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Intel Shares Fall on Report Nvidia Halts Production Test · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Business App. Listen on demand wherever you get your podcasts,
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  Speaker 2: Christina Quino sitting in for Scarlet for I'm Paul Sweeney
• 0:26
  Speaker 2: live here on our Bloomberg Interactive Brokers Studio. I always
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  Speaker 2: love chatting with Kim Farrest, founder and Chief Bestment Officer,
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  Speaker 2: Bok Partner.
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  Speaker 3: We love talking to.
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  Speaker 2: Kim about markets, about technology, AI and maybe I want
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  Speaker 2: to run this one by Intel. The news on Intel
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  Speaker 2: shares fell after report said that Nvidia halted a test
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  Speaker 2: to use Intel's production process to make advanced chips. Kim,
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  Speaker 2: you mentioned in the notes that your firm is an
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  Speaker 2: investor in Intel. How do you view this news? Is
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  Speaker 2: a big news game changer? Don't worry about it kind
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  Speaker 2: of thing?
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  Speaker 4: Oh?
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  Speaker 5: I think you know, as a portfolio manager managing other
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  Speaker 5: people's mine, you always worry about everything, But on this
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  Speaker 5: I'm not terribly worried about it. It's a new process
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  Speaker 5: for Intel. They've been trying hard to compete against Taiwan
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  Speaker 5: Semi and I think this is a setback for sure,
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  Speaker 5: but maybe in video really wasn't going to ever use
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  Speaker 5: Intel's processes.
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  Speaker 3: We have to think about that.
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  Speaker 5: And it's good that they tried it against the absolute
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  Speaker 5: pinnacle of chips at this point, or at least the
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  Speaker 5: pinnacle of chip makers at this point. So I think
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  Speaker 5: that the CEO of Intel is someone who actually learns
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  Speaker 5: and changes, and I believe that this is probably a
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  Speaker 5: good thing ultimately, as they probably gain Intel probably gained
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  Speaker 5: a lot of knowledge about what's right and what's wrong
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  Speaker 5: with the process.
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  Speaker 6: Yeah, caam, well, very interesting. That seems like really the
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  Speaker 6: AI trade at this point a lot of discussions around chips, right,
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  Speaker 6: and the diversification of where these companies are going to
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  Speaker 6: be getting their chips in Vida no longer perhaps the
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  Speaker 6: only player in the game. But yeah, what does that
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  Speaker 6: tell you about where we are in the AI trade cycle?
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  Speaker 6: Is it a good thing that we are starting to
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  Speaker 6: see more producers stepping up and saying like, hey, we
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  Speaker 6: can make these chips too, if you want to take
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  Speaker 6: a look at our business.
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  Speaker 7: I do.
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  Speaker 5: Actually, I think I'm a big fan of capitalism, which
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  Speaker 5: should be no one not a surprise in anyway. And
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  Speaker 5: what the very best thing that capitalism does is create
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  Speaker 5: a competitive environment. And even last year at this time,
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  Speaker 5: well maybe especially last year at this time, because twenty
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  Speaker 5: twenty four was the year of Nvidia, I think everybody
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  Speaker 5: thought it was game over. There was no way for
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  Speaker 5: any company to be able to compete with them. And
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  Speaker 5: yet here we are looking at a whole slew of
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  Speaker 5: not only new competition for the training kind of chips,
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  Speaker 5: but there's we're broadening out. We're understanding that AI may
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  Speaker 5: not just be asking chat GPT things, but there's other
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  Speaker 5: uses for it. And guess what we're going to need
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  Speaker 5: other chips. So vendors are lining up to try to
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  Speaker 5: figure out how to best serve this market. Again an
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  Speaker 5: advertisement for capitalism.
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  Speaker 2: So Kim has the discussion around AI, to what extent
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  Speaker 2: has it evolved? If it has it all, it feels
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  Speaker 2: like now we've got to ask some different questions, like
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  Speaker 2: maybe the return on some investment, like maybe what's it
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  Speaker 2: really going to do for productivity? Asking some harder questions,
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  Speaker 2: how do you think where do you think we are
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  Speaker 2: in that evolution?
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  Speaker 5: I think we're just beginning to scratch our head and
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  Speaker 5: it's disappointing to me. I came from software and the
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  Speaker 5: reason why I sit before you is because I worked
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  Speaker 5: at AI companies that weren't asking the question how much
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  Speaker 5: does my solution cost? And what problem am I solving
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  Speaker 5: and what's the cost of that problem?
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  Speaker 8: Right?
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  Speaker 5: So, how technology has to work. Sorry to tell people
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  Speaker 5: that it has to solve a problem less expensively than
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  Speaker 5: the problem itself. That's just it. And I don't think
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  Speaker 5: we're asking that the price of training these large language
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  Speaker 5: models is incredible, And I'm not sure that investors are
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  Speaker 5: really asking the questions that need to be asked, like
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  Speaker 5: who's going to pay for this? And what's the return
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  Speaker 5: and all of those kind of good things. Will this
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  Speaker 5: cause a train wreck? Maybe, but I think it again,
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  Speaker 5: I'm such an optimist. I think it would be a
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  Speaker 5: good thing because then would narrow down on how we
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  Speaker 5: can use this technology to actually get a benefit from it,
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  Speaker 5: not just because it's cool, interesting, or whatever drives people
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  Speaker 5: to look at tech.
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  Speaker 6: Yeah, well, game your question of who's going to pay
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  Speaker 6: for it? That was definitely the question that Marcus we're asking.
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  Speaker 6: A few weeks ago, if you recall when we did
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  Speaker 6: get a little bit of that AI bubble worry of
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  Speaker 6: permeating the markets. Where do you stand on that? Is
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  Speaker 6: that actually a good worry for markets to have at
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  Speaker 6: this stage? And who do you think is going to
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  Speaker 6: be the winners and losers coming out of that?
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  Speaker 4: Sure?
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  Speaker 8: I do.
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  Speaker 5: I think it's a great question. I think it's the
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  Speaker 5: only question an investor, not a technologist, an investor should ask,
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  Speaker 5: is you know who benefits and where should I put
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  Speaker 5: my money? Yes, it is early days, but I'm looking
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  Speaker 5: at companies that are very much married to the large
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  Speaker 5: language model. Most of them are private, and you know
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  Speaker 5: they're talking in their own book over and over again,
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  Speaker 5: and I think that should serve as a warning to investors.
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  Speaker 5: So I think the bubble thing still is out there.
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  Speaker 5: But ultimately I strongly believe that AI is productive when
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  Speaker 5: targeted correctly, when asking the right questions, and when delivering solutions.
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  Speaker 5: But I hate to tell investors this, especially on Christmas,
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  Speaker 5: because I am an optimist. It's going to take way
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  Speaker 5: longer than anybody thinks, way longer.
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  Speaker 3: Way longer. The good things usually waiting for that. They
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  Speaker 3: say as well.
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  Speaker 2: Kim Farres, thank you so much, we appreciate it. Kim
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  Speaker 2: far She's a founder and chief investment officer Bok Capital Partners.
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  Speaker 2: She's out there in Pittsburgh, one of my favorite towns.
• 6:10
  Speaker 3: It's a great town, Pittsburgh. Stay with us. More from
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  Speaker 3: Bloomberg Intelligence coming up after this.
• 6:18
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 6:32
  Speaker 2: Hi, Christina Quino sitting in for Scarlett film Paul Sweeney
• 6:35
  Speaker 2: Live here in our Bloomberg inenrective brokers studio, streaming live
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  Speaker 2: on YouTube. Well, a federal judge so the Trump administration
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  Speaker 2: can move ahead with a one hundred thousand dollars fee
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  Speaker 2: on new h one B visa application, providing setback for
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  Speaker 2: US technology companies. To get some more color there, were
• 6:50
  Speaker 2: joined by Eric Larson. He is a US legal reporter
• 6:53
  Speaker 2: for Bloomberg News, joining us live here in a Bloomberg
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  Speaker 2: inactive broker studio. I mean there's like a handful of
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  Speaker 2: people in this buildings. Eric's one of them.
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  Speaker 3: Eric, what's what?
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  Speaker 2: Just give us the background of this one hundred thousand
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  Speaker 2: dollars each would be visa thing.
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  Speaker 9: Sure, so the president put this fee in place, sort
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  Speaker 9: of surprised everyone with it. One of his many rules
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  Speaker 9: that he put in place, sort of slowing immigration, targeting immigration,
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  Speaker 9: saying that individuals who were using these particular visas were
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  Speaker 9: taking jobs from skilled American workers who could do those
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  Speaker 9: jobs but get paid more. Essentially, so they accuse these companies,
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  Speaker 9: these industries of basically profiting.
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  Speaker 4: From importing cheaper labor.
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  Speaker 9: And there are several lawsuits were filed and we've got
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  Speaker 9: our first ruling.
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  Speaker 6: Yeah, Well, given the popularity of these visas, particularly in
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  Speaker 6: a tech sector, Eric recom for audience, kind of what's
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  Speaker 6: been the response from these companies involved and how do
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  Speaker 6: they envision moving forward with the labor supply.
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  Speaker 9: Well, I mean, it remains to be seen what will
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  Speaker 9: actually happen with this one hundred thousand dollars.
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  Speaker 4: This is one ruling.
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  Speaker 9: There's a couple of other big lawsuits out there where
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  Speaker 9: there haven't been rulings yet. So notably, none of those
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  Speaker 9: lawsuits are filed by the big corporations who use these visas.
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  Speaker 9: Maybe perhaps they're waiting it out to see what happens
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  Speaker 9: with the lawsuits, but at any rate. There is another
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  Speaker 9: big lawsuit filed by a Democratic led states, led by
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  Speaker 9: California's attorney general. There's another big lawsuit filed by unions
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  Speaker 9: and a group of nurses, and we haven't gotten any
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  Speaker 9: rulings on those yet. So theoretically we could get a
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  Speaker 9: ruling that goes the other way. This could be one
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  Speaker 9: of the many cases that goes up to the Supreme
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  Speaker 9: Court eventually.
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  Speaker 2: What is the reality or what is the data show
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  Speaker 2: about the need for H one B VISA workers. Is
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  Speaker 2: there a lack of high tech workers coming out of
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  Speaker 2: the US, Is there in fact a need for these people?
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  Speaker 9: Well, it depends who you ask. Each of these lawsuits
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  Speaker 9: gave a slightly different perspective. The Chamber of Commerce lawsuit,
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  Speaker 9: which is the one we just had the ruling on
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  Speaker 9: representing the ideas of businesses. The States are saying that
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  Speaker 9: this fee harms the states in the capacity of hospitals
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  Speaker 9: needing H one V VISA employees, teacher like universities, things
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  Speaker 9: like that. And they're saying that pretty much every part
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  Speaker 9: of American society somehow uses these visas.
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  Speaker 4: So it depends on who you ask.
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  Speaker 9: The government says you can find these skilled workers here
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  Speaker 9: in the US, you're just going to have to pay
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  Speaker 9: them more. But that is not at all how these
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  Speaker 9: plans see it. They say that there's just a huge shortage,
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  Speaker 9: especially when it comes to hospitals, nurses, and these tech
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  Speaker 9: companies say that this creates innovation and having more diverse
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  Speaker 9: views from backgrounds coming in from around the world.
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  Speaker 4: That are people who are are.
• 9:44
  Speaker 9: Deeply you know, steeped in this in the tech sectors.
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  Speaker 9: It's impossible to really say, you know, both sides are
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  Speaker 9: pushing pretty hard here.
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  Speaker 6: Do we have a sense of what's been going on
• 9:55
  Speaker 6: in the ground in terms of companies and workers involved
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  Speaker 6: in in the process currently of trying to obtain an
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  Speaker 6: age one B. I imagine there's a lot of confusion and
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  Speaker 6: maybe delays in the process.
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  Speaker 4: Now, yes, I would think so.
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  Speaker 9: I've spoken immigration lawyers who say that this is a
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  Speaker 9: huge problem for them and their clients and expectations of
• 10:16
  Speaker 9: people who thought they might be able to use this visa.
• 10:20
  Speaker 4: But for now, I mean, this ruling.
• 10:22
  Speaker 9: Makes it pretty clear that this might be the law
• 10:25
  Speaker 9: of the land for a while. This was an Obama
• 10:28
  Speaker 9: appointed judge who said that the president has this broad
• 10:32
  Speaker 9: authority that Congress gave him. In the Immigration and Nationality
• 10:35
  Speaker 9: Act gave the president this type of authority when the
• 10:40
  Speaker 9: president believes that someone is or a group of people
• 10:43
  Speaker 9: are a threat to the economy, that that's in the
• 10:47
  Speaker 9: Immigration and Nationality Act. So this Democratic appointed judge who's
• 10:51
  Speaker 9: ruled against Trump on other things is saying he has
• 10:54
  Speaker 9: this authority. And that's kind of not saying that every
• 10:56
  Speaker 9: other judge will rule the same way in these other cases.
• 10:59
  Speaker 9: But that is how these individuals are gonna have to
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  Speaker 9: look at it, these companies in terms of planning for
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  Speaker 9: the future and as well as workers.
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  Speaker 3: Yeah, I don't see this just personally. I don't see
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  Speaker 3: this as a big issue for the big tech companies.
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  Speaker 2: They can afford it. They can whine, they can afford it.
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  Speaker 2: But you mentioned healthcare, and I'm thinking I keep hearing
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  Speaker 2: and reading about nursing shortages and things like that, and
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  Speaker 2: I would think they try to fill some of the
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  Speaker 2: shortages with non US workers via the H one B
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  Speaker 2: visa situation. That could be a problem if you're a
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  Speaker 2: hospital and now you're saying it where I'm a you know,
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  Speaker 2: I got to pay more to get my nurses in
• 11:32
  Speaker 2: from wherever I get them.
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  Speaker 4: That would be a child problem.
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  Speaker 9: I would think absolutely, And that was a highlight of
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  Speaker 9: the case filed by the nineteen or twenty Democratic attorneys general,
• 11:42
  Speaker 9: most of them in the country said that, you know,
• 11:45
  Speaker 9: this is a particular problem, and that's how they the
• 11:47
  Speaker 9: states in one of the ways they said they have
• 11:49
  Speaker 9: standing to sue. You know that they have a right
• 11:51
  Speaker 9: to sue, is saying that the threat to the healthcare
• 11:55
  Speaker 9: industry in particular makes it a public issue that the
• 11:59
  Speaker 9: states have responsibility to sue over essentially saying that they
• 12:03
  Speaker 9: need to keep the flow of these skilled healthcare workers
• 12:07
  Speaker 9: coming in.
• 12:08
  Speaker 2: Is that also for students as well? How do I
• 12:10
  Speaker 2: get that student visas are different?
• 12:11
  Speaker 4: I guess yeah, that's a different different because that's.
• 12:14
  Speaker 2: Also been a challenge for universities all the uncertainty about immigration.
• 12:18
  Speaker 2: A lot of their international applicants are down significant because
• 12:23
  Speaker 2: those people are unsure about what the policy is going
• 12:25
  Speaker 2: to be in the US, and that's hurting the universities
• 12:27
  Speaker 2: who depend upon them to some degree.
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  Speaker 3: Eric, thanks so much, appreciate it.
• 12:30
  Speaker 2: Eric Larson, us legal reporter for Bloomberg News, joining us
• 12:34
  Speaker 2: in our Bloomberg Interactive Brokers Studio Extra Star today. Eric
• 12:39
  Speaker 2: for coming in on Christmas Eve.
• 12:41
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 12:48
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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• 12:55
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• 12:59
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 13:02
  Speaker 2: Chicken with Smasha. She's a vice president Research and Insights
• 13:06
  Speaker 2: at Censor Tower. Sema, thanks so much for joining us here.
• 13:11
  Speaker 2: What are you seeing out there in I mean it's
• 13:13
  Speaker 2: Christmas season here? What are you seeing out there in
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  Speaker 2: the marketplace?
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  Speaker 7: I mean I would say, like we're talking about retail,
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  Speaker 7: I will say that, you know, our figures are slower
• 13:23
  Speaker 7: than they were in the prior years in terms of
• 13:26
  Speaker 7: monthly active users and in terms of traffic we're seeing
• 13:30
  Speaker 7: and some of the mobile apps has definitely been a
• 13:34
  Speaker 7: little bit slower. And we're also seeing a sort of
• 13:36
  Speaker 7: a skew to value. So if you think of like
• 13:41
  Speaker 7: the team Moves of the world as have sort of
• 13:42
  Speaker 7: seen a resurgence, but also life Polesale and other value players,
• 13:47
  Speaker 7: that's what we're sort of seeing in their retail landscape.
• 13:49
  Speaker 7: But I think from a broader step back if we
• 13:53
  Speaker 7: just look across categories in the US, I would say
• 13:55
  Speaker 7: that there's still this pressure on discretionary sort of expenditure.
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  Speaker 7: So based on how we look at the mobile app universe,
• 14:03
  Speaker 7: if you look at like dating app, subscriber revenue and
• 14:06
  Speaker 7: interaction is down, same with streaming as a whole. So
• 14:11
  Speaker 7: that's kind of what we're seeing at like a fifty
• 14:13
  Speaker 7: thousand fut level.
• 14:14
  Speaker 2: I mean, net how is this season going to be
• 14:17
  Speaker 2: in terms of the Christmas season?
• 14:19
  Speaker 3: And that just a holiday season.
• 14:20
  Speaker 2: I mean there's lots of reports out there that the
• 14:22
  Speaker 2: consumers stretched and all that type of stuff.
• 14:26
  Speaker 7: Yeah, and our data sort of confirms that, both our
• 14:29
  Speaker 7: mobile and our web data. And the other thing that
• 14:31
  Speaker 7: we saw is when we looked at the advertising spend
• 14:36
  Speaker 7: in prior years versus this year, we can already see
• 14:39
  Speaker 7: that in this fourth quarter there's been a slow down
• 14:42
  Speaker 7: in overall ad spend, which typically means that presumably the
• 14:45
  Speaker 7: advertisers think that there'll be a pullback and spending. And
• 14:48
  Speaker 7: we've sort of seen that slow down across the metrics
• 14:50
  Speaker 7: that we follow and that we sort of used to
• 14:53
  Speaker 7: infer how people are spending. What our metric don't take
• 14:56
  Speaker 7: into account that would be inflation and anything to do
• 15:00
  Speaker 7: specifically with price. So I think when we get the
• 15:03
  Speaker 7: retail sales numbers and other sort of comp numbers, we
• 15:06
  Speaker 7: should be cognizant to see how much of that was
• 15:08
  Speaker 7: price versus traffic, because from our end, the traffic part
• 15:12
  Speaker 7: seems to definitely be weaker.
• 15:13
  Speaker 2: All right, seem I was throwing for a loop here
• 15:15
  Speaker 2: because I know you in the context of talking about retail.
• 15:17
  Speaker 2: But yes, so now, okay, so now you've brought your
• 15:21
  Speaker 2: remit here and you can talk about I guess some
• 15:24
  Speaker 2: of these.
• 15:25
  Speaker 3: Media deals out there.
• 15:26
  Speaker 2: I love to get your thoughts on kind of what's
• 15:28
  Speaker 2: happening in Warner Brothers Discovery.
• 15:30
  Speaker 7: Yes, absolutely so. As everybody knows, there's two competing bids,
• 15:34
  Speaker 7: Netflix versus Paramount Skydance, and from our perspective, the results
• 15:40
  Speaker 7: of each merger, if they were passed, are very different,
• 15:43
  Speaker 7: and what Warner Brothers brings to each group is very different. Right.
• 15:47
  Speaker 7: Netflix is the leader by far, oh nearly fifty percent
• 15:51
  Speaker 7: of all monthly active users globally are on Netflix. For Paramount,
• 15:54
  Speaker 7: on the other hand, it's only four percent, with HBO
• 15:57
  Speaker 7: around ten percent. So if Netflix acquires Warner Brothers it
• 16:03
  Speaker 7: becomes even larger and more likely that people will not
• 16:06
  Speaker 7: be able to get caught up with them. For paramount,
• 16:09
  Speaker 7: the addition of HBO is huge. It jumps them up
• 16:12
  Speaker 7: to the same level of active user penetration as Disney
• 16:16
  Speaker 7: plus an Amazon Prime. It gives them access to tent
• 16:19
  Speaker 7: pole content, you know, like The Game of Thrones, White Lotus.
• 16:22
  Speaker 7: It kind of puts them into the higher sphere of
• 16:27
  Speaker 7: streamers in terms of content. For Netflix, it gives them
• 16:31
  Speaker 7: the opportunity to maybe jumpstart their subscriber growth. Right, it's
• 16:35
  Speaker 7: been pretty stagnant to down because they're so large, but
• 16:38
  Speaker 7: HBO is really the fastest growing international streamer that we follow,
• 16:42
  Speaker 7: So this would be an opportunity for Netflix to pick
• 16:45
  Speaker 7: up those users potentially, but also to leverage its content creation.
• 16:51
  Speaker 7: You know, Bohemoth that they can make local language content
• 16:55
  Speaker 7: and apply that to HBO's content. So I think there's
• 16:57
  Speaker 7: a lot of opportunity, but it just to really depends
• 17:00
  Speaker 7: on who ends up getting the deal or not what
• 17:03
  Speaker 7: it does for each player.
• 17:05
  Speaker 6: Yeah, we'll see that. It sounds like we're nowhere close
• 17:07
  Speaker 6: to finding who end up getting the deal because you know,
• 17:10
  Speaker 6: Warner Brothers leadership very clear they want to push their
• 17:13
  Speaker 6: investors to go with Netflix here, but then Larry Ellison
• 17:17
  Speaker 6: waiting into this battle in personally guaranteeing some of that
• 17:22
  Speaker 6: bid from Paramount. So where do you think these firms
• 17:25
  Speaker 6: stand in terms of who's closer to be able to
• 17:28
  Speaker 6: finally clinch the deal at the end of the day.
• 17:30
  Speaker 7: Well, I think just generally because the Warner Brothers board
• 17:33
  Speaker 7: is on board with Netflix, that definitely makes that seem
• 17:38
  Speaker 7: like a more likely deal. However, and I think that
• 17:41
  Speaker 7: if Paramount wants to get the deal, they have to
• 17:44
  Speaker 7: continue to increase their bid. I know that they recently
• 17:48
  Speaker 7: offered the same breakup fee as Netflix, but I think
• 17:52
  Speaker 7: there might be some other fees that they would have
• 17:54
  Speaker 7: to increase the value of that bid in order to
• 17:57
  Speaker 7: make it worth their while, you know so? And I
• 18:01
  Speaker 7: think it also depends on the value of discovery, which
• 18:04
  Speaker 7: I have heard valuations from one dollar to almost four
• 18:07
  Speaker 7: dollars per share for that portion of the business for
• 18:09
  Speaker 7: the linear TV. So I think it really depends on
• 18:13
  Speaker 7: how people view that because the Netflix bid does not
• 18:15
  Speaker 7: include that.
• 18:17
  Speaker 2: What do you think the regulators are going to say
• 18:18
  Speaker 2: about this deal going forward?
• 18:21
  Speaker 3: Yeah?
• 18:22
  Speaker 7: So, I mean to be fair, Look, Netflix is so large.
• 18:25
  Speaker 7: If they acquired Warner Brothers and they had HBO, they
• 18:28
  Speaker 7: would be by far the largest. But in the grand
• 18:31
  Speaker 7: scheme of life, like HBO is only ten percent of MAUS,
• 18:35
  Speaker 7: Netflix is already almost fifty percent. So it does make
• 18:39
  Speaker 7: it a little bit more difficult, I think, for the
• 18:41
  Speaker 7: average streamer to try to catch up to them. But
• 18:45
  Speaker 7: I don't think it's completely uncompetitive for I mean, but
• 18:48
  Speaker 7: I think that it'll be viewed potentially as uncompetitive just
• 18:52
  Speaker 7: because if other streamers also start consolidating, there's or fewer
• 18:57
  Speaker 7: options for consumers. And we're already seeing pricing issues for
• 19:00
  Speaker 7: subscribe for subscriptions both ad supported and non ad supported,
• 19:04
  Speaker 7: So I think that will be a concern, you know,
• 19:08
  Speaker 7: for regulatory purposes. For Netflix pre paramount, I don't really
• 19:11
  Speaker 7: see an, uh, you know, a real regulatory issue given
• 19:15
  Speaker 7: that its size is very small, and even with HBO,
• 19:19
  Speaker 7: it would just be on par with Disney Plus and
• 19:22
  Speaker 7: Amazon Prime, so it seems like it would have less
• 19:26
  Speaker 7: of an impact from a regulatory perspective.
• 19:28
  Speaker 3: And we'll see that.
• 19:29
  Speaker 6: You make an interesting point about kind of how this
• 19:31
  Speaker 6: could potentially change the streamer landscape, right and especially when
• 19:35
  Speaker 6: it comes to consolidation. Where do you see that going.
• 19:38
  Speaker 6: Which other streamers do you think might be prime for
• 19:40
  Speaker 6: a similar deal like this?
• 19:43
  Speaker 7: Well, you already saw Disney Plus sort of buy out
• 19:46
  Speaker 7: the rest of Hulu, So that is one form of consolidation, right,
• 19:50
  Speaker 7: they're all own together. I'm not sure if the other
• 19:52
  Speaker 7: streamers are are part of some of these larger companies,
• 19:55
  Speaker 7: so they are less likely to be acquired. But I
• 19:59
  Speaker 7: do think that if we're thinking from a competitive standpoint,
• 20:02
  Speaker 7: if you really want to understand this, you have to
• 20:05
  Speaker 7: realize that the streamers are not just competing with themselves.
• 20:08
  Speaker 7: They're basically competing with anything else that takes time. And
• 20:10
  Speaker 7: so we view that as like short form video and
• 20:13
  Speaker 7: social media. So if you broaden the landscape to include those,
• 20:18
  Speaker 7: neither deal is really anti competitive, right because users have
• 20:22
  Speaker 7: so many options on the ways to get content and
• 20:25
  Speaker 7: the way that they view content. And I think so
• 20:29
  Speaker 7: short form video and streaming, social storry, social media are
• 20:32
  Speaker 7: very growing, and you know, competitors that the streamers need
• 20:37
  Speaker 7: to look for. So I so on the consolidation question,
• 20:41
  Speaker 7: I don't think that's necessarily going to be a roll
• 20:44
  Speaker 7: up of the industry. But and I think from the
• 20:45
  Speaker 7: anti competitive spart portion. We should really look at the
• 20:48
  Speaker 7: broader space of how consumers spend their time.
• 20:52
  Speaker 4: Yeah.
• 20:52
  Speaker 6: Well, speaking of the broader space, then what's all look
• 20:54
  Speaker 6: for twenty twenty six? How do you think, Yeah, the
• 20:57
  Speaker 6: media space is going to shape up. Are there kind
• 20:59
  Speaker 6: of any underestimated risks or surprises that perhaps investors aren't
• 21:04
  Speaker 6: necessarily paying attention to.
• 21:06
  Speaker 1: Yeah.
• 21:07
  Speaker 7: I think that one thing that we've noticed has been
• 21:10
  Speaker 7: sort of an acceleration of what we called the fast
• 21:12
  Speaker 7: the free ad supporter streamers. Think of the two B's
• 21:15
  Speaker 7: of the world that have increased their live sports content,
• 21:18
  Speaker 7: which is really great for grabbing subscribers.
• 21:21
  Speaker 4: They're free.
• 21:22
  Speaker 7: Everybody knows that they come with ads. I don't think
• 21:24
  Speaker 7: there's any confusion as to the subscription that they have
• 21:27
  Speaker 7: or what they're getting, And I think that probably resonates
• 21:30
  Speaker 7: with a lot of the younger consumers like gen Z,
• 21:32
  Speaker 7: where finances might be a little bit tighter and you
• 21:35
  Speaker 7: really can't have all these subscriptions. So with these free
• 21:38
  Speaker 7: ad supported players improving their content and their live sports,
• 21:42
  Speaker 7: I think that's something to look for as we go
• 21:43
  Speaker 7: into twenty twenty six.
• 21:45
  Speaker 2: They seem if Paramount doesn't get Warner Brothers. What do
• 21:49
  Speaker 2: they do then, because boy, they're left kind of holding
• 21:52
  Speaker 2: their back here.
• 21:54
  Speaker 3: Yeah.
• 21:54
  Speaker 7: I mean, like from all aspects of our data, they
• 21:56
  Speaker 7: are very far one of the smallest. They only have
• 21:58
  Speaker 7: four percent of advertising dollars in the US compared to
• 22:02
  Speaker 7: the other streamers four percent of active users. I think that,
• 22:08
  Speaker 7: you know, it's going to be very hard for them
• 22:09
  Speaker 7: because people have so many subscriptions already it's hard to
• 22:13
  Speaker 7: add another one. So unless they really bump up their
• 22:16
  Speaker 7: content and have you know, a show that's in the
• 22:19
  Speaker 7: zeitgeist like Stranger Things or White Lotus, it's going to
• 22:22
  Speaker 7: be very difficult for them to sort of move out
• 22:24
  Speaker 7: of their positioning regardless of whether or not the Netflix
• 22:28
  Speaker 7: deal goes through.
• 22:29
  Speaker 2: Sema, thanks so much for joining us. I appreciate chatting
• 22:32
  Speaker 2: with you, Sima Shaw. She's vice president Research and Insights
• 22:34
  Speaker 2: at Sensor Towers.
• 22:36
  Speaker 8: Stay with us.
• 22:37
  Speaker 3: More from Bloomberg Intelligence coming up after this.
• 22:43
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US Live
• 22:47
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• 22:56
  Speaker 2: YouTube Christina Kuino sitting in for Scarlett Foo. I'm Paul
• 23:00
  Speaker 2: Sweeney live here in our Bloomberg Interactive Brokers studios. Let's stay,
• 23:04
  Speaker 2: let's focus on commercial real estate these days. I'm going
• 23:07
  Speaker 2: to call it better than stabilized. It feels like it's
• 23:11
  Speaker 2: kind of back and for a lot of sectors and
• 23:13
  Speaker 2: a lot of parts of the country here. Now we've
• 23:15
  Speaker 2: got interest rates coming down, should be another support being
• 23:18
  Speaker 2: for our commercial real estate. But Liz Hard, she's the
• 23:21
  Speaker 2: pro president of leasing for North America at Newmark based
• 23:24
  Speaker 2: in San Francisco.
• 23:25
  Speaker 3: I have no idea where she is now. I'm not
• 23:27
  Speaker 3: sure I want to know.
• 23:28
  Speaker 2: Liz characterized kind of you would right now, how's a
• 23:32
  Speaker 2: commercial real estate market in this country?
• 23:36
  Speaker 8: Well, I think you nailed it. Twenty twenty five was
• 23:38
  Speaker 8: really the pivot year. It was the year that we
• 23:40
  Speaker 8: started to have positive absorption across the country halfway through
• 23:42
  Speaker 8: the year, and we're heading into twenty twenty six on
• 23:45
  Speaker 8: quite the optimistic note. Trophy performing exceptionally well in New
• 23:49
  Speaker 8: York City where you guys are today, four point six
• 23:52
  Speaker 8: percent availability at the top of the market, demand double
• 23:55
  Speaker 8: that right now and with no supply expected until the
• 23:58
  Speaker 8: early twenty thirties.
• 24:00
  Speaker 6: Yeah, well, you know, the Trophy A space in Manhattan
• 24:02
  Speaker 6: especially very much thriving here, as you mentioned, Liz, do
• 24:05
  Speaker 6: you think that means that rent will continue to stay
• 24:08
  Speaker 6: elevated while even if overall they can see.
• 24:12
  Speaker 3: Is also still elevated.
• 24:14
  Speaker 8: Well, certainly in that part of the trophy market. We
• 24:17
  Speaker 8: would expect it to be elevated in New York City
• 24:19
  Speaker 8: and across the markets. But as you're kind of referencing,
• 24:23
  Speaker 8: rents aren't going to be going up across every single
• 24:25
  Speaker 8: sector at the Trophy definitely, and in the Class A
• 24:28
  Speaker 8: market where we see that we're doing, you know, one
• 24:31
  Speaker 8: third of the product inventory is doing half of the leasing.
• 24:34
  Speaker 8: We'd expect rents to increase there, but it's not going
• 24:36
  Speaker 8: to happen across every single part of the category. In
• 24:39
  Speaker 8: the lower end, we're still struggling.
• 24:41
  Speaker 3: How about retail here, how's that looking these days?
• 24:46
  Speaker 8: Retail's looking pretty strong again. It's a story of outperformance
• 24:48
  Speaker 8: at the top of the market. But what's looking like
• 24:50
  Speaker 8: it's going to be very interesting in the beginning of
• 24:52
  Speaker 8: the year, particularly for those New Year's resolutions. Wellness whileness
• 24:56
  Speaker 8: is really expected to be a standout in twenty twenty six.
• 24:59
  Speaker 6: Yeah, well, I'm definitely seeing a lot of what like
• 25:02
  Speaker 6: yoga studios, pilate studios, climbing James popping up in the neighborhood.
• 25:06
  Speaker 2: So very much about on the industrial side there, we've
• 25:10
  Speaker 2: got this reshoring near shuring, near shoring mandate. Is that
• 25:14
  Speaker 2: make industrial a good place to be?
• 25:17
  Speaker 8: It's showing up in the data. That's what's showing up well.
• 25:20
  Speaker 8: Is the new construction so certainly doing well. And then
• 25:23
  Speaker 8: also intermodial cities, So think of areas like Dallas and
• 25:26
  Speaker 8: Phoenix very close to Mexico. They're showing to be very
• 25:29
  Speaker 8: strong performers and expected to do so in twenty six
• 25:32
  Speaker 8: and beyond.
• 25:33
  Speaker 6: Yeah, what do you think is well moving to kind
• 25:36
  Speaker 6: of like the less optimistic part of commercial real estate? Liza,
• 25:39
  Speaker 6: do you think there are kind of sectors that will
• 25:43
  Speaker 6: be challenged heading into next year?
• 25:45
  Speaker 8: Well, I think when you look at the vacancy that's
• 25:47
  Speaker 8: been on the market for a long time, there's parts
• 25:50
  Speaker 8: that are just not really moving, particularly in retail. So
• 25:53
  Speaker 8: for space that's been on the market for greater than
• 25:56
  Speaker 8: you know, twenty four forty eight months, it's time to
• 25:58
  Speaker 8: reinvent and I think if your space has been on
• 26:01
  Speaker 8: the market for you know, a couple of years, you
• 26:02
  Speaker 8: really have to look at repositioning it and reconsidering it.
• 26:06
  Speaker 8: You know, if it's not moving, it's probably for a reason.
• 26:09
  Speaker 8: Demand is moving when there is space that matches it.
• 26:14
  Speaker 2: So tell us about San Francisco. I know you're based
• 26:16
  Speaker 2: in San Francisco. Give us kind of where we are
• 26:19
  Speaker 2: in San Francisco. No city city was in great, great,
• 26:22
  Speaker 2: great shape before the pandemic, and then maybe no major
• 26:25
  Speaker 2: uscit got hurt more during the pandemic than San Francisco.
• 26:29
  Speaker 2: But there's some real signs that it's been coming back.
• 26:32
  Speaker 2: Give us a kind of an overview.
• 26:34
  Speaker 7: Oh.
• 26:35
  Speaker 8: Absolutely, I mean the demand is back at pre pandemic levels,
• 26:38
  Speaker 8: mostly driven by the technology industry. The technology industry has
• 26:41
  Speaker 8: been an outperformer across the country, but certainly led by
• 26:45
  Speaker 8: the AI companies in San Francisco. You have Open Ai
• 26:48
  Speaker 8: Andthropic being two standouts there, but many others as well
• 26:51
  Speaker 8: who've leased well in excess of one hundred thousand square feet,
• 26:54
  Speaker 8: you know, several in excess of five hundred thousand square feet,
• 26:57
  Speaker 8: leading that demand curve rents increasing. So we'd expect San
• 27:01
  Speaker 8: francis going to be a strong performer than twenty six
• 27:03
  Speaker 8: and twenty seven as well.
• 27:05
  Speaker 6: Yeah, well you mentioned a pre pandemic situation, Liz, and
• 27:08
  Speaker 6: it's interesting because we'd still have about half of pre
• 27:10
  Speaker 6: pandemic office leases rolling. So do you think twenty twenty
• 27:14
  Speaker 6: six is going to be more about growth or are
• 27:16
  Speaker 6: we kind of hitting this right size sort of reality
• 27:21
  Speaker 6: now after we saw a few years of struggle in
• 27:25
  Speaker 6: that space.
• 27:27
  Speaker 8: Well, at the end of twenty five through twenty seven
• 27:29
  Speaker 8: is one about half of those pre pandemic leases are
• 27:32
  Speaker 8: set to expire. So we're tracking over a billion and
• 27:34
  Speaker 8: a half square a billion and a half square feet
• 27:36
  Speaker 8: of leases, and what we're seeing in the data is
• 27:38
  Speaker 8: that seventy two percent of those tenants are looking for
• 27:41
  Speaker 8: the same or greater amount of space. So what that
• 27:44
  Speaker 8: shows us is the contraction is mostly behind us, and
• 27:47
  Speaker 8: it looks like we're headed into a stabilization and growth cycle.
• 27:50
  Speaker 2: So how about just kind of out in Suburbia, Like
• 27:52
  Speaker 2: you drive around Suburbia, USA and any offs park, I
• 27:57
  Speaker 2: don't see a lot of cars. I'm talk to us
• 27:59
  Speaker 2: about that market because it just feels like that's got
• 28:02
  Speaker 2: a lot of vacancy there give us a suburban kind
• 28:05
  Speaker 2: of commercial.
• 28:06
  Speaker 8: Well, it's hard to say across every single market because
• 28:09
  Speaker 8: it does depend on which suburban market that you're talking about.
• 28:12
  Speaker 8: But certainly, you know the suburban markets outside of San Francisco,
• 28:15
  Speaker 8: the ones outside of Dallas there are some pretty strong performers.
• 28:18
  Speaker 8: So it depends on where that demand is and where
• 28:21
  Speaker 8: that job growth is, and if it's proximate to an
• 28:23
  Speaker 8: area that has it, then you know those those markets
• 28:25
  Speaker 8: are doing well as well.
• 28:27
  Speaker 6: Yeah, what's your up and cooming city for commercial in
• 28:29
  Speaker 6: twenty twenty six?
• 28:30
  Speaker 8: Liz, Well, I think the up and coming, even though
• 28:33
  Speaker 8: it's already there, is still going to be San Francisco
• 28:35
  Speaker 8: because that's set to be the outperformer in twenty six.
• 28:38
  Speaker 3: Is Dallas and Texas? Is that kind of peaked? Do
• 28:41
  Speaker 3: you think?
• 28:42
  Speaker 8: I don't think it's peaked yet. I think Dallas and
• 28:44
  Speaker 8: Houston still have quite a bit of way to go.
• 28:48
  Speaker 2: All right, Liz, thanks very much, appreciate it. Liz Hart,
• 28:51
  Speaker 2: President of Leasing for North America New Mark.
• 28:53
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• 29:02
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