaker 5: difficult when you think about paramount how they're being bought
• 28:07
  Speaker 5: at the moment, and really that's all about Hollywood and
• 28:09
  Speaker 5: the box office. Where will we see M and A.
• 28:13
  Speaker 5: Where will we see a refocusing coming from some of
• 28:15
  Speaker 5: the big companies.
• 28:16
  Speaker 8: I think the key word here, Carolyn, for next year
• 28:19
  Speaker 8: is spin offs, and we're seeing that with all the
• 28:21
  Speaker 8: TV businesses of these legacy media companies. We see Warner Brothers,
• 28:25
  Speaker 8: Discovery looking at how to spin off some of those
• 28:28
  Speaker 8: cable properties. I know Comcast is looking at something similar.
• 28:31
  Speaker 8: So in terms of how this impacts theatrical or the
• 28:36
  Speaker 8: box office, I.
• 28:37
  Speaker 1: Don't see an obvious answer yet.
• 28:38
  Speaker 8: It's a market on the rise, granted one that took
• 28:41
  Speaker 8: a big hit during the pandemic, but you compare that
• 28:43
  Speaker 8: to where linear television is right now, cable television is
• 28:46
  Speaker 8: right now, that's a market in the decline. So I
• 28:49
  Speaker 8: think the first point of focus right now is going
• 28:51
  Speaker 8: to be the coming cable apocalypse that is going to
• 28:54
  Speaker 8: be hitting the media sector next year. Dan talk to
• 28:57
  Speaker 8: us about China as a market for US films. As
• 29:00
  Speaker 8: recently as four or five years ago, it was the
• 29:03
  Speaker 8: growth driver and you know, almost as big as the
• 29:06
  Speaker 8: US Northern North American box office, and you could not
• 29:09
  Speaker 8: get a franchise film green lit unless you knew it
• 29:12
  Speaker 8: would play in China. Is that still the case or
• 29:15
  Speaker 8: is this kind of cold war that's been growing over
• 29:17
  Speaker 8: the least several years between the US and China.
• 29:19
  Speaker 1: Is that dampened market?
• 29:20
  Speaker 8: You know, I'm smiling, Paul, because ten years ago, in
• 29:23
  Speaker 8: my first appearance here, you asked me that very question.
• 29:25
  Speaker 8: And my answer then is it's crucial, it's vital, right.
• 29:28
  Speaker 8: I think that's changed in the last ten years. It's
• 29:31
  Speaker 8: changed significantly because it's a lot harder making sure that
• 29:35
  Speaker 8: China is a consistent player when it comes to release dates.
• 29:38
  Speaker 8: Forget box office returns, just a simple release date. So
• 29:41
  Speaker 8: it's not that I think it's more of a high
• 29:44
  Speaker 8: potential play rather than something that you can depend on.
• 29:47
  Speaker 8: And right now, where the market is, we need dependency.
• 29:52
  Speaker 5: What about the talent and the dependency that they're seeing
• 29:56
  Speaker 5: ever more so on technology And look, many took to
• 30:00
  Speaker 5: the strike action because of a concern about generative AI
• 30:03
  Speaker 5: and one's likeness in the future.
• 30:04
  Speaker 8: But how is that shaping I think that's a great question, Carolyn,
• 30:08
  Speaker 8: And that's exactly where we are with the AI question
• 30:10
  Speaker 8: in Hollywood right now. It's a labor question. We're not
• 30:13
  Speaker 8: to the point where it's a creative question yet. So
• 30:16
  Speaker 8: as soon as we can figure out how the labor
• 30:19
  Speaker 8: unions can embrace this or really live with it or
• 30:22
  Speaker 8: coexist with it, even that's when we'll really be able
• 30:26
  Speaker 8: to see how it looks like creatively.
• 30:28
  Speaker 1: I've said this before.
• 30:29
  Speaker 8: I think AI right now is a potential, but not
• 30:31
  Speaker 8: a reality in Hollywood.
• 30:34
  Speaker 3: Where are we in North American box office versus pre
• 30:39
  Speaker 3: pandemic level. It's called twenty nineteen because I think that
• 30:41
  Speaker 3: was kind of the peak year and then obviously very
• 30:44
  Speaker 3: very tough. You're in twenty twenty now trying to rebuild.
• 30:46
  Speaker 3: Where are we When do you think we'll get back
• 30:48
  Speaker 3: to that peak that box office of twenty nineteen.
• 30:50
  Speaker 8: So that twenty nineteen box office and really those years
• 30:52
  Speaker 8: in the latter half of the twenty tens was a
• 30:55
  Speaker 8: benchmark of eleven billion domestically, I don't think we'll get
• 30:59
  Speaker 8: there until twenty twenty seven at the earliest. Like I said,
• 31:02
  Speaker 8: I think next year twenty five we're looking around nine
• 31:05
  Speaker 8: point five billion. I think the ten billion benchmark is
• 31:08
  Speaker 8: going to come in twenty six and in twenty seven,
• 31:10
  Speaker 8: once we have a couple of years of a full
• 31:13
  Speaker 8: movie slate from these studios, because as you mentioned earlier, Paul,
• 31:16
  Speaker 8: it's really the first time since twenty nineteen where Hollywood
• 31:19
  Speaker 8: has an uninterrupted year of production. Now that we have
• 31:23
  Speaker 8: these movies coming out and hitting theaters, I think we
• 31:25
  Speaker 8: have to wait till twenty seven to get to that
• 31:28
  Speaker 8: pre pandemic level.
• 31:30
  Speaker 5: And are they all hitting theaters? How are we seeing
• 31:33
  Speaker 5: Netflix in particular or some of the key streamers decide
• 31:36
  Speaker 5: when to bring things out. I mean Amazon a bit
• 31:39
  Speaker 5: a bit of a U turn on one of its
• 31:40
  Speaker 5: key festive movies, and it looked like it worked to
• 31:44
  Speaker 5: bring it out to the theaters.
• 31:46
  Speaker 8: Yeah, I think it's a case by case basis when
• 31:49
  Speaker 8: we talk about the streamers. I don't expect Netflix to
• 31:51
  Speaker 8: embrace theatrical any time soon. Apple is still hot and
• 31:55
  Speaker 8: cold on what their strategy is. We'll see how that's
• 31:58
  Speaker 8: tested with a release like Foe One, the Formula one
• 32:01
  Speaker 8: racing drama coming out next summer.
• 32:03
  Speaker 1: But then you have someone like Amazon MGM, which.
• 32:05
  Speaker 8: Went forward with her release like Red One the theater,
• 32:09
  Speaker 8: so that movie is going to make one hundred million
• 32:10
  Speaker 8: dollars domestically, leading into a very profitable streaming run for
• 32:14
  Speaker 8: that title. And they have some really really interesting smaller
• 32:18
  Speaker 8: movies in theaters right now, a movie like The Fire
• 32:20
  Speaker 8: Inside biopic on the boxer Claressa Shields and my favorite
• 32:24
  Speaker 8: film of the year, Nickel Boyce, two really great dramas
• 32:27
  Speaker 8: that are going to be part of that awards conversation.
• 32:29
  Speaker 8: It depends on the company on what that strategy is.
• 32:32
  Speaker 8: But it's definitely still evolving.
• 32:34
  Speaker 3: Thirty seconds left, Dan, A billion dollar box office that's
• 32:38
  Speaker 3: still out there, isn't it? You can still do baffo numbers,
• 32:41
  Speaker 3: as the Variety magazine would say.
• 32:43
  Speaker 1: Absolutely. I think it's the stats.
• 32:45
  Speaker 8: Something like three of the seven highest grossing movies of
• 32:48
  Speaker 8: all time came out after the pandemic. So on an
• 32:51
  Speaker 8: individual title basis, if the movie's there, the public's going
• 32:54
  Speaker 8: to follow, and they're going to follow to it in
• 32:56
  Speaker 8: the theaters.
• 32:58
  Speaker 5: Daniel, So great catch out with you, Daniel Laurier. Of course,
• 33:02
  Speaker 5: what was your favorite movie?
• 33:03
  Speaker 1: Again?
• 33:03
  Speaker 5: Which one did you say? We should watch?
• 33:05
  Speaker 8: Nickel boy S that's out now and expanding soon from
• 33:07
  Speaker 8: Amazon MGM, great drama.
• 33:09
  Speaker 1: Highly recommend it.
• 33:10
  Speaker 5: Okay, Nickel voice, go watch it is, of course at
• 33:12
  Speaker 5: the box office company dying all the data and analytics
• 33:16
  Speaker 5: around the film industry. We appreciate him. Editorial direct to them.
• 33:20
  Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,
• 33:24
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• 33:27
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• 33:31
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• 33:34
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• 33:38
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