Latest / Bloomberg Intelligence / BI Weekend: Homebuilder Sentiment, Natural Gas Outlook, Connie Chung

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BI Weekend: Homebuilder Sentiment, Natural Gas Outlook, Connie Chung · 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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0:53
Speaker 2: Today, we'll look at the outlook for US oil and
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Speaker 2: natural guests heading into the twenty twenty six and why
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Speaker 2: it's well positioned to benefit from SAR structural demand.
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Speaker 3: Plus, we speak with award winning journalist Connie Chung on
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Speaker 3: the changes she is seeing in the media landscape.
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Speaker 2: The first perspective, homeowners in twenty twenty five were boxed
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Speaker 2: out by high borring cost and limited inventory, keeping affordability
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Speaker 2: near record lows. That's according to the latest research from
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Speaker 2: Bloomberg Intelligence.
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Speaker 3: That pressure is now reshaping twenty twenty six as builders
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Speaker 3: look to ramp up construction to meet pent up demand
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Speaker 3: while still moving cautiously because of financing costs, labor shortages,
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Speaker 3: and of course, uncertain economic growth.
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Speaker 2: For more, I spoke with Drew reading Bloomberg Intelligence US
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Speaker 2: home building analyst. I first asked Drew if lower interest
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Speaker 2: rates will help the home building sector.
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Speaker 4: So we actually think that twenty twenty six is going
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Speaker 4: to be another challenging year from a fundamental perspective for
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Speaker 4: the builders. If you think about the weakness that we've
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Speaker 4: had in demand over the last several quarters, it leaves
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Speaker 4: much of the group coming into the year with backlogs
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Speaker 4: that are down anywhere from ten to forty percent, and
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Speaker 4: that's ultimately what translates into revenue over the next called
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Speaker 4: it three to nine months. In addition, I think you're
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Speaker 4: going to see further pricing pressure as builders look to
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Speaker 4: adjust prices to meet market demand. So we're going to
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Speaker 4: have further base price reductions, and I think builders are
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Speaker 4: going to have to continue to lean on incentives because
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Speaker 4: it's something that home shoppers have become accustomed to, and
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Speaker 4: you know, they're looking for deals when they're out there
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Speaker 4: in the market. So, you know, slow top line growth,
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Speaker 4: and I think that incentive dynamic is also going to
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Speaker 4: continue to pressure gross margins as we get into next year.
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Speaker 5: You know, on the on the.
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Speaker 4: Positive side, we do have lower rates, so I do
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Speaker 4: think that orders can grow next year. You know, we're
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Speaker 4: looking at a six and a quarter rate call it
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Speaker 4: right now last year, room as one hundred basis points
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Speaker 4: higher heading into the spring. So lower rates and community
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Speaker 4: count growth could support orders, but I think that revenue
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Speaker 4: and margins are going to be down this year.
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Speaker 2: What's the relationship historically drew between new housing and existing
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Speaker 2: home sales.
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Speaker 4: So the new home market is historically about fifteen percent
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Speaker 4: of overall housing trands action, so a much smaller piece
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Speaker 4: of the market. You know, they've they've performed vastly differently
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Speaker 4: over the last couple of years. If you look at
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Speaker 4: the existing home market, we've been bumping along a four
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Speaker 4: million annualized run rate of home sales for about three
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Speaker 4: years now, and that's about twenty percent below normalized levels.
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Speaker 4: So there's been a lot of pressure because the mortgage
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Speaker 4: rate lock in effect affordability. We have seen an improvement
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Speaker 4: in demand in the resale market as rates have come down.
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Speaker 4: You know, we're looking at purchase applications, which is the
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Speaker 4: most high frequency data point that we have. So we
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Speaker 4: have seen some improvement and we think, you know, looking
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Speaker 4: into twenty twenty six, you could see growth in the
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Speaker 4: resale market anywhere from five to ten percent call it,
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Speaker 4: but keep in mind that's off a historically low level.
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Speaker 2: What's the Has the tariffs impacted the new home building market?
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Speaker 2: I'm thinking lumber and all the other materials used in
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Speaker 2: building a home. Is that god an impact on the profitability?
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Speaker 5: Yeah, good question. To this point, it really hasn't.
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Speaker 4: We've heard from a number of builders who haven't seen
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Speaker 4: much of a increase in twenty twenty five. I think
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Speaker 4: you could see as you get into twenty twenty six
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Speaker 4: that become more of a problem. You know, we did
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Speaker 4: an analysis that looked at all the tariffs that have
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Speaker 4: come through in it and you know, it shows that
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Speaker 4: there could be a ten thousand dollars cost increase per
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Speaker 4: home as it relates to tariffs. Now, when you think
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Speaker 4: about who's likely to feel that the most, it probably
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Speaker 4: won't be the large single family production builders. They've got
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Speaker 4: a lot of scale, they've got a lot of leverage,
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Speaker 4: and they've had success in pushing back against their suppliers.
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Speaker 4: I think you're more likely to see the pinch among
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Speaker 4: smaller private home builders who just don't have that scale
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Speaker 4: and ability to push back. So to this point it
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Speaker 4: hasn't had a bigger impact, but I think that's something
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Speaker 4: you need to watch as we look in the next year.
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Speaker 2: Are they still building like crazy down there in Florida
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Speaker 2: and Texas and Tennessee and those kinds of states.
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Speaker 5: Yeah, that's a good question.
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Speaker 4: I mean, during the pandemic, that's where a lot of
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Speaker 4: people were flocking to there was a lot of construction
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Speaker 4: down there. If you look at inventory levels now in
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Speaker 4: the South, they're actually at the highest level on record.
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Speaker 4: So that's where we're seeing a lot of the weakness
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Speaker 4: in the new home market. There's so much inventory, builders
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Speaker 4: have had to get increasingly aggressive on prices, you know,
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Speaker 4: to move inventory. A lot of incentives in the market,
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Speaker 4: a lot of base price reduction. So that's really where
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Speaker 4: we've seen the weakness, and if you can trast that
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Speaker 4: to some of the stronger markets, it's really a tale
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Speaker 4: of a couple of regions. You have the Midwest and
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Speaker 4: the Northeast, which tend not to be boom markets. We
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Speaker 4: didn't see the same type of inventory growth there, and
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Speaker 4: you're seeing a lot more price stability. On the other hand,
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Speaker 4: you mentioned the South, but you also have the West
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Speaker 4: where there was a lot of inventory growth and we're
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Speaker 4: seeing similar price and pressure.
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Speaker 2: So is there still a housing shortage in this country?
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Speaker 2: And if so, how does it right itself?
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Speaker 4: Yeah, another good question and the one that's frequently debated.
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Speaker 4: Just to take a step back, you'll hear estimates of
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Speaker 4: anywhere to you know, a million to five million unit
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Speaker 4: housing shortage. But I think, you know, I think it's
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Speaker 4: a more complex answer that the shortage, so called shortage,
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Speaker 4: is probably more at lower price points. So there's a
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Speaker 4: mismatch between where there's theoretically demand, which would be at
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Speaker 4: lower price points, and what's available out there in the market.
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Speaker 4: So it's really a affordability problem that's holding things back
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Speaker 4: and how do we get I mean, the government has
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Speaker 4: talked of about all sorts of things in order to
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Speaker 4: boost production and help builders to build more homes at
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Speaker 4: reasonable prices. Whether it's you know, dangling carrots in front
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Speaker 4: of local municipalities to get them to reduce their regulations,
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Speaker 4: you know, whether it's trying to knock down the price
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Speaker 4: of building materials.
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Speaker 5: There's a lot of different things.
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Speaker 4: But I don't really think that there's necessarily any one
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Speaker 4: single silver bullet that's going to solve this problem. I
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Speaker 4: think at the end of the day, you have home
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Speaker 4: prices that are up, you know, more than fifty percent
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Speaker 4: since twenty nineteen, and I think we need to let
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Speaker 4: kind of the basic laws of supply demands kind of
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Speaker 4: take course in order to write that our.
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Speaker 2: Thanks to Drew Writing, Bloomberg Intelligence, US home building analyst.
6:59
Speaker 2: We move next to the consumer hardline space, focusing on
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Speaker 2: the retail sector for durable, non consumable goods like electronics, appliances, tools,
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Speaker 2: and sporting goods.
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Speaker 3: Bloomberg Intelligence recently put out its twenty twenty six outlook
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Speaker 3: for consumer hardlines in North America, and according to BI
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Speaker 3: revenue gains should extend into twenty twenty six for most
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Speaker 3: consumer hardlines retailers.
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Speaker 5: For more.
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Speaker 2: Guest hosts Isabelle, Leah and I were joined by Lindsay
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Speaker 2: Dutch Bloomberg Intelligence Consumer hardline senior analysts. We first asked
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Speaker 2: Lindsay to talk to us about her expectations for hardline
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Speaker 2: retailers in twenty twenty six.
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Speaker 6: I think if you look at, you know, the guidance
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Speaker 6: for the rest of the year, I think a lot
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Speaker 6: of these big hardline companies are baking in a lot
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Speaker 6: of uncertainty with the consumer. But the reality is that
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Speaker 6: if we look back, you know, to performance to date
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Speaker 6: and results to date, results have you know, largely been
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Speaker 6: better than expected, and a lot of these retailers are
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Speaker 6: sort of tracking to the upper half of their guidance
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Speaker 6: range for the year because that consumer has stayed pretty
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Speaker 6: pretty resilient. You know, we see strength, you know, continuing
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Speaker 6: to come from that higher income consumer, while the lower
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Speaker 6: income might be you know, continuing to pull back a
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Speaker 6: little bit. And if you think about companies like Best Buy,
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Speaker 6: All To Beauty, Williams, Sonoma, dick Sboarding Goods, you know
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Speaker 6: they are bringing you know, premium products, new products, exclusive
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Speaker 6: products to that consumer and the consumers are willing to
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Speaker 6: pay up for that.
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Speaker 7: What was the one trend that shocked you this year?
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Speaker 7: Now that you look back.
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Speaker 6: I think a lot of the trends have been a
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Speaker 6: continuation of what we've been seeing. I think, you know,
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Speaker 6: if we go back to late twenty twenty two, that
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Speaker 6: is when the first pullback in that discretionary spend has been.
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Speaker 6: But this is the first year that we've seen more newness,
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Speaker 6: and newness is really a key driver to getting consumers
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Speaker 6: in the store and to fueling transactions. So the best
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Speaker 6: retailers are getting both transaction and ticket growth. But I
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Speaker 6: think those innovation pipelines that maybe we're you know, settled
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Speaker 6: down a bit during COVID, they've picked up again and
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Speaker 6: bring more newness is driving those transactions.
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Speaker 2: How promotional do you think retailers will be in twenty
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Speaker 2: twenty six to kind of drive the consumer to the
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Speaker 2: store or to the mouse to click.
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Speaker 6: So promotions are very important to bring shoppers to the store,
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Speaker 6: you know, especially for someone like a best Buy. You know,
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Speaker 6: promotions are very key, especially around holiday. We seen that
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Speaker 6: promotions are about flat, you know, in twenty five versus
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Speaker 6: twenty four, and I would sort of expect a continuation
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Speaker 6: of that in twenty six unless we see a huge
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Speaker 6: spike in demand, in which case the retailers might be
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Speaker 6: able to pull back on that promotional lever a little bit.
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Speaker 6: But this year so far it's been about flat. You
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Speaker 6: do see companies like a William's Sonoma very select promotions.
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Speaker 6: This has been a strategy coming out of COVID. They
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Speaker 6: sort of have stuck with it. They're even sticking with it,
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Speaker 6: you know, through this season going into next year. Pottery
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Speaker 6: Barn was a big focus for them. You know, they
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Speaker 6: need a rebound in that brand and growth is slowly
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Speaker 6: coming back, but they are staying steadfast in keeping those
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Speaker 6: promotions very limited.
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Speaker 7: I was going through your notes and then I read
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Speaker 7: that many retailers are resuming or accelerating brick and mortar
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Speaker 7: expansion plants because this leads to installing online sales. And
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Speaker 7: that's just kind of the reverse trend that I was expecting.
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Speaker 7: But you made a point that gen Z shows a
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Speaker 7: strong preference for in person shopping. Can you talk to
10:29
Speaker 7: us more about that and how each generation is different.
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Speaker 6: Sure, Yeah, in store shopping is definitely back, and just
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Speaker 6: meeting the consumer where they are so retailers I think
10:41
Speaker 6: are more focused on all channels, whether I'd said whether
10:46
Speaker 6: they have an app, they're online site, their brick and
10:49
Speaker 6: mortar stores, but brick and mortar as a whole. You know,
10:52
Speaker 6: we are seeing more openings than closings, and that has
10:56
Speaker 6: been a trend for the past couple of years. But
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Speaker 6: when we think about sort of the retail real estate market,
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Speaker 6: the demand has been solid coming out of COVID and
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Speaker 6: so vacancy is starting to get low and there's really
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Speaker 6: no new properties being built. So these retail are looking
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Speaker 6: to expand, which is great for their businesses. You know,
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Speaker 6: they really have to work hard to do so and
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Speaker 6: find good space to open stores because there's just not
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Speaker 6: that much of it. But best Buy has talked about
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Speaker 6: gen Z's preference for instore shopping, so has Alta Beauty,
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Speaker 6: and so we're definitely seeing that across the board, but
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Speaker 6: especially that younger generation.
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Speaker 2: There's plenty of retail space on Lexington Avenue and fifty
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Speaker 2: eighth Street. Man hen Lindsay John from the Highlands rights
11:38
Speaker 2: in and you want to ask about Alta Beauty, ELF Beauty,
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Speaker 2: So for how does that category look.
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Speaker 6: For twenty twenty six, So demand has showed a strengthening
11:48
Speaker 6: sort of in the back half of twenty five. I
11:51
Speaker 6: think that momentum can continue into twenty six. I think
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Speaker 6: for Alta in particular, they have done a great job,
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Speaker 6: you know, bringing elevating their assort and bringing on.
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Speaker 7: Exclusives and that has really helped them.
12:05
Speaker 6: Comps are going to get tougher next year and they
12:07
Speaker 6: need to continue to drive growth and I think for them,
12:10
Speaker 6: you know, leaning into their salon services could be a
12:13
Speaker 6: key way to do that. Leaning into wellness is a
12:15
Speaker 6: key way to do that. There's multiple levers that they
12:18
Speaker 6: can pull. The categories that are showing the most strength
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Speaker 6: is really fragrance and skincare, and we would expect that
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Speaker 6: demand to continue into next year.
12:28
Speaker 2: Our thanks to Lindsay Dutch, Bloomberg Intelligence Consumer Hardline Senior Analyst.
12:32
Speaker 3: Coming up, twenty twenty six should be a big year
12:34
Speaker 3: for natural guest producers. We'll explain why you're.
12:36
Speaker 2: Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth
12:39
Speaker 2: research and data on two thousand companies and one hundred
12:42
Speaker 2: and thirty industries.
12:43
Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal.
12:46
Speaker 3: I'm Scarlet Foo and I'm.
12:47
Speaker 2: Paul Sweeney, and this is Bloomberg.
12:54
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
12:59
Speaker 1: on Bloomberg Radio.
13:01
Speaker 2: The US continued to strong oil and gas production in
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Speaker 2: twenty twenty five, with crude output near record levels and
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Speaker 2: export growth.
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Speaker 3: One sector that performed particularly well is liquefied natural gas,
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Speaker 3: and that is set to continue into twenty twenty six.
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Speaker 3: According to BI natural Gas Exposed, E andp's financial performance
13:17
Speaker 3: will gain momentum next year as winter fully kicks in
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Speaker 3: and raises US gas benchmarks.
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Speaker 2: For more on this, we were joined by Vincent Piazza,
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Speaker 2: Bloomberg Intelligence senior equity research analyst. First ask Vincent what
13:27
Speaker 2: the outlook is for natural guests demand in twenty twenty six.
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Speaker 8: From our perspective, we are definitely more constructive on natural
13:36
Speaker 8: gas commodity relative to oil, and there are three key
13:40
Speaker 8: drivers for natural gas in twenty twenty six. Number One,
13:45
Speaker 8: we have structural demand growth and that's from LNG exports
13:50
Speaker 8: and also pipeline exports down into Mexico. We have what
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Speaker 8: the other presenter hinted at was AI demand growth. That's
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Speaker 8: also a strong structural a growth driver for twenty twenty six.
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Speaker 8: The demand side is really quite clear. It's really the
14:07
Speaker 8: production side that is running a little hotter this year
14:09
Speaker 8: versus last year, and that is our biggest risk to
14:13
Speaker 8: our twenty twenty six call. That's the first key driver.
14:16
Speaker 8: The second key driver is relatively robust free cash flow
14:20
Speaker 8: yields as balances tightened. So there is a great deal
14:24
Speaker 8: of cash flow sloshing around for this group. That gives
14:29
Speaker 8: them a great deal of optionality. And where we think
14:33
Speaker 8: that optionality is going to be targeted, aside from base
14:38
Speaker 8: and supplemental dividends, is really and a natural gas m
14:42
Speaker 8: and a lagged oil M and A. We think that
14:45
Speaker 8: turns in twenty twenty six. We saw the first real
14:48
Speaker 8: big hint of that in twenty twenty four and twenty
14:53
Speaker 8: twenty five when Expand Energy was created via the Seminal
14:58
Speaker 8: Acquisition Company between Chesapeak and Southwestern Energy. That created a goliath,
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Speaker 8: the largest natural gas operator, natural gas producer, independent producer
15:11
Speaker 8: in the lower forty eight. We think that'll drive incremental
15:16
Speaker 8: M and A. Because the biggest central theme for us
15:19
Speaker 8: in twenty twenty six is concentration via consolidation, we think
15:24
Speaker 8: that continues for the natural gas operators as it did
15:29
Speaker 8: for the oil centric names in twenty twenty five.
15:32
Speaker 2: What are the folks down there in domestic production? What
15:35
Speaker 2: do they do with oil around these prices here?
15:38
Speaker 5: They don't grow.
15:39
Speaker 8: We think production has peaked. We think you will see
15:43
Speaker 8: a change in sentiment as we see more focus on
15:47
Speaker 8: natural gas relative to oil. What is interesting for the
15:51
Speaker 8: natural gas producers. As you produce less liquids, so less crude,
15:56
Speaker 8: you also produce a fewer molecules of what's called associated gas.
16:02
Speaker 8: That's great for the natural gas guys because that means
16:04
Speaker 8: balance is titaned. So when you think about relative prices,
16:08
Speaker 8: that's a net benefit for the natural gas producers relative
16:11
Speaker 8: to the oil producers. Since associated gases roughly call it
16:15
Speaker 8: one third of total production of natural gas, So lower
16:20
Speaker 8: oil actually good for natural gas.
16:23
Speaker 3: Which nat gas players are best positioned. I know Bloomberg
16:26
Speaker 3: Intelligence doesn't do by holed sell on individual companies, but
16:29
Speaker 3: surely there are some that are more attractive than others.
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Speaker 8: Yeah, absolutely so. Again on this central theme of concentration
16:38
Speaker 8: via consolidation, expand has really gone out there and created
16:44
Speaker 8: a dominant player into the central basins EQT as well.
16:51
Speaker 8: Those are the two key names for twenty twenty six,
16:54
Speaker 8: given their size and relative importance in the market, not
16:58
Speaker 8: only in the lowerst Basin of Appalachia in the northeast,
17:03
Speaker 8: but also near Seaborn export markets around the Gulf around
17:09
Speaker 8: Haynesville as well. So expand EQT those are two names
17:13
Speaker 8: that we have focus ideas out for twenty twenty six.
17:17
Speaker 8: You can take a look at that on the terminal
17:19
Speaker 8: within the Bloomberg ecosystem.
17:21
Speaker 2: Nice, what's the OPEC plus do in these days? Do
17:24
Speaker 2: we really how much do we care about those folks?
17:26
Speaker 2: If we're a net exporter.
17:28
Speaker 8: These days, they are still the dominant player, the dominant
17:33
Speaker 8: governor of oil markets. They will still drive twenty twenty
17:40
Speaker 8: six supply balances. From the demand side, we think we
17:46
Speaker 8: are past that peak peak growth of demand here in
17:49
Speaker 8: the US, we pumped out roughly thirteen point six million
17:54
Speaker 8: barrels per day. We think we're past a peak there
17:56
Speaker 8: as well. In fact, the other central theme that we
18:01
Speaker 8: talked about for the oil players is really capital discipline.
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Speaker 8: You're going to hear a lot more of that, similar
18:08
Speaker 8: to what we talked about in twenty twenty four and
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Speaker 8: twenty twenty five. Investors, what your guys are telling people,
18:15
Speaker 8: Paul Scarlett is we don't want to see the production.
18:18
Speaker 8: We don't want to see a higher spending. What we
18:22
Speaker 8: really want to see is that free cashload coming back
18:26
Speaker 8: to the investor base. All that sung capital during the
18:29
Speaker 8: initial stage of the growth in shale. We are now
18:33
Speaker 8: at a maturity phase. We want to see those higher dividends.
18:37
Speaker 8: We want to see the based dividends. We want to
18:39
Speaker 8: see supplemental growth in dividends with buybacks taking a little
18:43
Speaker 8: more of a backseat. In order to clean up any
18:47
Speaker 8: equity issues via m and A market our.
18:49
Speaker 2: Thanks to Vincent Piazza, Bloomberg Intelligence senior equity research analyst.
18:52
Speaker 2: Staying with energy, we now look at how one of
18:55
Speaker 2: the nation's largest utility companies is faring.
18:57
Speaker 3: Excellent Corporation primarily engages in the generation of electricity from nuclear,
19:01
Speaker 3: fossil fuels, hydro electric and renewables. For one of the
19:04
Speaker 3: company's recent data center boom and some of the challenges
19:07
Speaker 3: in managing a large energy grid, we spoke to Callan Butler,
19:10
Speaker 3: CEO of Excellent.
19:12
Speaker 9: We're critical to the development of AI data centers and
19:19
Speaker 9: large load quantum and we take that responsibility very serious.
19:24
Speaker 9: And from a standpoint of building that infrastructure, protecting that grid,
19:29
Speaker 9: it's going to be the backbone of all this. We
19:31
Speaker 9: always say that the energy sector is five percent of
19:34
Speaker 9: the GDP, but we power the next ninety five and
19:37
Speaker 9: we take that very seriously.
19:39
Speaker 3: You take it seriously. So walk us through some of
19:41
Speaker 3: the plans you're making, how you're preparing for this transition,
19:45
Speaker 3: for this increase in demand.
19:48
Speaker 9: Yeah, thank you, Scarlett. What we have done, We've done
19:51
Speaker 9: a few things. Is one understanding for your listener's excellent.
19:56
Speaker 9: We are truly a transmission and distribution company, you know,
20:00
Speaker 9: proud to have six utilities operating the electric gas side
20:04
Speaker 9: through the pipes and wires. So, having said that, being
20:07
Speaker 9: the backbone of that, we're encouraging those data centers and
20:11
Speaker 9: large developers to come into the states in which we operate,
20:14
Speaker 9: and we put together a comprehensive plan to get them online,
20:19
Speaker 9: up and running sooner rather than later. Speed is everything
20:23
Speaker 9: for them, and so what it takes is a coordinated effort,
20:27
Speaker 9: and we've worked very hard to move upstream to get
20:31
Speaker 9: them online so they can do what they do, which
20:33
Speaker 9: is on the technology side. Now, as we do that,
20:37
Speaker 9: we have to keep in mind, first and foremost the
20:40
Speaker 9: affordability factor for all of our communities, and that's where
20:43
Speaker 9: we're working with them to identify sites that are more
20:48
Speaker 9: ready to put their equipment and their technology in place.
20:53
Speaker 2: We had a couple of governor races in New Jersey
20:56
Speaker 2: and in Virginia and affordability was one of the big issues.
20:59
Speaker 2: And in New Jersey, see the governor elect who actually won,
21:02
Speaker 2: one of our number one issues was bringing down electric
21:06
Speaker 2: utility bills. So this is an issue I we got
21:09
Speaker 2: to fund, we got to I guess, create and develop
21:12
Speaker 2: these data centers, but we've got to do it in
21:14
Speaker 2: a way that it doesn't cause everybody's power bills to
21:17
Speaker 2: go up. How do you think about that transition, Paul.
21:21
Speaker 9: You're absolutely right. It was a race in both New
21:24
Speaker 9: Jersey and Virginia an issue, and we believe it's going
21:28
Speaker 9: to be an issue in the twenty twenty six elections
21:31
Speaker 9: because of affordability, pocketbook issues are going to be key.
21:35
Speaker 9: So let me tell you what we're doing from excellent perspective.
21:38
Speaker 9: We are protecting our residential customers. You know, we serve
21:41
Speaker 9: almost eleven million customers. So as as important as it
21:44
Speaker 9: is for data center development, it's more important for me
21:48
Speaker 9: to protect the other customers in this process. So we've
21:51
Speaker 9: come up with what we consider a rather innovative solution
21:54
Speaker 9: in creating a tear up a transmission security agreement. So
21:58
Speaker 9: what that does is we require a letter of credit
22:02
Speaker 9: or a cash deposit from these large developers speculating are
22:06
Speaker 9: identifying what thir ten year revenue projections or cost projections
22:10
Speaker 9: coming back to our utility is, and anytime that they
22:14
Speaker 9: do not meet eighty percent of that load projections or
22:18
Speaker 9: cash projections, we draw down from that deposit. And what
22:23
Speaker 9: it does it protects the other customers on the systems
22:26
Speaker 9: for the investments that we're making. So we're being very
22:30
Speaker 9: intentional about protecting the other users on the system because
22:34
Speaker 9: when it's done right, it should reduce the costs for everyone,
22:38
Speaker 9: but when it's done haphazardly or piecemeal, it can have
22:43
Speaker 9: ramifications that everyone else has impacted. But what you're seeing
22:47
Speaker 9: not just from the capital investment, you're seeing the supply
22:51
Speaker 9: costs go up. Supply costs are going up because of
22:55
Speaker 9: the increased demand, and we have inadequate generation on the
22:58
Speaker 9: system to do that. You use New Jersey as an example.
23:02
Speaker 9: Let me give you a real example of what happened
23:04
Speaker 9: to New Jersey customers.
23:06
Speaker 5: Last year.
23:07
Speaker 9: New Jersey customers average residential customers bill rose thirty four
23:11
Speaker 9: dollars because they were reconciling our bill, our bill, our cost,
23:16
Speaker 9: the demand. The transmission and distribution part went down four dollars,
23:20
Speaker 9: but the bill still went up thirty four. That's how
23:23
Speaker 9: important it is to get this supply stack right to
23:26
Speaker 9: help lower all customers bills.
23:29
Speaker 3: Kelvin, let me ask you about nuclear, because the government
23:31
Speaker 3: announced it plans to buy and own up to ten
23:33
Speaker 3: large new nuclear reactors that could be paid for using
23:37
Speaker 3: Japan's pledge to fund five hundred and fifty billion dollars
23:41
Speaker 3: of investments in the US. Of course, this is part
23:43
Speaker 3: of a push to meet surging demand for electricity, and
23:46
Speaker 3: nuclear is increasingly seen as a solution to this need.
23:49
Speaker 7: What's your take.
23:51
Speaker 9: I think it's critical. I truly believe in a all
23:54
Speaker 9: of the above approach and that nuclear base load generation
23:58
Speaker 9: is going to be critical to us meeting this effort.
24:02
Speaker 9: As you know, again, we've always taken an approach that
24:06
Speaker 9: every electron matters to help on affordability, and that's why
24:10
Speaker 9: it's so critical. I use an example, the Crane Center
24:14
Speaker 9: that's coming back online in Pennsylvania. That's critical because it's
24:19
Speaker 9: new generation coming back online. Microsoft is paying for it,
24:23
Speaker 9: and that billion dollar loan is exactly what we need
24:27
Speaker 9: to encourage reopening of these former facilities to get more
24:32
Speaker 9: electrons back on. And that was one of the best
24:35
Speaker 9: operating nuclear plants prior to its shuttering.
24:38
Speaker 3: Thanks to Calvin Butler, CEO of Excellent Coming Up, we
24:41
Speaker 3: go inside Walmart's masterclass and reputation rehab plus an honest
24:45
Speaker 3: conversation with renowned news journalist Connie Chung.
24:47
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
24:50
Speaker 2: research and data on two thousand companies and one hundred
24:53
Speaker 2: and thirty industries.
24:54
Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal.
24:57
Speaker 3: I'm Scarlett Foo and I'm Paul Sweeney and this.
24:59
Speaker 1: Is This is Bloomberg Intelligence with Scarlet Foo and Paul
25:11
Speaker 1: Sweeney on Bloomberg Radio.
25:14
Speaker 2: Walmart was once criticized for its treatment of workers as
25:17
Speaker 2: well as its negative impact on communities, but its reputation
25:20
Speaker 2: has been rehabilitated under CEO Doug McMillan.
25:23
Speaker 3: That's the subject of a recent Bloomberg opinion piece titled
25:26
Speaker 3: Inside Walmart's Masterclass and reputation Rehab. For more, we're joined
25:30
Speaker 3: by the author of the piece, Bloomberg Opinion Colmus Beth Kohen.
25:33
Speaker 10: It's hard to think about this now, but a decade ago,
25:35
Speaker 10: Walmart was one of the most reviled companies in America.
25:38
Speaker 5: Right.
25:39
Speaker 10: It was being criticized for paying its employees low wages,
25:42
Speaker 10: for wiping out mom and pop retailers, for basically creating
25:47
Speaker 10: a culture of disposable consumerism. So it really was getting
25:50
Speaker 10: hit from a lot of different angles. And rather than
25:53
Speaker 10: just ignore the bad press or hire an army of
25:57
Speaker 10: pr people, it decided to do something about it. And
26:00
Speaker 10: Doug McMillan decided, we're going to invest in our people
26:03
Speaker 10: and two point seven billion dollars over a couple of years,
26:05
Speaker 10: and we now know this really paid off.
26:09
Speaker 2: So I mean, for Doug McMillan, I mean to me,
26:12
Speaker 2: after reading your article, this could be one of his
26:14
Speaker 2: as he's stepping down, could be one of his lasting
26:16
Speaker 2: legacies at the company.
26:17
Speaker 10: I really think so. I think that you know, he's
26:20
Speaker 10: been at the company now more than a decade. I
26:22
Speaker 10: think this will be amongst the most enduring things that
26:25
Speaker 10: he has done.
26:26
Speaker 5: I think this.
26:27
Speaker 10: I'm not sure that the company would be in the
26:30
Speaker 10: place it's at today if he had not really addressed this.
26:32
Speaker 3: And let's be clear about what exactly he did with
26:35
Speaker 3: that two point seven sharing dollars. Pay increases, there is training,
26:39
Speaker 3: and really just attracting a better quality worker.
26:43
Speaker 10: Yeah, and the way he did this was right. It
26:45
Speaker 10: was pay increases, but more than anything else, it was
26:47
Speaker 10: creating not low paying jobs, but a career.
26:51
Speaker 4: Right.
26:52
Speaker 10: There was now a path for people who started at
26:54
Speaker 10: Walmart to move up the ranks and that was really important,
26:57
Speaker 10: right to attracting more ambitious and employees to getting them
27:02
Speaker 10: to stay. And I think that that shifted the whole
27:05
Speaker 10: culture of the company.
27:07
Speaker 2: So what's the company saying about AI? Because there's a
27:11
Speaker 2: lot of answer just in the overall economy about what
27:14
Speaker 2: the impact AI will have upon jobs. One could look
27:17
Speaker 2: at big box stores as an industry that might be
27:19
Speaker 2: at risk because they do employ so many People's what
27:22
Speaker 2: does Walmart say.
27:22
Speaker 10: Walmart's taken a very different approach, I think than some
27:25
Speaker 10: other big employers, and it has embraced ay. Let's be clear,
27:29
Speaker 10: like there's a AI is through embedded throughout the company,
27:33
Speaker 10: but it has not used AIE to have some of
27:35
Speaker 10: these mass layoffs that were justify some of these mass
27:38
Speaker 10: layoffs that we've seen at other companies. And I think
27:40
Speaker 10: part of that is this history, Like it knows how
27:43
Speaker 10: important these entry level workers are and that they need
27:49
Speaker 10: a path, they need this workforce to sort of grow
27:52
Speaker 10: the company. So it said AI will change every job.
27:57
Speaker 10: It knows that, but it is trying to get every
28:00
Speaker 10: worker through to the other side, so whether that's retraining,
28:04
Speaker 10: finding new rules, rules for them. So it's just a
28:07
Speaker 10: very different outlook, I think than what we're hearing from others.
28:10
Speaker 3: And you've noted as well that the last ten years
28:12
Speaker 3: at Walmart has led to tremendous return for shareholders, but
28:16
Speaker 3: also it's become a case study at Harvard Business School
28:20
Speaker 3: on how to on how an experiment on paying your
28:24
Speaker 3: workers war or investing your workers can pay off.
28:26
Speaker 10: Absolutely. I mean, we you mentioned this at the beginning,
28:29
Speaker 10: but Wall Street hated this plant. I mean, the company
28:32
Speaker 10: lost tremendous value, tremendous value when they announced it, and
28:37
Speaker 10: now you know, we have the receipts a decade later,
28:40
Speaker 10: and the I think the market gap has tripled. The
28:43
Speaker 10: stock has returned more than four hundred percent. So they
28:47
Speaker 10: really took a gamble on this and stuck with it,
28:49
Speaker 10: and it really it has paid off for them.
28:52
Speaker 2: I mean every time I look at the dees screen
28:54
Speaker 2: for on the Bloomberg terminal for Walmart had just blown
28:57
Speaker 2: away by the fact that they have two point one
28:59
Speaker 2: million employees. What's the retention of those employees. I'm wondering
29:04
Speaker 2: if there's like I would think in the warehouses that
29:06
Speaker 2: might be really really high. I'm not sure about the stores.
29:08
Speaker 2: How is retention sure?
29:09
Speaker 10: So they've actually increased retention by ten percent since twenty
29:12
Speaker 10: fifteen when they started this plan. And another thing is
29:16
Speaker 10: that they've some of the more management level roles. Seventy
29:21
Speaker 10: five percent of those are hired from with it. So
29:24
Speaker 10: this pipeline is really critical for them. And so that's
29:27
Speaker 10: why I think that they are so focused on creating
29:29
Speaker 10: a place where people stay.
29:32
Speaker 5: That's key.
29:32
Speaker 3: And you only have to look at the outgoing CEO
29:34
Speaker 3: and the NTO, right, Both Doug McMillan and John Ferner,
29:38
Speaker 3: the successor, are Walmart lifers. They started off as hourly workers.
29:42
Speaker 10: There, right, they know the importance of that and having
29:44
Speaker 10: worked their way up. That needs to be something that continues.
29:47
Speaker 2: There is this something that you think the new CEO
29:50
Speaker 2: is as committed to as the prior CEO.
29:53
Speaker 10: I would think so because he has the same background.
29:55
Speaker 10: I mean, I think he knows the importance of emerging technologies.
29:59
Speaker 10: He's really focused on that. But I think because of
30:02
Speaker 10: his history and he's worked very closely with McMillan for
30:06
Speaker 10: a long time, so they must be aligned on this.
30:09
Speaker 2: Our thanks to Beth Kwitt Bloomberg Opinion Calmness. We move
30:12
Speaker 2: next to the interview we had this year with award
30:15
Speaker 2: winning journalist and news anchor Connie Chung.
30:17
Speaker 3: Connie was a first woman to co anchor the CBS
30:19
Speaker 3: Evening News, the flagship news broadcast on CBS. She was
30:22
Speaker 3: also the first Asian American to anchor any news program
30:25
Speaker 3: on CBS, NBC, and ABC. Both were milestones and broadcast
30:29
Speaker 3: television history. Connie Chung was also out with a memoir
30:31
Speaker 3: this year titled Connie.
30:33
Speaker 2: We began our conversation with the changing landscape of the
30:35
Speaker 2: news business and whether journalism should be treated more like
30:38
Speaker 2: a public good rather than a profit driven business.
30:41
Speaker 11: With a question when I first started at CBS News
30:45
Speaker 11: in nineteen seventy one. It was owned by William Paley yep,
30:50
Speaker 11: and he believed so strongly that the news division should
30:54
Speaker 11: be autonomous. We could spend as much money as it
30:59
Speaker 11: took to cover the news, and it was for the
31:04
Speaker 11: public good. But then what happened at CBS equally happened
31:09
Speaker 11: at NBC and ABC. Greedy owners took over, bought the companies,
31:15
Speaker 11: and made the bottom line the ultimate goal. We lost
31:20
Speaker 11: all our obligation to be objective and be truthful, and
31:28
Speaker 11: all they wanted was money. And I am just mortified
31:34
Speaker 11: that to this day I see it at CBS, money drove,
31:40
Speaker 11: the greed drove the fact that it was sold to
31:46
Speaker 11: David Ellison and Larry Ellison and they're unattention. I mean,
31:51
Speaker 11: they're not paying any attention to the old rules of journalism.
31:55
Speaker 2: Well is one could argue just over the last twenty
31:58
Speaker 2: twenty five years that the divide in this country and
32:01
Speaker 2: the the divide in the in the media coverage has
32:04
Speaker 2: been so stark and become maybe maybe even more stark.
32:07
Speaker 2: How do you make what do you make of that?
32:09
Speaker 2: The bias that may or may not be in the
32:12
Speaker 2: news business these days? Who that it is Okay, how
32:17
Speaker 2: do you view it?
32:18
Speaker 4: How do you help?
32:18
Speaker 2: How's it changed?
32:19
Speaker 11: Maybe I'm horrified, horrified with anyone who says on television,
32:25
Speaker 11: who purports to be an anchor or a news reporter, say,
32:30
Speaker 11: I think I don't care what you think. All I
32:34
Speaker 11: want is the facts. And I think everyone out there,
32:38
Speaker 11: because I've been across the country just in this last year,
32:42
Speaker 11: and people just want the facts. I think the only
32:46
Speaker 11: saving grace is actually local news. Local news still just
32:52
Speaker 11: primarily provides the facts and.
32:55
Speaker 3: The weather right and sports. With big tech comes, of course,
33:00
Speaker 3: artificial intelligence. How do you make the case for why
33:03
Speaker 3: companies should not replace news reporters news anchors with AI
33:07
Speaker 3: generated and presented news where they could focus on presumably
33:10
Speaker 3: the facts.
33:11
Speaker 11: It's fake two, it's all fake news and we cannot
33:16
Speaker 11: depend on it. The social media has truly destroyed our
33:21
Speaker 11: reporting ability in many ways because nothing is fact checked,
33:28
Speaker 11: and I fear that AI would not be fact checked.
33:33
Speaker 11: We can't depend on it. I can see the value
33:36
Speaker 11: of AI. For instance, if a doctor wants to look
33:41
Speaker 11: up research and figure out what a person's ailment is,
33:46
Speaker 11: he or she no longer has to go through volumes
33:49
Speaker 11: and volumes of medical literature. AI can find it in
33:56
Speaker 11: a second, and there are so many good benefits. But
33:59
Speaker 11: I think AI has no place in news.
34:04
Speaker 1: It just doesn't.
34:06
Speaker 11: I mean, I don't know what happened to truth. I
34:10
Speaker 11: believe that truth ruled when I was working in television.
34:15
Speaker 11: News was ancient, an ancient.
34:19
Speaker 2: How about even though you have white hair palms?
34:21
Speaker 11: You know I have white hair too, Just color it right.
34:24
Speaker 2: I understand. I understand what's also changed. It seems like
34:29
Speaker 2: initiatives not just in media, but across corporate America, in society,
34:33
Speaker 2: the diversity, equality, inclusion, those that movement, if you will,
34:39
Speaker 2: or that that seems to have lost its momentum. And
34:42
Speaker 2: is that a concern for the newsroom?
34:44
Speaker 11: Do you think it died with this administration? It's become
34:50
Speaker 11: non existent and forced upon us. I would not have
34:54
Speaker 11: had a career had it not been for the nineteen
34:57
Speaker 11: sixty four civil rights law which created the Equal Employment
35:02
Speaker 11: Opportunities Commission. My sister in law, Lynpovich, who was a
35:08
Speaker 11: researcher at Newsweek, filed a class action lawsuit with the
35:13
Speaker 11: other women. Because they were not allowed to move beyond
35:18
Speaker 11: the research stage, they could not be reporters, they could
35:23
Speaker 11: not be writers. They could not be editors period, full stop.
35:29
Speaker 11: And I was thanks to Lynn and the women's movement
35:35
Speaker 11: and the black movement at the time in the sixties
35:37
Speaker 11: and seventies when I started, I would not have had
35:41
Speaker 11: my first job at CBS News covering Watergate, covering a
35:46
Speaker 11: presidential campaign, the losing campaign of George mcgovernor in nineteen
35:51
Speaker 11: seventy two, And I would not have covered Nelson Rockefeller
35:56
Speaker 11: when he was vice president after he took over Ford
36:00
Speaker 11: took over from Nixon. We are seeing a replay of
36:05
Speaker 11: Nixon and Watergate. But during Watergate, at least Congress had
36:11
Speaker 11: a backbone. Members of Congress like Center Barry Goldwater went
36:17
Speaker 11: to Nixon and said, You're not gonna You're not gonna survive.
36:22
Speaker 3: Right, Yeah. No, It's a clear contrast to what we
36:24
Speaker 3: have on Capitol Hill today. Speaking of water eight, Connie,
36:27
Speaker 3: there is a famous photo of you at a House
36:29
Speaker 3: Judiciary Committee hearing on Watergate, and it's you, a young
36:32
Speaker 3: Asian woman in a sea of white men. Do you
36:36
Speaker 3: think female news reporters in twenty twenty five case the
36:39
Speaker 3: same challenges that you did in the seventies through nineties.
36:42
Speaker 11: It really hasn't changed that's surpressing. No, I know, I'm sorry,
36:47
Speaker 11: but it hasn't changed for men who still dominate. Not
36:52
Speaker 11: that not that there's anything wrong with being a man, Paul.
36:55
Speaker 2: You know, so far, so good, so far, so good,
36:58
Speaker 2: So far, so good. You mean what, just you know,
37:02
Speaker 2: we all work together, we'll all get along happy in
37:04
Speaker 2: here in this little studio.
37:05
Speaker 11: Okay, Well, that's good.
37:07
Speaker 3: We control what we can control, right, that's right.
37:09
Speaker 11: Yeah, well despite management. But yeah, it was in the
37:18
Speaker 11: nineteen seventies. But even today there's a dominance of white males.
37:26
Speaker 5: And the.
37:28
Speaker 11: It's not a level of parody we do. We are
37:31
Speaker 11: not seeing that. And in terms of this administration and
37:35
Speaker 11: its determination to kill DEI I'm I'm hoping that we
37:42
Speaker 11: the people will not stand for it.
37:44
Speaker 2: Our thanks to award winning journalists and news anchor Connie Chunk.
37:47
Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio,
37:50
Speaker 2: providing in depth research and data on two thousand companies
37:53
Speaker 2: and one hundred and thirty industries.
37:54
Speaker 3: And remember you can access Bloomberg Intelligence b I go
37:57
Speaker 3: on the terminal. I'm Scarlett Foo.
37:59
Speaker 2: And I'm Paul Switt. Me stay with us today's top
38:01
Speaker 2: stories and global business headlines are coming up right now.