Transcripts For BLOOMBERG Bloomberg 20240704

Welcome to bloomberg markets. Take a look at the markets. I have green on the screen behind me. The s p 500 up. 5. Same with big tech. Yields higher as well. Take a look at the 10year treasury yield higher by four basis points. Solidly over 4 . Added thanks to this mornings cpi data. Lets get a break down from mike mckeon. It came in hot. I would say it came in warm. The headline was that it was higher than expected coming in at. 4 rather than. 3 . A lot of that is due to energy and the fed will look past that. The core rate came in unchanged, a. 4 percent increase. What went up . Car insurance went up. It continues to do that. It is a sticky Price Inflation thing. Gasoline up 3. 8 . It had been a regular dropping gasoline for months and it has turned the other way as gasoline usage takes up here used cars up. 5 . 6 for apparel. Dani burger was pointing out that most of that was for womenswear. Bad news there. What does it mean for the fed . The fed is looking at things in terms of three buckets. One is goods overall. That is the white. Goods continue to deflate. Housing inflates but at a slower rate this month than last month. That polls down super court. Super court is the white line at the top. That is what everyone is looking at at the top. We had a jump in january, a retracement in february. Leaving the fed without any kind of change to its forecast. They will watch to see what happens in march. Mike mckee, thank you for the breakdown. Lets broaden the conversation to the markets. The ceo of laffer tinkler investments. Tell me how you are reading this mornings cpi numbers. In line with the market. One of the things we have talked about this before but we think this market is similar to the 1990s. You did have inflation hover above 3 for most of the decade. You had a 10 year between 5 and 7 . If we take a play from the Alan Greenspan playbook and say the fed will cut three times, that is what happened in 1990 and 1995 and then they left it at 5. 5 . And yet the economy and stocks roared. I think inflation is stickier then we would like but it has still come down dramatically. This Auto Insurance business i dont get it. It has been driving cpi for months. Sticky inflation but maybe not necessarily as big of a problem as it was a couple of years ago. Im glad you brought up the late 1990s. We have seen a lot of comparisons typically as it relates to the conversation about bubbles and what is going on in tech. You have seen goldman and jp morgan coming out and saying that you look at earnings and they justify what we are seeing in valuation. Walk me through how you are thinking about that conversation in relation to what we have seen already in the late 90s. I was managing money back then. It was an interesting time. It was fun. It ultimately ended. A number of things are different. One thing that drove for example cisco, what drove down the stock price was their underlying customers went out of business and that is partly because we were valuing companies on eyeballs and clicks and these companies melted down. Now we have what i think we are in the early stages of is the ai early generative. We are overweight technology but we are looking to names in the old economy that are utilizing and pivoting to digitization and generative ai computing. That broadens the universe. For Companies Generating strong Earnings Growth i agree with the strategists. The valuations are not out of line. Take a microsoft that is now trading at 33 times with a much more Robust Company underlying edge. Oracle is further proof that the ai evolution is not a bubble but is broadening out to all the technology economy. You are having a good day because oracle shares are currently up 10. 5 percent after reporting earnings. You bring up cisco. Cisco is one of those stocks that is brought up in those conversations about the late 90s. There is a temptation where you overlay nvidias charge over chart over cisco. Is that a blueprint we should be following . I dont think so. We use relative price to sales ratio. Nvidia is if you look at it on any other metric, it is not expensive. If you believe the growth can continue, then you have to assume we are in the early stages of nvidias growth. I went back and looked at amazon since the ipo and it is up 178,000 . Was it too late to buy it up 10,000 . This is an Industrial Revolution of sorts, a new ai driven one so you could continue to see growth and use cases are multiplying pretty rapidly for generative ai. I would not make that comparison yet. Remembering also that those were peak earnings at the end of the decade. And we are not at peak earnings right now. And let me just say this, look at the nasdaq from 2021 until 2023, it was down 3 . We are not in nosebleed territory. There is an interesting column out making the case that maybe it is not a bubble in prices but in earnings expectations. At this point it sounds like what you are saying that it is what is being priced in, that these companies can still deliver. In the 90s we had a labor shortage. Companies spent on productivity enhancing technologies. That is happening again now. The Labor Force Participation rate has been flatlined since the pandemic. Companies are being forced to spend on technology which will continue to drive margins and earnings. I think people should step back, use the dips to buy and add highquality names and extend your time horizon beyond three weeks. Probably should not be investing if you are not investing for 35 years. That is where we are focused. We let the algorithms drive volatility. Extend your time horizon by more than three weeks that is hard to do. Nancy, sit tight because we are looking at what is moving but beneath the markets. What is going on with paramount and apollo . Apollo has reached out to a special Committee Formed by paramount about a special takeover asset purchase. We know the media company, the parent of cbs has been selling their assets. They sold their Simon Schuster publishing arm to reduce debt. The stock is down more than 20 this year. Bloomberg intelligence already has a reaction out to this somewhat breaking news and they say the apollo deal is unlikely and a challenging environment is waiting on valuation making a buyout less appealing. Keeping ache lights keeping a close eye on that. It seems shareholders agree. The stock did initially pop but now it is down 1 . Lets talk more about oracle. Having a great day. Biggest intraday gain in almost two years. The earnings were a beat. Thirdquarter cloud revenue beat. And a metric on the remaining performance obligation which measures their sales backlog it was 80 billion for the most recent quarter versus estimates of 59 billion. It was a big surprise and what is driving the stock higher. The ceo said the figure was from new Cloud Infrastructure contracts signed in the third porter and analysts on the street pointed to momentum for oracle and a lot of these Cloud Computing Companies Working with different enterprise customers. A lot of euphoria around the cloud translating into a 10. 5 pop for the oracle for oracle. It has not snowed as much in recent years and that is not good for a lot of these ski resorts. Their visits fell 9. 7 this season to date. A lot of it has to do with the fact that it is snowing less and they lowered their physical 2024 forecast for net income to 325 million. They talked about how not just vale but a lot of these ski giants are pivoting to season passes. If you can get someone to buy a season pass, you dont have to ski every day and they can still get revenue out of that. Overall, the stock is just up 4 over the last year, underperforming s p 500. It does have the best take her, mtn. Issue still mounting for boeing as it faces a criminal investigation. We will take a look at the fallout in the rest of the industry. Details next. This is bloomberg. Shares under pressure as the Justice Department announced the plea meeker the New York Times also reporting that boeing failed 33 out of 89 audits during an examination by the faa. Joining us now is bloombergs head of aviation coverage. You have a story out that the united ceo is telling boeing to stop making its longdelayed max pens. It feels like the bad news wont stop for boeing. Scott kirby, the ceo of united has gone from longterm fan to a critic of boeing after the january for low out of that panel on that aircraft. And he said today that the that they are unsure when that aircraft will be certified and until that happens he will opt for smaller planes. This confirms our scoop from a week ago. Airbus, the archrival, season opening so they are trying to push their competing aircraft into that market seeking if he will buy it. A lot of moving pieces and none of it good for boeing. How seriously can airbus challenge this grip that boeing has when you think of all of the orders and the backlog that owing has built up . How hard is it for airbus to overcome . It is very hard. It seems it would be a golden opportunity for any industry but we are in an industry that is weirdly shaped with two Main Companies including airbus and boeing in the u. S. These companies have order books that stretch out many years. And even if airbus wanted to sell more planes and even if united or anyone else came along and said we are ditching boeing and we want to go with you, it is nice on paper, but in practice it means they dont have the planes to sell. They can scrape together a couple here or there but displacing the rival on a big order like this will be very difficult. We bring you back to the comments from the united ceo that they are recommending boeing stop making those delayed acts pens. Is there any chance that boeing would stop making those planes . I dont think they will stop making the plane out right. It is a question of the ceo saying we would like you to focus on the smaller variant and we would like to take more of those. He is essentially asking boeing to focus your manufacturing capacity on the smaller plane because we would like that one as well. Once you are out of the woods on the bigger variant, we will talk then. I dont think it means boeing, stop building that plane altogether but it is a specific request from him to this manufacturer. I know you are a busy man especially as boeing story continues to unfold. We are back with nancy. I want to ask you about boeing but before the break we were talking about the old economy names that are embracing digitization. A sweet spot you found in the market. What are some of the best examples of that . Think about walmart. It is using not just digitization but robotics and generative ai in their ad business and other businesses. That Company Raised the dividend 9 . And that is largely based on their confidence about future Earnings Growth. They beat on pretty much every metric this last quarter. Take American Express choosing generative ai to improve fraud detection. It is of 6 in a short period of time. Or a Water Treatment company that is that has all sorts of interesting aspects and one is the digitization of their water repair systems. That is 50 of their business and improves the margins by 50 . Those are the kinds of names we are looking for across industries and sectors. It has been a really productive way to look at holdings. How do you expect that embrace of ai to show up in some of these Companies Earnings . When i think of walmart, i think of their massive work for us you looking for ai to shave down that workforce . It certainly makes the workforce more productive. I dont think there is an intention for them to use ai to replace associates but rather to enhance or improve supply chain, improve inventory control, too, in some cases, improve the ecommerce business and the ad business around that as well as on other platforms. I think we need to think about it as a productivity enhancer. It will change the way we do business some jobs will be lost but i dont think that will be the ultimate story behind generative ai. You are telling us that you need to have a longer than three week horizon which is hard to do especially when you anchor a lot of television but what kind of timeframe are you expecting for these things to appear in Companies Bottom lines where this will benefit them on the earnings front . Walmart guided that they would start to see margin improvement in the second half of this year. I think it is going to vary by industry and company. We think this is going to be something that continues for years. Not just months. There is more to be learned but i think you want to watch the companies that are pivoting. Take a walmart versus a kohls or American Express versus capital one. The difference in performance as remarkable. You want to be what the management teams that are on the leading edge of new technologies in their business. Maybe this well because some gaps to form between companies in the same industries. You mentioned picks and shovels. I think everyones mind goes to nvidia. It is not just nvidia you are thinking about. We do not own nvidia because it does not meet our metrics. The names we own will be names like service now that provides direction on the cloud, oracle. We own i krzysztof and the poor mans we own microsoft of course and the poor mans nvidia. We will be using that weakness to add back to the name. In the cyberspace, crowd strike. It has had a big run but it has a secular narrative behind it which will continue for many years. I think it was bloomberg that reported that jamie dimon commented that they will that they are hit by an incomprehensible number of cyberattacks each day. The demand for cybersecurity will be with us for quite some time. I always enjoy speaking to you and say hello to the puppy. Still ahead, we are going to take a look at the Companies Making the most social buzz today which is in our social climbers segment up next. This is bloomberg. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan wealth management. Sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh it is time now for social climbers. First up, agriculture giant revising three years of internal sales after an internal investigation. Since it was first disclosed that shares topped a little bit up about 5 or so. 3m with Lillian Brown is the new ceo. This move comes from the most troubled period of its history. And tyson that would shelter their plant. The largest meat manufacturing is dealing with a glut in chicken and pork supplies. You can follow all of that on our bloomberg terminal. Liquid death is very much alive and well. The water into bread passing one billion in valuation. We will talk to the company ceo up next. Up next. Theyre already there. They wear business sneakers and pad their keyboards with something that makes their clicketyclacking. Clicketyclackier. But no one loves logistics as much as they do. You need tamra, izzy, and emma. They need a retirement plan. Work with principal so we can help you with a retirement and benefits plan thats right for your team. Let our expertise round out yours. How am i going to find a doctor when im hallucinating . What about zocdoc . So many options. Yeah, and dr. Xichun even takes your sketchy insurance. Xichun, xichun, xichun youve got more options than you know. Book now. It is the hottest thing in canned water, leps liquid death valuated at 1. 5 billion. Actors josh brolin and deandre hopkins. I am joined by liquid does ceo. 1. 4 billion, double the seven hundred million valuation in 2022. What he planned to do with the money . We started with springwater in nick cannon 2019 and we started expanding into sparkling and we launched our favorite flavored sparkling. Its more like a healthy soda and that did well for us when we launched it. We became the number two flavored sparkling and then we launched iced tea. Now that we have proven we are a multicategory band brent were looking to expand of those categories. We started with three flavors of ice tea and sparkling. You have regular water, sparkling water, what else are you looking for in the lineup . Our mission is to be a Healthy Beverage platform. You look at the marketing, the funny, irreverent marketing is a most always for unhealthy things beer, junk food, candy. How do you make better for you things that are marketed in the same funny way . Anything healthy is where we look to for innovation. I think its muddled to talk about a healthy body. You talked about beer brands, which you ever explore the alcoholic lineup . Mike we want to stick to better for you. That is the interesting dna of liquid death. And our death to plastic getting away with plastic bottles. There are companies that do good, companies that are funny and bradley together which is make it an interesting company. You have a scary guy undershirt there advertising liquid death in icu on tiktok, instagram. It is a groundup, grassroots approach. What is your approach to when it comes to marketing . Do you have any big plans to push out . Mike there are not too many people who consider social media grassroots. Its overtaken Television Years ago. Even on the freeway, people arent even looking at billboards. People are on phones in their cars. We are building up brand for the modern age and where their attention is. Most peoples attention is spent on social media and what you have to do to win those platforms is different than what they had to do to win on television. If theyre on their cars they should not be on the phone. But thats where the eyeballs are. I want to talk about distribution and how you push out to convenient source of the light. You think about energy drinks, celsius partnered with pepsi to handle distribution. How do you handle distribution . Similar to the celsius a monster energy. These bills were built in the beer Distribution Network. The beer Distribution Networks, they have begun to distribute nonalcoholic products. We have a Great Partnership with our network thats getting us out of the Convenience Stores and Grocery Stores different places where liquid dust sells including on premise, its one of the few brands this actually selling in bars. Talk to me about how that works. When it comes to distribution of these beverages is that the only way to cabinet in this environment they you have to partner with the heavy weight to do that for you . Mike for the most part. They call it dst distribution, our route to market. You cant really be in the coker Network Network unless they own you. The beard that work interesting because of alcohol laws are only allowed to own 20 of their Distribution Network so 80 of that network is independently owned. You can go in to get distribution without corporate partnership. Which is unique in that space. When you can build the dsd route to market with the brand to be pushed along with other brands that can be used tremendously successful. You hired goldman to lead a potential ipo. When it comes to ipos another branching out, however you thinking about that as liquid death continues to grow rapidly . Mike the unique thing about liquid death and im not sure theres any other beverage brand where its done, we are winning in completely different categories under the same brand name. There companies that have created brand names for categories but we have shown we can win in plain water, flavored sparkling and iced tea we are excited about preserving optionality and we can build a profitable business with the huge tail given this thing can transcend categories. We are focused on building a huge business, continuing to increase our margins and get smarter about the aspect of the supply chain and for able to do that we will have a lot of options whether that is ipo or strategic partnerships. An ipo is something youre thinking about. Can you talk us through the decision process . What goes into that . Mike there are a lot of things. We look at what stage is the business side . The market out . What other options are out there and at the end of the day we will make the smartest decision about what brings the greatest value. This just investors. Were just, look out where the most value. Looking up wrestling celsius a monster, ipo and that path is an exciting path we would want is an option and we will do everything we can do to make sure its an option if we wanted. You look at the share prices and they have been on fire. Before that you go talk to me about your investors. 1. 4 billion valuation is quite have d. I mention actors, athletes. Who is investing in liquid death at this stage . What came out in the press we have a couple of new investors zero o, greg creed, live nation wanted to reinvest and we look at the valuation and that celsius. Celsius training 18 times revenue. We are not being valued 18 times revenue. A lot of people where excited about the Growth Potential of the brand and the growth reef had until now. I think everybody was excited about being a part of the round in liquid death is really just getting started. s been fun to watch we really appreciate your time today. The ceo of liquid death, the hottest thing in canned water. Beverages in general have been on fire in the stock market. Lets take a broader look at the markets right now. Abigail these moves overall to the upside for stocks on that warmer than expected cpi print. Even the russell 2000 new could see some of the volatility both up and down and right now about flat. I suspect the gains are more sizable. The s p and nasdaq up about 1 . A big sigh of relief that cpi report was not much hotter than expected. The dollar index having a bit of a bid. Yields higher in sympathy with that report. We have yields going higher but not so much stock split can handle it. We have Something Interesting happening, this is a chart we started looking at last year. Rsi, we have a correction and since then weve been about that. Back in december we had this area that was a diamond top and the question is will we see a touchdown back to the bottom . These are custom patterns. While weve been making these new highs all year is been done unless bullish momentum. It might not take too much to pull them down. We take a look at the shares of oracle they are soaring. I believe this the best days since 2022. A much better quarter than expected. Plus, that evoke tailwind for ai. There was a Management Change their investors seem to like. Southwest airlines, the worst day since march of 2020. They have pulled their guidance for the year and officially pulled the gun is for the number of flights in the year as boeing said they will be able to deliver 46 as opposed to 79. Investors not liking that uncertainty. Coming up we are taking a look at how the war in gaza is impacting israeli u. S. Relations. Dan senor joyce beatty when we come back. This is bloomberg. At Ameriprise Financial our advice is personalized based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice. I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. Abigail you are looking at a live shot of the principal room. Coming up an interview with the ceo of coinshares. It is time for wall street week daily and we are looking at the rising tensions between President Biden and Benjamin Netanyahu over military activity in the gaza strip. The host of the podcast coming back along with wall street weeks david westin. A conversation months into the war. Thank you for joining us. Pick up on where katie left off. There has been such a bond between israel and the United States housetrained is that right now . We see it fall into the Public Domain right now. In the days after october 7 the could not have a stronger statement. Made it clear whose side he was on and since then he has gotten israel than military supplies even though there has been dysfunctionality and congress he has vetoed those members have that have called for immediate ceasefire. There are two issues going on now. The images of palestinian suffering, human catastrophe in gaza are unavoidable even if hamas is largely to blame. Those are images that are upsetting to watch. For President Bidens progressive base that he needs to turn out a november, his advisors want those images off Television Screens in tiktok in the only way they can get that is if they get this war over and dad. President biden realizes he cannot get that to happen. There is a position in rough up with 1. 3 million civilians are there. Its going to be a tough fight and theres no way around that. The calculation the administration is making is that even though they continue to support israel, for some public fight with netanyahu. He has strongly disliked by the progressive basin even if he cant stop the war is strategically it would be a failure to stop the war. They dont want israel to leave hamas attack. He has to demonstrate that he is going headtohead with that and yahoo . As more performative that a policybased. We have a president ial election in november and were talking about biden the candidate. Do you think thats impacting have the Biden Administration is handling this . Dan i think its somewhat of a mistake but his advisers are worried about busy as a against his progressive base. You need your base to be motivated. I believeth donald trump as their candidate they will have no problem motivating their progressive base. They will much more focused on donald trump than the plight of palestinians. For what is with, with the rise of antisemitism in the u. S. According to the adl, antisemitic incidents are up there is a real fear of this break out of order. That affects not just jewish voters. The silent majority in a President Biden were to take that on and say this is unacceptable. A few loud voices reading this much havoc it would do well for him it. David what about inside israel how concerned are they about losing the global youth. There was a big drop off in the economy of israel. Dan i see more alarmed about how young voters and younger citizens across the west are turning on israel. That is a concern they have that they value if there are longterm implication but shortterm is winning the war meaning they believe if hamas or its leadership or any part of its capability, its infrastructure is left intact israel will never be able to restore it to capability again. The economy shrunk by 20 of the Fourth Quarter but things look better now. The economy has suffered. 18 of the workforce was out of the workforce during the first few months of the war because they were called out of the reserves. If israelis feels they cannot restore their security. That struck it israel will be there new reality. You cant do that without winning the war. They will live to fight the pr were another day but in the immediate term they have to get rid of this threat. The start up economy, thats something you know very well. We have seen a sharp dropoff to funding of israeli startups. What impact do you see that having . Dan Venture Capital to israel is down, is still high. Some of it has synced with macro trends. I dont want to overstate the uniqueness to israels situation. Israeli startups having your head of development is called up and has to disappear for four months rather than work on closing deals, thats a hit to the company. Though biz now that these reservists will be coming back. Reintegrated into civilian society. That will change which is why you see in an uptick in the stock exchange. There is also a sense of after every war in modern history the economy has tended to bounce back. Since the start of the nation has flourished the number one reason is our entrepreneurs are extremely improvisational have interdisciplinary skills and this is what ceos tell me all the time. There are multinationals set up in israel from meta, intel, microsoft, cocacola. The talent you get in young this really is anything they see elsewhere in the world. Many of them have been plucked out of their jobs and put into the battlefield, leadership training and put back into their companies. Many analysts are saying, the start of nation talent pool will be Even Stronger after this war. I dont want to understate the pain and overhang of the trauma but it will be a stronger, more dynamic, more capable talented tech force by virtue that so many of them have had to serve. Will be able to speak to you again soon. That is dan senor author of the genius of israel in our thanks again to david westin. This is bloomberg. I couldnt slow down. We were starting a business from the ground up. People were showing up left and right. And so did our Business Needs the chase ink card made it easy. When you go for Something Big like this, your kids see that. And they believe they can do the same. Earn unlimited 1. 5 cash back on every purchase with the chase ink business unlimited card. Make more of whats yours. Lets take us some quick look at stocks, oracle soaring after thirdquarter results showed Strong Demand for ai. Ubs hitting highs. Greg martin from Rainmaker Securities coming up. Securities coming up. You know who knows what she wants . Me with empower, we get all of our financial questions answered. So you dont have to worry. Empower. Whats next. From the heart of where innovation, money and power collide in Silicon Valley and beyond this is Bloomberg Technology with Caroline Hyde and at the. Ed im at the though in san francisco. Coming up we will talk earnings about as oracles has the biggest earnings and years. Bitcoin continues his recordbreaking run