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Tesla Shares Surge After Blowout Quarter · Bloomberg Intelligence

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  Speaker 2: Earlier today on Surveance, we had Dan Ives from What
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  Speaker 2: Bush Securities on doing a little victory lap on his
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  Speaker 2: bullish tesla call. The stocks up seventeen percent today, the
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  Speaker 2: most since March of twenty twenty one, on the back
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  Speaker 2: of some pretty darn good earnings numbers. Let's break it
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  Speaker 2: down to Craig Trudell. He's a Global autos editor for
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  Speaker 2: Bloomberg News. Joins us from Zoom from London on Zoom
• 0:54
  Speaker 2: on that technology there. Hey, Craig, what stood out to you?
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  Speaker 2: Why do you think the stock is up seventeen percent today?
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  Speaker 2: What did you see it out of earnings release?
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  Speaker 3: I mean it was really It's really quite a combination,
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  Speaker 3: because oftentimes it feels like it's not necessarily the case
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  Speaker 3: that you can count on both both earnings and the
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  Speaker 3: vision to be positive. In this case, they both both
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  Speaker 3: were working in Musk's favor. I think the earnings were
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  Speaker 3: much better than expected. I do think that those expectations
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  Speaker 3: came down quite a bit over the last year year
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  Speaker 3: and a half, but they sort of they did exceed
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  Speaker 3: expectations by pretty significant measures. And the profit margins in particular,
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  Speaker 3: or something that everybody keeps a very close eye on
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  Speaker 3: their automotive profit margins when you back out the credits
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  Speaker 3: that they sell to other automakers for regulatory purposes, those
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  Speaker 3: in particular, I feel like, are you know, just quarter
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  Speaker 3: in and quarter out what everybody looks at? That was
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  Speaker 3: a big beat. And then I think Musk was as
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  Speaker 3: self assured as I've ever heard. He's never won lacking
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  Speaker 3: in confidence. And for him to throw out, you know,
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  Speaker 3: twenty to thirty percent sales increase for next year, I
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  Speaker 3: think was very surprising to people. After you know, we're
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  Speaker 3: nine ten months into the year and they've delivered fewer
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  Speaker 3: vehicles in twenty twenty four than they did in twenty
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  Speaker 3: twenty three.
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  Speaker 4: Hey, Craig, So when I'm walking around New York City
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  Speaker 4: ever so often, every so often I will see, to
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  Speaker 4: my surprise, a cyber truck. What is the leaatest on that?
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  Speaker 4: What do they say in earnings? What can we expect there?
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  Speaker 3: Yeah, they said that it was gross margin positive for
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  Speaker 3: the first time in the most recent quarter. And so
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  Speaker 3: we're almost we're roughly a year into the launch of
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  Speaker 3: that vehicle. So I would I would say that's a
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  Speaker 3: little on the early side, just relative to how Tesla
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  Speaker 3: has you know, are done with with the new vehicle
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  Speaker 3: launches in the past. So so that is another another
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  Speaker 3: positive I think, you know, in terms of volume, it's
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  Speaker 3: it's still quite low relative to the Model Y and
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  Speaker 3: the Model three. That is still where you see the
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  Speaker 3: vast majority of of Tesla's deliveries, so much so that
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  Speaker 3: Tesla has even yet to break out that that vehicle.
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  Speaker 3: And in terms of you know, quarterly results, and so
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  Speaker 3: you know, I think we have a rough idea of
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  Speaker 3: how many they've sold. Ironically, based on the recalls that
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  Speaker 3: the company has had to do with the vehicle. It's
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  Speaker 3: it's as of the latest recall was, which was just
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  Speaker 3: a few weeks ago. It was around twenty seven thousand units,
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  Speaker 3: I believe, So, you know, that's that's pretty small for
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  Speaker 3: a company that you know, may sell somewhere around one
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  Speaker 3: point eight million vehicles this year.
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  Speaker 2: Where is the the focus from the company here in
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  Speaker 2: terms of they've seems like they have a lot of
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  Speaker 2: balls in their obviously the car business itself, robotaxis, artificial intelligence.
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  Speaker 2: What do they what do you think they really want
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  Speaker 2: you to focus on? What does Elon want investors to
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  Speaker 2: focus on?
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  Speaker 5: Do you think?
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  Speaker 3: I think that's actually really one of the most interesting
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  Speaker 3: things here. And I think Liam Denning's column for Bloomberg
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  Speaker 3: Opinion this morning, uh, you know, does a great job
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  Speaker 3: of laying out this idea that uh, you know, Musk's
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  Speaker 3: emphasis has really been on, you know, don't don't bother
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  Speaker 3: with the here and now, forget uh you know, forget
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  Speaker 3: that the near term earnings. The sort of big potential
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  Speaker 3: for this company has to do with, you know, selling
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  Speaker 3: self driving cars and humanoid robots and and things that uh,
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  Speaker 3: you know, we've heard Elon talk about time and time again,
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  Speaker 3: but not actually deliver. Uh. And I think you know,
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  Speaker 3: if if if you're sort of looking at this company
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  Speaker 3: sort of class half full. It's it's uh, you know,
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  Speaker 3: I'm I'm less concerned than I am today about the
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  Speaker 3: here and now of this company and the earnings power
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  Speaker 3: of Tesla and its current business, and therefore, you know,
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  Speaker 3: more encouraged that they have, you know, the ability and
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  Speaker 3: the time and the financial wherewithal to go out and
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  Speaker 3: pursue those you know, big stretch goals that Musk has
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  Speaker 3: stepped for the company, and you know, depending on who
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  Speaker 3: you ask, you know may or may not be able
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  Speaker 3: to actually follow through on his various predictions.
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  Speaker 4: Well, from an equity perspective, this stock has been all
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  Speaker 4: over the place this year. I mean we were just
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  Speaker 4: looking earlier and year to date the stock was in
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  Speaker 4: the red. Now it seems as though today's games have
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  Speaker 4: pushed it to drift about eight ten percent higher for
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  Speaker 4: the year. What's the goal case here? What are people saying,
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  Speaker 4: how many how much legs do they have to run?
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  Speaker 4: Can the stock go much further? What's the consensus there?
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  Speaker 3: You're absolutely right. I mean back in April this was
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  Speaker 3: a stock that was down forty three percent for the year,
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  Speaker 3: and so for them to have, you know, come all
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  Speaker 3: the way back. They it sold off quite a bit,
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  Speaker 3: you know, after the Robotaxi unveiling just a few weeks ago,
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  Speaker 3: and you know, we we've now seen the shares go
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  Speaker 3: go positive again for the year. We'll see if they
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  Speaker 3: stay in positive territory. I think, you know, whether whether
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  Speaker 3: or not the company can can actually grow next year
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  Speaker 3: with deliveries, I think is really important because even Musk,
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  Speaker 3: who's you know, sort of perpetually said, you know, next
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  Speaker 3: year will be our year for autonomy, even he is saying,
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  Speaker 3: you know that that this cyber cab that they showed
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  Speaker 3: a couple of weeks ago isn't going to be ready
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  Speaker 3: in twenty twenty six, and so we need this company
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  Speaker 3: to bring you know, more affordable vehicles to market, to
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  Speaker 3: to make teslas more accessible to to to more consumers
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  Speaker 3: and get back to when it's you know, growing again,
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  Speaker 3: to put it to put it, put it simply, and
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  Speaker 3: you know, I think it's still unclear what exactly they
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  Speaker 3: have to offer that's going to make make help them
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  Speaker 3: get there.
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  Speaker 2: Craig, thanks so much for joining us. Really appreciate getting
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  Speaker 2: some of your time and perspective. Craig Trudell, He's a
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  Speaker 2: global autos editor for Bloomberg News. He's based in London,
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  Speaker 2: joining us via that zoom thing. You know, I think
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  Speaker 2: for me, and I think for a lot of investors
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  Speaker 2: and a lot of people that just think about the
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  Speaker 2: EV business, what is the ultimate demand out there for EV's.
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  Speaker 2: We had the early adopters, go, We've had the people
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  Speaker 2: that just love the technology.
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  Speaker 5: You know, they've bought their evs.
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  Speaker 2: Now it's about okay, Now I got to service the
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  Speaker 2: rest of the people the exact one value the people
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  Speaker 2: they may want cool design.
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  Speaker 4: Get the rest of us on board.
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  Speaker 2: Yeah, So I'm just not sure how that plays on.
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  Speaker 2: We've seen some of the existing auto manufacturers, like the
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  Speaker 2: Volkswagens and Fords kind of.
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  Speaker 6: Pulled back a little bit exactly.
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  Speaker 4: They started to pull back on their development there because
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  Speaker 4: they weren't really seeing demand as you just mentioned. So
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  Speaker 4: I think it's really interesting when we think about the
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  Speaker 4: broader landscape and whether or not they're actually going to
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  Speaker 4: be able to attract the broader group.
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  Speaker 5: Yeah.
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  Speaker 2: You know, you got that whole thing about the charging network.
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  Speaker 2: You got to you know a lot of people I
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  Speaker 2: talked to so say, when the charging network is like
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  Speaker 2: the gasoline state, network in this country.
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  Speaker 5: That's one I'll think about an EP.
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  Speaker 2: I don't know how that all plays out, but great
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  Speaker 2: day for Tesla and Edge shareholders.
• 8:09
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• 8:27
  Speaker 2: Following not getting the deal done? What's going on there?
• 8:30
  Speaker 2: Because they need to get people back to work. They
• 8:32
  Speaker 2: need to start cracking out some airplanes and getting some
• 8:34
  Speaker 2: cash into the door. Next guest has some thoughts on
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  Speaker 2: all this whole labor negotiation, unrest issues, workplace issues.
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  Speaker 5: Jessica Kriegel joints.
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  Speaker 2: It's in our Bloomberg Interactive Broker Studio chief scientists of
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  Speaker 2: Workplace Culture and the firm is named Culture Partners. So
• 8:49
  Speaker 2: there you go, joining us here in our Bloomberg Interactive
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  Speaker 2: Broker Studio. Thirty five percent seen or thirty percent whatever.
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  Speaker 2: It was seemed pretty good to me, helping out with
• 8:58
  Speaker 2: the four to one k's. Then labor comes back with
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  Speaker 2: defined pensions. Now my response would be nobody. I'm six
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  Speaker 2: years old. I don't know one person with a defined
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  Speaker 2: benefit pension plan that's nineteen seventies. Can you give us
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  Speaker 2: your thoughts about what's happening between Boeing and their striking workers.
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  Speaker 5: How do you view it?
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  Speaker 7: I don't know anyone that has a pension anymore these days,
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  Speaker 7: but they've been asking for it since the beginning, and
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  Speaker 7: it's a non starter. They're not going to get the pensions.
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  Speaker 7: I think Boeing will literally go bankrupt if they have
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  Speaker 7: to give up those pensions. But they have been asking
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  Speaker 7: for forty percent since the beginning. Boeing originally offered twenty five.
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  Speaker 7: They said overwhelmingly absolutely not enough. Then they came back
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  Speaker 7: at thirty percent, which was their quote unquote best and
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  Speaker 7: final offer, but apparently not because two weeks later they
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  Speaker 7: came back with thirty five percent. And they've got two
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  Speaker 7: thirds of the union that is still saying that's not enough,
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  Speaker 7: a third has been converted, a third did say yeah,
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  Speaker 7: I'll go back to work for that. So they're getting
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  Speaker 7: closer and they're going to have to bridge that gap.
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  Speaker 7: I think they'll have to go to forty percent, and
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  Speaker 7: since they're probably not going to get the pension, they
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  Speaker 7: might have to go above forty percent. They might have
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  Speaker 7: to go to forty five percent in order to say
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  Speaker 7: no pensions. But we'll give you more, and we'll give
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  Speaker 7: you a bigger signing bonus to make up for all
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  Speaker 7: the time that they haven't been paid. It's hard right now.
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  Speaker 3: For the union workers.
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  Speaker 4: Jessica, I know that you are of the opinion that
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  Speaker 4: management has been so focused on their balance sheet that
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  Speaker 4: they've pretty much forgotten about the workplace culture. What does
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  Speaker 4: that look like? I mean, how do you kind of
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  Speaker 4: turn that around? You did say that it seems like
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  Speaker 4: it's a little bit too late now.
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  Speaker 7: Yeah, I mean CEOs all over the world are focused
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  Speaker 7: on driving results right now, and some can take that
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  Speaker 7: so literally to only mean focusing on the financial results.
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  Speaker 7: But as we're seeing with Boeing, this is a classic
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  Speaker 7: example if you focus so much on the financials and
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  Speaker 7: not on the hearts and minds of your employees and
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  Speaker 7: bringing people along for the ride. Culture is really about
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  Speaker 7: how you think and act. It's not about the buzzwords
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  Speaker 7: you have on a poster board about your values. Kelly
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  Speaker 7: Orper did an interview the other day saying we got
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  Speaker 7: to focus on culture change, and we're doing that right
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  Speaker 7: now by revisiting our values. I mean, is that really
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  Speaker 7: going to move the need for the people who feel
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  Speaker 7: so much resentment, feel like they've lost so much, they
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  Speaker 7: have to see leaders take the lead on culture change,
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  Speaker 7: which means pay us what we think we're owed, show
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  Speaker 7: up on the floor, stop focusing so much on the
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  Speaker 7: balance seat, and also focus on quality control. Also focus
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  Speaker 7: on what we as people bring to the organization and
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  Speaker 7: what we need.
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  Speaker 2: High school buddy Mine life long engineer at Boeing in Seattle,
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  Speaker 2: and he says, hey, you know, he's not a radical dude,
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  Speaker 2: He's just saying, hey, this is what I think happened.
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  Speaker 2: They've management left the c suite, left Seattle twenty years
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  Speaker 2: ago for Chicago.
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  Speaker 5: Now they're in DC.
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  Speaker 2: That felt to a lot of these engineering types who
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  Speaker 2: take pride in the work that we lost their support,
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  Speaker 2: or we lost their support of the engineers drive Boeing
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  Speaker 2: and they started focusing more on profitability as opposed to
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  Speaker 2: the engineering prowess of Boeing.
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  Speaker 5: And that's twenty years ago.
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  Speaker 2: Yeah, and one could argue they think that's the beginning
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  Speaker 2: of perhaps some of these problems that we're now seeing
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  Speaker 2: twenty years later, I don't know how you get that back.
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  Speaker 7: Well. I think they've done a good job actually, because
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  Speaker 7: Kelly Orperg is someone with an engineering background, so they
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  Speaker 7: have realized they don't need to be encounter at the
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  Speaker 7: c suite level. They need someone who's been an engineer,
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  Speaker 7: who understands he's saying, let's get back to the floor.
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  Speaker 7: He bought a house in Seattle. He said, we're going
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  Speaker 7: back to Seattle. So there is already a shift to
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  Speaker 7: make up for what that is a well documented complaint
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  Speaker 7: that the union workers has if you lost the soul
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  Speaker 7: of this company, and this is a fight for the soul, right.
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  Speaker 2: I always tell people that one of the great drives
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  Speaker 2: from an airport to a downtown is in Seattle. You
• 12:36
  Speaker 2: get out of your plane in Sea Tech, you get
• 12:38
  Speaker 2: on one over that eye whatever that is, and you
• 12:40
  Speaker 2: drive to Seattle.
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  Speaker 5: It's about a forty minute drive in.
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  Speaker 2: On the left of you on the highway for almost
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  Speaker 2: forty miles is Boeing, and it's airfield after airfre right,
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  Speaker 2: and hangar after hangar, and plane after plane, and they're
• 12:52
  Speaker 2: taken off and flane. All about that to me is
• 12:54
  Speaker 2: Boeing and the fact when senior management left there, it
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  Speaker 2: seemed like for a lot of people, oh lost to
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  Speaker 2: heart and soul there.
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  Speaker 4: So, in building off of Paul's earlier question, I'm curious,
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  Speaker 4: did it seem as though there was a stronger, more
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  Speaker 4: intense crackdown after all the hiccups that Boeing has seen
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  Speaker 4: this year, or does this seem like it's kind of
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  Speaker 4: been a bubbling up point and it's finally bubbling over.
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  Speaker 4: As to why workers are so unhappy.
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  Speaker 7: Well, Boeing has had a lot of very public embarrassments
• 13:19
  Speaker 7: right in recent times, and I think the employees are
• 13:21
  Speaker 7: saying the executives are not protecting the company's brand and reputation,
• 13:26
  Speaker 7: so we will We are not okay with the quality control,
• 13:29
  Speaker 7: we are not okay with the way that production has
• 13:31
  Speaker 7: deteriorated over time, and so we are going to fight
• 13:34
  Speaker 7: to do things the right way. Because these are engineers
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  Speaker 7: who take a lot of value. They love the fact
• 13:39
  Speaker 7: that they can produce some of the most high quality
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  Speaker 7: machines in the world. Right they don't want to create
• 13:46
  Speaker 7: garbage material anymore. So they're fighting for it. And I
• 13:49
  Speaker 7: think this is something that will get resolved. It will
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  Speaker 7: absolutely get resolved. They're going to get back to the table.
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  Speaker 7: Maybe a few more weeks. Some people say we're only
• 13:56
  Speaker 7: at the halfway point. Either way, they're going to come together.
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  Speaker 7: Boeing will get back on track. I'm not worried about
• 14:00
  Speaker 7: the future of the company.
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  Speaker 2: Let's pivot a little bit away from Boeing get back
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  Speaker 2: to another key issue which I keep raising because I
• 14:06
  Speaker 2: just wonder how things revolving. Are people back in the office,
• 14:08
  Speaker 2: what's the new oral? I guess we are when you
• 14:12
  Speaker 2: talk to your clients. Yeah, Are we in a permanent
• 14:15
  Speaker 2: hybrid situation?
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  Speaker 1: Now?
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  Speaker 5: No?
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  Speaker 7: I mean right now. I think twenty twenty five is
• 14:18
  Speaker 7: going to be the year of forcing people back into
• 14:20
  Speaker 7: the office. Amazon just made an announcement that people have
• 14:23
  Speaker 7: to be back five days a week. I think that
• 14:25
  Speaker 7: is regressive thinking, if you want my personal opinion, because
• 14:29
  Speaker 7: think of the language people use when they talk about
• 14:31
  Speaker 7: return to the office. Go back to the office. It's
• 14:34
  Speaker 7: going backwards, as if COVID was just a pause and
• 14:37
  Speaker 7: now we can press play again and nothing's changed. But
• 14:40
  Speaker 7: the reality is culture has changed. If culture is how
• 14:43
  Speaker 7: people think and act, we had a major experience that
• 14:46
  Speaker 7: evolved our thinking about how we can be productive. And
• 14:49
  Speaker 7: I think companies that are forcing people back into the
• 14:51
  Speaker 7: office are counting on some people to leave that it's
• 14:53
  Speaker 7: a way to do layoffs without doing layoffs, and they're
• 14:57
  Speaker 7: relying on activity based manager. It's easy to manage activity
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  Speaker 7: of your employees if you can see them at the desk.
• 15:04
  Speaker 7: The more elevated way of leading a team is to
• 15:06
  Speaker 7: manage to outcomes and you don't have to be in
• 15:09
  Speaker 7: the office to manage to outcomes. So companies that want
• 15:12
  Speaker 7: the competitive edge on attracting talent from all over the nation,
• 15:15
  Speaker 7: they're going to allow people to work from home. And
• 15:17
  Speaker 7: companies that have a real estate bill that they're worried about,
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  Speaker 7: they're going to force people back into the office.
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  Speaker 4: And I mean our incentives enough as food and all
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  Speaker 4: the different things enough to lure people back into the office.
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  Speaker 4: Or do you think that a lot of people are
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  Speaker 4: really hard and fast I want to be removed.
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  Speaker 7: Well, it depends on the person, right There are some
• 15:33
  Speaker 7: people who are just excited to get back into the office.
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  Speaker 7: They want the kombucha Fridays and the Hawaiian shirt Tuesdays
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  Speaker 7: or whatever it is that people do right now to
• 15:42
  Speaker 7: create quote unquote culture. Those are not culture things. Those
• 15:46
  Speaker 7: are just perks, they're fun. Ultimately, it's how are we
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  Speaker 7: making decisions, how are people thinking? How are we committed
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  Speaker 7: to the mission of the organization? And I can do
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  Speaker 7: that at home or I can do that in the office.
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  Speaker 7: And I would ask, if you're questioning right now as
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  Speaker 7: a leader, whether or not you should force people back
• 16:01
  Speaker 7: into the office. Is think about what are the results
• 16:04
  Speaker 7: we're trying to achieve, What are the shared beliefs within
• 16:07
  Speaker 7: our team that are getting in the way of hitting
• 16:09
  Speaker 7: those results, and what do we need those beliefs to
• 16:11
  Speaker 7: be And is working from home going to help drive
• 16:14
  Speaker 7: those correct beliefs that will get us the results or not.
• 16:17
  Speaker 7: That's really the deeper work of leadership, rather than add
• 16:20
  Speaker 7: do we get people in the office three or five
• 16:22
  Speaker 7: days a week? So that's that's arbitrary.
• 16:23
  Speaker 5: I think that Amazon might be a little bit of
• 16:26
  Speaker 5: harbring rym. We might see more companies.
• 16:27
  Speaker 7: Yeah, well absolutely. Also, Amazon is not going to have
• 16:30
  Speaker 7: trouble replacing people that that don't want right because it's Amazon,
• 16:34
  Speaker 7: and so there are companies like that that can do
• 16:37
  Speaker 7: whatever they want and they'll be able to hire other companies.
• 16:39
  Speaker 7: They have to be a little bit more strategic about
• 16:41
  Speaker 7: how theyre going to attract talent.
• 16:42
  Speaker 5: Interesting.
• 16:43
  Speaker 2: I guess it's just ever evolving, satary evolved a Bloomberg
• 16:46
  Speaker 2: or four.
• 16:46
  Speaker 5: Days a week. I don't know, you will see. I'm
• 16:49
  Speaker 5: fine a week working. Just find for me.
• 16:51
  Speaker 2: Jessica Krigle, thank you so much for joining us. Jessica Krikles,
• 16:54
  Speaker 2: she's a chief scientist of workplace culture at Culture Partners,
• 16:58
  Speaker 2: joining us. Lifer in a Bloomberg interactive studio talking about
• 17:01
  Speaker 2: Boeing and just kind of the workplace in general, kind
• 17:04
  Speaker 2: of the evolving US workplace.
• 17:08
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 17:12
  Speaker 1: weekdays at ten am Eastern on Affo card Playing and
• 17:15
  Speaker 1: broud Otto with the Bloomberg Business app. Listen on demand
• 17:18
  Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
• 17:23
  Speaker 2: All Right, it is earnings, fast and furious. I think
• 17:26
  Speaker 2: today was probably the busiest day, or will be the
• 17:28
  Speaker 2: busiest day of the week. What's been a busy week,
• 17:31
  Speaker 2: and we've heard from pretty much everybody across the board,
• 17:33
  Speaker 2: all types of industries. One of the companies is United
• 17:35
  Speaker 2: Parcel Service UPS came out with some numbers. The stock
• 17:38
  Speaker 2: is up five percent, today, So some pretty good numbers.
• 17:41
  Speaker 2: Presumably Lee Claskal is he's right here now to Lee Clascott,
• 17:44
  Speaker 2: Senior Transport Logistics and Shipping annols for Bloomberg Intelligence. He
• 17:47
  Speaker 2: joins us from our Princeton, New Jersey offices. Hayley talk
• 17:51
  Speaker 2: to us about UPS stocks up five percent. So I
• 17:53
  Speaker 2: guess the market like what they saw.
• 17:55
  Speaker 8: Yeah, hey, Paul, Yeah, So UPS had a pretty good
• 17:58
  Speaker 8: print this morning, and they all so you know, indicated
• 18:02
  Speaker 8: that earnings might be a little better than expectations are
• 18:04
  Speaker 8: in the fourth quarter.
• 18:05
  Speaker 6: UPS has been kind of a show me story.
• 18:07
  Speaker 8: They've been doing a lot of self help things, but
• 18:10
  Speaker 8: a lot of those initiatives really haven't bubbled up to
• 18:14
  Speaker 8: the bottom line or the revenue numbers, just given the
• 18:18
  Speaker 8: difficult backdrop. And what we saw today was earnings per
• 18:21
  Speaker 8: share finally inflected, earnings per share growth finally inflected positively
• 18:27
  Speaker 8: after seven quarterly declines. So I see things seem to
• 18:31
  Speaker 8: be working for UPS. And you know, we expect earnings
• 18:35
  Speaker 8: expectations for the fourth quarter and probably next year to
• 18:38
  Speaker 8: move higher on kind of the progress that they've made
• 18:40
  Speaker 8: thus far.
• 18:42
  Speaker 4: Hey, Lee, I mean you mentioned that difficult backdrop. As
• 18:44
  Speaker 4: I'm looking at ups, we're seeing shares down about twelve
• 18:46
  Speaker 4: percent year to date. As we're thinking about the future,
• 18:49
  Speaker 4: I mean, how much of a move higher do you
• 18:51
  Speaker 4: really anticipate as we're thinking about the year end, should
• 18:54
  Speaker 4: investors start to see some gains here?
• 18:57
  Speaker 8: Well, we don't do buy whole cell recommendations of Bloomberg Intelligence,
• 19:00
  Speaker 8: but you know, what we can tell you is that
• 19:02
  Speaker 8: the company are doing the right things to see their
• 19:05
  Speaker 8: margins expand and and you know, our view is that
• 19:08
  Speaker 8: margin expansion could be more than than where where the
• 19:12
  Speaker 8: market currently is at. And a lot of that has
• 19:15
  Speaker 8: to do with a lot of the cost savings that
• 19:16
  Speaker 8: they've been able to generate. They've been able to, you know,
• 19:19
  Speaker 8: shut down various shifts, sorting shifts, They've been able to
• 19:25
  Speaker 8: close some facilities and just do more with the network
• 19:30
  Speaker 8: that they have. That and if you fast forward that,
• 19:33
  Speaker 8: you know, maybe you know, volumes could start to improve
• 19:37
  Speaker 8: a little more meaningfully from here. You know, they expect
• 19:40
  Speaker 8: a better peak season this year, albeit probably not as
• 19:43
  Speaker 8: as robust as they were probably planning for three months ago,
• 19:47
  Speaker 8: but the peak season is expected to grow and the
• 19:51
  Speaker 8: reason for you know, them tempering the outlook for the
• 19:54
  Speaker 8: peak season is given the fact that the peak season
• 19:57
  Speaker 8: is condensed. The peak season, for those don't know, is
• 20:00
  Speaker 8: from Black Friday to Christmas Eve. And because of that
• 20:04
  Speaker 8: condensed peaks time, you know, a lot of retailers think
• 20:08
  Speaker 8: that some consumers might be going to the stores versus
• 20:13
  Speaker 8: ordering online.
• 20:14
  Speaker 6: And making that gamble whether or not you get it
• 20:16
  Speaker 6: under the tree in time.
• 20:18
  Speaker 2: Haylee, we love talking to you for a variety of reason.
• 20:21
  Speaker 2: It's not the least of which is the companies you
• 20:23
  Speaker 2: cover lead give us a real sense of how the
• 20:24
  Speaker 2: underlying economy is doing, whether it's stuff's being shipped by
• 20:27
  Speaker 2: rail or truck or air cargo. What's GPS telling you
• 20:32
  Speaker 2: about kind of underlying activity that they're seeing.
• 20:36
  Speaker 8: Well, first and foremost, I love talking to you as well, Paul,
• 20:41
  Speaker 8: But you know what I think they're telling us is
• 20:43
  Speaker 8: the consumer is doing okay. You know, it's not doom
• 20:47
  Speaker 8: and gloom going into to the holiday season.
• 20:51
  Speaker 6: I think that you know, you are going to see growth.
• 20:54
  Speaker 8: Like I said earlier, that growth might be a little
• 20:56
  Speaker 8: more tempered, but you know, we are seeing a return
• 20:59
  Speaker 8: to kind of seasonality, which is really good because it's
• 21:03
  Speaker 8: not just going to impact the parcel providers. It's going
• 21:06
  Speaker 8: to impact the truckload providers, you know, like the Knights,
• 21:09
  Speaker 8: Swifts and the Warners of the world. It's going to
• 21:11
  Speaker 8: impact the intermodial providers like the JB Hunts and the
• 21:13
  Speaker 8: hub groups of.
• 21:14
  Speaker 6: The world, and the railroads as well.
• 21:16
  Speaker 8: So, you know what we're hearing about the consumer and
• 21:21
  Speaker 8: the fact that B to B volume grew for the
• 21:25
  Speaker 8: first time in a long time within their domestic business
• 21:29
  Speaker 8: is also telling me, you know that things might be
• 21:33
  Speaker 8: might be a little better in twenty twenty five. So
• 21:36
  Speaker 8: you know, we're pretty optimistic that demand should be increasing
• 21:40
  Speaker 8: across most of the modes that we cover, and you know,
• 21:43
  Speaker 8: twenty twenty five, in our view, is going to be
• 21:46
  Speaker 8: a much better year than twenty twenty four was.
• 21:49
  Speaker 4: And I do know back in about April, I remember
• 21:51
  Speaker 4: that it became UPS became USPS's primary air cargo provider.
• 21:57
  Speaker 4: Is that still a topic of conversation? How much does
• 21:59
  Speaker 4: that really add to the business if at all?
• 22:02
  Speaker 6: Yeah, so it is a great business win for them.
• 22:05
  Speaker 8: You know, FedEx walked away from it for various reasons
• 22:08
  Speaker 8: and UPS decided to pick it up. It's going to
• 22:11
  Speaker 8: be consistent volumes at a consistently good margin.
• 22:15
  Speaker 6: And you know what they're doing is.
• 22:16
  Speaker 8: They're really restructuring their overall business. They've been getting out
• 22:19
  Speaker 8: of businesses that are a lot more volatile. They just
• 22:22
  Speaker 8: sold their freight brokerage business, which was called Coyote to
• 22:26
  Speaker 8: r XO and and then that was earlier last month.
• 22:32
  Speaker 8: And then in twenty twenty one they sold their less
• 22:35
  Speaker 8: than truckload business UPS Freight to TFI and those were
• 22:39
  Speaker 8: not great businesses for UPS. And now UPS can really
• 22:43
  Speaker 8: focus on being a parcel provider. And to answer your question,
• 22:47
  Speaker 8: what that US postal service business can also do, It's
• 22:50
  Speaker 8: going to build density, and density is the name of
• 22:52
  Speaker 8: the game in any transportation company, and so they can
• 22:55
  Speaker 8: build off that density with other volumes.
• 23:00
  Speaker 2: All right, Lee, thanks so much for joining us. I'd
• 23:02
  Speaker 2: appreciate getting your expertise and all things logistics, railroads, trucks,
• 23:06
  Speaker 2: the sea transport, the air transport. Lee covers it all
• 23:09
  Speaker 2: and again his transports companies just got to give you
• 23:12
  Speaker 2: a real good insight into the strength of the overall
• 23:15
  Speaker 2: economy when you can see kind of what types of
• 23:18
  Speaker 2: goods are being transported all around the country and the world.
• 23:21
  Speaker 5: So some good stuff there.
• 23:24
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 23:28
  Speaker 1: weekdays at ten am Eastern on applecar Play and Android
• 23:31
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• 23:34
  Speaker 1: live on Amazon Alexa from our flagship New York station,
• 23:37
  Speaker 1: Just say Alexa playing Bloomberg eleven.
• 23:40
  Speaker 5: Thirty R Normal lend us sitting in for Alex still on.
• 23:43
  Speaker 2: Paul Sweney, You're live here in on our Bloomberg Interactive
• 23:45
  Speaker 2: Broker Studio, streaming video live on what.
• 23:48
  Speaker 5: Is that YouTube?
• 23:49
  Speaker 2: That's the interesting that thing the internetew dot com. So
• 23:51
  Speaker 2: just head over there and search Bloomberg Podcast, Bloomberg News
• 23:54
  Speaker 2: Morning Console.
• 23:55
  Speaker 5: We got to pull out this morning. I'm just gonna
• 23:57
  Speaker 5: guess dead heat.
• 23:59
  Speaker 2: Jody Schneider joined political news director for Bloomberg Television and Radio.
• 24:02
  Speaker 2: She joined us in Washington, DC. Jody, what do we
• 24:05
  Speaker 2: learn from the latest Bloomberg Morning Console poll.
• 24:09
  Speaker 9: Well, it reconfirms Paul that things are just very very close.
• 24:13
  Speaker 9: Probably couldn't get any closer. It is that dead heat.
• 24:16
  Speaker 9: We've seen some of that during this last year or
• 24:20
  Speaker 9: so of the polls we've done with Morning Consult, but
• 24:22
  Speaker 9: this one is as close as ever. And of course
• 24:25
  Speaker 9: it's the last one before the election, So it matters
• 24:28
  Speaker 9: as much as ever we're really seeing, you know, it's
• 24:32
  Speaker 9: up maybe a point or half a point in particular states,
• 24:37
  Speaker 9: but it's forty nine forty nine when you get to
• 24:41
  Speaker 9: all the swing states, and we are focused on those
• 24:43
  Speaker 9: swing states, the ones where they are going to determine
• 24:47
  Speaker 9: who wins the electoral college, which is who wins the presidency.
• 24:51
  Speaker 4: Definitely, And Jody, as you just said, we are really
• 24:54
  Speaker 4: coming up less than two weeks away from the election.
• 24:57
  Speaker 4: What are you seeing from those swing states? What has
• 24:59
  Speaker 4: really been general consensus of this latest chapter.
• 25:03
  Speaker 9: Yeah, I think the poll really reflects that that it
• 25:06
  Speaker 9: is so close that almost you know, too close to call.
• 25:09
  Speaker 9: In a number of states. There's some talk about, well,
• 25:12
  Speaker 9: one or the other may win the popular vote, but
• 25:14
  Speaker 9: that is, you know, almost beside the point. It is
• 25:17
  Speaker 9: those swing states where in the past somebody has won
• 25:21
  Speaker 9: by twenty thousand votes or forty thousand votes. Hillary Clinton
• 25:25
  Speaker 9: lost the blue Wall states of Michigan, Wisconsin, and Pennsylvania
• 25:29
  Speaker 9: by fewer than eighty thousand votes in twenty sixteen, so
• 25:34
  Speaker 9: it really is kind of, you know, down to that
• 25:36
  Speaker 9: so called knife's edge in the final days of the campaign,
• 25:40
  Speaker 9: and that's why you see the candidates in their running
• 25:42
  Speaker 9: mates almost exclusively focusing in those seven swing states, and
• 25:47
  Speaker 9: the Democratic candidate so much on those blue wall states.
• 25:52
  Speaker 9: She really needs to win there.
• 25:54
  Speaker 2: Jody, what are your sources tell you about the timing
• 25:57
  Speaker 2: of when we may have some resolution all on the
• 26:00
  Speaker 2: actual vote itself. Will we know eleven pm on November fifth,
• 26:05
  Speaker 2: or will be hours later, days later?
• 26:08
  Speaker 9: Yeah, that's the question everybody I know is asking me.
• 26:12
  Speaker 9: So that's what everybody wants to know. When are we
• 26:14
  Speaker 9: gonna know? And we may well not know that night,
• 26:18
  Speaker 9: not only the presidential but the House of Representatives. The
• 26:21
  Speaker 9: House is going to be a close race for control
• 26:24
  Speaker 9: of the House and it's going to go through New
• 26:26
  Speaker 9: York and California, So we may not know that night
• 26:30
  Speaker 9: who will control the House will probably know the Senate.
• 26:33
  Speaker 9: The presidential we may not know. In twenty twenty, of course,
• 26:36
  Speaker 9: we didn't find out till Saturday, but you might recall
• 26:39
  Speaker 9: two thousand, where we didn't know until December when it
• 26:42
  Speaker 9: went to the Supreme Court. So we may be in
• 26:45
  Speaker 9: a situation like that, and you know, the markets may
• 26:49
  Speaker 9: not wake up to that uncertainty until it starts happening
• 26:53
  Speaker 9: as well, which will be something else for us to
• 26:55
  Speaker 9: cover here at Bloomberg.
• 26:56
  Speaker 4: How exactly are the candidates strategizing in this last stretch
• 27:00
  Speaker 4: to mobilize voters.
• 27:02
  Speaker 9: Yeah, so they're really going to those swing states, you know,
• 27:05
  Speaker 9: trying to really make their case. They're so called closing arguments.
• 27:11
  Speaker 9: Kamala Harris is trying to do that in and we
• 27:13
  Speaker 9: heard her at a CNN town hall doing this last night,
• 27:16
  Speaker 9: sort of saying, I am you know, I have a
• 27:19
  Speaker 9: plan for the future, but I have experience with I've
• 27:23
  Speaker 9: been the vice president for the past four years, and
• 27:25
  Speaker 9: Donald Trump will be a danger to America. That's her case.
• 27:29
  Speaker 9: Donald Trump's case has been to kind of double down
• 27:32
  Speaker 9: on his rhetoric of making people feel that this administration
• 27:37
  Speaker 9: has failed them. He's done it on the economy, and
• 27:41
  Speaker 9: he's been successful on the economy, including a chosen our
• 27:44
  Speaker 9: poll that he is the one people trust more on
• 27:46
  Speaker 9: the economy. And he's making the case that to leave
• 27:49
  Speaker 9: this with her would be a danger to the future
• 27:53
  Speaker 9: of this country. So they're both making arguments based somewhat
• 27:57
  Speaker 9: more on that their other, their opponent, would do harmful
• 28:00
  Speaker 9: things to the future of America than as much on
• 28:04
  Speaker 9: their record. Their closing arguments are kind of mirror images
• 28:08
  Speaker 9: of themselves in some ways.
• 28:10
  Speaker 2: Jody, turnout, I've been told by the experts is really
• 28:13
  Speaker 2: really important here.
• 28:14
  Speaker 5: What do we expect turnout to be?
• 28:17
  Speaker 2: And number two, does either party have an advantage in
• 28:20
  Speaker 2: driving turnout?
• 28:22
  Speaker 9: Yeah, so I think turnout is key.
• 28:24
  Speaker 10: It's certainly key.
• 28:24
  Speaker 9: In those swing states. The other interesting fact, Paul, to
• 28:28
  Speaker 9: edit all this is early voting. We're seeing massive early voting.
• 28:32
  Speaker 9: I think it's as much as eighteen million or more
• 28:35
  Speaker 9: people have already voted, either by mail or in person,
• 28:39
  Speaker 9: and we will be seeing a massive amount of that
• 28:42
  Speaker 9: in the next week, historic amounts of early voting. Now,
• 28:44
  Speaker 9: in the past people said early voting tended to favor Democrats,
• 28:48
  Speaker 9: but now the Republicans are pushing it as well, and
• 28:51
  Speaker 9: it's becoming more the fabric of people thinking, well, why
• 28:54
  Speaker 9: should I wait? Why should I wait till election day?
• 28:56
  Speaker 9: So some of these closing arguments really might be falling
• 29:00
  Speaker 9: and so called jaffiers because people have already voted. And
• 29:04
  Speaker 9: we'll see when we do the historical analysis of this
• 29:07
  Speaker 9: campaign how early voting played into it.
• 29:11
  Speaker 4: With about thirty seconds or less. Just how important is
• 29:14
  Speaker 4: age in this election? Is that playing a factor at all?
• 29:17
  Speaker 9: It's playing a factor, but more gender seems to be.
• 29:20
  Speaker 9: It really does seem to be a very gender focused election.
• 29:23
  Speaker 9: The Democrats, you know, winning more women and Donald Trump
• 29:27
  Speaker 9: kind of doubling down on the mail vote, both older
• 29:31
  Speaker 9: and younger. But it really gender seems to be the
• 29:34
  Speaker 9: dividing line here more than age.
• 29:37
  Speaker 5: Jody, thank you so much for joining us.
• 29:38
  Speaker 2: Really appreciate your reporting as always. Jody Schneider. She's political
• 29:42
  Speaker 2: news director for Bloomberg Television and Radio. She joins us
• 29:44
  Speaker 2: from our newsroom in Washington, d C.
• 29:49
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 29:53
  Speaker 1: weekdays at ten am Eastern on applecar Play and androyd
• 29:57
  Speaker 1: Otto with the Bloomberg Business. You can also and live
• 30:00
  Speaker 1: on Amazon Alexa from our flagship New York station Just
• 30:03
  Speaker 1: Say Alexa playing Bloomberg eleven thirty.
• 30:08
  Speaker 5: Normal.
• 30:08
  Speaker 2: Linda is sitting in for Alex Steele Paul Swhen you
• 30:10
  Speaker 2: allow here on Bloomberg in nactive broke restview streaming the
• 30:13
  Speaker 2: video thing on YouTube, so aheadver YouTube dot com search
• 30:15
  Speaker 2: Bloomberg Podcast. That's where your finest is. John was just
• 30:18
  Speaker 2: reporting new home sales give in a little bit better
• 30:20
  Speaker 2: than expect it. Let's break it down with an expert.
• 30:22
  Speaker 2: We can do that with Bloomberg Intelligence. They got everybody
• 30:25
  Speaker 2: over there, Drew reading, he's a Bloomberg Intelligence US home
• 30:28
  Speaker 2: building analyst, Drew.
• 30:29
  Speaker 5: What you make of these numbers?
• 30:31
  Speaker 6: Here?
• 30:31
  Speaker 2: The new home sales seven hundred and thirty eight thousand.
• 30:33
  Speaker 2: Consensus was seven hundred and twenty thousand, so a little
• 30:36
  Speaker 2: bit better than expected.
• 30:38
  Speaker 11: Yeah, and not surprised to see a good number in September.
• 30:40
  Speaker 11: You have to remember in September we had mortgage rates
• 30:43
  Speaker 11: at the lowest level in about a year and a half,
• 30:46
  Speaker 11: so they hit as low as six point one. So
• 30:48
  Speaker 11: we got the data today and it's already backward looking
• 30:50
  Speaker 11: because since the beginning of October rates have shot back up.
• 30:54
  Speaker 11: It's about six point nine percent, and if you look
• 30:56
  Speaker 11: at the payment on a monthly basis, that's about nine
• 30:58
  Speaker 11: percent higher. So what we have heard is things have
• 31:01
  Speaker 11: started to slow down. The builders are noting more seasonality,
• 31:05
  Speaker 11: so we would expect things to slow down a little
• 31:07
  Speaker 11: bit as we get October data.
• 31:08
  Speaker 4: So as we think about the FED moving forward, Drew
• 31:11
  Speaker 4: and people expecting potential cuts what does this mean for
• 31:14
  Speaker 4: home builders when we're thinking about it on a longer scale,
• 31:16
  Speaker 4: looking further out.
• 31:19
  Speaker 11: Yeah, well, certainly, you know, it's all about affordability, and
• 31:22
  Speaker 11: mortgage rates are certainly a key part of that. Our
• 31:25
  Speaker 11: expectation was that we would get somewhere in that low
• 31:28
  Speaker 11: six percent range that would help spur at a little
• 31:30
  Speaker 11: bit of activity. I think you really need to see
• 31:32
  Speaker 11: a five handle to see more robust activity. But it's
• 31:36
  Speaker 11: important to mind it's not just about rates, it's prices too.
• 31:39
  Speaker 11: Prices are up more than fifty percent since the beginning
• 31:42
  Speaker 11: of twenty twenty. That's really the biggest component. And you know,
• 31:46
  Speaker 11: we did an analysis on monthly payments relative income and
• 31:49
  Speaker 11: based strictly on that just to show you how how
• 31:52
  Speaker 11: to whack the market is. Right now, prices would need
• 31:54
  Speaker 11: to fall somewhere about twenty five percent in order for
• 31:56
  Speaker 11: monthly payments relative income to fall in line with historical averages.
• 32:00
  Speaker 11: So it's a combination of what's happening with prices and
• 32:02
  Speaker 11: what's happening with rates.
• 32:04
  Speaker 4: Right, and so if we were to see a potential
• 32:06
  Speaker 4: uptake in we're to see a flight of existing homes
• 32:09
  Speaker 4: to come back on the market. How much competition do
• 32:11
  Speaker 4: you think that would actually pose for home builders when
• 32:13
  Speaker 4: we're thinking about new properties.
• 32:16
  Speaker 11: Yeah, that's a great question. Inventories are up about twenty
• 32:19
  Speaker 11: percent compared to last year. At the national level, they're
• 32:22
  Speaker 11: still down about twenty percent compared to pre pandemic levels,
• 32:25
  Speaker 11: but it's very market specific. You're seeing markets in Texas
• 32:28
  Speaker 11: think you know, Austin, Dallas, Houston, and San Antonio, as
• 32:32
  Speaker 11: well as most of the markets across Florida where inventories
• 32:35
  Speaker 11: are rising, you know, anywhere from thirty to fifty percent year.
• 32:38
  Speaker 11: Every year their back above twenty nineteen levels. So the
• 32:41
  Speaker 11: competitive dynamic is certainly shifting for builders in those markets,
• 32:44
  Speaker 11: particularly in Texas, and I think what you'll ultimately see
• 32:48
  Speaker 11: is that builders are going to have to continue to
• 32:50
  Speaker 11: lean on incentives. I think it could start to put
• 32:53
  Speaker 11: some downward pressure on prices as we move forward. So
• 32:56
  Speaker 11: if builders want to clear that speco inventory that they've
• 32:58
  Speaker 11: build up over the last year, they're gonna have to
• 33:01
  Speaker 11: keep their foot down on the gas pedal in terms
• 33:03
  Speaker 11: of their use of sales incentives.
• 33:06
  Speaker 2: Hey, Drew, thanks for joining us. We appreciate you hopping
• 33:08
  Speaker 2: on there. Drew reading home Building analysts Bloomberg Intelligence from Princeton,
• 33:11
  Speaker 2: New Jersey a little bit better than expected new home sales,
• 33:14
  Speaker 2: so we note that.
• 33:17
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 33:21
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• 33:24
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• 33:27
  Speaker 1: live on Amazon Alexa from our flagship New York station,
• 33:30
  Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
• 33:34
  Speaker 2: All right. When I started in the media business on
• 33:36
  Speaker 2: Wall Street thirty five years ago, my clients were radio companies,
• 33:39
  Speaker 2: TV companies, magazine companies, newspaper companies. Then along came cable television,
• 33:44
  Speaker 2: and then seeing the Internet, can You Age?
• 33:47
  Speaker 5: Which upended everything.
• 33:49
  Speaker 2: Our next guest was the MNA banker for the old media,
• 33:53
  Speaker 2: and now he's the lead m and A banker for
• 33:55
  Speaker 2: the new media. Terry kwasa JOINTS and he's the founder
• 33:57
  Speaker 2: and CEO of Luma Partners. I work with two moons
• 34:00
  Speaker 2: ago back on Wall Street when we were banking some
• 34:02
  Speaker 2: of those older media companies. Now it's all about Google, Facebook, Snapchat,
• 34:07
  Speaker 2: all these kinds of Amazon now major player and digital advertising. Terry,
• 34:11
  Speaker 2: thanks so much for joining us here in our studio.
• 34:14
  Speaker 2: You are in the biggest best industry I can think of,
• 34:17
  Speaker 2: I mean digital advertising. It has exploded over the last
• 34:20
  Speaker 2: ten to fifteen years. You banked the companies that support
• 34:23
  Speaker 2: the technology of all those big media companies that we like,
• 34:26
  Speaker 2: like Google and Facebook. Talk to us about the state
• 34:28
  Speaker 2: of digital advertising today. Is this as strong as it
• 34:31
  Speaker 2: it's been over the last several years.
• 34:32
  Speaker 1: Yeah.
• 34:33
  Speaker 10: Look, first of all, you're absolutely right to denote that,
• 34:36
  Speaker 10: you know, this is massive. We're talking about a trillion
• 34:40
  Speaker 10: dollars of spend globally. And what's interesting about it is
• 34:45
  Speaker 10: that the vast majority of that spend is actually those
• 34:50
  Speaker 10: ads are bought programmatically and all that that's just a
• 34:53
  Speaker 10: fancy word meaning auction bought in auctions, and so there's
• 34:58
  Speaker 10: a lot of technology that requires sort of real time
• 35:02
  Speaker 10: assessment and targeting of each particular ad slot that happens
• 35:07
  Speaker 10: in milliseconds. So the technology has completely moved to this
• 35:11
  Speaker 10: sort of software intermediated world. From a from a business
• 35:16
  Speaker 10: model standpoint, the giants that you mentioned there are somewhere
• 35:20
  Speaker 10: in the ninety plus percent of their revenue comes from advertising.
• 35:25
  Speaker 10: Not everyone can be bloomberg, right, I mean, I mean
• 35:27
  Speaker 10: so and but but it's beyond just those large platforms
• 35:31
  Speaker 10: so media and historically subscription based media like a Bloomberg,
• 35:38
  Speaker 10: but also like a Netflix and like a you know,
• 35:42
  Speaker 10: Disney that had these sort of B to B models
• 35:44
  Speaker 10: in the old TV world that you and I covered
• 35:46
  Speaker 10: well decades ago.
• 35:48
  Speaker 5: That's all.
• 35:49
  Speaker 10: They're all now shifting to advertising in order to garner
• 35:53
  Speaker 10: larger audiences and supplement their revenues.
• 35:56
  Speaker 4: I mean, obviously, this is ever evolving space. It seems
• 35:59
  Speaker 4: like there's something new every single day. How do you
• 36:01
  Speaker 4: all stay nimble?
• 36:03
  Speaker 10: You're absolutely right, Nora. In fact, I describe this sector
• 36:07
  Speaker 10: as having uniquely sorry, having five attributes scale. I mentioned
• 36:11
  Speaker 10: at trillion dollars, right, growth, So if you looked at
• 36:14
  Speaker 10: the combin and a growth rate of digital advertising, it's
• 36:17
  Speaker 10: over twenty percent for twenty years. Name another industry that
• 36:22
  Speaker 10: has that characteristic of growth. I'll wait, there is none.
• 36:26
  Speaker 10: It has fragmentation. There are thousands of companies across this
• 36:31
  Speaker 10: ecosystem that either offer services, media, data, software. It's very,
• 36:37
  Speaker 10: very complex. That's the fourth item. Tremendous amount of complexity.
• 36:41
  Speaker 10: And fifth what you mentioned, Noura, it's dynamic. It just
• 36:46
  Speaker 10: keeps changing. If you don't like it. Wait three months,
• 36:48
  Speaker 10: it'll be different. Either there will be a new technology,
• 36:51
  Speaker 10: or there'll be a new media channel witness TikTok vertical video,
• 36:56
  Speaker 10: a short form video, or there'll be a new technology
• 36:59
  Speaker 10: policy Google with you know, removing cookies, which is there
• 37:03
  Speaker 10: sort of identifier. Or there could be new regulation and
• 37:06
  Speaker 10: we're seeing a virulent antitrust and privacy legislation from both
• 37:11
  Speaker 10: the US government and Europe.
• 37:13
  Speaker 5: That's kind of where I wanted to go.
• 37:15
  Speaker 2: Terry and his firm, Luma Partners, they host these leading
• 37:19
  Speaker 2: conferences where all these tech people come together.
• 37:21
  Speaker 5: And I go to these conferences and.
• 37:22
  Speaker 2: I don't know anyone, I don't know any company, but
• 37:25
  Speaker 2: I just step back and I say, collectively, these are
• 37:27
  Speaker 2: the people that put all the ads on the Googles
• 37:31
  Speaker 2: of Facebook.
• 37:31
  Speaker 5: They figure it out. That's how I think about it.
• 37:34
  Speaker 2: Talk to us about M and A in your business,
• 37:36
  Speaker 2: because it's comprised of in the advertising technology space that
• 37:40
  Speaker 2: supports all the digital advertising that we all experience every day,
• 37:43
  Speaker 2: a lot of M and A. That's where you fit.
• 37:45
  Speaker 2: Talk to us about how that activity has been over
• 37:46
  Speaker 2: the last several years.
• 37:47
  Speaker 10: So first of all, you're right, your non recognition of
• 37:52
  Speaker 10: these people that are really driving the Internet. I mean,
• 37:55
  Speaker 10: think about it, right, who gets the headlines? Rupert Murdoch,
• 37:57
  Speaker 10: David Zaslov, right, great guys, meaningless as in terms of
• 38:04
  Speaker 10: their power and influence over how this all gets made.
• 38:08
  Speaker 10: The real people are these people that we don't even know,
• 38:12
  Speaker 10: you know, doing sort of B to B advertising technology,
• 38:15
  Speaker 10: certainly do so. This sector has gone through a wave
• 38:20
  Speaker 10: of new company formation, and there's always new innovation, so
• 38:24
  Speaker 10: there's always new companies, but it's direly in need of consolidation.
• 38:30
  Speaker 10: That's where I identified this as an opportunity fourteen years
• 38:34
  Speaker 10: ago when I formed Luma, and it's completely manifested and has.
• 38:37
  Speaker 6: A lot more to go.
• 38:40
  Speaker 10: Lately, the last eighteen months or eighteen of the last
• 38:43
  Speaker 10: twenty four months, we saw a huge slowdown in NEMENA
• 38:46
  Speaker 10: activity at ten year low because you know, the economy,
• 38:50
  Speaker 10: all these macro uncertainties. People weren't sure what was going
• 38:54
  Speaker 10: to happen with interest rates, with inflation, and so basically
• 38:58
  Speaker 10: everyone cut costs, improved their profitability in twenty two and
• 39:01
  Speaker 10: twenty three in anticipation for a recession that never came.
• 39:05
  Speaker 10: I swear to God, if we get to the end
• 39:07
  Speaker 10: of twenty four and there's not a recession. Jerome Powell
• 39:10
  Speaker 10: deserves to be on the twenty dollars bill. I mean,
• 39:12
  Speaker 10: what an incredible job. And so now everyone is like, wait,
• 39:18
  Speaker 10: we haven't done m and A for a couple of years.
• 39:20
  Speaker 10: We direly need new technologies and new markets to enter
• 39:23
  Speaker 10: and by the way, we've got our ebit done a
• 39:26
  Speaker 10: great place right now and we can't and the ad
• 39:29
  Speaker 10: market continues to grow. So not only is there not
• 39:32
  Speaker 10: a recession, digital ANTSPENT is growing fourteen percent this year
• 39:35
  Speaker 10: I'm talking about is the trillion dollar industry growing at
• 39:38
  Speaker 10: fourteen percent. Those are large numbers, so every year it
• 39:42
  Speaker 10: forms like an industry size of growth. And next year
• 39:46
  Speaker 10: forecasted to grow twelve percent. So it turns out you
• 39:48
  Speaker 10: can't cut your way to growth. And so they're back
• 39:51
  Speaker 10: on the bandwagon and strategic M and A is coming back.
• 39:54
  Speaker 2: The biggest platforms, as you mentioned before, the Facebook's, the Googles,
• 39:57
  Speaker 2: the Amazons of the world. It feels like Washington is
• 40:00
  Speaker 2: they got their regulatory sites trained upon them. How does
• 40:03
  Speaker 2: that impact kind of everybody else.
• 40:06
  Speaker 5: In the industry.
• 40:06
  Speaker 10: Excellent question. Here is my problem with the DOJ and
• 40:12
  Speaker 10: the FTC so Jonathan and Lena, they're well intended policies
• 40:18
  Speaker 10: to curb big tech. No one would argue with that
• 40:22
  Speaker 10: big tech. Look, come on, man, these companies have enormous power,
• 40:26
  Speaker 10: so by all means rain them in. However, the effect
• 40:30
  Speaker 10: of the well intended legislation was to put a pall
• 40:34
  Speaker 10: on all M and A activity. I mean, when they
• 40:36
  Speaker 10: blocked the Simon and Schuster deal, it's like it's like, sorry,
• 40:42
  Speaker 10: nineteen seventy seven called and they want their antitrust legislation back.
• 40:46
  Speaker 10: So it's it's totally ludicrous. They've i think overstepped. And
• 40:50
  Speaker 10: the net result is, you know, if you've got a
• 40:52
  Speaker 10: half a dozen companies that are omni powerful like at Amazon, Google, Facebook,
• 40:56
  Speaker 10: you know, and it's it's it's companies numbered seven through
• 41:01
  Speaker 10: fifty that you need to be doing M and A
• 41:04
  Speaker 10: in order to compete with the top six, and now
• 41:06
  Speaker 10: they're foreclosed from doing so. And so actually it's had
• 41:09
  Speaker 10: the opposite effect. It's actually increased monopoly power.
• 41:13
  Speaker 4: So let's talk AI. I mean, not that big of
• 41:15
  Speaker 4: a deal, but I'm curious, how does it actually impact
• 41:18
  Speaker 4: your business? Of course, that is something that everyone's been
• 41:20
  Speaker 4: watching in terms of AI and how obviously it trickles
• 41:23
  Speaker 4: into social media and how we think about the Internet
• 41:25
  Speaker 4: and things of that nature. And I'm sure it's very,
• 41:27
  Speaker 4: very critical to digital ad.
• 41:30
  Speaker 10: So I put AI in the category of shiny new objects, right,
• 41:33
  Speaker 10: I mean, and marketing loves the shiny new object. People
• 41:36
  Speaker 10: in this industry went crazy for Oh my god, five
• 41:40
  Speaker 10: g web three NFTs And you know, I feel there's
• 41:44
  Speaker 10: a responsibility, as someone who understands what's going on here
• 41:48
  Speaker 10: to call balls and strikes. So I said, this is nonsense,
• 41:51
  Speaker 10: this is bunk. You're wasting your dollars by all means.
• 41:54
  Speaker 10: Marketers spend in those categories for experimental purposes to look
• 41:57
  Speaker 10: cool and speak at conferences. But you're just know that
• 42:00
  Speaker 10: you're lighting all of that money on fire. Now AI.
• 42:04
  Speaker 10: There's a lot of hype around AI. So wait, are
• 42:06
  Speaker 10: we saying this is yet another shiny new object. I
• 42:09
  Speaker 10: believe this is one where there's both hype and reality.
• 42:12
  Speaker 10: In fact, one could make the argument that digital advertising
• 42:17
  Speaker 10: in media is the perfect application for AI because these
• 42:21
  Speaker 10: are large language models that do a lot of interesting things,
• 42:25
  Speaker 10: but they need huge amounts of data. Well, there is
• 42:27
  Speaker 10: no industry with more data in terms of real time
• 42:31
  Speaker 10: bidded trillions of AD calls daily in real time. It's
• 42:36
  Speaker 10: the perfect application for AI, and we're going to see
• 42:38
  Speaker 10: a spectrum from evolution to revolution. I put them in
• 42:42
  Speaker 10: three buckets. There's, of course, they're going to improve efficiency
• 42:45
  Speaker 10: in and around media data and workflow around how all
• 42:48
  Speaker 10: this stuff works because it's complex and AI will improve that.
• 42:53
  Speaker 10: Then there is another category around generative AI that's going
• 42:56
  Speaker 10: to improve content and the creative of the ads so
• 42:59
  Speaker 10: that they become more effective, not just more efficient, but
• 43:03
  Speaker 10: more effective. And then there's a third category of who
• 43:06
  Speaker 10: knows it could fundamentally change navigation on the web. What
• 43:10
  Speaker 10: do I mean by that it's gonna change search because
• 43:12
  Speaker 10: search is where you ask questions, whereas AI gives you answers. Right,
• 43:18
  Speaker 10: why do we need to manually navigate to websites? If
• 43:23
  Speaker 10: the if the publisher can simply publish to the ll M,
• 43:26
  Speaker 10: because the interface isn't gonna be manual navigation to a
• 43:29
  Speaker 10: www dot you know. Uh, it's just you're just gonna
• 43:33
  Speaker 10: ask your AI and a I'll give you the answer.
• 43:36
  Speaker 10: So the whole digital media world from a publisher standpoint,
• 43:41
  Speaker 10: could be going from uh B two C to B
• 43:45
  Speaker 10: two B where the B two B the other the
• 43:47
  Speaker 10: last B on B two B is in fact the
• 43:49
  Speaker 10: l ll ms of the AI.
• 43:51
  Speaker 5: You haven't lost your energy.
• 43:52
  Speaker 10: Dude, Oh no, hell no, I'm just getting so.
• 43:55
  Speaker 2: I told these people when this guy comes in, you're
• 43:56
  Speaker 2: gonna you're gonna know. Terry Quash, I thank you so
• 43:58
  Speaker 2: much for joining us. Tarry Quash is founder and CEO
• 44:00
  Speaker 2: of loom of Partners, really focusing on the digital advertising market,
• 44:05
  Speaker 2: all the companies that kind of fuel the global digital
• 44:07
  Speaker 2: advertising and what's digital advertising.
• 44:09
  Speaker 5: It's all the ads that come on your.
• 44:11
  Speaker 2: Facebook feed, each Google search, Snapchat, all that kind of stuff.
• 44:15
  Speaker 2: Somebody's responsible for that. Terry is certainly one of them.
• 44:18
  Speaker 2: The investment banker to the tech world getting an upbeat
• 44:21
  Speaker 2: view of digital advertising. Artificial intelligence a big, big player.
• 44:25
  Speaker 2: You know, if you're an advertiser, you want to make
• 44:26
  Speaker 2: sure that your ad message gets to the right person,
• 44:29
  Speaker 2: the right customer or potential customer, and AI can.
• 44:32
  Speaker 5: Certainly help in that. So we'll keep an eye on that.
• 44:36
  Speaker 2: So we appreciate getting a few minutes of Terry's presence
• 44:38
  Speaker 2: here in our New York studio.
• 44:39
  Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple Spotify,
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• 44:45
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• 44:56
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