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US Retail Sales Rise, EV Latest · Bloomberg Intelligence

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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 2: your podcasts, or watch us live on YouTube.
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Speaker 3: Let's get over to Dave Peacock. He's the CEO of
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Speaker 3: Advantage Solutions. He joins us live from Saint Louis, Missouri,
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Speaker 3: and we want to talk a little bit about retail
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Speaker 3: sales and the economic data that we got in this morning. Dave,
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Speaker 3: I see retail sales coming in stronger than anticipated on
0:41
Speaker 3: the headline, but if you take out.
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Speaker 4: Cars, they're weaker. Cars and gas they're weaker.
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Speaker 5: What's your view.
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Speaker 6: Yeah, we're seeing i'd say resilient consumer, but at the
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Speaker 6: same time a little bit sluggish, especially in the space
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Speaker 6: where we work, which is food and personal care, primarily
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Speaker 6: the retail sector. And some of that is because of
1:00
Speaker 6: the twenty two percent higher prices for groceries that you've
1:04
Speaker 6: seen kind of coming out of the pandemic. Well, wages
1:06
Speaker 6: are catching up with that. I think for certain consumers
1:09
Speaker 6: it's forced them to go value seeking.
1:12
Speaker 7: Are we still way above pre pandemic levels. As far
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Speaker 7: as things like that, the stuff that I actually.
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Speaker 6: Use and eat, we are so depending on the category,
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Speaker 6: but overall groceries are around twenty two percent higher than
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Speaker 6: they were pre pandemic.
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Speaker 7: As far as promotions, I want to set the table
1:30
Speaker 7: for Thanksgiving, so to just stick to promotions, the thing
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Speaker 7: that the things that are discounting.
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Speaker 6: You know, our proprietary research, the advantage we've got says
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Speaker 6: that forty percent of shoppers are going to either pull
1:45
Speaker 6: back or trade down as a shop for the holidays.
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Speaker 7: So when you have to trade down from a turkey, though, well.
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Speaker 6: Side be honest because it's ull per pounds, so you
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Speaker 6: might actually see people buy a smaller turkey.
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Speaker 7: You also have.
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Speaker 6: Different price points if it's frozen or fresh. And then
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Speaker 6: if you look at the other items in the store,
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Speaker 6: you're seeing private label products growing in the retail sector
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Speaker 6: while national brands are flattish to declining of it.
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Speaker 3: So rather than go with the butterball, you look at
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Speaker 3: the Kirkland turkey. Are consumers trading down still from you
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Speaker 3: name brand stores. I'm not going to go to Chico's,
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Speaker 3: I'm more likely to go to Costco.
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Speaker 5: Is that the case with everybody else.
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Speaker 6: You're continuing to see channel shift into the value segment,
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Speaker 6: into the club stores, into mass merge, and so yeah,
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Speaker 6: you are seeing that channel shift with with some consumers.
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Speaker 3: Are you seeing the discounting? I mean John mentions it,
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Speaker 3: he's always on the lookout.
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Speaker 5: For a sale.
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Speaker 3: But are producers offering discounts more than they normally would
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Speaker 3: around the season?
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Speaker 6: You know you're seeing continue discounting, But if you look
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Speaker 6: at percent of volume within the grocery store more broadly
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Speaker 6: sold on deal or sold on promotion, we're still actually
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Speaker 6: a little bit below pandemic levels. What consumers are doing
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Speaker 6: to value seek is some are looking for promotions, but
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Speaker 6: at a lower rate overall than pre pandemic. But they
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Speaker 6: are looking at private label and they are looking at
3:10
Speaker 6: different channels where prices can be lower.
3:13
Speaker 7: If retail sales are up in this period, does that
3:16
Speaker 7: mean debt is also? Are they putting it on credit cards?
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Speaker 6: Do you measure that you are seeing credit card balances
3:23
Speaker 6: increase and an increase somewhat dramatically. When you look at
3:27
Speaker 6: items like food and personal care, they tend to be
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Speaker 6: within the normal budget on a month to month basis
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Speaker 6: for most consumers, and so where you're seeing debt creep
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Speaker 6: up potentially is things like higher value durable goods.
3:40
Speaker 7: This is a question for both of you, who can
3:42
Speaker 7: afford a new car of these days? Well, I mean, it's.
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Speaker 5: Not average, it's not the average, Jill right. I'll just
3:48
Speaker 5: step in John and say.
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Speaker 3: Bloomberg News did a great story last week pointing out
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Speaker 3: that even you know, the top quintile is finding it
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Speaker 3: difficult to afford a new car, and therefore look at
4:00
Speaker 3: used cars.
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Speaker 4: That's why you.
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Speaker 3: Know, you see the retail number, retail sales advancing month
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Speaker 3: over month zero point four percent. We were only looking
4:08
Speaker 3: for zero point three percent. So it's doing well. Then
4:10
Speaker 3: you look at the x auto number and it's doing poorly,
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Speaker 3: and I guess that's because the price of new cars
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Speaker 3: is just so high.
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Speaker 4: Is that is that the case, Dave?
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Speaker 6: I think that's the case. And you know you're looking
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Speaker 6: at dollar increases and so the pricing plays a factor.
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Speaker 6: So one thing that we look at, because we operate
4:27
Speaker 6: in the retail space of grocery stores, convenience stores mass merged.
4:30
Speaker 6: But if you look at restaurants, you saw I think
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Speaker 6: zero point seven percent in the service sector growth but
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Speaker 6: pricing overall in food away from home has been growing
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Speaker 6: at three plus times the rate of food at home recently,
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Speaker 6: so food at home is prices have been going up
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Speaker 6: around one one and a half percent in the last year,
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Speaker 6: and food away from home and restaurants has been closer
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Speaker 6: to three and a half to four.
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Speaker 5: But on the.
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Speaker 3: Durable goods, do you see prices of other you know,
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Speaker 3: big ticket items like appliance is as high as they
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Speaker 3: are with automobiles.
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Speaker 6: Yeah, you're seeing pretty inflated pricing. And what's you know,
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Speaker 6: I don't know because we don't work in the automobile space,
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Speaker 6: But the question would be how much inventory or dealers
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Speaker 6: holding and how what kind of deals are being offered
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Speaker 6: by both dealers and manufacturers to get product off.
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Speaker 7: These lots going forward. Are retailer's confident that they can
5:23
Speaker 7: still pass costs along to consumers?
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Speaker 6: Yeah, I think it's to some degree, And it's really
5:30
Speaker 6: a question of manufacturers more than retailers, because retailers are
5:33
Speaker 6: often the one receiving runs, receiving the pricing. There are
5:36
Speaker 6: commodities depending on what you're making, what food you're providing,
5:40
Speaker 6: what personal care item for instance, that are still increasing
5:43
Speaker 6: or still at elevated levels, and so you know, cocoa
5:47
Speaker 6: and chocolate is a good example of that, and we
5:49
Speaker 6: saw that during Halloween and it certainly suppressed some of
5:52
Speaker 6: the volume during the Halloween windows. So people are going
5:56
Speaker 6: to pass it on when they have to, but I
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Speaker 6: think they're more reticent given the economic reality.
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Speaker 7: What does all this mean for the holiday shopping season.
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Speaker 6: It's a short season, right, so we have a late
6:06
Speaker 6: Black Friday, we have a late Thanksgiving, and so you
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Speaker 6: know the season will spread over twenty two or so
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Speaker 6: days versus thirty four. And I think it'll be interesting
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Speaker 6: to see how supply chains hold up relative to a
6:17
Speaker 6: more compressed demand. Sixty three percent of shoppers, based on
6:21
Speaker 6: our research, indicate they're going to shop a little earlier,
6:24
Speaker 6: so we may be seeing some of that creeping in
6:27
Speaker 6: earlier in November. So it'll be interesting to see where
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Speaker 6: the retail sales come out for the next month.
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Speaker 7: Hey, can you address for us the divide between the
6:34
Speaker 7: haves and have nots and what the overall retail picture
6:38
Speaker 7: looks like right now?
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Speaker 6: When you say have and have nots, do you mean
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Speaker 6: by retailer or by consumer?
6:43
Speaker 7: Well, we'll do both.
6:45
Speaker 6: I suppose yeah, I mean what we're seeing, let's look
6:48
Speaker 6: at the consumer, because I think everything starts there. What
6:50
Speaker 6: we see is, you know, lower income consumers are really
6:55
Speaker 6: kind of strained in this economy, especially with the elevated
6:57
Speaker 6: grocery prices we talked about, which are a day to
6:59
Speaker 6: day item, and so they're the ones that are going
7:02
Speaker 6: to different channels. They may be pulling back a bit
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Speaker 6: on their purchases, which is why you're seeing slower volume,
7:08
Speaker 6: and they are looking at private label products on the
7:10
Speaker 6: upper end. One thing, at least in the food space
7:13
Speaker 6: where we operate, you are seeing for some is golp
7:17
Speaker 6: one drugs. You know, is as much as fifteen percent
7:20
Speaker 6: of a company's pharmaceutical expenses within their benefits plans. Kimmy
7:24
Speaker 6: going now to golp one drugs. Depending on the company,
7:27
Speaker 6: it's not saying it's everywhere, but there is a belief
7:31
Speaker 6: that it is having an impact on demand, especially for
7:33
Speaker 6: that higher lend consumer. They can afford those medications.
7:37
Speaker 3: Yeah I can't afford them, but I can't wait to
7:40
Speaker 3: get my hands on some weig of eurozempic.
7:42
Speaker 7: Doesn't your healthcare plan pay for that?
7:44
Speaker 5: They won't? They say, I'm not fat enough yet.
7:47
Speaker 7: But what about me?
7:48
Speaker 5: I'm doing my best.
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Speaker 3: John Tucker, we can both try and find it from
7:52
Speaker 3: an unregistered pharmacy.
7:55
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8:13
Speaker 3: Let's shift gears a little bit to politics, or least
8:17
Speaker 3: large corporate involvement in politics. Brook Sutherland joins us Bloomberg's
8:21
Speaker 3: Boston bureau chief. She's also the writer of the Industrial
8:24
Speaker 3: Strength newsletter, and she has a story out on the
8:27
Speaker 3: terminal entitled Nobody Knows What's going to Happen CEO's Brace
8:31
Speaker 3: for More Trump Brooke, it's interesting you kick off the
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Speaker 3: story talking about how corporate leaders just really didn't want
8:40
Speaker 3: the same thing that the American public wanted, and that
8:42
Speaker 3: is Donald Trump in a second term.
8:46
Speaker 8: Yes, I mean, I think you know, if you look
8:47
Speaker 8: at a lot of the post is that he has proposed,
8:50
Speaker 8: they're not necessarily pro business. You know, of course you
8:53
Speaker 8: have the prospect of lower regulation, lower taxes. Those are
8:56
Speaker 8: the types of things that businesses love to hear. But
8:59
Speaker 8: you also have the disability of a trade war, and
9:02
Speaker 8: you know, a reignition of inflation, which is not helpful
9:06
Speaker 8: for business leaders. And then you know there's also just
9:08
Speaker 8: the chaos factor, you know, the possibility of governance by
9:12
Speaker 8: tweet returning and becoming sort of a commonplace thing. I
9:16
Speaker 8: think we all all forget a little bit about what
9:18
Speaker 8: exactly it was like during Trump's first term, but he
9:21
Speaker 8: would rather frequently target specific companies who he was frustrated
9:26
Speaker 8: for for whatever different reason, and that creates a lot
9:29
Speaker 8: of volatility, a lot of instability for these companies that
9:32
Speaker 8: really crave predictability and like to make their decisions on
9:36
Speaker 8: a playing field that they understand and can anticipate.
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Speaker 3: On the other hand, did you hear Jamie Diamond talking
9:43
Speaker 3: to Lisa Bromwitz yesterday from the APEC summit in Peru.
9:47
Speaker 4: He said, bank.
9:49
Speaker 3: Leaders, whether they voted for Trump or Kamala Harris, were
9:54
Speaker 3: dancing in the streets.
9:56
Speaker 5: He was pretty upbeat.
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Speaker 8: Brooke, Well, I think it might on one industry you're in.
10:01
Speaker 8: I mean, I think banking is certainly one that expects
10:04
Speaker 8: to see a lot of relief on the regulatory front
10:07
Speaker 8: and probably would be less likely to be directly affected
10:10
Speaker 8: by anything like tariffs. Whereas manufacturers, even those with substantially
10:14
Speaker 8: US manufacturing operations, it's extremely rare for those companies to
10:19
Speaker 8: have entirely domestic supply chains. They like to talk a
10:22
Speaker 8: lot about local for local manufacturing, but what that means
10:25
Speaker 8: is North America in terms of supplying their US operations.
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Speaker 8: It's not necessarily just America. And so a lot of
10:33
Speaker 8: these companies rely on raw material or component imports to
10:37
Speaker 8: some extent, and all of that could potentially be vulnerable
10:40
Speaker 8: under the tariffs that Trump has proposed. Now there is
10:42
Speaker 8: a sense that, you know, some of this is perhaps bluster,
10:45
Speaker 8: it's a negotiating tactic that you know, the policies that
10:48
Speaker 8: he's put out there, whether it's sixty percent tariffs on
10:50
Speaker 8: China goods, you know, up to one hundred percent tariffs
10:54
Speaker 8: on goods from Mexico, ten to twenty percent on everybody else,
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Speaker 8: that these are not necessarily the final destination. It's you know,
11:00
Speaker 8: meant to be more sort of a negotiating tactic. And
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Speaker 8: if that is the case, then you know, I think
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Speaker 8: a lot of these companies have shown an ability to
11:08
Speaker 8: be adept and pivot their supply chains. But I think
11:10
Speaker 8: it's very unpredictable right now and it's not entirely clear
11:14
Speaker 8: what his goals are. And he has focused a lot
11:16
Speaker 8: on Mexico. And if you look at Mexico, that really
11:19
Speaker 8: was one of the biggest beneficiaries of the tariffs from
11:22
Speaker 8: his last term, you know, because a lot of companies
11:24
Speaker 8: who had supply chains in China decided to bring those
11:27
Speaker 8: back to North America. But they didn't put them in
11:29
Speaker 8: the US. They put them in Mexico, which has seen
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Speaker 8: you know, a really big boom and spending, specifically by manufacturing.
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Speaker 7: Yeah, is there really a cost effective way for companies
11:38
Speaker 7: to bring their stuff back to the United States.
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Speaker 8: Well, to do it effectively, you have to have robots
11:45
Speaker 8: or automation. And you know, there are some industries for
11:48
Speaker 8: which that works better, for which it you know, makes
11:50
Speaker 8: more sense to invest in automation, and there are others
11:53
Speaker 8: for which it is much trickier. And you know, some
11:56
Speaker 8: of the companies that have been investing in Mexico are
11:59
Speaker 8: doing so part because they really struggle to find the
12:01
Speaker 8: labor that they need in the US. And so you know,
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Speaker 8: whether or not you have automation, just getting that the
12:06
Speaker 8: people that you need can be very challenging. And even now,
12:10
Speaker 8: you know, as we've seen sort of some of these
12:11
Speaker 8: labor shortages ease, you still hear manufacturers talking all the
12:14
Speaker 8: time about how difficult it is to get a quality workforce.
12:18
Speaker 8: And it's important to remember that this was a challenge
12:19
Speaker 8: for the industry even before the pandemic, which certainly exacerbated things.
12:23
Speaker 8: But this has been sort of a long standing issue
12:26
Speaker 8: in the US. Factory jobs tend to be very rigid.
12:29
Speaker 8: There's no work from Hull. They tend to operate on
12:32
Speaker 8: like a very set schedule, and that is not appealing
12:35
Speaker 8: to a lot of the American population.
12:38
Speaker 3: Yeah, it's I think a fascinating story and a fascinating topic.
12:41
Speaker 3: I just spoke with Peter Rollinson, the CEO of Lucid,
12:44
Speaker 3: and we were asking him if he was bummed about
12:47
Speaker 3: maybe losing the tax credit or the fact that his
12:52
Speaker 3: chief rival, Elon Musk is like best friends with Donald
12:55
Speaker 3: Trump now, and he pointed out, Hey, you know, we
12:58
Speaker 3: build and produce our pus here in the United States
13:01
Speaker 3: of America, and I think Donald Trump wants to keep
13:02
Speaker 3: manufacturing here.
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Speaker 7: One of the things that CEOs and investors always want
13:06
Speaker 7: is certainty.
13:08
Speaker 5: It doesn't sound like from that that's true, and that's.
13:09
Speaker 7: Reporting that they're getting much of it right now.
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Speaker 3: I think Brook's main point. Brook, thanks so much for
13:13
Speaker 3: joining us. Definitely recommend you read the story. Nobody knows
13:17
Speaker 3: what's going to happen. CEOs brace for more Trump.
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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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13:37
Speaker 3: We had seen shares of Tesla and Rivian sliding yesterday
13:42
Speaker 3: on a report that Trump plans to acts the seventy
13:45
Speaker 3: five hundred dollars EV tax credit put in place unto
13:48
Speaker 3: the Biden administration. You do see Tesla shares bouncing back
13:52
Speaker 3: a bit today. They're up three and a half percent
13:54
Speaker 3: after falling five point eight percent yesterday. Rivian, though still down,
13:59
Speaker 3: and I spoke earlier this morning with the CEO of Lucid,
14:03
Speaker 3: Peter Rollinson. His shares are off another four percent a
14:08
Speaker 3: day after falling five percent yesterday and have hit an
14:10
Speaker 3: all time low at less than two dollars Rivian or sorry,
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Speaker 3: Lucid trading for a dollar ninety nine a share. I
14:17
Speaker 3: want to bring in Steve Man, Bloomberg Intelligence, Global autos
14:20
Speaker 3: and Industrial Research Manager, and Steve, I guess the main question,
14:25
Speaker 3: how will the EV industry be affected by the Trump administration?
14:31
Speaker 9: Yeah, if Trump decides to kind of remove or cut
14:34
Speaker 9: the seventy five hundred tax credit or EV tax credit,
14:38
Speaker 9: I think most people believe that the EV penetration will stall.
14:43
Speaker 9: If not stall, it will probably fall because a lot
14:47
Speaker 9: of the consumers are relying on that that's seventy five
14:52
Speaker 9: hundred dollars to make sure, you know, to bring down
14:54
Speaker 9: the price, the effective price of the vehicle. Most evs
14:59
Speaker 9: sold in America are still very expensive. There's only a
15:02
Speaker 9: limited number of them that are under fifty thousand dollars.
15:06
Speaker 9: So the fear is, uh, you know, it's going to
15:09
Speaker 9: stall EV penetration. The automaker is going to have a
15:13
Speaker 9: hard time because they's already invested. They've already committed investing
15:17
Speaker 9: a lot of money under the Inflation Reduction Act, about
15:22
Speaker 9: one hundred and over one hundred and fifty billion dollars
15:24
Speaker 9: to onshore a lot of supply chains. So it's going
15:27
Speaker 9: to cost a lot of chaos within the industry.
15:30
Speaker 7: So they'll be under no pressure whatsoever moving forward, possibly
15:34
Speaker 7: to increase sales of evs.
15:38
Speaker 9: Yeah, I think the automakers are going to have to
15:41
Speaker 9: increase incentives. I think what could happen if the EV
15:45
Speaker 9: penetration rate does decrease from about eight percent currently in
15:51
Speaker 9: the US. You know you're gonna lead.
15:53
Speaker 5: He's gonna be.
15:54
Speaker 9: Left with the strongest players, And that to me, that
15:57
Speaker 9: looks like it's Tesla, because Tesla does have the lowest
16:00
Speaker 9: costs structure amongst all the EV makers in the US,
16:06
Speaker 9: and if the market shrinks, the weaker ones will probably
16:11
Speaker 9: fall on the wayside.
16:12
Speaker 7: And oddly enough, First Bro or what do we call him,
16:15
Speaker 7: first friend, Elon Musk, he's not necessarily in favor of
16:18
Speaker 7: these these tax subsidies for evs.
16:22
Speaker 9: Yeah, I think, you know, to him, I don't. He
16:26
Speaker 9: thinks Tesla doesn't need them, And you know, it's it's
16:30
Speaker 9: partly true if you look at the amount of cars
16:35
Speaker 9: that are least and eligible for the seventy five hundred.
16:40
Speaker 9: Actually a lot of the seventy five hundred tax credit
16:43
Speaker 9: as actually from leased vehicles If you look at the
16:46
Speaker 9: amount of leased vehicles that Tesla have sold in the
16:50
Speaker 9: past twelve months, it's about twenty percent, so you know
16:53
Speaker 9: they'll get impacted. But if you compare it to Rivian,
16:57
Speaker 9: you know, Rivian has about fifty percent of their vehicles
17:00
Speaker 9: and those and eligible for the seventy five hundred, so
17:05
Speaker 9: it could be a bigger impact in Rivian. Then that's
17:07
Speaker 9: probably why you're seeing their stop falling much more.
17:11
Speaker 3: Yeah, there's a limit on you don't get the tax
17:13
Speaker 3: credit if you're buying a vehicle that costs more than
17:16
Speaker 3: eighty thousand dollars. And I believe there's a household income
17:20
Speaker 3: requirement as well, you have to be below a certain level.
17:23
Speaker 3: But if you lease it, you can get around at
17:25
Speaker 3: least one part of that tax credit.
17:27
Speaker 5: Isn't that right, Steve? That's right.
17:29
Speaker 9: That's actually what I'm referring to. So when we look
17:31
Speaker 9: at the companies who's going to get impacted, we really
17:34
Speaker 9: look at, you know, how many of those vehicles are leased.
17:38
Speaker 9: If you look at EV's in general in the US,
17:40
Speaker 9: the you know, the leasing penetration is actually upwards of
17:44
Speaker 9: seventy five eighty ninety percent, so a lot of people
17:47
Speaker 9: that actually buy evs are leasing it to get that
17:50
Speaker 9: seventy five hundred dollars.
17:51
Speaker 3: What does the EV market look like right now? I mean,
17:54
Speaker 3: I know, if you read the headlines, you would think
17:58
Speaker 3: that no one has bought an this year. Like you know,
18:02
Speaker 3: the industry is in trouble because they're so unpopular, not
18:06
Speaker 3: just politically, but you know, since there's difficult to charge
18:09
Speaker 3: for a lot of people, it's just not an option. However,
18:12
Speaker 3: don't we still see EV sales actually growing?
18:16
Speaker 2: Oh?
18:16
Speaker 5: We are.
18:17
Speaker 9: We are seeing EV sales growing, especially in the second
18:20
Speaker 9: half of this year, because there's been a lot of
18:22
Speaker 9: price cuts right over the past eighteen twenty four months
18:26
Speaker 9: in the industry and a lot of these vehicles have
18:28
Speaker 9: become more affordable, and even especially in the used EV market,
18:34
Speaker 9: those vehicles are very competitive to gasoline cars. What the
18:38
Speaker 9: industry is really facing is really it's affordability, and it's exaggerating.
18:44
Speaker 9: It's getting more impacted by the fact that interest rates
18:49
Speaker 9: are high. A lot of people cannot afford expensive cars
18:52
Speaker 9: these days, and EV's are a little bit more expensive
18:54
Speaker 9: than ice at the moment. So what the industry was
18:57
Speaker 9: trying to do, and I think what the IRA was
18:59
Speaker 9: trying to dude. We're trying to onshore a lot of
19:01
Speaker 9: the production well on shore, a lot of the supply
19:04
Speaker 9: chain in the US in hopes of braining costs down
19:08
Speaker 9: so automakers can offer more affordable evs. And that's what
19:13
Speaker 9: we were expecting. We were actually expecting the EV penetration
19:18
Speaker 9: rate to rise, especially into twenty twenty six and twenty
19:22
Speaker 9: twenty seven.
19:23
Speaker 3: I got to break in here because I feel like,
19:25
Speaker 3: you know, Americans have shown a propensity for taking one
19:29
Speaker 3: thousand dollars plus monthly payments. I don't think it's about
19:31
Speaker 3: the price. Frankly, what do you are that's the big problem.
19:36
Speaker 3: I'm test driving right now at GMC Sierra EV. It
19:39
Speaker 3: is a fantastic vehicle. It's expensive, but I think a
19:43
Speaker 3: lot of people are willing to take on debt to
19:45
Speaker 3: own a car like that.
19:46
Speaker 4: The problem is there's nowhere to charge it.
19:48
Speaker 3: I park in a garage across the street in Manhattan,
19:51
Speaker 3: you know, capital of the world, and the only option
19:54
Speaker 3: they offer is the slowest potential charge for twenty dollars
19:57
Speaker 3: a day.
19:57
Speaker 5: So it's just not worth it.
19:59
Speaker 9: Yeah, think that's a very good point. Affordabuild. It is
20:02
Speaker 9: not the only hurdle. It's the charging and the range,
20:06
Speaker 9: and you know, depending on the use, I think a
20:08
Speaker 9: lot of people with the second vehicle may may get
20:11
Speaker 9: an EV. Uh, someone who's using it for daily commutes
20:15
Speaker 9: make an EV. But you know, America is a big
20:18
Speaker 9: country and people love to drive cars, and there are
20:22
Speaker 9: a big majority of car buyers that are you know,
20:27
Speaker 9: are you know, probably staying away from EV.
20:30
Speaker 5: Because of that?
20:31
Speaker 4: All right, Steve, great update, We got to hang out man.
20:35
Speaker 5: I need to talk to you a little bit more.
20:36
Speaker 3: Steve Man there Bloomberg Intelligence, Global Autos and Industrial.
20:39
Speaker 5: Steef, not me research manager.
20:41
Speaker 3: He knows more about cars than you do, and that's
20:44
Speaker 3: what I want to rap with him about.
20:47
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
20:51
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20:54
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20:57
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21:01
Speaker 2: station just say Alexa playing Bloomberg eleven.
21:06
Speaker 5: I know that you have plans tonight.
21:09
Speaker 7: We were just talking about it.
21:10
Speaker 3: You're an empty nester, right, You're gonna You're gonna hit
21:13
Speaker 3: the town with some Wall Street big wigs. I, however,
21:17
Speaker 3: have little kids at home, so I don't get to
21:19
Speaker 3: go out.
21:20
Speaker 5: But I'm excited.
21:21
Speaker 3: Nonetheless because iron Mike Tyson, a fifty eight year old
21:26
Speaker 3: man is preparing to knock out a twenty seven year
21:28
Speaker 3: old punk on Netflix. And there's no way I'm gonna
21:32
Speaker 3: miss that. Keitha wrong And Athen joins us right now
21:34
Speaker 3: Bloomberg Intelligence analysts for US Media, and she covers a
21:37
Speaker 3: course Netflix as well out of Princeton, New Jersey.
21:40
Speaker 7: Is he really expected to win this thing.
21:42
Speaker 5: Mike Tyson?
21:43
Speaker 3: He's not gonna lose a boxing match to fifty eight,
21:47
Speaker 3: all right, Keith.
21:48
Speaker 4: I don't know if you've got the odds on the fight,
21:50
Speaker 4: But what is this event?
21:51
Speaker 3: I never I hadn't really realized it was going to
21:56
Speaker 3: be on my TV until I started reading the news
21:58
Speaker 3: this morning.
21:59
Speaker 4: Yeah.
22:00
Speaker 10: I mean, there's just been so much buzz building up
22:03
Speaker 10: for this matchup. It's been heavily promoted, heavily hyped, and
22:08
Speaker 10: I mean regardless of whether Mike Tyson or Jake Paul,
22:11
Speaker 10: regardless of who wins that. I mean, obviously the big
22:13
Speaker 10: winner in either case is going to be Netflix. You know,
22:16
Speaker 10: they have over two hundred and eighty million subscribers all
22:19
Speaker 10: across the world. This is by far their biggest foray
22:24
Speaker 10: into live sports. And remember they're really trying to build
22:27
Speaker 10: a business here from scratch, that business being the advertising business,
22:31
Speaker 10: and you need eyeballs for that, and they know they
22:34
Speaker 10: will get the eyeballs with this matchup.
22:37
Speaker 7: So how many people signed up just to see this
22:40
Speaker 7: match that?
22:41
Speaker 4: I so we are.
22:43
Speaker 10: You know, we've obviously I think everybody who wants a
22:46
Speaker 10: Netflix subscription already kind of has one, but you know,
22:49
Speaker 10: for those who probably don't have one, I think this
22:52
Speaker 10: is obviously going to give them that impet us to join,
22:56
Speaker 10: and we think it'll actually end up triggering a lot
22:59
Speaker 10: more subscribe viers to go on the advertising tier, which
23:02
Speaker 10: is one of the cheaper options out there at seven
23:05
Speaker 10: dollars a month. And that's actually what Netflix really wants
23:09
Speaker 10: because at the end of the day, they want to
23:10
Speaker 10: kind of build up that viewer base so that they
23:12
Speaker 10: can sell ads against that. So we're actually projecting that,
23:16
Speaker 10: you know, Netflix over the course of the entire quarter
23:20
Speaker 10: will actually end up adding about ten more than ten
23:23
Speaker 10: million subscribers, which is a really healthy number for the
23:26
Speaker 10: fourth quarter.
23:27
Speaker 7: I remember the conversation my brother had with my father
23:30
Speaker 7: way way way back when to get cable. The great
23:33
Speaker 7: thing about cable they don't have any ads. How quickly
23:38
Speaker 7: that changed. Yeah, now it's changing.
23:39
Speaker 5: For streaming, dreaming, streaming as well, KEITHA.
23:42
Speaker 3: The main question, and I don't know if you're read
23:45
Speaker 3: in on this that I have, is is it a
23:49
Speaker 3: real fight?
23:50
Speaker 4: Is it a setup?
23:51
Speaker 3: I mean, are these two really gonna go at each other?
23:55
Speaker 4: No, hold bar, It's a real fight.
23:58
Speaker 10: This is not WWE where it's stayed, so it's a
24:01
Speaker 10: real fight. I mean, I know all the bets are
24:03
Speaker 10: out there, so you know everybody's excited.
24:07
Speaker 5: Yeah, I'm pumped.
24:08
Speaker 7: This gives you some indication of like just boxing in channel.
24:12
Speaker 7: Can you name who is the world heavyweight champion right now?
24:15
Speaker 5: No idea.
24:16
Speaker 3: But I also don't really know who Jake Paul is,
24:19
Speaker 3: so I'm not caught up on non financial news.
24:23
Speaker 5: In terms of entertainment.
24:24
Speaker 3: The only thing I know is like what drives money
24:28
Speaker 3: making and streaming and squid Game is one of those things.
24:32
Speaker 5: KEITHA.
24:33
Speaker 3: I think a ton of people watched this, and my
24:35
Speaker 3: sense is you had to get to the end, and
24:38
Speaker 3: when you did, you realized what an incredibly depressing, like
24:42
Speaker 3: disappointing letdown. I never want to go through something like
24:45
Speaker 3: that again. I would pay money not to watch Squid
24:49
Speaker 3: Game again. But Netflix is going to bring out another
24:54
Speaker 3: season of this. Is it going to do well?
24:56
Speaker 5: Or have we all learned our lesson.
25:00
Speaker 10: Want to be gangbusters? I mean, Squid Game one was
25:03
Speaker 10: by far the most watched series for Netflix ever. And
25:07
Speaker 10: why that's surprising is because this is a non English series.
25:10
Speaker 10: I mean, this, this came out of Korea. It was
25:12
Speaker 10: made for you know, you have series here that are
25:15
Speaker 10: made for something like three hundred four hundred million. This
25:17
Speaker 10: entire series was made for something like less than twenty
25:20
Speaker 10: million when when it first came out. So it just
25:23
Speaker 10: kind of showed how, you know, hits can be generated anywhere,
25:26
Speaker 10: how content can resonate across the globe. And Netflix will will,
25:31
Speaker 10: you know, obviously go all out on the second season,
25:33
Speaker 10: just kind of knowing how much of buzz and how
25:35
Speaker 10: much of anticipation has been built already, you know, for
25:39
Speaker 10: the after the first season launched.
25:41
Speaker 7: So the Korean producers this time or are they challenging
25:43
Speaker 7: Netflix a premium for this programming.
25:46
Speaker 10: I'm absolutely sure that they are.
25:49
Speaker 3: What apparently listen, dude, apparently the writer and Geith it
25:52
Speaker 3: correct me if I'm wrong. I think I read the
25:55
Speaker 3: other day or heard from Katie Orshnale the writer lost
25:59
Speaker 3: seven or eight because the production process was so stressful.
26:04
Speaker 5: Is that true?
26:05
Speaker 10: I read the same thing. Yeah, I mean it obviously
26:09
Speaker 10: they went all out. Yes, it is true, and I
26:12
Speaker 10: saw the same thing as well.
26:14
Speaker 7: I lost like ten teeth when they told me I
26:15
Speaker 7: had to co host with Matt today.
26:17
Speaker 4: Dude, I haven't lost teeth since like the fourth grade.
26:20
Speaker 5: How do you lose teeth?
26:21
Speaker 7: I guess it's stress thing.
26:24
Speaker 5: And I chewed tobacco for like thirty years.
26:26
Speaker 3: All Right, keitha wrongnoth and thanks so much for joining us.
26:29
Speaker 3: She is a Bloomberg Intelligence analyst on US media and Netflix.
26:32
Speaker 5: If nothing else, at least you know.
26:34
Speaker 3: From listening to us on Bloomberg Radio today that there's
26:37
Speaker 3: something to watch on Netflix today Mike Tyson versus Jake.
26:40
Speaker 5: Paul Who I guess is like you're gonna watch this
26:43
Speaker 5: or yeah, you know. That's a good question.
26:47
Speaker 3: What time does this thing actually start? I have no idea,
26:53
Speaker 3: but I'm assuming it's past their bedtime. Does anybody in
26:56
Speaker 3: the control room know when the Mike Tyson, Mike Tyson, no, no,
26:59
Speaker 3: no one knows. Well, we'll figure it out and I'll
27:01
Speaker 3: put the kids to bed no matter what.
27:04
Speaker 2: Now on Bloomberg Intelligence, Unis in Focus.
27:10
Speaker 5: Focus on UNIS is brought to you by Bam.
27:13
Speaker 3: Bam Mutual insures municipal bonds that finance essential infrastructure and
27:18
Speaker 3: provides guaranteed income to improve any portfolio. Be a part
27:23
Speaker 3: of Building America invest in Bam Bam insured bonds. Ma'n
27:30
Speaker 3: me and Paul one time did a showdown from Build
27:33
Speaker 3: America Mutual and it was a fantastic experience. Got to
27:36
Speaker 3: meet all the guys that were working there, got to
27:39
Speaker 3: really immerse ourselves in the MUNI market, which I love
27:42
Speaker 3: to do. We'll continue that right now with Bloomberg Municipal
27:44
Speaker 3: bond reporter Max Adler. He joins us on Zoom Out
27:48
Speaker 3: of Los Angeles and Max, before we get to any
27:51
Speaker 3: of the specific stories on your radar right now, I
27:55
Speaker 3: want to ask about the potential to remove the tax
28:00
Speaker 3: advantage of muni's. John mentioned it earlier on how likely
28:05
Speaker 3: is that to happen?
28:09
Speaker 1: Well, thanks for having me. It's going to be tough
28:11
Speaker 1: to follow up that fabulous ad read, But on the
28:15
Speaker 1: tax exemption, we don't think it's that likely. It's definitely
28:18
Speaker 1: something that's been floated. We have all of these potential
28:22
Speaker 1: tax cuts that the Trump administration is going to try
28:24
Speaker 1: to push through. They're going to try to extend the TCJA,
28:28
Speaker 1: and this has been floated as a possible way to
28:32
Speaker 1: make up some of the tax revenue that would be lost.
28:35
Speaker 1: But we don't think it's that likely. Trump does have
28:38
Speaker 1: a lot of finance people in his corner, Howard Lutnik
28:41
Speaker 1: and Canter Fitzgerald. They have some UNI holdings. I would
28:46
Speaker 1: not think that he'd be advising Trump to get rid
28:48
Speaker 1: of the MUNI tax exemption. And the federal government hasn't
28:52
Speaker 1: proven that it can make up for the infrastructure demands
28:55
Speaker 1: that unipoke bonds take care of. Right now, muni's about
29:00
Speaker 1: seventy five percent of the infrastructure projects that are built
29:04
Speaker 1: in the US. So there definitely would be a problem
29:08
Speaker 1: financing a lot of those infrastructure projects if the tax
29:11
Speaker 1: exemption was done away with.
29:14
Speaker 7: Yeah, they'd have to turn to the taxable market. I mean,
29:17
Speaker 7: how likely is that?
29:20
Speaker 1: Yeah, I don't know if that would be particularly likely.
29:26
Speaker 1: We do think that the taxable market would expand a
29:29
Speaker 1: little bit if Trump does get his tax cuts through,
29:34
Speaker 1: that would lessen the value of the UNI tax exemption
29:38
Speaker 1: to some extent, especially in bigger tax states. But yeah, no,
29:42
Speaker 1: we don't think it's particularly likely that all of the
29:45
Speaker 1: country's infrastructure needs would be met by the taxable market, all.
29:49
Speaker 3: Right, So it's not likely, but this is one of
29:52
Speaker 3: the ways he could make up for lost revenue from
29:58
Speaker 3: the tax cuts. How what kind of shape are the
30:03
Speaker 3: municipalities in right now, because you know, a few years
30:07
Speaker 3: ago they were just swimming in cash and didn't really
30:10
Speaker 3: need to issue too much debt anyway, how do they
30:13
Speaker 3: look currently?
30:16
Speaker 1: They're so showing some signs of strain, especially in bigger cities.
30:20
Speaker 1: We see a lot of different transit agencies right now
30:23
Speaker 1: are having a lot of problems that started before the
30:26
Speaker 1: COVID pandemic and was exacerbated during the pandemic. You're seeing
30:31
Speaker 1: San Francisco is having some signs of budget strain. Chicago
30:35
Speaker 1: has been talked about a lot. They're having a lot
30:38
Speaker 1: of problems funding their public schools and just with revenues
30:42
Speaker 1: in general. So a lot of cities are showing some
30:46
Speaker 1: signs of strain, especially now that some of the federal
30:50
Speaker 1: stimulus that was injected into the cities during COVID is
30:53
Speaker 1: drying up.
30:54
Speaker 7: All right, let's talk about sports. Sames traffic, and of
30:57
Speaker 7: field was pretty much destroyed by what was it, Hurricane Milton.
31:01
Speaker 7: But it's Muni's to the rescue, or is.
31:03
Speaker 5: It Probably not.
31:07
Speaker 1: It's actually the team that is likely to be covering
31:10
Speaker 1: the cost of this. So as part of their lease
31:12
Speaker 1: agreement with the City of Saint Petersburg, they don't pay
31:16
Speaker 1: anything in rent pretty much, but they are on the
31:19
Speaker 1: hook for any maintenance costs and the cost of repairing
31:23
Speaker 1: the stadium right now. And as you said there, the
31:26
Speaker 1: roof of Trump kind of Field was entirely ripped off
31:29
Speaker 1: during Hurricane Milton. They have about fifty five million dollars
31:32
Speaker 1: in damages. The Rays have been contributing to this escrow
31:36
Speaker 1: account essentially over the length of their lease, which has
31:40
Speaker 1: almost been like twenty seven years at this point. So
31:43
Speaker 1: there is money in that account that they'll then use
31:45
Speaker 1: for the repairs, but it won't be it won't be
31:49
Speaker 1: AMMUNI funded repair projects.
31:51
Speaker 7: Okay, So I saw the story where the Rays. Of
31:54
Speaker 7: course they're moving to Steinbrenner Field, the Yankee is going
31:56
Speaker 7: to let them use their training facility, but will everybody
32:04
Speaker 7: fit in there? And given the average fan base, yeah,
32:07
Speaker 7: they're not going to have any problems moving into a
32:10
Speaker 7: much smaller stadium.
32:11
Speaker 3: By the way, if people have invested in that kind
32:14
Speaker 3: of paper in the past, you know, financing stadiums and
32:19
Speaker 3: the like, how well do those investments typically do?
32:24
Speaker 1: They typically pay off pretty well. There's like a lot
32:27
Speaker 1: of demand for that paper as well. There are a
32:31
Speaker 1: lot of like affinity buyers that want to come in
32:33
Speaker 1: and buy credits of names that they that they know
32:38
Speaker 1: pretty well. It happens with universities, It even happens with
32:42
Speaker 1: smaller schools. There was a private school out here in
32:45
Speaker 1: La the Curtis School. Their bonds sold out really well,
32:48
Speaker 1: and that was mostly like affinity buyers. But stadiums in
32:52
Speaker 1: particular do get a lot of those affinity buyers. It
32:54
Speaker 1: reminds me of a recent deal that the City of Buffalo,
32:59
Speaker 1: actually County where Buffalo is located, was marketing recently. They
33:03
Speaker 1: were trying to sell bills bonds as they were calling them,
33:07
Speaker 1: and that deal also was pretty well subscribed. It didn't
33:11
Speaker 1: draw as much retail demand as they expected. But certainly
33:16
Speaker 1: the institutional investors stepped up, all.
33:19
Speaker 5: Right, Max, thanks so much for joining us.
33:21
Speaker 3: Max Adler there, Bloomberg Municipal Bond Reporter out of Los Angeles.
33:25
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