17 Burst results for "Joel Levington"
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"That's one way to imported capitulation might be another uh... i i'm just not sure they see another option at this point we've been through for now kevin mccarthy can't keep the job steve's police can't get and it tom emmer can't get it we're talking about majority leader majority with were sort of out of options here when it comes to senior leadership and that would be pretty amazing to be the first time that somebody not from senior leadership became speaker in a hundred forty which years makes us wonder exactly how this effort to govern might go he could be in the same lot as kevin mccarthy as well and we're doing this again in a few months so stay tuned wow alright job much thanks for joining so us to matthew uh... radio tv host bloomberg sound on bloomberg televisions balance of power appreciate getting a few minutes of his time that looks like i mean it is you see how this plays out but it kinda would that the i guess the more mainstream republicans have just said uh... you know they give up they give they get like it looks the only alternative is uh... working uh... alpha bipartisan candidate yep and i guess even the mainstream sort center of -right republicans are saying we would rather have somebody so far out on the he doesn't even believe in american democracy then work with democrats that's kind of i'd i guess that's kind of where the party is at the moment and then the question will be if that is in fact the leadership in kind of where they're leaning what can get done legislatively you know over the next term or uh... two and then that of course leads into the election next year well maybe maybe very little can get done and legislatively which well we can have to keep the government in open -going and funded that's important and that's november mid -seventeenth seventeenth that seems to be important to get done uh... and that will presumably require some bipartisan work there uh... maybe they do just the bare minimum you you know just kick the can down the road every once in a while and because gridlock is good uh... that's what i was raised to believe in terms of markets right right so for the equity market at least good yep very good alright so now let me go back to the the auto strike we still have no resolution uh... you know we had joel levington from bloomberg intelligence saying from a balance sheet perspective they're ok the companies are going to be ok uh... i think the big issue i mean if i'm an auto worker i need to have some i don't know where these these jobs are going i don't know if they're still going to be here as we make this evolution right that's that's one part of it for sure because uh... people who work in engine and transmissions uh... there are are plentiful right now and uh... in the evening future it seems from what i can see that there will be fewer bodies needed on the factory floor now maribara seems to to believe that they're gonna need just as many people to build a visa as they will to build i see uh... products and she is an engineer by trade so she is smarter than me on so many different levels that i wouldn't want to argue with her well here's my hot take which has absolutely zero value but i'll offer it up anyway I don't think the demand for EVs is going to be nearly as strong as maybe some of the folks think it doesn't look that way right right now does it with all the price cutting that's uh... having to happen in order plus the uh... incentives you get both federally and state in order to get people to buy these vehicles now they are more expensive uh... so that's one I come from it from a political perspective I think this is going to become a political football everything else is becoming too late no i don't think it is i don't hear anything out there oh I mean I spent a lot of time on the auto forums yeah that's a little dicey I just think the average thing is like I'm not doing this electric thing there's nothing against AVs if you have a charger network that's strong all right then it'll be fine right because they perform really well I like going to a gas station smelling gas that's kind of the kick thing you see and I are going to die soon let's get some company news with Lisa Mateo I'm with you there though though it's weird I know Jersey girls don't pump gas though we do not pump gas that's the one perk we get good morning guys well after two periods of declines snap returned to revenue growth in the third quarter now Bloomberg's Simone Foxman says there's been a few mixed messages the financials were pretty positive they returned to revenue growth in the third quarter following two periods of declines and net loss that came in lighter than anticipated but the company also saying that it actually could be hurt by the impact of the war in Israel and Gaza brands slowing their advertising campaigns putting them on pause since the start of the war and the company says that could continue into the fourth quarter making the outlook for that quarter very difficult to determine snap right now down about one and a half percent t -mobile third quarter earnings jumped after adding new subscribers the company added 850 ,000 post -paid phone connections topping expectations and outpacing rivals AT &T and Verizon revenue did miss t -mobile shares right now down just a fraction Apple TV customers can expect to change Bloomberg's Gino Cervetti explains sources tell Bloomberg News that Apple will redesign its TV app in a step toward consolidating its various video offerings later this year Apple is preparing a new version of the app for release around December now Apple shares down almost one percent Meanwhile Bloomberg has learned that Apple has raised the price of its Apple TV Plus arcade gaming and news plus subscription services and that means the company's Apple one services bundles yep that's going up too and Qualcomm says new its laptop processor can outperform rival products from Intel and Apple the company says its new Snapdragon X is as much as twice as fast as similar 12 global market news changes in an instant so don't miss a minute listen to Bloomberg Radio anytime anywhere around the world on the radio at tune in the Bloomberg Business app and bloomberg .com against issues pop culture is always evolving and those changes impact our lives ways in that are both visible and not so obvious I'm Lucas Shaw and I cover the business of pop culture for Bloomberg my job is to uncover how entertainment is changing and explain what that means for you because context changes how see you things I change things context changes everything start exploring my coverage and more at bloomberg .com on wall street the top names in finance and economics welcome now Sheila bear we are joined now by Brian Moynihan Bloomberg the Wall Street week podcast with David Weston the Bank of Japan shook global bond markets the week's top tough financial stories along with analysis from the business world's most prominent voices there's a 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Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"In their balance sheets so we got joel levington here he runs credit all research for bloomberg intelligence and his day job he follows these auto guys and the industrial companies from the credit perspective so joel you know i when i think of the auto companies i don't think of them with the strongest allen cheats and strongest credit profiles and if this strike goes on it is it a error what type of risk is it to to the balance sheets into the credit yep although it's a great question and really at the u s companies are uh... autos have weaker balance sheets begin within the european names uh... it hasn't really been too too much of a concern at this point but as it extends very wordy early in week six uh... it becomes comes an an issue and really becomes an issue because the payables on these companies balance sheets are huge you know in of excess thirty billion dollars and you don't really have receivables offset that so you have this liquidity issue of are you yard you lost map that yes it was a payables with the state was like you're paying your suppliers every sixty days uh... and as okay as you have no sales like yours thought to pay them on the flip side remember they're selling to their dealers so they get the cash kind of upfront so that cash right behind of right yet is it's when you sell a car to a dealer you don't get cash for it right right well it it's done through for are usually done through for your well essentially get it very quickly uh... and so there's a timing mismatch you get the cash up front and then you have to pay your suppliers so when there's no more sales or when sales decline you don't have the money coming in because you're not selling to the dealer but on the flip side you still have to pay your vendors and so that's where all the cash strain happens. If you recall during the pandemic Ford had to issue eight and a half billion dollars worth of debt which is very high coupon debt which eventually they called in at a premium on top of that just to keep their liquidity whole so hopefully that's not the situation we're in but certainly it feels more uncomfortable when we get into next year and we look back I'm sure the strike will be resolved in the next few weeks seems like they're done they just need to strike little bit longer is that right is that kind of the feeling and that's what I got from your interview with David Welch this morning which is that Sean Fain has to make a lot of noise he had huge demands they're gonna get a big pay bump but obviously not the pensions the or four -day work week I was rooting for the four -day work week yeah I thought it would be awesome for work our week is what I'm for but when you look back at the second half of 2023 how much of an impact is this gonna make on the top line probably not that much I mean I think particularly with Stellantis so you know like your Hellcat and Dodge and Chrysler they built inventory in front of this knowing that there might be a protracted they build a lot of Jeep Wranglers we heard ahead of this I mean that if you go to the Salerno in our town they certainly have a lot under lots of Broncos and and and Rams and Jeep so Wranglers you mean and Wranglers yes and so are Broncos Ford no well they they have to oh I see okay yeah like all of the all autos have lots of inventory other lots you know knowing that you might have a several week lack of supply coming out so wait just to sidetrack on the Bronco thing you got a dealership in your town that has a ton of Broncos on the lot do you go in there and I mean are they charging five or ten thousand dollars over MSRP or can you actually just buy one I think you could just buy where do you live the train station walk up to what yeah so do you think the Union is gonna get at the end of all this I mean it looks to me like they're gonna get 23 % increase in pay right it may be bigger compounded and but no pensions right they're not gonna get that back no I think you're totally right but and I think you're probably in the 25 % zone is where it kind of works out I think one of the reasons that you hear people like Walsh Dave who does a great job in our Detroit office talk about it being extended is because if you think about from the UAW side of things they've had a complete decline in in volume and customers for decades right and they have to kind of turn it around so if you can pop a you know 15 % increase in salary on day one that will get other industries beyond notice that if the UAW is in town certainly more people could join them which is really their goal and game to become more pro signing up battery factories now they I'm sure they hope that some Tesla shops will look at the union and say you know what let's do it let's try it again yeah and all the non -union shops down south or in the West BMW mm -hmm BMW Volkswagen is building a new two billion dollar Scout facility so I'm not sure if that's gonna happen is that really gonna happen I saw at the you know the import mechanic in Bronxville right around the corner from Rosie's they had an international scout on their lot and I thought man that is cool so cool but you have no room in your parking garage no I don't I know no but I but I feel like is it really gonna happen are they is Volkswagen really gonna revive that brand and actually make a mass -production product they are although if you look at the products that they've shown online it looks very very similar to the Caribbean products yeah with a brand name that nobody remembers is that gonna live? is Rivian gonna live? Rivian I think Kenlive you know like they did a convertible bond a couple months ago which really gives them some liquidity in time for their next product to come out but just like all of these EV companies they're years away from making profits so it really what's becomes your liquidity and access to the capital markets for more of it because you're going to need it. Let me ask one more big car question then I'll yield. The Cybertruck Elon Musk on the conference call when he was so bummed out and getting kind of philosophical and dark he said we ever should have you know launched into this special product and you know we we should have known that this like you know special edition would have caused us to go back into production hell. He was talking about as if it were limited right don't they want to challenge F -150 you know Chevy Silverado you know Ram 1500 these you know massive products volume with huge margins isn't that a market that they want to take a piece of or is this just like if you got one in the two -year production run you're lucky and then it's done. I don't think the Cybertruck is the answer to the F -150 or the Silverado. I think really what they're trying to do there is really work giga casting which is really making these huge casts and when you can do that you can really cut production down time really quickly but I think where Tesla is headed is really towards the Toyota side not towards making SUV not necessarily making a lot of money off of a pickup truck but really on the smaller and cars I think you'll see that with the Model 2 that's where I think they can get super high volume and get it out to the largest amount of consumers. Their business has always been about the retail person not the consumer and the application commercial like you'd see in an F -150 so I think that's really where they're headed but having that ability to cast in great scale at a short period of time that can give them a competitive advantage even against an amazing manufacturer like Toyota. Geez, back baby after like a 10 or 20 year hiatus in terms of being a stock and a direction.
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"From from these from these special you know audiophile you know corners the market why are they so bad well think about it right if you if you have a high -end system in your house it's it's in your house right if you have it in your vehicle it's exposed to all kinds of elements conditions temperatures vibration so while it's a name and brand and supposedly a high -end system it just can't be the same thing as what you would get you know in a in a home system it you know so I think that's as much licensing the name they just slices the name and they throw in the cheapest crappy China speakers they can possibly find it sounds like to me holy yeah you're gonna take it to the beach you're gonna get sand in the speakers and you know they look hey Matt like it even in my v12 right it came with its own technology I have a cassette deck rather than upgraded I've been going around buying cassettes from all the record stores no surprise all right let me ask the existential question that I've been asking a few people in the face of Tesla willy -nilly cutting prices again it seems to me it seems to me the willy it nilly term just makes me once again want to know do we do we know what the real long -term demand for EVs are I kind of feel like we don't how do you go from the Dodge Challenger with naturally I got the expert this is the opposite of EVs I got the expert I'm a guy because I'm starting to get skeptical that people are a lot of people or everybody's gonna go to EVs yeah I am to always kind of have been and I think the two factors you look have to at is that yes cutting prices and really they're still the only game in town you know so so it just kind of shows that the profitability really isn't there for everybody else and I don't think that you have to look at price parity of EV versus internal combustion you have to look at profit parity right and automakers not going to build what they can't make money on right and that's where we are and I think the lineup 2024 in terms of what's coming and all these EV announcements that we've had and the laundry list is huge out to 2030 compared to plug -in hybrids but I think if if there's not significant improvement through 2024 in terms of demand and ability of that drivetrain technology I think you're going to start to see those 2025 and beyond on and plans forecasts start to change significantly 2024 is kind of set right you roll that back at this point yeah but I think beyond that there's still a very very big and scary question I think for that technology well Kevin your colleague Joel Levington is writing on Bloomberg Intelligence on the credit side that Lucid loses three hundred thirty eight thousand dollars per vehicle that's insane that's how much they lose on their already expensively simply priced vehicles but yeah I think Dodge is making money on my challenger and I can keep in mind too right that business that model has a lot to do with direct sales right in this idea that that's a better model and but if you have a franchise dealer base retail base as a manufacturer you're booking your revenue on the sale to the dealer right even if it sits on the lot for months and months that revenue to the manufacturer is booked if you're selling directly you're not booking that revenue until the sale is delivered and paid for. So what you're getting in the cases of Lucid and Rivian is production you're paying cost of goods to to build the vehicles but if you can't sell them so if your if if your sales or deliveries are 60 percent of your output that's where you get so upside down at gross the profit line and that's what's happening there they would be better i think they sort of believe the myth that direct sales were better maybe for the consumer they are but for the manufacturer they're not and would have been better off to say we have a franchise base and if we produce i don't know even if it's a small number four thousand units a quarter we've sold them and booked the revenue for those units um on the wholesale to the dealership instead of having to worry about because you get into a demand environment like this and you can't move them and then your cost of goods is through the roof and your revenue is through the floor i want to dovetail so the death of the eight right my challengers the last of uh... of its kind uh... with these with the resurgence of or the uh... the uh... you know that the birth of evie's is hodge is tim canis kiss really going to come out with a muscle evie i mean they teased one like a year ago and no one's heard thing about it since today have anything to replace the challenger the charger with mean it would be that right i think he showed that ces originally and there was the a bunch of automotive stuff there and look and i get it uh... you we were out in monterrey for car week their drove around rolls -royce and it's unbelievable right and it really does feel or i should say the v_-twelve feel like uh... what the the those high horsepower evie's feel like exactly that the the evie mimics kind of of big block feel it's just power toward quiet and and quiet so so i think you can get there with uh... if the goal is performance he can do it with charter and challenger and the only thing i didn't really like is that they had you know piped in engine noise it's like a look at it in the end it's quiet just we've right okay and we're gonna go down to washington uh... for president by that's kevin tiny from bluebird intelligence thanks much so uh... right now we're gonna head down to washington d c present but it is making his way toward the lectern yes and comments on the jobs report from this morning to go there three hundred thirty six thousand jobs in september alone that me since i've taken office we've created thirteen point heard new jobs me say before we keep saying that my dad had an expression to joey jobs by a lot more than a paycheck spot your dignity spot respect for public a kidney and it's going to be okay and mean it well three hundred thirty six thousand more americans if they have children can say that to the children and mean it the unemployment rate has stayed below four percent for twenty months in a row the longest stretch in fifty years we've achieved the 70 -year low in unemployment rate for women record lows in unemployment for african americans and ispanic workers and people with disabilities folks who have been left behind in previous coverage and left behind for too long we have the highest share of working -age americans in the workforce in twenty years it's no accident despite nomics we're growing the economy from the middle out the bottom up not the top down and inflation is coming down at the same time it's down sixty percent since last summer core inflation was just 2 .2 percent over the past three months
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"I 70 to 75 I'm Rob Carolyn with your three -day forecast and Bloomberg 11 30 now from the interactive broker studio broadcasting coast coast -to Bloomberg 11 30 New York Bloomberg 99 1 Washington Bloomberg 106 1 Austin Bloomberg 960 San Francisco Sirius XM 119 the Bloomberg Business App and Bloomberg com this is Bloomberg Daybreak and it's coming up to I 30 on Wall Street good morning I'm Karen Moscow I'm Nathan Hager we are just about four hours away from the open of U .S. trading even Bloomberg Daybreak is brought to you by Oppenheimer Oppenheimer focuses the power of their thinking on you creating customized plans to help achieve your goals put the power of Oppenheimer thinking into your investing call an Oppenheimer professional today well we begin with talks between the United Auto Workers and Detroit carmaker sources tell Bloomberg that UAW president Sean Fain plans to cement the union strike plans at 10 p .m. Eastern Time tomorrow two hours before the contract officially expires Bloomberg intelligence director of credit research Joel Levington says the sides remain far apart it does feel like a strike coming is you know even when you see Bloomberg reporting that the that the UAW has offered some concessions going from 40 % growth to 36 % growth is still a huge difference between the 14 and a half percent that the auto companies seem to be giving and Joel Levington with Bloomberg intelligence says the biggest winner from an auto workers strike could be auto companies that don't have unions like Tesla and we're also following activity on Capitol Hill Karen House Republicans are launching an impeachment inquiry into President Biden speaker Kevin McCarthy says the probe will investigate what he calls a culture of corruption. House Democratic leader Fries Hakeem calls the probe a waste of time and taxpayer dollars and says House Democrats will defend the President Well we turn to the economy now Nathan and we get a key inflation rating this morning with the August CPI at 830 a .m. Street Wall time and Bloomberg's Vinny Dow Judice has a preview Bloomberg economics as we could see the longest stretch of subdued readings in the core data X food and energy in two years outside of higher August because forecasters anticipate tame readings in most of the retail sectors the Labor Department also issues producer the price index Thursday and the import price index Friday Vinny Dow Judice Bloomberg Radio okay Vinny thanks you've seen an uptick in COVID cases this summer now new COVID formulated shots have gotten a green light from the CDC's advisory panel Bloomberg's Ed Baxter has that story the panel is recommending the full CDC use for those six months and older it says it could allow the shots to be administered as early as this week but of course that will depend on individual health care providers getting supply and scheduling appointments but health care industry leaders along with Pfizer and Moderna say they have been working logistics already financially it will of course help both companies as vaccination administration has slowed Ed Baxter Bloomberg Radio all right Ed thanks well in the IPO space arm holdings long anticipated initial public offering is set to price after the close today and what's said to be the largest listing of the year investors will be watching to see how owner SoftBank fares it acquired arm seven years ago and helped grow the chip designer and change its business model futures this morning are little change to lower the ten -year treasury is down five five thirty seconds cl four point three zero percent and i'm excrete oil is up seven tenths of a percent and coming up on bloomberg daybreak we have more global headlines plus a check of thanks karen it's five thirty one on wall street michael bars here with a look at what else is going on around the world michael thank you very much nathan five former memphis police officers have been charged with federal civil rights violations in the beating death of tyree nickels the new charges come nine months after the beating violent of nickels by officers during a january seventh traffic stop near his memphis home civil rights attorney ben crump is representing nickels family these police officers brutally killed of tyree nickels and it was unjustified it was unnecessary and it was unconstitutional nickels died at a hospital three days after the beating an fda advisory panel has decided that a common decongestant ingredient found in sudafed allegra dayquil and generic store brands is no more effective than a placebo drug drug makers are defending the use of phenylephrine but the fda must eventually decide its fate please for an end to book banning on washington d c during a senate hearing the debate got contentious illinois secretary of state alexi generalist testified before a senate committee to promote an Illinois law that prevents banning books authoritarian regimes ban books not uh... democracies some republican -led states have restricted certain books from kids most of the books include stories about racism sexuality or gender identity g o p senator john kennedy of is the other the first one is called all boys are blue kennedy read explicit scenes from two of the ban books democrats and republicans did agree some books are inappropriate for children but they were unable to agree on who has the responsibility to censor the books global news twenty twenty four hours a day powered by more than twenty seven hundred journalist an analyst in over a hundred twenty countries on michael bar this is bloomberg the five thirty three on wall street time for the bloomberg sports update with john stansell all right the next edition of vastly disappointing season they have a new man in charge for sometime now owner steve cohen is looking for a new president of baseball operations replacing andy alderson the favorite all along has been david news and now he's been hired thirty eight -year -old harvard grad grew up in manhattan as a mess fan spent six running years the show in milwaukee next beat arizona seven to four p the ones of his forty fourth home run the goals for yankees the the rest of the way avoid finishing in last place avoid having a sub 500 record which hasn't happened since 1992 double header sweep in boston helps both cases yankees beat the red sox three to two and then four one to their first twin bill sweep in boston since 2006 they're now a game over 500 they're tied with the red the jets win over buffalo showed they have pieces in place two good running backs terrific wideout garrett wilson a stout defense but now of course they don't have aaron rogers their coach is rossala i feel feel more for aaron than anyone i you know he he is he's invested so much into this this organization so much into this journey that he's he's embarked on and wanting to uh... to be a part of what we've got going here and uh... and how much he's invested in not only this organization but his teammates self this fan base the city salas says this is now zack wilson's team his struggles the last two seasons is what led the jets to trade for rogers they certainly need to add another qb to at least back up s and p doubt and that's that futures are a little change to lower as we wait august consumer price data due out at eight thirty a m wall street time the ten -year treasuries down for thirty seconds for you the four point two nine percent nine x cruise moving higher up six tenths of one percent of fifty seven cents at eighty nine dollars forty one cents for a intermediate five thirty five on wall street return to politics now in our daily sound on brief today on the government spending fight on capitol hill and its impact on you aid to cranes military bloomberg's joe matthew kelly and lines talked about it with democratic senator mark warner of virginia the vast majority of the republicans in the senate and i believe the vast majority of the republicans in the house support assistance continued to ukraine so this is not simply a democrat republican issue this is that again far -right group that i sometimes question you know who before long -term in terms of
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"So like the BMW plants in Tennessee or wherever they put them. South Carolina. Are they're not unionized? They're not and so you know like there is going to be a relative treat here in terms of how much you can go. And it's one of the reasons why the auto companies are pushing back so hard because they play in a global market space. I don't know. So I from that you got to decide as a worker Paul do you want to live in Spartanburg. Do you want to live in Austin? Do you want to live in Motown? Probably Spartanburg is looking pretty good. All right so from the balance sheet perspective Joel do any of these Ford, GM, Stellantis, do they have a balance sheet that you're nervous about? Should a long strike take place? Well the thing that I look at the most and this is really a Ford and GM issue more than a Stellantis issue is that the way that they get paid is that they get paid when they sell the car to the dealer right but they don't pay their suppliers until your typical 45 or 60 days afterwards. What that means is that they have a huge amount of payables that are lined up and very little receivables. When you have a stoppage of work there's no receivable of money coming in but there's a huge amount of payables to the tune of maybe like five billion dollars a quarter so you have to have massive amounts of liquidity to handle kind of such a situation which is really what Ford and GM have. I think Ford has something like 50 billion of liquidity available. GM has about 45 billion dollars of liquidity available so they can handle a near -term impact but it has a huge view in terms of free cash flow for a year in terms of the liquidity on their balance sheet. They got a lot of leverage here I'm looking at GM I mean they got a debt to EBITDA I mean that's there's a lot there. There there is but keep in mind that that includes the finance company when you strip that out leverage at GM and Ford is actually relatively modest okay maybe more like one to one and a half turns okay it's really that they have finance companies which is kind of hard to see sometimes just because it's blended all together under their under their their primary now I will say everyone we talked to from we talked to Seth Harris yesterday at Northeastern who used to be an advisor to President Biden and deputy director of the White House's National Economic Council and Claudia Som she of the Som rule they all say look the union took bad deals for the workers at the end of the financial crisis and the car makers have raked it in since then surely they've been setting aside billions because they knew these negotiations were coming right surely but you're right I mean they kind of they got a certain deal with certain pay pay increases and then this inflation came along which nobody saw and then boom now they feel like they need to get back it's gonna be interesting it feels it feels contentious hopefully they can get something done by midnight Thursday night especially if they haven't produced my challenger I know I mean is I need them to make that incentive here that should be the priority of the negotiations. The whole thing we got to get that off thing the line. Joel Levington he's director of credit research for Bloomberg Intelligence, senior auto and industrial credit analyst as well so we appreciate getting some of his thoughts here again big big issues for the auto manufacturers coming up big labor big auto we've got strikes seemingly in a number of industries across this country. This is Bloomberg. Let's get some company news right now Lisa Mateo. Thanks Paul. Apple's biggest event of the year is just a few hours away. The company expected to unveil its iPhone 15 along with updated versions of the smartwatch and AirPods. Bloomberg's Ed Ludlow is in Cupertino. From a pure weightings perspective this a stock is that is seven percent of the S &P 500. It is normally the biggest points mover in either direction and that's that 100. And based on past precedent the bar is high. Go back to 2011. There have been 12 iPhone unveil events since 2011. Apple shares have only risen on three sessions corresponding to those events. Now Apple shares right now down about half a percent. and for the first time the new iPhone model you buy on launch day could be made in India. Bloomberg's Alex Webb puts it into perspective. The most recent data we have from March trading 12 month revenue is about six billion dollars in India, in China right now. Apple has in the order of Greater China which also includes Taiwan has in the order of only four billion dollars in revenue. So India has a long way to catch up. The iPhones that are going to be on sale made in India in the next generation. Only a small portion of them will be coming from that market. The vast majority will still be made in China. Now to hear that full conversation tune into the Bloomberg Daybreak Podcast. And Nvidia will join IBM and Salesforce at the White House today promising to adopt the administration's voluntary safety on artificial intelligence. Several companies including Amazon, meta platforms and Microsoft have already taken that pledge. Shares of Nvidia right now up almost a percent. Shares of IBM down a percent. Salesforce shares stairs down a fraction. Those are the company stories we're following this hour. We'll have more in just a bit. I'm Lisa Mateo and this is Bloomberg. Can't catch us live. Your favorite Bloomberg radio shows including Bloomberg Surveillance, Wall Street Week and Bloomberg Sound On are also available as podcasts. Listen today on Apple, Spotify and anywhere else you get your podcasts. The big take With no fees or minimums and no overdraft fees, banking with Capital One is the easiest decision in the history of of decisions. Kind of like choosing Derek Jeter as the pinch hitter for your baseball team. Jeter you're in. We need a home run. I'll give it a try. I've swung a bat once or twice. That's out of here. banking. Yep, No fees or minimums and no overdraft fees. Is it even a decision? That's banking be imagined what's in your wallet. Terms apply. See Capital One dot com slash bank for details. Capital One and a member FDIC. When you get your news from Bloomberg, you don't just get the story. You get the story behind the story. How your EVs battery may not be as green as it seems. Why a decrease in global birth rates send could countries scrambling to increase immigration. You get context. Context changes
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"Right now? Joel Levington is the smartest guy in the block. That's true. He's a Bloomberg Intelligence he and does credit. He has just published, John, that 296 GTB Ferrari you want. Go down Madison Avenue looking for what you can. I mean it's popping in. The EBITDA on that Ferrari is $175 ,000. Profit. That's what Ford pickup trucks have in trouble with. The margin on it is $175 That's called a luxury margin. That's a luxury margin. Joel Levington to the rescue today. Have you been past the Showroom on Park Avenue. I have. I've never been in. I know you've been in. I haven't been in. I haven't been in. I I'd just like to have a look. Why don't the others more do it? That's what I don't understand. It's Just just so beautiful. Is there anything more aspirational than that? It's just. Now the latest. Now with the latest news from New York City and around the world, here's Michael Barr. Tom, Lisa, John, new clues after the arrest of suspected serial killer Rex Heuerman. The New York architect and father is accused of murdering at least three women in 2010. Suffolk County District Attorney Raymond says Tierney that investigators are pulling a ton of information from the suspects home. Some key evidence in in this case has been hairs and DNA. So we're starting out at the molecular level. saliva, DNA, hair fibers and then we're working all all the the way up to anything else that would be relevant. DA Raymond Tierney says police found more than 200 firearms in Heuermann's basement. Extreme heat continues across the nation. His forecast has set a record of 19 straight days of 110 degrees or more. George's Supreme Court rejected Donald Trump's request to hold a state investigation and to his efforts to over time. That's what it is. Live from the Bloomberg Interactive Broker Studios, this is Global News 24 Four
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"And net corporate debt was valued at plus or $-11 billion versus that addressable market. We feel that through the next up cycle, it will, as CarMax returns to typical unit economics and typical units sold, it implies plus or $-40 billion of sales. And if we translate that into earnings power, it really implies as they return to the normal unit economics and the normal units sold. It's about 8 to $11 a share of earnings power versus a stock that until today had been trading in the 50s and 60s. But there is a binary aspect to this, right? I mean, our Joel levington at Bloomberg intelligence says bondholders rather than work out restructuring should just wait and see what they get in bankruptcy. If that happens, right? No, that's CarMax. Oh, is that CarMax level? Okay. Well, actually, you're talking about financial risk and just kind of business model risk. We're in an environment right now where anybody selling used car selling used cars is facing macro headwinds. But this is the epitome of an environment where the competitive advantages that CarMax already had with their business model. The ones they had, the ones they have been investing in throughout this downturn, playing the lawn game to win the long game in the industry. If you compare that to the likes of carvana and room out there and certainly if you compare it to the mom and pops out there in what is still a very fragmented industry. At the end of the day, what CarMax is showing even in a recessionary environment is all the advantage they have as a scaled up omnichannel winner. And I could run through the laundry list of it. No, you're right. And Paul's right. I was wrong. Joel was talking about carvana. I get these confused, right? Carvana is the one with the venue. Was the cooler story until more recently, right? Yes, exactly. Well, it seemed like such a success until it no longer did. Until the tide went out. When the tide went out, you've seen the value of CarMax's platform. We think it's going to show through in a downturn and in the next up cycle. All right, Colin, thanks for joining us. Really appreciate it. Colin mcway, portfolio manager, heartland adviser, talking value stock investing. Let's
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"And every week at this time Tapping into our Bloomberg intelligence analyst covering some 2000 companies and 130 industries worldwide. It seems like the consensus is that 2023 is going to be really hard and developed economies are going to be in some kind of recession for some undetermined amount of time. Now, the worst place to be may actually be Europe, particularly if you're an industrial company and dealing with record high gas prices. Let's get more on the outlook for that industry within Europe. Bloomberg intelligence senior industrials analyzed omit Vaziri joins us now. Omid, how bad is it going to get for these guys? It feels like if we stack all the cards together, the worst deck is going to come and be played with European industrials. Well, just plenty of industrials within Europe, the benefit from very strong structural growth drivers. So what we've been focusing on in our research is on the structure growth element over and above its industrial production sensitivity for the respective companies. Now, we think European industrial demand could do this strength if macroeconomic backdrop deteriorates on rising interest rates and sustained inflation. Meaning consensus earnings may need to be cut by as much as ten to 15%. Based on the scenarios that we've run. Having said that sectors with pricing power and structural strong structural drivers, including grid energy and mining equipment, manufacturers could outperform. Automotive and aerospace may show some improvement, there are likely to remain below pre virus levels. And clearly currencies will play a big part in earning reporting. We think the currency profit tailwind seems likely to turn neutral or even reverse next year. And on the capital allocation side macroeconomic risks could weigh on sentiment and reduce appetite for large M and a and payouts. So it really depends on where you look. The European capital goods are broad in their end market exposure. They're quite global. High sensitivity to Eurozone industrial production amongst the most cyclical SKF sandwich method auto attack could put them at risk should industrial production weekend next year. How does the war in Ukraine impact some of the operations? What have you heard from some of your big European global plays? Julia, high energy cost has made it a lot more difficult for the European industrials to compete in the global markets. So it has been an impediment for the cost structure development. And making them more competitive in the global landscape. Having said that, a lot of the European industrials provide solutions, products into energy efficiency, industrial automation, but also those processes that drive sustainability and we've seen enhanced we've seen an acceleration in demand for energy efficient solutions. So the likes of Siemens Schneider ABB are reporting quite healthy order intake even from within Europe on the back of higher energy prices. How much of all of this is going to become from government spending in some capacity on the energy transition. And I'm wondering how reliable we think that is. Europe clearly has a strong agenda to reduce its reliance to fossil fuel and Russian gas. Now, this will be a multiyear agenda and it has created already quite a nice secular growth driver on top of the sustainability driven secular drivers for the European industrials. Through energy efficiency through increased automation, the provision of reducing labor involvement and energy use. And so we think a combination of private sector seeking more efficient operations, more energy efficient operations, but also government fiscal support and spending to reduce Europe's reliance on the Russian gas could they both pay a big part over the next couple of years for as strong demand drivers for the European industrial energy efficient products. How about profitability here? What's the margin profile for some of these companies here given the inflationary pressures we are seeing out there? Well, the margin of your opinion industry has benefiting from both pricing and strong volume developments growth year over year this year. We think going into next year, both the margin and the volume support for margin could wane. In some sectors, the price empowers the pricing power specifically can help advance margins incrementally further into 2023 in some others, we think that they may struggle. Is the bad news priced in? We don't think so, especially with respect to the highly cyclicals at the highly cyclical stocks can see the organic sales materials very rapidly if industrial production Europe declines, especially the likes of Volvo sandwich SKS they have very high gearing into industrial production developments based on historical analysis historical trends. Having said that some other stocks within that space such as Siemens hexagon at Iraq and sandwich benefit from quite a strong structure of growth cushion should industrial production decline next year. Right, so you got sort of the have nots and then the maybe halves. Down the road. All right, thanks a lot, really appreciate omid Vaziri, Bloomberg intelligence senior industrials analyst. All right, let's shift to the global credit market, which is coming off a year of disappointing total returns, due mostly in part to recession fears and lingering COVID effects. What do we do for 2023? How bad is it going to get? Let's answer that question now with Bloomberg intelligence director of credit research Joel levington, Joel. Over the past week, I did a credit panel for you guys. And I told you to high yield panel, specifically for Bloomberg intelligence. And I got to say, there was a dispersion of views. Where is consensus? Where do you think we're going to end up when it comes to how high high yield spreads can go and what default rate looks like and what the investment grade credit market looks like. Yeah, no allergen, you did a fantastic job at the event. They heat them up for that. But you're right. There was a very wide range. I think most people think that spreads on the high yield market have the potential to widen out in the first half. And it might be towards the 500 to 600 basis point area in a difficult scenario like a recession scenario. But we heard others like Matt mish from UBS who talked about the market widening to
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"In about 450 or 460 basis points. So that's a dramatic widening that he was looking for in the high yield space. I think most of our team here sees that you're reaching ahead and fundamentals. But I think leans more towards the 500 side than a more draconian case that Matt was suggesting. So Joel, I know you guys, again, just had that big conference and a lot of sectors were talked about here. Did anybody jump out as, okay, these are maybe the sectors that in a recessionary environment might do better on a relative basis? I totally fall in. I think people think of recession resistant and difficult times and amazingly U.S. banks is a spot that came up both during the conference. I think it was David del beo Prudential as well as our own analysts tend to think that the big 6 banks, their bonds have widened out. They see consumer credit weakening, but not to the extent where it would really negatively impact their balance sheets or their capital allocation plans. And they also see less issuance coming up in the year ahead as asset growth flows. So U.S. banks was one. And then, of course, rob Schiffman are outstanding tech analyst. Always is a very positive tech sector. And it's easy to understand why, because even though their businesses and their stocks are down dramatically, they generate a ton of free cash flow and have very light dividend payments. So they have a lot of financial flexibility. So I think those are the kinds of sectors where we our team tends to be more favorable than others. Here's a weird question. How long does spread stay wide? And I'm talking more about Matt mish from UBS, which also saw they also see a terminal rate on the low threes from the fed. The fed's going to cut aggressively. And I'm wondering sort of how quickly spreads are going to react to that kind of momentum. Well, I mean, if they are tightening, that's because the recession is a lot steeper than what people are expecting right there. They're still plans for future rate hikes, not cuts. So if you're in that kind of scenario, I'm not really sure spreads are going to be tightening rapidly. That might be at best a second half of the year kind of event. So as it relates to the high yield, if we're going into recession, I think most people are mostly economists at least suggesting it looks to be maybe more mild. So does that mean high yield can be a sector that might outperform maybe expectations? It totally could be Paul and it was interesting because Howard marks the co chairman of oaktree capital was saying at current levels and you're at about 8.7% yield to worst on the high yield index. You're getting paid to take risk. And you can afford to have some defaults into that kind of performance. So if your view is that there's going to be a soft landing. This is a spot where you would certainly think about in terms of an allocating your capital. Coming up on the program will continue our conversation with Bloomberg intelligence director of credit research Joel levington. You're listening to Bloomberg intelligence on Bloomberg radio, providing in depth research and data on 2000
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"And every week at this time Tapping into our Bloomberg intelligence analyst covering some 2000 companies and 130 industries worldwide. It seems like the consensus is that 2023 is going to be really hard and developed economies are going to be in some kind of recession for some undetermined amount of time. Now, the worst place to be may actually be Europe, particularly if you're an industrial company and dealing with record high gas prices. Let's get more on the outlook for that industry within Europe. Bloomberg intelligence senior industrials analyzed omit Vaziri joins us now. Omen, how bad is it going to get for these guys? It feels like if we stack all the cards together, the worst deck is going to come and be played with European industrials. Well, there's plenty of industrials within Europe to benefit from very strong structural growth drivers. So what we've been focusing on in our research is on the structure growth element over and above its industrial production sensitivity for the respective companies. Now, we think European industrial demand could do this strength if macroeconomic backdrop deteriorates on rising interest rates and sustained inflation. Meaning consensus earnings may need to be cut by as much as ten to 15%. Based on the scenarios that we've run. Having said dissectors with pricing power and structural strong structural drivers, including grid energy and mining equipment, manufacturers could outperform. Automotive and aerospace may show some improvement, there are likely to remain below previs levels. And clearly currencies will play a big part in earning reporting. We think the currency profit tailwind seems likely to turn neutral or even reverse next year. And on the capital allocation side macroeconomic risks could weigh on sentiments and reduce appetite for large M and a and payouts. So it really depends on where you look. The European capital goods are broad in their end market exposure. They're quite global high sensitivity to Eurozone industrial production amongst the most cyclical SKS and could put them at risk should industrial production weaken next year. How does the war in Ukraine impact some of the operations? What have you heard from some of your big European global plays? Clearly, high energy cost has made it a lot more difficult for the European industrials to compete in the global markets. So it has been an impediment for the cost structure development. And making them more competitive in the global landscape. Having said that, a lot of European industrials provide solutions, products into energy efficiency, industrial automation, but also those processes that drive sustainability and we've seen enhanced we've seen an acceleration in demand for energy efficient solutions. So the likes of zeeman's Schneider ABB are reporting quite healthy order intake even from within Europe on the back of higher energy prices. How much of all of this is going to become from government spending in some capacity on the energy transition. And I'm wondering how reliable we think that is. Europe clearly has a strong agenda to reduce its reliance to fossil fuel and Russian gas. Now, this will be a multiyear agenda and it has created already quite a nice secular growth driver on top of the sustainability driven secular drivers for the European industrials. Through energy efficiency through increased automation, the provision of reducing labor involvement and energy use. And so we think a combination of private sector seeking more efficient operations, more energy efficient operations, but also government fiscal support and spending to reduce Europe's reliance on the Russian gas could they both pay a big part over the next couple of years for as strong demand drivers for the European industrial energy efficient products. And how about profitability here? What's the margin profile for some of these countries here given the inflationary pressures we are seeing out there? Well, the margin of European industrials have benefiting from both pricing and strong volume developments growth year over year this year. We think going into next year, both the margin and the volume support for margin could wane. In some sectors, the price in power is the pricing power specifically can help advance margins incrementally further into 2023 in some others, we think that they may struggle. Is the bad news priced in? We don't think so, especially with respect to the highly cyclicals at the highly cyclical stocks can see the organic sales materials very rapidly if industrial production in Europe declines, especially the likes of Volvo sandwich SKF they have very high gearing into industrial production developments based on historical analysis historical trends. Having said that some other stocks within that space such as Siemens, hexagon, epi rock and sandwich benefit from quite a strong structure of growth cushion should industrial production decline next year. Right, so you got sort of the have nots, and then the maybe halves. Down the road. All right, thanks a lot really appreciate omid Vaziri, Bloomberg intelligence in your industrials analyst. All right, let's shift to the global credit market, which is coming off a year of disappointing total returns due mostly in part to recession fears and lingering COVID effects. What do we do for 2023? How bad's it gonna get? Let's answer that question now with Bloomberg intelligence director of credit research Joel levington, Joel, over the past week, I did a credit panel for you guys. And I told you to high yield panel, specifically for Bloomberg intelligence. And I got to say, there was a dispersion of views. Where is consensus? Where do you think we're going to end up when it comes to how high high yield spreads can go, and what default rate looks like and what the investment grade credit market looks like. Yeah, no Alex, and you did a fantastic job at the event. Well, thank you. Thank you to them up for that. But you're right. There was a very wide range. I think most people think that spreads on a high yield market have the potential to widen out in the first half. And it might be towards the 500 to 600 basis point area in a difficult scenario like a recession scenario. But we heard others like Matt Mitch from UBS who talked about the market widening to as much as 750 basis points and keep in mind that the market today is
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"The market right now. It's what we see in analyst expectations. There have been recessions in the past where earnings have only fallen at a single digit pace, and that's pretty much what analysts are into. What is the pricing power debate look like right now? The unit dynamic and the price dynamic at the revenue line. It is extremely variable by industry and sector. I think you can't talk about the S&P 500 as one big. Can you even talk about one sector? Do you have to go like a partition profit makers and zombies? You almost do. You do, you do. Because frankly, you've got such extraordinary distress emerging in the inventory cycle, which is really also behind a lot of this weakness for, say, semiconductors and retail, which are the areas of greatest distress on the inventory lines, along with maybe autos coming into 2023. There's a tremendous amount of margin pain and inventory access that we have to work with. So what do you do when you see that? Did my answer is your cost rationalized. That's just got to ask. And you're starting to see that. I mean, we've seen layoffs. We've seen announced layoffs. We've seen a lot of these sectors talk about retailers even talking about how much labor they need into the holiday season. You've seen the tech companies laying off people, autos have announced layoffs coming already. So you're starting to see this in these segments. Now the interesting thing is they're offset by this unique dynamic of services industries actually finally getting some traffic. Right. So services industries get some traffic this year that provides some basis of support for services industries. Let's take the airlines as an example. Suddenly businesses are traveling again. You've got business travel coming back online. They're dynamic looks a lot different than an inventory focused goods company. That was depressing. Well, I mean, I don't know. Maybe not, actually, because if they actually are going to see margin expansion, maybe the pain has been in. It's an interesting counterintuitive kind of play Gina Martin. Thank you. That was great. We got to come back. I want to talk to you about elephant beta and are we back to a stock pickers environment? Gina Martin Adams and her team have Bloomberg intelligence. I really can't say enough about the service. Look for it on the Bloomberg terminal and it's on the equity side in also she never talks about it, of course. On the fixed income, the debt side as well of corporations in America, Joel levington and others there doing a great job. What an odd Monday. On a really strange strange week, given all of the data coming out, the ECB rate decision, the bank of Canada, rate decision, which is often a FrontRunner to what happens next week for the fed. Two weeks to the U.S. election, then with all the turmoil in the UK and oh yeah, a total regime shift in China at least what we heard over the weekend. There may be a regime shift in the United Kingdom. Stay with us on radio and television in the coming minutes, perhaps a new prime minister in the United
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"That's a Bloomberg business flash Bloomberg markets continues now both Sweeney and Matt Miller. All right, great, Jared. Good stuff. We appreciate it. You know Matt was just calling out here and I end screen the Bloomberg index browser, Bloomberg, U.S. corporate, total return value year to date. -14.6%. Treasuries too, -14.8. I mean, what's going on? And that does in total return. So not that it would have mattered because the coupons are so low, man. Yes. But it's harsh. And look, my mom and dad just retired. This month and I feel for them. I guess I'm going to have to step up. Sure. Is there broke now? You know? All right, Liz McCormick, global fixed income on foreign exchange reporter joins us live here in a Bloomberg, you know, I have to broker studio. So Liz, again, these are numbers. These are performance numbers. Your Friends in a fixed income market have ever seen? Never seen? Yeah, I mean, some of the data how you splice and dice it is like at least the worst first half and kind of modern times call it. I was mentioning to Matt that Deutsche Bank had some great data back to the 1700s, like how bad it was. I mean, people just aren't, most people aren't used to this kind of beating up in bonds. I mean, do people in fixed income today? They try to call the bottom like we hear equity. Investors try to call the Bacchus. Yeah, and this is where I feel like I see the same dichotomy going on as you guys are talking all about and stocks, you know, is this like a bear rally? Is it over? Same thing in bonds. People saying, oh, we've seen the peak and yields, you know, all the fed pricing for hikes is in there, the worst is over. And then other people saying, um, wait a minute, you know? Like 3.5 on the ten year was the highest we've seen, but like, listen, you know, I've been around for a while like the folks at Bridgewater have said to me a few times. We think rates go a lot higher, ten year could go to 4% or more. You know, fed is just got a lot more tightening to do. So there is these battles, I think, in both asset classes, you know? We'll see who wins in the end, right? Maybe next year sometime. I met a guy over the weekend, 83 years old, fascinating guy, and he watches and listens to us every day. He trades bonds every night. So at the end of the day, he'll make a trade, put on a position and then the next day. No one, nobody does that, right? Nobody does that. My father, who I've been doing this for so long, still says to me, can you explain to me again? What a bond is, you know what I mean? All the bond traders, I know all the guys I know who worked in firms on the street have long since retired or quit. Right, exactly. I remember my old boss ward McCarthy saying, years back when there was yield saying, I bought, you know, zero coupons, ages ago, and that put my kids through college. You know, like what used to be such great rates and those are just gone. Well, actually, Scott miner did say he's buying the strips, right? 20 years. Which is kind of jargony, but I guess when you strip out the coupon, you can trade the maturities, and then you can also trade each due date of the coupon. It's like a bullet, you know? It's just like a single coupon, in a sense, just what you get at the end. But yeah, they're stripping and I saw that. And we'll see, I mean, if we were in this era that we're never going to get rates too high again, which I'm not sure I buy into yet. People who bought strips or locked in tens at over 3% are going to be pretty happy if in a couple of years the feds fighting in a recession cutting rates again. Is that, by the way, kind of a consensus that the fed is going to raise rates high enough to fight inflation because now they have to. That's they're locked in and not only is it one of their actual mandates. And then we're going to have a recession in 2023 and they're going to have to cut right back down again. Well, I would say the timing of the recession gets nebulous. A lot of people say late 2023, I've heard a few say, maybe there's enough cash in the system corporations are much better. It could be 2024, but I think in general Matt, you're right that it's fast up front loaded quick and then the fed is going to have to eventually not too long be cutting rates again because they're trying to manage in pal said he's gone from, you know, like soft landing soft dish to saying, well, we could have a slow. He's trying, but you raise rates this fast, and I know there's not a lot of floating rate debt out there, but I have a home equity line of credit. And I was like, oh, they raised that rate pretty darn fast. You know what I mean? And not only that. Joel levington wrote a piece about the automakers. Now they're facing a $145 billion wall of debt. And it's not like, you know, they can just hold it. Right. They're constantly rolling over. So now they're going to look at 250, 300 basis points of increased cost. This, by the way, adds to inflation because they've got to pass that along to the customer, but it's tough for companies as well. Yeah, I think everyone, you're going to feel this very quickly. Now the fed said, we're really watching financial conditions, which is kind of nebulous, you know, how tight do they have to get, you know, not just what's the hard rate, the fed funds has to get to, but that's what they're watching. How does this filter through, look at mortgage rates over 6%. You know, they seem like so low for so long. The housing market has an imploded yet, but for once, not that I'm looking to buy, but you see on Zillow finally, price reduction. We didn't see that forever. So I think it's going to be no sale. I know people who wanted to sell and now they can't so they got to rent. Yeah, and you know what rents are crazy, right? Going up in price, the leases up, I've heard so many people complaining, oh, the lounge putting up my rank 25. Rent is too damn high. The rent is too damn high. So if you move, is that another reason to move the Austin Texas or? I don't think pricing is good in Austin Texas. I don't think it is either. You don't get a special rates because it's Texas. So where do you have to go? Columbus, Ohio. It's a great place to live in very affordable. People are just wonderful. And they play football. No accent. It's the only place in the country where there's absolutely no regional accents. They use people from the great state of Ohio often for newscasters. And Matt Miller, case in point. All right, Liz McCormick. Thanks so much for joining us, Liz McCormack. She covers all things global fixed income, foreign exchange reporters. She does it all for Bloomberg news and most important. She is in the Bloomberg director broker studio today, so we appreciate that. Looking at these markets here, just a little bit of red on the screen, not going to oversell here
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"Stocks are climbing as data signal the strengthening recovery while dip buyers are stepping in following a sell off spurred by a hawkish Federal Reserve The S&P 500 is advancing after reports show the U.S. economy expanded more than four cash in the fourth quarter While jobless claims fail last week and we check the markets every 15 minutes throughout the trading day on Bloomberg the S&P is up 1.6% up 67 points at 44 17 the Dow Jones Industrial Average up one and a half percent or 524 points at 34,695 and then asked to accept 1.4% or a 194 points at 13,736 Ten year treasury up 1730 seconds He had 1.80% that yield on the two year 1.16% Nymex crude oil is up 1% or 88 cents at $88 24 cents a barrel Down 1.2% down 21.9 cents at 1810 an ounce the Euro 1.1160 against the dollar British pound at 1.3404 again is at one 15.33 Bitcoin is at $37,000 And Apple were watching those shares up 2.4% This ahead of its earnings report do after the market closed and that's a Bloomberg business flash Tom and Paul Karen thanks so much greatly appreciate that Paul I'm going to let you bring this game because he's a danger to society And he's talking about Tesla being an investment grade How do you do that Did they even make money I don't know All right Joe all right listen we have really good colors out of ten I know We have Bloomberg intelligence here at Bloomberg 350 animals around the world covering stocks bonds all that kind of stuff And they all listen to this guy They all listen to this guy He runs the credit side of it for Bloomberg intelligence Joel levington he's been on Wall Street for decades on credit research And it's interesting for Tesla Joel thanks for joining us here in our Bloomberg interactive broker studio You're saying that Tesla has credit metrics that are superior to Ford Stellantis and General Motors How do they do that They generate cash That's what they do Really They actually become a cash machine Okay That's how they generated 5 billion last year In 2021 I think between 22 and 23 that's over $12 billion Just to put it in perspective Ford and GM this year are going to combine generated about $2 billion of free cash versus the 5 that Tesla did So that's how you get it Okay So they reported numbers last night What are the highlights from you from I know the stocks off a little bit from a credit perspective because Tesla does folks Remember they have about $7 billion of total debt outstanding So how did the numbers look last night From a credit perspective they were terrific They reduced about $4.9 billion of debt in 2021 so the credit metrics keep getting stronger They said on their call that they can expect to continue to pay down that I think really what the market is getting a sense of is that they said the CyberTruck won't be out until 2023 instead of 22 And I think there's very logical reasons for that And I think most models and consensus didn't include CyberTruck but I think that is somewhat of a disappointment to use some folks I want to talk to you This has come up three times at least in the last couple of days A small startup company called Microsoft is 97% equity 3% debt and 2.8% long-term debt of 72 gazillion dollars When you walk in and talk to their CFO or critically to their leadership talk to the CFO does a CFO almost have an obligation to tell them their balance sheet is a mess and they should immediately have more debt Well the very talented rob shift covers them And he's talking to other CFOs But but I do think that you're seeing a change over time of lazy balance sheets getting utilized Where very high quality names it seems like the triple-b categories where everybody has moved down to from the single a category meaning that they are using their balance sheets whether it's for share purchases dividends acquisitions or some kind of combination thereof That seems to be where the world has settled in Am I right that pros like you think Microsoft could do They have 72 billion of folks long-term debt They could do a $30 billion issuance tomorrow and they could do it in 6 phone calls like one 800 Singapore 100 Oslo and one 800 fidelity Yeah I think they could Well that's amazing It is Well the credit market show I mean your credit markets are so strong here What is a company like Tesla who is free cash flow positive or is Tom's mentioning Microsoft with all the free cash flow They have why do they even bother going to the credit markets No that's a great question I think with the case of Tesla it's a different need from two years ago as it is today Two years ago they were struggling very hard Today they're swimming in cash But that might be something.
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"It's really interesting here This has been a timeless debate folks This goes back forever really back You know as far as I'd say John my memory to Arthur burns before Greenspan But the idea of parsing it I haven't heard chairman Powell doing that much recently I'll give him credit for that John do you see the GE news Go on some GE launches $23 billion bond tender offer to slash their debt load which is really something I mean this is not apple or Microsoft with minuscule percentage of debt John This is 36% debt And again John this goes back to corporate dynamism and corporate action I think that's underestimate An attempt into the world and Tommy had admit it's taken a long time for this company to adapt to the world around him Well in the defense of Lawrence cop I just looked at the weighted average cost of capital function John I just looked at return on invested capital and it's amazing what cop has done out of 2018 in the crater there The cards he was dealt were just extraordinary But this is again this action Have you seen in his Joel levington told us yesterday who's next is 3M the next GE Well Tom you understand the ark of management better than anyone over at GE Did we need an outsider to make this Absolutely Yes This is a sensitive issue always And you know when you can get someone of cops character and what he did at Dan and her years ago okay I get it But it's a general rule to shake things up Yeah you gotta go on Okay but let's also talk about the broader backdrop How they got to this point was reducing debt dramatically How could they reduce debt dramatically and actually finance themselves at such a good cost Because of the backdrop of how low rates are and how much demand there was for debt How much has that ultra easy credit market given the flexibility to these companies to make adjustments in their capital structure John that are very needed To me this is actually something to watch Because GE was a death story among all others Do you know what I'm excited about I'm not talking about GE anymore We just won't have to talk about GE anymore Just reminds me of Deutsche Bank Tom Do you remember how much we used to have to talk about Deutsche Bank Well yeah I got to be careful when I say you be careful You be careful Under stories like method two get to cover method two all the time and then you're just not Deutsche Bank Wednesday at CPR It's API Wednesday Let's build up some enthusiasm for the data point that comes in one hour And 5 minutes Enthusiastic I think it's fascinating I'm not sad enthusiastic Come on Equity future of 1% I'm not enthusiastic about that you're right The other time by four.
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"Has started on the takeoff stage now in years where maybe China was ten years ago So it's got a long way to go and it's going to be a long run Of course they're going to be corrections along the way So you have to be aware of that But otherwise India is really on a run It's going to do very very well My Mobius there on emerging markets as always on India specifically from New York City this morning Good morning Tom Keane Lisa brammer and Jonathan Ferro your equity market shaping up as follows We're down 6 with negative attempt of 1% After an 8 day winning streak on the S&P it's been a while since we've seen some red on the screen The S&P 500 just a little bit softer Yields come in three basis points The race for the fed is on welling to hear something from The White House at some point in the near term One 46 19 on tens and your pre market mover of this morning and maybe you know what of the week General Electric GE splitting into three healthcare power and aviation the years that Jack Welch wow behind us now This stock is up by more than 7% in the premarket some one 16 ten A premier now and without question or global Wall Street interview of the day Joe levington joins us director of credit research from Bloomberg intelligence and folks This is different than the rah rah of the stock market equity sell side This is about really looking acutely at any given industrial company is doing Joel levington is expert When you split off three companies even over timeline the PR the spin and all that who gets the liabilities who's gonna grandfather the headaches here Yeah they're all gonna get some of the liabilities Tom My guess is if they follow the Tycho playbook which seems to be what they're doing in terms of the spinoff what you'll wind up having is the new companies and the energy company and the healthcare company will issue debt back and use the proceeds back to the parent to pay down some of the liabilities but the aerospace company at the end of the day will wind up with the majority of the liabilities because it's the company that can handle the most liabilities You rode 15 days ago or maybe it was 20 days ago about the idea of a piece of this train wreck being junk junior subordinated paper This is on the aircraft leasing And I get it's a small part of it but I think a lot of our viewers and listeners would be surprised that an adult like you is writing about junior supported aid in garbage Well that's true but GE part of its capital business has a junior preferred debt That is across over credit meaning that it is junk on one side from the readers and investment grade That is likely to remain investment grade in the future Joel going forward this will be a tale of many different bonds I'm sure as we parse out what the capital structure of the new entities are I am wondering though from a larger perspective whether the de conglomeration that we saw over the past three years has shifted in light of what happened with the pandemic the idea that size actually helped with respect to shoring up supply chains and other types of resources Well Lisa you're totally on point and size definitely matters but it's also the kind of size that you have Here when you have so diversified businesses where you really can't leverage the technologies to a great extent it's not the same as let's say a Roper Technologies where it's a software based platform across different verticals So here I think it's clearly a case for making it into three unique companies I would also say it makes my eyes move towards an Emerson Electric or 3M where you might not have the same kind of consistency in their portfolios and maybe those are portfolios that might be next to see breakups So Joel do you think that the reaction that we're seeing both in equities and frankly even in bonds to the split up of GE will actually encourage some of the separations whether it's 3M or Emerson Without a doubt I think people like having straight plain vanilla stories with a growth outlook that they can understand It's never really great in a diversified conglomerate because in that case there's always some companies that are doing well and other companies that aren't doing as well So I think you will see more breakups happen in the future How does Amazon 20 or 30 years out with their different businesses not become what you just described Well I guess that'll become an issue once Amazon's PE is S&P 500 level Same thing with Tesla right Tesla has a variety of different businesses inside of it But I think when the markets are hot for your stock it doesn't really make a difference Protect you Yes Exactly Super instance I'm gonna stay on Amazon is a real company and some people would say Tesla's not a real company but on something like Amazon which is like Jack Welch pre ML right now How do they avoid in your debt expertise to run into the challenges that we saw with GE The market is always about growth And as long as you have growth you'll be okay It's this is the story They got buried because of growth at all costs They did and that's really what happened right Because you had during the ML days and the Jack wall stays the build up of the capital business which became two risky two levered and with lower quality assets And that's really where the problem started When it comes to the big industrials chill just sort of to wrap this all together Have you rethought the breakup of any companies the potential breakup I should say as a result of what we have seen with supply chain issues what we have seen with respect to pricing power when it comes to the bigger companies I really haven't Lisa but what I would say is that there are a lot of diversified industrials out there where I think you have to question do the businesses make sense together To me something like Emerson Electric does not belong together where you have it a Home Depot type business where you're selling a home consumer goods as well as an automated business where you're dealing with chemical petrochemical companies It doesn't really come together I think Stanley Black & Decker is another situation 3M I think also gets put into question And I think there are shareholders and bondholders need to take notice because as you can see with GE it's going to work out pretty well for them today in terms of how people are going to think about them as a streamlined entity Joe before you run can we talk about how wrong we all were on Tesla credit I just want to bring that out quickly We haven't spoken for a while What a run It's been just the equity It's been massive and it certainly has played out well They are following many of their EV peers in getting rid of all the debt on their balance sheet They just have a little bit left And right now if you look at the CDS on Tesla it's trading inside of companies like salons which is a triple B minus credit So the corporate credit market has gone from thinking of it as almost dying about three and a half years ago to being worthy of investment grade quality John can you imagine Joel lovington and Lisa abramo at a bar having a conversation You're talking about how your credit Tom We were just down to its knees with happiness When Lisa walks in and everyone goes I'll have another one There's a flattering Making that a dumpling Can we talk to 7 year auction Thank you Wow love blow Tom Tends to be TK Ten $39 billion of Ted's $25 billion of 30 years tomorrow I'm sorry the reach here of reginald Jones who got all this started and this goes back to my youth and a company called Lin tempo vote at LTV And I'm sorry John conglomerates just don't work I mean what can I say I think the Amazon question serious Well hold on a second Tom That was the view three years ago And then suddenly at the end of last year people were saying well actually maybe some of these conglomerates make sense if they do have pricing power The key is as Joel was saying what's the synergy I hate that word I know you this is breaking news we got John I'm sorry peloton introduces strength training TV devices Camera Nice Quick I think it's fair to say industrial conglomerates don't work Maybe Yeah I think that might be Yeah but I think being more specific is important here As always features in four 20 years when we're doing this Things I thought could never happen for me in a punk band What We are lady parts a new original comedy.
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"Welcome Joel levington He's the Bloomberg intelligence senior credit analyst So Joel going into the pandemic a big shutdown of the industry across the U.S. and the world A lot of companies raised cash to show up their balance sheets How did their balance sheets look now as we're coming out of the pandemic and industrial productions picking back up Sure thank Paul The balance sheets are actually quite strong in the world of industrials That's kind of a blessing and a curse for bondholders Blessing is they throw off a ton of cash and the curse is that they throw off a ton of cash which means that they're always doing something and whether it's portfolio of management higher dividend share repurchases it becomes a game of capital allocation and who is willing to risk their balance sheet So which ones typically do best Which ones do you need to be looking at Is there like a criteria like X-Men of leverage This is the kind of margin Yeah totally Alex We did a recent study on it Where we look back over the past 5 years to see who are the outperformers and what are the key themes behind that outperformance And what we found is that the big winners in the game are the ones that are able to expand margins faster than the peers And that is usually done through portfolio management In the world of industrials it's usually a game of addition by subtraction So if you get rid of your lowest growing business your growth rate goes up And whether that happens or through acquisitions more software based companies This is adding to the growth profile and margins But often at the expense of the balance sheet All right so a lot of companies including industrial companies like the reward their shareholders That's why I went into equity and also Buying back stock paying dividends that type of thing that's often funded off the balance sheet How would the industrial companies behaving in that regard right now Are they managing to their Fitch and S&P ratings or are they really focusing on their equity shareholders I think it's really pedal to the metal for the equity shareholders right now I think they see an opportunity for growth over the next couple of years and they are going out and they're at a record pace acquisitions this year It's going to be about $320 billion worth of acquisitions And then of course with dividends to your point there's some very high dividend players companies like 3M Emerson Dover these are the dividend aristocrats I think in your world and for me it's the guys that have less debt capacity to do these things without impeding their credit worthiness This might sound like a really public question here but how do you determine So if they're all doing it how do you know which ones are better off doing it and which ones can 'cause you can't avoid them doing it when you have this kind of low interest rate environment You're totally right Alex And I think it becomes a game of history knowing the company's long-term financial policies to knowing where readers think about the companies and how much debt capacity you have basically until you can get into another category And three looking at the consistency of their cash flows So I could take a company like Dan or her where it's 75% of its cash flow is recurring revenue And you know you have a pretty steady stream So they can level up but they can easily pay it back down versus maybe more of a machinery company maybe like a caterpillar or a deer if they're doing acquisition activity That's very cyclical cash flow and that can create problems long term for a bondholder So talk to us about the industrial companies we're hearing about all these logistical problems in the global supply chain and it's affecting almost every industry out there How many industrial companies that have a lot of big input of raw materials and then you know they do all their manufacturing stuff and then there's an output How are they dealing with that Supply chain has become a really big issue and COVID has become very very challenging for them because you can have companies in Malaysia that are facing COVID to a greater extent than the folks in the United States and that can delay your products So really the companies that manufacture locally have been the ones that have been able to outperform right now Right that makes sense You don't have to transport as far et cetera Quick question here So we talked about this with oil stocks a few weeks ago that a lot of oil companies were borrowing money to pay back debt or using a lot of their free cash flow to pay back debt But they already paid it back So now they're like they're paying it back early and they had to pay a premium for it et cetera Is that happening in industrials No it does because they do generate a lot of cash flow They tend to not look to pay off debt early and wind up having to pay either a make whole fee or some sort of premium for it Whereas something like on the energy side because of the volatility and all of the bankruptcies that they've kind of gone through I think maybe they've gained a little bit of religion and have decided to pay down debt while they still can Fair enough All right so the world's looking for yield Where's the relative value in your space There's a big industrial companies the credit profiles there Where's the relative value Yeah it's hard to find But the names that I like is everything is relative You have to put your money to work somewhere Long dated carrier bonds carrier the maker of each pack equipment So air conditioning and heating General Electric long dated bonds are another race that I like to be Yes Okay So those are the GE bonds on the industrial side because they've gotten rid of the vast majority if not all of their financial side They have gotten rid of their majority of.
Bloomberg Radio New York
"joel levington" Discussed on Bloomberg Radio New York
"Listening. About 300, Florida residents are told to evacuate in Miami Beach condominium tower because of safety concerns. The crest View Towers condominium in North Miami Beach has been deemed structurally and electrically unsafe. All residents of the 156 unit tower, built nearly half a century ago have been forced to move out. City officials cite the Surfside condo collapse for triggering an immediate review of all high rise condos in the Miami area. The death toll from the collapse is now at 22 more than 100. People remain unaccounted for. Residents of the Florida Keys are getting ready for the effects of Hurricane Elsa. The category one storm with winds of around 80 MPH will be felt in the keys starting Monday night as it skirts the islands on its way to the Gulf of Mexico. Federal health officials say. Nearly 15 million people have missed their second doses of the covid vaccine. That's the latest I'm Cameron Fairchild, and I'm Susanna Palmer in the Bloomberg newsroom. A massive ransomware attack on the software supply chain has impacted more than 1000 businesses so far, and the number may continue to grow. That, according to the cybersecurity firm Huntress Labs, the attack is focused on managed service providers, which provide I T services primarily to small and medium sized businesses. Such attacks can have a multiplying effect. Since the hackers may then gain access and infiltrate the MSP s customers, too. Hackers were identified as the Russian linked ransom group. Reville, which was accused last month of hacking giant meatpacker JBs S A an investor group led by Fortress investment, agreed to by Britain's William Morrison Supermarkets PLC for about $8.7 billion That move could potentially trigger a bidding war for one of the UK's largest Grocers supermarket chain, said in June that it rejected a $7.6 billion offer from Clayton, Dubilier and Rice. Others in the Fortress consortium include the Canada Pension Plan Investment Board and the real estate arm of Koch Industries. That's the largest privately held company in the U. S. Run by Coke family of conservative political donors. Danny Meyer, who owns Gramercy Tavern and started the Shake Shack Burger chain sees a path to recovery for New York City eateries, and it starts this weekend. More on that from Bloomberg's Charlie Pellet. He was interviewed on Bloomberg TV s balance of power, he says, quote for the first time in months, we are going to be able to welcome people into our restaurants with plexiglass barriers coming down and bars fully reopened, he says. Quote You can enjoy restaurants just the way you always did. Establishments, however, are still finding their footing in the city's business districts, which should be helped us. More people return to offices. Charlie Pellets, Bloomberg Radio Global News 24 Hours a day on air and on Bloomberg. Quick take powered by more than 2700, journalists and analysts in more than 120 countries. I'm Susanna Palmer, This is Bloomberg. This is Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio. We're going to be here each and every week at this time tapping into our Bloomberg intelligence analysts covering some 2000 companies and 130 Industries World Wide Everybody's heard of Tesla. Everybody probably wants a Tesla. Even those in China want and love a Tesla. However, there are a ton of other electric vehicle companies within China that are also gearing up to take on musk's superstar that one of them is neo and potentially, they might have a faster path to profitability than we thought. Right for more. We're pleased to welcome Joel Levington, director of credit research for Bloomberg. Intelligence. First. Just give us the primer on what Neo is last time. I took down the company a couple years ago. They had a good idea, and they were seriously bleeding money. Yeah. No, Alex, let's break it down. Neo is a company that still bleeding money, Although it looks like it will turn profitable in 2022, Really? The similarities are many with Tesla, but with a few differences. Both are manufacturers both compete in very large markets for Tesla, mainly North America, although it's also in China and has established itself in Europe. Neo is really a Chinese player right now, although it's also exposed to add Norway job and both make cars that are luxury premium branded That's where the the differences stop with with Tesla. It is a very vertically integrated business, so they do everything from the manufacturing of the car too many of its components, including the batteries. And they also do the dealership. So he kind of run the whole business and that has some pros and cons. It's much more capital intensive, but you're grabbing all of the margin out of all those areas. Kneel, on the other hand, is not vertically integrated. They have a joint venture for manufacturing with with a Chinese company called Jacks. And they also outsource the battery with a partner called C A. P L and between those two it makes it makes the new business a less fixed capital intensive business, which enables it to generate catch low quicker. And so to me neo of tomorrow meeting 2022 looks very similar from a From a business standpoint of Tesla in 2016, but with a wider product line and arguably arguably in a higher growth market than Tessa was. How do you do with the volatility? If you're a credit guy? Yeah. No, That's a great question because there are no credit ratings on neo It was tricky. Yeah, it's definitely tricky. Luckily, we were able to re engineer Moody's methodology. The Bloomberg terminal has great functions like the RSK, which tell you about default risk. We also have my background has nine years of experience that s and P and using all three methodologies we came out with with with neo having risk about a mid to high single B, which Amazing isn't is a weak credit, but it's certainly not one that is going to be on a deathbed anytime soon. Where Tesla really was three years ago when it was trying to scratch out profits and, you know, issued its first unsecured bonds. Do you think that the market wants a neo car or do they want a Tesla car? Or is there room for both? I think the answer is there's there's room for both. The Chinese market is over 20 million cars a year and it's just 10% easy right now, but rapidly growing, and there are a lot of great players in that in that in that market, including neo ID. Volkswagen and Daimler are going to be strong competitors in the coming years. But that is a market that is destined to become a market much quicker. And so there's certainly room for multiple players, just like there has been in the United States for ice engines. And so I think they'll all be able to get a good market share and do quite well in terms of profitability as their businesses scale up in in the platform. In terms of the government. How does China feel about neo? I think all countries tend to feel like autos are in an extremely important component of their economy, and you can see that whether it's the U. S. That has helped helped out GM. And then they didn't need to do that with Ford. But you can see that with all country then China certainly supported neo. You know, a year or so ago when it was struggling, and he supported the business, and I would assume that it will continue to support its own domestic manufacturers. Because there are so many jobs that are based around autos, and it's not just the auto itself. But it's the the engineering and software and the suppliers. The dealers that go around cars. It's the insurance. Create so many jobs off of autos that it becomes critically important to most governments to maintain a healthy market for the for the manufacturers. Yeah, It's really interesting. I mean, you just so you know, Boeing and Airbus and ending their You know, decade almost long dispute, and you wonder how the subsidy thing will play into in factor into E V s, um, for different countries. All right. Thanks so much Jill. Really interesting stuff to say that develops Joel Levington, director of credit research for Bloomberg Intelligence. All right, Coming up on the program. You got Rocca's Tech like valuation may be out of media acquires reach. So what happens more on that next? You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on 2000 companies. 130.