Latest / Bloomberg Intelligence / BI Weekend: Luxury, Railroad, and Machinery 2026 Outlook

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BI Weekend: Luxury, Railroad, and Machinery 2026 Outlook · Bloomberg Intelligence

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Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big
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Speaker 3: Each and every week we provide in depth research and
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Speaker 3: hundred and thirty industries are analysts cover worldwide.
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Speaker 2: Today, we'll look at the outlook for US railroad, transportation,
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Speaker 2: telecoms and cloud computing business for twenty twenty six plus.
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Speaker 3: We speak with the writer and producer of the film
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Speaker 3: Ball Run on capturing the excess and high octane world
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Speaker 3: of Wall Street.
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Speaker 2: First, we lean into the world of luxury. According to
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Speaker 2: the most recent Bloomberg Intelligence research, the recovery of luxury
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Speaker 2: goods makers in twenty twenty six hinges on limited price
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Speaker 2: increases and a shift toward volume led growth.
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Speaker 3: For more pollen guest host Normal and I spoke with
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Speaker 3: deb Acon, Bloomberg Intelligence luxury goods analysts.
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Speaker 4: We started out twenty twenty five with an expectation that
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Speaker 4: we'd move back to growth, and that certainly didn't materialize
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Speaker 4: through the first half of the year, but we seem
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Speaker 4: to be ending at around three to four percent growth
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Speaker 4: as we exit twenty twenty five. Now, the US has
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Speaker 4: been robust, Middle East doing very well, but particularly in
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Speaker 4: the first half the year, it was China which was
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Speaker 4: the drag. And what we've noticed is we end the year.
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Speaker 4: We've actually just heard on a fireside chat over the
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Speaker 4: last few days from Laurel where they're mentioning high end
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Speaker 4: beauty doing very well out of the US, but also
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Speaker 4: in China too, So they're adding to what we've heard
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Speaker 4: from the luxury companies, where we've seen two thirds of
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Speaker 4: luxury companies and most of the top ten switching to
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Speaker 4: growth in China in Q three from a low base
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Speaker 4: from negatives a year ago. But actually that we're calling
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Speaker 4: green shoots into the end of year.
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Speaker 5: How are these companies holding up as it releads to
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Speaker 5: tariff overhangs.
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Speaker 4: Yeah, so we did a lot of work around May
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Speaker 4: time and again through July and August with the different
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Speaker 4: tariff rates moving around, and what we've actually seen it
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Speaker 4: was less detrimental overall in our numbers. We probably think
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Speaker 4: that EPs won't be pulled as much as was expected
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Speaker 4: because there have been some cost savings and the biggest
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Speaker 4: companies and those that were where brands were really in favor,
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Speaker 4: have managed to pass on price, and generally because these
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Speaker 4: companies operate on high gross margin, the cost in the US,
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Speaker 4: they've moved around two to four percent on additional price
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Speaker 4: into the US as well as two three percent from
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Speaker 4: the beginning of the year, So some of those brands
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Speaker 4: have absorbed passing through six seven percent pricing to the
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Speaker 4: US consumer, and we think into twenty twenty six that
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Speaker 4: moves nearer to two to three percent overall, so it
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Speaker 4: should be less intimidating for the consumer overall twenty twenty six.
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Speaker 4: So it's one of our drivers for the year ahead.
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Speaker 2: Dev talk to us about the Chinese consumer. Are they
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Speaker 2: not traveling? So is that an impact for New York
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Speaker 2: and London and Paris and things like that.
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Speaker 4: We actually have a survey out of our Asia office
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Speaker 4: that we've just incorporated into a travel document which will
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Speaker 4: be producing. But this piece of work has already produced
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Speaker 4: and actually on October versus May. The China consumer is
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Speaker 4: looking to travel more into Europe to start with, So
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Speaker 4: that's the first big positive. I think part of that
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Speaker 4: is is just on the way the tariff situation has
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Speaker 4: gone maybe so that would be the first time that
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Speaker 4: we're looking for them to come back so versus three
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Speaker 4: months ago. They're looking to traveling outside of Asia. But
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Speaker 4: overall what we call the China cohort that's actually really
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Speaker 4: operateing more avidly across the Asia region. We're not seeing
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Speaker 4: so much travel from Chinese into Japan, and of course
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Speaker 4: we know that there are there's some political commentary there
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Speaker 4: as well, so we wouldn't expect that to pick up
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Speaker 4: next year. But we are seeing Korea, Singapore, Australia and
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Speaker 4: others being positive and the first move to Europe should
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Speaker 4: hopefully indicate that towards the end of the year and
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Speaker 4: as tariffs settle more in twenty twenty six, that we
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Speaker 4: see some of that return to the US as well.
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Speaker 5: And sticking with China, how are we thinking about supply
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Speaker 5: chain operations as it releads to a lot of these
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Speaker 5: luxury firms, especially stemming from China.
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Speaker 4: Yeah, so if we think about maybe if we if
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Speaker 4: we look at it from some of the aspirational or
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Speaker 4: entry level luxury companies, then they will have some production
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Speaker 4: moving around the Asia region. But if we think about
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Speaker 4: the heritage traditional higher end luxury companies, then most of
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Speaker 4: their production is France, Italy, some Portugal, some parts of
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Speaker 4: southern Spain. Not so much going on in the Asia region,
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Speaker 4: and so they've been able to manage on the twenty
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Speaker 4: percent tariff from made in Europe over to the US
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Speaker 4: more so than some of the peer group. For example,
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Speaker 4: one of our entry level that we call branded affordable
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Speaker 4: jewelry Pandora producers out of Thailand, it's really suffered in
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Speaker 4: terms of share price this year versus some of the
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Speaker 4: Asian retail jewelers who've done very very well on the
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Speaker 4: price of gold.
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Speaker 2: So you got to explain this whole handbag thing to me,
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Speaker 2: dev I was in Italy in September towards some place
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Speaker 2: factors and artisan shops where they make these handbags and
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Speaker 2: they sell them for tens of thousands of dollars in euros?
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Speaker 2: What is going on there? Who buys that?
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Speaker 6: Yeah?
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Speaker 4: It has I always say, if you bought a Ermez,
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Speaker 4: you have a just as good or a better correlation
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Speaker 4: than if you'd have held gold. So I think that
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Speaker 4: you know, these bags, particularly for sought after material, the
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Speaker 4: craftsmanship and the fact that they have continued value, are
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Speaker 4: seen as investment pieces, and so we have the middle ground.
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Speaker 4: You know, if we look over the last year and
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Speaker 4: one of the things that we think for twenty twenty
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Speaker 4: six bags from Tapestry, from Coach, Ralph Lauren, others as
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Speaker 4: well as ready to wear have done very very well,
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Speaker 4: resonated with a consumer who's been a little bit more
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Speaker 4: skeptical on the consumer sentiment side and maybe shopped around
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Speaker 4: one thousand dollars or so. But at the very high
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Speaker 4: end there hasn't been much of a move. So we've
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Speaker 4: seen Mmes, Brunello, Kuche you others doing very very well
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Speaker 4: at that high end.
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Speaker 2: All right, thanks to Debacon Bloomberg Intelligence luxury goods analyst.
7:06
Speaker 2: We move next to a conversation with Jonathan Goldstein, co
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Speaker 2: founder and CEO of Kine International. It's an alternative asset
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Speaker 2: manager specializing in real estate investment solutions.
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Speaker 3: Jonathan's real estate and experiential investments have helped him morph
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Speaker 3: into sports related investments. In twenty twenty two, he also
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Speaker 3: became director and co owner of Chelsea Football Club, a
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Speaker 3: prominent soccer club in the English Premier League.
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Speaker 2: He shares details about his new club and what it
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Speaker 2: means to be part of a growing ownership group.
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Speaker 6: While I'm on the board of Chelsea and obviously the
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Speaker 6: buyout was led by my partner Todd Bowley and in
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Speaker 6: partnership with clear Lake. Back in twenty twenty two, teams
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Speaker 6: doing well, obviously huge success in the summer in New York,
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Speaker 6: winning the Club World Club Championship, which was a proud
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Speaker 6: moment for the fans. The women's team don't extraordinarily well,
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Speaker 6: winning the Women's Premier League for multi times in the
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Speaker 6: a row last summer. So you know, we're very proud
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Speaker 6: of the development since we've been involved in twenty twenty two.
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Speaker 6: We think there's more to come. We're very excited.
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Speaker 2: So the valuations on some of these franchises, whether it's
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Speaker 2: huge franchises like in the English Premier League or the
8:09
Speaker 2: National Football League here in US, just beyond the realm
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Speaker 2: of arguably even one hundred millionaires. These are billionaires, if
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Speaker 2: not private equity corporate money. So that leads some people
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Speaker 2: to say, Hey, I'm going to go to some of
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Speaker 2: these smaller sports where I can maybe get some better value.
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Speaker 2: How about cricket Trent Rockets. What's the play there? And
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Speaker 2: I don't know that's all I got from cricket.
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Speaker 6: First of all, let me explain that the way that
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Speaker 6: the one hundred competition works that we've invested in and
8:37
Speaker 6: try and put in an American language. Please, Let's assume
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Speaker 6: you have a baseball game, YEP, where you have one
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Speaker 6: hundred pitches per side, and the objective is to score
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Speaker 6: as many runs of those one hundred pitches as you can.
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Speaker 6: It's short form nature of the game two to two
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Speaker 6: and a half hours, exciting every pitch is important and
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Speaker 6: this is what the English Cricket Board created five years
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Speaker 6: ago in London in the UK with one hundred with
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Speaker 6: eight franchises around the country. Now it modeled itself on
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Speaker 6: the Indian Premier League, which obviously has been a phenomenal
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Speaker 6: product for the Indian population and globally for those who
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Speaker 6: like cricket. It has the second most valuable broadcast rights
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Speaker 6: a game in the world, behind the NFL on a
9:23
Speaker 6: per game basis. There are larger broadcast contracts, but not
9:27
Speaker 6: on a per game basis. So we have watched this
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Speaker 6: competition in the UK and we thought there was a
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Speaker 6: significant opportunity for us to get involved add value, and
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Speaker 6: we watched other people get involved obviously, and there's you know,
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Speaker 6: of the eight teams, four of them are owned directly
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Speaker 6: by Indian Premier League teams. One of them is owned
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Speaker 6: by a group of what they call themselves the tech
9:47
Speaker 6: Titans on the West coast of America, you know, the
9:50
Speaker 6: Microsoft CEO by way of example. And then so you know,
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Speaker 6: a lot of you know, Indian heritage love cricket, and
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Speaker 6: so we thought, you know, here it's a significant opportunity
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Speaker 6: to create the baby product to the IPL and over
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Speaker 6: five to ten years grow that. It's a great window
10:07
Speaker 6: of the summer in the UK. Obviously, you have to,
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Speaker 6: just like in America, a good external climate to play
10:13
Speaker 6: cricket because you want to outdoors. You can't play in
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Speaker 6: the rain, just like baseball. So it's a great time
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Speaker 6: mid July to mid August where there's a window for
10:22
Speaker 6: an opportunity to build huge product and broadcast and spectator.
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Speaker 6: And I think what's really important is that you're building
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Speaker 6: it in a country which has an undercurrent of love
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Speaker 6: for the sport.
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Speaker 2: So therefore you for a good base thing for me
10:36
Speaker 2: to go see. I'm not looking out to see a
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Speaker 2: cricket match.
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Speaker 6: Well right, professional, I'm going to invite you next summer.
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Speaker 6: I think what we're doing here and what playing back
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Speaker 6: to your initial question, we've watched the valuations of the
10:48
Speaker 6: NFL teams of the you know, the baseball teams. I
10:51
Speaker 6: mean Todd obviously led the way with the Dodgers, you know,
10:55
Speaker 6: over ten years ago at just around two billion dollars.
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Speaker 6: And we've seen what trades are happening today. You know,
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Speaker 6: we saw, you know, the valuation has been put on
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Speaker 6: the NFL teams recently, and even the MLS is training
11:06
Speaker 6: at very high levels. So you know, you try and
11:08
Speaker 6: see a situation where you think you can add value
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Speaker 6: and grow a franchise and grow a Business.
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Speaker 3: Jonathan, Do you see a future for cricket in the US.
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Speaker 6: Well, I think there's a future for most sports in
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Speaker 6: most places. It depends upon the depth of demand and
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Speaker 6: the depth of local participation. I don't think you can
11:24
Speaker 6: just pick up a sport and put it in each
11:26
Speaker 6: country unless there is an underlying desire. But in my view,
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Speaker 6: there's a much greater opportunity in the UK because of
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Speaker 6: the inherent nature the love of cricket that people grew
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Speaker 6: up with. And I think there's so much competition in
11:40
Speaker 6: the US for again, no basketball and baseball and football
11:44
Speaker 6: and all the major sports. I think the MLS has
11:46
Speaker 6: made a breakthrough, but it hasn't really gone up to
11:49
Speaker 6: the top table. And I think if you look at
11:51
Speaker 6: how many years that's been at it, I think cricket
11:53
Speaker 6: will find itself even harder to get to that top
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Speaker 6: table in the US.
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Speaker 2: Go to any of the parks in Yes, Queens Brooklyn.
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Speaker 3: Across the street from my house.
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Speaker 2: World class cricket dudes out there.
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Speaker 6: Yeah.
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Speaker 3: Yeah, they're playing every Sunday and every Saturday.
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Speaker 2: It's crazy everyone.
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Speaker 6: Well, let's say, you know, I think Americans have had
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Speaker 6: a view of cricket overall, which is wrong, right. It's
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Speaker 6: an amazing sport. Even the five day variety is probably
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Speaker 6: the most the most enthralling sport you could ever watch. Yeah,
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Speaker 6: and I think that, you know, I think that cricket
12:23
Speaker 6: is a growth area and that's why we put some
12:25
Speaker 6: money behind it.
12:26
Speaker 2: Our thanks to Jonathan Goldtein, co founder and CEO Caine International.
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Speaker 3: Coming up, Railroad's on the move, telecoms in orbit, and
12:32
Speaker 3: gaming in the cloud. As we look ahead to twenty
12:35
Speaker 3: twenty six, you're.
12:36
Speaker 2: Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth
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Speaker 2: research and data on two thousand companies and one hundred
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Speaker 2: and thirty industries.
12:42
Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal.
12:45
Speaker 3: I'm Scarlet Foo and.
12:46
Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
12:52
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
12:57
Speaker 1: on Bloomberg Radio.
13:00
Speaker 2: Start on the rails. Heading into twenty twenty six, North
13:02
Speaker 2: American railroad companies are betting on precision technology and cost
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Speaker 2: control as a navigate steadier demand.
13:08
Speaker 3: According to the latest Bloomberg Intelligence research, North American railroads
13:11
Speaker 3: earnings growth look poised to pick up next year, but
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Speaker 3: may fall short of double digits because of President Trump's tariffs.
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Speaker 2: For more guest hosts, Christine Aquino and I are joined
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Speaker 2: by Lee Klascow, Bloomberg Intelligence Senior Transport, Logistics and Chipping analysts.
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Speaker 7: We are thinking that next year is going to be
13:26
Speaker 7: a better year, but it's not going to be a
13:28
Speaker 7: great year. So earnings for the rails broadly speaking increased
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Speaker 7: by mid single digits. We expect that to accelerate to
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Speaker 7: high single digits. I think investors would really like to
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Speaker 7: see it get it into the double digits and even
13:40
Speaker 7: mid teens, but I think we might be a ways
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Speaker 7: out for that for a while. And that's really being
13:45
Speaker 7: driven on the demand side. We're really expecting tepid demand
13:48
Speaker 7: across the board at low single digit growth. You know,
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Speaker 7: some rails might do slightly better than others, like CSX,
13:54
Speaker 7: which has easier comparisons versus this year in Canadian Pacific,
13:59
Speaker 7: which is has a lot of synergy opportunities following its
14:03
Speaker 7: merger with Kansas City a couple of years ago, and
14:07
Speaker 7: they're still working through some new business opportunities following that merger.
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Speaker 7: So those two rails will probably outperform when it comes
14:14
Speaker 7: to volume growth and you could see flat growth from
14:17
Speaker 7: a rail like Norfolk Southern, which is dealing with possibly
14:21
Speaker 7: some loss share on the intermodal side and some tougher
14:25
Speaker 7: comparisons when it comes to export coal.
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Speaker 8: Yeah, well, very interestingly, of course, still a challenging outlook.
14:30
Speaker 8: It seemed like for the rail sector next year. How
14:34
Speaker 8: do tarriffs play into that outlook because we still don't
14:38
Speaker 8: have a lot of clarity on whether terrors are going
14:40
Speaker 8: to stay, But if they do, how could that disrupt
14:42
Speaker 8: the outlook for rail in twenty twenty six.
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Speaker 7: Yeah, So it's impacting rails differently. It's impacting the Canadian rails,
14:49
Speaker 7: Canadian National and Pacific, Kansas City or Kansas City Southern,
14:54
Speaker 7: they're impacting them, you know, kind of on if you
14:57
Speaker 7: think about it, forest products or metals or photos that's
15:01
Speaker 7: being negatively impacted. And if you look at Union Pacific,
15:04
Speaker 7: you know, if you have inconsistency with imports coming into
15:08
Speaker 7: southern California.
15:10
Speaker 2: That's impacting them.
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Speaker 7: So you know, it's really creating a level of uncertainty
15:15
Speaker 7: among shippers and that's creating, you know what I would say,
15:20
Speaker 7: not allowing the rails to operate as fluid as they
15:23
Speaker 7: possibly can. Because of that stop and go demand.
15:26
Speaker 2: Well, one of the big topics in the railroad industry,
15:29
Speaker 2: and I think it'll be most of the year, is
15:32
Speaker 2: the proposed Union Pacific Norfolk Southern m and A transaction
15:36
Speaker 2: here creating the first east west coast to coast railroad
15:40
Speaker 2: in the United States. Is this even going to get approved?
15:43
Speaker 7: Do you think we're we're kind of cautious on that,
15:47
Speaker 7: you know, I think we have like a forty percent
15:50
Speaker 7: probability that the deal gets done and we're well below consensus.
15:53
Speaker 7: We admit we might be a little naive thinking that,
15:56
Speaker 7: you know, the STB will remain you know, neutral when
16:00
Speaker 7: they take a look at this deal because the parties
16:03
Speaker 7: have to prove that it's in the public interest and
16:05
Speaker 7: it's going to enhance competition. Some could argue that some
16:08
Speaker 7: of that enhanced competition is going on right now because
16:11
Speaker 7: you've seen Burlington Northern, which is a competitor in the West,
16:16
Speaker 7: teaming up with CSX to provide coast to coast services
16:19
Speaker 7: not through an acquisition but through more of a collaborative effort.
16:23
Speaker 7: And you are seeing CSX winning some share from Norfolk
16:27
Speaker 7: Southern based on that.
16:29
Speaker 8: Yeah, Well, if that does not clear the regulators. Lee,
16:33
Speaker 8: what do you think that will say about the future
16:36
Speaker 8: of potential consolidation or strategic partnerships across the rail industry.
16:40
Speaker 8: Is it kind of do you think people are going
16:42
Speaker 8: to see as a one off sort of situation or
16:44
Speaker 8: is it kind of a harbinger of challenges to come
16:46
Speaker 8: when it comes to M and A in this space.
16:49
Speaker 7: Well, the SDB raised the bar for large Class one
16:53
Speaker 7: railroads to merge back in two thousand and one, and
16:56
Speaker 7: that was really driven on some service issues from a
17:00
Speaker 7: mergers and so you know that's why the bar has
17:03
Speaker 7: been set so high. All the other railroads obviously they're
17:07
Speaker 7: talking in their book, but you know, they think that
17:09
Speaker 7: they can create a better network through collaboration. You know,
17:13
Speaker 7: we think that it can happen through a merger or
17:17
Speaker 7: through collaboration. But you know, like I mentioned earlier, Union
17:20
Speaker 7: Pacific and Norfolk Southern still have to you know, clear
17:23
Speaker 7: that high hurdle that it enhances competition and it's also
17:28
Speaker 7: in the public interest, which is again it's it's really
17:30
Speaker 7: tough to prove. Also, you know, we expect that you know,
17:35
Speaker 7: we probably get an answer about whether or not the
17:38
Speaker 7: STB or the Service Transportation Board will approve this deal
17:41
Speaker 7: in early twenty twenty seven, so we'll be talking about
17:44
Speaker 7: it all year, and I hope to talk to you
17:46
Speaker 7: guys about it all year.
17:47
Speaker 2: Our thanks to lead Clasical Bloomberg Intelligence, senior Transport, Logistics
17:51
Speaker 2: and Shipping analyst, we move next to the telecom and
17:53
Speaker 2: satellite space. Bloomberg Intelligence recently put out as out Look
17:56
Speaker 2: for US telecoms and satellites in twenty twenty six.
18:00
Speaker 3: To their research, slowing wireless service revenue gains and mounting
18:03
Speaker 3: cable competition are prompting a deeper push into broadband for
18:06
Speaker 3: growth as US telecoms enter next year.
18:08
Speaker 2: For more guestos, Alex Semonova and I were joined by
18:11
Speaker 2: John Butler, Bloomberg Intelligence senior telecom analysts.
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Speaker 9: So I think the big thing to keep in mind here, Paul,
18:16
Speaker 9: is as we roll into twenty twenty six, I think
18:20
Speaker 9: we're going to see price promotion take a modest step up.
18:24
Speaker 9: The bullets are really flying in wireless right now. I
18:28
Speaker 9: think part of it is AT and TM Verizon both
18:31
Speaker 9: have new CEOs. Both CEOs are going to want to
18:35
Speaker 9: make their mark. I think the one to watch is
18:39
Speaker 9: Dan Shulman at Verizon He is very focused on volume.
18:45
Speaker 9: He wants to get Verizon back to subscriber growth, and
18:49
Speaker 9: I think the only way to do it is going
18:51
Speaker 9: to be by promoting a little bit more aggressively than
18:54
Speaker 9: they have in the past.
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Speaker 10: John, Where do you see the strongest incremental demanding from.
19:00
Speaker 10: Is it going to be mobile data? Is it going
19:02
Speaker 10: to be broadband?
19:04
Speaker 9: Two areas, alex One, as you touched on, is broadband.
19:08
Speaker 9: That's a real growth factor for the telecoms. If you
19:11
Speaker 9: look at fixed wireless access, which is delivering broadband over
19:16
Speaker 9: a wireless link into the home, that has proven to
19:19
Speaker 9: be exceptionally popular with people. So I think the all
19:23
Speaker 9: three telcodes are going to lean into broadband in order
19:27
Speaker 9: to supplement the slowdown in wireless growth. But the one
19:32
Speaker 9: area I'm watching as we move into next year is satellite.
19:36
Speaker 9: Starlink is partnered with T Mobile. The two of them
19:40
Speaker 9: are already offering limited texting service on a nationwide basis.
19:46
Speaker 9: It's sort of early stages. They are early innings, if
19:50
Speaker 9: you will, for them. Verizon, an AT and T are
19:54
Speaker 9: partnered with AST Space Mobile, which is in the process
19:58
Speaker 9: of launching its constellation. Now they actually have more better
20:03
Speaker 9: satellites than starlink, and so the space race is on.
20:08
Speaker 9: As I like to say, it's going to be really
20:10
Speaker 9: interesting to see once for Verizon and AT and T
20:14
Speaker 9: are able to launch services early next year, how that
20:18
Speaker 9: market segment unfolds.
20:20
Speaker 2: So the wireless operators the verizons of the world, AT
20:22
Speaker 2: and TS, John, they they're partnering with some of these
20:26
Speaker 2: space satellite services.
20:28
Speaker 9: Yeah, I mean, I think the way to think about it,
20:31
Speaker 9: Paul is it's almost like cell sites in space at
20:35
Speaker 9: this point yep. So the major carriers have partnered with
20:38
Speaker 9: starlink and AST to provide that infrastructure and the transmission
20:43
Speaker 9: capability up in space to be able to provide coverage
20:48
Speaker 9: outside the range of terrestrial networks now, so essentially that
20:52
Speaker 9: concept of coverage everywhere is going to become a reality
20:57
Speaker 9: as we move through next year.
21:00
Speaker 10: We will say it was getting a new iPhone in
21:01
Speaker 10: T Mobile. I'm still grandfathered into my father's plan, very
21:05
Speaker 10: Lucky's still paying for my cell phone.
21:06
Speaker 2: But they immediately got on comment by the way, to
21:09
Speaker 2: get Wi Fi.
21:10
Speaker 10: With them with T Mobile, So it's really interesting and
21:13
Speaker 10: a new offering from them.
21:14
Speaker 2: As you mentioned, is there a six G out there,
21:17
Speaker 2: because we I think I've grown up and we've had
21:18
Speaker 2: three G, four G, five G. Is there a six
21:21
Speaker 2: G out there?
21:22
Speaker 1: Not yet.
21:23
Speaker 9: I think six G is going to move onto the
21:25
Speaker 9: horizon probably as we move through next year. It's a
21:29
Speaker 9: development process by the industry, and so that standard, if
21:34
Speaker 9: you will, is getting developed now by industry committees. It
21:38
Speaker 9: will then move into tests probably in twenty twenty eight
21:42
Speaker 9: and become a reality for us by twenty thirty. Right now,
21:47
Speaker 9: we're mid cycle with five GS. So if you think
21:50
Speaker 9: back to when four G was originally launched, it was
21:54
Speaker 9: much lower speed than it is today, So that standard
21:58
Speaker 9: those generations of mobile evolve over what are typically ten
22:02
Speaker 9: year cycles. So we're mid cycle with five G. Expect
22:07
Speaker 9: better speeds and better performance there as we move through
22:10
Speaker 9: the next five years, and then ultimately six G will appear,
22:14
Speaker 9: probably again in the twenty thirty timeframe.
22:17
Speaker 2: Our thanks to John Butler, Bloomberg Intelligence senior telecom analyst.
22:20
Speaker 2: Now we move to the cloud gaming space. Bloomberg Intelligence
22:23
Speaker 2: has recently put out a deep dive in cloud streamed
22:26
Speaker 2: gaming and specifically how AI could accelerate game development with
22:30
Speaker 2: a shift toward cloud based games.
22:32
Speaker 3: This development could in theory make physical gaming consoles obsolete
22:36
Speaker 3: for more. We talked to Nathan Nadu, he is Bloomberg
22:38
Speaker 3: Intelligence technology research analyst.
22:41
Speaker 11: Consoles will decline gradually and that's what I mean, and
22:44
Speaker 11: no kind of remaining over the long term as a
22:46
Speaker 11: NICHS device for loyal fans, the really hardcore gamers. As
22:51
Speaker 11: advancement in cloud infrastructure and we see what's happening with
22:54
Speaker 11: data centers as well as a wider spread of mobile
22:57
Speaker 11: gaming playing games from mobile device is whether smartphones or tablets.
23:02
Speaker 11: As that game wider spread and people become less interested,
23:06
Speaker 11: you know, in playing games at an unportable gaming hardware
23:10
Speaker 11: that's stuck at home or living room. If they can
23:13
Speaker 11: do so and have the same experience on momor device,
23:16
Speaker 11: why not right?
23:18
Speaker 2: So where are we in kind of that evolution in
23:21
Speaker 2: terms of really putting more and more of the content
23:25
Speaker 2: of the technology, of the capabilities in the cloud. How
23:28
Speaker 2: is that changing the gaming experience the gaming business?
23:31
Speaker 11: Yes? So the key pain point to cloud gaming is
23:34
Speaker 11: network latency because that literally depends on the distance between
23:38
Speaker 11: the user's hardware, whether a mobile device or console, to
23:41
Speaker 11: the nearest cell tower. And we know that five G
23:44
Speaker 11: network coverage are improving not just in emerging markets, but
23:47
Speaker 11: also becoming better in even develop markets including China and
23:51
Speaker 11: the US and so as that infrastructure and also cloud
23:55
Speaker 11: improved because the proximity to data centers also is factor
24:00
Speaker 11: in determining the experience of cloud. So far, you know,
24:04
Speaker 11: in emerging market there is a pain point, but we're
24:07
Speaker 11: seeing really huge uptick in coverage footprint, whether five G
24:12
Speaker 11: or four glte in markets like India and Middle East
24:16
Speaker 11: and Latin America. So that just support our conclusion that
24:20
Speaker 11: you know, in the next ten years, the experience that
24:23
Speaker 11: pain point would become better. And also let's not forget
24:26
Speaker 11: that you know, mobile phones, mobile screens capture you know,
24:29
Speaker 11: a lot of our attention economy. Actually, there's a study
24:33
Speaker 11: according to Harmony Harmony Healthcare it that it captures more
24:36
Speaker 11: than five hours of our time every every day, at
24:40
Speaker 11: about twenty percent of those times actually go to gaming
24:45
Speaker 11: among Generation Alpha and Generation Z and the other bulk
24:49
Speaker 11: of the gamers. And also these gamers don't really care
24:53
Speaker 11: about playing games at home anymore if they can play
24:56
Speaker 11: on mobile because what they care about is access and
24:58
Speaker 11: also be able to do things on their mobile devices.
25:02
Speaker 11: So I feel like with this generation coming up and
25:07
Speaker 11: entering into the workforce, and they're the one who would
25:10
Speaker 11: see spending power increasing. And I feel like there's a
25:14
Speaker 11: lot less inclination to actually play games on a console.
25:17
Speaker 11: If down ten years downline, you can have the same
25:19
Speaker 11: experience playing games on a mobile device.
25:23
Speaker 2: Thanks to Nathan Nadu, Bloomberg Intelligence technology research.
25:26
Speaker 3: Analyst, coming up from factory floors to farm fields, how
25:29
Speaker 3: US machinery makers are positioned for twenty twenty six.
25:32
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio for writing
25:35
Speaker 2: in depth research and data on two thousand companies and
25:37
Speaker 2: one hundred and thirty industries.
25:38
Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal.
25:42
Speaker 3: I'm Scarlett Foo and.
25:43
Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
25:51
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
25:56
Speaker 1: on Bloomberg Radio.
25:58
Speaker 2: Let's turn out to US machinery heading into twenty twenty six.
26:01
Speaker 2: The outlook is defined by softer demand but steady investment,
26:04
Speaker 2: and manufacturers focus on automation, replacement cycles and cost discipline.
26:08
Speaker 3: For more on this, Paul caught up with Chrispherchilino, Bloomberg
26:11
Speaker 3: Intelligence Senior US machinery analyst.
26:14
Speaker 12: We believe that the US machinery earnings are likely approaching
26:18
Speaker 12: a inflection point in twenty twenty six, really after a
26:22
Speaker 12: multi year downturn. You know, despite lingering tariff headwinds, the
26:27
Speaker 12: prospect of lower interest rates, policy and regulatory clarity, normalizing inventories,
26:33
Speaker 12: and better pricing have really provided a favorable setup for
26:37
Speaker 12: most machinery producers heading into twenty six. I would say
26:41
Speaker 12: the outlooks do vary a little bit by end market.
26:45
Speaker 12: You know, we're most constructive on the outlook for construction
26:48
Speaker 12: equipment next year, particularly as non residential construction markets approach
26:52
Speaker 12: to trough. You also have favorable secular trends around power generation,
26:58
Speaker 12: infrastructure and mega projects as well as some of these
27:03
Speaker 12: reshoring investments. So we have really good visibility in terms
27:06
Speaker 12: of twenty six and really even beyond. On the flip
27:09
Speaker 12: side of that, we're a little more cautious on the
27:11
Speaker 12: ad equipment outlook, and then I throw, you know, commercial
27:14
Speaker 12: vehicles somewhere in between.
27:15
Speaker 2: There equipment companies. I think about Caterpillar, for example, and
27:19
Speaker 2: that stocks up fifty four year to date. So has
27:23
Speaker 2: the market already discounted the cyclical up turner ors or
27:25
Speaker 2: more to go.
27:26
Speaker 12: Yeah, I think there's a lot of runway here. You know,
27:29
Speaker 12: there's been a lot of optimism around their power gen
27:32
Speaker 12: and exposure to the data center market. But I think
27:36
Speaker 12: we're still very early innings in this story playing out.
27:39
Speaker 12: They're going to double their large engine capacity here through
27:42
Speaker 12: the end of the decade. Gas turbines are going to
27:45
Speaker 12: be up two and a half times. You're just beginning
27:48
Speaker 12: to see some of these products come to the marketplace,
27:51
Speaker 12: and really there's just insatiable demand for power generation, and
27:55
Speaker 12: I would say Caterpillar and Cummings are somewhat uniquely positioned
27:59
Speaker 12: within the machinery space to kind of capitalize on these
28:02
Speaker 12: these longer term secular stories.
28:04
Speaker 2: Yeah, that is a long term secular story power generation.
28:07
Speaker 2: So did do they disclose backlog information or anything like
28:11
Speaker 2: that to get a sense of kind of how big
28:13
Speaker 2: this business could be for them?
28:15
Speaker 12: Yeah, So Caterpillar's backlog for the enterprise is at a
28:19
Speaker 12: record level and it just continues to, you know, set
28:22
Speaker 12: new records with each passing quarter. In terms of their
28:24
Speaker 12: actual power generation business. Uh, No, they keep that pretty
28:29
Speaker 12: close to the vest, but it does expend, It does
28:32
Speaker 12: extend multiple years and the fact that they're making you know,
28:35
Speaker 12: essentially more than doubling their large engine capacity through the
28:38
Speaker 12: end of the decade. Just I think uh lends support
28:41
Speaker 12: to they have very good visibility for several years out
28:46
Speaker 12: and same thing I would allude to that as Cummings
28:50
Speaker 12: as well. You know, they have very good backlog visibility
28:52
Speaker 12: in terms of their power generation business. And then you
28:55
Speaker 12: throw on, you know, the cyclical recovery that we should
28:57
Speaker 12: see in these businesses. It's a pretty favorable set up,
29:00
Speaker 12: not only for twenty six but beyond all.
29:02
Speaker 2: Right, you mentioned the other part of the business are
29:05
Speaker 2: a different part of the business, one that focuses on
29:07
Speaker 2: the agricultural sector of the economy. We know the farmers
29:10
Speaker 2: in a really tough spot these days, and when they
29:13
Speaker 2: face financial difficulties, they're not buying deer tractors and things
29:17
Speaker 2: like that. So what's the outlook there over twenty six Yeah, right.
29:21
Speaker 12: Now, we anticipate that the large ag market here in
29:25
Speaker 12: North America will be down another ten to fifteen percent
29:28
Speaker 12: in twenty twenty six, So this is going to mark
29:31
Speaker 12: the third year of a downturn. And really, to put
29:33
Speaker 12: things into perspective, assuming we're down in other you know,
29:36
Speaker 12: double digits in twenty six, we're going to be volumes
29:39
Speaker 12: are going to be at the lowest level in more
29:41
Speaker 12: than four decades as long as we've been tracking the industry.
29:44
Speaker 12: So I do think there's pretty high degree of confidence
29:48
Speaker 12: that this will mark the trough of the cycle. And
29:51
Speaker 12: we actually think that downside risk is probably limited here
29:55
Speaker 12: and relative to a lot of the other sectors that
29:57
Speaker 12: we cover. The problem is, you know, farm fundamental still
30:00
Speaker 12: remain quite weak, crop prices are still low, while the
30:04
Speaker 12: government still continues to hand out additional aid payments. Farmers
30:09
Speaker 12: historically don't use this to go out and spend on
30:11
Speaker 12: new machinery. But we think really the bigger overhang here
30:14
Speaker 12: is still the lingering export market uncertainty. You know, we
30:17
Speaker 12: did have a US China trade agreement. I think farmers
30:20
Speaker 12: are really just going to take a wait and see approach,
30:23
Speaker 12: and until we get tangible progress on you know, China
30:27
Speaker 12: executing on some of these purchase orders and commitments, I
30:31
Speaker 12: think farmers are just going to be hesitant to go
30:33
Speaker 12: out and spend on equipment. When we do see that
30:35
Speaker 12: come to fruition, hopefully then you'll start to see a
30:38
Speaker 12: rebound and crop prices, and then maybe we could become
30:41
Speaker 12: a little bit more constructive on the equipment outlook there.
30:43
Speaker 2: So just to put a bow on that, Chris weig
30:45
Speaker 2: about thirty seconds off, what is the export market for
30:48
Speaker 2: the US farmer generally on average? And what is it today?
30:52
Speaker 12: Yeah, so we export the vast majority of particularly our
30:56
Speaker 12: row crops soybeans. China is still the largest buyer of
31:00
Speaker 12: our beans. We do send a lot of corn to
31:03
Speaker 12: Mexico in Japan as well, but put those big row
31:08
Speaker 12: crops corn, soy wheat. That's what really drives farmer profitability.
31:12
Speaker 12: It's more than half of US crop cash receipts and
31:14
Speaker 12: we need to start to see some kind of a
31:16
Speaker 12: rebound there before. I think we've become a little bit
31:18
Speaker 12: more positive on the outlook.
31:20
Speaker 2: Thanks to Chris Cheerle, you know, Bloomberg Intelligence senior US
31:22
Speaker 2: machinery analyst. We shift gears now to the creative side
31:25
Speaker 2: of financial storytelling.
31:27
Speaker 3: Wall Street has long been a backdrop for films exploring ambition,
31:31
Speaker 3: excess and high stakes drama, from The Wolf of Wall
31:33
Speaker 3: Street to Margin Call and The Big Short.
31:35
Speaker 2: Now you can add another to your list. It's called
31:38
Speaker 2: bull Run, a film based on the memoir entitled Discussion
31:41
Speaker 2: Materials Tales of a Rookie Wall Street Investment Banker. For more,
31:45
Speaker 2: we caught up the film's writer and producer, Bill Keenan.
31:48
Speaker 13: So like all those movies classics, right, they, bull Run
31:53
Speaker 13: has an outsider as a protagonist, So we kind of
31:56
Speaker 13: have that journey of someone entering this world trying to
31:58
Speaker 13: figure out what to do and where they fit in.
32:01
Speaker 13: I think the difference is a lot of those films
32:03
Speaker 13: follow that story of kind of there's this crazy excess,
32:07
Speaker 13: there's ultimately this corruption that happens and then redemption, and
32:11
Speaker 13: the protagonist in bull Run really retains this outsider's perspective,
32:15
Speaker 13: which is the way I experienced it. I kind of
32:17
Speaker 13: saw life through the eyes of a storyteller and tried
32:20
Speaker 13: to maintain this distance, and I think we tried to
32:22
Speaker 13: do that in this film. So it's not so much
32:24
Speaker 13: about the corruption as it is about just observing the
32:27
Speaker 13: absurdity that goes on in this world.
32:30
Speaker 2: So you were on Wall Street. Tell us what you
32:33
Speaker 2: did in Wall Street and how that might have influenced
32:34
Speaker 2: kind of this product.
32:35
Speaker 13: Yeah, what I did, well, my title I was an
32:38
Speaker 13: investment banking associate in the Industrials group at Deutsche Bank.
32:42
Speaker 13: We parted ways after about two years. I think it
32:45
Speaker 13: was mutual. It wasn't for me, and it wasn't They
32:48
Speaker 13: weren't sad to see me go, but it was I mean,
32:51
Speaker 13: the beauty of Wall Street is that again as a storyteller,
32:54
Speaker 13: it's such a combustible environment. So everything is so urgent
32:58
Speaker 13: and is life and death. But then it's like this
33:00
Speaker 13: is a specialty lubricin's deal, and like it's not. It's
33:04
Speaker 13: okay if it doesn't go through, but it's fun to
33:08
Speaker 13: be a part of it. I knew the second that
33:09
Speaker 13: I started this would be so ripe with anecdotes and
33:13
Speaker 13: characters that it was you know, I need to stay
33:15
Speaker 13: long enough that I could get enough material to write
33:17
Speaker 13: about it.
33:17
Speaker 3: I kind of think of your book Discussion Materials as
33:20
Speaker 3: a twenty twenty version of Liars Poker, except instead of
33:22
Speaker 3: bond Trader, as you're writing about investment bankers. So when
33:26
Speaker 3: you were there, I mean, you kind of sounds like
33:28
Speaker 3: you decided early on that you're going to take notes
33:30
Speaker 3: and observe everything. What were you doing in meetings? Were
33:33
Speaker 3: you taking notes on what people were saying, or were
33:35
Speaker 3: you kind of engaging in you know, the lubricant steal.
33:38
Speaker 13: Yeah, I mean, I mean, I think you know like this.
33:41
Speaker 13: I was always commended at the beginning by like the
33:43
Speaker 13: staffers and the senior bankers because they saw me with
33:45
Speaker 13: the notepads and every day it was a new notepad.
33:47
Speaker 13: And of course they didn't necessarily know that I wasn't
33:50
Speaker 13: taking notes on the content as much as like who
33:52
Speaker 13: was doing what and what would lend itself to a story.
33:56
Speaker 13: But it was, you know, it felt like it was
34:01
Speaker 13: a lot longer than two years, but I got I
34:03
Speaker 13: got enough out out of those two years to you know.
34:07
Speaker 2: They pack a lot in two years because you're working
34:09
Speaker 2: around the clock.
34:10
Speaker 13: You're working, Yeah, And you know, I'd like to kind
34:13
Speaker 13: of the way that I try to capture what the
34:14
Speaker 13: experience was like. The first day that I showed up,
34:16
Speaker 13: I didn't even know where my desk was, and I'm
34:19
Speaker 13: kind of going around this maze of cubicles and I
34:21
Speaker 13: get called over to the staffer and he says, here's
34:24
Speaker 13: an address, and here's three names. And ultimately what I
34:27
Speaker 13: was tasked with doing that first day was taking around
34:29
Speaker 13: these three energy executives through midtown Manhattan. They start were
34:33
Speaker 13: starting a new venture and they were looking to raise
34:34
Speaker 13: like a couple hundred million dollars from these private equity firms.
34:38
Speaker 13: And so I said to the staffer, you know, we
34:40
Speaker 13: just met. You know, I don't know what's going on.
34:42
Speaker 13: And his response was definitely, don't tell that to these guys,
34:46
Speaker 13: like as far as they know, you're a full timer
34:48
Speaker 13: and you've been here for a long time. And so
34:50
Speaker 13: you know, being thrown in the deep end. Then ultimately
34:53
Speaker 13: meeting these guys and and feeling that responsibility, it was,
34:56
Speaker 13: you know, you feel accountable. Tuesday, I show up, I
34:59
Speaker 13: gets AFT on a fertilizer deal and I had two
35:02
Speaker 13: tasks that day. I do find my desk. I sit
35:04
Speaker 13: at my desk for twelve hours. And the first task
35:07
Speaker 13: is to chart the cow dung spot prices historically over time.
35:11
Speaker 13: And the second thing is the managing director in that
35:13
Speaker 13: sector he had recently undergone gastric bypass surgery. He lost
35:17
Speaker 13: about eighty pounds, and so I had to change the
35:21
Speaker 13: photo of him in the team pages of all the decks.
35:23
Speaker 13: And I'm thinking, Monday, Tuesday, what's Wednesday going to bring?
35:26
Speaker 13: But like this is this is like two, this is gold.
35:30
Speaker 3: It is gold. But you know, and this is why
35:33
Speaker 3: it's so great talking to you and the book is
35:34
Speaker 3: so fantastic. You also chronicle participating in these odd meetings
35:40
Speaker 3: with managing directors, updating sell spreadsheets at two in the morning,
35:43
Speaker 3: reformatting the font in pitch books. I think about all
35:46
Speaker 3: this and how open AI in twenty twenty five is
35:49
Speaker 3: hiring former investment bankers to train its models and presumably
35:53
Speaker 3: replace the need for to hire people like you to
35:56
Speaker 3: handle these mundane tasks. Is that a good thing.
36:01
Speaker 13: I think all these things are going to need oversight,
36:03
Speaker 13: like we know. But I mean, the reality is we
36:07
Speaker 13: were sort of outsourcing it, not to AI, but to
36:09
Speaker 13: all these other companies and other countries, and they did
36:13
Speaker 13: a lot of my work. To be honest, I kind
36:15
Speaker 13: of took credit for most of it and change the
36:17
Speaker 13: names and made sure all the everything appeared as though
36:19
Speaker 13: I had done the work. But anything that makes it
36:22
Speaker 13: more efficient and gets kind of people out of the
36:25
Speaker 13: way when they don't serve a purpose, that's additive. I
36:28
Speaker 13: think it is useful.
36:30
Speaker 2: Yeah, I've been telling Scarlett, you know, the first two
36:32
Speaker 2: or three years of my I was in investment banking
36:34
Speaker 2: associate as well. After business. Well, I felt like most
36:37
Speaker 2: of what I did can be I'm sorry to say,
36:40
Speaker 2: but I mean, though I need to be sitting at
36:42
Speaker 2: the printer at two o'clock in the morning on a Tuesday,
36:44
Speaker 2: I can't AI do this with me.
36:46
Speaker 13: But totally the fact is though to have that experience
36:50
Speaker 13: as a human to pay or use their huge value
36:52
Speaker 13: to that, and you hope that there's a way. I
36:54
Speaker 13: think the way humans are, they always find a way
36:57
Speaker 13: to go towards struggle.
37:00
Speaker 2: My kids are in the workforce now and the whole
37:02
Speaker 2: work from home versus I'm like, go to the office.
37:05
Speaker 2: All my memories are sitting at the printer and the
37:08
Speaker 2: guys I sat at the printer with at two o'clock
37:09
Speaker 2: in the morning on a Tuesday, and they're still my
37:11
Speaker 2: best friend, the guys that I can call up and
37:12
Speaker 2: they will I need anything.
37:14
Speaker 4: Boom.
37:15
Speaker 3: Yeah, that's how it goes with Band of Brothers. Really, So, Bill,
37:18
Speaker 3: when you adapted this into a film, what was that
37:20
Speaker 3: process like? Was that I mean, I'm sure you could
37:23
Speaker 3: write a book about that process too.
37:24
Speaker 2: Yeah, I mean.
37:27
Speaker 13: There were practical issues. We shot it during the pandemic,
37:29
Speaker 13: so this was an independent film shot in one location.
37:31
Speaker 13: So we're all over each other. We got the mass on.
37:33
Speaker 13: We had to shut down production in fact for a
37:35
Speaker 13: couple of days, so there was that. We got through it.
37:38
Speaker 13: As far as the story, you know, so much of
37:40
Speaker 13: my experience was me versus Excel, me versus PowerPoint me,
37:44
Speaker 13: and the phone with somebody telling me the numbers didn't tie.
37:46
Speaker 13: I just screwed this up. And so there's a lot
37:48
Speaker 13: of internal drama that's great for a book but does
37:51
Speaker 13: not lend itself to a visual medium. So the director
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Speaker 13: did a great job of really retaining the spirit of
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Speaker 13: the book and the humor and how I viewed that world,
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Speaker 13: but then putting it in a visually compelling, commercial sort
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Speaker 13: of feel.
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Speaker 2: Our thanks to Bill keenan writer and producer of the
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Speaker 2: film Bull Run. That's this week's edition of Bloomberg Intelligence
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Speaker 2: two thousand companies and one hundred and thirty industries.
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Speaker 3: And remember you can access Bloomberg Intelligence via b I
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Speaker 3: go on the terminal. I'm Scarlett Foo and.
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Speaker 2: I'm Paul Sweeney. Stay with us. Today's top stories and
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